---

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

FORM 10-QSB

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

For the Quarterly Period ended March 31, 2005

**Strategic Internet Investments, Incorporated**
  (Small Business Issuer)

|Suite 450, 650 West Georgia Street            
|----------------------------------------------
|Vancouver, BC                                 
|Canada V6B 4N8                                
|(Address of principal executive offices)      
|                                              
|84-1116458                                    
|(IRS Employer Identification)                 
|                                              
|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 April 30, 2005:25,353,523

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, 2005

(Stated in U.S. Dollars)

(Unaudited)

---

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

|                                                            |   | March 31,  |   |   | December 31, |  
|----------------------------------------------------------- | - | ---------- | - | - | ------------ | -
|                                                            |   | 2005       |   |   | 2004         |  
|                                                            |   |            |   |   |              |  
|ASSETS                                                      |   |            |   |   |              |  
|                                                            |   |            |   |   |              |  
|Current                                                     |   |            |   |   |              |  
|Cash                                                        | $ | 2,347      |   | $ | 22,987       |  
|Prepaid expenses                                            |   | 124,010    |   |   | 64,030       |  
|                                                            |   |            |   |   |              |  
|                                                            |   | 126,357    |   |   | 87,017       |  
|                                                            |   |            |   |   |              |  
|Capital assets                                              |   | 2,115      |   |   | 2,286        |  
|Deferred investment costs – Note 3                          |   | 34,210     |   |   | 34,210       |  
|                                                            |   |            |   |   |              |  
|                                                            | $ | 162,682    |   | $ | 123,513      |  
|                                                            |   |            |   |   |              |  
|                                                            |   |            |   |   |              |  
|LIABILITIES                                                 |   |            |   |   |              |  
|                                                            |   |            |   |   |              |  
|Current                                                     |   |            |   |   |              |  
|Accounts payable                                            | $ | 86,368     |   | $ | 110,836      |  
|Due to related parties                                      |   | 33,544     |   |   | 28,752       |  
|Current portion of loans payable – Note 4                   |   | 166,529    |   |   | 183,698      |  
|                                                            |   |            |   |   |              |  
|                                                            |   | 286,441    |   |   | 323,286      |  
|Loans payable – Note 4                                      |   | -          |   |   | 236,137      |  
|                                                            |   |            |   |   |              |  
|                                                            |   | 286,441    |   |   | 559,423      |  
|                                                            |   |            |   |   |              |  
|STOCKHOLDERS’ DEFICIENCY                                    |   |            |   |   |              |  
|                                                            |   |            |   |   |              |  
|Capital Stock – Notes 4, 5 and 7                            |   |            |   |   |              |  
|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                                      |   |            |   |   |              |  
|24,503,799 outstanding
      (2004: 18,972,675 outstanding) |   | 24,502     |   |   | 18,971       |  
|Additional paid-in capital                                  |   | 7,052,016  |   |   | 3,937,186    |  
|Contributed capital                                         |   | 424,827    |   |   | 411,727      |  
|Deficit accumulated during the development stage            |   | (7,625,302 | ) |   | (4,803,992   | )
|                                                            |   |            |   |   |              |  
|                                                            |   | (123,759   | ) |   | (435,910     | )
|                                                            |   |            |   |   |              |  
|                                                            | $ | 162,862    |   | $ | 123,513      |  

SEE ACCOMPANYING NOTES

---

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

|                                    |   |                    |   |   |                  |   |   | Cumulative     |  
|----------------------------------- | - | ------------------ | - | - | ---------------- | - | - | -------------- | -
|                                    |   |                    |   |   |                  |   |   | from February  |  
|                                    |   |                    |   |   |                  |   |   | 28, 1989 (Date |  
|                                    |   | Three months ended |   |   | of Inception) to |  
|                                    |   | March 31,          |   |   | March 31,        |  
|                                    |   | 2005               |   |   | 2004             |   |   | 2005           |  
|                                    |   |                    |   |   |                  |   |   |                |  
|General and Administrative Expenses |   |                    |   |   |                  |   |   |                |  
|Accounting and audit fees           | $ | 17,184             |   | $ | 2,152            |   | $ | 133,304        |  
|Amortization                        |   | 171                |   |   | 72               |   |   | 2,982          |  
|Automobile                          |   | -                  |   |   | -                |   |   | 565            |  
|Business promotion                  |   | -                  |   |   | -                |   |   | 213            |  
|Communications                      |   | 2,610              |   |   | 3,238            |   |   | 59,113         |  
|Consulting fees                     |   | 50,563             |   |   | 1,500            |   |   | 2,101,352      |  
|Interest                            |   | 9,761              |   |   | 4,792            |   |   | 60,895         |  
|Investor relations                  |   | 6,174              |   |   | 5,724            |   |   | 83,026         |  
|Legal fees                          |   | 13,805             |   |   | 337              |   |   | 128,218        |  
|Management fees                     |   | -                  |   |   | -                |   |   | 112,932        |  
|Office and general                  |   | 708                |   |   | 1,144            |   |   | 132,836        |  
|Regulatory fees                     |   | 178                |   |   | -                |   |   | 16,465         |  
|Rent                                |   | 4,892              |   |   | 4,553            |   |   | 59,659         |  
|Transfer agent fees                 |   | 7,579              |   |   | 1,140            |   |   | 40,718         |  
|Travel                              |   | 15,637             |   |   | 26,891           |   |   | 115,355        |  
|Non-cash compensation charge        |   | 13,100             |   |   | 33,550           |   |   | 443,135        |  
|                                    |   |                    |   |   |                  |   |   |                |  
|Loss before the following:          |   | (142,362           | ) |   | (85,093          | ) |   | (3,490,768     | )
|                                    |   |                    |   |   |                  |   |   |                |  
|Unauthorized distribution           |   | -                  |   |   | -                |   |   | (69,116        | )
|Termination fee                     |   | -                  |   |   | -                |   |   | (792,000       | )
|Loss on foreign exchange            |   | (530               | ) |   | -                |   |   | (4,127         | )
|Gain on settlement of debt          |   | -                  |   |   | -                |   |   | 15,464         |  
|Write-down of advances to           |   |                    |   |   |                  |   |   |                |  
|related party                       |   | -                  |   |   | -                |   |   | (606,337       | )
|                                    |   |                    |   |   |                  |   |   |                |  
|Net loss for the period             | $ | (142,892           | ) | $ | (85,093          | ) | $ | (4,946,884     | )
|                                    |   |                    |   |   |                  |   |   |                |  
|Basic loss per share                | $ | (0.01              | ) | $ | (0.00            | ) |   |                |  
|                                    |   |                    |   |   |                  |   |   |                |  
|Weighted average number of common   |   |                    |   |   |                  |   |   |                |  
|shares outstanding                  |   | 21,092,761         |   |   | 18,112,820       |   |   |                |  

