---

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

FORM 10-QSB

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

For the Quarterly Period ended September 30, 2004

Strategic Internet Investments, Incorporated
  Small Business Issuer

|State of incorporation:                 | Delaware                          
|--------------------------------------- | ----------------------------------
|                                        |                                   
|IRS Employer Identification:            | 84-1116458                        
|                                        |                                   
|Address of principal executive offices: | Suite 450, 650 West Georgia Street
|                                        | Vancouver, BC                     
|                                        | Canada V6B 4N8                    
|                                        |                                   
|Issuer's telephone number               | 604-684-8662                      

|Check whether the issuer
        (1) filed all reports required to be filed by Section 13 or
        15(d) of the Exchange Act during the past 12 months,  and
        (2) has been subject to such filing requirements for the past 90 days. | Yes | x | No |  ̈ | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | - | -- | - | 
|                                                                                                                                                                                                                                              |     |   |    |   | 
|Common shares outstanding
        as of October 31, 2004:19,628,960                                                                                                                                                                           |     |   |    |   | 
|                                                                                                                                                                                                                                              |     |   |    |   | 
|Transitional Small Business
        Disclosure Format.                                                                                                                                                                                        | Yes |  ̈ | No | x | 

PART I  FINANCIAL INFORMATION

Statements made in this report that are not historical or
  current facts are "forward-looking statements" made pursuant to the Safe Harbor
  Provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
  21E of the Securities Exchange Act of 1934. These statements often can be identified
  by the use of terms such as "may", "will", "expect", "believe", "anticipate",
  "estimate", "approximate" or "continue" or the negative thereof.

The Company intends that such forward-looking statements be
  subject to the Safe Harbors for such statements. The Company wishes to caution
  readers not to place undue reliance upon any such forward-looking statement,
  which speak only as of the date made. Any forward-looking statement represents
  management's best judgment as to what may occur in the future. However, forward-looking
  statements are subject to risks, uncertainties and important factors beyond
  the control of the Company that could cause actual results and events to differ
  materially from historical results of operations and events and those presently
  anticipated or projected. The Company disclaims any obligation to subsequently
  revise any forward-looking statements to reflect events or circumstances after
  the date of such statements or to reflect the occurrence of anticipated or unanticipated
  events.

| | 1. | Financial Statements
| | -- | --------------------

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2004

(Stated in U.S. Dollars)

(Unaudited)

---

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

|                                                            |   | September 30, |   |   | December 31, |  
|----------------------------------------------------------- | - | ------------- | - | - | ------------ | -
|                                                            |   | 2004          |   |   | 2003         |  
|ASSETS                                                      |   |               |   |   |              |  
|                                                            |   |               |   |   |              |  
|Current                                                     |   |               |   |   |              |  
|Cash                                                        | $ | 412           |   | $ | 346          |  
|Prepaid expenses                                            |   | 2,280         |   |   | -            |  
|Due from related party                                      |   | -             |   |   | 9,494        |  
|                                                            |   |               |   |   |              |  
|                                                            |   | 2,692         |   |   | 9,840        |  
|                                                            |   |               |   |   |              |  
|Capital assets                                              |   | 2,506         |   |   | 949          |  
|Deferred investment costs  Note 4                          |   | 99,210        |   |   | 99,210       |  
|                                                            |   |               |   |   |              |  
|                                                            | $ | 104,408       |   | $ | 109,999      |  
|                                                            |   |               |   |   |              |  
|LIABILITIES                                                 |   |               |   |   |              |  
|                                                            |   |               |   |   |              |  
|Current                                                     |   |               |   |   |              |  
|Accounts payable                                            | $ | 141,248       |   | $ | 189,852      |  
|Due to related parties                                      |   | 40,444        |   |   | 49,259       |  
|Current portion of loans payable
       Note 5             |   | 114,590       |   |   | 122,708      |  
|                                                            |   |               |   |   |              |  
|                                                            |   | 296,282       |   |   | 361,819      |  
|Loans payable  Note 5                                      |   | 268,145       |   |   | 114,689      |  
|                                                            |   |               |   |   |              |  
|                                                            |   | 564,427       |   |   | 476,508      |  
|                                                            |   |               |   |   |              |  
|STOCKHOLDERS' DEFICIENCY                                    |   |               |   |   |              |  
|                                                            |   |               |   |   |              |  
|Capital Stock 
      Notes 6 and 8                         |   |               |   |   |              |  
|Class A Convertible
      Preferred stock, $0.001 par value |   |               |   |   |              |  
|10,000,000 authorized,
      198,000 outstanding            |   | 198           |   |   | 198          |  
|Class B preferred stock,
      $0.001 par value             |   |               |   |   |              |  
|10,000,000 authorized,
      none outstanding               |   |               |   |   |              |  
|Common stock, $0.001
      par value                        |   |               |   |   |              |  
|100,000,000 authorized                                      |   |               |   |   |              |  
|19,278,960 outstanding
      (2003: 17,305,596 outstanding) |   | 19,277        |   |   | 17,304       |  
|Additional paid-in capital                                  |   | 3,853,194     |   |   | 3,608,630    |  
|Contributed capital                                         |   | 374,927       |   |   | 294,027      |  
|Deficit accumulated during the development stage            |   | (4,707,615    | ) |   | (4,286,668   | )
|                                                            |   |               |   |   |              |  
|                                                            |   | (460,019      | ) |   | (366,509     | )
|                                                            |   |               |   |   |              |  
|                                                            | $ | 104,408       |   | $ | 109,999      |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  (A Development Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
  (Stated in US Dollars)
  (Unaudited)

