---

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

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) 
  OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2004

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

|**Delaware**           | **84-1116458**             
|---------------------- | ---------------------------
|State of incorporation | IRS Employer Identification

**Suite 450, 650 West Georgia Street
  Vancouver, BCCanada V6B 4N8**Address of principal executive offices

**604-684-8662**
  Issuers telephone number

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 May 10, 2004:**18,198,960**

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

March 31, 2004

(Stated in U.S. Dollars)

(Unaudited)

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED 
  (A Development Stage Company)
  INTERIM CONSOLIDATED BALANCE SHEETS 
  March 31, 2004 and December 31, 2003
  (Stated in U.S. Dollars) (Unaudited)

|                                                            |   | March 31,  |   |   | December 31, |  
|----------------------------------------------------------- | - | ---------- | - | - | ------------ | -
|                                                            |   | 2004       |   |   | 2003         |  
|ASSETS                                                      |  
|                                                            |   |            |   |   |              |  
|Current                                                     |   |            |   |   |              |  
|Cash                                                        |   | 18,436     |   |   | 346          |  
|Due
      from related party                                |   | 669        |   |   | 9,494        |  
|                                                            |   | 19,105     |   |   | 9,840        |  
|Capital assets                                              |   | 877        |   |   | 949          |  
|Deferred investment costs  Note 4                          |   | 99,210     |   |   | 99,210       |  
|                                                            | $ | 119,192    |   | $ | 109,999      |  
|                                                            |   |            |   |   |              |  
|LIABILITIES                                                 |  
|                                                            |   |            |   |   |              |  
|Current                                                     |   |            |   |   |              |  
|Accounts
      payable                                      | $ | 181,096    |   | $ | 189,852      |  
|Due
      to related parties                                |   | 49,259     |   |   | 49,259       |  
|Current
      portion of loans payable  Note 5             |   | 87,024     |   |   | 122,708      |  
|                                                            |   | 317,379    |   |   | 361,819      |  
|Loans payable  Note 5                                      |   | 171,328    |   |   | 114,689      |  
|                                                            |   | 488,707    |   |   | 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                                |   |            |   |   |              |  
|18,130,960
      outstanding (2003: 17,305,596 outstanding) |   | 18,129     |   |   | 17,304       |  
|Additional paid-in capital                                  |   | 3,656,342  |   |   | 3,608,630    |  
|Contributed capital                                         |   | 327,577    |   |   | 294,027      |  
|Deficit accumulated during the development stage            |   | (4,371,761 | ) |   | (4,286,668   | )
|                                                            |   | (369,515   | ) |   | (366,509     | )
|                                                            | $ | 119,192    |   | $ | 109,999      |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED 
  (A Development Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 
  for the three months ended March 31, 2004 and 2003 
  and February 28, 1989 (Date of Inception) to March 31, 2004
  (Stated in US Dollars) (Unaudited)