SEE ACCOMPANYING NOTES

---

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

|                                              |   |                    |   |   |               |   |   | Cumulative from |  
|--------------------------------------------- | - | ------------------ | - | - | ------------- | - | - | --------------- | -
|                                              |   |                    |   |   |               |   |   | February 28,    |  
|                                              |   |                    |   |   |               |   |   | 1989 (Date of   |  
|                                              |   | Three months ended |   |   | Inception) to |  
|                                              |   | March 31,          |   |   | March 31,     |  
|                                              |   | 2005               |   |   | 2004          |   |   | 2005            |  
|Operating Activities                          | $ | (142,892           | ) | $ | (85,093       | ) | $ | (4,946,884      | )
|Net loss for the period                       |   |                    |   |   |               |   |   |                 |  
|Adjustments to reconcile net loss to net      |   |                    |   |   |               |   |   |                 |  
|cash used in operations:                      |   |                    |   |   |               |   |   |                 |  
|Amortization                                  |   | 171                |   |   | 72            |   |   | 2,982           |  
|Consulting fees                               |   | 44,562             |   |   | -             |   |   | 1,936,166       |  
|Gain on settlement of debt                    |   | -                  |   |   | -             |   |   | (15,464         | )
|Legal fees                                    |   | 6,545              |   |   |               |   |   | 6,545           |  
|Management fees                               |   | -                  |   |   | -             |   |   | 7,000           |  
|Write-down of advances to related party       |   | -                  |   |   | -             |   |   | 606,337         |  
|Non-cash compensation charge                  |   | 13,100             |   |   | 33,550        |   |   | 443,135         |  
|Termination fees                              |   | -                  |   |   | -             |   |   | 792,000         |  
|Changes in non-cash items:                    |   |                    |   |   |               |   |   |                 |  
|Prepaid expenses                              |   | (1,572             | ) |   | -             |   |   | (4,353          | )
|Accounts payable                              |   | 16,717             |   |   | (8,756        | ) |   | 281,023         |  
|Due
      to/from related parties, net        |   | 4,792              |   |   | 8,825         |   |   | 33,544          |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Net cash used in operating activities         |   | (58,577            | ) |   | (51,402       | ) |   | (857,969        | )
|                                              |   |                    |   |   |               |   |   |                 |  
|Investing Activities                          |   |                    |   |   |               |   |   |                 |  
|Organization costs                            |   | -                  |   |   | -             |   |   | (750            | )
|Advance to related party                      |   | -                  |   |   | -             |   |   | (606,337        | )
|Acquisition of capital assets                 |   | -                  |   |   | -             |   |   | (4,347          | )
|Deferred investment costs                     |   | -                  |   |   | -             |   |   | (34,210         | )
|                                              |   |                    |   |   |               |   |   |                 |  
|Net cash used in investing activities         |   | -                  |   |   | -             |   |   | (645,644        | )
|                                              |   |                    |   |   |               |   |   |                 |  
|Financing Activities                          |   |                    |   |   |               |   |   |                 |  
|Increase (decrease) in loans payable          |   | (3,146             | ) |   | 69,492        |   |   | 510,227         |  
|Proceeds from issuance of common stock        |   | 41,083             |   |   | -             |   |   | 997,561         |  
|Payment of offering costs                     |   | -                  |   |   | -             |   |   | (27,270         | )
|Contributed capital                           |   | -                  |   |   | -             |   |   | 25,442          |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Net cash provided by financing activities     |   | 37,937             |   |   | 69,492        |   |   | 1,505,960       |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Increase (decrease) in cash during the period |   | (20,640            | ) |   | 18,090        |   |   | 2,347           |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Cash, beginning of the period                 |   | 22,987             |   |   | 346           |   |   | -               |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Cash, end of the period                       | $ | 2,347              |   | $ | 18,436        |   | $ | 2,347           |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Supplementary disclosure of cash flows:       |   |                    |   |   |               |   |   |                 |  
|Cash paid for Interest                        | $ | 301                |   | $ | -             |   | $ | 6,952           |  
|                                              |   |                    |   |   |               |   |   |                 |  
|Cash paid for Income taxes                    | $ | -                  |   | $ | -             |   | $ | -               |  
|Non cash Transactions
      – Note 6          |   |                    |   |   |               |   |   |                 |  

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, 2005
  (Stated in U.S. Dollars) 
  (Unaudited)

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

...Cont’d

SEE ACCOMPANYING NOTES

---

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, 2005
  (Stated in U.S. Dollars) 
  (Unaudited)

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

... 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, 2005
  (Stated in U.S. Dollars) 
  (Unaudited)