|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   | Cumulative     |  
|--------------------------------------- | - | ------------------- | - | - | ------------------- | - | - | ---------------- | - | - | ---------- | - | - | -------------- | -
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   | from February  |  
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   | 28, 1989 (Date |  
|                                        |   | Three months        |   |   | Nine months         |   |   | of Inception) to |  
|                                        |   | ended September 30, |   |   | ended September 30, |   |   | September 30,    |  
|                                        |   | 2004                |   |   | 2003                |   |   | 2004             |   |   | 2003       |   |   | 2004           |  
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|General and Administrative Expenses     |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Accounting and audit
      fees         | $ | 7,357               |   | $ | 5,673               |   | $ | 29,035           |   | $ | 17,388     |   | $ | 107,062        |  
|Amortization                            |   | 220                 |   |   | 101                 |   |   | 512              |   |   | 305        |   |   | 2,591          |  
|Automobile                              |   | -                   |   |   | 1,245               |   |   | 565              |   |   | 1,245      |   |   | 565            |  
|Business promotion                      |   | 213                 |   |   | -                   |   |   | 213              |   |   | -          |   |   | 213            |  
|Communications                          |   | 4,459               |   |   | 7,174               |   |   | 10,698           |   |   | 12,036     |   |   | 53,967         |  
|Consulting fees                         |   | 67,250              |   |   | 109,450             |   |   | 76,805           |   |   | 172,874    |   |   | 2,002,829      |  
|Interest                                |   | 16,149              |   |   | 2,542               |   |   | 26,073           |   |   | 5,569      |   |   | 41,133         |  
|Investor relations                      |   | 5,972               |   |   | -                   |   |   | 20,554           |   |   | -          |   |   | 71,056         |  
|Legal fees                              |   | 5,734               |   |   | 4,064               |   |   | 7,479            |   |   | 8,608      |   |   | 106,506        |  
|Management fees                         |   | -                   |   |   | -                   |   |   | -                |   |   | -          |   |   | 112,000        |  
|Office and general                      |   | 3,981               |   |   | 777                 |   |   | 9,365            |   |   | 5,138      |   |   | 123,880        |  
|Regulatory fees                         |   | 460                 |   |   | 868                 |   |   | 1,181            |   |   | 1,948      |   |   | 15,866         |  
|Rent                                    |   | 4,560               |   |   | 5,799               |   |   | 13,613           |   |   | 5,799      |   |   | 49,847         |  
|Transfer agent fees                     |   | 1,201               |   |   | 1,209               |   |   | 4,585            |   |   | 3,933      |   |   | 30,693         |  
|Travel                                  |   | 26,688              |   |   | 4,954               |   |   | 89,191           |   |   | 23,121     |   |   | 137,755        |  
|Non-cash
      compensation charge      |   | 62,050              |   |   | 26,750              |   |   | 130,650          |   |   | 26,750     |   |   | 399,235        |  
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Loss before the following:              |   | (206,294            | ) |   | (170,606            | ) |   | (420,519         | ) |   | (284,714   | ) |   | (3,255,198     | )
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Unauthorized distribution               |   | -                   |   |   | -                   |   |   | -                |   |   | -          |   |   | (69,116        | )
|Termination fee                         |   | -                   |   |   | (792,000            | ) |   | -                |   |   | (792,000   | ) |   | (792,000       | )
|Loss on foreign exchange                |   | (428                | ) |   | -                   |   |   | (428             | ) |   | -          |   |   | (428           | )
|Gain on settlement
      of debt        |   | -                   |   |   | -                   |   |   | -                |   |   | -          |   |   | 15,464         |  
|Write-down of
      advances to related |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|party                                   |   | -                   |   |   | -                   |   |   | -                |   |   | -          |   |   | (606,337       | )
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Net loss for the period                 | $ | (206,722            | ) | $ | (962,606            | ) | $ | (420,947         | ) | $ | (1,076,714 | ) | $ | (4,707,615     | )
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Basic loss per share                    | $ | (0.01               | ) | $ | (0.06               | ) | $ | (0.02            | ) | $ | (0.07      | ) |   |                |  
|                                        |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|Weighted average number of common       |   |                     |   |   |                     |   |   |                  |   |   |            |   |   |                |  
|shares outstanding                      |   | 18,913,525          |   |   | 17,305,596          |   |   | 18,167,966       |   |   | 16,254,863 |   |   |                |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  (A Development Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Stated in US Dollars)
  (Unaudited)

|                                                 |                   |          |   |                        |            |   |   | Cumulative from   |  
|------------------------------------------------ | ----------------- | -------- | - | ---------------------- | ---------- | - | - | ----------------- | -
|                                                 |                   |          |   |                        |            |   |   | February 28, 1989 |  
|                                                 | Nine months ended |          |   | (Date of Inception) to |           
|                                                 | September 30,     |          |   | September 30,          |           
|                                                 |                   | 2004     |   |                        | 2003       |   |   | 2004              |  
|Operating Activities                             |                   |          |   |                        |            |   |   |                   |  
|Net loss for the period                          | $                 | (420,947 | ) | $                      | (1,076,714 | ) | $ | (4,707,615        | )
|Adjustments
      to reconcile net loss          |                   |          |   |                        |            |   |   |                   |  
|to net cash
      used in operations:            |                   |          |   |                        |            |   |   |                   |  
|Amortization                                     |                   | 512      |   |                        | 305        |   |   | 2,591             |  
|Consulting fees                                  |                   | -        |   |                        | -          |   |   | 6,200             |  
|Gain on settlement of debt                       |                   | -        |   |                        | -          |   |   | (15,464           | )
|Management fees                                  |                   | -        |   |                        | -          |   |   | 7,000             |  
|Write-down of advances to related party          |                   | -        |   |                        | -          |   |   | 606,337           |  
|Non-cash compensation charge                     |                   | 130,650  |   |                        | 26,750     |   |   | 399,235           |  
|Termination fees                                 |                   | -        |   |                        | -          |   |   | 792,000           |  
|Issue of stock pursuant to consulting agreements |                   | 20,000   |   |                        | 172,874    |   |   | 1,677,987         |  
|Changes
      in non-cash items:                 |                   |          |   |                        |            |   |   |                   |  
|Prepaid expenses                                 |                   | (2,280   | ) |                        | (234       | ) |   | 25,720            |  
|Accounts payable                                 |                   | (48,604  | ) |                        | 770,502    |   |   | 397,261           |  
|Advance to related party                         |                   | -        |   |                        | -          |   |   | (615,831          | )
|Due
      to/from related parties, net           |                   | 679      |   |                        | (55        | ) |   | 65,562            |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash used in operating activities                |                   | (319,990 | ) |                        | (106,572   | ) |   | (1,359,017        | )
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Investing Activities                             |                   |          |   |                        |            |   |   |                   |  
|Organization costs                               |                   | -        |   |                        | -          |   |   | (750              | )
|Acquisition
      of capital assets              |                   | (2,069   | ) |                        | -          |   |   | (4,347            | )
|Deferred investment costs                        |                   | -        |   |                        | (34,210    | ) |   | (34,210           | )
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash used in investing activities                |                   | (2,069   | ) |                        | (34,210    | ) |   | (39,307           | )
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Financing Activities                             |                   |          |   |                        |            |   |   |                   |  
|Bank indebtedness                                |                   | -        |   |                        | (19        | ) |   | -                 |  
|Loans payable                                    |                   | 238,875  |   |                        | 79,218     |   |   | 476,272           |  
|Proceeds from issuance
      of common stock     |                   | 83,250   |   |                        | 65,000     |   |   | 924,292           |  
|Payment of offering
      costs                  |                   | -        |   |                        | -          |   |   | (27,270           | )
|Contributed capital                              |                   | -        |   |                        | -          |   |   | 25,442            |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash provided by financing activities            |                   | 322,125  |   |                        | 144,199    |   |   | 1,398,736         |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Increase in cash during the period               |                   | 66       |   |                        | 3,417      |   |   | 412               |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash, beginning of the period                    |                   | 346      |   |                        | -          |   |   | -                 |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash, end of the period                          | $                 | 412      |   | $                      | 3,417      |   | $ | 412               |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Supplementary disclosure of cash flows:          |                   |          |   |                        |            |   |   |                   |  
|Cash paid for Interest                           |                   | -        |   |                        | -          |   |   | 5,661             |  
|                                                 |                   |          |   |                        |            |   |   |                   |  
|Cash paid for Income taxes                       |                   | -        |   |                        | -          |   |   | -                 |  
|Non-cash Transactions
       Note 7             |                   |          |   |                        |            |   |   |                   |  