|                                              |   |                 |   |   |                  |   |   | Cumulative     |  
|--------------------------------------------- | - | --------------- | - | - | ---------------- | - | - | -------------- | -
|                                              |   |                 |   |   |                  |   |   | from February  |  
|                                              |   |                 |   |   |                  |   |   | 28, 1989 (Date |  
|                                              |   | Three months    |   |   | of Inception) to |  
|                                              |   | ended March 31, |   |   | March 31,        |  
|                                              |   | 2004            |   |   | 2003             |   |   | 2004           |  
|                                              |   |                 |   |   |                  |   |   |                |  
|General and Administrative Expenses           |   |                 |   |   |                  |   |   |                |  
|Accounting and audit
      fees               | $ | 2,152           |   | $ | -                |   | $ | 80,179         |  
|Amortization                                  |   | 72              |   |   | 102              |   |   | 2,151          |  
|Consulting fees                               |   | 1,500           |   |   | 21,000           |   |   | 1,927,524      |  
|Filing fees (recovery)                        |   | -               |   |   | (162             | ) |   | 14,685         |  
|Interest                                      |   | 4,792           |   |   | 1,355            |   |   | 19,852         |  
|Legal fees                                    |   | 337             |   |   | 3,544            |   |   | 50,839         |  
|Investor relations                            |   | 5,724           |   |   | -                |   |   | 104,751        |  
|Management fees                               |   | -               |   |   | -                |   |   | 112,000        |  
|Office and general
      expenses             |   | 1,144           |   |   | 216              |   |   | 115,659        |  
|Rent                                          |   | 4,553           |   |   | -                |   |   | 40,787         |  
|Telephone expenses                            |   | 3,238           |   |   | 2,636            |   |   | 46,507         |  
|Transfer agent fees                           |   | 1,140           |   |   | 981              |   |   | 27,248         |  
|Travel and promotion                          |   | 26,891          |   |   | -                |   |   | 75,455         |  
|Non-cash compensation
      charge            |   | 33,550          |   |   | -                |   |   | 302,135        |  
|                                              |   |                 |   |   |                  |   |   |                |  
|Loss before the following:                    |   | (85,093         | ) |   | (29,672          | ) |   | (2,919,772     | )
|Unauthorized distribution                     |   | -               |   |   | -                |   |   | (69,116        | )
|Termination fee                               |   | -               |   |   | -                |   |   | (792,000       | )
|Gain on settlement
      of debt              |   | -               |   |   | -                |   |   | 15,464         |  
|Write-down of advances
      to related party |   | -               |   |   | -                |   |   | (606,337       | )
|                                              |   |                 |   |   |                  |   |   |                |  
|Net loss for the period                       | $ | (85,093         | ) | $ | (29,672          | ) | $ | ( 4,371,761    | )
|                                              |   |                 |   |   |                  |   |   |                |  
|Basic loss per share                          | $ | (0.00           | ) | $ | (0.00            | ) |   |                |  
|                                              |   |                 |   |   |                  |   |   |                |  
|Weighted average number of common shares      |   |                 |   |   |                  |   |   |                |  
|outstanding                                   |   | 18,112,820      |   |   | 15,237,651       |   |   |                |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED 
  (A Development Stage Company)
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  for the three months ended March 31, 2004 and 2003 
  and February 28, 1989 (Date of Inception) to March 31, 2004
  (Stated in US Dollars) (Unaudited)

|                                                        |   |                    |   |   |                  |   |   | Cumulative     |  
|------------------------------------------------------- | - | ------------------ | - | - | ---------------- | - | - | -------------- | -
|                                                        |   |                    |   |   |                  |   |   | from February  |  
|                                                        |   |                    |   |   |                  |   |   | 28, 1989 (Date |  
|                                                        |   | Three months ended |   |   | of Inception) to |  
|                                                        |   | March 31,          |   |   | March 31,        |  
|                                                        |   | 2004               |   |   | 2003             |   |   | 2004           |  
|                                                        |   |                    |   |   |                  |   |   |                |  
|Cash flows used in operating activities:                |   |                    |   |   |                  |   |   |                |  
|Net
      loss                                          | $ | (85,093            | ) | $ | (29,672          | ) | $ | (4,371,761     | )
|Adjustments
      to reconcile net loss to net cash     |   |                    |   |   |                  |   |   |                |  
|used
      in operations:                               |   |                    |   |   |                  |   |   |                |  
|Amortization                                            |   | 72                 |   |   | 102              |   |   | 2,151          |  
|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                      |   | 33,550             |   |   | -                |   |   | 302,135        |  
|Termination
      fees                                  |   | -                  |   |   | -                |   |   | 792,000        |  
|Issue
      of stock pursuant to a consulting agreement |   | -                  |   |   | -                |   |   | 1,657,987      |  
|Changes
      in non-cash items:                        |   |                    |   |   |                  |   |   |                |  
|Due
      from related party                            |   | 8,825              |   |   | -                |   |   | (607,006       | )
|Accounts
      payable                                  |   | (8,756             | ) |   | (10,568          | ) |   | 437,109        |  
|Prepaid
      expense                                   |   | -                  |   |   | 852              |   |   | 28,000         |  
|Due
      to related party                              |   | -                  |   |   | (25              | ) |   | 64,883         |  
|                                                        |   |                    |   |   |                  |   |   |                |  
|Net cash used in operating activities                   |   | (51,402            | ) |   | (39,311          | ) |   | (1,090,429     | )
|                                                        |   |                    |   |   |                  |   |   |                |  
|Cash flow used in investing activities                  |   |                    |   |   |                  |   |   |                |  
|Organization
      costs                                |   | -                  |   |   | -                |   |   | (750           | )
|Acquisition
      of capital assets                     |   | -                  |   |   | -                |   |   | (2,278         | )
|Deferred
      investment cost                          |   | -                  |   |   | (34,210          | ) |   | (34,210        | )
|                                                        |   |                    |   |   |                  |   |   |                |  
|Net cash used in investing activities                   |   | -                  |   |   | (34,210          | ) |   | (37,238        | )

