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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,
D.C. 20549**

FORM 10-K

[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended: December 31,
2008

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from
______________to________________

Commission File No. 033-28188

Strategic Internet Investments,
Incorporated(Exact name of registrant as specified in its
charter)

State of incorporation:
    DelawareIRS Employer Identification:
    84-1116458Address of principal executive offices:
    Nisar Square, Benyas Centre Office No. 207P.O. Box 40088,Dubai, United Arab EmiratesRegistrants telephone number:
    009 714 223 1189


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

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

Indicate by checkmark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.  Yes [  ] No [ X ]

Indicate by checkmark if the registrant is not required to file
reports pursuant to Section 13 or   15(d) of the Act.  Yes [  ] No [ X ]

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

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Indicate
by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
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-K
or any  amendment
to this Form 10-K.   [ X ]

Indicate by checkmark whether the registrant is a
      large accelerated filer, an accelerated filer, a non-accelerated filer, or
      a smaller reporting company. See the definitions of large accelerated
      filer, accelerated filer and smaller reporting company in Rule 12b-2
      of the Exchange Act.
    Large accelerated filer
    [   ]Non-accelerated filer
    [   ]Accelerated filer
    [   ]Smaller reporting company
    [ X ]


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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter, being June 30, 2008: $1,247,761 based on a
price of $0.07 per share, being the price the common equity last sold on June
20, 2008 as quoted on the OTC Bulletin Board .

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS:

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

Yes [   ] No [   ] N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
27,610,326common shares issued and outstanding as of March 31,
2009.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which
the document is incorporated: (1) any annual report to security holders; (2) any
proxy or information statement; and (3) any prospectus filed pursuant to Rule
424(b) or (c) of the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to security
holders for fiscal year ended December 24, 1980). Not Applicable

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PART I

Forward Looking Statements.

This annual report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, should,
expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors and the risks set out below, any of which may cause our
or our industrys actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. These risks include, by way of example and not in
limitation:

- results of initial feasibility, pre-feasibility and feasibility studies,
  and the possibility that future real estate development results will not be
  consistent with our expectations;
- real estate development risks, including risks related to accidents,
  equipment breakdowns, labour disputes or other unanticipated difficulties or
  interruptions in development construction;
- the potential for delays in development activities or the completion of
  feasibility studies;
- risks related to the inherent uncertainty of cost estimates and the
  potential for unexpected costs and expenses;
- risks related to commodity price fluctuations;
- the uncertainty of profitability based upon our history of losses;
- risks related to failure to obtain adequate financing on a timely basis
  and on acceptable terms for our planned development projects;
- risks related to environmental regulation and liability;
- risks that the amounts reserved or allocated for environmental compliance,
  reclamation, control measures, monitoring and on-going maintenance may not be
  sufficient to cover such costs;
- risks related to tax assessments;
- political and regulatory risks associated with real estate development;
  and
- other risks and uncertainties related to our prospects, properties and
  business strategy.

This list is not an exhaustive list of the factors that may
affect any of our forward-looking statements. These and other factors should be
considered carefully and readers should not place undue reliance on our
forward-looking statements.

The Company intends that such forward-looking statements be
subject to the Safe Harbors for such statements. Forward looking statements are
made based on managements beliefs, estimates and opinions on the date the
statements are made and we undertake no obligation to update forward-looking
statements if these beliefs, estimates and opinions or other circumstances
should change. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
stock refer to the common shares in our capital stock. As used in this annual
report, the terms we, us, our, the Company and Strategic mean
Strategic Internet Investments, Incorporated, unless otherwise indicated.

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ITEM 1. BUSINESS

Form of Organization

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.

Current Business

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 has been devoting its business efforts to real
estate development projects located in Bahrain and Turkey. Current projects
include the Dream Island Resort project is located in Manama, Bahrain; and the
Port Residence Project located in Calkaya, Turkey.

Dream Island Resort Project

The Dream Island Resort project is located 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.

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 on demand.

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 require 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

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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.

As at December 31, 2008 there has been no activity or changes involving the Dream Island project since March 13, 2006.

Port Residence Project

The Company entered into a Letter of Intent to potentially acquire by option up to a 100% indirect interest in the Port Residence Project by purchasing the outstanding shares of a Turkish company. The Port Residence Project is a real estate
development project that will be located on a 16.5 hectare parcel of land in Calkaya, near Antalya, Turkey.

The letter of intent dated January 7, 2008, provides the Company the potential to purchase 100% of the outstanding shares of a Turkish company (TurkCo) to be formed and, thereby, acquiring a 100% interest in the Port Residence Project, a
real estate development project, in Calkaya, Turkey, as follows:

|1) | The Company shall be granted the option to purchase, on a pro-rata basis, up to 30% of the outstanding shares of TurkCo for compensation as described below (the Initial Share Purchase Option). The Company may exercise
the share purchase option based upon construction progress of the Project as follows:                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2) | The shareholders of TurkCo shall grant a secondary option to the Company to purchase on a pro-rata basis the remaining 70% of the outstanding shares of TurkCo at the price as described below, (the Second Share Purchase
Option). The Second Share Purchase Option may only be exercised by the Company upon full exercise of the Initial Share Purchase Option, unless TurkCo agrees to allow an earlier exercise as requested by the Company.                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3) | Compensation of Initial and Second Share Purchase Options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company shall have the option to pay the full exercise price of the Share Purchase Options either in cash, or by issuing common shares of the Company at the higher value of either, $2.00 per share or the discounted market
price of the Companys share, as quoted on the OTC:BB Stock Exchange where the Discounted Market Price is defined by calculating the average previous 10 day closing price of the Company shares as of the Exercise Date in question and
reducing that price by 25%. Any issuance of common shares of the Company would occur as of the date of the Option Exercise Notice, under a Restricted Rule 144 Reg. S share issuance.

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

As at December 31, 2008 there has been no activity or changes involving the Port Residence Project.

Competition

We are an development stage company engaged in the acquisition of a prospective real estate property. As we currently do not own an interest in any real estate property, we compete with other companies for both the acquisition of prospective
properties and the financing necessary to develop such properties.

We conduct our business in an environment that is highly competitive and unpredictable.  In seeking out prospective properties, we have encountered intense competition in all aspects of our proposed business as we compete directly with other
development stage companies as well as established international companies. Many of our competitors are national or international companies with far greater resources, capital and access to information than us.  Accordingly, these competitors may be
able to spend greater amounts on the acquisition of prospective properties and on the development of such properties. In addition, they may be able to afford greater expertise in the development real estate properties. This

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competition could result in our competitors having real estate properties of greater quality and attracting prospective investors to finance the development of such properties on more favorable terms. As a result of this competition, we may become
involved in an acquisition with more risk or obtain financing on less favorable terms.

Compliance with Government Regulation

We will not know the government regulations and the cost of compliance with such regulations with which we must comply until such time as we acquire an interest in a particular real estate property. If we are successful in acquiring a property
interest, we will be required to comply with the regulations of governmental authorities and agencies applicable to the federal, state or provincial and local jurisdictions where the property is located. Development of real estate properties may
require prior approval from applicable governmental regulatory agencies. There can be no assurance that such approvals will be obtained.

If our activities should advance to the point where we engage in real estate development operations, we could become subject to environmental regulations promulgated by federal, state or provincial, and local government agencies as applicable.
Environmental legislation provides for restrictions and prohibitions on real estate development which could result in environmental liability.  A breach or violation of such legislation may result in the imposition of fines and penalties.  In
addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental assessments are increasingly imposing higher standards, greater enforcement, fines and penalties for non-compliance.
Environmental assessments of proposed projects carry a heightened degree of responsibility for companies, directors, officers and employees. The cost of compliance in respect of environmental regulation has the potential to reduce the profitability
of any future revenues that our company may generate.

Employees

The Company currently does not have any employees. All business activities and services are provided by the Companys directors or consultants.

ITEM 2. PROPERTIES.

The Company does not directly or indirectly own or otherwise have any interest in any other real estate, property, capital assets, or leases of assets.

ITEM 3. LEGAL PROCEEDINGS.

We know of no material, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets.
There are no proceedings in which any of our companys directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our companys interest.

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

No matters were submitted to the vote of the holders of our companys securities during the year ended December 31, 2008.

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

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
    Low2009
    First quarter
    $0.01
    $0.012008
    First quarter
    $0.10
    $0.05Second quarter
    $0.10
    $0.07Third quarter
    $0.07
    $0.05Fourth quarter
    $0.05
    $0.012007
    First quarter
    $0.44
    $0.20Second quarter
    $0.44
    $0.17Third quarter
    $0.29
    $0.12Fourth quarter
    $0.20
    $0.07


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

Holders of our Common Stock

As of March 31, 2009, we have approximately 125 registered
stockholders and 27,610,326 shares issued and outstanding.

Dividend Policy

We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our future dividend policy will be determined from time to time by our
board of directors.

**Securities authorized for issuance under equity
compensation plans**

| | Equity Compensation Plan Information                         |                                                                                               |  |                                                                               |  |                                                              
| | ------------------------------------------------------------ | --------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------- |  | -------------------------------------------------------------
| | Plan
      category                                          | Number of securities to be issued upon exercise of outstanding options, warrants, and rights. |  | Weighted average exercise price of outstanding options, warrants, and rights. |  | Number of securities remaining available for future issuance.
| |                                                              |                                                                                               |  |                                                                               |  |                                                              
| | Equity compensation plans approved by security
      holders | -                                                                                             |  | -                                                                             |  | -                                                            
| |                                                              |                                                                                               |  |                                                                               |  |                                                              
| | Equity compensation plans not approved by security holders   | 4,125,000                                                                                     |  | $0.15                                                                         |  | 16,549                                                       
| |                                                              |                                                                                               |  |                                                                               |  |                                                              
| | Total                                                        | 4,125,000                                                                                     |  | $0.15                                                                         |  | 16,549                                                       

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2002 Stock Award Plan

In 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 10%, repayable on demand. The lender has the right to convert all or part of the principal sum 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. 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. On August 31, 2008 the Company entered into agreements to transfer previous advances and accrued interest to convertible loans under the Convertible Loan Facility Agreement. At December 31, 2008, the Star Leisure loan principal was
$255,209 and had accrued interest of $22,052. The loan principal is convertible into 4,526,436 units at conversion price ranging from $0.05 to $0.12 as set at the time the principal was borrowed. Star Leisure has not converted

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any part of the principal sums advanced into units as of September 30, 2008. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

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 were held in escrow and were to be released subject to the Company obtaining certain future financial goals, however these goals were never achieved and the shares were subsequently cancelled. 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 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 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. 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. At December 31, 2008, the CMB loan
principal was $163,766 and had accrued interest of $17,804. The loan principal is convertible into 2,320,858 units. Conversion of this loan and associated warrants to equity will be at a price ranging from $0.05 to $0.23. This
transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

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.

On April 23, 2007 the Company completed a private placement of 200,000 common shares at $0.25 per share for total proceeds of $50,000. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S.

In May 2007 the Company entered into two Consulting Agreements for financial consulting services for a period of 12 months. Pursuant to these agreements, the Company issued 700,000 common shares at a deemed price of $0.20 per share, for a total
deemed consideration of $140,000. 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.

In June 2008 the Company entered into two Consulting Agreements for consulting services for a period of 12 months. Pursuant to these agreements, the Company issued 750,000 common shares with a market price of $0.07 per share, for a total deemed
consideration of $52,000. 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.

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Purchase of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during the year ended December 31, 2008.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with our
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include those discussed below and
elsewhere in this annual report.

Our audited consolidated financial statements are stated in
United States dollars and are prepared in accordance with United States
generally accepted accounting principles (GAAP).

Plan of Operation

The Company has been devoting its business efforts to real
estate development projects located in Bahrain and Turkey. Current projects
include the Dream Island Resort project is located in Manama, Bahrain; and the
Port Residence Project located in Calkaya, Turkey. The Company plans to continue
perusing these real estate development projects and to investigate new real
estate development projects during its 2009 fiscal year.

Our estimated cash expenses over the next twelve months are as
follows:

| | Accounting , audit, and legal fees  | $ | 60,000  | 
| | ----------------------------------- | - | ------- | 
| | Consulting and management fees      |   | 10,000  | 
| | Interest                            |   | 20,000  | 
| | General and administrative expenses |   | 3,000   | 
| | Regulatory and transfer agent fees  |   | 7,000   | 
| |                                     | $ | 100,000 | 

To date we have funded our operations primarily with loans from
shareholders and issue new equity. In addition to funding the Companys general,
administrative and corporate expenses the Company is obligated to address its
current obligations totaling $1,030,555. To the extent that cash needs are not
achieved from operating cash flow and existing cash on hand, the Company will be
required to raise necessary cash through shareholder loans, equity issuances
and/or other debt financing. Amounts raised will be used to continue the
development of the Company's investment activities, and for other working
capital purposes, which may be dilutive to existing shareholders. The company
currently has no agreement in place to raise funds for current liabilities and
no guarantee can be given that we will be able to raise funds for this purpose
on terms acceptable to the company. Failure to raise funds for general,
administrative and corporate expenses and current liabilities could result in a
severe curtailment of the company operations.

Any advance in the real estate development strategy set-out
herein will require additional funds. These funds may be raised through equity
financing, debt financing or other sources which may result in further dilution
of the shareholders percentage ownership in the company. See Future Financing,
below.

---

RESULTS OF OPERATIONS

Our operating results for the years ended December 31, 2007 and
2008 are summarized as follows:

Year Ended December 31,
      2008
    Year Ended December 31,
      2007
    Percentage Increase
      (Decrease)Revenue
    Nil
    NilExpenses
    $746,050
    $499,380
    49%Other Expenses (Income)
    $(22,239)
    $19,965
    (211%)Net Income (loss)
    $(723,811)
    $(519,345)
    39%


Revenues

We have had no operating revenues for the years ended December
31, 2008 and 2007. We anticipate that we will not generate any revenues for so
long as we are an development stage company.