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

... 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, 2005
  (Stated in U.S. Dollars) 
  (Unaudited)

|                                                          |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  | Deficit     |   |  |            |  
|--------------------------------------------------------- | --------------- |  | ------------ | --------------- |  | ---------- | - |  | ----------- | - |  | ----------- | - |  | ------- | - |  | ----------- | - |  | ---------- | -
|                                                          |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  | Accumulated |   |  |            |  
|                                                          |                 |  |              |                 |  |            |   |  |             |   |  | Additional  |   |  |         |   |  | During the  |   |  |            |  
|                                                          | Preferred Stock |  | Common Stock |                 |  | Paid-In    |   |  | Contributed |   |  | Development |   |  |         |  
|                                                          | Shares          |  |              | Par
      Value |  | Shares     |   |  | Par Value   |   |  | Capital     |   |  | Capital |   |  | Stage       |   |  | Total      |  
|                                                          |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|Balance, December 31, 2002                                | -               |  |              | -               |  | 15,205,596 |   |  | 15,204      |   |  | 2,550,928   |   |  | 240,527 |   |  | (3,077,727  | ) |  | (271,068   | )
|Non-cash compensation charge                              | -               |  |              | -               |  | -          |   |  | -           |   |  | -           |   |  | 53,500  |   |  | -           |   |  | 53,500     |  
|Issue of stock for services    
             –  at $0.14  | -               |  |              | -               |  | 1,450,000  |   |  | 1,450       |   |  | 201,550     |   |  | -       |   |  | -           |   |  | 203,000    |  
|Issue of stock for cash pursuant to a
      private       |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|placement  
                         
         – at $0.10 | -               |  |              | -               |  | 65,000     |   |  | 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                              | -               |  |              | -               |  | -          |   |  | -           |   |  | -           |   |  | 161,450 |   |  | -           |   |  | 161,450    |  
|Stock-based compensation on the exercise
      of         |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|options                                                   | -               |  |              | -               |  | -          |   |  | -           |   |  | 43,750      |   |  | (43,750 | ) |  | -           |   |  | -          |  
|Issue of stock for cash pursuant to the
      exercise    |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|of share purchase
      warrants     – at $0.10           | -               |  |              | -               |  | 320,000    |   |  | 320         |   |  | 31,680      |   |  | -       |   |  | -           |   |  | 32,000     |  
|– at $0.05                                                | -               |  |              | -               |  | 643,715    |   |  | 644         |   |  | 31,542      |   |  | -       |   |  | -           |   |  | 32,186     |  
|Issue of stock for cash pursuant to the
      exercise    |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|of share purchase
      options     –  at $0.25           | -               |  |              | -               |  | 205,000    |   |  | 205         |   |  | 51,045      |   |  | -       |   |  | -           |   |  | 51,250     |  
|Issue of stock for debt                                   | -               |  |              | -               |  | 563,000    |   |  | 563         |   |  | 29,437      |   |  | -       |   |  | -           |   |  | 30,000     |  
|– at $0.06                                                | -               |  |              | -               |  | 825,364    |   |  | 825         |   |  | 47,712      |   |  | -       |   |  | -           |   |  | 48,537     |  
|– at $0.30                                                | -               |  |              | -               |  | 50,000     |   |  | 50          |   |  | 14,950      |   |  | -       |   |  | -           |   |  | 15,000     |  
|Issuance of stock for services  
          – at $2.00     | -               |  |              | -               |  | 10,000     |   |  | 10          |   |  | 19,990      |   |  | -       |   |  | -           |   |  | 20,000     |  
|– at $0.35                                                | -               |  |              | -               |  | 350,000    |   |  | 350         |   |  | 122,150     |   |  | -       |   |  | -           |   |  | 122,500    |  
|Cancellation of stock issued for deferred                 |                 |  |              |                 |  |            |   |  |             |   |  |             |   |  |         |   |  |             |   |  |            |  
|Investment costs 
                    – at $0.05          |                 |  |              |                 |  | (1,300,000 | ) |  | (1,300      | ) |  | (63,700     | ) |  | -       |   |  | -           |   |  | (65,000    | )
|Net loss                                                  | -               |  |              | -               |  | -          |   |  | -           |   |  | -           |   |  | -       |   |  | (517,324    | ) |  | (517,324   | )

... Cont’d

SEE ACCOMPANYING NOTES

---

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, 2005
  (Stated in U.S. Dollars) 
  (Unaudited)

|                                                           |                 |  |              |                 |  |            |  |   |             |  |   |             |  |   |         |  |   | Deficit     |   |   |          |  
|---------------------------------------------------------- | --------------- |  | ------------ | --------------- |  | ---------- |  | - | ----------- |  | - | ----------- |  | - | ------- |  | - | ----------- | - | - | -------- | -
|                                                           |                 |  |              |                 |  |            |  |   |             |  |   |             |  |   |         |  |   | Accumulated |   |   |          |  
|                                                           |                 |  |              |                 |  |            |  |   |             |  |   | Additional  |  |   |         |  |   | During the  |   |   |          |  
|                                                           | Preferred Stock |  | Common Stock |                 |  | Paid-In    |  |   | Contributed |  |   | Development |  |   |         | 
|                                                           | Shares          |  |              | Par
      Value |  | Shares     |  |   | Par Value   |  |   | Capital     |  |   | Capital |  |   | Stage       |   |   | Total    |  
|                                                           |                 |  |              |                 |  |            |  |   |             |  |   |             |  |   |         |  |   |             |   |   |          |  
|Balance, December 31, 2004                                 | 198,000         |  | $            | 198             |  | 18,972,675 |  | $ | 18,971      |  | $ | 3,937,186   |  | $ | 411,727 |  | $ | (4,803,992  | ) | $ | (435,910 | )
|Non-cash compensation charge                               | -               |  |              | -               |  | -          |  |   | -           |  |   | -           |  |   | 13,100  |  |   | -           |   |   | 13,100   |  
|Issue of stock for cash pursuant to the exercise           |                 |  |              |                 |  |            |  |   |             |  |   |             |  |   |         |  |   |             |   |   |          |  
|of share purchase warrants       
              – at $0.10 | -               |  |              | -               |  | 357,760    |  |   | 357         |  |   | 35,418      |  |   | -       |  |   | -           |   |   | 35,775   |  
|– at $0.07                                                 | -               |  |              | -               |  | 75,820     |  |   | 76          |  |   | 5,232       |  |   | -       |  |   | -           |   |   | 5,308    |  
|Issue of stock for debt      
               – at $0.39    | -               |  |              | -               |  | 635,901    |  |   | 636         |  |   | 249,524     |  |   | -       |  |   | -           |   |   | 250,160  |  
|Issuance of stock for services   
         – at $0.25      | -               |  |              | -               |  | 150,000    |  |   | 150         |  |   | 37,350      |  |   | -       |  |   | -           |   |   | 37,500   |  
|– at $0.50                                                 | -               |  |              | -               |  | 121,000    |  |   | 121         |  |   | 60,379      |  |   | -       |  |   | -           |   |   | 60,500   |  
|– at $0.54                                                 | -               |  |              | -               |  | 20,000     |  |   | 20          |  |   | 10,680      |  |   |         |  |   |             |   |   | 10,700   |  
|– at $0.84                                                 | -               |  |              | -               |  | 50,000     |  |   | 50          |  |   | 41,950      |  |   | -       |  |   | -           |   |   | 42,000   |  
|Issuance of stock dividend    
           – at $0.65       |                 |  |              |                 |  | 4,120,643  |  |   | 4,121       |  |   | 2,674,297   |  |   | -       |  |   | (2,678,418  | ) |   | -        |  
|Net loss                                                   | -               |  |              | -               |  | -          |  |   | -           |  |   | -           |  |   | -       |  |   | (142,892    | ) |   | (142,892 | )
|                                                           |                 |  |              |                 |  |            |  |   |             |  |   |             |  |   |         |  |   |             |   |   |          |  
|Balance, March 31, 2005                                    | 198,000         |  | $            | 198             |  | 24,503,799 |  | $ | 24,502      |  | $ | 7,052,016   |  | $ | 424,827 |  | $ | (7,625,302  | ) | $ | (123,759 | )