SEE ACCOMPANYING NOTES

---

STRATEGICINTERNETINVESTMENTS,INCORPORATED(A Development Stage Company)
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
  for the period from February 28, 1989 (Date of Inception) to September 30, 2004
  (Stated in U.S. Dollars)
  (Unaudited)

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

.../Con'd

SEE ACCOMPANYING NOTES

---

Continued

STRATEGICINTERNETINVESTMENTS,INCORPORATED
  (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY 
  for the period from February 28, 1989 (Date of Inception) to September 30, 2004
  (Stated in U.S. Dollars)
  (Unaudited)

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



SEE ACCOMPANYING NOTES

---

Continued

STRATEGICINTERNETINVESTMENTS,INCORPORATED
  (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY 
  for the period from February 28, 1989 (Date of Inception) to September 30, 2004
  (Stated in U.S. Dollars)
  (Unaudited)

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



SEE ACCOMPANYING NOTES

---

Continued

STRATEGICINTERNETINVESTMENTS,INCORPORATED
  (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY 
  for the period from February 28, 1989 (Date of Inception) to September 30, 2004
  (Stated in U.S. Dollars)
  (Unaudited)

|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            | Deficit     |   |          |            |  
|------------------------------------------------ | ---------- | --------------- | - | ------------ | --------- | ---------- | --------- | - | ------ | ----------- | - | --------- | ----------- | - | ------- | ------- | - | ---------- | ----------- | - | -------- | ---------- | -
|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            | Accumulated |   |          |            |  
|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           | Additional  |   |         |         |   |            | During the  |   |          |            |  
|                                                 |            | Preferred Stock |   | Common Stock |           |            | Paid-in   |   |        | Contributed |   |           | Development |   |         |         |  
|                                                 |            | Shares          |   |              | Par Value |            | Shares    |   |        | Par Value   |   |           | Capital     |   |         | Capital |   |            | Stage       |   |          | Total      |  
|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |            |  
|Balance, December 31, 2002                       | -          |                 |   | -            |           | 15,205,596 |           |   | 15,204 |             |   | 2,550,928 |             |   | 240,527 |         |   | (3,077,727 | )           |   | (271,068 | )         
|Non-cash compensation charge                     | -          |                 |   | -            |           | -          |           |   | -      |             |   | -         |             |   | 53,500  |         |   | -          |             |   | 53,500   |           
|Issue of stock for services                      |  at $0.14 | -               |   |              | -         |            | 1,450,000 |   |        | 1,450       |   |           | 201,550     |   |         | -       |   |            | -           |   |          | 203,000    |  
|Issue of stock for cash pursuant to a private    |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |           
|placement                                        |  at $0.10 | -               |   |              | -         |            | 650,000   |   |        | 650         |   |           | 64,350      |   |         | -       |   |            | -           |   |          | 65,000     |  
|Net loss                                         |            | -               |   |              | -         |            | -         |   |        | -           |   |           | -           |   |         | -       |   |            | (1,208,941  | ) |          | (1,208,941 | )
|Issued for termination fee                       |            | 198,000         |   |              | 198       |            | -         |   |        | -           |   |           | 791,802     |   |         | -       |   |            | -           |   |          | 792,000    |  
|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |            |  
|Balance, December 31, 2003                       | 198,000    |                 |   | 198          |           | 17,305,596 |           |   | 17,304 |             |   | 3,608,630 |             |   | 294,027 |         |   | (4,286,668 | )           |   | (366,509 | )         
|Non-cash compensation charge                     | -          |                 |   | -            |           | -          |           |   | -      |             |   | -         |             |   | 130,650 |         |   | -          |             |   | 130,650  |           
|Stock-based compensation on exercise of          |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |           
|options                                          |            | -               |   |              | -         |            | -         |   |        | -           |   |           | 49,750      |   |         | (49,750 | ) |            | -           |   |          | -          |  
|Issue of stock pursuant to the exercise of       |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |           
|share purchase warrants                          |  at $0.10 | -               |   |              | -         |            | 320,000   |   |        | 320         |   |           | 31,680      |   |         | -       |   |            | -           |   |          | 32,000     |  
|Issue of stock 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     |  
|Issue of stock for debt                          |  at $0.06 | -               |   |              | -         |            | 825,364   |   |        | 825         |   |           | 47,712      |   |         | -       |   |            | -           |   |          | 48,537     |  
|Issue of stock for debt                          |  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   |           
|Net loss                                         |            | -               |   |              | -         |            | -         |   |        | -           |   |           | -           |   |         | -       |   |            | (420,947    | ) |          | (420,947   | )
|                                                 |            |                 |   |              |           |            |           |   |        |             |   |           |             |   |         |         |   |            |             |   |          |            |  
|Balance, September 30,
      2004                | 198,000    |                 | $ | 198          |           | 19,278,960 |           | $ | 19,277 |             | $ | 3,853,194 |             | $ | 374,927 |         | $ | (4,707,615 | )           | $ | (460,019 | )         

