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UNITED STATES**SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

FORM 10-KSB

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF1934

For the fiscal year ended **December 31, 2006**

Commission File No. **033-28188**

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**Small Business Issuer:

|Delaware                                | 84-1116458                  
|--------------------------------------- | ----------------------------
|State of incorporation:                 | IRS Employer Identification:
|                                        |                             
|                                        |                             
|Suite 250, 1090 West Georgia Street     |                             
|Vancouver, BC                           |                             
|Canada V6E 3V7                          | **604-684-8662**            
|Address of principal executive offices: | Issuers telephone number   

Securities registered under Section 12(b) of the Exchange Act:
**None**

Securities registered under Section 12(g) of the Exchange Act:
**None**

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]   No [   ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. 
[X]

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

Issuers revenues for its most recent fiscal year.
**Nil**

Aggregate market value of the voting common equity held by non-
affiliates as of March 31, 2007: **$6,749,685**

Common shares outstanding as of March 31, 2007:
**25,960,326**

Transitional Small Business Disclosure Format. Yes [  
]   No [X]

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Statements made in this 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.

PART I

|1. | Description of Business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company is in the development stage, accordingly
      certain matters discussed herein are based on potential future
      circumstances and developments, which the Company anticipates, but which
      cannot be assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company is currently 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.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In January 2007 the Company entered into a Letter of
      Intent to potentially acquire by option up to a 100% indirect interest in
      the Renaissance Residence Project by purchasing the outstanding shares of
      a Turkish company. The Renaissance Residence Project is a real estate
      development project that will be located on an 8.7 hectare parcel of land
      in Antalya, Turkey.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (See Plan of Operation below)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | Description of Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company maintains an office in rented premises
      located in Vancouver, BC, Canada. The Companys equipment consists of
      computer equipment, which is generally located in the Companys office,
      but may be transported elsewhere as needed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Except as described above, the Company does not directly
      or indirectly own or otherwise have any interest in any other real
      estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Management is not aware of any legal proceedings pending
      or contemplated against the Company, its directors or officers or any of
      its affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|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

|5. | Market for Common Equity and Related Stockholder
      Matters                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                      
|   | 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 Yahoo Finance (www.yahoo.com), was as
  follows:

Year
    Period
    High
    Low2007
    First quarter
    $0.45
    $0.162006
    First quarter
    $0.37
    $0.15Second quarter
    $1.03
    $0.15Third quarter
    $0.72
    $0.30Fourth quarter
    $0.52
    $0.252005
    First quarter
    $0.95
    $0.35Second quarter
    $0.64
    $0.23Third quarter
    $0.50
    $0.16Fourth quarter
    $0.50
    $0.21


These quotations reflect inter-dealer
prices, without retail mark-up, mark-down, or commission and may not represent
actual transactions.

Holders of common equity As
at December 31, 2006 there were approximately 130 holders of record of the
common shares of Strategic.

Dividends On March 11, 2005,
the Company issued 4,060,643 common shares, net of escrowed shares, pursuant to
a common stock dividend declared by the Board of Directors on February 14, 2005,
payable to the shareholders of record as of March 4, 2005. In connection with
this stock dividend, pursuant to the terms of stock option, convertible
debenture, and stock warrant agreements the number of units or shares issuable
under those agreements shall be increased by 20% and the exercise or conversion
price shall be decreased by 20%. These shares are restricted under Rule 144.

Except for the above mentioned stock
dividend, 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.

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Securities authorized for issuance
under equity compensation plans

| | Equity Compensation Plan Information |                       |                      
| | ------------------------------------ | --------------------- | ---------------------
| |                                      | Number of securities  |                      
| |                                      | to be issued upon     | Weighted average     
| |                                      | exercise of           | exercise price of    
| |                                      | outstanding options,  | outstanding options, 
| | Plan
      category                  | warrants, and rights. | warrants, and rights.
| |                                      |                       |                      
| | Equity compensation plans            |                       |                      
| | approved by security holders         | -                     | -                    
| |                                      |                       |                      
| | Equity compensation plans not        |                       |                      
| | approved by security holders         | 1,962,000             | $0.23                
| |                                      |                       |                      
| | Total                                | 1,962,000             | $0.23                

2002 Stock Award PlanIn
2002, the Companys board of directors approved a stock award plan. The plan
provides both for the direct award or sale of shares, and for the grant of
options to purchase shares. Shares may be awarded in consideration of services
rendered to the Company. The Company may also grant a 30-day right to purchase
shares at a price of not less than 90% of the fair market value of the shares.

Under the plan directors, employees and
consultants may be granted incentive stock options to purchase common stock of
the Company at a price of not less than 100% of the fair market value of the
stock. The total number of shares awarded under the plan must not exceed 15% of
the outstanding common stock of the Company. Certain changes in the capital
structure of the Company, such as a stock split or stock dividend, may result in
an appropriate adjustment to the number and/or the price of shares issuable
under the plan. The plan expires on July 1, 2017.

Sales of Securities Without
Registration Under the Securities Act of 1933 On March 11, 2005, the
Company issued 4,060,643 common shares, net of escrowed shares, pursuant to a
common stock dividend declared by the Board of Directors on February 14, 2005,
payable to the shareholders of record as of March 4, 2005. In connection with
this stock dividend, pursuant to the terms of stock option, convertible
debenture, and stock warrant agreements the number of units or shares issuable
under those agreements shall be increased by 20% and the exercise or conversion
price shall be decreased by 20%. These shares are restricted under Rule 144.

On November 15, 2002 the Company
entered into a Convertible Loan Facility Agreement with Icon Management Ltd.
(Icon) whereby the Company would, from time to time, borrow operating funds
from Icon, at an interest rate of ten percent (10%), repayable on demand. The
lender has the right to convert all or part of the principal sum and interest
into units at a conversion rate which is calculated at a discount to the average
closing market price for ten days preceding a loan advance or conversion of
interest. Each unit consists of one common share of the Company and one
non-transferable share purchase warrant, expiring 2 years from the conversion
date, exercisable at the applicable conversion rate. Certain loans made under
this agreement had specific maturity dates, thereby limiting to 2 years the
lenders right to convert all or part of the principal sum into units. During
the year ended December 31, 2004, Icon converted $48,537 of the loan into
825,364 units of the Company, including warrants exercisable at an average price
of $0.06 per share, expiring at various dates between December 31, 2004 and
March 31, 2006. On December 31, 2004, Icon exercised warrants to purchase
643,715 shares. During the year ended December 31, 2005, Icon converted $227,140
of the loan plus accrued interest of $23,020, into 635,901 units of the Company,
including warrants exercisable at an average price of $0.39 per share, expiring
at various dates between April 1, 2005 and January 31, 2007. During the period
ended September 30, 2005, Icon also exercised warrants to purchase a further
420,107 shares for cash proceeds of $43,153. This transaction is with an
offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S.

---

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 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 cash
proceeds of $65,000 were allocated to working capital. In July 2004, 320,000 of
the warrants were exercised, and 320,000 shares were issued for cash proceeds of
$32,000. During the year ended December 31, 2005, the investor exercised the
remaining warrants to purchase a further 330,000 shares for cash proceeds of
$33,000. These 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. This transaction is with an offshore
non-U.S. person; accordingly, these securities are exempt from registration
pursuant to Regulation S.

On August 10, 2003 the Company entered
into a Convertible Loan Facility Agreement with Star Leisure & Entertainment
Inc. (Star Leisure), a company controlled by a Director and Officer of
Strategic, whereby the Company would, from time to time, borrow operating funds
from Star Leisure, at an interest rate of ten percent (10%), repayable on
demand. The lender has the right to convert all or part of the principal sum and
interest into units at a conversion rate which is calculated at a discount to
the average closing market price for ten days preceding a loan advance or
conversion of interest. Each unit consists of one common share of the Company
and one non-transferable share purchase warrant, expiring 2 years from the
conversion date, exercisable at the applicable conversion rate. Certain loans
made under this agreement had specific maturity dates, thereby limiting to 2
years the lenders right to convert all or part of the principal sum into units.
At December 31, 2005, Star Leisure had advanced a total of $103,206 and accrued
interest of $25,100. During the year ended December 31, 2005, $81,206 of the
loans matured, and the right to convert this principal amount and accrued
interest into units expired. On January 31, 2006 the right to convert the
remaining loan principal of $22,000 and accrued interest into units expired.
Under the terms of the Convertible Loan Facility Agreement, any loans that
mature without being converted or repaid become due on demand. During the year
ended December 31, 2006, Star Leisure advanced $49,700 and accrued interest of
$3,496. The loan principal is convertible into 416,248 units at an average price
0f $0.12. Star Leisure has not converted any part of the principal sums advanced
or accrued interest into units as of December 31, 2006. This transaction is with
an offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S.

On January 31, 2004, the Company issued
1,137,500 Class A Convertible Preferred Shares(1) at a deemed value
of $4.00 per share, as payment for technical planning services to be performed
by the Arkan Group for Projects of Dammam, Saudi Arabia. The total value of the
technical planning services contract is $4,550,000. These shares were issued in
escrow and were to be released over time as work on the Dream Island Project
progressed. In December 2004 this contract was terminated, and the escrowed
shares were cancelled. This transaction is with an offshore non-U.S. person;
accordingly, these securities are exempt from registration pursuant to
Regulation S.

In August 2004, the Company issued
10,000 common shares at a deemed price of $2.00 per share, for a total deemed
consideration of $20,000, pursuant to a Consulting Services Agreement for
financial consulting. This transaction is with an offshore non-U.S. person;
accordingly, these securities are exempt from registration pursuant to
Regulation S, however they are restricted under Rule 144.

The Company also issued 300,000 common
shares in August 2004, at a deemed price of $0.38 per share, for a total deemed
consideration of $112,500, pursuant a Promotional and Capital Funding Agreement
for financial and investor relation services. These shares are held in escrow
and are to be released subject to the Company obtaining certain future financial
goals. This transaction is with an offshore non-U.S. person; accordingly, these
securities are exempt from registration pursuant to Regulation S, however they
are restricted under Rule 144.