SEE ACCOMPANYING NOTES

---

Continued

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  
  (A Development Stage Company) 
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  for the three months ended March 31, 2004 and 2003 
  and February 28, 1989 (Date of Inception) to March 31, 2004
  (Stated in US Dollars) (Unaudited)

|                                                   |   |                    |  |   |                  |   |   | Cumulative     |  
|-------------------------------------------------- | - | ------------------ |  | - | ---------------- | - | - | -------------- | -
|                                                   |   |                    |  |   |                  |   |   | from February  |  
|                                                   |   |                    |  |   |                  |   |   | 28, 1989 (Date |  
|                                                   |   | Three months ended |  |   | of Inception) to |  
|                                                   |   | March 31,          |  |   | March 31,        |  
|                                                   |   | 2004               |  |   | 2003             |   |   | 2004           |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Cash flows from financing activities:              |   |                    |  |   |                  |   |   |                |  
|Bank
      indebtedness                            |   | -                  |  |   | (19              | ) |   | -              |  
|Loans
      payable                                |   | 69,492             |  |   | 8,586            |   |   | 306,889        |  
|Proceeds
      from issuance of common stock       |   | -                  |  |   | 65,000           |   |   | 841,042        |  
|Payment
      of offering costs                    |   | -                  |  |   | -                |   |   | (27,270        | )
|Contributed
      capital                          |   | -                  |  |   | -                |   |   | 25,442         |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Net cash provided by financing activities          |   | 69,492             |  |   | 73,567           |   |   | 1,146,103      |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Net increase in cash                               |   | 18,090             |  |   | 46               |   |   | 18,436         |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Cash, beginning of period                          |   | 346                |  |   | -                |   |   | -              |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Cash, end of period                                | $ | 18,436             |  | $ | 46               |   | $ | 18,436         |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Supplementary disclosure of cash flow information: |   |                    |  |   |                  |   |   |                |  
|Cash
      paid for:                               |   |                    |  |   |                  |   |   |                |  
|Interest                                           | $ | -                  |  | $ | -                |   | $ | 6,651          |  
|                                                   |   |                    |  |   |                  |   |   |                |  
|Income
      taxes                                 | $ | -                  |  | $ | -                |   | $ | -              |  

Non-cash Transactions  Note 7

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED 
  (A Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY 
  for the period from February 28, 1989 (Date of Inception) to March 31, 2004
  (Stated in U.S. Dollars)

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

/Contd.

SEE ACCOMPANYING NOTES

---

|STRATEGIC INTERNET
      INVESTMENTS, INCORPORATED                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A
      Development Stage Company)                                                                                                                                       
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS
      DEFICIENCY
      for the period from February 28, 1989 (Date of Inception) to March 31, 2004
      (Stated in U.S. Dollars)



|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  | Deficit     |   |  |          |  
|--------------------------------------------------------------------------- | --------------- |  | ------------ | --------- |  | --------- |  |  | --------------- |  |  | ----------- | - |  | ------- |  |  | ----------- | - |  | -------- | -
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  | Accumulated |   |  |          |  
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  | Additional  |   |  |         |  |  | During the  |   |  |          |  
|                                                                            | Preferred Stock |  | Common Stock |           |  | Paid-in   |  |  | Contributed     |  |  | Development |   |  |         | 
|                                                                            | Shares          |  |              | Par Value |  | Shares    |  |  | Par
      Value |  |  | Capital     |   |  | Capital |  |  | Stage       |   |  | Total    |  
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  |             |   |  |          |  
|Balance, December 31, 1995                                                  | -               |  |              | -         |  | 116,695   |  |  | 116             |  |  | 84,114      |   |  | 24,842  |  |  | (110,500    | ) |  | (1,428   | )
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  |             |   |  |          |  
|Net loss                                                                    | -               |  |              | -         |  | -         |  |  | -               |  |  | -           |   |  | -       |  |  | (9,068      | ) |  | (9,068   | )
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  |             |   |  |          |  
|Balance, December 31, 1996                                                  | -               |  |              | -         |  | 116,895   |  |  | 116             |  |  | 84,114      |   |  | 24,842  |  |  | (119,568    | ) |  | (10,496  | )
|                                                                            |                 |  |              |           |  |           |  |  |                 |  |  |             |   |  |         |  |  |             |   |  |          |  
|Issuance of stock for cash 
      as 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 rendered 
      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   |  

/Contd.