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  (A Development Stage Company) 
  NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
  September 30, 2004
  (Stated in U.S. Dollars) 
  (Unaudited)

|Note 1 | Interim Reporting
      The accompanying unaudited interim financial statements
        have been prepared by Strategic Internet Investments, Incorporated (the
        "Company") pursuant to the rules and regulations of the United States
        Securities and Exchange Commission. Certain information and disclosures
        normally included in annual financial statements prepared in accordance
        with accounting principles generally accepted in the United States of
        America have been condensed or omitted pursuant to such rules and regulations.
        In the opinion of management, all adjustments and disclosures necessary
        for a fair presentation of these financial statements have been included.
        Such adjustments consist of normal recurring adjustments. These interim
        financial statements should be read in conjunction with the annual audited
        financial statements of the Company for the fiscal year ended December
        31, 2003, as filed with the United States Securities and Exchange Commission.
      The results of operations for the Nine months ended
        September 30, 2004 are not indicative of the results that may be expected
        for the full year.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Note 2 | Continuance of Operations
      The financial statements have been prepared using generally
        accepted accounting principles in the United States of America applicable
        for a going concern which assumes that the Company will realize its assets
        and discharge its liabilities in the ordinary course of business. As at
        September 30, 2004, the Company has a working capital deficiency of $293,590,
        which is not sufficient to meet its planned business objectives or ongoing
        operations for the next fiscal year and has accumulated losses of $4,707,615
        since its inception. The ability of the Company to continue as a going
        concern is dependent upon arranging the necessary financing to meet its
        obligations and pay its liabilities arising from normal business operations
        when they come due.                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Note 3 | Principles of Consolidation
      These interim consolidated financial statements include
        the accounts of the Company and its wholly owned subsidiaries Strategic
        Internet Investment Canada Inc. and 3851630 Canada Inc. Both of these
        subsidiaries companies are dormant and were incorporated by the Company
        in March 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Note 4 | Deferred Investment Costs
      Deferred investment costs consist of consultants' fees
        and payments to reimburse Star Leisure and Entertainment Inc. with respect
        to the acquisition of Gulf Star World Development W.L.L. (Note 6).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 2
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 5 | Loans Payable Note
      6 |                                                            |   |               |   |   |             
|------ | --------------------------- | ---------------------------------------------------------- | - | ------------- | - | - | ------------
|       |                             |                                                            |   | September 30, |   |   | December 31,
|       |                             |                                                            |   | 2004          |   |   | 2003        
|       | a)                          | Loan payable to a shareholder. This loan is unsecured,     |   |               |   |   |             
|       |                             | non-interest bearing and repayable on demand.              | $ | -             |   | $ | 13,837      
|       |                             |                                                            |   |               |   |   |             
|       | b)                          | Loan payable to a company controlled by a director of the  |   |               |   |   |             
|       |                             | Company including accrued interest of $8,341 (2003: Nil)   |   |               |   |   |             
|       |                             | The loan is unsecured, bearing interest at 12% per         |   |               |   |   |             
|       |                             | annum and is repayable no later than August 12, 2005.      |   | 28,341        |   |   | 50,000      
|       |                             |                                                            |   |               |   |   |             
|       | c)                          | Loan payable to a shareholder including accrued interest   |   |               |   |   |             
|       |                             | of $2,486 (2003: $1,992). The loan is unsecured, bears     |   |               |   |   |             
|       |                             | interest at 8% per annum and is repayable upon demand.     |   | 8,521         |   |   | 8,027       
|       |                             |                                                            |   |               |   |   |             
|       | d)                          | Loans payable to a company controlled by a shareholder     |   |               |   |   |             
|       |                             | of the Company, including accrued interest of $14,844      |   |               |   |   |             
|       |                             | (2003: $5,820), pursuant to Convertible Loan               |   |               |   |   |             
|       |                             | Agreements. Interest is calculated at 10% per annum.       |   |               |   |   |             
|       |                             | The loans mature on various dates to September 23,         |   |               |   |   |             
|       |                             | 2006. The lender may at anytime convert the principal      |   |               |   |   |             
|       |                             | sum plus accrued interest into units of the Company.       |   |               |   |   |             
|       |                             | Each unit will consist of one common share plus one        |   |               |   |   |             
|       |                             | common share purchase warrant. Conversion of this loan     |   |               |   |   |             
|       |                             | and associated warrants to equity will be at various rates |   |               |   |   |             
|       |                             | ranging from $0.05 to $1.16 per share.                     |   | 232,484       |   |   | 67,359      
|       |                             |                                                            |   |               |   |   |             
|       | e)                          | Loan payable to a shareholder including accrued interest   |   |               |   |   |             
|       |                             | of $ Nil (2002: $905). The loan is unsecured, bears        |   |               |   |   |             
|       |                             | interest at 10% per annum and was settled in May 2004      |   |               |   |   |             
|       |                             | for 30,000 shares at a deemed price of $0.30 per share.    |   | -             |   |   | 14,821      
|       |                             |                                                            |   |               |   |   |             
|       | f)                          | Loans payable to a company controlled by a director of     |   |               |   |   |             
|       |                             | the Company, including accrued interest of $10,183         |   |               |   |   |             
|       |                             | (2003: $2,149), pursuant to Convertible Loan               |   |               |   |   |             
|       |                             | Agreements. Interest is calculated at 10% per annum.       |   |               |   |   |             
|       |                             | The loans mature on various dates to January 31, 2006.     |   |               |   |   |             
|       |                             | The lender may at anytime convert the principal sum plus   |   |               |   |   |             
|       |                             | accrued interest into units of the Company. Each unit will |   |               |   |   |             
|       |                             | consist of one common share plus one common share          |   |               |   |   |             
|       |                             | purchase warrant. Conversion of this loan and associated   |   |               |   |   |             
|       |                             | warrants to equity will be at various rates ranging from   |   |               |   |   |             
|       |                             | $0.13 to $0.24 per share.                                  |   | 113,389       |   |   | 83,353      
|       |                             |                                                            |   |               |   |   |             
|       |                             |                                                            |   | 382,735       |   |   | 237,397     
|       |                             | Less: current portion                                      |   | (114,590      | ) |   | (122,708    
|       |                             |                                                            |   |               |   |   |             
|       |                             |                                                            | $ | 268,145       |   | $ | 114,689     