The Company issued an additional
563,000 common shares in August 2004, as a $30,000 partial settlement of a loan
from Canarab Acquisitions Inc. (Canarab), a company controlled by a director. In
2001, Canarab secured a loan on behalf of the Company, and the lender received
as fees and collateral 563,000 shares of the Company that were owned by Canarab.
The lender subsequently applied the collateral shares as payment of the
outstanding loan. Accordingly, the Company issued 563,000 common shares to
Canarab as reimbursement for those shares forfeited to the lender. This
transaction is with an offshore non-U.S. person;

---

accordingly, these securities are
exempt from registration pursuant to Regulation S, however they are restricted
under Rule 144.

In November 2004, the Company issued
350,000 common shares at a deemed price of $0.35 per share, for a total deemed
consideration of $122,500, pursuant a Promotional and Capital Funding Agreement
for financial and investor relation services. This transaction is with an
offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S, however they are restricted under Rule
144.

In August 2004, the Company issued
10,000 common shares at a deemed price of $2.00 per share, for a total deemed
consideration of $20,000, pursuant to a Consulting Services Agreement for
financial consulting. This transaction is with an offshore non-U.S. person;
accordingly, these securities are exempt from registration pursuant to
Regulation S, however they are restricted under Rule 144.

In January 2005, the Company issued
141,000 common shares at a deemed price of $.50 per share, for a total deemed
consideration of $70,500, pursuant to various consulting agreements for legal,
computer, and financial services. These transactions are with offshore non-U.S.
persons; accordingly, these securities are exempt from registration pursuant to
Regulation S.

The Company issued 50,000 common shares
in January 2005, at a deemed price of $0.84 per share, for a total deemed
consideration of $42,000, pursuant a Promotional and Capital Funding Agreement
for financial and investor relation services. This transaction is with an
offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S, however they are restricted under Rule
144.

The Company also issued 400,000 common
shares in January 2005, at a deemed price of $0.25 per share, for a total deemed
consideration of $100,000, pursuant a Promotional and Capital Funding Agreement
for financial and investor relation services. Of these shares, 250,000 are held
in escrow and are to be released subject to the Company obtaining certain future
financial goals. This transaction is with an offshore non-U.S. person;
accordingly, these securities are exempt from registration pursuant to
Regulation S, however they are restricted under Rule 144.

In March 2005 the Company entered into
a Promotional and Capital Funding Agreement for financial and investor relation
services. Pursuant to this agreement, the Company issued 100,000 common shares
in May 2005, at a deemed price of $0.36 per share, for a total deemed
consideration of $36,000. This transaction is with an offshore non-U.S. person;
accordingly, these securities are exempt from registration pursuant to
Regulation S, however they are restricted under Rule 144.

In December 2005 the Company entered
into three Consulting Agreements for public relations and promotional services.
Pursuant to these agreements, the Company issued 800,000 common shares at a
deemed price of $0.25 per share, for a total deemed consideration of $200,000.
These transactions are with offshore non-U.S. persons; accordingly, these
securities are exempt from registration pursuant to Regulation S, however they
are restricted under Rule 144.

On May 5, 2006 the Company entered into
a Convertible Loan Facility Agreement with CMB Investments Ltd. (CMB), a
company controlled by a Director and Officer of Strategic, whereby the Company
would, from time to time, borrow operating funds from CMB, at an interest rate
of ten percent (10%), repayable on demand. The lender has the right to convert
all or part of the principal sum and interest into units at a conversion rate
which is calculated at a discount to the average closing market price for ten
days preceding a loan advance or conversion of interest. Each unit consists of
one common share of the Company and one share purchase warrant, expiring 2 years
from the conversion date, exercisable at the applicable conversion rate. During
the period ended December 31, 2006; loans, accrued interest, cash advances and
accounts payable, were consolidated under this new agreement, resulting in a new
convertible loans payable in the amount of $65,507. At December 31, 2006, the
CMB loan principal was $86,366 and had accrued interest of $4,869. The loan
principal is convertible into 772,858 units. Conversion of this loan and
associated warrants to equity will be at a rate of $0.11 per share. This
transaction is with an offshore non-U.S. person; accordingly, these securities
are exempt from registration pursuant to Regulation S.

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|   | On October 11, 2006 the Company completed a private
        placement of 200,000 common shares at $0.40 per share for total proceeds
        of $80,000. In connection with this financing, the Company paid cash of
        $3,000 and issued 100,000 common shares as finders fees. This transaction
        is with an offshore non-U.S. person; accordingly, these securities are
        exempt from registration pursuant to Regulation S.                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (1) Refer to the Notes of the Consolidated Financial
        Statements for the Class A Convertible Preferred Shares terms of conversion
        and rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|6. | Plan of Operation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Plan of Operation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company has an agreement 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 Dream Island Resort project.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | 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 based on construction progress.
        In addition, the Company shall make cash payments to Star Leisure totaling
        $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
        had paid $34,210, with the balance of $65,790 to be paid by August 31,
        2007.                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On March 13, 2006, the Ministry of Finance, Bahrain
        (MOFB) notified Gulf Star that due to a lack of progress and
        failure to advance the project in a timely basis, the MOFB intends to
        seek termination of the lease contract for the Dream Island site. The
        Company, Gulf Star, and Star Leisure intend to oppose the action by the
        MOFB. However, due to the uncertainty of the future viability of the Dream
        Island project, management has written-down the associated deferred development
        costs to a nominal value of $1.00 at December 31, 2005.                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Dream Island project in Bahrain 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.                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The first stage of the project, dredging and reclamation
        of the 41 acre man-made island site, is to be paid by the issuance of
        1,268,750 Class A Convertible Preferred Shares in the capital of the Company
        at a deemed price of $4.00 per share to Robodh Contracting Establishment,
        Manama, Bahrain. The total value of the Dredging and Reclamation Works
        contract is $5,075,000.                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In August 2004, limited construction commenced on the
        Dream Island Project. This initial phase of work consists of the construction
        of a temporary causeway to provide access from the coast to the offshore
        site of the future island location. Large haulage trucks transported and
        dumped quarry stone to create the temporary causeway from which access
        will be gained to the island site. Once the temporary causeway has been
        completed, work will commence on the creation of the Dream Island perimeter
        of the future offshore island. Thereafter, reclamation dredging operations
        will commence to move sand into the perimeter thereby creating the Dream
        Island site.             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In January 2007 The Company has entered into a Letter
        of Intent (LOI) with MEC-Narmont Grup Insaat San. Ve. Tic.
        Ltd. (MEC-Narmont), Al Habeeb & Al Mokairesh Commercial
        Brokers LLC (Habeeb), Mideast Development Company Inc. (MidDevCo)
        and certain property owners (the Landowners), to potentially acquire
        by option up to a 100% indirect interest in the Renaissance Residence
        Project (the Project) in Antalya, Turkey by purchasing the
        outstanding shares of a Turkish company (TurkCo) that will
        be incorporated to hold and own 100% of the Project, subject only to certain
        payments to the landowners. MidDevCo is controlled by a director of the
        Company.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Project is a real estate development project that
        will be located on an 8.762 hectare parcel of land near the Antalya Airport
        and Lara Beach in Antalya, Turkey. It will consist of three multi-storey
        buildings with over                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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200 residential units. In recent years,
the Gulf of Antalya, with a coastal strip of some 200 km with bays and coves of
exceptional beauty filled with the crystal clear waters of the Mediterranean,
has become one of the most popular tourist resorts in Turkey.

The LOI contemplates that SIII will
assist in designing a financing plan for the Project and SIII will be granted
two options to purchase up to 100% of the outstanding shares of TurkCo. An
Initial Option will allow SIII to purchase up to thirty 30% of the outstanding
shares of TurkCo. Upon full exercise of the Initial Option, SIII shall be
entitled to exercise a Second Option to purchase the remaining outstanding
shares of TurkCo. Compensation to be paid to the shareholders of TurkCo shall,
at the choice of SIII, be paid either in cash or by issuing common shares of
SIII. Any issuance of common shares of SIII would occur as of the date of the
Option exercise notice, under a Restricted Rule 144 Reg. S share issuance.

The financial statements have been
prepared on a going concern basis. The Company has accumulated a deficit of
$8,362,335 since inception and at December 31, 2006 has a working capital
deficiency of $461,323. 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 next twelve months by issuing equity securities, private placements,
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. The
Company remains at the development stage, as there were no revenues during the
past fiscal year.

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 2007 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.

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.

---

|7. | Financial Statements
|-- | --------------------

STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Development Stage Company)

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006 AND 2005

(Stated in U.S. Dollars)

---

|A PARTNERSHIPOFINCORPORATEDPROFESSIONALS | AMISANO HANSON      
|---------------------------------------- | --------------------
|                                         | CHARTEREDACCOUNTANTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2006 and 2005 and the related consolidated
statements of operations, cash flows and stockholders deficiency for each of
the years in the two year period ended December 31, 2006 and for the period from
inception of the development stage, February 28, 1989 to December 31, 2006.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States of America). Those
standards require that we plan and perform an audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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, 2006 and 2005, and the results of their operations and their cash
flows for each of the years in the two year period ended December 31, 2006 and
for the period from inception of the development stage, February 28, 1989 to
December 31, 2006, 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, 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     
|----------------- | ---------------------
|April 11, 2007    | Chartered Accountants