SEE ACCOMPANYING NOTES

---

|STRATEGIC INTERNET
      INVESTMENTS, INCORPORATED                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A
      Development Stage Company)                                                                                                                                       
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS
      DEFICIENCY
      for the period from February 28, 1989 (Date of Inception) to March 31, 2004
      (Stated in U.S. Dollars)

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

/Contd.

SEE ACCOMPANYING NOTES

---

|STRATEGIC INTERNET
      INVESTMENTS, INCORPORATED                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A
      Development Stage Company)                                                                                                                                       
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS
      DEFICIENCY
      for the period from February 28, 1989 (Date of Inception) to March 31, 2004
      (Stated in U.S. Dollars)

|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   | Deficit     |   |   |            |  
|--------------------------------------------- | --------------------- |  | ------------------ | --------------- |  | ---------- |  | - | --------------- |  | - | ----------- |  | - | ------- |  | - | ----------- | - | - | ---------- | -
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   | Accumulated |   |   |            |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   | Additional  |  |   |         |  |   | During the  |   |   |            |  
|                                              | Preferred
      Stock |  | Common
      Stock |                 |  | Paid-in    |  |   | Contributed     |  |   | Development |  |   |         | 
|                                              | Shares                |  |                    | Par
      Value |  | Shares     |  |   | Par
      Value |  |   | Capital     |  |   | Capital |  |   | Stage       |   |   | Total      |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Balance, December 31, 2002                    | -                     |  |                    | -               |  | 15,205,596 |  |   | 15,204          |  |   | 2,550,928   |  |   | 240,527 |  |   | (3,077,727  | ) |   | (271,068   | )
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Non-cash compensation charge                  | -                     |  |                    | -               |  | -          |  |   | -               |  |   | -           |  |   | 53,500  |  |   | -           |   |   | 53,500     |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Issue of stock for services  at $0.14        | -                     |  |                    | -               |  | 1,450,000  |  |   | 1,450           |  |   | 201,550     |  |   | -       |  |   | -           |   |   | 203,000    |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Issue of stock for cash pursuant to a private |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|placement  at $0.10                          | -                     |  |                    | -               |  | 650,000    |  |   | 650             |  |   | 64,350      |  |   | -       |  |   | -           |   |   | 65,000     |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Net loss                                      | -                     |  |                    | -               |  | -          |  |   | -               |  |   | -           |  |   | -       |  |   | 1,208,941   |   |   | (1,208,941 | )
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Issued for termination fee                    | 198,000               |  |                    | 198             |  | -          |  |   | -               |  |   | 791,802     |  |   | -       |  |   | -           |   |   | 792,000    |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Balance, December 31, 2003                    | 198,000               |  |                    | 198             |  | 17,305,596 |  |   | 17,304          |  |   | 3,608,630   |  |   | 294,027 |  |   | (4,286,668  | ) |   | (366,509   | )
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Non-cash compensation charge                  | -                     |  |                    | -               |  | -          |  |   | -               |  |   | -           |  |   | 33,550  |  |   | -           |   |   | 33,550     |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Issue of stock for debt                       | -                     |  |                    | -               |  | 825,364    |  |   | 825             |  |   | 47,712      |  |   | -       |  |   | -           |   |   | 48,537     |  
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Net loss                                      | -                     |  |                    | -               |  | -          |  |   | -               |  |   | -           |  |   | -       |  |   | (85,093     | ) |   | (85,093    | )
|                                              |                       |  |                    |                 |  |            |  |   |                 |  |   |             |  |   |         |  |   |             |   |   |            |  
|Balance, March 31, 2004                       | 198,000               |  | $                  | 198             |  | 18,130,960 |  | $ | 18,129          |  | $ | 3,656,342   |  | $ | 327,577 |  | $ | (4,371,761  | ) | $ | (369,515   | )