SEE ACCOMPANYING NOTES

---

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

|1. | Interim Reporting and Continuation of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | 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, 2004, as filed with the United States
      Securities and Exchange Commission.                                                                                                                                                                                                                                                                                                                                               
|  
|   | The results of operations for the three months ended March 31, 2005 are
      not indicative of the results that may be expected for the full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | 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, 2005,
      the Company has a working capital deficiency of $160,084, which is not
      sufficient to meet its planned business objectives or ongoing operations
      for the next fiscal year, has not yet attained profitable operations and
      has accumulated losses of $7,625,302 since its inception. The ability
      of the Company to continue as a going concern is dependent upon the ability
      of the Company to generate profitable operations in the future and/or arranging
      the necessary financing to meet its obligations and pay 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 and
      raise substantial doubt that the Company will be able to continue as a going
      concern. These financial statements do not include any adjustments to the
      amounts and classification of assets and liabilities that may be necessary
      should the Company be unable to continue as a going concern.
|  
|2. | 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 subsidiary companies are
      dormant and were incorporated by the Company in March 2001. All significant
      intercompany transactions were eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|3. | Deferred Investment Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Deferred investment costs consist of consultants’ fees and payments
      to reimburse Star Leisure and Entertainment Inc. with respect to the acquisition
      of Gulf Star World Development W.L.L. (Note 5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  

---

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

|4. | Loans Payable – Note 5
|-- | ----------------------

| |    |                                                                         |   | March 31, |   |   | December 31, |  
| | -- | ----------------------------------------------------------------------- | - | --------- | - | - | ------------ | -
| |    |                                                                         |   | 2005      |   |   | 2004         |  
| |    |                                                                         |   |           |   |   |              |  
| | a) | Loan payable to a company controlled by a director of the               |   |           |   |   |              |  
| |    | Company including accrued interest of $10,062 (2004: $9,198)            |   |           |   |   |              |  
| |    | The loan is unsecured, bearing interest at 12% per annum and
      is   |   |           |   |   |              |  
| |    | repayable no later than August 12, 2005.                                | $ | 30,062    |   | $ | 29,198       |  
| |    |                                                                         |   |           |   |   |              |  
| | b) | Loan payable to a shareholder including accrued interest of             |   |           |   |   |              |  
| |    | $2,831 (2004: $2,658). The loan is unsecured, bears
      interest at   |   |           |   |   |              |  
| |    | 8% per annum and is repayable upon demand.                              |   | 8,866     |   |   | 8,693        |  
| |    |                                                                         |   |           |   |   |              |  
| | c) | Loan payable to a company controlled by a director of the               |   |           |   |   |              |  
| |    | Company including accrued interest of $46 (2004: $52)
      The loan    |   |           |   |   |              |  
| |    | is unsecured, bearing interest at 10% per annum and is                  |   |           |   |   |              |  
| |    | repayable upon demand. This loan and accrued interest is                |   |           |   |   |              |  
| |    | payable in Canadian funds in the amount
      of Cdn$10,277.            |   | 8,496     |   |   | 17,652       |  
| |    |                                                                         |   |           |   |   |              |  
| | d) | Loans payable to a company controlled by a shareholder of
      the     |   |           |   |   |              |  
| |    | Company, including accrued interest payable of $NIL (2004:              |   |           |   |   |              |  
| |    | $20,914), pursuant to Convertible Loan Agreements. Interest
      is    |   |           |   |   |              |  
| |    | calculated at 10% per annum. The loans mature on various                |   |           |   |   |              |  
| |    | dates to September 23, 2006. The lender may at anytime                  |   |           |   |   |              |  
| |    | convert the principal sum plus accrued interest into units
      of the |   |           |   |   |              |  
| |    | Company. Each unit will consist of one common share plus one            |   |           |   |   |              |  
| |    | common share purchase warrant. In January 2005 this loan and            |   |           |   |   |              |  
| |    | accrued interest was converted into 635,901 units at an average         |   |           |   |   |              |  
| |    | price of $0.39 per share.                                               |   | -         |   |   | 248,053      |  
| |    |                                                                         |   |           |   |   |              |  
| | e) | Loans payable to a company controlled by a director of the              |   |           |   |   |              |  
| |    | Company, including accrued interest of $15,899 (2004:
      $13,033),   |   |           |   |   |              |  
| |    | pursuant to Convertible Loan Agreements. Interest is calculated         |   |           |   |   |              |  
| |    | at 10% per annum. The loans mature on various dates to                  |   |           |   |   |              |  
| |    | January 31, 2006. The lender may at anytime convert the                 |   |           |   |   |              |  
| |    | principal sum plus accrued interest into units of the Company.          |   |           |   |   |              |  
| |    | Each unit will consist of one common share plus one common              |   |           |   |   |              |  
| |    | share purchase warrant. Conversion of this loan and associated          |   |           |   |   |              |  
| |    | warrants to equity will be at various rates ranging from $0.11
      to |   |           |   |   |              |  
| |    | $0.20 per share.                                                        |   | 119,105   |   |   | 116,239      |  
| |    |                                                                         |   |           |   |   |              |  
| |    |                                                                         |   | 166,529   |   |   | 419,835      |  
| |    | Less: current portion                                                   |   | (166,529  | ) |   | (183,698     | )
| |    |                                                                         |   |           |   |   |              |  
| |    |                                                                         | $ | -         |   | $ | 236,137      |  