General and Administrative Expenses

The major components of our general and administrative expenses
for the year ended December 31, 2007 and 2008 are outlined in the table
below:

Year Ended December 31,
      2008
    Year Ended December 31,
      2007
    Percentage Increase
      (Decrease)Accounting , audit, and legal fees
    $ 53,064
    $ 35,230
    51%Consulting, management fees, and stock based compensation
    505,416
    356,960
    42%Interest
    163,627
    70,345
    127%Office and communications
    3,043
    2,929
    4%Regulatory and transfer agent fees
    3,051
    5,243
    (42%)Rent
    17,760
    22,120
    (20%)Travel
    89
    6,553
    (99%)Total Operating Expenses
    $746,050
    $499,380
    49%


The increase in our general and administrative expenses for the
year ended December 31, 2008 was primarily due to:

| | a) | The increase in accounting, audit, and legal fees from
      2007 to 2008 due to a general increase in the fees charged by the
      consultants and professionals who provide these services. In addition,
      there has been an increase in the amount of time spent by these
      consultants and professionals to ensure the Company is in compliance with
      the increased reporting requirement imposed by regulatory
    authorities.                                                                                                            
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | b) | The increase in consulting, management fees, and stock
      based compensation expense is mainly due to the granting of 4,225,000 new
      stock options during 2008 as compared to the previous year. In accordance
      with GAAP, these options were deemed to have a fair value of $251,078
      (2007  29,240) during the year. Management fees declined by $28,462 in
      2008 as a result of a director resigning his position as CEO in September
      2008, and the resulting termination of his management contract fees at
      that time.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | c) | c)	Interest increased by a total of $93,282 as a result of the fair value of the beneficial conversion feature of the convertible loans being charged to interest expense during the year. The fair value of the beneficial conversion feature in 2008 was $122,262, a $82,662 increase over the $39,600 amount recorded in 2007. The increase in interest is also attributed to the principal balance on its loans increasing during the year.                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | d) | Regulatory and transfer agent fees decreased by $2,192 in
      2008 mainly due to the Company recording a $2,000 reversal of an
      over-accrued liability recorded in prior years, relating to transfer agent
      fees.                                                                                                                                                                                                                                                                                                                                 

---

| | e) | Rent decreased because the Company terminated its
      Vancouver office facilities concurrent with the resignation of the former
      CEO in September 2008.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                               
| | f) | Travel decreased as the Company has curtailed this
      discretionary expense.                                                                               

Funding for operating and investing activities was provided by
both non-interest and interest bearing advances and loans from related parties,
including directors of the Company, and companies controlled by these directors.

LIQUIDITY AND WORKING CAPITAL

As of December 31, 2008, the Company had total current assets
of $10,256 and total liabilities of $1,030,555. As of December 31, 2008, the
Company had cash of $256 and a working capital deficiency of $1,020,299 as of
December 31, 2008 compared to cash on hand of $65 and a working capital
deficiency of $721,828 for the year ended December 31, 2007. We anticipate that
we will incur approximately $100,000 for operating expenses, including
professional, legal and accounting expenses associated with our reporting
requirements under the Exchange Act during the next twelve months. In addition
to funding the Companys general, administrative and corporate expenses the
Company is obligated to address its current obligations totaling $1,030,555. To
the extent that cash needs are not achieved from operating cash flow and
existing cash on hand, the Company will be required to raise necessary cash
through shareholder loans, equity issuances and/or other debt financing. Amounts
raised will be used to continue the development of the Company's investment
activities, and for other working capital purposes. Accordingly, we will need to
obtain additional financing in order to continue our planned business
activities.

Cash used in operating activities for the year ended December 31, 2008 was $134,347 as compared to cash used by operating activities for the same period in 2007 of $112,644.  The decrease in cash used in operating activities was primarily due to the decrease in cash expenditures on consulting fees, management fees and rent.

The Company has the following loans outstanding as of December
31, 2008:

A $10,591 loan payable to a company controlled by a director of
the Company including accrued interest of $3,789 (2007 -$2,605). The loan is
unsecured, bearing interest at 12% per annum and is repayable on demand.

$23,417 in loans payable to companies controlled by directors
of the Company are unsecured, non-interest bearing, and repayable upon demand.

A $181,570 loan payable to a company controlled by a director of the Company, including accrued interest payable of $17,804 (2007 - $14,341), pursuant to a Convertible Loan Agreement.  The loan is unsecured, bearing interest at 10% per annum and is repayable on demand.  The lender may at anytime convert the principal sum into units of the Company.  Each unit will consist of one common share plus one common share purchase warrant.  The principal sum of $163,766 may be converted into 2,320,858 units.  Conversion of these loans and resulting associated warrants to equity will be based on the conversion price set at the time the principal amount was drawn ranging from $0.05 to $0.23.  During the year ended December 31, 2008 an amount of $14,874 (2007 - $39,600) was recognized as the intrinsic value of the beneficial conversion feature of these loans and this amount was included in interest expense. Upon conversion of this loan the fair value of the warrants, $73,685 would be recognized as an interest expense and credited to additional paid-in capital.

A $277,261 loan payable to a company controlled by a director of the Company, including accrued interest of $22,052 (2007 - $9,018), pursuant to a Convertible Loan Agreement.  The loan is unsecured, bearing interest at 10% per annum and is repayable on demand.  The lender may at anytime convert the principal sum into units of the Company.  Each unit will consist of one common share plus one common share purchase warrant.  The principal sum of $255,209 may be converted into 4,526,436 units.  Conversion of this loan and resulting associated warrants to equity will be based on the conversion price set at the time the principal amount was drawn ranging from $0.05 to $0.12. During the period ended December 31, 2008 an amount of $107,388 (2007 - $Nil) was recognized as the intrinsic value of the beneficial conversion feature of these loans and this amount was included in interest expense. Upon conversion of this loan the fair value of the warrants, $113,338 would be recognized as an interest expense and credited to additional paid-in capital.

---

Going Concern

The audited financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business.
Our company has not generated revenues since inception and has never paid any cash dividends and is unlikely to pay cash dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is
dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of March 31, 2009, we had cash
of $8,700 and we estimate that we will require approximately $100,000 to fund our business operations over the next twelve months.  In addition to funding the Companys general, administrative and corporate expenses the Company is
obligated to address its current obligations totaling $1,030,555. To the extent that cash needs are not achieved from operating cash flow and existing cash on hand, the Company will be required to raise necessary cash through shareholder loans,
equity issuances and/or other debt financing. Amounts raised will be used to continue the development of the Company's investment activities, and for other working capital purposes.

Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations after that date.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors report on the December 31, 2008 and 2007 financial statements which are
included with this annual report. The financial statements do not include any adjustments that might result from the outcome of that uncertainty.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that
additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps
even cease the operation of our business.

Future Financings

As of March 31, 2009, we had cash of $8,700 and we estimate that we will require approximately $100,000 to fund our business operations over the next twelve months. In addition to funding the Companys general, administrative and
corporate expenses the Company is obligated to address its current obligations totaling $1,030,555. Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations after that
date. We anticipate continuing to rely on equity sales of our common shares or shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no
assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

Off-Balance Sheet Arrangements

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

Employees

The Company currently has no employees. There are no plans to hire additional employees as administrative requirements at are now being adequately met by the efforts of the directors and consultants. Any land development and construction activities
will be conducted through consultants and contractors.

---

New Accounting Standards

Recently Adopted Accounting Pronouncements

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. This SFAS did not have a material
impact on the Companys financial position or results from operations.

In June 2007, the Emerging Issues Task Force (EITF) reached a
consensus on EITF No. 07-03, Accounting for Non-refundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities
(EITF 07-03). EITF 07-03 specifies the timing of expense recognition for
non-refundable advance payments for goods or services that will be used or
rendered for research and development activities. EITF 07-03 was effective for
fiscal years beginning after December 15, 2007. The adoption of EITF 07-03 did
not have a material impact on the Companys financial position and results of
operations.

Recent Accounting Pronouncements Not Yet Adopted

In December 2007, the Emerging Issues Task Force (EITF)
reached a consensus on EITF No. 07-01, Accounting for Collaborative Arrangements
Related to the Development and Commercialization of Intellectual Property (EITF
07-01). EITF 07-01 discusses the appropriate income statement presentation and
classification for the activities and payments between the participants in
arrangements related to the development and commercialization of intellectual
property. The sufficiency of disclosure related to these arrangements is also
specified. EITF 07-01 is effective for fiscal years beginning after December 15,
2008. As a result, EITF 07-01 was effective for the Company as of January 1,
2009. The Company expects that the adoption of EITF 07-01 will have minimal, if
any, impact on its financial position and results of operations. However, based
upon the nature of the Companys business, EITF 07-01 could have a material
impact on its financial position and results of operations in future years.

In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations. The standard requires the acquiring entity in a business
combination to recognize all (and only) the assets acquired and liabilities
assumed in the transaction; establishes the acquisition date fair value as the
measurement objective for all assets acquired and liabilities assumed; and
requires the acquirer to disclose to investors and other users all of the
information they need to evaluate and understand the nature and financial effect
of the business combination. The Company is currently reviewing the guidance,
which is effective for fiscal years beginning after December 15, 2008, to
determine the potential impact, if any, on its financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements. The standard requires all
entities to report noncontrolling (minority) interests as equity in consolidated
financial statements. SFAS No. 160 eliminates the diversity that currently
exists in accounting for transactions between an entity and noncontrolling
interests by requiring they be treated as equity transactions. The Company is
currently reviewing the guidance, which is effective for fiscal years beginning
after December 15, 2008, to determine the potential impact, if any, on its
financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities  An Amendment of FASB Statement
No. 133 (SFAS 161). SFAS 161 requires enhanced qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company is
currently evaluating the impact of SFAS 161 on its financial statements.

In April 2008, the FASB issued FSP 142-3, Determination of the
Useful Life of Intangible Assets. This FSP amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142,
Goodwill and Other Intangible Assets. The intent of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
Statement 142 and the period of expected cash flows used to measure the fair
value of the asset under FASB Statement No. 141 (Revised 2007), Business
Combinations, and other U.S. generally accepted accounting principles (GAAP).
This FSP is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years.
Early

---

adoption is prohibited. The Company does not expect the
adoption of FAS 142-3 to have a material effect on its results of operations and
financial condition.

In May 2008, FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles (SFAS 162). This standard is intended
to improve financial reporting by identifying a consistent framework, or
hierarchy, for selecting accounting principles to be used in preparing financial
statements that are presented in conformity with U.S. GAAP for nongovernmental
entities. SFAS No. 162 is effective 60 days following the U.S. Securities and
Exchange Commissions approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, the meaning of Present Fairly in Conformity with
GAAP. The Company is in the process of evaluating the impact, if any, of SFAS
162 on its financial statements.

In May 2008, the FASB issued Staff Position No. APB 14-1
Accounting for Convertible Debt Instruments that may be Settled in Cash Upon
Conversion (FSP APB 14-1). FSP APB 14-1 requires the issuer of certain
convertible debt instruments that may be settled in cash (or other assets) on
conversion to separately account for the liability and equity components of the
instrument in a manner that reflects the issuers nonconvertible debt borrowing
rate. Further, FSP ABP 14-1 clarifies the appropriate economics of the
conversion options as borrowing costs and their potential dilutive effects in
earnings per share. FSP APB 14-1 is effective for fiscal years beginning after
December 15, 2008. The Company has not yet completed its evaluation of FSP APB
14-1, but the Company does not currently believe that it will have a material
impact on its results of operations, financial position or cash flows.

In June 2008, the Emerging Issues Task Force (EITF) reached
consensus on Issue No. 07-5, Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entitys Own Stock (EIFT 07-5). EIFT 07-5
provides guidance for instruments (including options or warrants on a companys
shares, forward contracts on a companys shares, and convertible debt
instruments and convertible preferred stock) that may contain contract terms
that call into question whether the instrument or embedded feature is indexed to
the entitys own stock. EIFT 07-5 is effective for financial statements issued
for fiscal years and interim periods beginning after December 15, 2008. The
Company currently is evaluating the impact of applying EIFT 07-5.

Application of Critical Accounting Estimates

The financial statements of our company have been prepared in
accordance with generally accepted accounting principles in the United States.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgment. The
financial statements have, in managements opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:

The preparation of our consolidated financial statements
requires management to make estimates and assumptions regarding future events.
These estimates and assumptions affect the reported amounts of certain assets
and liabilities, and disclosure of contingent liabilities.

Stock-based Compensation The Company accounts for
stock-based compensation using SFAS 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. The Company uses the
Black-Scholes option valuation model to calculate stock-based compensation at
the date of the grant. Option valuation models require the input of highly
subjective assumptions, including the expected price volatility. Changes in
assumptions can materially affect the fair value estimate. Compensation expense
for unvested options to non-employees is revalued at each period end and is
being amortized over the vesting period of the options.

Convertible Instruments and Beneficial Conversion
Feature 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. As at December 31, 2008 and 2007, there were
no convertible instruments with detachable instruments outstanding.

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). The Company first assessed the convertible debt securities to determine if the embedded conversion feature meets the exemption criteria of paragraph 11(a) of SFAS No. 133 Accounting for Derivative Instruments and
Hedging Activities. For the convertible debt securities outstanding as at December 31, 2008 and 2007, the embedded conversion features met the exemption criteria to be classified as equity instruments. 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 using the effective interest rate over the term of the loan.  However, due to demand nature of the convertible debt
securities, the discount of the debt instrument was immediately expensed.

These accounting policies are applied consistently for all years presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the notes to our financial
statements.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.









STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Development Stage Company)

FINANCIAL STATEMENTS

December 31, 2008 AND 2007

(Stated in U.S. Dollars)







---

|                      | BDO DunwoodyLLP                     | 600 Cathedral Place
|--------------------- | ----------------------------------- | -------------------
|Chartered Accountants | 925 West Georgia Street            
|                      | Vancouver, BC, Canada V6C
      3L2
|                      | Telephone: (604) 688-5421          
|                      | Telefax: (604) 688-5132            
|                      | E-mail: vancouver@bdo.ca           
|                      | www.bdo.ca                         

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying balance sheets of Strategic
  Internet Investments, Incorporated (the Company, a Development Stage Company)
  as of December 31, 2008 and 2007 and the statements of operations, cash flows
  and changes in capital deficit for the years then ended and the period from
  inception (February 28, 1989) to December 31, 2008. 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). Those standards
  require that we plan and perform the audits to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The Company
  is not required to have, nor were we engaged to perform, an audit of its
  internal control over financial reporting. Our audits included consideration of
  internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose of
  expressing an opinion on the effectiveness of the Companys internal control
  over financial reporting. Accordingly, we express no such opinion. 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, the financial statements referred to above
  present fairly, in all material respects the financial position of Strategic
  Internet Investments, Incorporated as of December 31, 2008 and 2007 and the
  results of its operations and its cash flows for the years then ended and for
  the period from inception (February 28, 1989) to December 31, 2008, in
  conformity with accounting principles generally accepted in the United States of
  America.

The accompanying 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 not yet achieved profitable operations and is dependent
  on its ability to raise capital from shareholders or other sources to meet its
  obligations and repay its liabilities arising from normal business operations
  when they come due. 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 financial statements do not include any adjustments that might
  result from the outcome of these uncertainties.

The financial statements as of December 31, 2007 and for the
  period from inception (February 28, 1989) to December 31, 2007 have been
  restated to correct an error in the presentation of Class A convertible
  preferred shares as described in Note 10.



/s/ BDO Dunwoody LLP

Chartered Accountants

Vancouver, Canada 
  April 15, 2009





BDO DunwoodyLLP is a Limited Liability Partnership
  registered in Ontario

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

|                                                                  |   | December 31, |   |   | December 31,       |  
|----------------------------------------------------------------- | - | ------------ | - | - | ------------------ | -
|                                                                  |   | 2008         |   |   | 2007               |  
|                                                                  |   |              |   |   | Restated  Note 10 |  
|                                                                  |   |              |   |   |                    |  
|ASSETS                                                            |   |              |   |   |                    |  
|                                                                  |   |              |   |   |                    |  
|Current                                                           |   |              |   |   |                    |  
|Cash                                                              | $ | 256          |   | $ | 65                 |  
|Prepaid expenses  Note 5                                         |   | 10,000       |   |   | 55,400             |  
|                                                                  |   |              |   |   |                    |  
|                                                                  |   | 10,256       |   |   | 55,465             |  
|                                                                  |   |              |   |   |                    |  
|Deferred investment costs  Notes 3 and 5                         |   | 1            |   |   | 1                  |  
|                                                                  |   |              |   |   |                    |  
|                                                                  | $ | 10,257       |   | $ | 55,466             |  
|                                                                  |   |              |   |   |                    |  
|                                                                  |   |              |   |   |                    |  
|LIABILITIES                                                       |   |              |   |   |                    |  
|                                                                  |   |              |   |   |                    |  
|Current                                                           |   |              |   |   |                    |  
|Accounts payable  Note
      7                                   | $ | 537,716      |   | $ | 383,551            |  
|Loans payable  Note 4                                            |   | 492,839      |   |   | 393,742            |  
|                                                                  |   |              |   |   |                    |  
|TOTAL LIABILITIES                                                 |   | 1,030,555    |   |   | 777,293            |  
|                                                                  |   |              |   |   |                    |  
|Class A Convertible Preferred stock, $0.001 par value             |   |              |   |   |                    |  
|10,000,000 authorized, 198,000
      outstanding  Notes 5 and 10 |   | 792,000      |   |   | 792,000            |  
|                                                                  |   |              |   |   |                    |  
|CAPITAL DEFICIT                                                   |   |              |   |   |                    |  
|                                                                  |   |              |   |   |                    |  
|Capital Stock  Notes 4, 5 and 7                                  |   |              |   |   |                    |  
|Class B Preferred stock, $0.001 par
      value                   |   |              |   |   |                    |  
|10,000,000 authorized, none outstanding                           |   |              |   |   |                    |  
|Common stock, $0.001 par value                                    |   |              |   |   |                    |  
|100,000,000 authorized                                            |   |              |   |   |                    |  
|27,610,326
      outstanding (2007: 26,860,326 outstanding)       |   | 27,610       |   |   | 26,860             |  
|Additional paid-in capital                                        |   | 7,765,583    |   |   | 7,340,993          |  
|Deficit
      accumulated during the development stage            |   | (9,605,491   | ) |   | (8,881,680         | )
|                                                                  |   |              |   |   |                    |  
|                                                                  |   | (1,812,298   | ) |   | (1,513,827         | )
|                                                                  |   |              |   |   |                    |  
|                                                                  | $ | 10,257       |   | $ | 55,466             |  

Nature of Operations and Ability to Continue as a Going Concern
   Note 1 
  Commitments  Notes 4, 5, and 7

SEE ACCOMPANYING NOTES

---

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

|                                           |   |                                |   |   |              |   |   | Cumulative from |  
|------------------------------------------ | - | ------------------------------ | - | - | ------------ | - | - | --------------- | -
|                                           |   |                                |   |   |              |   |   | February 28,    |  
|                                           |   |                                |   |   |              |   |   | 1989 (Date of   |  
|                                           |   |                                |   |   |              |   |   | Inception) to   |  
|                                           |   | Years
      ended December 31, |   |   | December 31, |  
|                                           |   | 2008                           |   |   | 2007         |   |   | 2008            |  
|                                           |   |                                |   |   |              |   |   |                 |  
|General and Administrative Expenses        |   |                                |   |   |              |   |   |                 |  
|Accounting and audit fees                  | $ | 46,469                         |   | $ | 35,230       |   | $ | 289,317         |  
|Amortization                               |   | -                              |   |   | -            |   |   | 3,616           |  
|Communications                             |   | 2,151                          |   |   | 1,674        |   |   | 104,603         |  
|Consulting fees  Note 7                   |   | 348,478                        |   |   | 171,560      |   |   | 3,409,546       |  
|Interest  Notes 4
      and 7             |   | 163,627                        |   |   | 70,345       |   |   | 406,985         |  
|Investor relations                         |   | -                              |   |   | -            |   |   | 91,385          |  
|Legal fees                                 |   | 6,595                          |   |   | -            |   |   | 166,684         |  
|Management fees  Note 7                   |   | 156,938                        |   |   | 185,400      |   |   | 546,325         |  
|Office and general 
      Note 7          |   | 892                            |   |   | 1,255        |   |   | 142,324         |  
|Regulatory fees                            |   | 3,251                          |   |   | 3,447        |   |   | 28,554          |  
|Rent  Note 7                              |   | 17,760                         |   |   | 22,120       |   |   | 135,615         |  
|Transfer agent fees (recovery)             |   | (200                           | ) |   | 1,796        |   |   | 43,193          |  
|Travel                                     |   | 89                             |   |   | 6,553        |   |   | 110,120         |  
|Loss on disposal of equipment              |   | -                              |   |   | -            |   |   | 1,481           |  
|Write-down of advances
      to            |   |                                |   |   |              |   |   |                 |  
|related party                              |   | -                              |   |   | -            |   |   | 606,337         |  
|                                           |   |                                |   |   |              |   |   |                 |  
|Operating loss                             |   | (746,050                       | ) |   | (499,380     | ) |   | (6,086,085      | )
|                                           |   |                                |   |   |              |   |   |                 |  
|Unauthorized distribution                  |   | -                              |   |   | -            |   |   | (69,116         | )
|Termination fee                            |   | -                              |   |   | -            |   |   | (792,000        | )
|Gain (loss) on foreign exchange            |   | 22,239                         |   |   | (19,965      | ) |   | (9,896          | )
|Gain on settlement of payables             |   | -                              |   |   | -            |   |   | 25,233          |  
|Write-down of deferred investment          |   |                                |   |   |              |   |   |                 |  
|costs  Note
      5                       |   | -                              |   |   | -            |   |   | (34,209         | )
|                                           |   |                                |   |   |              |   |   |                 |  
|Net loss for the period                    | $ | (723,811                       | ) | $ | (519,345     | ) | $ | (6,966,073      | )
|                                           |   |                                |   |   |              |   |   |                 |  
|Basic and diluted loss per share           | $ | (0.03                          | ) | $ | (0.02        | ) |   |                 |  
|                                           |   |                                |   |   |              |   |   |                 |  
|Weighted average common shares outstanding |   | 27,215,121                     |   |   | 26,524,710   |   |   |                 |  

SEE ACCOMPANYING NOTES

---

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

|                                                            |   |                          |   |   |              |   |   | Cumulative from |  
|----------------------------------------------------------- | - | ------------------------ | - | - | ------------ | - | - | --------------- | -
|                                                            |   |                          |   |   |              |   |   | February 28,    |  
|                                                            |   |                          |   |   |              |   |   | 1989 (Date of   |  
|                                                            |   |                          |   |   |              |   |   | Inception) to   |  
|                                                            |   | Years ended December 31, |   |   | December 31, |  
|                                                            |   | 2008                     |   |   | 2007         |   |   | 2008            |  
|Operating Activities                                        |   |                          |   |   |              |   |   |                 |  
|Net loss for the period                                     | $ | (723,811                 | ) | $ | (519,345     | ) | $ | (6,966,073      | )
|Adjustments to reconcile net loss
      to net cash used in |   |                          |   |   |              |   |   |                 |  
|operating activities:                                       |   |                          |   |   |              |   |   |                 |  
|Amortization                                                |   | -                        |   |   | -            |   |   | 3,616           |  
|Beneficial
      conversion feature on convertible debt     |   | 122,262                  |   |   | 39,600       |   |   | 239,662         |  
|Communications                                              |   | -                        |   |   | -            |   |   | 28,000          |  
|Consulting
      fees                                       |   | 97,400                   |   |   | 84,600       |   |   | 2,468,554       |  
|Gain
      on settlement of payables                        |   | -                        |   |   | -            |   |   | (25,233         | )
|Net interest
      accrued (paid) on loans                  |   | (35,441                  | ) |   | 22,912       |   |   | 43,645          |  
|Legal
      fees                                            |   | -                        |   |   | -            |   |   | 25,000          |  
|Loss on disposal
      of equipment                         |   | -                        |   |   | -            |   |   | 1,481           |  
|Management
      fees                                       |   | -                        |   |   | -            |   |   | 7,000           |  
|Stock-based
      compensation                              |   | 251,078                  |   |   | 29,240       |   |   | 736,053         |  
|Termination
      fees                                      |   | -                        |   |   | -            |   |   | 792,000         |  
|Write-down
      of deferred investment costs               |   | -                        |   |   | -            |   |   | 34,209          |  
|Write-down
      of advances to related party               |   | -                        |   |   | -            |   |   | 606,337         |  
|Changes in non-cash item:                                   |   |                          |   |   |              |   |   |                 |  
|Accounts
      payable                                      |   | 154,165                  |   |   | 230,349      |   |   | 675,661         |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Net cash used in operating activities                       |   | (134,347                 | ) |   | (112,644     | ) |   | (1,330,088      | )
|                                                            |   |                          |   |   |              |   |   |                 |  
|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                                               |   | 134,538                  |   |   | 51,887       |   |   | 802,659         |  
|Due to related parties                                      |   | -                        |   |   | -            |   |   | 15,526          |  
|Proceeds from issuance of common stock                      |   | -                        |   |   | 50,000       |   |   | 1,162,631       |  
|Payment of offering costs                                   |   | -                        |   |   | -            |   |   | (30,270         | )
|Additional paid-in
      capital                            |   | -                        |   |   | -            |   |   | 25,442          |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Net cash provided
      by financing activities             |   | 134,538                  |   |   | 101,887      |   |   | 1,975,988       |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Increase (decrease) in cash during the period               |   | 191                      |   |   | (10,757      | ) |   | 256             |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Cash, beginning of
      the period                         |   | 65                       |   |   | 10,822       |   |   | -               |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Cash, end of the
      period                               | $ | 256                      |   | $ | 65           |   | $ | 256             |  
|                                                            |   |                          |   |   |              |   |   |                 |  
|Supplementary disclosure of cash flows:                     |   |                          |   |   |              |   |   |                 |  
|Cash paid for Interest                                      | $ | 76,806                   |   | $ | -            |   | $ | 93,859          |  