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
  
  (A Development Stage Company) 
  NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
  March 31, 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 three months ended
        March 31, 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
        March 31, 2004, the Company has a working capital deficiency of $298,274,
        which is not sufficient to meet its planned business objectives or ongoing
        operations for the next fiscal year and has accumulated losses of $4,371,761
        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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---



|Note 5 | Loans Payable  Note 6
|------ | ----------------------
|       |                       
|       |                       
|       |                       
|       |                       
|       | a)                    
|       |                       
|       |                       
|       | b)                    
|       |                       
|       |                       
|       |                       
|       | c)                    
|       |                       
|       |                       
|       |                       
|       | d)                    
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       |                       
|       | e)                    
|       |                       
|       |                       

---

Note 5 	Loans Payable  Note 6  (contd)

| |    |                                                                                    |   | March 31, |   |   | December 31, |  
| | -- | ---------------------------------------------------------------------------------- | - | --------- | - | - | ------------ | -
| |    |                                                                                    |   | 2004      |   |   | 2003         |  
| |    |                                                                                    |   |           |   |   |              |  
| | f) | Loans payable to a company controlled by a director of the Company                 |   |           |   |   |              |  
| |    | pursuant to Convertible Loan Agreements. Interest is calculated at 10%
      per   |   |           |   |   |              |  
| |    | annum. The loans mature on various dates to November 27, 2005. 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.             |   | 107,925   |   |   | 83,353       |  
| |    |                                                                                    |   |           |   |   |              |  
| |    |                                                                                    |   | 258,352   |   |   | 237,397      |  
| |    | Less:                                                                              |   | (87,024   | ) |   | (122,708     | )
| |    |                                                                                    | $ | 171,328   |   | $ | 114,689      |  

|       | The long-term portion of loans payable is repayable not later than November
      27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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 either $4.00 per
        share during the first 180 days following issuance, and thereafter at
        the average of twenty consecutive days closing prices, which shall not
        be less than $1.50 per share or greater than $6.00 per share.
      Commitments
      Stock Option Plan
      The Companys board of directors approved an employees
        stock option plan. The plan allows for the granting of share purchase
        options at a price of not less than 100% of the fair market value of the
        stock. The total number of options granted must not exceed 15% of the
        outstanding common stock of the Company. The plan expires on July 1, 2017.
      Stock-based Compensation
      On February 5, 2004, the Company granted stock options
        to a consultant to the Company to purchase common shares of the Company
        at the closing price of the Companys common stock on the date of
        the grant. The options have been granted with a term of 5 years. The stock
        options vest over a period of one year.

---

|Note 6 | Capital Stock  Note 8  (contd)
      Commitments  (contd)
      Stock-based Compensation  (contd)
      During the period ended March 31, 2004, the change in share purchase
        options outstanding is as follows:
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                      |               |  |           |  | Weighted       | 
| | ------------------------------------ | ------------- |  | --------- |  | -------------- | 
| |                                      |               |  |           |  | Average        | 
| |                                      | Expiry        |  | Shares    |  | Exercise Price | 
| |                                      |               |  |           |  |                | 
| | Outstanding at beginning of period   | Sept. 5, 2008 |  | 1,765,000 |  | $0.25          | 
| | Granted during the period            | Feb. 5, 2009  |  | 100,000   |  | $0.35          | 
| | Options outstanding at end of period |               |  | 1,865,000 |  | $0.26          | 

| | At March 31, 2004, 1,079,000 share purchase options
        have vested.
      As the stock options have a graded vesting schedule,
        the total compensation cost recognized for the three months ended March
        31, 2004 is as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                    |   |           |   |   |           |  |   | Cumulative    |  
| | ---------------------------------- | - | --------- | - | - | --------- |  | - | ------------- | -
| |                                    |   |           |   |   |           |  |   | from          |  
| |                                    |   |           |   |   |           |  |   | February 28,  |  
| |                                    |   |           |   |   |           |  |   | 1989 (Date of |  
| |                                    |   |           |   |   |           |  |   | Inception)    |  
| |                                    |   | March 31, |   |   | March 31, |  |   | March 31,     |  
| |                                    |   | 2004      |   |   | 2003      |  |   | 2004          |  
| |                                    |   |           |   |   |           |  |   |               |  
| | Total non-cash compensation charge |   |           |   |   |           |  |   |               |  
| | vested                             | $ | 95,050    |   | $ | -         |  | $ | 665,057       |  
| | Consultants non-cash compensation |   |           |   |   |           |  |   |               |  
| | charge recognized                  |   | (33,550   | ) |   | -         |  |   | (302,135      | )
| | Employees non-cash compensation   |   |           |   |   |           |  |   |               |  
| | charge                             | $ | 61,500    |   | $ | -         |  | $ | 362,922       |  

