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

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d) 
  Of the Securities Exchange Act of 1934

For the Fiscal Year ended **December 31, 2003**

Commission File Number **33 - 281888**

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  (Exact name of registrant as specified in its charter)

|**Delaware**             | **84 - 1116458**   
|------------------------ | -------------------
|(State of Incorporation) | (I.R.S. Employer   
|                         | Identification No.)

**650 West Georgia Street, Suite 450, Vancouver, B.C.,
  Canada V6B 4N8** 
  (Address of Principal Executive Offices) (Postal Code)

Registrant's telephone number, including area code:**(604) 684-8662**

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

Title of each class: **None**

Name of each exchange on which registered: **None**

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

Title of each class:**None**

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

Check if disclosure of delinquent filers pursuant 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.    **x**

State issuer's revenues for its most recent fiscal year: **Nil**

Transitional Small Business Disclosure Format:
  YES** ̈**NO  
  **x**

Aggregate market value of the voting stock held by non-affiliates
  of the Registrant as of December 31, 2003:**$11,162,109**

Number of outstanding shares of the Registrant's No Par Value
  Common Stock, as at December 31, 2003: **17,305,596**

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|      | Item 1:         Description
        of Business
      (a) Business History and Development
      Jefferson Capital Corporation (the Company), a development
        stage company, was organized under the laws of the State of Colorado on
        February 28, 1989. The Company is in the development stage as defined
        in Financial Standards Board Statement No. 7.
      On January 4, 1990, the Company sold 10,000,000 units
        of no par value common stock in a "Blind Pool" public offering. The offering
        price for each unit was $.01. Each unit consisted of one share of the
        Company's no par value common stock and 25 Class A Common Stock Redeemable
        Purchase Warrants (Class A Warrants). The Class A Warrants are exercisable
        for 24 months from the effective date of the registration statement (October
        30, 1989) and entitled the holder thereof to purchase 25 shares of common
        stock at a price of $.014 per share. The Company received $72,730, net
        of offering costs, from the sale of common stock in the public offering.
      Effective June 13, 1990, the Company entered into a
        merger agreement with Ohio & Southwestern Energy Company (OHIO). The
        Company issued 80,000,000 shares of its common stock in exchange for all
        of the outstanding shares of OHIO. After the exchange of shares, OHIO's
        sole shareholder, Members Service Corporation (MSC), owned 80% of the
        Company's issued and outstanding common stock. The name of the corporation
        was changed to Ohio & Southwestern Energy Company (OHIO).
      While the company commenced 1990 with a successful public
        offering, the subsequent merger agreement with Ohio & Southwestern
        Energy Corp. (OHIO) became an abortive transaction. The new management
        of OHIO never completed the merger with assets represented, and without
        authorization distributed the corporate funds to unauthorized parties
        or uses which resulted in a total write off of the capital of the Company.
      The majority stockholder, MSC, failed to disclose to
        the minority stockholders the distribution of corporate funds during the
        year ended 1990. The Company recorded an extraordinary loss in the amount
        of $69,116 as a result of the unauthorized distribution of corporate funds
        in 1990.
      The minority shareholders filed a complaint in Arapahoe
        County Colorado District Court, Civil Division, during April, 1991 alleging
        among other things that the majority shareholder, MSC, failed to disclose
        the distribution of corporate funds, failed to account for the operations
        of the corporation, transferred assets of the corporation without stockholder
        or board meetings and questioned the value of the corporations assets
        and operations.
      On August 28, 1991, a Receiver was appointed and the
        court ordered the 80,000,000 shares of common stock issued to MSC to be
        canceled. On January 12, 1995, the minority shareholders filed a motion
        for supplemental orders requesting that the merger between Jefferson Capital
        Corporation and Ohio and Southwestern Energy Company be declared null
        and void and a bar date of April 15, 1995, be set within which any and
        all creditors must file a claim.
      On May 23, 1995, the Receiver issued his final report
        stating that no claims of creditors had been filed by the bar date. The
        Receiver incurred $36,395 in costs during receivership. Certain of the
        costs had been advanced by the Receiver in the anticipation of issuance
        of shares of common stock by the Board of Directors after the dismissal
        of the Receivership.
      On June 21, 1995, the Court ordered the merger null
        and void, approved the Receiver's final report and authorized the restoration
        of the name of the Company to Jefferson Capital Corporation. The Board
        has elected to retain the existing name for consistency. The Company engaged
        in no foreign operations or export sales to date.
      On August 30, 1995 the shareholders of the company voted
        to approve a reverse split of up to one new share for 300 shares outstanding.
        On September 25, 1995, the directors effectuated a reverse split on a
        one for 300 shares basis.
      The Company was inactive in 1997.

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| | On June 25, 1998, OHIO entered into a Purchase Agreement
        with CanArab Acquisitions Corp. ("CanArab") under which CanArab purchased
        8,650,000 common shares of The Ohio & Southwestern Energy Company
        for $160,000, from GeoTech Management Services, Inc.
      The following shareholders of CanArab Acquisition Corp.
        own or control more than 5% of the total issued capital of CanArab:
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| | Cankaz Technology Systems Corp. | 10,000,000 shares | 41 | %
| | ------------------------------- | ----------------- | -- | -
| | Arab-German Fisheries, Inc.     | 9,500,000 shares  | 39 | %