Non-cash Transactions  Note 6

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A
  Development Stage Company) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For
  the period from February 28, 1989 (Date of Inception) to December 31, 2008 
  (Stated in U.S. Dollars)

|                                           |            |  |              |  |   |                 |  |   | Restated   |  |   | Deficit     |   |   |            |  
|------------------------------------------ | ---------- |  | ------------ |  | - | --------------- |  | - | ----------- |  | - | ----------- | - | - | ---------- | -
|                                           |            |  |              |  |   |                 |  |   | Note 10     |  |   | Accumulated |   |   |            |  
|                                           |            |  |              |  |   |                 |  |   | Additional  |  |   | During the  |   |   | Restated  |  
|                                           |            |  | Common Stock |  |   | Paid-In         |  |   | Development |  |   | Note 10     |  
|                                           |            |  | 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) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For the period
  from February 28, 1989 (Date of Inception) to December 31, 2008 
  (Stated in
  U.S. Dollars)

|                                   |                |           |              |   |       |                 |   |         | Restated   |   |          | Deficit     |   |         |            |  
|---------------------------------- | -------------- | --------- | ------------ | - | ----- | --------------- | - | ------- | ----------- | - | -------- | ----------- | - | ------- | ---------- | -
|                                   |                |           |              |   |       |                 |   |         | Note 10     |   |          | Accumulated |   |         |            |  
|                                   |                |           |              |   |       |                 |   |         | Additional  |   |          | During the  |   |         | Restated - |  
|                                   |                |           | Common Stock |   |       | Paid-In         |   |         | Development |   |          | Note 10     |  
|                                   |                |           | 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          |                |           | 116,695      |   |       | 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) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For
  the period from February 28, 1989 (Date of Inception) to December 31, 2008 
  (Stated in U.S. Dollars)

|                                               |                   |            |              |  |        |                 |  |           | Restated   |   |            | Deficit     |   |          |            |  
|---------------------------------------------- | ----------------- | ---------- | ------------ |  | ------ | --------------- |  | --------- | ----------- | - | ---------- | ----------- | - | -------- | ---------- | -
|                                               |                   |            |              |  |        |                 |  |           | Note 10     |   |            | Accumulated |   |          |            |  
|                                               |                   |            |              |  |        |                 |  |           | Additional  |   |            | During the  |   |          | Restated - |  
|                                               |                   |            | Common Stock |  |        | Paid-In         |  |           | Development |   |            | Note 10     |  
|                                               |                   |            | 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) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For the period
  from February 28, 1989 (Date of Inception) to December 31, 2008 
  (Stated in
  U.S. Dollars)

|                                                              |            |   |              |   |   |                 |   |         | Restated
       |   |   | Deficit     |   |         |            |  
|------------------------------------------------------------- | ---------- | - | ------------ | - | - | --------------- | - | ------- | ---------------- | - | - | ----------- | - | ------- | ---------- | -
|                                                              |            |   |              |   |   |                 |   |         | Note 10          |   |   | Accumulated |   |         |            |  
|                                                              |            |   |              |   |   |                 |   |         | Additional       |   |   | During the  |   |         | Restated  |  
|                                                              |            |   | Common Stock |   |   | Paid-In         |   |         | Development      |   |   | Note 10     |  
|                                                              |            |   | 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 |   | 650,000      |   |   | 650             |   |         | 64,350           |   |   | -           |   |         | 65,000     |  
|Net
      loss                                                |            |   | -            |   |   | -               |   |         | -                |   |   | (1,208,941  | ) |         | (1,208,941 | )
|                                                              |            |   |              |   |   |                 |   |         |                  |   |   |             |   |         |            |  
|Balance, December 31, 2003                                    |            |   | 17,305,596   |   |   | 17,304          |   |         | 3,110,855        |   |   | (4,286,668  | ) |         | (1,158,509 | )
|Non-cash compensation
      charge                            |            | - |              |   | - |                 |   | 161,450 |                  |   | - |             |   | 161,450 |           
|Issue of stock for cash pursuant to the exercise of           |            |   |              |   |   |                 |   |         |                  |   |   |             |   |         |           
|share
      purchase warrants                                 |  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) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For
  the period from February 28, 1989 (Date of Inception) to December 31, 2008
  (Stated in U.S. Dollars)

|                                                              |            |   |              |  |   |                 |  |        | Restated   |   |   | Deficit     |   |        |            |  
|------------------------------------------------------------- | ---------- | - | ------------ |  | - | --------------- |  | ------ | ----------- | - | - | ----------- | - | ------ | ---------- | -
|                                                              |            |   |              |  |   |                 |  |        | Note 10     |   |   | Accumulated |   |        |            |  
|                                                              |            |   |              |  |   |                 |  |        | Additional  |   |   | During the  |   |        | Restated  |  
|                                                              |            |   | Common Stock |  |   | Paid-In         |  |        | Development |   |   | Note 10     |  
|                                                              |            |   | Shares       |  |   | Par
      Value |  |        | Capital     |   |   | Stage       |   |        | Total      |  
|                                                              |            |   |              |  |   |                 |  |        |             |   |   |             |   |        |            |  
|Balance, December 31, 2004                                    |            |   | 18,972,675   |  | $ | 18,971          |  | $      | 3,557,111   |   | $ | (4,803,992  | ) | $      | (1,227,910 | )
|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      |  |   | 358             |  |        | 35,417      |   |   | -           |   |        | 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                                    |            |   | 25,660,326   |  | $ | 25,660          |  | $      | 6,928,553   |   | $ | (7,960,680  | ) | $      | (1,006,467 | )
|                                                              |            |   |              |  |   |                 |  |        |             |   |   |             |   |        |            |  
|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   | )

Contd

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development
  Stage Company) 
  STATEMENTS OF CHANGES IN CAPITAL DEFICIT 
  For the period
  from February 28, 1989 (Date of Inception) to December 31, 2008 
  (Stated in
  U.S. Dollars)

|                                                              |            |            |              |   |        |                 |   |           | Restated   |   |            | Deficit     |   |            |            |  
|------------------------------------------------------------- | ---------- | ---------- | ------------ | - | ------ | --------------- | - | --------- | ----------- | - | ---------- | ----------- | - | ---------- | ---------- | -
|                                                              |            |            |              |   |        |                 |   |           | Note 10     |   |            | Accumulated |   |            |            |  
|                                                              |            |            |              |   |        |                 |   |           | Additional  |   |            | During the  |   |            | Restated - |  
|                                                              |            |            | Common Stock |   |        | Paid-In         |   |           | Development |   |            | Note 10     |  
|                                                              |            |            | Shares       |   |        | Par
      Value |   |           | Capital     |   |            | Stage       |   |            | Total      |  
|                                                              |            |            |              |   |        |                 |   |           |             |   |            |             |   |            |            |  
|Balance, December 31, 2006                                    |            |            | 25,960,326   |   | $      | 25,960          |   | $         | 7,083,053   |   | $          | (8,362,335  | ) | $          | (1,253,322 | )
|Issue of stock for cash pursuant
      to a private placement |            |            |              |   |        |                 |   |           |             |   |            |             |   |            |           
|                                                              |  at $0.25 |            | 200,000      |   |        | 200             |   |           | 49,800      |   |            | -           |   |            | 50,000     |  
|Issuance of stock for services                                |  at $0.20 |            | 700,000      |   |        | 700             |   |           | 139,300     |   |            | -           |   |            | 140,000    |  
|Non-cash compensation
      charge                            |            | -          |              |   | -      |                 |   | 29,240    |             |   | -          |             |   | 29,240     |           
|Beneficial conversion feature
      on convertible debt       |            | -          |              |   | -      |                 |   | 39,600    |             |   | -          |             |   | 39,600     |           
|Net loss                                                      |            |            | -            |   |        | -               |   |           | -           |   |            | (519,345    | ) |            | (519,345   | )
|                                                              |            |            |              |   |        |                 |   |           |             |   |            |             |   |            |            |  
|Balance, December 31, 2007                                    |            |            | 26,860,326   |   |        | 26,860          |   |           | 7,340,993   |   |            | (8,881,680  | ) |            | (1,513,827 | )
|Issuance of stock for services                                |  at $0.07 |            | 750,000      |   |        | 750             |   |           | 51,250      |   |            | -           |   |            | 52,000     |  
|Non-cash compensation
      charge                            |            | -          |              |   | -      |                 |   | 251,078   |             |   | -          |             |   | 251,078    |           
|Beneficial conversion feature
      on convertible debt       |            | -          |              |   | -      |                 |   | 122,262   |             |   | -          |             |   | 122,262    |           
|Net loss                                                      |            |            | -            |   |        | -               |   |           | -           |   |            | (723,811    | ) |            | (723,811   | )
|                                                              |            |            |              |   |        |                 |   |           |             |   |            |             |   |            |            |  
|Balance, December 31, 2008                                    |            | 27,610,326 |              | $ | 27,610 |                 | $ | 7,765,583 |             | $ | (9,605,491 | )           | $ | (1,812,298 | )         

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
  Development Stage Company) 
  NOTES TO THE FINANCIAL STATEMENTS
  December 31,
  2008 and 2007 
  (Stated in U.S. Dollars)

|1. | Nature of Operations and Ability to Continue as a
      Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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,
      2008, the Company had not yet achieved profitable operations, has an accumulated
      deficit of $9,605,491 since its inception, has a working capital deficiency
      of $1,020,299 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. Management anticipates that it
      requires approximately $100,000 over the twelve months ended December
      31, 2008 to continue operations. In addition to funding the Companys
      general, administrative and corporate expenses the Company is obligated
      to address its current obligations totaling $1,030,555. To the extent
      that cash needs are not achieved from operating cash flow and existing
      cash on hand, the Company will be required to raise necessary cash through
      shareholder loans, equity issuances and/or other debt financing. Amounts
      raised will be used to continue the development of the Company's investment
      activities, and for other working capital purposes.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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, 2009, 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 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 financial statements have, in managements
      opinion, been properly prepared within the framework of the significant
      accounting policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Development Stage Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company is a development stage company as defined
      in Statement of Financial Accounting Standards (SFAS) 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

1

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|2. | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Deferred Investment Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Deferred investment costs 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 net realizable value if it is determined that there is
      an impairment of its value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company utilizes the liability method of accounting
      for income taxes as set forth in SFAS No. 109, Accounting for Income
        Taxes(SFAS 109). Under the liability method, deferred
      taxes are determined based on the temporary differences between the financial
      statement and tax basis of assets and liabilities using tax rates expected
      to be in effect during the years in which the basis differences reverse.
      A valuation allowance is recorded when it is more likely than not that
      some of the deferred tax assets will not be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On January 1, 2007 the Company adopted the provisions
      of FASB Interpretation No. 48, Accounting for Uncertainty in Income
        Taxes  An Interpretation of FASB Statement No. 109(FIN
      48), which have been applied to all income tax positions commencing
      from that date. FIN 48 provides detailed guidance for the financial statement
      recognition, measurement and disclosure of uncertain tax positions recognized
      in an enterprises financial statements in accordance with SFAS 109.
      Income tax positions must meet a more-likely-than-not recognition threshold
      at the effective date to be recognized upon the adoption of FIN 48 and
      in subsequent periods. The Company recognizes potential accrued interest
      and penalties related to unrecognized tax benefits within operations as
      income tax expense. The adoption of FIN 48 did not have a material impact
      on the Companys financial position, results of operations or cash
      flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Prior to 2007, the Company determined its income tax
      contingencies in accordance with SFAS No. 5, Accounting for Contingencies.
      The Company recorded estimated tax liabilities to the extent the contingencies
      were probable and could be reasonably estimated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Basic Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company reports basic loss per share in accordance
      with the SFAS No. 128, Earnings Per Share. Basic loss per
      share is computed using the weighted average number of shares outstanding
      during the period. Diluted loss per share is computed similar to basic
      loss per share except that the denominator is increased to include the
      number of additional common shares that would have been outstanding if
      the dilutive potential common shares had been issued. In addition, in
      computing the dilutive effect of convertible securities, the numerator
      is adjusted to add back any convertible preferred dividend and the after-tax
      amount of interest in the period associated with any convertible debt.
      The numerator is also adjusted for any other changes in income or loss
      that would result from the assumed conversion of these potential common
      shares. Common share equivalents represent the dilutive effect of the
      assumed exercise of the outstanding stock options and warrants, using
      the treasury stock method, at either the beginning of the respective period
      presented or the date of issuance, whichever is later, and only if the
      common stock equivalents are considered dilutive based upon the Companys
      net loss position at the calculation date. At December 31, 2008, the Company
      had 18,017,588 (2007  6,643,212) common share equivalents in respect
      to convertible preferred shares, stock options, warrants and convertible
      debt. Because the Company incurred a loss diluted loss per share is the
      same as basic loss per share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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 SFAS
      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. Any exchange
      gains or losses are included in the Statements of Operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

2

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|2. | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The carrying value of cash, accounts payable, and loans
      payable approximates fair value because of the demand or short term to
      maturity of such instruments. Unless otherwise noted, it is managements
      opinion that the Company is not exposed to significant interest, currency
      or credit risks arising from these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company accounts for stock-based compensation using
      SFAS 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. The Company uses the Black-Scholes option
      valuation model to calculate stock-based compensation at the date of the
      grant. Option valuation models require the input of highly subjective
      assumptions, including the expected price volatility. Changes in assumptions
      can materially affect the fair value estimate. Compensation expense for
      unvested options to non-employees is revalued at each period end and is
      being amortized over the vesting period of the options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Convertible Instruments and Beneficial Conversion
      Feature                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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. As at December 31, 2008 and 2007, there were no convertible
      instruments with detachable instruments outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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). The
      Company first assessed the convertible debt securities to determine if
      the embedded conversion feature meets the exemption criteria of paragraph
      11(a) of SFAS No. 133 Accounting for Derivative Instruments and
      Hedging Activities. For the convertible debt securities outstanding
      as at December 31, 2008 and 2007, the embedded conversion features met
      the exemption criteria to be classified as equity instruments. 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 using the effective interest
      rate over the term of the loan. However, due to demand nature of the convertible
      debt securities, the discount of the debt instrument was immediately expensed.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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 unless partially or fully deferred by the FASB. This SFAS
      did not have a material impact on the Companys financial position
      or results from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