---

|Note 6 | Capital Stock  Note 8  (contd)
      Commitments  (contd)
      Stock-based Compensation  (contd)
      Under SFAS No. 123, if the Company elects to follow
        APBO No. 25, in respect to the employees stock options, it is required
        to present pro-forma information as to the effect on income and earnings
        per share as if the Company had accounted for its employee stock options
        under the fair value method of that statement. Had compensation cost been
        determined based on the fair value at the grant dates for those options
        issued to officers, directors and employees, the Companys net loss
        and loss per share would have been adjusted to the pro-forma amounts indicated
        below:
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                      |             |   |           |   |   |           |   |   | Cumulative    |  
| | -------------------- | ----------- | - | --------- | - | - | --------- | - | - | ------------- | -
| |                      |             |   |           |   |   |           |   |   | from          |  
| |                      |             |   |           |   |   |           |   |   | February 28,  |  
| |                      |             |   |           |   |   |           |   |   | 1989 (Date of |  
| |                      |             |   |           |   |   |           |   |   | Inception)    |  
| |                      |             |   | March 31, |   |   | March 31, |   |   | March 31      |  
| |                      |             |   | 2004      |   |   | 2003      |   |   | 2004          |  
| |                      |             |   |           |   |   |           |   |   |               |  
| | Net loss             | As reported | $ | (85,093   | ) | $ | (29,672   | ) | $ | (4,371,761    | )
| |                      | Pro-forma   | $ | (146,593  | ) | $ | (29,672   | ) | $ | (4,673,896    | )
| |                      |             |   |           |   |   |           |   |   |               |  
| | Basic loss per share | As reported | $ | (0.00     | ) | $ | (0.00     | ) | $ | -             |  
| |                      | Pro-forma   | $ | (0.01     | ) | $ | (0.00     | ) | $ | -             |  

| | The weighted average fair value of the options vested during the three
      months ended March 31, 2004 were as follows:
| | -------------------------------------------------------------------------------------------------------------------------

| |                                        |   | 2004    | 
| | -------------------------------------- | - | ------- | 
| |                                        |   |         | 
| | Weighted average fair value            | $ | 0.25    | 
| | Total options vested                   |   | 373,000 | 
| | Total fair value of all options vested | $ | 95,050  | 

---

|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 | 
| | ----------------------- | ---- | 
| |                         |      | 
| | Expected dividend yield | 0.0% | 
| | Expected volatility     | 185% | 
| | Risk-free interest rate | 2%   | 
| | Expected term in years  | 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 March 31, 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     | 
| | 650,000     |  | $0.10    |  | March 13, 2005    | 
| | 1,475,364   |  |          |  |                   | 

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

---

|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, 2004. 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.                                                                                                                                                                                                                                           

---

|Note 6 | Capital Stock  Note 8  (contd)
      Commitments  (contd)
      Acquisition of Gulf Star World Development W.L.L. 
        (contd)
      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 March 31, 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.
      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 March
        31, 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.
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|Note 7 | Non-Cash Transactions  (contd)
      The Company issued common shares for services provided to the Company
        during the following years:
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------

| |      |  | Number of |  | Number of     |  | Price  |  |          
| | ---- |  | --------- |  | ------------- |  | ------ |  | ---------
| |      |  | Preferred |  | Common Shares |  | Share  |  | $        
| |      |  | Shares    |  |               |  |        |  |          
| |      |  |           |  |               |  |        |  |          
| | 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 |  | -         |  | 825,314       |  | $0.06  |  | 48,537   
| |      |  | 198,000   |  | 12,239,583    |  |        |  | 1,405,910