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


---

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

|                                                       |   | December 31, |   |   | December 31, |  
|------------------------------------------------------ | - | ------------ | - | - | ------------ | -
|                                                       |   | 2006         |   |   | 2005         |  
|                                                       |   |              |   |   |              |  
|ASSETS                                                 |   |              |   |   |              |  
|                                                       |   |              |   |   |              |  
|Current                                                |   |              |   |   |              |  
|Cash                                                   | $ | 10,822       |   | $ | 581          |  
|Prepaid expenses                                       |   | -            |   |   | 141,667      |  
|                                                       |   |              |   |   |              |  
|                                                       |   | 10,822       |   |   | 142,248      |  
|                                                       |   |              |   |   |              |  
|Equipment  Note 3                                     |   | -            |   |   | 1,601        |  
|Deferred investment costs  Notes 4 and 6              |   | 1            |   |   | 1            |  
|                                                       |   |              |   |   |              |  
|                                                       | $ | 10,823       |   | $ | 143,850      |  
|                                                       |   |              |   |   |              |  
|                                                       |   |              |   |   |              |  
|LIABILITIES                                            |   |              |   |   |              |  
|                                                       |   |              |   |   |              |  
|Current                                                |   |              |   |   |              |  
|Accounts payable 
      Note 8                        | $ | 137,675      |   | $ | 143,486      |  
|Due to related parties  Note 8                        |   | 15,527       |   |   | 15,527       |  
|Loans payable  Note 5                                 |   | 318,943      |   |   | 199,304      |  
|                                                       |   |              |   |   |              |  
|                                                       |   | 472,145      |   |   | 358,317      |  
|                                                       |   |              |   |   |              |  
|STOCKHOLDERS DEFICIENCY                               |   |              |   |   |              |  
|                                                       |   |              |   |   |              |  
|Capital Stock  Notes 5, 6 and 12                      |   |              |   |   |              |  
|Class A Convertible Preferred stock, $0.001 par value  |   |              |   |   |              |  
|10,000,000 authorized, 198,000 outstanding             |   | 198          |   |   | 198          |  
|Class B Preferred stock, $0.001 par value              |   |              |   |   |              |  
|10,000,000 authorized, none outstanding                |   |              |   |   |              |  
|Common stock, $0.001 par value                         |   |              |   |   |              |  
|100,000,000 authorized                                 |   |              |   |   |              |  
|25,960,326 outstanding (2005: 25,660,326 outstanding)  |   | 25,959       |   |   | 25,659       |  
|Additional paid-in capital                             |   | 7,874,856    |   |   | 7,720,356    |  
|Deficit accumulated during the development
      stage |   | (8,362,335   | ) |   | (7,960,680   | )
|                                                       |   |              |   |   |              |  
|                                                       |   | (461,322     | ) |   | (214,467     | )
|                                                       |   |              |   |   |              |  
|                                                       | $ | 10,823       |   | $ | 143,850      |  
|                                                       |   |              |   |   |              |  
|Nature and Continuance of Operations  Note
      1    |   |              |   |   |              |  
|Commitments  Notes 5, 6 and 12                        |   |              |   |   |              |  
|Subsequent Events  Notes 6 and 12                     |   |              |   |   |              |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)

|                                         |   |                          |   |   |              |   |   | Cumulative       |  
|---------------------------------------- | - | ------------------------ | - | - | ------------ | - | - | ---------------- | -
|                                         |   |                          |   |   |              |   |   | from February    |  
|                                         |   |                          |   |   |              |   |   | 28, 1989 (Date   |  
|                                         |   |                          |   |   |              |   |   | of Inception) to |  
|                                         |   | Years ended December 31, |   |   | December 31, |  
|                                         |   | 2006                     |   |   | 2005         |   |   | 2006             |  
|                                         |   |                          |   |   |              |   |   |                  |  
|General and Administrative Expenses      |   |                          |   |   |              |   |   |                  |  
|Accounting and audit
      fees          | $ | 40,271                   |   | $ | 51,227       |   | $ | 207,618          |  
|Amortization                             |   | 120                      |   |   | 685          |   |   | 3,616            |  
|Automobile                               |   | -                        |   |   | -            |   |   | 565              |  
|Business Promotion                       |   | -                        |   |   | -            |   |   | 213              |  
|Communications                           |   | 4,638                    |   |   | 39,637       |   |   | 100,778          |  
|Consulting fees  Note 8                 |   | 168,901                  |   |   | 214,083      |   |   | 2,433,773        |  
|Interest  Notes 5 and
      8           |   | 101,048                  |   |   | 20,831       |   |   | 173,013          |  
|Investor relations                       |   | -                        |   |   | 14,533       |   |   | 91,385           |  
|Legal fees                               |   | 10,522                   |   |   | 35,154       |   |   | 160,089          |  
|Management fees  Note 8                 |   | 50,615                   |   |   | 40,440       |   |   | 203,987          |  
|Office and general 
      Note 8        |   | 2,048                    |   |   | 5,223        |   |   | 139,399          |  
|Regulatory fees                          |   | 3,176                    |   |   | 2,393        |   |   | 21,856           |  
|Rent  Note 8                            |   | 21,158                   |   |   | 19,810       |   |   | 95,735           |  
|Transfer agent fees                      |   | 3,615                    |   |   | 4,843        |   |   | 41,597           |  
|Travel                                   |   | -                        |   |   | 3,760        |   |   | 103,478          |  
|Non-cash compensation charges  Note 6   |   | -                        |   |   | 25,700       |   |   | 455,735          |  
|                                         |   |                          |   |   |              |   |   |                  |  
|Loss before the following:               |   | (406,112                 | ) |   | (478,319     | ) |   | (4,232,837       | )
|                                         |   |                          |   |   |              |   |   |                  |  
|Unauthorized distribution                |   | -                        |   |   | -            |   |   | (69,116          | )
|Termination fee  Note
      7           |   | -                        |   |   | -            |   |   | (792,000         | )
|Loss on foreign exchange                 |   | (3,831                   | ) |   | (4,742       | ) |   | (12,170          | )
|Gain on settlement of
      debt         |   | 9,769                    |   |   | -            |   |   | 25,233           |  
|Loss on disposal of equipment            |   | (1,481                   | ) |   | -            |   |   | (1,481           | )
|Write-down of deferred
      investment  |   |                          |   |   |              |   |   |                  |  
|costs  Note 6                           |   | -                        |   |   | (34,209      | ) |   | (34,209          | )
|Write-down of advances
      to          |   |                          |   |   |              |   |   |                  |  
|related party                            |   | -                        |   |   | -            |   |   | (606,337         | )
|                                         |   |                          |   |   |              |   |   |                  |  
|Net loss for the
      period            | $ | (401,655                 | ) | $ | (517,270     | ) | $ | (5,722,917       | )
|                                         |   |                          |   |   |              |   |   |                  |  
|Basic loss per
      share               | $ | (0.02                    | ) | $ | (0.02        | ) |   |                  |  
|                                         |   |                          |   |   |              |   |   |                  |  
|Weighted average number of common shares |   |                          |   |   |              |   |   |                  |  
|outstanding                              |   | 25,727,723               |   |   | 23,984,947   |   |   |                  |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)

|                                                         |   |                          |   |   |              |   |   | Cumulative from        |  
|-------------------------------------------------------- | - | ------------------------ | - | - | ------------ | - | - | ---------------------- | -
|                                                         |   |                          |   |   |              |   |   | February 28, 1989      |  
|                                                         |   |                          |   |   |              |   |   | (Date of Inception) to |  
|                                                         |   | Years ended December 31, |   |   | December 31, |  
|                                                         |   | 2006                     |   |   | 2005         |   |   | 2006                   |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Operating Activities                                     |   |                          |   |   |              |   |   |                        |  
|Net loss for the period                                  | $ | (401,655                 | ) | $ | (517,270     | ) | $ | (5,722,917             | )
|Adjustments to reconcile net
      loss to net cash used |   |                          |   |   |              |   |   |                        |  
|in operating
      activities:                           |   |                          |   |   |              |   |   |                        |  
|Amortization                                             |   | 120                      |   |   | 685          |   |   | 3,616                  |  
|Beneficial
      conversion on convertible debt          |   | 77,800                   |   |   | -            |   |   | 77,800                 |  
|Communications                                           |   | -                        |   |   | 28,000       |   |   | 28,000                 |  
|Consulting
      fees                                    |   | 141,667                  |   |   | 214,083      |   |   | 2,286,554              |  
|Gain on settlement of debt                               |   | (9,769                   | ) |   | -            |   |   | (25,233                | )
|Legal fees                                               |   | -                        |   |   | 23,015       |   |   | 25,000                 |  
|Loss on disposal of equipment                            |   | 1,481                    |   |   | -            |   |   | 1,481                  |  
|Management
      fees                                    |   | -                        |   |   | -            |   |   | 7,000                  |  
|Non-cash compensation charge                             |   | -                        |   |   | 25,700       |   |   | 455,735                |  
|Termination
      fees                                   |   | -                        |   |   | -            |   |   | 792,000                |  
|Write-down of advances to related party                  |   | -                        |   |   | -            |   |   | 606,337                |  
|Write-down
      of deferred investment costs            |   | -                        |   |   | 34,209       |   |   | 34,209                 |  
|Changes in non-cash items:                               |   |                          |   |   |              |   |   |                        |  
|Prepaid
      expenses                                   |   | -                        |   |   | 2,780        |   |   | -                      |  
|Accounts
      payable                                   |   | (5,811                   | ) |   | 60,610       |   |   | 291,146                |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Net cash used in operating activities                    |   | (196,167                 | ) |   | (128,188     | ) |   | (1,139,272             | )
|                                                         |   |                          |   |   |              |   |   |                        |  
|Investing Activities                                     |   |                          |   |   |              |   |   |                        |  
|Organization costs                                       |   | -                        |   |   | -            |   |   | (750                   | )
|Acquisition of capital assets                            |   | -                        |   |   | -            |   |   | (4,347                 | )
|Deferred investment costs                                |   | -                        |   |   | -            |   |   | (34,210                | )
|Advances to related party                                |   | -                        |   |   | -            |   |   | (606,337               | )
|                                                         |   |                          |   |   |              |   |   |                        |  
|Net cash used in investing activities                    |   | -                        |   |   | -            |   |   | (645,644               | )
|                                                         |   |                          |   |   |              |   |   |                        |  
|Financing Activities                                     |   |                          |   |   |              |   |   |                        |  
|Loans payable                                            |   | 129,408                  |   |   | 29,629       |   |   | 672,409                |  
|Due to related parties                                   |   | -                        |   |   | -            |   |   | 15,526                 |  
|Proceeds from issuance of common stock                   |   | 80,000                   |   |   | 76,153       |   |   | 1,112,631              |  
|Payment of offering costs                                |   | (3,000                   | ) |   | -            |   |   | (30,270                | )
|Additional
      paid-in capital                         |   | -                        |   |   | -            |   |   | 25,442                 |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Net cash provided
      by financing activities          |   | 206,408                  |   |   | 105,782      |   |   | 1,795,738              |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Increase (decrease) in cash during the period            |   | 10,241                   |   |   | (22,406      | ) |   | 10,822                 |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Cash, beginning of
      the period                      |   | 581                      |   |   | 22,987       |   |   | -                      |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Cash, end of the
      period                            | $ | 10,822                   |   | $ | 581          |   | $ | 10,822                 |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Supplementary disclosure of cash flows:                  |   |                          |   |   |              |   |   |                        |  
|Cash paid for Interest                                   | $ | -                        |   | $ | 10,403       |   | $ | 17,054                 |  
|                                                         |   |                          |   |   |              |   |   |                        |  
|Non-cash Transactions  Note 7                           |   |                          |   |   |              |   |   |                        |  