3

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|2. | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Recently Adopted Accounting Pronouncements 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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. This SFAS
      did not have a material impact on the Companys financial position or
      results from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In June 2007, the Emerging Issues Task Force (EITF)
      reached a consensus on EITF No. 07-03, Accounting for Non- refundable
      Advance Payments for Goods or Services to Be Used in Future Research and
      Development Activities (EITF 07-03). EITF 07-03 specifies the timing of
      expense recognition for non-refundable advance payments for goods or
      services that will be used or rendered for research and development
      activities. EITF 07-03 was effective for fiscal years beginning after
      December 15, 2007. The adoption of EITF 07-03 did not have a material
      impact on the Companys financial position and results of
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Recent Accounting Pronouncements Not Yet
      Adopted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In December 2007, the Emerging Issues Task Force (EITF)
      reached a consensus on EITF No. 07-01, Accounting for Collaborative
      Arrangements Related to the Development and Commercialization of
      Intellectual Property (EITF 07- 01). EITF 07-01 discusses the
      appropriate income statement presentation and classification for the
      activities and payments between the participants in arrangements related
      to the development and commercialization of intellectual property. The
      sufficiency of disclosure related to these arrangements is also specified.
      EITF 07-01 is effective for fiscal years beginning after December 15,
      2008. As a result, EITF 07-01 was effective for the Company as of January
      1, 2009. The Company expects that the adoption of EITF 07-01 will have
      minimal, if any, impact on its financial position and results of
      operations. However, based upon the nature of the Companys business, EITF
      07-01 could have a material impact on its financial position and results
      of operations in future years.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In December 2007, the FASB issued SFAS No. 141(R),
      Business Combinations. The standard requires the acquiring entity in a
      business combination to recognize all (and only) the assets acquired and
      liabilities assumed in the transaction; establishes the acquisition date
      fair value as the measurement objective for all assets acquired and
      liabilities assumed; and requires the acquirer to disclose to investors
      and other users all of the information they need to evaluate and
      understand the nature and financial effect of the business combination.
      The Company is currently reviewing the guidance, which is effective for
      fiscal years beginning after December 15, 2008, to determine the potential
      impact, if any, on its financial statements.                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In December 2007, the FASB issued SFAS No. 160,
      Noncontrolling Interests in Consolidated Financial Statements. The
      standard requires all entities to report noncontrolling (minority)
      interests as equity in consolidated financial statements. SFAS No. 160
      eliminates the diversity that currently exists in accounting for
      transactions between an entity and noncontrolling interests by requiring
      they be treated as equity transactions. The Company is currently reviewing
      the guidance, which is effective for fiscal years beginning after December
      15, 2008, to determine the potential impact, if any, on its financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In March 2008, the FASB issued SFAS No. 161, Disclosures
      about Derivative Instruments and Hedging Activities  An Amendment of FASB
      Statement No. 133 (SFAS 161). SFAS 161 requires enhanced qualitative
      disclosures about objectives and strategies for using derivatives,
      quantitative disclosures about fair value amounts of and gains and losses
      on derivative instruments, and disclosures about credit-risk-related
      contingent features in derivative agreements. SFAS 161 is effective for
      financial statements issued for fiscal years and interim periods beginning
      after November 15, 2008. The Company is currently evaluating the impact of
      SFAS 161 on its financial statements.                                                                                                                                                                                                                                                                                                                                                                     

4

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|2. | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Recent Accounting Pronouncements Not Yet Adopted 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In April 2008, the FASB issued FSP 142-3, Determination
      of the Useful Life of Intangible Assets. This FSP amends the factors that
      should be considered in developing renewal or extension assumptions used
      to determine the useful life of a recognized intangible asset under FASB
      Statement No. 142, Goodwill and Other Intangible Assets. The intent of
      this FSP is to improve the consistency between the useful life of a
      recognized intangible asset under Statement 142 and the period of expected
      cash flows used to measure the fair value of the asset under FASB
      Statement No. 141 (Revised 2007), Business Combinations, and other U.S.
      generally accepted accounting principles (GAAP). This FSP is effective for
      financial statements issued for fiscal years beginning after December 15,
      2008, and interim periods within those fiscal years. Early adoption is
      prohibited. The Company does not expect the adoption of FAS 142-3 to have
      a material effect on its results of operations and financial
      condition.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In May 2008, FASB issued SFAS No. 162, The Hierarchy of
      Generally Accepted Accounting Principles (SFAS 162). This standard is
      intended to improve financial reporting by identifying a consistent
      framework, or hierarchy, for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      GAAP for non-governmental entities. SFAS No. 162 is effective 60 days
      following the U.S. Securities and Exchange Commissions approval of the
      Public Company Accounting Oversight Board amendments to AU Section 411,
      the meaning of Present Fairly in Conformity with GAAP. The Company is in
      the process of evaluating the impact, if any, of SFAS 162 on its financial
      statements.                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In May 2008, the FASB issued Staff Position No. APB 14-1
      Accounting for Convertible Debt Instruments that may be Settled in Cash
      Upon Conversion (FSP APB 14-1). FSP APB 14-1 requires the issuer of
      certain convertible debt instruments that may be settled in cash (or other
      assets) on conversion to separately account for the liability and equity
      components of the instrument in a manner that reflects the issuers
      nonconvertible debt borrowing rate. Further, FSP ABP 14-1 clarifies the
      appropriate economics of the conversion options as borrowing costs and
      their potential dilutive effects in earnings per share. FSP APB 14-1 is
      effective for fiscal years beginning after December 15, 2008. The Company
      has not yet completed its evaluation of FSP APB 14-1, but the Company does
      not currently believe that it will have a material impact on its results
      of operations, financial position or cash flows.                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In June 2008, the Emerging Issues Task Force (EITF)
      reached consensus on Issue No. 07-5, Determining Whether an Instrument
        (or Embedded Feature) is Indexed to an Entitys Own Stock(EIFT
      07-5). EIFT 07-5 provides guidance for instruments (including options or
      warrants on a companys shares, forward contracts on a companys shares,
      and convertible debt instruments and convertible preferred stock) that may
      contain contract terms that call into question whether the instrument or
      embedded feature is indexed to the entitys own stock. EIFT 07-5 is
      effective for financial statements issued for fiscal years and interim
      periods beginning after December 15, 2008. The Company currently is
      evaluating the impact of applying EIFT 07-5.                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Deferred Investment Costs Note 5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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 (2007 - $1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

5

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|4. | Loans Payable
|-- | -------------

| |    |                                                                                     |   | December 31, |  |   | December 31, | 
| | -- | ----------------------------------------------------------------------------------- | - | ------------ |  | - | ------------ | 
| |    |                                                                                     |   | 2008         |  |   | 2007         | 
| |    |                                                                                     |   |              |  |   |              | 
| | a) | Loan payable to a company controlled by a director
      of the Company             | $ | 10,591       |  | $ | 9,407        | 
| |    | including accrued interest of $3,789 (2007 - $2,605). The loan
      is             |   |              |  |   |              | 
| |    | unsecured, bearing interest at 12% per annum
      and is repayable on demand.      |   |              |  |   |              | 
| |    |                                                                                     |   |              |  |   |              | 
| | b) | Loans payable to companies controlled by directors
      of the Company. The        |   | 23,417       |  |   | 19,217       | 
| |    | loans are unsecured, non-interest bearing, and repayable upon
      demand.         |   |              |  |   |              | 
| |    |                                                                                     |   |              |  |   |              | 
| | c) | Loan payable to a company controlled by a director of the Company                   |   | -            |  |   | 156,329      | 
| |    | including accrued interest of $Nil (2007 -
      $53,123 ). The loans were          |   |              |  |   |              | 
| |    | unsecured, bearing interest at 10% per annum, and repayable
      upon              |   |              |  |   |              | 
| |    | demand.                                                                             |   |              |  |   |              | 
| |    |                                                                                     |   |              |  |   |              | 
| | d) | Loan payable to a company controlled by a director
      of the Company,            |   | 181,570      |  |   | 150,071      | 
| |    | including accrued interest payable of $17,804 (2007 - $14,341),
      pursuant      |   |              |  |   |              | 
| |    | to a Convertible Loan Agreement. The loan is
      unsecured, bearing interest      |   |              |  |   |              | 
| |    | at 10% per annum and is repayable on demand. The lender may
      at                |   |              |  |   |              | 
| |    | anytime convert the principal sum into units
      of the Company. Each unit        |   |              |  |   |              | 
| |    | will consist of one common share plus one common share purchase                     |   |              |  |   |              | 
| |    | warrant. The principal sum of $163,766 may
      be converted into 2,320,858        |   |              |  |   |              | 
| |    | units. Conversion of these loans and resulting associated warrants
      to         |   |              |  |   |              | 
| |    | equity will be based on the conversion price
      set at the time the principal    |   |              |  |   |              | 
| |    | amount was drawn ranging from $0.05 to $0.23. During the year
      ended           |   |              |  |   |              | 
| |    | December 31, 2008 an amount of $19,660 (2007
      - $39,600) was                   |   |              |  |   |              | 
| |    | recognized as the intrinsic value of the beneficial conversion
      feature of     |   |              |  |   |              | 
| |    | these loans and this amount was included in
      interest expense. Upon            |   |              |  |   |              | 
| |    | conversion of this loan the fair value of the warrants, $73,685
      would be      |   |              |  |   |              | 
| |    | recognized as an interest expense and credited
      to additional paid-in capital. |   |              |  |   |              | 
| |    |                                                                                     |   |              |  |   |              | 
| | e) | Loan payable to a company controlled by a director
      of the Company,            |   | 277,261      |  |   | 58,718       | 
| |    | including accrued interest of $22,052 (2007 - $9,018), pursuant
      to a          |   |              |  |   |              | 
| |    | Convertible Loan Agreement. The loan is unsecured,
      bearing interest at        |   |              |  |   |              | 
| |    | 10% per annum and is repayable on demand. The lender may at
      anytime           |   |              |  |   |              | 
| |    | convert the principal sum into units of the
      Company. Each unit will           |   |              |  |   |              | 
| |    | consist of one common share plus one common share purchase
      warrant.           |   |              |  |   |              | 
| |    | The principal sum of $255,209 may be converted
      into 4,526,436 units.          |   |              |  |   |              | 
| |    | Conversion of this loan and resulting associated warrants to
      equity will be   |   |              |  |   |              | 
| |    | based on the conversion price set at the time
      the principal amount was        |   |              |  |   |              | 
| |    | drawn ranging from $0.05 to $0.12. During the period ended
      December           |   |              |  |   |              | 
| |    | 31, 2008 an amount of $102,602 (2007 - $Nil)
      was recognized as the            |   |              |  |   |              | 
| |    | intrinsic value of the beneficial conversion feature of these
      loans and this  |   |              |  |   |              | 
| |    | amount was included in interest expense. Upon
      conversion of this loan the     |   |              |  |   |              | 
| |    | fair value of the warrants, $113,338 would be recognized as
      an interest       |   |              |  |   |              | 
| |    | expense and credited to additional paid-in capital.                                 |   |              |  |   |              | 
| |    |                                                                                     |   |              |  |   |              | 
| |    |                                                                                     | $ | 492,839      |  | $ | 393,742      | 

6

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|5. | Capital Stock Notes 4 and 6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On June 1, 2008, the Company issued 750,000 common shares
      to two consultants for consulting services to be provided over a twelve
      month period, valued at $52,000. The Company determined the fair value of
      the shares issued using the market price on the share issuance date. In
      September 2008 the Company terminated its agreement with one of the
      consultants and the remaining value of these shares was charged to
      operations. As a result as at December 31, 2008, $10,000 is remaining in
      prepaid expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the year ended December 31, 2007, the Company
      completed a private placement of 200,000 common shares at $0.25 per share
      for total proceeds of $50,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On May 24, 2007, the Company issued a total of 700,000
      shares to two consulting firms for investor relations consulting services
      to be provided over a twelve month period, valued at $140,000. The Company
      determined the fair value of the shares issued using the market price on
      the share issuance date. At December 31, 2007, $55,400 is recorded as
      prepaid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Class A Convertible Preferred Shares  Note 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Class A convertible preferred shares issued in 2003
      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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The aggregate liquidation value of the Class A
      convertible preferred shares is $792,000. A merger or consolidation of the
      Company that results in the Companys stockholders immediately prior to
      the transaction not holding at least 50% of the voting power of the
      surviving entity shall be deemed a liquidation event.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the year ended December 31, 2008, the Company
      granted 4,225,000 (2007  125,000) share purchase options to directors and
      consultants of the Company entitling them to acquire 4,225,000 (2007 
      125,000) common shares at $0.15 per share, the closing price of the
      Companys common stock on the date of the grants. 3,825,000 of these
      options were granted on June 1, 2008 and 400,000 were granted on October
      1, 2008. The options have been granted with a term of 5 years (2007  5
      years). In conjunction with the issuance of these new options, those same
      directors and consultants agreed to the cancellation of 1,931,000
      previously issued share purchase options. The Company has charged to
      consulting fees on the statement of operations: $251,078 (2007 - $29,240)
      of compensation expense, for share purchase options awarded to directors
      and consultants during the period ended December 31, 2008. The weighted
      average fair value of the options granted during the period was $0.06
      (2007 - $0.23) per option.

7

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|5. | Capital Stock Notes 4 and 6  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The fair value of each option grant was estimated on the
      date of the grant using the Black-Scholes option valuation model. The
      Black-Scholes option valuation 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Stock-based Compensation  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The weighted average fair value at the date of grant of
      the options was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                     | 2008      | 2007   
| | ----------------------------------- | --------- | -------
| |                                     |           |        
| | Weighted average fair value         | $0.06     | $0.23  
| | Total options granted               | 4,225,000 | 125,000
| | Total fair value of options granted | $251,078  | $29,240

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

| |                              | 2008  | 2007 
| | ---------------------------- | ----- | -----
| |                              |       |      
| | Expected dividend yield      | 0.0%  | 0.0% 
| | Expected volatility          | 170%  | 167% 
| | Risk-free Interest Rate      | 3.30% | 4.68%
| | Expected term in
      years | 5     | 5    

The expected volatility is calculated
  based on the Companys historical share price.

During the previous two years ended
  December 31, 2008, the change in share purchase options outstanding are as
  follows:

| |                                                |            |   | Weighted |  | Weighted         |  |   |           | 
| | ---------------------------------------------- | ---------- | - | -------- |  | ---------------- |  | - | --------- | 
| |                                                |            |   | Average  |  | Average          |  |   | Aggregate | 
| |                                                |            |   | Exercise |  | Remaining        |  |   | Intrinsic | 
| |                                                | Shares     |   | Price    |  | Contractual Life |  |   | Value     | 
| |                                                |            |   |          |  |                  |  |   |           | 
| | Options outstanding at December 31, 2006       | 1,962,000  |   | $0.23    |  | 1.76 years       |  | $ | 392,400   | 
| | Granted during the
      year                  | 125,000    |   | $0.35    |  | 4.00
      years |  |   |           | 
| |                                                |            |   |          |  |                  |  |   |           | 
| | Options outstanding at December 31, 2007       | 2,087,000  |   | $0.23    |  | 0.96 years       |  | $ | -         | 
| | Granted during the year                        | 4,225,000  |   | $0.15    |  | 5.0 years        |  |   | -         | 
| | Cancelled during
      the period              | (2,187,000 | ) | $0.23    |  | 0.73
      years |  |   | -         | 
| |                                                |            |   |          |  |                  |  |   |           | 
| | Options
      outstanding at December 31, 2008 | 4,125,000  |   | $0.15    |  | 4.45
      years |  | $ | -         | 

8

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|5. | Capital Stock Notes 4 and 6  (contd)
        Stock-based Compensation  (contd)       
|-- | ------------------------------------------------------------------------------------------
|   |                                                                                           
|   | At December 31, 2008, the Company had share purchase
      options outstanding as follows:

| | Number of Options | Exercise Price | Expiry Date       
| | ----------------- | -------------- | ------------------
| |                   |                |                   
| | 3,725,000         | $0.15          | June 1, 2013      
| | 400,000           | $0.15          | September 30, 2013
| | 4,125,000         |                |                   

At December 31, 2008 and 2007 all of
  the outstanding share purchase options were exercisable. Commitments 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.