| | Cankaz Technology is owned 100% by Gerab Investments.
        Arab-German Fisheries is owned 80% by Gerab Investments Corp. and 20%
        by the Arab Group International for Investment and Acquisition. Gerab
        Investments is owned 80% by Abbas Salih and 20% is held by 2 German citizens.
        Abbas Salih would be considered as the control person of the aggregated
        entities and he therefore controls 80% of the Registrant.
      OHIO entered into a Plan of Reorganization Agreement
        to acquire CanArab Technology Limited ("CAT"), a Yukon corporation, from
        shareholders in consideration of the issuance of Fourteen Million Six
        Hundred Fifty Thousand (14,650,000) shares of common stock of Registrant.
        CAT has developed marine aquaculture designs for shrimp farming. Concurrent
        with the acquisition. CanArab Acquisitions Corp. was to surrender 8,650,000
        shares to Registrant for cancellation. The acquisition was never completed
        because funding sufficient to implement the plan of business was never
        achieved.
      The Company entered into an Agreement in October 1998
        to acquire CanbauConstruction GMBH of Germany for one million shares of
        common stock of the Registrant. The Agreement required certain due diligence
        investigation and was based upon the representation of Canbau that it
        will have audited financial statements showing a four million dollar asset
        base. Canbau was retained to construct a shrimp processing plan in Germany
        with an estimated cost of $42 million, subject to arrangement of financing
        which is not yet assured as of the date of the Agreement. The Agreement
        was never consummated due to lack of funding and has expired..
      On July 31, 2000 the Company entered into an Agreement
        and Plan of Reorganization with CAT wherein the CAT shareholders agreed
        to exchange all of the issued and outstanding shares of CAT for a total
        of 5,280,907 shares in the common stock of the Company and, thereby, become
        a wholly owned subsidiary of the Company. CAT is the holder of a Letter
        Agreement to purchase certain interests in Strategic Profits Inc. ("SPI"),
        a British Columbia corporation, doing business as communitystorefronts.com.
      Under the terms and conditions of the Letter of Intent
        with SPI, CAT can acquire a 40% interest in SPI by SPI issuing common
        escrow shares equal to 40% of the total issued and outstanding shares
        of SPI, in exchange for CAT issuing 2,475,000 common escrow shares. As
        a further share purchase option, SPI has granted to CAT the right to acquire
        an additional 35% of SPI's outstanding shares by the issuance of up to
        2,400,000 common shares of CAT, which shares will both become part of
        the existing common escrow shares of SPI and CAT under the Agreement.
        The SPI escrow shares can be released to CAT on the basis of CAT providing
        funding to SPI, from any source, to assist in the implementation of its
        business plan dated April l, 2000. CAT must provide SPI with up to $2,400,000
        in Canadian funds in order to have all the SPI escrow shares released
        to CAT. The formula for release of the SPI escrow shares provides that
        for every increment of $400,000 Cdn of funding provided by CAT to SPI
        1/6 of the SPI escrow shares are released to CAT. SPI has further granted
        to CAT the first right of refusal to acquire the remaining 25% of SPI
        shares.
      SPI can earn the release of all or a portion of the
        CAT escrow shares by achieving certain minimum revenue generating projections
        over a three to five year period. If the maximum total funding to be provided
        by CAT of $2,400,000 in the first year is not achieved then the amount
        of revenue needed to release 1/3 of the Cantech escrow shares in each
        of the following three years, as stipulated in the Letter of Intent, will
        be prorated lower by the factor of the percentage of the total agreed
        funding ($2,400,000) achieved. Any CAT escrow shares not released by the
        end of the third year may be released at the end of year five by SPI generating
        combined revenue of $20,000,000 Cdn in years four and five. Any shares
        not released at the end of year five are subject to repurchase by Cantech
        for $0.001 per share.
      In December, 2000 the Company secured short term financing
        sufficient to begin funding SPI as per its business plan and to secure
        the first release of the SPI escrow shares under the provisions of the
        CAT/SPI Letter of Intent which the Company assumed. In December, 2000,
        the Company completed a 1,133,334 unit private placement
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| | consisting of one share and one warrant, exercisable
        within one year at $2.00 per share, at a price of $0.30 US per unit for
        total proceeds of $340,000 . The final balance of this unit private placement
        of 533,333 shares was completed on February 14, 2001 for additional proceeds
        of $160,000.
      On June 15, 2001 the Company held its Annual General
        Meeting of Shareholders. At the General Meeting the shareholders approved
        resolutions to change the name of the Company from The Ohio & Southwestern
        Energy Company to Strategic Internet Investments, Incorporated and to
        migrate the Company from its current State of Incorporation, Colorado,
        to the State of Delaware. The name change and change of domicile became
        effective on July 1, 2001. The Company commenced trading on the OTC Bulletin
        Board under the new trading symbol "SIII" effective October 8, 2001. The
        shareholders also approved the Agreement and Plan of Reorganization between
        CAT and the Company, that will allow CAT to become a wholly owned subsidiary
        of the Company.
      On August 13, 2001 the Company completed a private placement
        to two placees in Europe for total proceeds of $105,000. Under the terms
        of the private placement agreements the Company issued a total of 350,000
        common shares under Regulation S at a price of $0.30 per share with a
        warrant attached to each share entitling the placees to purchase one additional
        common share at a price of $0.70 within a one year period. To date, none
        of the warrants have been exercised.
      On December 19, 2001 SPI initiated litigation by Writ
        of Summons in the Supreme Court of British Columbia, Canada against Telus
        Communications Inc., Telus Advanced Communications and Hewlett-Packard
        Canada Ltd.(the "Defendants") for damages for Breach of Contract under
        the binding agreement dated December 11, 2000 between the parties. The
        litigation by SPI seeks damages for the failure of the Defendants to perform
        under the agreement or, in the alternative, the return of monies paid
        by SPI to the Defendants. As of December 31, 2001 the litigation is ongoing.
      As at December 31, 2001, the Company had advanced a
        total of $606,337 to Strategic Profits Inc. under the Agreement and Plan
        of Arrangement with Canarab Technology Limited.
      Effective December 31, 2001 management of the Company
        has abandoned its plan of re-organization under the Agreement and Plan
        of Arrangement with Canarab Technology Limited and has written-off total
        advances to SPI of $606,337. Catherine Clarke-Luckhurst, the President
        of Strategic Profits Inc., resigned as a director of the Company on January
        24, 2002
      On July 12, 2002 the Company entered into an agreement
        with Star Leisure & Entertainment Inc., a British Columbia based corporation
        controlled by Abbas Salih, a director and controlling shareholder of the
        Company, to acquire 80% of the outstanding shares of Bahrain incorporated
        Gulf Star World Developments W.L.L. Gulf Star holds 100% of the rights
        to develop a planned leisure and entertainment resort facility ("Dream
        Island") in Manama, Bahrain. The Dream Island resort will be an integrated
        real estate and tourism complex to be constructed off the north-east coast
        of Manama, Bahrain on a 41 acre man-made island connected to Bahrain by
        a quarter mile long causeway.
      The agreement gives the Company the right to acquire
        80% of the outstanding shares of Gulf Star by issuing to Star Leisure,
        in escrow, a total of five million (5,000,000) common shares of the Company
        to be earned out of escrow based on progressive stages of development
        of the Dream Island project over a three year period. The Company has
        agreed to reimburse Star Leisure for a portion of its start-up and development
        costs for Dream Island, initially to a total of $100,000 and thereafter
        upon verification of expenses by an independent audit. The payment of
        the $100,000 under the agreement is due as to $50,000 on October 11, 2003
        and $50,000 on January 11, 2004. During the year ended December 31, 2003,
        the Company paid $34,210 as partial payment toward the October 11, 2003
        payment. On September 30, 2003, Star Leisure agreed to extend the due
        dates of the balance owing of the first payment, of $15,790, and the second
        payment of $50,000 to be due on or before July 11, 2004. Star Leisure
        will assign all agreements relating to the Dream Island project including
        the 'Dredging and Reclamation Works Agreement' with Robodh Contracting
        of Manama, Bahrain( assigned on August 21, 2002) and the Planning, Consulting
        and Supervision agreement for Dream Island. Under the agreement with Robodh
        Contracting, the Company has issued to Robodh 1,268,750 Series A Convertible
        Preferred shares of the Company with a face value of $5,075,000, the total
        value of the contract, as full payment to carry out the necessary dredging
        and reclamation work to construct the island.
      On July 10, 2002 the Company entered into an agreement
        with Crescent Fund, Inc. a private venture capital and management consulting
        firm with offices in Dallas, New York and Los Angeles, to assist the Company
        in raising
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| | equity capital as part of the financing for the planned
        Dream Island project. The term of this agreement was six months, however,
        the agreement was terminated on October 28, 2002, by the Company, following
        an unsuccessful campaign by Crescent Fund to attract any significant investor
        interest or capital funding. Crescent Fund, Inc. was to receive a total
        of 500,000 restricted common shares with registration rights to be released
        pro-rata based upon levels of capital funding achieved or trading activity
        of the Company's shares. No shares were earned or released to Crescent
        Fund, Inc. during the term of the agreement and there are no remaining
        obligations by either party to the agreement.
      On July 30, 2002, the Company entered into a Letter
        of Understanding (LOU) with Aegis Systems Inc. of Vernon, British Columbia,
        to market the 'Skyhook ' suite of proprietary security software technology,
        developed by Aegis, in the region of the Middle East. Aegis 'Skyhook'
        products offer secure digital communications, data security and absolute
        user authentication. Pursuant to the LOU Aegis and the Company would create
        and jointly own a corporation to market the Aegis technologies with the
        Middle East by forming partnerships with selected businesses, located
        and operating in various Middle Eastern countries, with whom management
        of the Company has formed prior associations and is satisfied as to the
        credentials and strengths of these entities. The Company will provide
        initial funding for the jointly owned corporation and Aaegis will provide
        exclusive marketing rights in the selected areas, subject to mutually
        acceptable performance levels being maintained.
      On August 20, 2002 the Company entered into a Letter
        of Intent agreement with Ultra Information Systems, Inc. ("UIS") and Skyhook
        Security Systems, Inc. whereby the Company had the right to acquire a
        30% equity interest in UIS, pursuant to a Preferred Share Purchase Agreement
        and, additionally, would have the option, exercisable within twelve months,
        to acquire additional equity interest in UIS at fair market value up to
        a total of 51% if the option is fully exercised. As compensation for the
        UIS shares, the Company was to issue 1,000,000 shares of its common stock
        to UIS, in escrow, and agree to provide $3,500,000 in funding, as per
        the terms and conditions of the Preferred Share Purchase Agreement. The
        escrow shares were to be released to UIS based upon UIS meeting its first
        year financial projections as contained in its Business Plan dated March
        18, 2002.
      On December 31, 2002 the Letter of Intent agreement
        with UIS was terminated by mutual written consent of the parties due to
        the fact that no source of equity funding had been completed sufficient
        to meet certain terms of the agreement. All rights and obligations of
        the Company under the UIS Letter of Intent have terminated.
      The Company issued 1,268,750 Class A Convertible preferred
        shares with a $0.001 par value. These shares were issued in escrow on
        January 31, 2003. The shares will be released over time as work on the
        Dream Island Project dredging progresses. The Class A convertible preferred
        shares have a par value of $0.001 and are convertible to common shares
        at either $4.00 per share until July 30, 2003, or thereafter at the average
        of twenty consecutive days closing prices which shall not be less than
        $1.50 per share or greater than $6.00 per share.
      On March 13, 2003 the Company completed an offering
        of 650,000 units of its share capital to one accredited investor at a
        price of $0.10 per unit, each unit consisting of one share of common stock
        and one common stock share purchase warrant. Each common stock purchase
        warrant gives the investor the right, but not the obligation, to purchase
        one additional share of common stock at any time during the first two
        years at a price of $0.10 per share. Total proceeds of the Unit Offering
        are $65,000 which were allocated to working capital. No share purchase
        warrants have been exercised as of the date of this Annual Report. The
        650,000 shares were issued pursuant to an exemption from registration
        under Section 4(6) of the Securities Act of 1933. Sale or transfer of
        the shares by the investor shall be in accordance with the provisions
        of Regulation S, or pursuant to registration under the Securities Act
        of 1933 or pursuant to an available exemption from registration.
      On June 30, 2003 the Company signed a Letter of Intent
        with Bin Hassan Establishments Trading Group (Bin Hassan),
        a privately owned group of business enterprises registered in Saudi Arabia.
        Bin Hassan owns certain real estate properties and business interests
        within the Gulf Council States. The Letter of Intent outlines the terms
        and conditions of an agreement wherein the Company has the right to purchase
        up to 14 individual revenue generating real estate assets with a combined
        estimated value of $42,760,000 US. The real estate assets consist of land
        and buildings operating as ten private schools, two colleges, a resort
        and an amusement center. The Company can purchase any or all of the 14
        real estate assets, on an individual basis, subject to satisfactory due
        diligence and a financial review of all relevant current and past financial
        statements including three years audited statements, market evaluations
        and all material contracts. Bin Hassan Establishments Trading Group has
        engaged the firm of Ernst & Young to complete a preliminary assessment
        of the value of the revenue generating real estate assets based on an
        analysis of their overall business performance, key aspects of their financial
        statements and operating
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| | projections for the next 3-5 years. As part of their
        engagement, Ernst and Young will appoint three independent real estate
        evaluators to assess the value of the property assets.
      As full consideration for the purchase of any individual
        asset or all of the assets, under the Letter of Intent, Bin Hassen has
        agreed to accept common shares of SIII issued under Regulation S of the
        U.S. Securities Exchange Act, at a deemed price of not less than $2.00
        US per share and not more than $5.00 US per share. Final share issuance
        price for each individual asset acquired will be determined by calculating
        the average trading closing price of SIIIs common shares in the
        ten day period immediately prior to the closing date of the individual
        asset purchase.
      The terms and conditions of the Letter of Intent will
        be incorporated into a formal acquisition agreement to be prepared by
        legal counsel for the parties.
      The Company has entered into Convertible Loan Facility
        Agreements with two British Columbia corporations as lenders, Icon Management
        Ltd. (Icon) as previously disclosed, (please see audited financial
        dated Dec 31, 2002) and under an August 10, 2003 agreement with Star Leisure
        & Entertainment Inc. (Star Leisure), a company controlled
        by a Director and Officer of SIII. Under each separate agreement, Icon
        and Star Leisure would, from time to time, agree to lend certain operating
        capital funds to the Company, as borrower. Under the terms and conditions
        of the Agreements, the funds loaned to the Company by the Lenders are
        repayable on or before December 31, 2004, (or such other date as agreed
        upon on a case by case basis), the maturity date of the loans, and bear
        interest at the rate of 10% per annum. The individual loans shall be made
        in either United States currency or Canadian currency (which, for the
        purpose of calculating ratios, is converted into equivalent US amounts)
        and, for each particular loan, the Company shall execute and deliver to
        the Lender a Promissory Note evidencing the loan.
      At any time and from time to time prior to the maturity
        date, the Lenders shall each have the right to convert all or part of
        the Principal Sum and/or interest, into units, each unit consisting of
        one common share without par value in the capital of the Company and one
        non-transferable share purchase warrant, at the applicable conversion
        rate per unit. The conversion rate is calculated from the date of the
        loan using the previous 10 day closing average trading price less a discount
        to the average trading price (ATP) as follows: less than $0.11 per share,
        conversion @ $0.05/unit, from $0.11 to $0.26 per share, conversion @ 40%
        discount to ATP, from $0.26 to $0.50 per share, conversion @ 50% discount
        to ATP and greater than $0.50 per share, conversion @ 60% discount to
        ATP.
      For the period ending December 31, 2003 Star Leisure
        is owed a total of $83,353, principal plus accrued interest, which can
        be converted into 477,010 units at various prices between $0.13 to $0.24
        per unit. Icon is owed a total of $67,359, principal plus accrued interest,
        which can be converted into 952,957 units at various prices between $0.05
        to $0.23 per unit. Neither of the lenders has converted any part of the
        principal sums advanced or accrued interest into units as of December
        31, 2003.
      On August 23, 2003 all directors, officers, employees
        and consultants outstanding stock option agreements were mutually cancelled
        which resulted in the cancellation of a total of 265,000 share purchase
        options previously issued pursuant to the Stock Option Plan of June, 2000.
        Subsequently, on September 5, 2003, the Board of Directors completed incentive
        stock option agreements with eight optionees to grant a total of 1,765,000
        options to purchase common shares of the Company for a period of five
        years at a price of $0.25 per share, pursuant to the terms and conditions
        of the new Stock Award Plan adopted July 1, 2002. All option vest to the
        Optionee as to 20% upon issue and 20% every three months such that the
        option will be fully vested one year after the issue date. To date, none
        of the 1,765,000 stock options has been exercised.
      (b) Business of Issuer
      The Company's direction and efforts are now focused
        on the development of the planned Dream Island project in the Kingdom
        of Bahrain, and, to a secondary extent, on other promising opportunities
        for successful entry and implementation of services or products in the
        Middle Eastern region including the marketing of the Ultra Information
        Systems, Inc. 'Skyhook' suite of software technology products.
      This decision to move the Company's initiatives to the
        Middle East was made by management subsequent to the abandonment of the
        plan of re-organization under the Agreement and Plan of Arrangement with
        Canarab Technology Limited to acquire an equity interest in Strategic
        Profits Inc. The opportunity to acquire the controlling interest in Gulf
        Star World W.L.L. and, thereby, the right to develop the Dream Island
        project and shift the Company's focus from North America to the Middle
        East was primarily due to the experience and knowledge gained by the Board
        of Directors and, in particular, the Chairman and Secretary, Mr. Abbas
        Salih, through
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| | numerous projects he has undertaken or been involved
        with in this area of the world over the past 20 years. Mr. Salih has extensive
        ties with businesses and investment groups in the Gulf States and other
        neighboring countries and it was from these associations that the Dream
        Island project was presented to the Company.
      The planning and feasibility stage of the Dream Island
        project has required extensive research, investigation and analyses carried
        out over several years by international consulting firms, such as KPMG
        Consulting, with expertise in construction, tourism and financial analysis.
        The approval process to undertake this project was a cooperative effort
        among the Company and Jzala Group of Saudi Arabia, the Government of Bahrain
        and the major construction, consulting and investment participants, each
        playing key roles.
      By description, the Dream Island project will be an
        integrated resort, entertainment, hotel and real estate facility to be
        built on a 41 acre man-made island off the north eastern coast of Manama,
        Bahrain. It will be an all-inclusive residential and resort destination
        for local residents of Bahrain and the surrounding areas and for international
        travelers. When completed in approximately three years it will comprise
        120 villas to be managed by an international hotel operator, 100 villas
        for sale, for rental and for timesharing, 85 apartments for sale and rent,
        a luxury hotel with 225 rooms and suites, a spa, health club and other
        personal treatment facilities, a restaurant, cafes, and a shopping, retail
        and entertainment center, a marina, water-park and other ocean-side recreational
        facilities.
      The cost of the project, which is estimated to be $160,000,000,
        will be shared among the major participants, banking and government institutions
        and through sales of the real estate to private investors.
      In the preliminary phase, the man-made island will be
        constructed by Robodh Contracting Establishment, a large construction
        company in Bahrain, under a Dredging and Reclamation Agreement signed
        August 2, 2002 for which Robodh will receive 1,268,750 Series A Convertible
        Preferred Shares of the Company with a face value of $5,075,000 in full
        settlement of their contract fees. Mobilization of dredging equipment
        to Bahrain has occurred and initial dredging and reclamation work was
        to begin during March 2003 but was temporarily postponed at that time
        due to the conflict in Iraq. The Company had anticipated that dredging
        operations were to start during January 2004 but have again been postponed
        due to dredging contractor delays associated with permitting. The company
        is optimistic that full permitting will be achieved in the immediate future
        allowing the dredging project to commence and will advise its shareholders
        accordingly.
      Item 2: Description of Property
      SIII maintains an office in downtown Vancouver, British
        Columbia on a month to month basis. The total monthly rent is $535 including
        taxes and surcharges. Records are maintained and mail received at the
        offices of the corporate solicitor in Houston, Texas. The Company does
        not directly or indirectly own or otherwise have any interest in any other
        real estate properties.
      Item 3: Legal Proceedings
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| | (a)                                                                                                                                                                                                                                                | On November 28, 2002 a Writ of Summons
        was filed in the Supreme Court of British Columbia against the Company
        and Ralph Shearing, Director and President, as co-Defendants, by BCE Emergis
        Inc., a British Columbia corporation with an office in Vancouver, B.C.,
        as Plaintiff. In the Statement of Claim filed by the Plaintiff as part
        of the Writ, the sum of Cdn$11,802 together with interest pursuant to
        the Court Order Interest Act and Costs are claimed against the Defendants
        for services in the area of press releases, public announcements and related
        marketing matters provided by the Plaintiff on behalf of and at the request
        of the Defendants between January, 2001 and March, 2001.
      In July, 2003 a settlement agreement was reached with
        the Plaintiff, BCE Emergis Inc. whereby the Company would pay to the Plaintiff
        the amount claimed in the Writ, plus all accrued interest and costs, by
        monthly installments, after which the claim against the Company will be
        fully resolved and the court proceedings summarily terminated. At December
        31, 2003, Cdn$1450 remains payable under the settlement agreement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (b)                                                                                                                                                                                                                                                | The Company is not a party to any proceeding
        involving a governmental authority nor is it aware of any matter or cause
        which may be contemplated by any governmental authority as to possible
        proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Except as disclosed above
        management is not aware of any other legal proceedings pending or contemplated
        against the Company, its directors or officers or any of its affiliates.
        No director, officer or affiliate of the