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY For
the period from February 28, 1989 (Date of Inception) to December 31, 2006
(Stated in U.S. Dollars )

|                                           |  |                 |  |   |              |  |  |         |  |   |             |  |   |            |  |   | Deficit     |   |   |         |  
|------------------------------------------ |  | --------------- |  | - | ------------ |  |  | ------- |  | - | ----------- |  | - | ---------- |  | - | ----------- | - | - | ------- | -
|                                           |  |                 |  |   |              |  |  |         |  |   |             |  |   |            |  |   | Accumulated |   |   |         |  
|                                           |  |                 |  |   |              |  |  |         |  |   |             |  |   | Additional |  |   | During the  |   |   |         |  
|                                           |  | Preferred Stock |  |   | Common Stock |  |  | Paid-In |  |   | Development |  |   |            | 
|                                           |  | Shares          |  |   | Par Value    |  |  | Shares  |  |   | Par Value   |  |   | 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 | )
|Issuance 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

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY For
the period from February 28, 1989 (Date of Inception) to December 31, 2006
(Stated in U.S. Dollars )

|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  | Deficit     |   |  |          |  
|--------------------------------------------------------- |  | --------------- |  |  | ------------ |  |  | --------- |  |  | ----------- |  |  | ---------- | - |  | ----------- | - |  | -------- | -
|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  | Accumulated |   |  |          |  
|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  | Additional |   |  | During the  |   |  |          |  
|                                                          |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In   |  |  | Development |  |  |            |  
|                                                          |  | Shares          |  |  | Par Value    |  |  | Shares    |  |  | Par Value   |  |  | Capital    |   |  | Stage       |   |  | Total    |  
|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1995                                |  | -               |  |  | -            |  |  | 116,695   |  |  | 116         |  |  | 108,956    |   |  | (110,500    | ) |  | (1,428   | )
|Net loss                                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (9,068      | ) |  | (9,068   | )
|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance December 31, 1996                                 |  | -               |  |  | -            |  |  | 116,895   |  |  | 116         |  |  | 108,956    |   |  | (119,568    | ) |  | (10,496  | )
|Issuance of stock for cash                
      - $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                                |  | -               |  |  | -            |  |  | 2,116,695 |  |  | 2,116       |  |  | 128,856    |   |  | (141,829    | ) |  | (10,857  | )
|Issuance of stock services                                |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|- 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       |  |  | 134,436    |   |  | (194,137    | ) |  | (49,965  | )
|Net loss                                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (35,995     | ) |  | (35,995  | )
|                                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1999                                |  | -               |  |  | -            |  |  | 9,736,695 |  |  | 9,736       |  |  | 134,436    |   |  | (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   |  

Contd

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31,
2006(Stated in U.S. Dollars )

|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  | Deficit     |   |  |            |  
|----------------------------------------------------- |  | --------------- |  |  | ------------ |  |  | ---------- |  |  | ----------- |  |  | ---------- | - |  | ----------- | - |  | ---------- | -
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  | Accumulated |   |  |            |  
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  | Additional |   |  | During the  |   |  |            |  
|                                                      |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In    |  |  | Development |  |  |            |  
|                                                      |  | Shares          |  |  | Par Value    |  |  | Shares     |  |  | Par Value   |  |  | Capital    |   |  | Stage       |   |  | Total      |  
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|Balance December 31, 2000                             |  | -               |  |  | -            |  |  | 10,920,029 |  |  | 10,919      |  |  | 551,960    |   |  | (566,563    | ) |  | (3,684     | )
|Issuance of stock for services - 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 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      |  |  | 2,459,714  |   |  | (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 of 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

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY For
the period from February 28, 1989 (Date of Inception) to December 31, 2006
(Stated in U.S. Dollars )

|                                                       |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  | Deficit     |   |  |            |  
|------------------------------------------------------ |  | --------------- |  |  | ------------ |  |  | ---------- | - |  | ----------- | - |  | ---------- | - |  | ----------- | - |  | ---------- | -
|                                                       |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  | Accumulated |   |  |            |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |             |   |  | Additional |   |  | During the  |   |  |            |  
|                                                       |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In    |   |  | Development |   |  |            |  
|                                                       |  | Shares          |  |  | Par Value    |  |  | Shares     |   |  | Par Value   |   |  | Capital    |   |  | Stage       |   |  | Total      |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  |             |   |  |            |  
|Balance, December 31, 2002                             |  | -               |  |  | -            |  |  | 15,205,596 |   |  | 15,204      |   |  | 2,791,455  |   |  | (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  |  | -               |  |  | -            |  |  | 65,000     |   |  | 650         |   |  | 64,350     |   |  | -           |   |  | 65,000     |  
|Net loss                                               |  | -               |  |  | -            |  |  | -          |   |  | -           |   |  | -          |   |  | (1,208,941  | ) |  | (1,208,941 | )
|Issued for termination fee     
       - at $4.00      |  | 198,000         |  |  | 198          |  |  | -          |   |  | -           |   |  | 791,802    |   |  | -           |   |  | 792,000    |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  |             |   |  |            |  
|Balance, December 31, 2003                             |  | 198,000         |  |  | 198          |  |  | 17,305,596 |   |  | 17,304      |   |  | 3,902,657  |   |  | (4,286,668  | ) |  | (366,509   | )
|Non-cash compensation charge                           |  | -               |  |  | -            |  |  | -          |   |  | -           |   |  | 161,450    |   |  | -           |   |  | 161,450    |  
|Issue of stock for cash pursuant
      to the exercise |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  |             |   |  |            |  
|of share purchase warrant 
      s  at $0.10          |  | -               |  |  | -            |  |  | 320,000    |   |  | 320         |   |  | 31,680     |   |  | -           |   |  | 32,000     |  
| at $0.05                                             |  | -               |  |  | -            |  |  | 643,715    |   |  | 644         |   |  | 31,542     |   |  | -           |   |  | 32,186     |  
|Issue of stock for cash pursuant to the exercise       |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  |             |   |  |            |  
|of share purchase
      options      at $0.25         |  | -               |  |  | -            |  |  | 205,000    |   |  | 205         |   |  | 51,045     |   |  | -           |   |  | 51,250     |  
|Issue of stock for debt           
        at $0.05   |  | -               |  |  | -            |  |  | 563,000    |   |  | 563         |   |  | 29,437     |   |  | -           |   |  | 30,000     |  
| at $0.06                                             |  | -               |  |  | -            |  |  | 825,364    |   |  | 825         |   |  | 47,712     |   |  | -           |   |  | 48,537     |  
| at $0.30                                             |  | -               |  |  | -            |  |  | 50,000     |   |  | 50          |   |  | 14,950     |   |  | -           |   |  | 15,000     |  
|Issuance of stock for services
       at $2.00        |  | -               |  |  | -            |  |  | 10,000     |   |  | 10          |   |  | 19,990     |   |  | -           |   |  | 20,000     |  
| at $0.35                                             |  | -               |  |  | -            |  |  | 350,000    |   |  | 350         |   |  | 122,150    |   |  | -           |   |  | 122,500    |  
|Cancellation of stock issued for
      deferred        |  |                 |  |  |              |  |  |            |   |  |             |   |  |            |   |  |             |   |  |            |  
|Investment costs              
        at $0.05       |  |                 |  |  |              |  |  | (1,300,000 | ) |  | (1,300      | ) |  | (63,700    | ) |  | -           |   |  | (65,000    | )
|Net loss                                               |  | -               |  |  | -            |  |  | -          |   |  | -           |   |  | -          |   |  | (517,324    | ) |  | (517,324   | )

Contd

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY For
the period from February 28, 1989 (Date of Inception) to December 31,
2006(Stated in U.S. Dollars )