To acquire 80% of Gulf Star, the
  Company must issue five million common shares at $0.125 per share. The shares
  are to be issued over a three-year period as follows:

| | a) | 1,000,000 allotted shares issued to Star Leisure upon
      completion of dredging works (estimated cost of dredging contract is
      $4,500,000);                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 1,000,000 allotted shares issued to Star Leisure upon
      completion of final planning and design works (estimated planning contract
      cost is $8,000,000);                           
| | c) | 1,000,000 allotted shares issued to Star Leisure upon the
      Company securing full funding in a combination of debt and/or equity that
      allows main resort construction to commence;
| | d) | 1,000,000 allotted shares issued to Star Leisure upon
      completion of 50% of resort construction; and                                                                                   
| | e) | 1,000,000 allotted shares issued to Star Leisure upon
      resort being opened for business at the start of
      operations.                                                              

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 demand. 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 issued into
  escrow 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
  released from escrow in stages as the dredging contract progresses. 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.

9

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|5. | Capital Stock Notes 4 and 6  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Commitments  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Acquisition of Gulf Star World Development W.L.L. 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | As at December 31, 2008 there has been no activity or
      changes involving the Dream Island project since March 13, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Acquisition of Port Residence Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company entered into a letter of intent dated January
      7, 2008, to purchase 100% of the outstanding shares of a Turkish company
      (TurkCo) to be formed and, thereby, acquiring a 100% interest in the
      Port Residence Project, a real estate development project, in Calkaya,
      Turkey. An initial option will allow the Company to purchase up to 30%
      of the outstanding shares of Calkaya TurkCo. Upon full exercise of the
      initial option, the Company shall be entitled to exercise a second
      option to purchase the remaining outstanding shares of Calkaya TurkCo.,
      as follows:                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

10

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|6. | 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 |  |               |   | Weighted        |  |   |           |  
| | -------------------------------------------- | --------------- |  | ------------- | - | --------------- |  | - | --------- | -
| |                                              | Preferred       |  | Number of     |   | Average Price   |  |   |           |  
| | Year                                         | Shares          |  | Common Shares |   | Per
      Share |  |   | Total     |  
| |                                              |                 |  |               |   |                 |  |   |           |  
| | 1995 Consulting fee                          | -               |  | 50,000        |   | $0.03           |  | $ | 1,500     |  
| | 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    |  
| | 2007 Consulting fees                         | -               |  | 700,000       |   | $0.20           |  |   | 140,000   |  
| | 2008
      Consulting fees                   | -               |  | 750,000       |   | $0.07           |  |   | 52,000    |  
| |                                              |                 |  |               |   |                 |  |   |           |  
| |                                              | 198,000         |  | 20,589,343    |   |                 |  | $ | 6,530,725 |  

These amounts have been excluded from
  the investing and financing activities of the statements of cash flows.

11

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|7. | Related Party Transactions Notes 4 and
      5                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                        
|   | The Company was charged the following by stockholders,
      directors, by companies controlled by directors and/or stockholders 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, | 
| |                    |   | 2008                    |  |   | 2007         |  |   | 2008            | 
| |                    |   |                         |  |   |              |  |   |                 | 
| | Consulting fees    | $ | 184,223                 |  | $ | 29,150       |  | $ | 249,043         | 
| | Interest           |   | 163,627                 |  |   | 70,345       |  |   | 259,220         | 
| | Management fees    |   | 156,938                 |  |   | 185,400      |  |   | 546,325         | 
| | Office and general |   | -                       |  |   | -            |  |   | 26,944          | 
| | Rent               |   | 17,760                  |  |   | 22,120       |  |   | 130,232         | 
| |                    |   |                         |  |   |              |  |   |                 | 
| |                    | $ | 522,548                 |  | $ | 307,015      |  | $ | 1,211,764       | 

At December 31, 2008, accounts payable
  includes $442,684 (2007 - $288,276) 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, 2008, accounts payable
  also includes $15,527 (2007 - $15,527) of expenses for operating costs paid on
  behalf of the Company by companies with directors in common.

The Company entered into two Management
  Services Agreements dated January 1, 2007 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, plus taxes where applicable, for
  management services. These agreements are for a 24-month period and expired on
  December 31, 2008. Effective September 12, 2008, one of the agreements was
  terminated and the other was not renewed subsequent to 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.

The Company also entered into a
  Consulting Services Agreement with a company controlled by a director of the
  Company. Under the terms of this agreement, the Company will pay $5,500 per
  month, plus taxes where applicable, for consulting services. This agreement was
  suspended in May 2007, and terminated in September 2008.

12

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|8. | Income Taxes                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                              
|   | The tax effects of temporary differences that give rise
      to deferred tax assets at December 31, 2008 and 2007 are presented
      below:

| |                                            |   | December
      31, |  
| | ------------------------------------------ | - | ------------------ | -
| |                                            |   | 2008               |  
| |                                            |   |                    |  
| | Net tax operating loss carryforwards       | $ | 2,578,000          |  
| | Accrued liabilities                        |   | 124,000            |  
| | Investment                                 |   | 12,000             |  
| | Gross deferred tax assets                  |   | 2,714,000          |  
| | Valuation allowance for deferred tax asset |   | (2,714,000         | )
| |                                            |   |                    |  
| |                                            | $ | -                  |  

The Company evaluates its valuation
  allowance requirements based on projected future operations. When circumstances
  change and this causes a change in managements judgment about the
  recoverability of deferred tax assets, the impact of the change on the valuation
  allowance is reflected in current income.

At December 31, 2008, the Company has
  accumulated non-operating losses of approximately $7,367,000 (2007 - $7,370,000)
  which may be carried forward to reduce taxation income in future years. The
  non-operating losses expire from 2009 to 2028.

The potential benefits of the losses
  have not been recorded in the financial statements. As at December 31, 2008 the
  Company is in arrears on filing its statutory income tax returns and the amounts
  presented above are based on estimates. The actual losses available could differ
  from these estimates.

The provision for income taxes differs
  from the result which would be obtained by applying the statutory income tax
  rate to the loss before income taxes as follows:

| |                                 |   | December
      31, |  
| | ------------------------------- | - | ------------------ | -
| |                                 |   | 2008               |  
| | Loss for the year               | $ | (723,811           | )
| | Statutory income
      tax rate |   | 35%                |  
| | Expected income tax recovery    | $ | (253,000           | )
| | Permanent differences           |   | 140,000            |  
| | Change in valuation allowance   |   | 113,000            |  
| | Income tax expense              | $ | -                  |  

On January 1, 2007, the Company adopted
  FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
  48"). The Company files income tax returns in the United States. All of the
  Companys tax returns are subject to tax examinations until respective statue of
  limitation. The Company currently has no tax years under examination.

Based on managements assessment of FIN
  48, the Company concluded that the adoption of FIN 48, as of January 1, 2007,
  had no significant impact on our results of operations or financial position,
  and required no adjustment to the

13

---

**STRATEGIC INTERNET INVESTMENTS,
  INCORPORATED**(A Development Stage Company) 
  NOTES TO THE
  FINANCIAL STATEMENTS
  December 31, 2008 and 2007 
  (Stated in U.S.
    Dollars)

|8. | Income Taxes (cont)
|-- | ---------------------

opening balance sheet accounts. The
  year-end analysis supports the same conclusion, and the Company does not have an
  accrual for uncertain tax positions as of December 31, 2007 and 2008. As a
  result, tabular reconciliation of beginning and ending balances would not be
  meaningful. If interest and penalties were to be assessed, the Company would
  charge interest to interest expense, and penalties to other operating expense.
  It is not anticipated that unrecognized tax benefits would significantly
  increase or decrease within twelve months of the reporting date.

The Companys tax filings are
  delinquent for all tax years since inception and are subject to audit by taxing
  authorities in jurisdictions where it conducts business. These audits may result
  in assessments of additional taxes, penalties and interest that are subsequently
  resolved with the authorities or potentially through the courts. Management
  believes the Company has adequately provided for any ultimate amounts that are
  likely to result from these audits; however, final assessments, if any, could be
  significantly different than the amounts recorded in the financial
  statements.

|9. | Comparative Figures
|-- | -------------------

Certain comparative figures have been
  reclassified to conform to current years presentation.

|10. | Restatement
|--- | -----------

Subsequent to the issue of the December
  31, 2007 financial statements, the Company has corrected an error in the
  accounting for convertible preferred shares (Note 5). The issuance was original
  recorded as permanent equity; however, the Class A Preferred Stock was issued
  with a deemed liquidation clause that provides that the preferred shares become
  redeemable at the election of the holders of a majority of the then outstanding
  shares of Class A Preferred Stock in the event of a consolidation or merger by
  the Company, as defined, or the sale of all or substantially all of the assets
  of the Company. In accordance with Emerging Issues Task Force (EITF) D-98, the
  Class A Preferred Stock is required to be classified as mezzanine equity because
  a change of our control could occur without the Companys approval and thus
  redemption of the Series A Preferred Stock is not solely under the Companys
  control.

As a result the following components of
  Capital Deficit were restated after giving effect to the restatement adjustment
  for the year ended December 31, 2007:

| | • | Additional paid-in capital was reduced by $791,802 from
      $8,132,795 to $7,340,993                               
| | - | ---------------------------------------------------------------------------------------------------------------------
| | • | Class A Convertible preferred stock of $198 was removed
      from capital deficit and classified as mezzanine equity

The Class A Convertible preferred stock
  issued in 2003 has been classified as mezzanine equity at December 31, 2007 and
  for all periods since issuance at $792,000, being the liquidation value of the
  preferred shares.

The above restatement had no impact on
  the statement of operations or statement of cash flows.

14

---



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

Resignation of Independent Accountant

On January 21, 2008, Amisano Hanson. Chartered Accountant
resigned as our independent accountant. Amisano Hanson entered into an agreement
with BDO Dunwoody LLP, pursuant to which Amisano Hanson merged its operations
into BDO Dunwoody and certain of the professional staff and partners joined BDO
Dunwoody either as employees or partners of BDO Dunwoody and will continue to
practice as members of BDO Dunwoody.

The report of Amisano Hanson regarding our financial statements
for the fiscal years ended December 31, 2006 and 2005 did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles, except that such report on
our financial statements for the years ended December 31, 2006 and 2005
contained an explanatory paragraph in respect to uncertainty as to our ability
to continue as a going concern. During the years ended December 31, 2006 and
2005 and during the period from the end of the most recently completed fiscal
year through January 21, 2008, the date of resignation, there were no
disagreements with Amisano Hanson on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Amisano Hanson would have
caused it to make reference to such disagreements in its reports.

We provided Amisano Hanson with a copy of our Current Report on
Form 8-K prior to its filing with the Securities and Exchange Commission and
requested that Amisano Hanson furnish our company with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements and, if it does not agree, the respects in which it does not agree. A
copy of such letter, dated February 19, 2008, was filed as Exhibit 16.1 to our
Current Report on Form 8-K filed with the Securities and Exchange Commission on
February 22, 2008.

Engagement of Independent Accountant.

Concurrent with the resignation of Amisano Hanson, we engaged
BDO Dunwoody, as our independent accountant. Prior to engaging BDO Dunwoody, we
did not consult with BDO Dunwoody regarding the application of accounting
principles to a specific completed or contemplated transaction or regarding the
type of audit opinion that might be rendered by BDO Dunwoody on our financial
statements, and BDO Dunwoody did not provide any written or oral advice that was
an important factor considered by our company in reaching a decision as to any
such accounting, auditing or financial reporting issue. The engagement of BDO
Dunwoody was approved by our board of directors.

Disagreements With Accountants on Accounting and Financial
Disclosure

Not applicable

Item 9A(T). Controls and Procedures.

Disclosure controls and procedures

As required by Rule 13(a)-15 under the Exchange Act, in
connection with this annual report on Form 10-K, under the direction of our
Chief Executive Officer and Chief Financial Officer, we have evaluated our
disclosure controls and procedures as of December 31, 2008, including the
remedial actions discussed below, and we have concluded that, as of December 31,
2008, our disclosure controls and procedures were ineffective as discussed in
greater detail below. As of the date of this filing, we are still in the process
of remediating such material weaknesses in our internal controls and procedures.
Additionally, we are currently inactive as we seek new business opportunities.

It should be noted that while our management believes our
disclosure controls and procedures provide a reasonable level of assurance, they
do not expect that our disclosure controls and procedures or internal controls
will prevent all error and all fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within our company have been detected. These inherent limitations include
the realities that

---

judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

Internal control over financial reporting

Managements annual report on internal control over financial reporting

We have effected a  restatement of our financial results for the year ended December 31, 2007.

a) The restatement

The restatement  was effected to correct errors in our accounting treatment of the  classification of Class A Convertible preferred shares.

As a result of our  review of these transactions, the effect on the amended accounting for the  adjustments above is discussed in Note 10 to our financial statements.

(b) Evaluation of  disclosure controls and procedures and remediation

In connection with  the restatement our financial results for the year ended December 31, 2007,  under the direction of our management, we have reevaluated certain disclosure  controls and procedures and internal controls over financial reporting. In  connection with the restatement we identified a material weakness in our  internal controls and procedures relating to the accounting treatment of our preferred  stock.