---

|        | Company is (i) a party adverse to the Company in any
        legal proceeding or (ii) has an adverse interest to the Company in any
        legal proceeding.
      Item 4: Submission of Matters to a Vote of Security
        Holders
      No matters were submitted during the fiscal year covered
        by this report to a vote of security holders of the Company, through the
        solicitation of proxies or otherwise.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|PART II
|        | Item 5: Market for Common Equity and Related Stockholder
        Matters
      (a) Market Information
      The Company's common shares are quoted and traded on
        the US OTC Bulletin Board under the symbol "SIII". The range of high and
        low bid quotations for each quarter within the last two fiscal years,
        as reported by Bloomberg, was as follows:                                                    

| |  | 2003           | High  |  | Low   | 
| |  | -------------- | ----- |  | ----- | 
| |  |                |       |  |       | 
| |  | First Quarter  | $0.25 |  | $0.06 | 
| |  | Second Quarter | $0.25 |  | $0.08 | 
| |  | Third Quarter  | $0.49 |  | $0.21 | 
| |  | Fourth Quarter | $0.65 |  | $0.42 | 
| |  |                |       |  |       | 
| |  | 2002           | High  |  | Low   | 
| |  |                |       |  |       | 
| |  | First Quarter  | $0.14 |  | $0.04 | 
| |  | Second Quarter | $0.38 |  | $0.10 | 
| |  | Third Quarter  | $0.23 |  | $0.08 | 
| |  | Fourth Quarter | $0.25 |  | $0.13 | 

| | The above quotations reflect inter-dealer prices, without
        retail mark-up, mark-down or commission and may not necessarily represent
        actual transactions.
      (b) Holders
      As at December 31, 2003 there were approximately 48
        holders of record of the common shares of SIII.
      (c) Dividends
      The Company has not declared or paid per share cash
        distributions or dividends on its common stock in the last two fiscal
        years. Future distributions or dividends on the common stock, if any,
        will be determined by the Company's Board of Directors and will depend
        upon the Company's results of operations, financial condition, capital
        requirements and other factors.
      Sales of Securities Without Registration Under the Securities
        Act of 1933
      On November 15, 2002 the Company entered into a Convertible
        Loan Facility Agreement with Icon Management Ltd. of Vancouver, British
        Columbia in order to formalize an arrangement whereby the Company would,
        from time to time, borrow certain operating capital funds from Icon, at
        an agreed interest rate of ten percent (10%) and for which repayment the
        right would be given to Icon to convert all or part of the principal sum,
        plus interest or interest alone, into units each unit consisting of one
        common share of the Company and one non-transferable share purchase warrant,
        at the applicable conversion rate which is calculated at a discount to
        the average closing market price for ten days preceding a loan advance.
        For the year ending December 31, 2003, Icon had advanced a total of $61,539,
        plus accrued interest of $5,820, which can be converted into 952,957 units,
        at various a conversion prices of $0.05 to $0.23 per unit. The principal
        sum and any accrued interest under the Convertible Loan Facility are
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | payable on or before August 1, 2005. As at December
        31, 2003 Icon had not exercised, under its right of conversion, any amount
        of the principal sum or accrued interest.
      The Company issued 1,268,750 Class A Convertible Preferred
        Shares with a $0.001 par value. These shares were issued in escrow on
        January 31, 2003. The shares will be released over time as work on the
        Dream Island Project dredging progresses. The Class A convertible preferred
        shares have a par value of $0.001 and are convertible to common shares
        at either $4.00 per share until July 30, 2003, or thereafter at the average
        of twenty consecutive days closing prices which shall not be less than
        $1.50 per share or greater than $6.00 per share.
      On March 13, 2003 the Company completed an offering
        of 650,000 units of its share capital to one accredited investor at a
        price of $0.10 per unit, each unit consisting of one share of common stock
        and one common stock share purchase warrant. Each common stock purchase
        warrant gives the investor the right, but not the obligation, to purchase
        one additional share of common stock at any time during the first two
        years at a price of $0.10 per share. Total proceeds of the Unit Offering
        are $65,000 which were allocated to working capital. No share purchase
        warrants have been exercised as of the date of this Annual Report. The
        650,000 shares were issued pursuant to an exemption from registration
        under Section 4(6) of the Securities Act of 1933. Sale or transfer of
        the shares by the investor shall be in accordance with the provisions
        of Regulation S, or pursuant to registration under the Securities Act
        of 1933 or pursuant to an available exemption from registration.
      On August 10, 2003 the Company entered into a Convertible
        Loan Facility Agreements with agreement with Star Leisure & Entertainment
        Inc. (Star Leisure), a company controlled by a Director and
        Officer of SIII. Under the agreement Star Leisure would, from time to
        time, agree to lend certain operating capital funds to the Company, as
        borrower. Under the terms and conditions of the Agreements, the funds
        loaned to the Company by the Lender are repayable on various dates up
        to November 27, 2005, and bear interest at the rate of 10% per annum.
        The individual loans were made in either United States currency or Canadian
        currency (which, for the purpose of calculating ratios, is converted into
        equivalent US amounts) and, for each particular loan, the Company shall
        execute and deliver to the Lender a Promissory Note evidencing the loan.
      At any time and from time to time prior to the maturity
        date, the Lender shall each have the right to convert all or part of the
        Principal Sum and/or interest, into units, each unit consisting of one
        common share without par value in the capital of the Company and one non-transferable
        share purchase warrant, at the applicable conversion rate per unit. The
        conversion rate is calculated from the date of the loan using the previous
        10 day closing average trading price less a discount to the average trading
        price (ATP) as follows: less than $0.11 per share, conversion at $0.05/unit,
        from $0.11 to $0.26 per share, conversion at 40% discount to ATP, from
        $0.26 to $0.50 per share, conversion at 50% discount to ATP and greater
        than $0.50 per share, conversion at 60% discount to ATP.
      For the year ending December 31, 2003 Star Leisure had
        advanced a total of $81,206, plus accrued interest of $2,147 which can
        be converted into 477,010 units, at various a conversion prices of $0.13
        to $0.24 per unit. The lender has not converted any part of the principal
        sums advanced or accrued interest into units as of December 31, 2003.
      On November 30, 2003, the Company issued 198,000 Class
        A Convertible Preferred Shares at a deemed value of $4 to settle a termination
        fee of $792,000. This termination fee is to a former contractor who was
        to perform planning services for the Company which were subsequently assigned
        to another contractor. These Class A shares have a par value of $0.001
        and are convertible to common shares at either $4.00 per share or the
        average of twenty consecutive days closing prices which shall not be less
        than $1.50 per share or greater than $6.00 per share.
      Item 6: Management's Discussion and Analysis or Plan
        of Operation
      Statements made in this Annual Report that are not historical
        or current facts are "forward-looking statements" made pursuant to the
        Safe Harbor Provisions of Section 27A of the Securities Act of 1933 (the
        "Act") and Section 21E of the Securities Exchange Act of 1934. These statements
        often can be identified by the use of terms such as "may", "will", "expect",
        "believe", "anticipate", "estimate", "approximate" or "continue" or the
        negative thereof.
      The Company intends that such forward-looking statements
        be subject to the Safe Harbors for such statements. The Company wishes
        to caution readers not to place undue reliance upon any such forward-looking
        statement, which speak only as of the date made. Any forward-looking statement
        represents management's best judgment as to what may occur in the future.
        However, forward-looking statements are subject to risks, uncertainties
        and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | important factors beyond the control of the Company
        that could cause actual results and events to differ materially from historical
        results of operations and events and those presently anticipated or projected.
        The Company disclaims any obligation to subsequently revise any forward-looking
        statements to reflect events or circumstances after the date of such statements
        or to reflect the occurrence of anticipated or unanticipated events.
      (a) Plan of Operation
      In the following discussion, management outline's its
        plan of operation for the next quarter and the balance of the fiscal year
        2004. The discussion should be read in conjunction with the audited financial
        statements and notes for the year ended December 31, 2003 which are shown
        in Item 7 of this Annual Report. Certain matters discussed below are based
        on potential future circumstances and developments which the Company anticipates
        but which cannot be assured.
      As at December 31, 2003 the Company had $346 cash on
        hand and a working capital deficiency of $351,979. Of this working capital
        deficiency $71,181 is due to related parties of which repayment will not
        be demanded until adequate resources become available. Management will
        also seek to settle certain outstanding debts by means of share issuances.
        The Company remains at the development stage as there were no revenues
        during the past fiscal year.
      The Dream Island project in Bahrain, the Company's principal
        business, will require, over the next twenty to twenty-four months, a
        significant amount of investment capital to be secured to ensure that
        all stages of development can proceed and be completed on schedule and
        on budget. The highest percentage of the funding requirements will be
        met through senior debt instruments with banking, investment and construction
        institutions and through government financing incentives and concessions.
      Further financing will be achieved through the pre-selling
        of the real estate units, villas and apartments, to be constructed as
        part of the Dream Island complex. Final arrangements and documentation
        are taking place at the present time with interested parties in Bahrain
        and Saudi Arabia for the commencement of these pre-sales during the second
        quarter of 2004. Pre-sale funds committed will be held in escrow in Bahrain
        financial institutions pursuant to the sales agreements and pending completion
        and release.
      The first stage of the project, dredging and reclamation
        of the 41acre man-made island site, has been financed through the issuance
        to Robodh Contracting Establishment, Manama, Bahrain, of 1,268,750 Series
        A Convertible Preferred Shares in the capital of the Company at a deemed
        price of $4.00 per share. The total value of the Dredging and Reclamation
        Works contract is $5,075,000 USD.
      Management believes that the close connections and contacts
        it has made in the Middle East, especially the efforts of its Chairman,
        Mr. Abbas Salih, who has been stationed predominately in Saudi Arabia
        and Bahrain for the past year to oversee the project, will be of immense
        value in completing other essential contracts during the course of this
        project.
      The Company's plan during the next quarter and for the
        balance of 2004 is to maintain the size and staffing of its Vancouver,
        British Columbia head office at the current levels. There are no plans
        to hire additional employees as administrative requirements at head office
        are now being adequately met by the efforts of the board members the full-time
        and temporary staff and consultants. Field operations and construction
        activities in Bahrain will be conducted through contracting and sub-contracting
        of work.
      As required, any additional funding needed for general
        and administrative expenses will be raised by private placement or loans
        and debentures convertible into equity. Additional operating capital could
        be obtained through the potential exercise of management and director
        stock options and/or exercise of outstanding stock purchase warrants.
      Off-Balance Sheet Arrangements
      As of the date of this Annual Report, the Company does
        not have any off-balance sheet arrangements that have or are reasonably
        likely to have a current or future effect on the company's financial condition,
        change in financial condition, revenues or expenses, results of operations,
        liquidity, capital expenditures or capital resources that are material
        to investors. The term "off-balance sheet arrangement" generally means
        any transaction, agreement, or other contractual arrangement to which
        an entity unconsolidated with the Company is a party under which the
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | Company has (i) any obligation arising under a guarantee
        contract, derivative instrument or variable interest; or (ii) a retained
        or contingent interest in assets transferred to such entity or similar
        arrangement that serves as credit, liquidity or market risk support for
        such assets.
      Audit Committee
      As of this Annual Report, the Company has not appointed
        members to an audit committee. The respective role of an audit committee
        has been conducted by the board of directors. When established, the audit
        committee's primary function will be to provide advice with respect to
        the Company's financial matters and to assist the board of directors in
        fulfilling its responsibility to oversee finance, accounting, tax and
        legal compliance matters. The audit committee will (i) serve as an independent
        and objective party to monitor the Company's financial reporting process
        and internal control systems; (ii) review and appraise the audit efforts
        of the Company's independent accountants; (iii) evaluate the Company's
        quarterly financial performance as well as its compliance with laws and
        regulations; (iv) oversee management's establishment and enforcement of
        financial policies and business practices; and, (v) provide an open avenue
        of communication among the independent accountants, management and the
        board of directors.
      Audit Fees
      During the fiscal year ended December 31, 2003, the
        Company incurred approximately $ 10,000 in fees to Amisano Hanson, Chartered
        Accountants, for professional services rendered in connection with the
        audit of the Company's financial statements and approximately $9,100 for
        review of the Company's financial statements for the quarters ended March
        31, 2003, June 30, 2003 and September 30, 2003.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | Item 7: Financial Statements                                                                                                                                                                               
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                            
| |                                                                                                                                                                                                            
| | STRATEGIC INTERNET INVESTMENTS, INCORPORATED
        (A Development Stage Company)
        REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
        December 31, 2003 and 2002
        (Stated in U.S. Dollars)

---

|TERRY AMISANO LTD. | AMISANO
      HANSON 
|------------------ | ---------------------
|KEVIN HANSON, CA   | CHARTERED ACCOUNTANTS



INDEPENDENT AUDITORS' REPORT

To the Stockholders, 
  Strategic Internet Investments, Incorporated
  (A Development Stage Company)

We have audited the accompanying consolidated balance sheets
  of Strategic Internet Investments, Incorporated (A Development Stage Company)
  and subsidiaries as of December 31, 2003 and 2002 and the related consolidated
  statements of operations, stockholders deficiency and cash flows for each
  of the years in the three year period ended December 31, 2003 and for the period
  from inception of the development stage, February 28, 1989 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 auditing standards
  generally accepted in the United States of America. Those standards require
  that we plan and perform an audit to obtain reasonable assurance about whether
  the consolidated 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 audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Strategic Internet Investments, Incorporated and subsidiaries as of December
  31, 2003 and 2002, and the results of their operations and their cash flows
  for each of the years in the three year period ended December 31, 2003 and for
  the period from inception of the development stage, February 28, 1989 to December
  31, 2003, in conformity with accounting principles generally accepted in the
  United States of America.