| | Pursuant to the terms of the Convertible Loan Agreements, the exercise
      price and number of shares were adjusted as a result of a 20% stock dividend
      granted by the Company on March 4, 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

|5. | Capital Stock– Notes 4 and 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Class A Convertible Preferred Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | The Class A convertible preferred shares have a par value of $0.001
      and are convertible to common shares at $4.00 per share during the first
      180 days following issuance, and thereafter at the average of twenty consecutive
      days closing prices, but shall not be less than $1.50 per share or greater
      than $6.00 per share. The Company has the right to redeem its Class
      A convertible preferred stock at any time by paying to the holders thereof
      the sum of $4 per share.
|  
|   | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | The Company’s board of directors approved a stock option plan.
      Under the plan directors, employees and consultants may be granted options
      to purchase common stock of the Company at a price of not less than 100%
      of the fair market value of the stock. The total number of options granted
      must not exceed 15% of the outstanding common stock of the Company. The
      plan expires on July 1, 2017.                                                                                   
|  
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | The Company granted share purchase options to directors, employees and
      consultants of the Company at the closing price of the Company’s common
      stock on the date of the grants. The options have been granted with a term
      of 5 years. The stock options are exercisable at 20% on the date of grant,
      and then 20% every three months thereafter, such that they are fully exercisable
      after a period of one year from the date of grant.                                              
|  
|   | During the period ended March 31, 2005, the share purchase options outstanding
      is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                                       |                   |           | Weighted      
| | ------------------------------------- | ----------------- | --------- | --------------
| |                                       |                   |           | Average       
| |                                       | Expiry            | Shares    | Exercise Price
| |                                       |                   |           |               
| | Outstanding at December 31, 2004      | September 5, 2008 | 1,872,000 | $0.21         
| |                                       | February 5, 2009  | 120,000   | $0.29         
| |                                       | April 15, 2009    | 30,000    | $0.53         
| |                                       | July 8, 2009      | 108,000   | $0.33         
| |                                       |                   |           |               
| | Options outstanding at March 31, 2005 |                   | 2,130,000 | $0.22         

| | Pursuant to the terms of the Stock Option Plan, the exercise price
        and number of shares were adjusted as a result of a 20% stock dividend
        granted by the Company on March 4, 2005.
      At March 31, 2005, of the total outstanding share purchase options,
        2,080,800 (December 31, 2004: 2,029,200) were exercisable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

|5. | Capital Stock– Notes 4 and 7 – (cont’d)                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Commitments – (cont’d)                                                                                                                                    
|   | Stock-based Compensation – (cont’d)                                                                                                                       
|  
|   | As the stock options have a graded vesting schedule, the total compensation
      cost recognized for the three months ended March 31, 2005 is as follows:

| |                                    |   |                    |   |   |               |   |   | Cumulative from |  
| | ---------------------------------- | - | ------------------ | - | - | ------------- | - | - | --------------- | -
| |                                    |   |                    |   |   |               |   |   | February 28,    |  
| |                                    |   |                    |   |   |               |   |   | 1989 (Date of   |  
| |                                    |   | Three months ended |   |   | Inception) to |  
| |                                    |   | March 31,          |   |   | March 31,     |  
| |                                    |   | 2005               |   |   | 2004          |   |   | 2005            |  
| | Total non-cash compensation        |   |                    |   |   |               |   |   |                 |  
| | charge vested                      | $ | 15,900             |   | $ | 95,050        |   | $ | 940,257         |  
| | Employee’s non-cash                |   |                    |   |   |               |   |   |                 |  
| | compensation charge                |   | (2,800             | ) |   | (61,500       | ) |   | (497,122        | )
| |                                    |   |                    |   |   |               |   |   |                 |  
| | Consultants’ non-cash compensation |   |                    |   |   |               |   |   |                 |  
| | charge recognized                  | $ | 13,100             |   | $ | 33,550        |   | $ | 443,135         |  

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

| |                      |             |   |                    |   |   |                  |   |   | Cumulative     |  
| | -------------------- | ----------- | - | ------------------ | - | - | ---------------- | - | - | -------------- | -
| |                      |             |   |                    |   |   |                  |   |   | from February  |  
| |                      |             |   |                    |   |   |                  |   |   | 28, 1989 (Date |  
| |                      |             |   | Three months ended |   |   | of Inception) to |  
| |                      |             |   | March 31,          |   |   | March 31,        |  
| |                      |             |   | 2005               |   |   | 2004             |   |   | 2005           |  
| |                      |             |   |                    |   |   |                  |   |   |                |  
| | Net loss             | As reported | $ | (159,059           | ) | $ | (85,093          | ) | $ | (4,963,051     | )
| |                      |             |   |                    |   |   |                  |   |   |                |  
| |                      | Pro-forma   | $ | (161,859           | ) | $ | (146,593         | ) | $ | (5,460,173     | )
| |                      |             |   |                    |   |   |                  |   |   |                |  
| | Basic loss per share | As reported | $ | (0.01              | ) | $ | (0.00            | ) |   | -              |  
| |                      | Pro-forma   | $ | (0.01              | ) | $ | (0.01            | ) |   | -              |  