Management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management evaluated, under the supervision and with the participation of our Chief
Executive Officer, the effectiveness of our internal control over financial reporting as of December 31, 2008.

Based on its evaluation under the framework in Internal ControlIntegrated Framework , issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that our internal control over financial reporting
was not effective as of December 31, 2008, due to the existence of significant deficiencies constituting material weaknesses, as described in greater detail below. A material weakness is a control deficiency, or combination of control deficiencies,
such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

This annual report does not include an attestation report of our companys independent registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by our
companys independent registered public accounting firm pursuant to temporary rules of the SEC that permit our company to provide only managements report in this annual report.

Limitations on Effectiveness of Controls

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



---

Material Weaknesses Identified

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2008, certain significant deficiencies in internal control became evident to management that represents material weaknesses, including:

|a) | Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the year ended December 31, 2008, we had limited personnel that performed nearly all aspects of our financial reporting
process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible
duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the
SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) | Insufficient corporate governance policies. Although we
      have corporate governance policies which provides broad guidelines for
      corporate governance, our corporate governance activities and processes
      are not always formally documented. Specifically, decisions made by the
      board to be carried out by management should be documented and
      communicated on a timely basis to reduce the likelihood of any
      misunderstandings regarding key decisions affecting our operations and
      management; and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|c) | Our companys accounting personnel does not have
      sufficient technical accounting knowledge relating to accounting for
      income taxes and complex US GAAP matters. In consultation with our
      auditors, management corrected any errors prior to the release of our
      companys December 31, 2008 financial statements.                                                                                                                                                                                                     

The Company believes these material weaknesses are partially
mitigated by: the active involvement of senior management and the board of
directors in all the affairs of the Company; open lines of communication within
the Company; the present levels of activities and transactions within the
Company being readily transparent; the thorough review of the Companys
financial statements by management, and the board of directors. However, these
mitigating factors will not necessarily prevent the likelihood that a material
misstatement will not occur as a result of the aforesaid weaknesses in the
Companys internal controls over financial reporting. A system of internal
controls over financial reporting, no matter how well conceived or operated, can
provide only reasonable, not absolute, assurance that the objectives of the
internal controls over financial reporting are met.

Plan for Remediation of Material Weaknesses

We intend to take appropriate and reasonable steps to make the
necessary improvements to remediate these deficiencies. We intend to consider
the results of our remediation efforts and related testing as part of our
year-end 2009 assessment of the effectiveness of our internal control over
financial reporting.

Subject to receipt of additional financing, we intend to
undertake the below remediation measures to address the material weaknesses
described in this annual report. Such remediation activities include the
following:

| | (1) | We intend to continue to update the documentation of our
      internal control processes, including formal risk assessment of our
      financial reporting processes.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial
reporting during the fourth quarter of our fiscal year ended December 31, 2008
that have materially affected or are reasonably likely to materially affect, our
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

---

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Directors and Executive Officers

|                                        |     |                    | Business
      experience |                          
|--------------------------------------- | --- | ------------------ | ------------------------- | -------------------------
|Name and position                       | Age | Term               | during
      past 5 years | Other
      directorships
|                                        |     |                    |                           |                          
|Abbas Salih                             | 62  | March 7, 2001      | Director and officer      | None                     
|Chairman, President, CEO, CFO,          |     | to                 | of the Company.           |                          
|Director                                |     | Present            |                           |                          
|                                        |     |                    |                           |                          
|Mohammed Baymain                        | 55  | September 22, 2008 | Director of the           | None                     
|Director                                |     | to                 | Company and               |                          
|                                        |     | Present            | independent               |                          
|                                        |     |                    | businessman               |                          
|                                        |     |                    |                           |                          
|Ralph Shearing                          | 52  | March 7, 2001      | Director of both the      | Soho Resources           
|Director                                |     | to                 | Company, and a            | Corp., a reporting       
|                                        |     | Present            | natural resource          | issuer in Canada.        
|                                        |     |                    | exploration company.      |                          
|                                        |     |                    |                           |                          
|Dr. Ralf Zabel                          | 49  | September 18, 2008 | Officer of the            | None                     
|Vice-president - International Business |     | to                 | Company, and              |                          
|Development and Operations              |     | Present            | independent               |                          
|                                        |     |                    | businessman               |                          

Abbas Salih, CEO, CFO, President, Director Mr. Salih is a
graduate of the Khartoum Technical Institute in the Sudan. He received his
formal training while serving as a member of the Sudan Royal Air Force which
included attendance at the British Royal Air Force Academy, Newton No. 9 in
Nottingham, England, where he studied aircraft electronics and instrumentation.

Mr. Salih is a businessman and has conducted business in
Europe, Middle East, and Canada most extensively in Germany and the Sudan, prior
to 1994. Since 1992 Mr. Salih has been a senior officer and director to the
issuer and currently resides in Dubai, UAE.

Ralph Shearing, Director Mr. Shearing is a Professional
Geologist, has extensive experience in the management of public companies. In
addition to being a director of the Company, since 1986 he has been the
President and Chief Executive Officer of Soho Resources Corp, a Canadian
reporting issuer listed on the Toronto Venture Exchange. Sohos principal
business activity consists of the acquisition and exploration of mineral
properties. During the five years rpior to September 2008, Mr. Shearing was the
CEO and Secretary of the Company.

Mohammed Baymain, Director Mr. Baymain is a resident of
Dubai, U.A.E. Mr. Baymain is a resident of Dubai, U.A.E. For the past 10 years
Mr. Baymain has operated an international trade business with branches in three
regions, Riyadh, K.S.A., Republic of Yemen and Dubai, U.A.E. The business sells
food products, furniture and carpets, construction materials and computers.

Dr. Ralf Zabel, Vice-president - International Business
Development and Operations 
Dr. Zabel is a resident of Germany and holds a Doctorate degree
in Engineering from the University of Dresden, Germany. Dr. Zabel has held
senior positions with Construction, Engineering and Architectural firms in
German since 1986.

---

Term of Office

The directors serve until their successors are elected by the
shareholders. Vacancies on the Board of Directors may be filled by appointment
of the majority of the continuing directors. The executive officers serve at the
discretion of the Board of Directors.

Family Relationships

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

Significant Employees

We have no significant
  employees.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offenses);                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated.             

Audit Committee

As at the date hereof, the Audit Committee is comprised of
Ralph Shearing, Abbas Salih and Mohammed Baymain. Ralph Shearing and Mohammed
Baymain are independent. All of the members of the Audit Committee are
financially literate.

The text of the Audit Committee Charter is attached
below:

Charter of the Audit Committee of the Board of Directors of
Strategic Internet Investments, Incorporated (the Company)

Article 1  Mandate and Responsibilities

The Audit Committee is appointed by the board of directors of
the Company (the Board) to oversee the accounting and financial reporting
process of the Company and audits of the financial statements of the Company.
The Audit Committees primary duties and responsibilities are to:

| | (a) | recommend to the Board the external auditor to be nominated for the
      purpose of preparing or issuing an auditor's report or performing other
      audit, review or attest services for the Company;                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                
| | (b) | recommend to the Board the compensation of the external
      auditor;                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                
| | (c) | oversee the work of the external auditor engaged for the
      purpose of preparing or issuing an auditor's report or performing other
      audit, review or attest services for the Company, including the resolution
      of disagreements between management and the external auditor regarding
      financial reporting;



---

| | (d) | pre-approve all non-audit services to be provided to the
      Company or its subsidiaries by the Companys external auditor;                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                       
| | (e) | review the Companys financial statements, 10-K (MD&A)
      and annual and interim earnings press releases before the Company publicly
      discloses this information;                                                                                             
| |     |                                                                                                                                                                                                                                                                       
| | (f) | be satisfied that adequate procedures are in place for the
      review of all other public disclosure of financial information extracted
      or derived from the Companys financial statements, and to periodically
      assess the adequacy of those procedures;
| |     |                                                                                                                                                                                                                                                                       
| | (g) | establish procedures for:                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                       
| |     | (i)                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                       
| |     | (ii)                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                       
| | (h) | review and approve the Companys hiring policies
      regarding partners, employees and former partners and employees of the
      present and former external auditor of the Company.                                                                               

The Board and management will ensure that the Audit Committee
has adequate funding to fulfill its duties and responsibilities.

Audit Committee Oversight

Since the commencement of the Companys most recently completed
fiscal year, the Companys Board of Directors has not failed to adopt a
recommendation of the Audit Committee to nominate or compensate an external
auditor.

Pre-Approval Policies and Procedures

The Company has not adopted specific policies and procedures
for the engagement of non-audit services. The Audit Committee will review the
engagement of non-audit services as required.

Audit Committee Financial Expert

Our board of directors has determined that it does not have an
audit committee member that qualifies as an audit committee financial expert
as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the audit
committee members are collectively capable of analyzing and evaluating our
financial statements and understanding internal controls and procedures for
financial reporting. In addition, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development and the fact that we have not generated revenues
to date.

Corporate Governance

The following is a summary of the Companys corporate
governance policies.

Board of Directors

The Board, at present, is composed of three directors, one of
whom is an executive officer of the Company and two of whom are considered to be
independent, as that term is defined in applicable securities legislation.
Messrs. Ralph Shearing and Mohammed Baymain are considered to be independent
directors. Mr. Abbas Salih, by reason of his being the President, CEO, and CFO
of the Company, is not. In determining whether a director is independent, the
Board chiefly considers whether the director has a relationship which could, or
could be perceived to, interfere with the directors ability to objectively
assess the performance of management.

The Board is responsible for approving long-term strategic
plans and annual operating plans and budgets recommended by management. Board
consideration and approval is also required for material contracts and business
transactions, and all debt and equity financing transactions.

---

The Board delegates to management responsibility for meeting
defined corporate objectives, implementing approved strategic and operating
plans, carrying on the Companys business in the ordinary course, managing the
Companys cash flow, evaluating new business opportunities, recruiting staff and
complying with applicable regulatory requirements. The Board also looks to
management to furnish recommendations respecting corporate objectives, long-term
strategic plans and annual operating plans.

Directorships 
  Certain of the directors of the Company are also directors of
other registrant (or equivalent) in a jurisdiction or a foreign jurisdiction as
follows:

| | Name
      of Director | Other
      registrant (or equivalent in a foreign jurisdiction)
| | ---------------------- | ----------------------------------------------------------------
| |                        |                                                                 
| | Ralph Shearing         | Soho Resources Corp. (Reporting
      issuer  Canada)          
| | Abbas Salih            | None                                                            
| | Mohammed Baymain       | None                                                            

Orientation and Continuing Education 
  The Company has not yet developed an official orientation or
training program for new directors. As required, new directors will have the
opportunity to become familiar with the Company by meeting with the other
directors and with officers and employees. Orientation activities will be
tailored to the particular needs and experience of each director and the overall
needs of the Board.

Ethical Business Conduct 
  The Board monitors the ethical conduct of the Company and
ensures that it complies with applicable legal and regulatory requirements, such
as those of relevant securities commissions and stock exchanges. The Board has
found that the fiduciary duties placed on individual directors by the Companys
governing corporate legislation and the common law, as well as the restrictions
placed by applicable corporate legislation on the individual directors
participation in decisions of the Board in which the director has an interest,
have been sufficient to ensure that the Board operates independently of
management and in the best interests of the Company.

Nomination of Directors The Board has not appointed a
nominating committee because the Board fulfills these functions.

Compensation The Board of Directors is responsible for
determining all forms of compensation, including long-term incentive in the form
of stock options, to be granted to the Chief Executive Officer of the Company
and the directors, and for reviewing the Chief Executive Officers
recommendations respecting compensation of the other officers of the Company, to
ensure such arrangements reflect the responsibilities and risks associated with
each position. When determining the compensation of its officers, the Board
considers: i) recruiting and retaining executives critical to the success of the
Company and the enhancement of shareholder value; ii) providing fair and
competitive compensation; iii) balancing the interests of management and the
Companys shareholders; and iv) rewarding performance, both on an individual
basis and with respect to operations in general.

Committees of the Board of Directors The Board has
appointed an Audit Committee, the members of which are Ralph Shearing, Abbas
Salih, and Mohammed Baymain. A description of the function of the Audit
Committee can be found in this under Item 15  Principal Accountant Fees and
Services.

The Board has not, as yet, adopted formal procedures for
assessing the effectiveness of the Board, its Audit Committee or individual
directors.

---

Code of Ethics

The Company has not adopted a Code of Ethics applicable to all
of our directors, officers, employees and consultants, which is a code of
ethics as defined by applicable rules of the SEC.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange Act requires our executive
officers and directors and persons who own more than 10% of a registered class
of our equity securities to file with the SEC initial statements of beneficial
ownership, reports of changes in ownership and annual reports concerning their
ownership of our common stock and other equity securities, on Forms 3, 4 and 5
respectively. Executive officers, directors and greater than 10% shareholders
are required by the SEC regulations to furnish us with copies of all Section
16(a) reports that they file.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that all filing requirements applicable to our officers, directors and greater
than ten percent beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION.

The particulars of compensation paid to the following
persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the year ended December 31, 2008; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive
officers, for our years ended December 31, 2008 and 2007, are set out in the
following summary compensation table:

| | Name               | Year | Option Awards(1) | All
      Other Compensation(2)
| | ------------------ | ---- | ---------------- | -------------------------------
| |                    |      |                  |                                
| | Mohammed           |      |                  |                                
| | Baymain            | 2008 | $21,800          | $ Nil                          
| | Director           | 2007 | $ Nil            | $ Nil                          
| |                    |      |                  |                                
| | Ralph Shearing     |      |                  |                                
| | Director           | 2008 | $80,875          | $66,938                        
| |                    | 2007 | $ Nil            | $95,400                        
| |                    |      |                  |                                
| | Abbas Salih        |      |                  |                                
| | CEO, CFO, Director | 2008 | $80,875          | $90,000                        
| |                    | 2007 | $ Nil            | $90,000                        

| | (1) | The amount of the Option Awards represents the fair value
      of the stock options granted and recognized for financial reporting
      purposes during the year indicated. The fair value of each option grant
      was estimated on the date of the grant using the Black-Scholes option
      valuation model with the following assumptions being used: expected
      dividend yield 0.0%; expected volatility 170%; risk-free interest rate;
      3.30%; and expected term is 5 years.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (2) | The amount of All Other Compensation are the fees charged
      by the named executive officers pursuant to Management Services
      Agreements, as described below.                                                                                                                                                                                                                                                                                                                           

Management Contracts

On January 1, 2007 the Company entered into two Management
Services Agreements with Abbas Salih, a director of the Company, and a company
controlled by Ralph Shearing, a director of the Company. Under the terms of
these agreements they will each be paid $7,500 per month, plus taxes where
applicable, for management consulting services. These

---

agreements were 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.