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 3
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 6 | Capital Stock Note 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Class A Convertible Preferred Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Class A convertible preferred shares
        have a par value of $0.001 and are convertible to common shares at $4.00
        per share during the first 180 days following issuance, and thereafter
        at the average of twenty consecutive days closing prices, but shall not
        be less than $1.50 per share or greater than $6.00 per share.                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Company's board of directors approved
        a stock option plan. Under the plan directors, employees and consultants
        may be granted options to purchase common stock of the Company at a price
        of not less than 100% of the fair market value of the stock. The total
        number of options granted must not exceed 15% of the outstanding common
        stock of the Company. The plan expires on July 1, 2017.                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | During the period ended September 30,
        2004, the Company granted share purchase options to consultants of the
        Company at the closing price of the Company's common stock on the date
        of the grants. The options have been granted with a term of 5 years. The
        stock options are exercisable at 20% on the date of grant, and then 20%
        every three months thereafter, such that they are fully exercisable after
        a period of one year from the date of grant.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | During the period ended September 30,
        2004, the change in share purchase options outstanding is as follows:                                                                                                                                                                                                                                                                                                                                                                                        

| |                                      |                   |  |           |   | Weighted
| | ------------------------------------ | ----------------- |  | --------- | - | --------
| |                                      |                   |  |           |   | Average 
| |                                      |                   |  |           |   | Exercise
| |                                      | Expiry            |  | Shares    |   | Price   
| |                                      |                   |  |           |   |         
| | Outstanding at beginning of period   | September 5, 2008 |  | 1,765,000 |   | $0.25   
| | Exercised during the period          |                   |  | (205,000  | ) | $0.25   
| | Granted during the period            | February 5, 2009  |  | 100,000   |   | $0.35   
| |                                      | April 15, 2009    |  | 25,000    |   | $0.63   
| |                                      | July 8, 2004      |  | 90,000    |   | $1.55   
| | Options outstanding at end of period |                   |  | 1,775,000 |   | $0.33   

| | At September 30, 2004, of the total outstanding share purchase options,
      1,648,000 were exercisable.
| | ---------------------------------------------------------------------------------------------------------

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 4
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 6 | Capital Stock Note 8  (cont'd)                                                                                                                                       
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                        
|       | Commitments  (cont'd)                                                                                                                                                 
|       |                                                                                                                                                                        
|       | Stock-based Compensation  (cont'd)                                                                                                                                    
|       |                                                                                                                                                                        
|       | As the stock options have a graded vesting
        schedule, the total compensation cost recognized for the nine months ended
        September 30, 2004 is as follows:

| |                            |   |                    |   |   |                   |   |   |               |   |   |         |   |   | Cumulative    |  
| | -------------------------- | - | ------------------ | - | - | ----------------- | - | - | ------------- | - | - | ------- | - | - | ------------- | -
| |                            |   |                    |   |   |                   |   |   |               |   |   |         |   |   | from February |  
| |                            |   |                    |   |   |                   |   |   |               |   |   |         |   |   | February 28,  |  
| |                            |   |                    |   |   |                   |   |   |               |   |   |         |   |   | 1989 (Date of |  
| |                            |   | Three months ended |   |   | Nine months ended |   |   | Inception)    |  
| |                            |   | September 30,      |   |   | September 30,     |   |   | September 30, |  
| |                            |   | 2004               |   |   | 2003              |   |   | 2004          |   |   | 2003    |   |   | 2004          |  
| | Total non-cash             |   |                    |   |   |                   |   |   |               |   |   |         |   |   |               |  
| | compensation charge vested | $ | 124,850            |   | $ | 88,250            |   | $ | 317,750       |   | $ | 88,250  |   | $ | 887,757       |  
| | Consultants' non-cash      |   |                    |   |   |                   |   |   |               |   |   |         |   |   |               |  
| | compensation charge        |   |                    |   |   |                   |   |   |               |   |   |         |   |   |               |  
| | recognized                 |   | ( 62,050           | ) |   | ( 26,750          | ) |   | (130,650      | ) |   | (26,750 | ) |   | ( 399,235     | )
| |                            |   |                    |   |   |                   |   |   |               |   |   |         |   |   |               |  
| | Employee's non-cash        |   |                    |   |   |                   |   |   |               |   |   |         |   |   |               |  
| | compensation charge        | $ | 62,800             |   | $ | 61,500            |   | $ | 187,100       |   | $ | 61,500  |   | $ | 488,522       |  

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

| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   |              |  
| | --------- | ----------- | - | ------------------ | - | - | ----------------- | - | - | ------------- | - | - | ---------- | - | - | ------------ | -
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   | Cumulative   |  
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   | From         |  
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   | February 28, |  
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   | 1989 (Date   |  
| |           |             |   | Three months ended |   |   | Nine months ended |   |   | of Inception) |  
| |           |             |   | September 30,      |   |   | September 30,     |   |   | September 30, |  
| |           |             |   | 2004               |   |   | 2003              |   |   | 2004          |   |   | 2003       |   |   | 2004         |  
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   |              |  
| | Net loss  | As reported | $ | (206,722           | ) | $ | (962,606          | ) | $ | (420,947      | ) | $ | (1,076,714 | ) | $ | (4,707,615   | )
| |           | Pro-forma   | $ | (269,522           | ) | $ | (1,024,106        | ) | $ | (608,047      | ) | $ | (1,138,214 | ) | $ | (5,196,137   | )
| |           |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   |              |  
| | Basic los |             |   |                    |   |   |                   |   |   |               |   |   |            |   |   |              |  
| | per share | As reported | $ | (0.01              | ) | $ | (0.06             | ) | $ | (0.01         | ) | $ | (0.07      | ) | $ | -            |  
| |           | Pro-forma   | $ | (0.01              | ) | $ | (0.06             | ) | $ | (0.02         | ) | $ | (0.07      | ) | $ | -            |  

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 5
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 6 | Capital Stock Note 8  (cont'd)                                                                                                                                       
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                        
|       | Commitments  (cont'd)                                                                                                                                                 
|       |                                                                                                                                                                        
|       | Stock-based Compensation  (cont'd)                                                                                                                                    
|       |                                                                                                                                                                        
|       | The fair value of each option
        grant was estimated on the date of the grant using the Black-Scholes option-pricing
        model with the following assumptions:

| |                         | 2004      | 2003
| | ----------------------- | --------- | ----
| | Expected dividend yield | 0.0%      | 0.0%
| | Expected volatility     | 141%-185% | 252%
| | Risk-free interest rate | 2%-2.88%  | 4.5%
| | Expected term in years  | 5         | 5   

| | The Black-Scholes option pricing model requires the
        input of highly subjective assumptions including the expected price volatility. 
        Changes in the subjective input assumptions can materially affect the
        fair value estimate and therefore the Black-Scholes model does not necessarily
        provide a reliable single  measure of  the fair value of the
        Company's share purchase options.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | At September 30, 2004, the following share purchase warrants were outstanding:                                                                                                                                                                                                                                                                                                                                                  

|            |  |          |  |                  
|----------- |  | -------- |  | -----------------
|Number      |  | Exercise |  | Expiry           
|of Warrants |  | Price    |  | Date             
|            |  |          |  |                  
|643,716     |  | $0.05    |  | December 31, 2004
|75,820      |  | $0.07    |  | February 5, 2005 
|27,760      |  | $0.10    |  | February 5, 2005 
|50,568      |  | $0.12    |  | March 5, 2005    
|27,500      |  | $0.08    |  | March 5, 2005    
|330,000     |  | $0.10    |  | March 13, 2005   
|            |  |          |  |                  
|1,155,364   |  |          |  |                  

| | Each warrant entitles the holder thereof the right to purchase one common
      share at the prices as indicated above.
| | -----------------------------------------------------------------------------------------------------------------------