|Note 8 | Subsequent Events
      Subsequent to March 31, 2004, the Company:
|------ | ------------------------------------------------------------------
|       |                                                                   
|       | i)                                                                
|       |                                                                   
|       | ii)                                                               
|       |                                                                   
|       | iii)                                                              
|       |                                                                   
|       | iv)                                                               

|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, 2004.
      The financial statements have been prepared on a going
        concern basis. The Company has accumulated a deficit of $4,371,761 since
        inception and at March 31, 2004 has a working capital deficiency of $298,274.
        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. In April 2004, the Company in conjunction
        with Star Leisure & Entertainment Inc. signed a Letter of Intent ('LOI')
        with Al Misehal Real Estate & Mr. Adil Alaeiry Establishment, (the
        'Marketing Group') outlining the terms and conditions of an agreement;
        wherein the Marketing Group will market, on a pre-sale basis, residential
        real estate consisting of Beach Villas and Marina Residence units from
        the Dream Island Project. Pre-sale funds committed will be held in escrow
        in Bahrain financial institutions pursuant to the sales agreements and
        pending completion and release.
      The first stage of the project, dredging and reclamation
        of the 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.
      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'), whereby the Company will issue, 1,056,000 of it common shares
        under Regulation S, at a deemed value of $1.25 per share (the 'SIII Payment
        Shares') to Bayindir in exchange for Bayindir issuing to the Company that
        number of its common shares equal to 60% of Bayindir's total outstanding
        common shares. Upon issuance the Company will assign that number of Bayindir's
        newly issued common shares that is equal to 9% of Bayindir's total outstanding
        common shares as a finder's fee compensation. The share exchange will
        occur upon Bayindir receiving Turkish governmental authority approval
        to the transaction.
      The agreement contemplates that the Company will secure
        funding to capitalize Bayindir in an amount equal to or greater than $1,320,000
        by June 7th, 2004. Upon securing the funding and thereby capitalizing
        Bayindir, Bayindir will, at the option of the Company, return the SIII
        Payment Shares to the Company. Should the Company fail to capitalize Bayindir
        in the amount outlined above, the share exchange agreement will be terminated
        and all shares returned to their respective parties.
      Bayindir is one of the leading factoring companies operating
        within the Turkish financial markets. Bayindir's customers within the
        Turkish market conduct business within the transportation, food, textile,
        medical and machinery sectors. Bayindir employs 20 people within its main
        office in Istanbul and a branch office in Izmir, Turkey.
|--------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|PART II  OTHER INFORMATION
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1.                          | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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 March 31, 2004, Icon had advanced a total of $55,702,
        plus accrued interest of $7,701, which can be converted into 289,053 units,
        at various a conversion prices of $0.05 to $0.28 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 March 31, 2006. During
        the period ended March 31, 2004, Icon converted $48,537 of the loan into
        825,364 units of the Company, including warrants exercisable at an average
        price of $0.06 per share, expiring at various dates between December 31,
        2004 and March 31, 2006. 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, but not the obligation, to purchase
        one additional share of common stock at any time during the first two
        years at a price of $0.10 per share. Total cash proceeds of $65,000 were
        allocated to working capital. None of these share purchase warrants have
        been exercised. The 650,000 shares were issued pursuant to an exemption
        from registration under Section 4(6) of the Securities Act of 1933. Sale
        or transfer of the shares by the investor shall be in accordance with
        the provisions of Regulation S, or pursuant to registration under the
        Securities Act of 1933 or pursuant to an available exemption from registration.
        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 March 31, 2004, Star Leisure had advanced a total of
        $103,206, plus accrued interest of $4,719, 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 principal
        sums advanced or accrued interest into units as of March 31, 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 which 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|3. | Defaults Upon Senior Securities                          
|-- | ---------------------------------------------------------
|   |                                                          
|   |                                                          
|   |                                                          
|4. | Submission of Matters to a Vote of Security
      Holders
|   |                                                          
|   |                                                          
|   |                                                          
|5. | Other Information                                        
|   |                                                          
|   |                                                          
|   |                                                          
|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: | May 19, 2004 |  | /s/ Ralph Shearing                                
|      |              |  | Ralph Shearing, CEO, Director                     
|      |              |  |                                                   
|Date: | May 19, 2004 |  | /s/ Abbas Salih                                   
|      |              |  | Abbas Salih, CFO, Director                        

---