|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   | Deficit     |   |   |          |  
|------------------------------------------------------- |  | --------------- |  | - | ------------ |  |  | ---------- |  | - | ----------- |  | - | ---------- | - | - | ----------- | - | - | -------- | -
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   | Accumulated |   |   |          |  
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   | Additional |   |   | During the  |   |   |          |  
|                                                        |  | Preferred Stock |  |   | Common Stock |  |  | Paid-In    |  |   | Development |  |   |            |  
|                                                        |  | Shares          |  |   | Par Value    |  |  | Shares     |  |   | Par Value   |  |   | Capital    |   |   | Stage       |   |   | Total    |  
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|Balance, December 31, 2004                              |  | 198,000         |  | $ | 198          |  |  | 18,972,675 |  | $ | 18,971      |  | $ | 4,348,913  |   | $ | (4,803,992  | ) | $ | (435,910 | )
|Non-cash compensation charge                            |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | 25,700     |   |   | -           |   |   | 25,700   |  
|Issue of stock for
      cash pursuant to the exercise  |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|of share purchase warrants
       at $0.07             |  | -               |  |   | -            |  |  | 75,820     |  |   | 76          |  |   | 5,232      |   |   | -           |   |   | 5,308    |  
| at $0.10                                              |  | -               |  |   | -            |  |  | 357,760    |  |   | 357         |  |   | 35,418     |   |   | -           |   |   | 35,775   |  
| at $0.11                                              |  | -               |  |   | -            |  |  | 299,724    |  |   | 300         |  |   | 31,270     |   |   | -           |   |   | 31,570   |  
| at $0.21                                              |  | -               |  |   | -            |  |  | 16,803     |  |   | 17          |  |   | 3,483      |   |   | -           |   |   | 3,500    |  
|Issue of stock for debt            
      at $0.39     |  | -               |  |   | -            |  |  | 635,901    |  |   | 636         |  |   | 249,524    |   |   | -           |   |   | 250,160  |  
|Issuance of stock for services 
      at $0.25         |  | -               |  |   | -            |  |  | 950,000    |  |   | 950         |  |   | 236,550    |   |   | -           |   |   | 237,500  |  
| at $0.36                                              |  | -               |  |   | -            |  |  | 100,000    |  |   | 100         |  |   | 35,900     |   |   | -           |   |   | 36,000   |  
| at $0.50                                              |  | -               |  |   | -            |  |  | 121,000    |  |   | 121         |  |   | 60,379     |   |   | -           |   |   | 60,500   |  
| at $0.54                                              |  | -               |  |   | -            |  |  | 20,000     |  |   | 20          |  |   | 10,680     |   |   | -           |   |   | 10,700   |  
| at $0.84                                              |  | -               |  |   | -            |  |  | 50,000     |  |   | 50          |  |   | 41,950     |   |   | -           |   |   | 42,000   |  
|Issuance of stock dividend     
       at $0.65        |  | -               |  |   | -            |  |  | 4,060,643  |  |   | 4,061       |  |   | 2,635,357  |   |   | (2,639,418  | ) |   | -        |  
|Net loss                                                |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | -          |   |   | (517,270    | ) |   | (517,270 | )
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|Balance, December 31, 2005                              |  | 198,000         |  |   | 98           |  |  | 25,660,326 |  |   | 25,659      |  |   | 7,720,356  |   |   | (7,960,680  | ) |   | (214,467 | )
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|Issue of stock for cash
      pursuant to a private     |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|placement                           
       at $0.40   |  | -               |  |   | -            |  |  | 200,000    |  |   | 200         |  |   | 79,800     |   |   | -           |   |   | 80,000   |  
|Issue of stock for finders
      fee  at $0.40        |  | -               |  |   | -            |  |  | 100,000    |  |   | 100         |  |   | 39,900     |   |   | -           |   |   | 40,000   |  
|Share issue costs                                       |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | (43,000    | ) |   | -           |   |   | (43,000  | )
|Beneficial
      conversion feature on convertible debt |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | 77,800     |   |   | -           |   |   | 77,800   |  
|Net loss                                                |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | -          |   |   | (401,655    | ) |   | (401,655 | )
|                                                        |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |   |   |             |   |   |          |  
|Balance, December 31, 2006                              |  | 198,000         |  | $ | 198          |  |  | 25,960,326 |  | $ | 25,959      |  | $ | 7,874,856  |   | $ | (8,362,335  | ) | $ | (461,322 | )

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
Development Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005 (Stated in U.S. Dollars)

|1. | Nature and Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company is in the development stage and is devoting
        its efforts to developing real estate projects in the Middle East.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | These financial statements have been prepared in accordance
        with generally accepted accounting principles applicable to a going concern,
        which assumes that the Company will be able to meet its obligations and
        continue its operations for its next fiscal year. Realization values may
        be substantially different from carrying values as shown and these financial
        statements do not give effect to adjustments that would be necessary to
        the carrying values and classification of assets and liabilities should
        the Company be unable to continue as a going concern. At December 31,
        2006, the Company had not yet achieved profitable operations, has accumulated
        losses of $8,362,335 since its inception, has a working capital deficiency
        of $461,323 and expects to incur further losses in the development of
        its business, all of which casts substantial doubt about the Companys
        ability to continue as a going concern. The Companys ability to
        continue as a going concern is dependent upon its ability to generate
        future profitable operations and/or to obtain the necessary financing
        to meet its obligations and repay its liabilities arising from normal
        business operations when they come due. Management has no formal plan
        in place to address this concern but considers that the Company will be
        able to obtain additional funds by equity financing and/or related party
        advances, however there is no assurance of additional funding being available.
        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, 2007, by issuing
        equity securities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The consolidated 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 judgment. Actual results may differ
        from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The consolidated financial statements have, in managements
        opinion, been properly prepared 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

1

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|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 (FAS) 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Equipment and Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Equipment is recorded at cost and consists 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
        or written down to its net realizable value if it is determined that there
        is an impairment of its value.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company follows 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 and Diluted Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company computes net loss per share in accordance
        with SFAS No. 128, Earnings Per Share. SFAS No. 128 requires
        presentation of both basic and diluted earnings per share (EPS)
        on the face of the income statement. Basic EPS is computed by dividing
        net loss available to common shareholders by the weighted average number
        of common shares outstanding during the year. Diluted EPS gives effect
        to all dilutive potential common shares outstanding during the year including
        stock options, using the treasury stock method, and convertible preferred
        stock, using the if-converted method. In computing diluted EPS, the average
        stock price for the year is used in determining the number of shares assumed
        to be purchased from the exercise of stock options or warrants. Diluted
        EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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 the 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

2

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|2. | Summary of Significant Accounting Policies
        (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Beneficial Conversion Feature                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | When the Company issues convertible debt securities
        with a non-detachable conversion feature that provides for a rate of conversion
        that is below market value on the commitment date, it is known as a beneficial
        conversion feature (BCF). Pursuant to Emerging Issues Task
        Force (EITF) Issue No. 98-5 Accounting for Convertible
        Securities with Beneficial Conversion Features or Contingently Adjustable
        Conversion Ratios and EITF Issue No. 00-27 Application of
        Issue No. 98-5 to Certain Convertible Instruments, the conversion
        feature of the security that has characteristics of an equity instrument
        is measured at its intrinsic value at the commitment date and is recorded
        as additional paid-in capital. A portion of the proceeds of the security
        issued is allocated to the conversion feature equal to its intrinsic value
        to a maximum of the proceeds received. The resulting discount of the debt
        instrument is amortized into income as interest expense over the conversion
        features vesting period.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company accounts for stock-based compensation using
        FAS 123R which requires public companies to recognize the cost of services
        received in exchange for equity instruments, based on the grant-date fair
        value of those instruments, with limited exceptions. The Company uses
        the Black-Scholes option valuation model to calculate stock-based compensation
        at the date of the grant. Option pricing models require the input of highly
        subjective assumptions, including the expected price volatility. Changes
        in assumptions can materially affect the fair value estimate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Convertible Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | When the Company issues convertible instruments with
        detachable instruments, the proceeds of the issuance are allocated between
        the convertible instrument and other detachable instruments based on their
        relative fair values pursuant to Emerging Issues Task Force (EITF)
        Issue No. 00-27 Application of Issue No. 98-5 to Certain Convertible
        Instruments. The resulting discount of the convertible instrument
        is amortized into income as interest expense over the term of the convertible
        instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | When the Company issues convertible debt securities
        with a non-detachable conversion feature that provides for an effective
        rate of conversion that is below market value on the commitment date,
        it is known as a beneficial conversion feature (BCF) and pursuant
        to EITF Issue No. 98-5 Accounting for Convertible Securities with
        Beneficial Conversion Features or Contingently Adjustable Conversion Ratios
        and EITF Issue No. 00-27, the conversion feature of the security that
        has characteristics of an equity instrument is measured at its intrinsic
        value at the commitment date and is recorded as additional paid in capital.
        A portion of the proceeds of the security issued is allocated to the conversion
        feature equal to its intrinsic value to a maximum of the amount allocated
        to the convertible instrument. The resulting discount of the debt instrument
        is amortized into income as interest expense over the conversion features
        vesting period.                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Recently Issued Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In June 2006, the Financial Accounting Standards Board
        (FASB) issued FASB Interpretation No. 48, Accounting
        for Uncertainty in Income Taxes. The interpretation clarifies the
        accounting for uncertainty in income taxes recognized in a companys
        financial statements in accordance with Statement of Financial Accounting
        Standards No. 109, Accounting for Income Taxes. Specifically,
        the pronouncement prescribes a recognition threshold and a measurement
        attribute for the financial statement recognition and measurement of a
        tax position taken or expected to be taken in a tax return. The interpretation
        also provides guidance on the related derecognition, classification, interest
        and penalties, accounting for interim periods, disclosure and transition
        of uncertain tax position. The interpretation is effective for fiscal
        years beginning after December 15, 2006. The adoption of FIN 48 is not
        expected to have a material impact on the Companys consolidated
        financial position, results of operations or cash flows; however, the
        Company is still analyzing the effects of FIN 48.

3

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|2. | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Recently Issued Accounting Pronouncements
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In September 2006, the FASB issued SFAS No. 157, Fair
      Value Measurements. This Statement defines fair value as used in numerous
      accounting pronouncements, establishes a framework for measuring fair
      value in generally accepted accounting principles and expands disclosure
      related to the use of fair value measures in financial statements. The
      Statement is to be effective for the Companys financial statements issued
      in 2008; however, earlier application is encouraged. The Company is
      currently evaluating the timing of adoption and the impact that adoption
      might have on its financial position or results of operations.                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In September 2006, the Securities and Exchange Commission
      (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). Due to
      diversity in practice among registrants, SAB 108 expressed SEC staff views
      regarding the process by which misstatements in financial statements are
      evaluated for purposes of determining whether financial statement
      restatement is necessary. SAB 108 is effective for fiscal years ending
      after November 15, 2006, and early application is encouraged. The Company
      does not believe SAB 108 will have a material impact on its financial
      position or results from operations.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In December 2006, the FASB issued FASB Staff Position
      (FSP) EITF 00-19-2, Accounting for Registration Payment Arrangements.
      This FSP specifies that the contingent obligation to make future payments
      or otherwise transfer consideration under a registration payment
      arrangement should be separately recognized and measured in accordance
      with FASB No. 5, Accounting for Contingencies. This FSP is effective
      immediately for registration payment arrangements and the financial
      instruments subject to those arrangements that re entered into or modified
      subsequent to December 31, 2006. For registration payment arrangements and
      financial instruments subject to those arrangements that were entered into
      prior to December 31, 2006, the guidance in the FSP is effective January
      1, 2006 for the Company. The Company does not believe that this FSP will
      have a material impact on its financial position or results from
      operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On February 15, 2007, the FASB issued SFAS No. 159 The
      Fair Value Option for Financial Assets and Financial Liabilities. This
      Statement establishes presentation and disclosure requirements designed to
      facilitate comparisons between companies that choose different measurement
      attributes for similar types of assets and liabilities. SFAS No. 159 is
      effective for the Companys financial statements issued in 2008. The
      Company is currently evaluating the impact that the adoption of SFAS No.
      159 might have on its financial position or results of
  operations.                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

2006
    
    
    
    
    
    
    
    
    2005Accumulated
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    amortization
    
    
    Net
    
    
    Cost
    
    
    amortization
    
    
    NetComputer equipment
    $
    -
    
    $
    -
    
    $
    -
    
    $
    4,348
    
    $
    2,747
    
    $
    1,601


|4. | Deferred Investment Costs Note 6                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                
|   | 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., net of a write-
      down to a nominal value of $1.00.