Effective September 12, 2008, the agreement with the company controlled by Ralph Shearing was terminated.

During the fiscal year ended December 31, 2008, directors and officers received compensation for acting in their capacities as a director or officer, in the amounts as shown above (see Summary compensation table). The directors and
officers are reimbursed for any out-of-pocket expenses incurred by them on behalf of the Company.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the
future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of
directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

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 12 employees including consultants, directors and officers have been granted share purchase options to acquire a total of 4,125,000 common shares of the Company at a weighted average price of
$0.15 per share. Under the Plan, two directors of the Company have each been granted 1,200,000 share purchase options and a third director received 400,000 share purchase options, all at an exercise price of $0.15 per share.

---

The outstanding equity awards of the named executive officers,
for our year ended December 31, 2008, are set out in the following outstanding
equity awards table:

| |                    | Number
      of securities |                       |                        
| | ------------------ | -------------------------- | --------------------- | -----------------------
| |                    | underlying unexercised     |                       |                        
| |                    | options                    |                       |                        
| | Name               | #
      exercisable        | Option exercise price | Options expiration date
| |                    |                            |                       |                        
| | Abbas Salih        |                            |                       |                        
| | CEO, CFO, Director | 1,200,000                  | $0.15                 | June 1, 2013           
| |                    |                            |                       |                        
| | Ralph Shearing     |                            |                       |                        
| | Director           | 1,200,000                  | $0.15                 | June 1, 2013           
| |                    |                            |                       |                        
| | Mohammed Baymain   |                            |                       |                        
| | Director           | 400,000                    | $0.15                 | September 30, 2013     

All of these options were vested and exercisable on the date
they were granted. None have been exercised.

Aggregated Options Exercised in
  the Year Ended December 31, 2008 and Year End Option Values

There were no
  stock options exercised during the year ended December 31, 2008.

Repricing of Options/SARS

During the year ended December 31, 2008, the Company granted
4,225,000 (2007  125,000) share purchase options to directors and consultants
of the Company entitling them to acquire 4,225,000 (2007  125,000) common
shares at $0.15 per share, the closing price of the Companys common stock on
the date of the grants. 3,825,000 of these options were granted on June 1, 2008
and 400,000 were granted on October 1, 2008. The options have been granted with
a term of 5 years (2007  5 years). In conjunction with the issuance of these
new options, those same directors and consultants agreed to the cancellation of
1,931,000 previously issued share purchase options. The Company has charged to
consulting fees on the statement of operations: $251,078 (2007 - $29,240) of
compensation expense, for share purchase options awarded to directors and
consultants during the period ended December 31, 2008. The weighted average fair
value of the options granted during the period was $0.06 (2007 - $0.23) per
option.

Director Compensation

We reimburse our directors for expenses incurred in connection
with attending board meetings. We did not pay any other directors fees or other
compensation for services rendered as a director, except for the granting of
stock options, for the fiscal year ended December 31, 2008.

We have no formal plan for compensating our directors for their
service in their capacity as directors, although such directors have been
granted stock options, and may in the future receive additional stock options to
purchase common shares as awarded by our board of directors or (as to future
stock options) a compensation committee which may be established. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket expenses
incurred in connection with attendance at meetings of our board of directors.
Our board of directors may award special remuneration to any director
undertaking any special services on our behalf other than services ordinarily
required of a director. Other than stock options, no director received and/or
accrued any compensation for their services as a director, including committee
participation and/or special assignments.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of March 31, 2009, there were 27,610,326 shares of our
common stock outstanding. The following tables sets forth certain information
known to us with respect to the beneficial ownership of our common stock as of
that date by (i) each of our directors, (ii) each of our executive officers, and
(iii) all of our directors and executive officers as a group. Except as set
forth in the tables below, there is no person known to us who beneficially owns
more than 5% of our common stock.

Security ownership of certain beneficial owners and
management

| | Title of class    | Name and address of beneficial
      owners(1)   | Amount and nature of beneficial
      ownership | Percentage of class(2),(3)
| | ----------------- | ------------------------------------------------ | ----------------------------------------------- | --------------------------
| |                   |                                                  |                                                 |                           
| | Management        |                                                  |                                                 |                           
| | Common stock      | Ralph Shearing                                   | Nil (indirect) (4)                              | 11%                       
| |                   | 250-1090 W. Georgia St.                          |                                                 |                           
| |                   | Vancouver, BC, Canada                            |                                                 |                           
| |                   |                                                  |                                                 |                           
| | Common stock      | Abbas Salih                                      | 9,785,172 (indirect)
      (5)                  | 46%                       
| |                   | Nisar Square, Benyas Centre Office No. 207       |                                                 |                           
| |                   | P.O. Box 40088,                                  |                                                 |                           
| |                   | Dubai, United Arab Emirates                      |                                                 |                           
| |                   |                                                  |                                                 |                           
| | Common stock      | Mohammed Baymain                                 | Nil (6)                                         | *%                        
| |                   | Nisar Square, Benyas Centre
      Office No. 207 |                                                 |                           
| |                   | P.O. Box 40088,                                  |                                                 |                           
| |                   | Dubai, United Arab Emirates                      |                                                 |                           
| |                   |                                                  |                                                 |                           
| | Common stock      | Ralf Zabel                                       | 60,000 (7)                                      | *%                        
| |                   | Shulstrasse 18 D-01723                           |                                                 |                           
| |                   | Kesseldorf, Germany                              |                                                 |                           
| |                   |                                                  |                                                 |                           
| | Management total  |                                                  | 9,845,172                                       | 49%                       
| |                   |                                                  |                                                 |                           
| | Beneficial owners |                                                  |                                                 |                           
| | Common stock      | Cede & Co.                                       | 8,548,765 (direct)                              | 31%                       
| |                   | PO Box 20, Bowling Green Station                 |                                                 |                           
| |                   | New York, N.Y., U.S.A.                           |                                                 |                           

| | (1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The beneficial owners, amounts, and percentage of class
      is based on 27,610,326 shares of common stock issued and outstanding as of
      March 31, 2009 as provide by the Companys transfer agent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (3) | * Less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (4) | The beneficial owner has the right to acquire 1,200,000
      shares through the exercise of stock options and 2,320,858 units through
      the conversion of outstanding loans into units, each unit consisting of
      one common share of the Company and one share purchase warrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (5) | The beneficial owner also has the right to acquire a
      further 1,200,000 shares through the exercise of stock options and
      4,526,436 units through the conversion of outstanding loans into units,
      each unit consisting of one common share of the Company and one share
      purchase warrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (6) | The beneficial owner has the right to acquire 400,000
      shares through the exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (7) | The beneficial owner has the right to acquire 100,000
      shares through the exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Changes in Control

None

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Transactions with related persons

No director, executive officer, principal shareholder holding
at least 5% of our common shares, or any family member thereof, had any material
interest, direct or indirect, in any transaction, or proposed transaction, since
the beginning of our companys fiscal year ended December 31, 2008, in which the
amount involved in the transaction exceeded or exceeds the $120,000.

The Company was charged the following by directors, officers,
by companies controlled by directors and/or stockholders of the Company, and by
companies with directors in common:

Year ended December 31,2008
    
    
    2007Consulting fees
    $
    184,223
    
    $
    29,150Interest
    
    163,627
    
    
    70,345Management fees
    
    156,938
    
    
    185,400Rent
    
    17,760
    
    
    22,120$
    522,548
    
    $
    307,015


At December 31, 2008, accounts payable includes $442,684 (2007
- $288,276) 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, 2008, accounts payable also includes $15,527
(2007 - $15,527) of expenses for operating costs paid on behalf of the Company
by companies with directors in common.

The Company entered into two Management Services Agreements
dated January 1, 2007 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, plus taxes where applicable, for management services. These
agreements are for a 24-month period expiring on December 31, 2008. Effective
September 12, 2008, one of the agreements was terminated. 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.

The Company also entered into a Consulting Services Agreement
with a company controlled by a director of the Company. Under the terms of this
agreement, the Company will pay $5,500 per month, plus taxes where applicable,
for consulting services. This agreement was suspended in May 2007, and
terminated in September 2008.

Director Independence

The Board, at present, is composed of three directors, one of
whom is an executive officer of the Company and two of whom are considered to be
independent, as that term is defined in applicable securities legislation.
Messrs. Ralph Shearing and Mohammed Baymain are considered to be independent
directors. Mr. Abbas Salih, by reason of his being the President, CEO, and CFO
of the Company, is not. In determining whether a director is independent, the
Board chiefly considers whether the director has a relationship which could, or
could be perceived to, interfere with the directors ability to objectively
assess the performance of management.

---

Board of Directors

Our board of directors facilitates its exercise of independent supervision over management by endorsing the guidelines for responsibilities of the board as set out by regulatory authorities on corporate governance in the United States. Our
boards primary responsibilities are to supervise the management of our company, to establish an appropriate corporate governance system, and to set a tone of high professional and ethical standards.

The board is also responsible for:

- selecting and assessing members of the Board;
- choosing, assessing and compensating the Chief Executive Officer of our company, approving the compensation of all executive officers and ensuring that an orderly management succession plan exists;
- reviewing and approving our companys strategic plan, operating plan, capital budget and financial goals, and reviewing its performance against those plans;
- adopting a code of conduct and a disclosure policy for our company, and monitoring performance against those policies;
- ensuring the integrity of our companys internal control and management information systems;
- approving any major changes to our companys capital structure, including significant investments or financing arrangements; and
- reviewing and approving any other issues which, in the view of the Board or management, may require Board scrutiny.

Orientation and Continuing Education

We have an informal process to orient and educate new recruits to the board regarding their role of the board, our committees and our directors, as well as the nature and operations of our business. This process provides for an orientation with key
members of the management staff, and further provides access to materials necessary to inform them of the information required to carry out their responsibilities as a board member. This information includes the most recent board approved budget,
the most recent annual report, the audited financial statements and copies of the interim quarterly financial statements.

The board does not provide continuing education for its directors. Each director is responsible to maintain the skills and knowledge necessary to meet his or her obligations as directors.

Nomination of Directors

The board is responsible for identifying new director nominees. In identifying candidates for membership on the board, the board takes into account all factors it considers appropriate, which may include strength of character, mature judgment,
career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the board. As part of the process, the board, together with management, is responsible for conducting background searches,
and is empowered to retain search firms to assist in the nominations process.  Once candidates have gone through a screening process and met with a number of the existing directors, they are formally put forward as nominees for approval by the
board.

Assessments

The board intends that individual director assessments be conducted by other directors, taking into account each directors contributions at board meetings, service on committees, experience base, and their general ability to contribute to one
or more of our companys major needs. However, due to our stage of development and our need to deal with other urgent priorities, the board has not yet implemented such a process of assessment.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit fees

The aggregate fees billed for the two most recently completed
fiscal periods ended December 31, 2008 and December 31, 2007 for professional
services rendered by BDO Dunwoody LLP, Chartered Accountants, for the audit of
our annual consolidated financial statements, quarterly reviews of our interim
consolidated financial statements and services normally provided by the
independent accountant in connection with statutory and regulatory filings or
engagements for these fiscal periods were as follows:

Year Ended December 31,
      2008
    Year Ended December 31,
      2007Audit Fees
    $37,138
    $32,870(1)Audit Related Fees
    Nil
    NilTax Fees
    Nil
    NilAll Other Fees
    Nil
    NilTotal
    $37,138
    $32,870


|(1) | Fees charged by Amisano Hanson prior to its merger with
      BDO Dunwoody LLP), for review of the Company's quarterly financial
      statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

In the above table, audit fees are fees billed by our
companys external auditor for services provided in auditing our companys
annual financial statements for the subject year along with reviews of interim
quarterly financial statements and involvement with various in arrears filing
earlier in 2008. Audit-related fees are fees not included in audit fees that
are billed by the auditor for assurance and related services that are reasonably
related to the performance of the audit review of our companys financial
statements. Tax fees are fees billed by the auditor for professional services
rendered for tax compliance, tax advice and tax planning. All other fees are
fees billed by the auditor for products and services not included in the
foregoing categories.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

The board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

The board of directors has considered the nature and amount of
fees billed by BDO Dunwoody LLP and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining BDO Dunwoody
LLP.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

| | Table of Exhibit |                                               |           
| | ---------------- | --------------------------------------------- | ----------
| | Items            | Description                                   | Exhibit   
| |                  |                                               |           
| | 601-3(i)         | Articles of Incorporation                     | Note 1    
| | 601-(3)(ii)      | Bylaws                                        | Note 1    
| | 601-(3)(iii)     | Certificate of Amendment                      | Note 1    
| | 601-(10)         | Stock Award Plan                              | Note 2    
| | 601-(31)         | Rule 13a-14(a)/15d-14(a)
      Certifications | Exhibit 31
| | 601-(32)         | Section 1350 Certifications                   | Exhibit 32

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


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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,
      Incorporated
|----- | -------------------- |  | --------------------------------------------------
|      |                      |  |                                                   
|Date: | April
      15, 2009 |  | /s/
      Ralph Shearing                          
|      |                      |  | Ralph Shearing, Director                          
|      |                      |  |                                                   
|Date: | April
      15, 2009 |  | /s/
      Abbas Salih                             
|      |                      |  | Abbas Salih, CEO, CFO, Director                   

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