---

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

|5. | Capital Stock– Notes 4 and 7 – (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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 142%-191% | 
| | Risk-free Interest Rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 2%-2.88%  | 
| | 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, 2005, the following share purchase warrants were outstanding:

| | Number of Warrants | Exercise Price | Expiry Date      
| | ------------------ | -------------- | -----------------
| |                    |                |                  
| | 60,682             | $0.10          | May 1, 2005      
| | 33,000             | $0.07          | May 1, 2005      
| | 57,600             | $0.04          | April 1, 2005    
| | 8,182              | $0.09          | May 1, 2005      
| | 30,000             | $0.08          | June 1, 2005     
| | 7,067              | $0.10          | June 1, 2005     
| | 19,192             | $0.10          | July 1, 2005     
| | 19,072             | $0.12          | August 1, 2005   
| | 14,526             | $0.16          | October 1, 2005  
| | 76,800             | $0.21          | February 1, 2006 
| | 114,428            | $0.23          | March 1, 2006    
| | 43,500             | $0.25          | April 1, 2006    
| | 10,126             | $0.50          | May 1, 2006      
| | 55,264             | $0.63          | May 1, 2006      
| | 22,500             | $0.67          | June 1, 2006     
| | 131,507            | $0.61          | July 1, 2006     
| | 8,824              | $0.57          | July 1, 2006     
| | 26,939             | $0.41          | September 1, 2006
| | 21,510             | $0.44          | October 1, 2006  
| | 96,047             | $0.24          | January 31, 2007 
| |                    |                |                  
| | 856,766            |                |                  

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

---

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

|5. | Capital Stock– Notes 4 and 7 – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Commitments – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Share Purchase Warrants – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Pursuant to the terms of the share purchase warrant agreements,
      the exercise price and number of shares were adjusted as a result of a 20%
      stock dividend granted by the Company on March 4, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | 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, September 30, 2003, and June 30, 2004 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | In addition, the Company shall make cash payments to Star Leisure
      totaling $100,000 to cover a portion of hard costs accumulated by Star
      Leisure in progressing the Dream Island Project. During the year ended December
      31, 2003, the Company paid $34,210 as partial payment toward the $100,000
      payment. The remaining balance of $65,790 is due on or before July 11,
      2005. The Company has also agreed to reimburse Star Leisure and Jzala Investment
      Group (20% shareholder of Gulf Star) for costs to be verified that they
      may have incurred upon the project financing being fully secured and having
      released in sufficient amounts to commence the main construction.                                                                                                                                                                
|  
|   | On August 9, 2002, the Company entered into an assignment agreement,
      whereby the Company was assigned all rights and obligations under a Dredging
      and Reclamation Contract entered into by Star Leisure pertaining to the
      construction of The Dream Island Resort project. Under the terms of the
      Dredging and Reclamation contract, the Company issued 1,268,750 Class A
      Convertible Preferred shares, with a deemed value of $5,075,000, as
      full payment due under this contract. These shares were issued in escrow,
      and will be released in stages as the dredging contract progresses. At March
      31, 2005, no value had been recorded for the shares as work had not commenced
      on the project and none of the shares have been released from escrow. An
      agent’s fee of 0.5% of the value of the shares released will be payable.

---

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

|5. | Capital Stock– Notes 4 and 7 – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Commitments – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Acquisition of Gulf Star World Development W.L.L. – (cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In August 2004 work commenced on the Dream Island Project, however there
      has not yet been sufficient progress to warrant a release of escrowed shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Financial Consulting Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Pursuant to the terms of a consulting agreement dated January 6, 2005
      for financial and business promotional services for a term of six months
      commencing January 6, 2005, the Company issued 400,000 common shares at
      a fair value of $0.25 per share for a total consideration of $100,000.
      250,000 of these shares are held in escrow and are to be released upon the
      Company’s share price closing at $2.50, as to the release of 150,000
      shares, and at $5.00, as to the release of 100,000 shares. The Company
      recorded the fair value of the 150,000 shares issued as $37,500, of
      which $18,750 was recorded as a consulting expense and $18,750 as
      a prepaid expense.
|  
|   | Pursuant to the terms of a 6 month consulting agreement dated March 9,
      2005 for business promotional services, the Company agreed to issue 100,000
      common shares at a fair value of $0.36 per share for a total consideration
      of $36,000. In this regard, the Company accrued $6,000 as a consulting
      expense as at March 31, 2005.                                                                                                                                                                                                                                                                                                                                                                         

---

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

|6. | Non-Cash Transactions                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Investing and financing activities that do not have a direct impact on
      cash flows are excluded from the statement of cash flows.                 
|  
|   | The Company issued common shares for settlement of debts, convertible
      loans, and for services provided to the Company during the following years:

| |                               | Number of        | Number of           |   | Average Price |   |           |  
| | ----------------------------- | ---------------- | ------------------- | - | ------------- | - | --------- | -
| |                               | Preferred Shares | Common
      Shares |   | Per Share     |   | Total     |  
| |                               |                  |                     |   |               |   |           |  
| | 1995 Consulting fee           | -                | 50,000              |   | $0.03         | $ | 1,500     |  
| | 1998 Management fee           | -                | 7,000,000           |   | $0.001        |   | 7,000     |  
| | 1998 Consulting fee           | -                | 620,000             |   | $0.01         |   | 6,200     |  
| | 2000 Finders fee              | -                | 50,000              |   | $0.001        |   | 50        |  
| | 2001 Consulting fee           | -                | 233,333             |   | $0.50         |   | 116,667   |  
| | 2001 Consulting fee           | -                | 95,023              |   | $0.50         |   | 47,512    |  
| | 2001 Consulting fee           | -                | 13,383              |   | $1.55         |   | 20,744    |  
| | 2001 Consulting fee           | -                | 366,667             |   | $3.50         |   | 1,283,331 |  
| | 2002 Deferred investment cost | -                | 1,300,000           |   | $0.05         |   | 65,000    |  
| | 2002 Consulting fee           | -                | 604,143             |   | $0.17         |   | 103,400   |  
| | 2002 Debt settlement          | -                | 458,135             |   | $0.20         |   | 91,627    |  
| | 2002 Debt settlement          | -                | 222,751             |   | $0.209        |   | 46,379    |  
| | 2002 Consulting fee           | -                | 1,380,000           |   | $0.07         |   | 93,000    |  
| | 2003 Consulting fee           | -                | 1,450,000           |   | $0.14         |   | 203,000   |  
| | 2003 Termination fee          | 198,000          | -                   |   | $4.00         |   | 792,000   |  
| | 2004 Loan conversion          | -                | 825,364             |   | $0.06         |   | 48,537    |  
| | 2004 Loan settlement          | -                | 563,000             |   | $0.05         |   | 30,000    |  
| | 2004 Loan settlement          | -                | 50,000              |   | $0.30         |   | 15,000    |  
| | 2004 Consulting fee           | -                | 10,000              |   | $2.00         |   | 20,000    |  
| | 2004 Consulting fee           | -                | 350,000             |   | $0.35         |   | 122,500   |  
| | 2004 Deferred investment      |                  |                     |   |               |   |           |  
| | cost (cancellation)           | -                | (1,300,000          | ) | $0.05         |   | (65,000   | )
| | 2005 Consulting fees          | -                | 291,000             |   | $0.43         |   | 125,700   |  
| | 2005 Legal fees               | -                | 50,000              |   | $0.50         |   | 25,000    |  
| | 2005 Loan settlement          | -                | 635,901             |   | $0.39         |   | 250,160   |  
| |                               |                  |                     |   |               |   |           |  
| |                               | 198,000          | 15,318,700          |   |               | $ | 3,449,307 |  

|   | These amounts have been excluded from the statements of cash flows.                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. | Subsequent Event                                                                                                                                                                                   
|  
|   | Subsequent to March 31, 2005, the Company issued 299,724 common shares
      pursuant to the exercise of share purchase warrants outstanding at March
      31, 2005, for cash proceeds of $31,570.

---

|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. In 2003 the Company had paid $34,210, with the balance
      of $65,790 to be paid by July 11, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The financial statements have been prepared on a going concern basis.
      The Company has accumulated a deficit of $7,625,302 since inception
      and at March 31, 2005 has a working capital deficiency of $160,084.
      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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The first stage of the project, dredging and reclamation of the 41 acre
      man-made island site, has been paid by the issuance to Robodh Contracting
      Establishment, Manama, Bahrain, of 1,268,750 Class A Convertible Preferred
      Shares in the capital of the Company at a deemed price of $4.00 per
      share. The total value of the Dredging and Reclamation Works contract is
      $5,075,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In August 2004, construction commenced on the Dream Island Project. This
      initial phase of work consists of the construction of a temporary causeway
      to provide access from the coast to the offshore site of the future island
      location. Large haulage trucks have begun transporting and dumping quarry                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|   | stone to create the temporary causeway from which access will be gained
      to the island site. Once the temporary causeway has been completed, work
      will commence on the creation of the Dream Island perimeter of the future
      offshore island. Thereafter, reclamation dredging operations will commence
      to move sand into the perimeter thereby creating the Dream Island site.                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Management believes that the close connections and contacts it has made
      in the Middle East, especially the efforts of its Chairman, Mr. Abbas Salih,
      who has been stationed predominately in Saudi Arabia and Bahrain for the
      past year to oversee the project, will be of immense value in completing
      other essential contracts during the course of this project.                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | In December 2004, the Company signed a Letter Of Intent (the "LOI") with
      G7 Limited, a Doha, Qatar registered corporation. G7 is an affiliated party
      to the Company. The LOI outlines the general terms and conditions which
      will govern a more definitive agreement to be entered into between the Company
      and G7, relating to the engagement of the Company as a financial partner
      in certain motion picture production ventures to be carried on by G7. Under
      the LOI, G7 has appointed the Company as the exclusive agent of G7 for the
      purposes of facilitating financing to meet that portion of G7's film production
      budgets that is not met through non-equity financing such as presales, subsidies
      or other similar non-debt financial programs.
|  
|   | It is the intent of the parties that the Company will, subject to such
      transactions being qualified or eligible under applicable securities laws,
      receive financing funds as a private placement investment in the Company
      and to issue common shares of the Company in respect therefore, at a price
      per share to be agreed to by the Company and the participating investors.
      The Company will, in turn, advance the required film’s equity funding
      to G7.                                                                                                                                                                                                                                                                                                                
|  
|   | All funds advanced by the Company to G7 will be advanced to purchase
      a participating equity interest in certain film(s). The amount of participating
      interest in each film to be purchased by the Company will be negotiated
      on a case-by-case basis. In addition, the Company will also be entitled
      to receive options (also to be negotiated on a case-by-case basis) entitling
      the Company to purchase a greater participating interest in a film, up to
      an aggregate of fifty percent, with such option being exercisable by the
      Company through the issuance of common shares of the Company or as negotiated
      by the parties by the payment of cash, or some combination of cash and common
      shares of the Company.                                   
|  
|   | The Company's plan during the next quarter and for the balance of 2005
      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.                                                                                                                                                                                                                                              
|  
|3. | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | The Company's executive officers have concluded that the Company's disclosure
      controls and procedures are effective based upon their evaluation of such
      controls and procedures as of a date within 90 days prior to the filing
      of this Annual Report. There were no significant changes in the Company's
      internal control or in the other factors that could significantly affect
      the Company's internal controls subsequent to the date of their most recent
      evaluation.                                                                                                                                                                                                                                                                                                  