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 6
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 6 | Capital Stock
        Note 8  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | Commitments  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | Acquisition of Gulf Star
        World Development W.L.L.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | By a letter of agreement
        dated July 11, 2002, amended October 10, 2002, May 10, 2003 and September
        30, 2003, the Company agreed to purchase 80% of the outstanding shares
        of Gulf Star World Development W.L.L. ("Gulf Star"), a Bahrain corporation,
        from Star Leisure & Entertainment Inc. ("Star Leisure"). Star Leisure
        is controlled by a director of the Company and is based in British Columbia,
        Canada. Gulf Star is the 100% owner and developer of the residential and
        tourist project known as the Dream Island Resort, located on the north
        coast of Bahrain at Manama City.                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | To acquire 80% of Gulf
        Star, the Company must issue five million common shares at a price of
        $0.125 per share. The shares are to be issued over a three-year period
        as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | In addition, the Company
        shall make cash payments to Star Leisure totalling $100,000 to cover a
        portion of hard costs accumulated by Star Leisure in progressing the Dream
        Island Project. During the year ended December 31, 2003, the Company paid
        $34,210 as partial payment toward the $100,000 payment. The remaining
        balance of $65,790 is due on or before July 11, 2005. 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 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 were issued in escrow, and will be released in stages as
        the dredging contract progresses. At September 30, 2004, no value had
        been recorded for the shares as work had not commenced on the project
        and none of the shares have been released from escrow.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | An agent's fee of 0.5%
        of the value of the shares released will be payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 7
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 6 | Capital Stock
        Note 8  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Commitments  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Acquisition of Gulf Star
        World Development W.L.L.  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | The Company also engaged
        a consultant to act as an advisor in respect to the above noted acquisition.
        The company  issued 1,300,000  common shares  during the
        year ended December 31, 2002, which were deposited into escrow and are
        to be released on the basis of the progress of the Dredging and Reclamation
        Contract noted above. These shares have been recorded at their estimated
        fair value ($65,000) and have been deferred with other related investment
        costs pertaining to the acquisition of Gulf Star World Development W.L.L.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Pursuant to an agreement
        dated October 20, 2003, the Company has issued 1,137,500 Class A convertible
        preferred shares of the Company at a deemed value of $4 per share for
        Technical  Planning services  for the Dream Island Project.
        These  shares were issued in escrow, and will be released over time
        as work on the project progresses. At September 30, 2004, no value had
        been recorded for the shares as work had not commenced on the project
        and none of the shares have been released from escrow.                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | In August 2004 work commenced
        on the Dream Island Project, however there has not yet been sufficient
        progress to warrant a release of escrowed shares.                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Note 7 | Non-Cash Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Investing and financing
        activities that do not have a direct impact on cash flows are excluded
        from the statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | The Company issued common
        shares for settlement of debts, convertible loans, and for services provided
        to the Company during the following years:                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |      |  | Number of        |  | Number of     |  | Average Price |  |            | 
| | ---- |  | ---------------- |  | ------------- |  | ------------- |  | ---------- | 
| |      |  | Preferred Shares |  | Common Shares |  | Per Share     |  | $          | 
| |      |  |                  |  |               |  |               |  |            | 
| | 1995 |  | -                |  | 50,000        |  | $0.03         |  | 1,500      | 
| | 1998 |  | -                |  | 7,000,000     |  | $0.001        |  | 7,000      | 
| | 1998 |  | -                |  | 620,000       |  | $0.01         |  | 6,200      | 
| | 2001 |  | -                |  | 233,333       |  | $0.50         |  | 116,667    | 
| | 2002 |  | -                |  | 680,886       |  | $0.12         |  | 138,006    | 
| | 2002 |  | -                |  | 1,380,000     |  | $0.07         |  | 93,000     | 
| | 2003 |  | -                |  | 1,450,000     |  | $0.14         |  | 203,000    | 
| | 2003 |  | 198,000          |  | -             |  | $4.00         |  | 792,000    | 
| | 2004 |  | -                |  | 825,364       |  | $0.06         |  | 48,537     | 
| | 2004 |  | -                |  | 613,000       |  | $0.30         |  | 45,000     | 
| | 2004 |  | -                |  | 10,000        |  | $2.00         |  | 20,000     | 
| |      |  | 198,000          |  | 12,862,583    |  |               |  | $1,470,910 | 

---

Strategic Internet Investments, Incorporated
  (A Development Stage Company) 
  Notes to the Interim Consolidated Financial Statements 
  September 30, 2004  Page 8
  (Stated in U.S. Dollars)
  (Unaudited)

|Note 8 | Subsequent Events                                   
|------ | ----------------------------------------------------
|       |                                                     
|       | Subsequent to September 30, 2004,
      the Company:
|       |                                                     
|       |                                                     
|       | i)                                                  
|       |                                                     
|       | ii)                                                 