4

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|5. | Loans Payable
|-- | -------------

| |    |                                                                              | December 31,           | December 31,    
| | -- | ---------------------------------------------------------------------------- | ---------------------- | ----------------
| |    |                                                                              | 2006                   | 2005            
| |    |                                                                              |                        |                 
| | a) | Loan payable to a company controlled by
      a director of the Company      |                        |                 
| |    | including accrued interest of $1,556 (2005:
      $406) The loan is          |                        |                 
| |    | unsecured, bearing interest at 12% per annum
      and is repayable on       |                        |                 
| |    | demand.                                                                      | $          8,358       | $          7,426
| |    |                                                                              |                        |                 
| | b) | Loan payable to a shareholder of the Company
      including accrued         |                        |                 
| |    | interest of $3,734 (2005: $3,376) was forgiven
      by the lender.          | -                      | 9,411           
| |    |                                                                              |                        |                 
| | c) | Loans payable to companies controlled by
      directors of the              |                        |                 
| |    | Company. The loans are unsecured, non-interest
      bearing, and            |                        |                 
| |    | repayable upon demand.                                                       | 24,527                 | 44,638          
| |    |                                                                              |                        |                 
| | d) | Loans payable to companies controlled by
      directors of the              |                        |                 
| |    | Company including accrued interest of $38,420
      (2005: $25,832)          |                        |                 
| |    | The loans are unsecured, bearing interest
      at 10% per annum, and        |                        |                 
| |    | repayable upon demand. Portions of these
      loans were formerly           |                        |                 
| |    | convertible loans; the rights to convert
      to equity having expired.     | 141,626                | 137,829         
| |    |                                                                              |                        |                 
| | e) | Loans payable to a company controlled by
      a director of the             |                        |                 
| |    | Company, including accrued interest payable
      of $4,869 (2005: NIL),     |                        |                 
| |    | pursuant to Convertible Loan Agreements.
      The loan is unsecured,        |                        |                 
| |    | bearing interest at 10% per annum and is
      repayable on demand.          |                        |                 
| |    | The lender may at anytime 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. The               |                        |                 
| |    | principal sum of $86,366 may be converted
      into 772,858 units.          |                        |                 
| |    | Conversion of these loans and associated
      warrants to equity will be    |                        |                 
| |    | at a weighted average price of $0.11 per
      share. An amount of           |                        |                 
| |    | $60,850 was recognized during the year ended
      December 31, 2006         |                        |                 
| |    | as the fair value of the beneficial conversion
      feature of these loans. |                        |                 
| |    | This amount is included in interest expense.                                 | 91,236                 | -               
| |    |                                                                              |                        |                 
| | f) | Loan payable to a company controlled by
      a director of the              |                        |                 
| |    | Company, including accrued interest of $3,496
      (2005: $NIL),            |                        |                 
| |    | pursuant to Convertible Loan Agreements.
      The loan is unsecured,        |                        |                 
| |    | bearing interest at 10% per annum and is
      repayable on demand.          |                        |                 
| |    | The lender may at anytime 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. The               |                        |                 
| |    | principal sum of $49,700 may be converted
      into 416,248 units.          |                        |                 
| |    | Conversion of this loan and associated warrants
      to equity will be at   |                        |                 
| |    | a weighted average price of $0.12 per share.
      An amount of              |                        |                 
| |    | $16,950 was recognized during the year ended
      December 31, 2006         |                        |                 
| |    | as the fair value of the beneficial conversion
      feature of these loans. |                        |                 
| |    | This amount is included in interest expense                                  | 53,196                 | -               
| |    |                                                                              |                        |                 
| |    |                                                                              | $
             318,943 | $        199,304

5

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|6. | Capital Stock Notes 5 and 12                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Class A Convertible Preferred Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Class A convertible preferred shares have a par value
      of $0.001 and are convertible to common shares at $4.00 per share during
      the first 180 days following issuance, and thereafter at the average of
      twenty consecutive days closing prices, but shall not be less than $1.50
      per share or greater than $6.00 per share. The Company has the right to
      redeem its Class A convertible preferred stock at any time by paying to
      the holders thereof the sum of $4 per share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Companys board of directors approved a stock option
      plan. Under the plan directors, employees and consultants may be granted
      options to purchase common stock of the Company 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company granted share purchase options to directors,
      employees, and consultants of the Company at the closing price of the
      Companys common stock on the date of the grants. The options have been
      granted with a term of 5 years. The stock options are exercisable at 20%
      on the date of grant, and then 20% every three months thereafter, such
      that they are fully exercisable after a period of one year from the date
      of grant.                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | During the previous two years, the change in share
      purchase options outstanding are as follows:                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                                                           |  |           |   |   | Weighted       | 
| | ------------------------------------------------------------------------- |  | --------- | - | - | -------------- | 
| |                                                                           |  |           |   |   | Average        | 
| |                                                                           |  | Shares    |   |   | Exercise Price | 
| | Options outstanding at December 31,2004
      Adjusted for stock dividend |  | 2,130,000 |   | $ | 0.22           | 
| | Cancelled during
      the year                                           |  | (120,000  | ) | $ | 0.21           | 
| | Options outstanding at December 31, 2005                                  |  | 2,010,000 |   | $ | 0.22           | 
| | Cancelled during
      the year                                           |  | (48,000   | ) | $ | 0.21           | 
| | Options outstanding at December 31,2006                                   |  | 1,962,000 |   | $ | 0.23           | 

At December 31, 2006, the Company had
share purchase options outstanding as follows:

Number of Options
    Exercise Price
      Expiry Date1,704,000
    $0.21
    September 5, 2008120,000
    $0.29
    February 5, 200930,000
    $0.53
    April 15, 2009108,000
    $0.33
    July
      8, 20091,962,000


6

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|6. | Capital Stock Notes 5 and 12 
(contd)                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                        
|   | Commitments  (contd)                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                        
|   | Stock-based Compensation  (contd)                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                        
|   | Pursuant to the terms of the Stock Option Plan, the
      exercise price and number of shares were adjusted as a result of a 20%
      stock dividend granted by the Company on March 4, 2005.                                                                         
|   |                                                                                                                                                                                                                                                                        
|   | At December 31, 2006, all of the outstanding share
      purchase options were exercisable.                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                        
|   | As no options were granted during the year ending
      December 31, 2006, the total non-cash compensation charge determined is
      $NIL (2005 - $NIL). The stock options have a graded vesting schedule; the
      total compensation cost recognized is as
follows:

| |                                                            |  |                         |  |   |               |   |   | Cumulative from |  
| | ---------------------------------------------------------- |  | ----------------------- |  | - | ------------- | - | - | --------------- | -
| |                                                            |  |                         |  |   |               |   |   | February 28,    |  
| |                                                            |  |                         |  |   |               |   |   | 1989 (Date of   |  
| |                                                            |  | Year ended December 31, |  |   | Inception) to |  
| |                                                            |  |                         |  |   |               |   |   | December 31,    |  
| |                                                            |  | 2006                    |  |   | 2005          |   |   | 2006            |  
| |                                                            |  |                         |  |   |               |   |   |                 |  
| | Total non-cash compensation charge vested                  |  | -                       |  | $ | 31,300        |   | $ | 955,657         |  
| | Employees non-cash
      compensation charge              |  | -                       |  |   | (5,600        | ) |   | (499,922        | )
| |                                                            |  |                         |  |   |               |   |   |                 |  
| | Consultants
      non-cash compensation charge recognized |  | -                       |  | $ | 25,700        |   | $ | 455,735         |  

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) to   |  
| |                                    |   | Year ended December 31, |   |   | December 31, |  
| |                                    |   | 2006                    |   |   | 2005         |   |   | 2006            |  
| |                                    |   |                         |   |   |              |   |   |                 |  
| | Net loss  as reported             | $ | (401,655                | ) | $ | (517,270     | ) | $ | (5,722,917      | )
| |                                    |   |                         |   |   |              |   |   |                 |  
| | Net loss  pro-forma               | $ | (401,655                | ) | $ | (522,870     | ) | $ | (6,222,839      | )
| |                                    |   |                         |   |   |              |   |   |                 |  
| | Basic loss per share  as reported | $ | (0.02                   | ) | $ | (0.02        | ) |   |                 |  
| |                                    |   |                         |   |   |              |   |   |                 |  
| | Basic loss per share  pro-forma   | $ | (0.02                   | ) | $ | (0.02        | ) |   |                 |  

7

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|6. | Capital Stock Notes 5 and 12 
(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Commitments  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Stock-based Compensation  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The fair value of each option grant was estimated on the
      date of the grant using the Black-Scholes option pricing model. The
      Black-Scholes option pricing model requires the input of highly subjective
      assumptions including the expected price volatility. Changes in the
      subjective input assumptions can materially affect the fair value estimate
      and therefore the Black-Scholes model does not necessarily provide a
      reliable single measure of the fair value of the Companys share purchase
      options.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the previous two years, the change in share
      purchase warrants outstanding are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                                              |  |          |   |   | Weighted       | 
| | ---------------------------------------------------------------------------- |  | -------- | - | - | -------------- | 
| |                                                                              |  |          |   |   | Average        | 
| |                                                                              |  | Warrants |   |   | Exercise Price | 
| |                                                                              |  |          |   |   |                | 
| | Warrants outstanding at
      December 31, 2004, adjusted for stock dividend |  | 99,683   |   | $ | 0.09           | 
| | Issued during the year                                                       |  | 757,080  |   | $ | 0.41           | 
| | Exercised during the year                                                    |  | (316,526 | ) | $ | 0.09           | 
| |                                                                              |  |          |   |   |                | 
| | Warrants outstanding at
      December 31, 2005                              |  | 540,237  |   | $ | 0.41           | 
| | Expired and cancelled during the year                                        |  | (444,190 | ) | $ | 0.45           | 
| |                                                                              |  |          |   |   |                | 
| | Warrants outstanding at December 31, 2006                                    |  | 96,047   |   | $ | 0.24           | 

All outstanding warrants are
exercisable at a price of $0.24 and expire January 31, 2007.