The accompanying consolidated financial statements referred
  to above have been prepared assuming that the Company will continue as a going
  concern. As discussed in Note 1 to the financial statements, the Company is
  in the development stage, and has no established source of revenue and is dependent
  on its ability to raise capital from shareholders or other sources to sustain
  operations. These factors, along with other matters as set forth in Note 1,
  raise substantial doubt that the Company will be able to continue as a going
  concern. The consolidated financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

|Vancouver, Canada | Amisano Hanson     
|----------------- | ---------------------
|March 21, 2004    | Chartered Accountants

|750 WEST PENDER STREET, SUITE 604 | TELEPHONE: 604-689-0188   
|--------------------------------- | --------------------------
|VANCOUVER CANADA                  | FACSIMILE:   604-689-9773 
|V6C 2T7                           | E-MAIL:  amishan@telus.net

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) 
  CONSOLIDATED BALANCE SHEETS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|ASSETS                                                               |  
|-------------------------------------------------------------------- | -
|                                                                     |  
|                                                                     |  
|Current                                                              |  
|Cash                                                                 | $
|Prepaid expense                                                      |  
|Due from
      related party  Note 6                                |  
|                                                                     |  
|                                                                     |  
|Capital assets  Note 3                                              |  
|Deferred investment costs  Note 4                                   |  
|                                                                     | $
|                                                                     |  
|LIABILITIES                                                          |  
|                                                                     |  
|Current                                                              |  
|Bank indebtedness                                                    | $
|Accounts
      payable  Note 6                                      |  
|Due to related
      parties  Note 6                                |  
|Current
      portion of loans payable  Notes 7 and 11              |  
|                                                                     |  
|                                                                     |  
|Loans payable  Notes 7 and 11                                       |  
|                                                                     |  
|STOCKHOLDERS DEFICIENCY                                             |  
|                                                                     |  
|Capital Stock                                                        |  
|Class A
      Convertible Preferred stock, $0.001 par value          |  
|10,000,000
      authorized, 198,000 outstanding  Note 5            |  
|Class B
      preferred stock, $0.001 par value                      |  
|10,000,000
      authorized, none outstanding                        |  
|Common stock,
      $0.001 par value                                 |  
|100,000,000
      authorized                                         |  
|17,305,596
      outstanding (2002: 15,205,596 outstanding)  Note 5 |  
|Additional
      paid-in capital                                     |  
|Contributed
      capital                                            |  
|Deficit
      accumulated during the development stage               |  
|                                                                     |  
|                                                                     | $

Nature and Continuance of Operations  Note 1 
  Commitments  Notes 5 and 7 
  Subsequent Events  Notes 7 and 11

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF OPERATIONS 
  for the years ended December 31, 2003, 2002 and 2001 
  and the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                              |   |             |   |   |            |   |   |             |   |   | Cumulative       |  
|--------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ----------- | - | - | ---------------- | -
|                                              |   |             |   |   |            |   |   |             |   |   | from February    |  
|                                              |   |             |   |   |            |   |   |             |   |   | 28, 1989 (Date   |  
|                                              |   |             |   |   |            |   |   |             |   |   | of Inception) to |  
|                                              |   |             |   |   |            |   |   |             |   |   | December 31,     |  
|                                              |   | 2003        |   |   | 2002       |   |   | 2001        |   |   | 2003             |  
|                                              |   |             |   |   |            |   |   |             |   |   |                  |  
|General and Administrative Expenses           |   |             |   |   |            |   |   |             |   |   |                  |  
|Accounting and audit fees                     | $ | 33,870      |   | $ | 10,602     |   | $ | 18,892      |   | $ | 78,027           |  
|Amortization                                  |   | 407         |   |   | 581        |   |   | 341         |   |   | 2,079            |  
|Consulting fees  Note 6                      |   | 232,520     |   |   | 161,901    |   |   | 1,349,563   |   |   | 1,926,024        |  
|Filing fees                                   |   | 3,185       |   |   | 2,563      |   |   | 3,448       |   |   | 14,685           |  
|Interest  Note 6                             |   | 9,399       |   |   | 1,641      |   |   | 4,020       |   |   | 15,060           |  
|Investor relations                            |   | -           |   |   | -          |   |   | 50,502      |   |   | 50,502           |  
|Legal fees                                    |   | 2,553       |   |   | 12,077     |   |   | 22,261      |   |   | 99,027           |  
|Management fees  Note 6                      |   | -           |   |   | -          |   |   | 63,000      |   |   | 112,000          |  
|Office and general expenses Note
      6     |   | 13,016      |   |   | 8,087      |   |   | 15,716      |   |   | 114,515          |  
|Rent  Note 6                                 |   | 10,239      |   |   | 5,383      |   |   | 6,198       |   |   | 36,234           |  
|Telephone expense                             |   | 18,074      |   |   | 6,284      |   |   | 7,097       |   |   | 43,269           |  
|Transfer agent fees                           |   | 5,362       |   |   | 5,639      |   |   | 7,715       |   |   | 26,108           |  
|Travel and promotion                          |   | 34,816      |   |   | -          |   |   | 4,938       |   |   | 48,564           |  
|Non-cash compensation charge 
      Note 5   |   | 53,500      |   |   | -          |   |   | 136,378     |   |   | 268,585          |  
|                                              |   |             |   |   |            |   |   |             |   |   |                  |  
|Loss before the following:                    |   | (416,941    | ) |   | (214,758   | ) |   | (1,690,069  | ) |   | (2,834,679       | )
|Unauthorized distribution                     |   | -           |   |   | -          |   |   | -           |   |   | (69,116          | )
|Termination fee  Note 5                      |   | (792,000    | ) |   | -          |   |   | -           |   |   | (792,000         | )
|Gain on settlement of debt                    |   | -           |   |   | -          |   |   | -           |   |   | 15,464           |  
|Write-down of advances to related
      party |   | -           |   |   | -          |   |   | (606,337    | ) |   | (606,337         | )
|                                              |   |             |   |   |            |   |   |             |   |   |                  |  
|Net loss for the period                       | $ | ( 1,208,941 | ) | $ | (214,758   | ) | $ | ( 2,296,406 | ) | $ | ( 4,286,668      | )
|                                              |   |             |   |   |            |   |   |             |   |   |                  |  
|Basic loss per share                          | $ | (0.07       | ) | $ | (0.02      | ) | $ | (0.19       | ) |   |                  |  
|                                              |   |             |   |   |            |   |   |             |   |   |                  |  
|Weighted average number of common shares      |   |             |   |   |            |   |   |             |   |   |                  |  
|outstanding                                   |   | 16,513,952  |   |   | 13,050,725 |   |   | 12,193,953  |   |   |                  |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF CASH FLOWS 
  for years ended December 31, 2003, 2002 and 2001 
  and the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                                    |   |            |   |   |          |   |   |            |   |   | Cumulative      |  
|--------------------------------------------------- | - | ---------- | - | - | -------- | - | - | ---------- | - | - | --------------- | -
|                                                    |   |            |   |   |          |   |   |            |   |   | from February   |  
|                                                    |   |            |   |   |          |   |   |            |   |   | 28, 1989        |  
|                                                    |   |            |   |   |          |   |   |            |   |   | (Date of Incep- |  
|                                                    |   |            |   |   |          |   |   |            |   |   | tion) to        |  
|                                                    |   |            |   |   |          |   |   |            |   |   | December 31,    |  
|                                                    |   | 2003       |   |   | 2002     |   |   | 2001       |   |   | 2003            |  
|Cash flows used in operating activities:            |   |            |   |   |          |   |   |            |   |   |                 |  
|Net loss                                            | $ | (1,208,941 | ) | $ | (214,758 | ) | $ | (2,296,406 | ) | $ | (4,286,668      | )
|Adjustments to reconcile net loss
      to net cash |   |            |   |   |          |   |   |            |   |   |                 |  
|used in operations:                                 |   |            |   |   |          |   |   |            |   |   |                 |  
|Amortization                                        |   | 407        |   |   | 581      |   |   | 341        |   |   | 2,079           |  
|Consulting
      fees                               |   | -          |   |   | -        |   |   | -          |   |   | 6,200           |  
|Gain
      on settlement of debt                    |   | -          |   |   | -        |   |   | -          |   |   | (15,464         | )
|Issue
      of stock pursuant to a consulting       |   |            |   |   |          |   |   |            |   |   |                 |  
|agreement                                           |   | 203,000    |   |   | 103,400  |   |   | 1,351,587  |   |   | 1,657,987       |  
|Management
      fees                               |   | -          |   |   | -        |   |   | -          |   |   | 7,000           |  
|Non-cash
      compensation charge                  |   | 53,500     |   |   | -        |   |   | 136,378    |   |   | 268,585         |  
|Termination
      fees                              |   | 792,000    |   |   | -        |   |   | -          |   |   | 792,000         |  
|Write-down
      of advance to related party        |   | -          |   |   | -        |   |   | 606,337    |   |   | 606,337         |  
|Changes in non-cash items:                          |   |            |   |   |          |   |   |            |   |   |                 |  
|Prepaid
      expenses                              |   | 28,000     |   |   | -        |   |   | -          |   |   | 28,000          |  
|Due
      from related party                        |   | (9,494     | ) |   | -        |   |   | (281,337   | ) |   | (615,831        | )
|Accounts
      payable                              |   | (13,395    | ) |   | 60,187   |   |   | 124,523    |   |   | 445,865         |  
|Due
      to related party                          |   | (55        | ) |   | 8,358    |   |   | (15,899    | ) |   | 64,883          |  
|                                                    |   |            |   |   |          |   |   |            |   |   |                 |  
|Net cash used in operating activities               |   | (154,978   | ) |   | (42,232  | ) |   | (374,476   | ) |   | (1,039,027      | )
|                                                    |   |            |   |   |          |   |   |            |   |   |                 |  
|Cash flow used in investing activities:             |   |            |   |   |          |   |   |            |   |   |                 |  
|Organization costs                                  |   | -          |   |   | -        |   |   | -          |   |   | (750            | )
|Acquisition of capital assets                       |   | -          |   |   | -        |   |   | (2,278     | ) |   | (2,278          | )
|Deferred investment costs                           |   | (34,210    | ) |   | -        |   |   | -          |   |   | (34,210         | )
|                                                    |   |            |   |   |          |   |   |            |   |   |                 |  
|Net cash used in investing activities               |   | (34,210    | ) |   | -        |   |   | (2,278     | ) |   | (37,238         | )
|                                                    |   |            |   |   |          |   |   |            |   |   |                 |  
|Cash flows from financing activities:               |   |            |   |   |          |   |   |            |   |   |                 |  
|Bank indebtedness                                   |   | (19        | ) |   | 19       |   |   | -          |   |   | -               |  
|Loans payable                                       |   | 124,553    |   |   | 42,157   |   |   | 70,687     |   |   | 237,397         |  
|Proceeds from issuance of common stock              |   | 65,000     |   |   | -        |   |   | 304,742    |   |   | 841,042         |  
|Payment of offering costs                           |   | -          |   |   | -        |   |   | -          |   |   | (27,270         | )
|Contributed capital                                 |   | -          |   |   | -        |   |   | -          |   |   | 25,442          |  
|                                                    |   |            |   |   |          |   |   |            |   |   |                 |  
|Net cash provided by financing activities           |   | 189,534    |   |   | 42,176   |   |   | 375,429    |   |   | 1,076,611       |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATEDContinued (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF CASH FLOWS 
  for years ended December 31, 2003, 2002 and 2001 
  and the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                     |   |      |  |   |       |   |   |        |   |   | Cumulative      | 
|------------------------------------ | - | ---- |  | - | ----- | - | - | ------ | - | - | --------------- | 
|                                     |   |      |  |   |       |   |   |        |   |   | from February   | 
|                                     |   |      |  |   |       |   |   |        |   |   | 28, 1989        | 
|                                     |   |      |  |   |       |   |   |        |   |   | (Date of Incep- | 
|                                     |   |      |  |   |       |   |   |        |   |   | tion) to        | 
|                                     |   |      |  |   |       |   |   |        |   |   | December 31,    | 
|                                     |   | 2003 |  |   | 2002  |   |   | 2001   |   |   | 2003            | 
|                                     |   |      |  |   |       |   |   |        |   |   |                 | 
|Net increase (decrease) in cash      |   | 346  |  |   | (56   | ) |   | (1,325 | ) |   | 346             | 
|                                     |   |      |  |   |       |   |   |        |   |   |                 | 
|Cash, beginning of period            |   | -    |  |   | 56    |   |   | 1,381  |   |   | -               | 
|                                     |   |      |  |   |       |   |   |        |   |   |                 | 
|Cash, end of period                  | $ | 346  |  | $ | -     |   | $ | 56     |   | $ | 346             | 
|                                     |   |      |  |   |       |   |   |        |   |   |                 | 
|Supplemental disclosure of cash flow |   |      |  |   |       |   |   |        |   |   |                 | 
|information:                         |   |      |  |   |       |   |   |        |   |   |                 | 
|Cash paid for:                       |   |      |  |   |       |   |   |        |   |   |                 | 
|Interest                             | $ | 990  |  | $ | 1,641 |   | $ | 4,020  |   | $ | 6,651           | 
|Income
      taxes                   | $ | -    |  | $ | -     |   | $ | -      |   | $ | -               | 