---

|2. | Plan of Operation
      The Company is in the development stage, accordingly
        certain matters discussed herein are based on potential future circumstances
        and developments, which the Company anticipates, but which cannot be assured.
        The Company is currently devoting its efforts to developing The Dream
        Island Resort project in Manama, Bahrain. The Dream Island Resort project
        will be an integrated resort, entertainment, hotel and real estate facility
        to be built on a 41 acre man-made island off the north eastern coast of
        Manama, Bahrain.
      The Company was incorporated in Colorado on February
        28, 1989 as Jefferson Capital Corporation. Effective June 13, 1990 the
        Company changed its name to Ohio & Southwestern Energy Company. Effective
        July 1, 2001, the Company and Strategic Internet Investments, Incorporated
        ("Strategic"), an inactive Delaware corporation incorporated on March
        2, 2001, were merged. All common shares outstanding of the Company were
        converted into an equal number of common shares of Strategic. The purpose
        of this merger was to change the corporate jurisdiction of the Company
        from Colorado to Delaware and to change the name of the Company. The surviving
        corporation of the merger is Strategic, a Delaware corporation.
      The Company has an agreement to purchase 80% of the
        outstanding shares of Gulf Star World Development W.L.L. ("Gulf Star"),
        a Bahrain corporation, from Star Leisure & Entertainment Inc. ("Star
        Leisure"). Star Leisure is controlled by a director of the Company and
        is based in British Columbia, Canada. Gulf Star is the 100% owner and
        developer of the Dream Island Resort project.
      To acquire 80% of Gulf Star, the Company must issue
        five million common shares at a price of $0.125 per share. The shares
        are to be issued over a three year period based on construction progress.
        In addition, the Company shall make cash payments to Star Leisure totaling
        $100,000 to cover a portion of hard costs accumulated by Star Leisure
        in progressing the Dream Island Project. At December 31, 2003 the Company
        had paid $34,210, with the balance of $65,790 to be paid by July 11, 2005.
      The financial statements have been prepared on a going
        concern basis. The Company has accumulated a deficit of $4,707,615 since
        inception and at September 30, 2004 has a working capital deficiency of
        $293,590. Its ability to continue as a going concern is dependent upon
        the ability of the Company to generate profitable operations in the future
        and/or to obtain the necessary financing to meet its obligations and repay
        its liabilities arising from normal business operations when they come
        due. The outcome of these matters cannot be predicted with any certainty
        at this time. The Company has historically satisfied its capital needs
        primarily by issuing equity securities. Management plans to continue to
        provide for its capital needs during the next twelve months by issuing
        equity securities, private placements, loans, and debentures convertible
        into equity. Additional operating capital could be obtained through the
        potential exercise of management and director stock options and/or exercise
        of outstanding stock purchase warrants. The Company remains at the development
        stage, as there were no revenues during the past fiscal year.
      The Dream Island project in Bahrain, the Company's principal
        business, will require, over the next twenty to twenty-four months, a
        significant amount of investment capital to be secured to ensure that
        all stages of development can proceed and be completed on schedule and
        on budget. The highest percentage of the funding requirements will be
        met through senior debt instruments with banking, investment and construction
        institutions and through government financing incentives and concessions.
        Further financing will be achieved through the pre-selling of the real
        estate units, villas and apartments, to be constructed as part of the
        Dream Island complex.
      On June 8, 2004 the Company entered into a Marketing,
        Promotion and Property Share Agreement (the 'Marketing Agreement') with
        AL Misehal Real Estate, Al Ayiri Real Estate and Khalil Ibrahim Ali Khan,
        (collectively the 'Marketing Group'). The Marketing Group will market
        and sell, on a pre-sale basis, the future residential real estate of the
        Dream Island Project consisting of beach villas, and marina residences
        units. Proceeds from all pre-sales will be held in a joint escrow account
        and released to the project in stages based upon construction milestones
        being achieved. Al Misehal Real Estate of Damam, Kingdom of Saudi Arabia,
        has all necessary marketing experience and sales capabilities from initial
        sales contact though formal bid proposals and contract negotiations. Al
        Misehal
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|   | Real Estate offers an unrivalled service in project
        management, sales and marketing through in-house specialists and through
        partners in the Europe and the USA (www.almisehal.com). Al Ayiri Real
        Estate, Damam, Kingdom of Saudi Arabia is a privately owned business with
        experience in real estate marketing and sales within the Gulf Council
        States. Khalil Ibrahim Ali Khan is an individual residing in Al Kohbar
        with experience in real estate marketing and sales in Saudi Arabia.
      The first stage of the project, dredging and reclamation
        of the 41 acre man-made island site, has been paid by the issuance to
        Robodh Contracting Establishment, Manama, Bahrain, of 1,268,750 Class
        A Convertible Preferred Shares in the capital of the Company at a deemed
        price of $4.00 per share. The total value of the Dredging and Reclamation
        Works contract is $5,075,000.
      In August 2004, 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 have begun transporting
        and dumping quarry stone to create the temporary causeway from which access
        will be gained to the island site. Once the temporary causeway has been
        completed, work will commence on the creation of the Dream Island perimeter
        of the future offshore island. Thereafter, reclamation dredging operations
        will commence to move sand into the perimeter thereby creating the Dream
        Island site.
      Management believes that the close connections and contacts
        it has made in the Middle East, especially the efforts of its Chairman,
        Mr. Abbas Salih, who has been stationed predominately in Saudi Arabia
        and Bahrain for the past year to oversee the project, will be of immense
        value in completing other essential contracts during the course of this
        project.
      The Company's plan during the next quarter and for the
        balance of 2004 is to maintain the size and staffing of its Vancouver,
        British Columbia head office at the current levels. There are no plans
        to hire additional employees as administrative requirements at head office
        are now being adequately met by the efforts of the board members the full-time
        and temporary staff and consultants. Field operations and construction
        activities in Bahrain will be conducted through contracting and sub-contracting
        of work.
      In May 2004, the Company entered into a share exchange
        agreement with Bayindir Faktoring Hizmetleri A.S. of Istanbul, Turkey
        ('Bayindir'). This agreement contemplated the Company providing working
        capital financing to Bayindir, and ultimately the acquisition of a controlling
        interest in Bayindir. This agreement has now lapsed, and the Company does
        not plan to pursue this investment any further.
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | Controls and Procedures
      The Company's executive officers have concluded that
        the Company's disclosure controls and procedures are effective based upon
        their evaluation of such controls and procedures as of a date within 90
        days prior to the filing of this Annual Report. There were no significant
        changes in the Company's internal control or in the other factors that
        could significantly affect the Company's internal controls subsequent
        to the date of their most recent evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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PART II  OTHER INFORMATION