Pursuant to the terms of the share
purchase warrants, the exercise price and number of shares were adjusted as a
result of a 20% stock dividend granted by the Company on March 4, 2005.

Each warrant entitles the holder
thereof the right to purchase one common share at the prices as indicated above.
Subsequent to December 31, 2006, the 96,047 warrants exercisable at $0.24 per
share expired.

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, June 30,
2004, July 11, 2005 and August 9, 2006, 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.

8

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|6. | Capital Stock Notes 5 and 12 
(contd)                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                            
|   | Commitments  (contd)                                                                                                                                                                     
|   |                                                                                                                                                                                            
|   | Acquisition of Gulf Star World Development W.L.L. 
      (contd)                                                                                                                         
|   |                                                                                                                                                                                            
|   | 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:
|   |                                                                                                                                                                                            
|   | a)                                                                                                                                                                                         
|   | b)                                                                                                                                                                                         
|   | c)                                                                                                                                                                                         
|   | d)                                                                                                                                                                                         
|   | e)                                                                                                                                                                                         

In addition, the Company shall make
cash payments to Star Leisure totaling $100,000 to cover a portion of hard costs
accumulated by Star Leisure in progressing the Dream Island Project. During the
year ended December 31, 2003, the Company paid $34,210 as partial payment toward
the $100,000 payment. The remaining balance of $65,790 is due on or before
August 31, 2007. The Company has also agreed to reimburse Star Leisure and Jzala
Investment Group (20% shareholder of Gulf Star) for 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 will issue
1,268,750 Class A Convertible Preferred shares, with a deemed value of
$5,075,000, as full payment due under this contract. These shares will be issued
in stages as the dredging contract progresses. These shares were placed in
escrow and no value was recorded for these shares due to the contingent nature
of their release from escrow. During the year ended December 31, 2006, these
shares were cancelled. At December 31, 2006, although work has commenced on the
Dream Island Project, there has not yet been sufficient progress to warrant
issuance of the shares. An agents fee of 0.5% of the value of the shares
released will be payable.

On March 13, 2006, the Ministry of
Finance, Bahrain (MOFB) notified Gulf Star that due to a lack of progress and
failure to advance the project in a timely basis, the MOFB intends to seek
termination of the lease contract for the Dream Island site and have Gulf Star
pay all associated expenses incurred for the enforcement thereof. In addition,
the MOFB has indicated that it reserves the right to claim damages towards all
losses it has incurred and all gains denied. The Company, Gulf Star, and Star
Leisure intend to oppose the action by the MOFB. However, due to the uncertainty
of the future viability of the Dream Island project, management has written-down
the associated deferred investment costs to a nominal value of $1.00.

9

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|7. | Non-Cash Transactions                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                            
|   | Investing and financing activities that do not have a
      direct impact on cash flows are excluded from the statements of cash
      flows. The Company issued common shares for settlement of debts,
      convertible loans, and for services provided to the Company during the
      following years:

| |                                              |  | Number
      of |  |  | Number
      of |   |   | Weighted        |  |   |           |  
| | -------------------------------------------- |  | --------------- |  |  | --------------- | - | - | --------------- |  | - | --------- | -
| |                                              |  | Preferred       |  |  | Common          |   |   | Average Price   |  |   |           |  
| |                                              |  | Shares          |  |  | Shares          |   |   | Per
      Share |  |   | Total     |  
| |                                              |  |                 |  |  |                 |   |   |                 |  |   |           |  
| | 1995 Consulting fee                          |  | -               |  |  | 50,000          |   | $ | 0.03            |  | $ | 1500      |  
| | 1998 Management fee                          |  | -               |  |  | 7,000,000       |   | $ | 0.001           |  |   | 7,000     |  
| | 1998 Consulting fee                          |  | -               |  |  | 620,000         |   | $ | 0.01            |  |   | 6,200     |  
| | 2000 Finders fee                             |  | -               |  |  | 50,000          |   | $ | 0.001           |  |   | 50        |  
| | 2001 Consulting fee                          |  | -               |  |  | 708,406         |   | $ | 2.07            |  |   | 1,468,254 |  
| | 2002 Deferred investment cost                |  | -               |  |  | 1,300,000       |   | $ | 0.05            |  |   | 65,000    |  
| | 2002 Consulting fee                          |  | -               |  |  | 684,143         |   | $ | 0.19            |  |   | 131,400   |  
| | 2002 Debt settlement                         |  | -               |  |  | 680,886         |   | $ | 0.20            |  |   | 138,006   |  
| | 2003 Consulting fee                          |  | -               |  |  | 1,450,000       |   | $ | 0.14            |  |   | 203,000   |  
| | 2003 Termination fee                         |  | 198,000         |  |  | -               |   | $ | 4.00            |  |   | 792,000   |  
| | 2004 Loan conversion                         |  | -               |  |  | 825,364         |   | $ | 0.06            |  |   | 48,537    |  
| | 2004 Loan settlement                         |  | -               |  |  | 613,000         |   | $ | 0.07            |  |   | 45,000    |  
| | 2004 Consulting fee                          |  | -               |  |  | 360,000         |   | $ | 0.40            |  |   | 142,500   |  
| | 2004 Deferred investment cost (cancellation) |  | -               |  |  | (1,300,000      | ) | $ | 0.05            |  |   | (65,000   | )
| | 2005 Communications                          |  | -               |  |  | 56,000          |   | $ | 0.50            |  |   | 28,000    |  
| | 2005 Consulting fees                         |  | -               |  |  | 1,135,000       |   | $ | 0.29            |  |   | 333,700   |  
| | 2005 Legal fees                              |  | -               |  |  | 50,000          |   | $ | 0.50            |  |   | 25,000    |  
| | 2005 Loan conversion                         |  | -               |  |  | 635,901         |   | $ | 0.39            |  |   | 250,160   |  
| | 2005 Stock dividend                          |  | -               |  |  | 4,120,643       |   | $ | 0.65            |  |   | 2,678,418 |  
| | 2006
      Finders fee                       |  | -               |  |  | 100,000         |   | $ | 0.40            |  |   | 40,000    |  
| |                                              |  |                 |  |  |                 |   |   |                 |  |   |           |  
| |                                              |  | 198,000         |  |  | 19,139,343      |   |   |                 |  | $ | 6,338,725 |  

These amounts have been excluded from
the statements of cash flows.

10

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|8. | Related Party Transactions Notes 5, 6 and
    12                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                  
|   | The Company was charged the following by shareholders,
      directors, by companies controlled by directors and/or shareholders of the
      Company, and by companies with directors in
common:

| |                    |   |                         |  |   |              |  |   | Cumulative from | 
| | ------------------ | - | ----------------------- |  | - | ------------ |  | - | --------------- | 
| |                    |   |                         |  |   |              |  |   | February 28,    | 
| |                    |   |                         |  |   |              |  |   | 1989 (Date of   | 
| |                    |   |                         |  |   |              |  |   | Inception) to   | 
| |                    |   | Year ended December 31, |  |   | December 31, | 
| |                    |   | 2006                    |  |   | 2005         |  |   | 2006            | 
| |                    |   |                         |  |   |              |  |   |                 | 
| | Consulting fees    | $ | -                       |  | $ | -            |  | $ | 35,670          | 
| | Interest           |   | 22,890                  |  |   | 18,684       |  |   | 64,848          | 
| | Management fees    |   | 50,615                  |  |   | 40,440       |  |   | 203,987         | 
| | Office and general |   | -                       |  |   | -            |  |   | 26,944          | 
| | Rent               |   | 21,158                  |  |   | 19,810       |  |   | 90,352          | 
| |                    |   |                         |  |   |              |  |   |                 | 
| |                    | $ | 94,663                  |  | $ | 78,934       |  | $ | 421,801         | 

|   | At December 31, 2006, accounts payable includes $57,915
      (2005: $40,301) due to directors of the Company and companies controlled
      by directors of the Company in respect of unpaid management fees and
      expenses incurred on behalf of the Company.                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                            
|   | At December 31, 2006 and 2005, due to related parties are
      comprised of expenses for operating costs paid on behalf of the Company by
      companies with directors in common. These amounts are non-interest
      bearing, unsecured and there are no specific terms for
repayment.
|   |                                                                                                                                                                                                                                                                                            
|9. | Deferred Tax Assets                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                            
|   | The following table summarizes the significant components
      of the Companys deferred tax assets:                                                                                                                                                                                      

| |                                            |   | December 31, |  
| | ------------------------------------------ | - | ------------ | -
| |                                            |   | 2006         |  
| |                                            |   |              |  
| | Net tax operating loss carryforward        | $ | 2,637,096    |  
| | Net tax capital
      loss carryforward    |   | 103,077      |  
| |                                            |   |              |  
| | Gross deferred tax assets                  |   | 2,740,173    |  
| | Valuation allowance for deferred tax asset |   | (2,740,173   | )
| |                                            |   |              |  
| |                                            | $ | -            |  

11

---

**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|9.  | Deferred Tax Assets (contd)                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | 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.                   
|    |                                                                                                                                                                                                                                                                                                                                                                     
|10. | Income Taxes                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | At December 31, 2006, the Company has net operating loss
      carryforwards which expire commencing in 2010 totaling approximately
      $8,011,000. The Company has a capital loss carryforward which expires in
      2006, totaling approximately $606,000. The potential tax benefits of these
      losses have not been recorded in the financial statements.
|    |                                                                                                                                                                                                                                                                                                                                                                     
|11. | Comparative Figures                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | Certain comparative figures for the year ended December
      31, 2005, have been reclassified to conform to the financial statement
      presentation adopted for the year ended December 31, 2006.                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                     
|12. | Subsequent Events Note 6                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | Subsequent to the year ended December 31, 2006 the
      Company;                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | a)                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | b)                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    | c)                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                     

12

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**STRATEGIC INTERNET INVESTMENTS, INCORPORATED**(A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2006 and 2005 (Stated in U.S.
Dollars)

|12. | Subsequent Events Note 6  (contd)
|--- | ------------------------------------
|    |                                     
|    | b)                                  
|    |                                     
|    | c)                                  
|    |                                     
|    |                                     
|    |                                     
|    |                                     
|    |                                     
|    |                                     

The letter of intent is subject to the
completion of a formal agreement.