Non-Cash Transactions - Note 10

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY
  for the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   | Deficit     |   |   |         |  
|-------------------------------------------------------- | --------------- | - | ------------ |  | ------- | - | ----------- | - | ----------- | - | ------- | - | ----------- | - | - | ------- | -
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   | Accumulated |   |   |         |  
|                                                         |                 |   |              |  |         |   |             |   | Additional  |   |         |   | During the  |   |   |         |  
|                                                         | Preferred Stock |   | Common Stock |  | Paid-in |   | Contributed |   | Development |   |         |   |            
|                                                         | Shares          |   | Par Value    |  | Shares  |   | Par Value   |   | Capital     |   | Capital |   | Stage       |   |   | Total   |  
|Balance, February 28, 1989                               | -               | $ | -            |  | -       | $ | -           | $ | -           | $ | -       | $ | -           |   | $ | -       |  
|Issuance of stock to insiders on                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|March 7, 1989  at $0.30                                 | -               |   | -            |  | 33,347  |   | 33          |   | 9,967       |   |         |   | -           |   |   | 10,000  |  
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1989                               | -               |   | -            |  | 33,347  |   | 33          |   | 9,967       |   | -       |   | -           |   |   | 10,000  |  
|Issuance of stock during public offering
      for $3.00 |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|per share, net of offering costs
      of $27,270        | -               |   | -            |  | 33,348  |   | 33          |   | 72,697      |   |         |   | -           |   |   | 72,730  |  
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (84,159     | ) |   | (84,159 | )
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1990                               | -               |   | -            |  | 66,695  |   | 66          |   | 82,664      |   |         |   | (84,159     | ) |   | (1,429  | )
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (3,416      | ) |   | (3,416  | )
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1991                               | -               |   | -            |  | 66,695  |   | 66          |   | 82,664      |   |         |   | (85,575     | ) |   | (4,845  | )
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (2,713      | ) |   | (2,713  | )
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1992                               | -               |   | -            |  | 66,695  |   | 66          |   | 82,664      |   |         |   | (90,288     | ) |   | (7,558  | )
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (1,614      | ) |   | (1,614  | )
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1993                               | -               |   | -            |  | 66,695  |   | 66          |   | 82,664      |   |         |   | (91,902     | ) |   | (9,172  | )
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (1,863      | ) |   | (1,863  | )
|                                                         |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
|Balance, December 31, 1994                               | -               |   | -            |  | 66,695  |   | 66          |   | 82,664      |   |         |   | (93,765     | ) |   | (11,035 | )
|Issuances of stock for services rendered                 |                 |   |              |  |         |   |             |   |             |   |         |   |             |   |   |         |  
| at $0.03                                               | -               |   | -            |  | 50,000  |   | 50          |   | 1,450       |   |         |   | -           |   |   | 1,500   |  
|Contributed capital                                      | -               |   | -            |  | -       |   | -           |   | -           |   | 24,842  |   | -           |   |   | 24,842  |  
|Net loss                                                 | -               |   | -            |  | -       |   | -           |   | -           |   |         |   | (16,735     | ) |   | (16,735 | )

/Contd.

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY
  for the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                         |                 |  |              |  |           |  |             |  |             |   |         |  | Deficit     |   |  |          |  
|---------------------------------------- | --------------- |  | ------------ |  | --------- |  | ----------- |  | ----------- | - | ------- |  | ----------- | - |  | -------- | -
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  | Accumulated |   |  |          |  
|                                         |                 |  |              |  |           |  |             |  | Additional  |   |         |  | During the  |   |  |          |  
|                                         | Preferred Stock |  | Common Stock |  | Paid-in   |  | Contributed |  | Development |   |         |  |            
|                                         | Shares          |  | Par Value    |  | Shares    |  | Par Value   |  | Capital     |   | Capital |  | Stage       |   |  | Total    |  
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Balance, December 31, 1995               | -               |  | -            |  | 116,695   |  | 116         |  | 84,114      |   | 24,842  |  | (110,500    | ) |  | (1,428   | )
|Net loss                                 | -               |  | -            |  | -         |  | -           |  | -           |   | -       |  | (9,068      | ) |  | (9,068   | )
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Balance, December 31, 1996               | -               |  | -            |  | 116,895   |  | 116         |  | 84,114      |   | 24,842  |  | (119,568    | ) |  | (10,496  | )
|Issuance of stock for cash  at $0.011   | -               |  | -            |  | 2,000,000 |  | 2,000       |  | 19,300      |   | -       |  | -           |   |  | 21,300   |  
|Contributed capital                      | -               |  | -            |  | -         |  | -           |  | -           |   | 600     |  | -           |   |  | 600      |  
|Net loss                                 | -               |  | -            |  | -         |  | -           |  | -           |   | -       |  | (22,261     | ) |  | (22,261  | )
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Balance, December 31, 1997               |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Issuance of stock for services rendered  | -               |  | -            |  | 2,116,695 |  | 2,116       |  | 103,414     |   | 25,442  |  | (141,829    | ) |  | (10,857  | )
| at $0.001                              | -               |  | -            |  | 7,000,000 |  | 7,000       |  | -           |   | -       |  | -           |   |  | 7,000    |  
| at $0.01                               | -               |  | -            |  | 620,000   |  | 620         |  | 5,580       |   | -       |  | -           |   |  | 6,200    |  
|Net loss                                 | -               |  | -            |  | -         |  | -           |  | -           |   | -       |  | (52,308     | ) |  | (52,308  | )
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Balance, December 31, 1998               | -               |  | -            |  | 9,736,695 |  | 9,736       |  | 108,994     |   | 25,442  |  | (194,137    | ) |  | (49,965  | )
|Net loss                                 | -               |  | -            |  | -         |  | -           |  | -           |   | -       |  | (35,995     | ) |  | (35,995  | )
|                                         |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|Balance, December 31, 1999               | -               |  | -            |  | 9,736,695 |  | 9,736       |  | 108,994     |   | 25,442  |  | (230,132    | ) |  | (85,960  | )
|Issuance of stock for cash pursuant to a |                 |  |              |  |           |  |             |  |             |   |         |  |             |   |  |          |  
|private placement  at $0.30             | -               |  | -            |  | 1,133,334 |  | 1,133       |  | 338,867     |   | -       |  | -           |   |  | 340,000  |  
|Issue of stock for finders fee           | -               |  | -            |  | 50,000    |  | 50          |  | (50         | ) | -       |  | -           |   |  | -        |  
|Net loss                                 | -               |  | -            |  | -         |  | -           |  | -           |   | -       |  | (336,431    | ) |  | (336,431 | )
|Non-cash compensation charge             | -               |  | -            |  | -         |  | -           |  | -           |   | 78,707  |  | -           |   |  | 78,707   |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATEDContinued (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY
  for the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                                       |                 |  |              |  |            |  |             |  |             |   |         |  | Deficit     |   |  |            |  
|------------------------------------------------------ | --------------- |  | ------------ |  | ---------- |  | ----------- |  | ----------- | - | ------- |  | ----------- | - |  | ---------- | -
|                                                       |                 |  |              |  |            |  |             |  |             |   |         |  | Accumulated |   |  |            |  
|                                                       |                 |  |              |  |            |  |             |  | Additional  |   |         |  | During the  |   |  |            |  
|                                                       | Preferred Stock |  | Common Stock |  | Paid-in    |  | Contributed |  | Development |   |         |  |            
|                                                       | Shares          |  | Par Value    |  | Shares     |  | Par Value   |  | Capital     |   | Capital |  | Stage       |   |  | Total      |  
|                                                       |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|Balance, December 31, 2000                             | -               |  | -            |  | 10,920,029 |  | 10,919      |  | 447,811     |   | 104,149 |  | (566,563    | ) |  | (3,684     | )
|Issuance of stock for services rendered                |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
| at $0.50                                             | -               |  | -            |  | 328,356    |  | 328         |  | 163,851     |   | -       |  | -           |   |  | 164,179    |  
| at $1.55                                             | -               |  | -            |  | 13,383     |  | 13          |  | 20,731      |   | -       |  | -           |   |  | 20,744     |  
| at $3.50                                             | -               |  | -            |  | 366,667    |  | 367         |  | 1,282,964   |   | -       |  | -           |   |  | 1,283,331  |  
|Issuance of stock for cash pursuant to a
      private |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|placement 
      at $0.30                             | -               |  | -            |  | 883,332    |  | 883         |  | 264,117     |   | -       |  | -           |   |  | 265,000    |  
|Issuance of stock for cash                             |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|pursuant to
      the exercise of warrants  at $2.00  | -               |  | -            |  | 28,800     |  | 29          |  | 57,571      |   | -       |  | -           |   |  | 57,600     |  
|Less: issue costs                                      | -               |  | -            |  | -          |  | -           |  | (17,858     | ) | -       |  | -           |   |  | (17,858    | )
|Net loss                                               | -               |  | -            |  | -          |  | -           |  | -           |   | -       |  | (2,296,406  | ) |  | (2,296,406 | )
|Non-cash compensation charge                           | -               |  | -            |  | -          |  | -           |  | -           |   | 136,378 |  | -           |   |  | 136,378    |  
|                                                       |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|Balance, December 31, 2001                             | -               |  | -            |  | 12,540,567 |  | 12,539      |  | 2,219,187   |   | 240,527 |  | (2,862,969  | ) |  | (390,716   | )
|Issuance of stock for
      prepaid consulting         |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
| at $0.35                                             | -               |  | -            |  | 80,000     |  | 80          |  | 27,920      |   | -       |  | -           |   |  | 28,000     |  
|                                                       |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|Issuance of stock for deferred investment              |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|Costs 
      at $ 0.05                                | -               |  | -            |  | 1,300,000  |  | 1,300       |  | 63,700      |   | -       |  | -           |   |  | 65,000     |  
|Issuance of stock for services                         |                 |  |              |  |            |  |             |  |             |   |         |  |             |   |  |            |  
|-at $0.05                                              | -               |  | -            |  | 100,000    |  | 100         |  | 4,900       |   | -       |  | -           |   |  | 5,000      |  
|at $0.055                                             | -               |  | -            |  | 60,000     |  | 60          |  | 3,240       |   | -       |  | -           |   |  | 3,300      |  
|at $0.10                                              | -               |  | -            |  | 105,000    |  | 105         |  | 10,395      |   | -       |  | -           |   |  | 10,500     |  
|at $0.148                                             | -               |  | -            |  | 27,000     |  | 27          |  | 3,973       |   | -       |  | -           |   |  | 4,000      |  
|at $0.20                                              | -               |  | -            |  | 175,000    |  | 175         |  | 34,825      |   | -       |  | -           |   |  | 35,000     |  
|at $0.209                                             | -               |  | -            |  | 17,143     |  | 17          |  | 3,583       |   | -       |  | -           |   |  | 3,600      |  
|at $0.35                                              | -               |  | -            |  | 120,000    |  | 120         |  | 41,880      |   | -       |  | -           |   |  | 42,000     |  
|Issuance for stock for debt  at $0.20                 | -               |  | -            |  | 458,135    |  | 458         |  | 91,169      |   | -       |  | -           |   |  | 91,627     |  
|at $0.209                                             | -               |  | -            |  | 222,751    |  | 223         |  | 46,156      |   | -       |  | -           |   |  | 46,379     |  
|Net loss                                               | -               |  | -            |  | -          |  | -           |  | -           |   | -       |  | (214,758    | ) |  | (214,758   | )

/Contd.