|1. | Legal Proceedings
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        None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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|2. | Changes in Securities
      Sales of Securities Without Registration Under the Securities
        Act of 1933
      On November 15, 2002 the Company entered into a Convertible
        Loan Facility Agreement with Icon Management Ltd. ("Icon") whereby the
        Company would, from time to time, borrow operating funds from Icon, at
        an interest rate of ten percent (10%), repayable two years from the date
        the funds are advanced (the "maturity date"). The lender has the right
        to convert all or part of the principal sum and interest into units, each
        unit consisting of one common share of the Company and one non-transferable
        share purchase warrant, expiring on the maturity date, exercisable at
        the applicable conversion rate which is calculated at a discount to the
        average closing market price for ten days preceding a loan advance. At
        September 30, 2004, Icon had advanced a total of $217,640, plus accrued
        interest of $14,844, which can be converted into 462,042 units, at various
        a conversion prices of $0.05 to $1.16 per unit. The principal sum and
        any accrued interest under the Convertible Loan Facility are repayable
        on various dates ranging from April 5, 2005 to September 23, 2006. During
        the period ended September 30, 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. This transaction is with an offshore non-U.S.
        person; accordingly, these securities are exempt from registration pursuant
        to Regulation S.
      On January 31, 2003, the Company issued 1,268,750 Class
        A Convertible Preferred Shares(1), at a deemed value of $4.00
        per share, as payment for the dredging and reclamation services to be
        performed by Robodh Contracting Establishment of Manama, Bahrain. The
        total value of the Dredging and Reclamation Works contract is $5,075,000.
        These shares were issued in escrow and will be released over time as work
        on the Dream Island Project dredging progresses. 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, the 320,000 warrants were exercised, and 320,000 shares
        were issued for cash proceeds of $32,000. 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 SIII, whereby
        the Company would, from time to time, borrow operating funds from Icon,
        at an interest rate of ten percent (10%), repayable two years from the
        date the funds are advanced (the "maturity date"). The lender has the
        right to convert all or part of the principal sum and interest into units,
        each unit consisting of one common share of the Company and one non-transferable
        share purchase warrant, expiring on the maturity date, exercisable at
        the applicable conversion rate which is calculated at a discount to the
        average closing market price for ten days preceding a loan advance. At
        September 30, 2004, Star Leisure had advanced a total of $103,206, plus
        accrued interest of $10,183, which can be converted into 588,694 units,
        at various a conversion prices of $0.13 to $0.24 per unit. The principal
        sum and any accrued interest under the Convertible Loan Facility are repayable
        on various dates ranging from August 13, 2005 to January 31, 2006. Star
        Leisure has not converted any part of the

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| | principal sums advanced or accrued interest into units
        as of September 30, 2004. This transaction is with an offshore non-U.S.
        person; accordingly, these securities are exempt from registration pursuant
        to Regulation S.
      On November 30, 2003, the Company issued 198,000 Class
        A Convertible Preferred Shares(1)at a deemed value of $4.00
        per share to settle a termination fee of $792,000. This termination fee
        is to a former contractor who was to perform planning services for the
        Company that were subsequently assigned to another contractor. This transaction
        is with an offshore non-U.S. person; accordingly, these securities are
        exempt from registration pursuant to Regulation S.
      On January 31, 2004, the Company issued 1,137,500 Class
        A Convertible Preferred Shares(1) at a deemed value of $4.00
        per share, as payment for technical planning services to be performed
        by the Arkan Group for Projects of Dammam, Saudi Arabia. The total value
        of the technical planning services contract is $4,550,000. These shares
        were issued in escrow and will be released over time as work on the Dream
        Island Project progresses. This transaction is with an offshore non-U.S.
        person; accordingly, these securities are exempt from registration pursuant
        to Regulation S.
      In August 2004, the Company issued 10,000 common shares
        at a deemed price of $2.00 per share, for a total deemed consideration
        of $20,000, pursuant to a Consulting Services Agreement for financial
        consulting. This transaction is with an offshore non-U.S. person; accordingly,
        these securities are exempt from registration pursuant to Regulation S,
        however they are restricted under Rule 144.
      The Company also issued 300,000 common shares in August
        2004, at a deemed price of $0.38 per share, for a total deemed consideration
        of $112,500, pursuant a Promotional and Capital Funding Agreement for
        financial and investor relation services. These shares are held in escrow
        and are to be released subject to the Company obtaining certain future
        financial goals. This transaction is with an offshore non-U.S. person;
        accordingly, these securities are exempt from registration pursuant to
        Regulation S, however they are restricted under Rule 144.
      The Company issued an additional 563,000 common shares
        in August 2004, as a $30,000 partial settlement of a loan from Canarab
        Acquisitions Inc. (Canarab), a company controlled by a director. In 2001,
        Canarab secured a loan on behalf of the Company, and the lender received
        as fees and collateral 563,000 shares of the Company that were owned by
        Canarab. The lender subsequently applied the collateral shares as payment
        of the outstanding loan. Accordingly, the Company issued 563,000 common
        shares to Canarab as reimbursement for those shares forfeited to the lender.
        This transaction is with an offshore non-U.S. person; accordingly, these
        securities are exempt from registration pursuant to Regulation S, however
        they are restricted under Rule 144.
      In August 2004 work commenced on the Dream Island Project,
        however there has not yet been sufficient progress to warrant a release
        of any of the escrowed shares.
      Subsequent to September 30, 2004, the Company also issued
        350,000 common shares at a deemed price of $0.35 per share, for a total
        deemed consideration of $122,500, pursuant a Promotional and Capital Funding
        Agreement for financial and investor relation services. This transaction
        is with an offshore non-U.S. person; accordingly, these securities are
        exempt from registration pursuant to Regulation S, however they are restricted
        under Rule 144.
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|   | (1)                                                                      | Refer to the Notes of the Interim Consolidated Financial
        Statements for the Class A Convertible Preferred Shares terms of conversion
        and rights.
|-- | ------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                          |                                                                                                                                                                 
|3. | Defaults Upon Senior Securities

        None                          
|   |                                                                         
|4. | Submission of Matters to a Vote of Security
      Holders

        None

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|5.     | Other Information
      
        None
|------ | --------------------------------------
|       |                                       
|**6.** | Exhibits                              

| | 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)
      Certification | Exhibit
      31.1
| | 601-(31)      | Rule 13a-14(a)/15d-14(a) Certification       | Exhibit 31.2      
| | 601-(32)      | Section 1350 Certification                   | Exhibit
      32.1
| | 601-(32)      | Section 1350 Certification                   | Exhibit 32.2      
| |               |                                              |                   

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

SIGNATURES

In accordance with the requirements of the Exchange Act, the
  registrant caused this report to be signed on its behalf by the undersigned,
  thereunto duly authorized.

|      |                   |  | Strategic Internet Investments, Incorporated
|----- | ----------------- |  | --------------------------------------------
|      |                   |  |                                             
|Date: | November 19, 2004 |  | /s/ Ralph Shearing                          
|      |                   |  | Ralph Shearing, CEO, Director               
|      |                   |  |                                             
|Date: | November 19, 2004 |  | /s/ Abbas Salih                             
|      |                   |  | Abbas Salih, CFO, Director                  

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