13

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|8. | Changes In and Disagreements With Accountants on
        Accounting and Financial Disclosure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | There have been no changes in or disagreements with
        accountants on accounting and financial disclosure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Controls and procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Evaluation of disclosure controls and procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Our Chief Executive Officer and Chief Financial Officer
        (collectively the Certifying Officers) are responsible for
        establishing and maintaining a system of disclosure controls and procedures
        that are designed to ensure that information which is required to be disclosed
        by the Company in the reports that it files or submits under the Exchange
        Act is recorded, processed, summarized and reported within the time periods
        specified in the Commissions rules and forms. As required under
        the Exchange Act, as of the end of the period covered by this report,
        being December 31, 2006, we have performed an evaluation of the effectiveness
        of the design and operation of our disclosure controls and procedures.
        This evaluation was performed under the supervision and with the participation
        of our Certifying Officers. Based upon that evaluation, the Certifying
        Officers concluded that our disclosure controls and procedures are effective
        in ensuring that information that is required to be reported is recorded,
        processed, summarized and reported, within the time periods specified
        in the Commissions rules and forms. Furthermore, the Certifying
        Officers concluded that our disclosure controls and procedures in place
        are designed to ensure that information required to be disclosed by us,
        including our consolidated subsidiaries, in reports that we file or submit
        under the Exchange Act is (i) recorded, processed, summarized and reported
        on a timely basis in accordance with applicable Commission rules and regulations;
        (ii) accumulated and communicated to our management, including our Certifying
        Officers and other persons that perform similar functions, if any, to
        allow us to make timely decisions regarding required disclosure in our
        periodic filings.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Changes in internal controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In connection with our evaluation of our internal controls
        during the period ended December 31, 2006, our Certifying Officers have
        not identified any material deficiencies or weaknesses or other factors
        that have materially affected or are reasonably likely to materially affect
        these controls, and therefore, we have not made any changes to these controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Part III

|9. | Directors, Executive Officers, Promoters and Control
      Persons
|-- | ------------------------------------------------------------------
|   |                                                                   
|   | Directors and Executive
Officers                                  

Name and
    
    Business
      experienceposition
    Term
    during
      past 5 years
    Other
      directorshipsRalph Shearing
    March 7, 2001
    Director and officer of both
    Soho Resources Corp., aPresident, CEO,
    to
    the Company, and two
    reporting issuer in Canada.Director
    Present
    natural resource explorationcompanies.Abbas Salih
    March 7, 2001
    Director and officer of the
    NoneChairman,
    to
    Company.Secretary, CFO,
    PresentDirector


Significant employeesNone

Family relationshipsThere are no family relationships among directors, executive officers,
officers or significant employees and any nominees chosen to hold these
positions.

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|    | 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
        the 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, 2006.                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10. | Executive Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | On January 1, 2007 the Company entered into two Management
        Services Agreements with a director and a company controlled by a director
        of the Company. Under the terms of these agreements they will each be
        paid $7,500 per month for management consulting services. These agreements
        are for a 24-month period expiring on December 31, 2008. If the Company
        is unable to pay for the services, the consultant may elect to settle
        any portion of outstanding amounts plus interest with units of the Company.
        Each unit shall consist of one common share and one share purchase warrant
        entitling the holder to purchase one additional common share of the Company.
        The price for the units and warrants will be determined based on a discount
        to the 10 day average market price ranging from 50% to 60%, but no less
        than $0.05 per share.                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | During the fiscal year ended December 31, 2006, directors
        and officers received compensation for acting in their capacities as a
        director or officer, in the amounts as shown below (see Summary
        compensation table). 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 adopted
        and approved a Stock Award Plan. The plan provides both for the direct
        award or sale of shares, and for the grant of options to purchase shares.
        Shares may be awarded in consideration of services rendered to the Company.
        The Company may also grant a 30- day right to purchase shares at a price
        of not less than 90% of the fair market value of the shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Under the plan directors, employees and consultants
        may be granted incentive stock options to purchase common stock of the
        Company at a price of not less than 100% of the fair market value of the
        stock. Outside directors may be granted non-statutory stock options to
        purchase common stock of the Company at a price of not less than 85% of
        the fair market value of the stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The total number of shares awarded under the plan must
        not exceed 15% of the outstanding common stock of the Company. Certain
        changes in the capital structure of the Company, such as a stock split
        or stock dividend, may result in an appropriate adjustment to the number
        and/or the price of shares issuable under the plan. The plan expires on
        July 1, 2017.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | 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 13 employees including consultants, directors and officers have been
granted share purchase options to acquire a total of 2,087,000 common shares of
the Company at a weighted average price of $0.23 per share. The President and
the Secretary of the Company have each been granted 720,000 share purchase
options each under the Plan.

Pursuant to the terms of the stock
award plan, the number of shares under option and their exercise price has been
adjusted as a result of the 20% stock dividend declared by the Board of
Directors on February 14, 2005.

Summary compensation table

| |                |      | Annual
      Compensation | Long
      Term Compensation 
| | -------------- | ---- | ------------------------- | -----------------------------
| | Name           | Year | Other annual compensation | Securities underlying options
| |                |      |                           |                              
| | Ralph Shearing |      |                           |                              
| | CEO, Director  | 2006 | $21,200                   | -                            
| |                | 2005 | -                         | -                            
| |                | 2004 | $932                      | -                            
| |                |      |                           |                              
| | Abbas Salih    |      |                           |                              
| | CFO, Director  | 2006 | $29,415                   | -                            
| |                | 2005 | $40,440                   | -                            
| |                | 2004 | -                         | -                            

Aggregated fiscal year end option
values

| |                | Number
      of securities     |                              
| | -------------- | ------------------------------ | -----------------------------
| |                | underlying unexercised options | Value of unexercised in-the- 
| |                | at fiscal year end             | money options fiscal year end
| | Name           | exercisable / unexercisable    | exercisable / unexercisable  
| |                |                                |                              
| | Ralph Shearing |                                |                              
| | CEO, Director  | 720,000 / nil share options    | $158,400 / nil               
| |                |                                |                              
| | Abbas Salih    |                                |                              
| | CFO, Director  | 720,000 / nil share options    | $158,400 / nil               

|11. | Security Ownership of Certain Beneficial Owners and
      Management
|--- | --------------------------------------------------------------------
|    |                                                                     
|    | Security ownership of certain beneficial
    owners                 

| |                |                                         | Amount
      and nature of | Percentage
| | -------------- | --------------------------------------- | -------------------------- | ----------
| | Title of class | Name of beneficial owners               | beneficial ownership       | of class  
| |                |                                         |                            |           
| | Common stock   | Cede & Co.
      New York, N.Y., U.S.A. | 8,051,265 (direct)         | 31%       

---

Security ownership of management

| |                |                                             | Amount
      and nature of     | Percentage
| | -------------- | ------------------------------------------- | ------------------------------ | ----------
| | Title of class | Name of beneficial owners                   | beneficial ownership           |           
| |                |                                             |                                |           
| | Common stock   | Ralph Shearing 
      Vancouver, BC, Canada | Nil (indirect) (1)             | 3%        
| |                |                                             |                                |           
| | Common stock   | Abbas Salih 
      Vancouver, BC, Canada    | 9,785,172 (indirect)
      (2) | 40%       

| | (1) | The beneficial owner has the right to acquire 720,000
      shares through the exercise of stock options and 772,858 shares through
      the conversion of outstanding loans into units, each unit consisting of
      one common share of the Company and one share purchase warrant.                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                             
| | (2) | The beneficial owner also has the right to acquire a
      further 720,000 shares through the exercise of stock options and 416,248
      shares through the conversion of outstanding loans into units, each unit
      consisting of one common share of the Company and one share purchase
      warrant.

|12. | 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 items 5,
      6, and 7 of this Annual Report.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|13. | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Table ofExhibit Items
      Description
      Exhibit601-3(i)
      Articles of Incorporation
      Note 1601-(3)(ii)
      Bylaws
      Note 1601-(3)(iii)
      Certificate of Amendment
      Note 1601-(10)
      Stock Award Plan
      Note 2601-(31)
      Rule 13a-14(a)/15d-14(a)
        Certification
      Exhibit 31.1601-(31)
      Rule 13a-14(a)/15d-14(a) Certification
      Exhibit 31.2601-(32)
      Section 1350 Certification
      Exhibit 32.1601-(32)
      Section 1350 Certification
      Exhibit 32.2


Note 1:
      Incorporated by reference to Form 10-KSB Annual Report
      for the year ending December 31, 2001Note 2:
      Incorporated by reference to Form 10-KSB Annual Report
      for the year ending December 31, 2002


|14. | Principal Accountant Fees and Services                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Audit Fees                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | During the fiscal years ended December 31, 2006 and 2005,
      the Company incurred approximately $16,000 and $13,765 respectively in
      fees to Amisano Hanson, Chartered Accountants, for professional services
      rendered in connection with the audit of the Company's financial
      statements and approximately $17,275 (2005: $12,950) for review of the
      Company's quarterly financial statements.

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Audit-Related Fees

None

Tax Fees

None

All Other Fees

None

Audit Committee

As of this Annual Report, the Company
  has not appointed members to an audit committee. The board of directors has
  conducted the respective role of an audit committee. 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.

SIGNATURES

In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

Strategic Internet Investments,
      IncorporatedDate:
    April
      11, 2007
    
    /s/
      Ralph ShearingRalph Shearing, CEO, DirectorDate:
    April
      11, 2007
    
    /s/
      Abbas SalihAbbas Salih, CFO, Director


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