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY 
  for the period from February 28, 1989 (Date of Inception) to December 31, 2003
  (Stated in U.S. Dollars)

|                                              |                 |   |              |  |            |   |             |   |             |   |         |   | Deficit     |   |   |            |  
|--------------------------------------------- | --------------- | - | ------------ |  | ---------- | - | ----------- | - | ----------- | - | ------- | - | ----------- | - | - | ---------- | -
|                                              |                 |   |              |  |            |   |             |   |             |   |         |   | Accumulated |   |   |            |  
|                                              |                 |   |              |  |            |   |             |   | Additional  |   |         |   | During the  |   |   |            |  
|                                              | Preferred Stock |   | Common Stock |  | Paid-in    |   | Contributed |   | Development |   |         |   |            
|                                              | Shares          |   | Par Value    |  | Shares     |   | Par Value   |   | Capital     |   | Capital |   | Stage       |   |   | Total      |  
|                                              |                 |   |              |  |            |   |             |   |             |   |         |   |             |   |   |            |  
|Balance, December 31, 2002                    | -               |   | -            |  | 15,205,596 |   | 15,204      |   | 2,550,928   |   | 240,527 |   | (3,077,727  | ) |   | (271,068   | )
|Non-cash compensation charge                  | -               |   | -            |  | -          |   | -           |   | -           |   | 53,500  |   | -           |   |   | 53,500     |  
|Issue of stock for services  at $0.14        | -               |   | -            |  | 1,450,000  |   | 1,450       |   | 201,550     |   | -       |   | -           |   |   | 203,000    |  
|Issue of stock for cash pursuant to a private |                 |   |              |  |            |   |             |   |             |   |         |   |             |   |   |            |  
|placement  at $0.10                          | -               |   | -            |  | 650,000    |   | 650         |   | 64,350      |   | -       |   | -           |   |   | 65,000     |  
|Net loss                                      | -               |   | -            |  | -          |   | -           |   | -           |   | -       |   | 1,208,941   |   |   | (1,208,941 | )
|Issued for termination fee                    | 198,000         |   | 198          |  | -          |   | -           |   | 791,802     |   | -       |   | -           |   |   | 792,000    |  
|                                              |                 |   |              |  |            |   |             |   |             |   |         |   |             |   |   |            |  
|Balance, December 31, 2003                    | 198,000         | $ | 198          |  | 17,305,596 | $ | 17,304      | $ | 3,608,630   | $ | 294,027 | $ | (4,286,668  | ) | $ | (366,509   | )

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 1 | Nature and Continuance of Operations
      The Company is in the development stage and is devoting
        its efforts to developing The Dream Island Resort project in Manama, Bahrain.
        The Dream Island Resort project will be an integrated resort, entertainment,
        hotel and real estate facility to be built on a 41 acre man-made island
        off the north eastern coast of Manama, Bahrain.
      These financial statements have been prepared on a going
        concern basis. The Company has accumulated a deficit of $4,286,668 since
        inception and at December 31, 2003 has a working capital deficiency of
        $351,979. Its ability to continue as a going concern is dependent upon
        the ability of the Company to generate profitable operations in the future
        and/or to obtain the necessary financing to meet its obligations and repay
        its liabilities arising from normal business operations when they come
        due. The outcome of these matters cannot be predicted with any certainty
        at this time. The Company has historically satisfied its capital needs
        primarily by issuing equity securities. Management plans to continue to
        provide for its capital needs during the year ended December 31, 2004
        by issuing equity securities. These financial statements do not include
        any adjustments to the amount and classification of assets and liabilities
        that may be necessary should the Company be unable to continue as a going
        concern.
      The Company was incorporated in Colorado on February
        28, 1989 as Jefferson Capital Corporation. Effective June 13, 1990 the
        Company changed its name to Ohio & Southwestern Energy Company. Effective
        July 1, 2001, the Company and Strategic Internet Investments, Incorporated
        (Strategic), an inactive Delaware corporation incorporated
        on March 2, 2001, were merged. All common shares outstanding of the Company
        were converted into an equal number of common shares of Strategic. The
        purpose of this merger was to change the corporate jurisdiction of the
        Company from Colorado to Delaware and to change the name of the Company.
        The surviving corporation of the merger is Strategic, a Delaware corporation.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Note 2 | Summary of Significant Accounting Policies
      The financial statements of the Company have been prepared
        in accordance with accounting principles generally accepted in the United
        States of America. 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. Actual results could differ from
        those estimates.
      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:
      Principles of Consolidation
      These consolidated financial statements included the
        accounts of the Company and its wholly-owned subsidiaries Strategic Internet
        Investment Canada Inc. and 3851630 Canada Inc. Both of these subsidiary
        companies are dormant and were incorporated by the Company in March 2001.
        All significant inter-company transactions were eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

/Contd.

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 2 | Summary of Significant Accounting Policies 
        (contd)
      Development Stage Company
      The Company is a development stage company as defined
        in Statement of Financial Accounting Standards No. 7. The Company is devoting
        substantially all of its present efforts to establish a new business and
        none of its planned principal operations have commenced. All losses accumulated
        since inception have been considered as part of the Companys development
        stage activities.
      Capital Assets and Amortization
      Capital assets are recorded at cost and consist of computer
        equipment. The Company provides for amortization using the declining balance
        method at the rate of 30% per annum.
      Deferred Investment Costs
      Deferred investment costs are recorded at cost and represent
        preliminary costs incurred with respect to the acquisition of an investment.
        These costs will be deferred until the Company completes the acquisition,
        at which time, the costs will be added to the cost of the investment.
        These costs will be written-off if the Company does not complete the acquisition.
      Income Taxes
      The Company follows Statement of Financial Accounting
        Standard, (FAS) No. 109, Accounting for Income Taxes
        which requires the use of the asset and liability method of accounting
        of income taxes. Under the assets and liability method of FAS No. 109,
        deferred tax assets and liabilities are recognized for the future tax
        consequences attributable to temporary differences between the financial
        statements carrying amounts of existing assets and liabilities and loss
        carry forwards and their respective tax bases. Deferred tax assets and
        liabilities are measured using enacted tax rates expected to apply to
        taxable income in the years in which those temporary differences are expected
        to be recovered or settled.
      Basic Loss Per Share
      The Company reports basic loss per share in accordance
        with FAS No. 128, Earnings Per Share. Basic loss per share
        is computed using the weighted average number of shares outstanding during
        the years. Diluted loss per share has not been provided as it would be
        antidilutive.
      Foreign Currency Translation
      Foreign currency transactions are translated into U.S.
        dollars, the functional and reporting currency, by the use of the exchange
        rate in effect at then date of the transaction, in accordance with FAS
        No. 52, Foreign Currency Translation. At each balance sheet
        date, recorded balances that are denominated in a currency other than
        U.S. dollars are adjusted to reflect the current exchange rate.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 2 | Summary of Significant Accounting Policies 
        (contd)
      Fair Value of Financial Instruments
      The carrying value of cash, accounts payable, due to/from
        related parties and loans payable approximates fair value because of the
        short maturity of these instruments. The long-term portion of loans payable
        also approximates fair value. Unless otherwise noted, it is managements
        opinion that the Company is not exposed to significant interest, currency
        or credit risks arising from these financial instruments.
      Stock-based Compensation
      The Company has elected to account for stock-based compensation
        following APB No. 25, Accounting for Stock Issued to Employees,
        and provide the disclosures required under FAS No. 123, Accounting
        for Stock-based Compensation, as amended by FAS No. 148, Accounting
        for Stock-based Compensation  Transition and Disclosure, amendment
        of FAS Statement No. 123.
      New Accounting Standards
      Management does not believe that any recently issued,
        but not yet effective accounting standards if currently adopted could
        have a material effect on the accompanying financial statements.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Note 3 | Capital Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |                    |   | 2003  |  |   | 2002         | 
| | ------------------ | - | ----- |  | - | ------------ | 
| |                    |   |       |  |   | Accumulated  | 
| |                    |   | Cost  |  |   | Amortization | 
| | Computer equipment | $ | 2,278 |  | $ | 1,329        | 

|Note 4 | Deferred Investment Costs
      Deferred investment costs consist of consultants fees
        and payments to reimburse Star Leisure and Entertainment Inc. with respect
        to the acquisition of Gulf Star World Development W.L.L. (Note 5).
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 5 | Capital Stock  Note 7
      Class A Convertible Preferred Shares
      On November 15, 2002, the Company filed a Certificate
        of Designation for Class A Convertible Preferred Shares with the State
        of Delaware. These Class A shares have a par value of $0.001 and are convertible
        to common shares at either $4.00 per share or the average of twenty consecutive
        days closing prices which shall not be less than $1.50 per share or greater
        than $6.00 per share. On November 30, 2003, the Company issued 198,000
        shares at a value of $4 to settle a termination fee of $792,000. This
        termination fee is to a former contractor who was to perform planning
        services for the Company which were subsequently assigned to another contractor.
      Commitments
      Stock Option Plan
      The Companys board of directors approved an employees
        stock option plan. The plan allows for the granting of share purchase
        options at a price of not less than 100% of the fair market value of the
        stock. The total number of options granted must not exceed 15% of the
        outstanding common stock of the Company. The plan expires on July 1, 2017.
      Stock-based Compensation
      On September 5, 2003, the Company granted stock options
        to officers, directors and employees of the Company and consultants to
        the Company to purchase common shares of the Company at the closing price
        of the Companys common stock on the date of the grant. Options are
        not granted to anyone other than the aforementioned individuals. The options
        have been granted with a term of 5 years. The stock options vest over
        a period of one year.
      Presented below is a summary of the stock option activity
        for the years shown:
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                             | December 31, 2003 |   | December 31, 2003 |         
| | --------------------------- | ----------------- | - | ----------------- | --------
| |                             |                   |   |                   | Weighted
| |                             | Number of         |   |                   | Average 
| |                             | Stock             |   |                   | Exercise
| |                             | Options           |   |                   | Price   
| | Outstanding at beginning of |                   |   |                   |         
| | year                        | 265,000           |   | $                 | 0.50    
| | Cancelled                   | (265,000          | ) | $                 | 0.50    
| | Granted                     | 1,765,000         |   | $                 | 0.25    
| |                             |                   |   |                   |         
| | Outstanding at end of year  | 1,765,000         |   | $                 | 0.25    
| | Exercisable at end of year  | 706,000           |   | $                 | 0.25    

25

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 5 | Capital Stock  Note 7  (contd)
      Commitments  (contd)
      Stock-based Compensation  (contd)
      At December 31, 2003, 1,765,000 share purchase options
        are outstanding to directors, employees and consultants entitling the
        holders thereof the right to purchase one common share of the Company
        at $0.25 per share. These share purchase options expire September 5, 2008.
      The Company grants stock options at exercise prices
        equal to the fair market value of the Companys stock at the date
        of the grant. Pursuant to APBO No. 25, the compensation charge associated
        with consultants options has been recorded in the financial statements.
        The compensation charge associated with employees options (officers,
        directors and employees) is not recognized in the financial statements
        but included in the pro-forma amounts.
      For the year ending December 31, 2003, the total non-cash
        compensation charge determined is $441,250. As the stock options have
        a graded vesting schedule, the total compensation cost recognized at December
        31, 2003 is as follows:
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                |   |         |   |   |      |  |   |          |   |   | Cumulative    |  
| | ------------------------------ | - | ------- | - | - | ---- |  | - | -------- | - | - | ------------- | -
| |                                |   |         |   |   |      |  |   |          |   |   | from          |  
| |                                |   |         |   |   |      |  |   |          |   |   | February 28,  |  
| |                                |   |         |   |   |      |  |   |          |   |   | 1989 (Date of |  
| |                                |   |         |   |   |      |  |   |          |   |   | Inception)    |  
| |                                |   |         |   |   |      |  |   |          |   |   | December 31,  |  
| |                                |   | 2003    |   |   | 2002 |  |   | 2001     |   |   | 2003          |  
| | Total non-cash compensation    |   |         |   |   |      |  |   |          |   |   |               |  
| | charge vested                  | $ | 176,500 |   | $ | -    |  | $ | 249,222  |   | $ | 570,007       |  
| | Consultants non-cash          |   |         |   |   |      |  |   |          |   |   |               |  
| | compensation charge recognized |   | (53,500 | ) |   | -    |  |   | (136,378 | ) |   | (268,585      | )
| | Employees non-cash            |   |         |   |   |      |  |   |          |   |   |               |  
| | compensation charge            | $ | 123,000 |   | $ | -    |  | $ | 112,844  |   | $ | 301,422       |  

26

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 5 | Capital Stock  Note 7  (contd)
      Commitments  (contd)
      Stock-based Compensation  (contd)
      Under SFAS No. 123, if the Company elects to follow
        APBO No. 25, in respect to the employees stock options, it is required
        to present pro-forma information as to the effect on income and earnings
        per share as if the Company had accounted for its employee stock options
        under the fair value method of that statement. Had compensation cost been
        determined based on the fair value at the grant dates for those options
        issued to officers, directors and employees, the Companys net loss
        and loss per share would have been adjusted to the pro-forma amounts indicated
        below:
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                      |             |   |            |   |   |          |   |   |            |   |   | Cumulative    |  
| | -------------------- | ----------- | - | ---------- | - | - | -------- | - | - | ---------- | - | - | ------------- | -
| |                      |             |   |            |   |   |          |   |   |            |   |   | from          |  
| |                      |             |   |            |   |   |          |   |   |            |   |   | February 28,  |  
| |                      |             |   |            |   |   |          |   |   |            |   |   | 1989 (Date of |  
| |                      |             |   |            |   |   |          |   |   |            |   |   | Inception)    |  
| |                      |             |   |            |   |   |          |   |   |            |   |   | December 31,  |  
| |                      |             |   | 2003       |   |   | 2002     |   |   | 2001       |   |   | 2003          |  
| | Net loss             | As reported | $ | (1,208,941 | ) | $ | (214,758 | ) | $ | (2,296,406 | ) | $ | (4,286,668    | )
| |                      | Pro-forma   | $ | (1,331,941 | ) | $ | (214,758 | ) | $ | (2,409,250 | ) | $ | (4,588,090    | )
| |                      |             |   |            |   |   |          |   |   |            |   |   |               |  
| | Basic loss per share | As reported | $ | (0.07      | ) | $ | (0.02    | ) | $ | (0.19      | ) | $ | -             |  
| |                      | Pro-forma   | $ | (90.08     | ) | $ | (0.02    | ) | $ | (0.20      | ) | $ | -             |  

| | The weighted average fair value at date of grant of the options granted
      were as follows:
| | ----------------------------------------------------------------------------------------------

| |                                         |   | 2003      | 
| | --------------------------------------- | - | --------- | 
| | Weighted average fair value             | $ | 0.25      | 
| | Total options granted                   |   | 1,765,000 | 
| | Total fair value of all options granted | $ | 441,250   | 

| | The fair value of each option grant was estimated
        on the date of the grant using the Black-Scholes option-pricing model
        with the following assumptions:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                         | 2003 | 
| | ----------------------- | ---- | 
| | Expected dividend yield | 0.0% | 
| | Expected volatility     | 252% | 
| | Risk-free interest rate | 4.5% | 
| | Expected term in years  | 5    | 

| | Share Purchase Warrants
      At December 31, 2003 there were 650,000 share purchase
        warrants outstanding entitling the holders thereof the right to purchase
        one common share at $0.10 per share for each warrant held. These warrants
        expire on March 13, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 5 | Capital Stock 
        Note 7  (contd)
      Commitments  (contd)
      Acquisition of Gulf Star World Development W.L.L.
      By a letter of agreement dated July 11, 2002, amended
        October 10, 2002, May 10, 2003 and September 30, 2003, the Company agreed
        to purchase 80% of the outstanding shares of Gulf Star World Development
        W.L.L. (Gulf Star), a Bahrain corporation, from Star Leisure
        & Entertainment Inc. (Star Leisure). Star Leisure is controlled
        by a director of the Company and is based in British Columbia, Canada.
        Gulf Star is the 100% owner and developer of the residential and tourist
        project known as the Dream Island Resort, located on the north coast of
        Bahrain at Manama City.
      To acquire 80% of Gulf Star, the Company must issue
        five million common shares at a price of $0.125 per share. The shares
        are to be issued over a three year period as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | In addition, the Company shall
        make cash payments to Star Leisure totalling US$100,000 to cover a portion
        of hard costs accumulated by Star Leisure in progressing the Dream Island
        Project. At December 31, 2003 the Company has paid $34,210 with the balance
        of $65,790 to be paid on or before July 11, 2004. The Company has also
        agreed to reimburse Star Leisure and Jzala Investment Group (20% shareholder
        of Gulf Star) for hard costs to be verified that they may have incurred
        upon the project financing being fully secured and having released in
        sufficient amounts to commence the main construction.
      On August 9, 2002, the Company entered into an assignment
        agreement, whereby the Company was assigned all rights and obligations
        under a Dredging and Reclamation Contract entered into by Star Leisure
        pertaining to the construction of The Dream Island Resort project. Under
        the terms of the Dredging and Reclamation contract, the Company issued
        into escrow $5,075,000 face value Class A Convertible Preferred shares
        as full payment (1,268,750 Class A Convertible Preferred Shares). These
        shares will be released in stages as the dredging contract progresses
        At December 31, 2003, no value has been recorded for the shares as work
        has not commenced in the project and none of the shares have been released
        from escrow. An agents fee of 0.5% of the value of the shares released
        will be payable.

28

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 5 | Capital Stock  Note 7  (contd)
      Commitments  (contd)
      Acquisition of Gulf Star World Development W.L.L. 
        (contd)
      Pursuant to an agreement dated October 20, 2003, the
        Company has agreed to issue 1,137,500 Class A convertible preferred shares
        of the Company at a deemed value of $4 per share for Technical Planning
        services for the Dream Island Project. These shares will be placed in
        escrow and released as work is performed. The shares are convertible to
        common shares at the average or twenty consecutive days closing prices
        which shall not be less than $1.50 per share or greater than $6 per share.
        At December 31, 2003, no value has been recorded for the shares as work
        has not commenced on the project and none of the shares have been released
        from escrow.
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 6 | Related Party Transactions  Notes 5 and
        7
      The Company was charged the following by a director
        of the Company and by companies with common directors of the Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                             |   |        |  |   |      |  |   |         |  |   | Cumulative    | 
| | --------------------------- | - | ------ |  | - | ---- |  | - | ------- |  | - | ------------- | 
| |                             |   |        |  |   |      |  |   |         |  |   | from          | 
| |                             |   |        |  |   |      |  |   |         |  |   | February 28,  | 
| |                             |   |        |  |   |      |  |   |         |  |   | 1989 (Date of | 
| |                             |   |        |  |   |      |  |   |         |  |   | Inception) to | 
| |                             |   |        |  |   |      |  |   |         |  |   | December 31,  | 
| |                             |   | 2003   |  |   | 2002 |  |   | 2001    |  |   | 2003          | 
| | Consulting fees             | $ | -      |  | $ | -    |  | $ | 29,470  |  | $ | 35,670        | 
| | Interest                    |   | 2,445  |  |   | 695  |  |   | -       |  |   | 3,140         | 
| | Management fees             |   | -      |  |   | -    |  |   | 63,000  |  |   | 112,000       | 
| | Office and general expenses |   | 3,925  |  |   | -    |  |   | 10,050  |  |   | 26,944        | 
| | Rent                        |   | 10,239 |  |   | -    |  |   | 6,198   |  |   | 30,851        | 
| |                             | $ | 16,609 |  | $ | 695  |  | $ | 108,718 |  | $ | 208,605       | 

| | Deferred investment costs at December 31, 2003 included
        $34,210 (2002: $Nil) charged by a related company in respect to a cash
        payment required pursuant to an acquisition agreement (Note 5).
      These charges were measured by the exchange amount, which
        is the amount agreed upon by the transacting parties.
      At December 31, 2003 due from related party is comprised
        of advances to a company with which the Company has a common director.
        These amounts are non-interest bearing, unsecured and repayable on demand.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 6 | Related Party Transactions  Notes 5 and 7
      At December 31, 2003, accounts payable includes $71,181 (2002: $90,441)
        due to directors of the Company and companies controlled by directors
        of the Company in respect to unpaid management fees.
      At December 31, 2003 and 2002, due to related parties are comprised
        of expenses for operating costs paid on behalf of the Company by companies
        with common directors. These amounts are non-interest bearing, unsecured
        and there are no specific terms for repayment.
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Note 7 | Loans payable  Note 11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        | 2003 |   |        | 2002 | 
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ------ | ---- | - | ------ | ---- | 
| | a) | Loan payable to a shareholder. This loan
        is unsecured, non-interest bearing and repayable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                              | $ | 13,837 |      | $ | 13,837 |     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |      | 
| | b) | Loan payable to companies controlled
        by directors of the Company. $50,000 is unsecured, non-interest bearing
        and repayable no later than July 15, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                              |   | 50,000 |      |   | 65,693 |     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |      | 
| | c) | Loan payable to a shareholder including
        accrued interest of $1,992 (2002: $1,385). The loan is unsecured, bears
        interest at 8% per annum and is repayable upon demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                              |   | 8,027  |      |   | 7,420  |     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |      | 
| | d) | Loan payable to a shareholder pursuant
        to a Convertible Loan Agreement. Interest is calculated at 10% per annum.
        This loan matures not later than August 1, 2005.
      The lender may, at any time, convert the principal sum
        plus accrued interest into units of the Company. Each unit will consist
        of one common share plus one common share purchase warrant. Any conversion
        by the Lender of the Loan and/or accrued interest into equity as contemplated
        under the Agreement shall occur at a discount, as specified below, to
        the ten (10) day average market closing price, calculated from the ten
        business days immediately preceding a loan draw date, (the Average
        Price), of the Borrowers common stock as quoted through the facilities
        of the OTC:BB. The Conversion Rate will be calculated as follows: |                                                                                                                                                              |   |        |      |   |        |     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |     
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | The Conversion Rate will be deemed to be $0.05 per
        unit for all Loan Draws where the Average Price is less than or equal
        to $0.10 per share; |   |        |      |   |        |      | 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |     
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Average Price less than or equal to $0.25 per share
        and more than $0.10 per share, discount is 40%;                                                  |   |        |      |   |        |      | 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                              |   |        |      |   |        |     
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Average Price less than or equal to $0.50 per share
        and more than $0.25 per share, discount is 50%; and                                              |   |        |      |   |        |      | 

30

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 7 | Loans payable  Note 11  (contd)                                                                                               
|------ | ---------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       | e)                                                                                                                               
|       |                                                                                                                                  
|       | f)                                                                                                                               
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       | The long-term portion of loans payable is repayable not later
      than November 27, 2005.                                      
|       |                                                                                                                                  
|Note 8 | Deferred Tax Assets
      The following table summarizes the significant components of the Companys
        deferred tax assets:
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  
|       |                                                                                                                                  

| | The amount taken into income as deferred tax assets
        must reflect that portion of the income tax loss carryforwards which is
        likely to be realized from future operations. The Company has chosen to
        provide an allowance of 100% against all available income tax loss carryforwards,
        regardless of their time of expiry.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A Development Stage Company)
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2003 and 2002 (Stated in U.S. Dollars)

|Note 9  | Income Taxes
      At December 31, 2003, the Company has net operating
        loss carryforwards which expire commencing in 2010 totalling approximately
        $4,301,725. The Company has a capital loss carryforward which expires
        in 2006, totalling approximately $606,000. The potential tax benefits
        of these losses have not been recorded in the financial statements.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                  
|Note 10 | Non-Cash Transactions
      Investing and financing activities that do not have
        a direct impact on cash flows are excluded from the statement of cash
        flows. The Company issued common shares for services provided to the Company
        during the following years:                                                                                                           

| |      |  |                  |  |               |  | Average   |  |          
| | ---- |  | ---------------- |  | ------------- |  | --------- |  | ---------
| |      |  | Number of        |  | Number of     |  | Price     |  |          
| |      |  | Preferred Shares |  | Common Shares |  | Per Share |  | $        
| | 1995 |  | -                |  | 50,000        |  | $0.03     |  | 1,500    
| | 1998 |  | -                |  | 7,000,000     |  | $0.001    |  | 7,000    
| | 1998 |  | -                |  | 620,000       |  | $0.01     |  | 6,200    
| | 2001 |  | -                |  | 233,333       |  | $0.50     |  | 116,667  
| | 2002 |  | -                |  | 680,886       |  | $0.12     |  | 138,006  
| | 2002 |  | -                |  | 1,380,000     |  | $0.07     |  | 93,000   
| | 2003 |  | 198,000          |  | -             |  | $4.00     |  | 792,000  
| | 2003 |  | -                |  | 145,000       |  | $0.14     |  | 203,000  
| |      |  |                  |  |               |  |           |  |          
| |      |  | 198,000          |  | 11,414,219    |  |           |  | 1,357,373

|        |                                                                                | These amounts have been excluded from the statement of cash flows.                                                                    
|------- | ------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                |                                                                                                                                       
|Note 11 | Subsequent Events  Note 7
      Subsequent to December 31, 2003, the Company;
|        |                                                                                |                                                                                                                                       
|        | i)                                                                             | received an additional $35,000 pursuant to the Convertible
        Loan Agreement (Note 7 (d)); and                                   
|        |                                                                                |                                                                                                                                       
|        | ii)                                                                            | granted options to a consultant to purchase 100,000
        common shares at $0.35 per share expiring not later than February 5, 2009.

| | Item 8 **Changes In and Disagreements With Accountants
        on Accounting and Financial Disclosure**
      Amisano Hanson, Chartered Accountants, of Vancouver,
        British Columbia, were appointed as auditors for the Company for the fiscal
        year 1998. Prior auditors for the Company for the fiscal years 1991 through
        1997 were A.J. Robbins & Company, CPA's, of Denver, Colorado. The
        decision to change auditors was recommended and approved by the board
        of directors in the course of business as there was a change of control
        and new directors in 1998 who resolved to have the auditing services located
        in the Vancouver area where the Company was headquartered.
      In connection with Audits of the two most recent fiscal
        years and any interim period preceding resignation, no disagreements exist
        with any former accountant or auditor on any matter of accounting principles
        or practices, financial statement disclosure, or auditing scope of procedure,
        which disagreements if not resolved to the satisfaction of the former
        accountant or auditor would have caused him to make reference in connection
        with his report to the subject matter of the disagreements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32

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The principal auditor's report on the financial statements
  for any of the past two years contained no adverse opinion or a disclaimer of
  opinion nor was there any qualification as to uncertainty, audit scope or accounting
  principles except for the "going concern" qualification **PART III** Item 10 **Directors, Executive Officers, Promoters and Control Persons;
  Compliance With Section 16(a) of the Exchange Act** (a) The directors and executive officers of the Company as
  at December 31, 2002 are as follows: Name
    Age
    Position**Ralph Shearing**
    **47**
    **President, CEO****Abbas Salih**
    **56**
    **Chairman** Each director and executive officer of the Company is elected
  at the Annual Meeting of Shareholders to hold office until the next Annual Meeting
  of Shareholders and until his successor has been elected and qualified. Any
  director appointed to fill a vacancy on the board shall serve for the unexpired
  term of his predecessor. Officers of the Company are elected at the Annual Meeting
  of the Board of Directors to serve until the next Annual Meeting of the Board
  of Directors and until a successor has been duly elected and qualified. A vacancy
  in any office may be filled by the Board of Directors for the unexpired term
  of the departing officer. Ralph Shearing was appointed as a Director and President in
  December, 1998 and Abbas Salih was appointed Chairman of the Board on October
  7, 1998. **RALPH E. SHEARING****, B.Sc., P.Geol., Age 47,
  President and CEO** Mr. Shearing has been President and Director of the Company
  since December, 1998. Mr. Shearing graduated from the University of British
  Columbia in 1981 with a Bachelor of Science Degree in Geology and immediately
  began practicing his profession in Canada on numerous large scale mining projects.
  In 1985 he and a colleague founded Quest Canada Drilling Ltd., a very successful
  diamond drilling company, and, in 1986, he founded Soho Resources Corp., a resource
  exploration company currently listed on the Canadian Venture Exchange (symbol
  "SOH"). Mr. Shearing also serves on the Board of Mantle Minerals Corp.,
  a Canadian diamond exploration company. With over seventeen years of senior level public company management
  experience, Mr. Shearing is well qualified and competent to preside over the
  Board of Ohio. **ABBAS SALIH, Age 55 Chairman of the Board/Secretary** Mr. Salih has been a Director and Chairman of the Board since
  October, l998. Mr. Salih is a graduate of the Khartoum Technical Institute in
  the Sudan. He received his formal training while serving as a member of the
  Sudan Royal Air Force which included attendance at the British Royal Air Force
  Academy, Newton No. 9 in Nottingham, England, where he studied aircraft electronics
  and instrumentation. After his British training, Mr. Salih received further aviation
  training in Kyrgyzstan, Southern Russia, as a guest of the Russian Air Force
  where he studied and maintained MIG - 21 jet aircraft. Mr. Salih has conducted business in Europe and the Middle East,
  most extensively in Germany and the Sudan, prior to taking residence in Canada
  in l994. He and several associates formed Regions International Investment Company
  Limited (RIICO) in l989, the largest trucking company in the Sudan with a fleet
  of 125 tanker/cargo transport vehicles. As a Director of RIICO Mr. Salih was
  instrumental in securing a $20 Million financing for the


33

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| | company's initial capital requirements. Mr. Salih joined
        the Board of Directors of Arab Group International for Investment and
        Acquisitions (AGIIA) during 1992 and was instrumental in arranging the
        acquisition of the controlling share interest in the Ohio & Southwestern
        Energy Company. Mr. Salih's Middle Eastern and European contacts plus
        his experience in arranging financing for large projects, allows Ohio
        access to significant foreign resources including people and potential
        capital.
      (b) Significant Employees
      None
      (c) Family Relationships
      There are no family relationships among directors, executive officers,
        officers or significant employees and any nominees chosen to hold these
        positions.
      (d) Involvement in Certain Legal Proceedings
      As of the date of this Annual Report no director, executive
        officer, promoter or control person or any nominee for these positions
        is or has been the subject of any legal proceeding in any court of jurisdiction
        concerning (i)any bankruptcy petition filed by or against any business
        of which such person was a general partner or executive officer at the
        time of the bankruptcy, or within two years prior to that time; (ii) any
        conviction in a criminal proceeding or being subject to a pending criminal
        proceeding(excluding traffic violations and other minor offences) within
        th past five years; (iii) being subject to any order, judgment or decree
        permanently or temporarily enjoining, barring, suspending or otherwise
        limiting involvement in any type of business, securities or banking activity;
        or (iv) being found by a court, the Securities and Exchange Commission
        or the Commodities Futures Trading Commission to have violated a federal
        or state securities or commodities law (and the judgment has not been
        reversed, suspended or vacated).
      **Compliance With Section 16(a) of the Exchange
        Act**
      Section 16(a) of the Exchange Act requires the Company's
        directors and officers, and the persons who beneficially own more than
        ten percent (10%) of Company's common stock, to file reports of ownership
        and changes in ownership with the Securities and Exchange Commission.
        Copies of all filed reports are required to be furnished to the Company
        by each reporting person. Based solely upon a review of Forms 3 and 4
        (and amendments thereto) and Forms 5 (and amendments thereto) and the
        written representations of the reporting persons, it is the Company's
        belief and understanding that all such persons have fully complied with
        the applicable filing requirements under the Act during the fiscal year
        ended December 31, 2002.
      Item 11 **Executive Compensation**
      **(a) General**
      (1) For the fiscal year ended December 31, 2003 neither
        of the directors or officers was compensated for acting in their capacities
        as a director or officer. The directors and officers are reimbursed for
        any out-of-pocket expenses incurred by them on behalf of the Company.
        The Company currently has no pension plan, health plan, income profit
        sharing or other similar plan. There are no compensatory plans or arrangements,
        with respect to any former or present executive officer of the Company
        which result or will result from the resignation, retirement or other
        termination of such officer's employment with the Company or from a change
        of control of the Company or a change in the officer's responsibilities
        following a change in control.
      On July 1, 2002 the Company's Board of Directors abandoned
        the Stock Option Plan established on September 30, 2000 and adopted and
        approved an Stock Award Plan which allows for the granting of incentive
        options in an amount not greater than 15% of the total outstanding shares
        of the Company at a price of not less than 100% of the fair market value
        of the stock on the date of granting of the option. The Plan provides
        for both direct award and sale of shares and for the grant of options
        to purchase shares. Options granted under the Plan may include Non-Statutory
        Options as well as ISO's intended to qualify under Section 422 of the
        Internal Revenue Code of 1986. Under the Plan, options are exercisable
        within ten years of the date of granting, or, 90 months after employment
        ceases, whichever date is earliest. The plan is effective for a period
        of fifteen years expiring on July 1, 2017.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

34

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| | The purpose of the Stock Option Plan is to advance
        the interests of the Company and its shareholders by affording key personnel
        in the Company an opportunity for investment in the Company and other
        incentive advantages inherent in stock ownership in the Company. Pursuant
        to the provisions of the Stock Option Plan, stock options will be granted
        only to key personnel of the Company, generally defined as a person designated
        by management upon whose judgment, initiative and efforts the Company
        may rely, including any director, officer, employee or consultant of the
        Company.
      As of the date of this Annual Report, a total of 11 employees
        including consultants, directors and officers have been granted share
        purchase options to acquire a total of 1,765,000 common shares of the
        Company at a price of $0.25 per share. The President of the Company and
        the Chairman of the Board have each been granted 600,000 share purchase
        options each under the Plan.
      **(b) Summary Compensation Table**
        (1)
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SUMMARY COMPENSATION TABLE OF EXECUTIVE OFFICERS

|                   |                     |        |       |              | Longterm Compensation
|------------------ | ------------------- | ------ | ----- | ------------ | ---------------------
|                   | Annual Compensation | Awards
|(a)                | (b)                 | (c)    | (d)   | (e)          | (f)                  
|Name and           | Year                | Salary | Bonus | Other Annual | Restricted           
|Principal          |                     |        |       | Compensation | Stock                
|Position           |                     |        |       |              | Awards               
|                   |                     | $      | $     | $            | $                    
|                   |                     |        |       |              |                      
|                   |                     |        |       |              |                      
|Ralph Shearing     | 2003                | 0      | 0     | 0            | 0                    
|Director/President | 2002                | 0      | 0     | 0            | 0                    
|                   | 2001                | 0      | 0     | 31,500       | 0                    
|                   |                     |        |       |              |                      
|Abbas Salih        | 2003                | 0      | 0     | 0            | 0                    
|Director/Chairman/ | 2002                | 0      | 0     | 0            | 0                    
|Secretary          | 2001                | 0      | 0     | 31,500       | 0                    

| | (b) 
      (2)(iv) Other than the share purchase options detailed under column (g)
      there were no other long-term compensation awards or pay-outs in the last
      fiscal year ending December 31, 2003.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                               
| | (b)
      (2)(v) There was no other compensation for the fiscal year ended December
      31, 2003.                                                                                                           
| |                                                                                                                                                                                                               
| | (c) Option/SAR Grants Table                                                                                                                                                                                   

Option/SAR Grants in Last Fiscal Year

|               | Individual Grants    
|-------------- | ---------------------
|(a)            | (b)                  
|               |                      
|Name           | Number of            
|               | Securities Underlying
|               | Options/SAR's Granted
|               |                      
|Ralph Shearing | 600,000              
|(Director)     |                      
|               |                      
|Abbas Salih    | 600,000              
|(Director)     |                      

35


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| | (d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR
      Value Table
| | ------------------------------------------------------------------------------------

|               | Aggregate Option/SAR Exercises in Last Fiscal
      Year and
|-------------- | ------------------------------------------------------------
|               | Fiscal Year-End Option/SAR Values                           
|(a)            | (b)                                                         
|               |                                                             
|Name           | Shares                                                      
|               | Acquired on                                                 
|               | Exercise(#)                                                 
|               |                                                             
|               |                                                             
|               |                                                             
|Ralph Shearing | $0.00                                                       
|               |                                                             
|Abbas Salih    | $0.00                                                       

| | (e) | Long-Term Incentive Plan ("LTIP") Awards Table                                             
| | --- | -------------------------------------------------------------------------------------------
| |     |                                                                                            
| |     | None. Not Applicable                                                                       
| |     |                                                                                            
| | (f) | Compensation of Director                                                                   
| |     | (1) Standard Arrangements - none                                                           
| |     | (2) Other Arrangements - none                                                              
| |     |                                                                                            
| | (g) | Employment Contracts and Termination of Employment
      and Change In Control Arrangements
| |     |                                                                                            
| |     | (2) None. Not Applicable                                                                   
| |     |                                                                                            
| | (h) | Report on Repricing of Options/SAR's                                                       
| |     | (1) Not Applicable.                                                                        
| |     | (2) Not Applicable                                                                         

Item 12Security Ownership of Certain Beneficial Owners and Management

(a) The following table sets forth information, as at December
  31, 2003, as to the names and addresses and the number of shares of common stock
  of the Company owned of record or beneficially owned by each individual known
  by the Company to be the beneficial owner of more than five percent of the outstanding
  common stock, the names and addresses of each officer and director and the number
  of shares controlled by the officers and directors as a group.

36

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|Title of Class                    | Name and Address of                                                                                       | Beneficial Ownership | Percent  | 
|--------------------------------- | --------------------------------------------------------------------------------------------------------- | -------------------- | -------- | 
|                                  | Beneficial Owner                                                                                          |                      | of Class | 
|                                  |                                                                                                           |                      |          | 
|                                  |                                                                                                           |                      |          | 
|Common                            | Ralph Shearing
      President
      Suite 450, 650 West
      Georgia Street,
      Vancouver, B.C.      | 0                    | 0%       | 
|                                  |                                                                                                           |                      |          | 
|Common                            | Abbas Salih
      Chairman/Secretary
      Suite 450, 650 West
      Georgia Street
      Vancouver, B.C. | 7,003,310            | 40%      | 
|Officers and Directors as a group |                                                                                                           | 7,003,310            | 40%      | 

* The 7,003,310 shares controlled by the officers and directors
  as a group is beneficially owned by Canarab Acquisitions, a private company
  the majority of whose shares are controlled by Abbas Salih. Mr. Ralph Shearing
  is President of Canarab Acquisitions and a minority shareholder.

** The 5,000,000 common shares to be issued in escrow to Star
  Leisure & Entertainment Inc. under the agreement of July 12, 2002 will be
  beneficially owned by Abbas Salih, the sole director and shareholder of Star
  Leisure.

(c)Changes in ControlNone

Item 13 Certain Relationships and Related Transactions

The officers and directors of the Company are engaged in other
  businesses, either individually or through partnerships or corporations in which
  they may have an interest, hold an office or serve on the Boards of Directors.
  Certain conflicts of interest may arise between the Company and the respective
  officers and directors. Such conflicts can be resolved through the exercise
  by such officers and directors of judgment consistent with their fiduciary duties
  to the Company. It is the intent of the officers and directors to resolve any
  such conflicts in the best interest of the Company and to allocate sufficient
  of their time to the affairs of the Company in order to fully and competently
  carry out their duties and responsibilities.

Certain financial related party transactions are adequately
  explained in Item 7, Note 6 of this report.

Item 14 Controls and Procedures

The Company's executive officers have concluded that the Company's
  disclosure controls and procedures are effective based upon their evaluation
  of such controls and procedures as of a date within 90 days prior to the filing
  of this Annual Report. Tt There were no significant changes in the Company's
  internal control or in the other factors that could significantly affect the
  Company's internal controls subsequent to the date of their most recent evaluation.

Item 15 Exhibits and Reports on Form 8-K

The following documents are filed as part of this report:

(1) Exhibits:

37

---

|Regulation |                                                                                                                                                               |   
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|S-K Number | Exhibit                                                                                                                                                       |   
|           |                                                                                                                                                               |   
|3.1        | Articles of Incorporation                                                                                                                                     | * 
|3.4        | Bylaws                                                                                                                                                        | * 
|3.5        | Certificate of Amendment                                                                                                                                      | * 
|           |                                                                                                                                                               |   
|10.5       | Stock Award Plan                                                                                                                                              | * 
|           |                                                                                                                                                               |   
|31.1       | Certification of Chief Executive
      Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                      |   
|31.2       | Certification of Chief Financial
      Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                      |   
|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 |   
|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 |   
|           |                                                                                                                                                               |   
|99.2       | Court Order dated August 23, 1991                                                                                                                             | **
|99.3       | Court Order dated June21, 1995                                                                                                                                | **

|*  | Incorporated by reference to Form 10-KSB Annual Report for
      the years ending December 31, 2001 and December 31, 2002
|-- | -------------------------------------------------------------------------------------------------------------------------
|** | Incorporated by reference to Form 10-KSB Annual Report for 
        the year ending December 31, 1994                    

**SIGNATURES**

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

|Date: April 13, 2004 | **STRATEGIC INTERNET INVESTMENTS, INCORPORATED**
        (Registrant)
      ***/s/ Ralph Shearing***
        ___________________________ 
        Ralph Shearing, President
|-------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|Date: April 13, 2004                                                                        | **STRATEGIC INTERNET INVESTMENTS, INCORPORATED**
        (Registrant)                                  
|------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------
|                                                                                            |                                                                                                        
|***/s/ Ralph Shearing***
      ___________________________ 
      Ralph Shearing, President | ***/s/ Abbas Salih***
      ___________________________ 
      Abbas Salih, Director/Chairman/Secretary

38

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