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PART II – OTHER INFORMATION

|1. | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | – None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|2. | Changes in Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | Sales of Securities Without Registration Under the Securities Act of
      1933                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | On March 11, 2005, the Company issued 4,120,643 common shares pursuant
      to a common stock dividend declared by the Board of Directors on February
      14, 2005, payable to the shareholders of record as of March 4, 2005. In
      connection with this stock dividend, pursuant to the terms of stock option,
      convertible debenture, and stock warrant agreements the number of units
      or shares issuable under those agreements shall be increased by 20% and
      the exercise or conversion price shall be decreased by 20%. These shares
      are restricted under Rule 144.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | On November 15, 2002 the Company entered into a Convertible Loan Facility
      Agreement with Icon Management Ltd. (“Icon”) whereby the Company
      would, from time to time, borrow operating funds from Icon, at an interest
      rate of ten percent (10%), repayable 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. During the year
      ended December 31, 2004, Icon converted $48,537 of the loan into 825,364
      units of the Company, including warrants exercisable at an average price
      of $0.06 per share, expiring at various dates between December 31, 2004
      and March 31, 2006. On December 31, 2004, Icon exercised warrants to purchase
      643,715 shares. During the period ended March 31, 2005, Icon converted $227,140
      of the loan plus accrued interest of $23,020, into 635,901 units of
      the Company, including warrants exercisable at an average price of $0.39
      per share, expiring at various dates between April 1, 2005 and January 31,
      2007. During the period ended March 31, 2005, Icon also exercised warrants
      to purchase a further 103,580 shares for cash proceeds of $8,083. This
      transaction is with an offshore non-U.S. person; accordingly, these securities
      are exempt from registration pursuant to Regulation S.
|  
|   | Subsequent to March 31, 2005, Icon exercised warrants to purchase a further
      299,724 shares for cash proceeds of $31,570.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | On January 31, 2003, the Company issued 1,268,750 Class A Convertible
      Preferred Shares(1), at a deemed value of $4.00 per share,
      as payment for the dredging and reclamation services to be performed by
      Robodh Contracting Establishment of Manama, Bahrain. The total value of
      the Dredging and Reclamation Works contract is $5,075,000. These shares
      were issued in escrow and will be released over time as work on the Dream
      Island Project dredging progresses. This transaction is with an offshore
      non-U.S. person; accordingly, these securities are exempt from registration
      pursuant to Regulation S.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | On March 13, 2003 the Company completed an offering of 650,000 units
      of its share capital to one accredited investor at a price of $0.10
      per unit, each unit consisting of one share of common stock and one common
      stock share purchase warrant. Each common stock purchase warrant gives the
      investor the right to purchase one additional share of common stock at any
      time during the first two years at a price of $0.10 per share. Total
      cash proceeds of $65,000 were allocated to working capital. In July
      2004, the 320,000 warrants were exercised, and 320,000 shares were issued
      for cash proceeds of $32,000. During the period ended March 31, 2005,
      the investor exercised the remaining warrants to purchase a further 330,000
      shares for cash proceeds of $33,000. These shares were issued pursuant
      to an exemption from registration under Section 4(6) of the Securities Act
      of 1933. Sale or transfer of the shares by the investor shall be in accordance
      with the provisions of Regulation S, or pursuant to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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| | 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, 2005, Star Leisure had advanced a total of $103,206, plus
        accrued interest of $15,899, which can be converted into 706,433 units,
        at various a conversion prices of $0.11 to $0.20 per unit, post
        stock dividend. 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, 2005. This
        transaction is with an offshore non-U.S. person; accordingly, these securities
        are exempt from registration pursuant to Regulation S.
      On November 30, 2003, the Company issued 198,000 Class A Convertible
        Preferred Shares(1)at a deemed value of $4.00 per share
        to settle a termination fee of $792,000. This termination fee is to
        a former contractor who was to perform planning services for the Company
        that were subsequently assigned to another contractor. This transaction
        is with an offshore non-U.S. person; accordingly, these securities are
        exempt from registration pursuant to Regulation S.
      In August 2004, the Company issued 10,000 common shares at a deemed
        price of $2.00 per share, for a total deemed consideration of $20,000,
        pursuant to a Consulting Services Agreement for financial consulting.
        This transaction is with an offshore non-U.S. person; accordingly, these
        securities are exempt from registration pursuant to Regulation S, however
        they are restricted under Rule 144.
      The Company also issued 300,000 common shares in August 2004, at a deemed
        price of $0.38 per share, for a total deemed consideration of $112,500,
        pursuant a Promotional and Capital Funding Agreement for financial and
        investor relation services. These shares are held in escrow and are to
        be released subject to the Company obtaining certain future financial
        goals. This transaction is with an offshore non-U.S. person; accordingly,
        these securities are exempt from registration pursuant to Regulation S,
        however they are restricted under Rule 144.
      The Company issued an additional 563,000 common shares in August 2004,
        as a $30,000 partial settlement of a loan from Canarab Acquisitions
        Inc. (Canarab), a company controlled by a director. In 2001, Canarab secured
        a loan on behalf of the Company, and the lender received as fees and collateral
        563,000 shares of the Company that were owned by Canarab. The lender subsequently
        applied the collateral shares as payment of the outstanding loan. Accordingly,
        the Company issued 563,000 common shares to Canarab as reimbursement for
        those shares forfeited to the lender. This transaction is with an offshore
        non-U.S. person; accordingly, these securities are exempt from registration
        pursuant to Regulation S, however they are restricted under Rule 144.
      In August 2004 work commenced on the Dream Island Project, however there
        has not yet been sufficient progress to warrant a release of any of the
        escrowed shares. In January 2005, the Company issued 141,000 common shares
        at a deemed price of $.50 per share, for a total deemed consideration
        of $70,500, pursuant to various consulting agreements for legal, computer,
        and financial services. These transactions are with offshore non-U.S.
        persons; accordingly, these securities are exempt from registration pursuant
        to Regulation S.
      In November 2004, the Company issued 350,000 common shares at a deemed
        price of $0.35 per share, for a total deemed consideration of $122,500,
        pursuant a Promotional and Capital Funding Agreement for financial and
        investor relation services. This transaction is with an offshore non-U.S.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|   | person; accordingly, these securities are exempt from registration
      pursuant to Regulation S, however they are restricted under Rule 144.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company issued 50,000 common shares in January 2005, at
      a deemed price of $0.84 per share, for a total deemed consideration
      of $42,000, pursuant a Promotional and Capital Funding Agreement for
      financial and investor relation services. This transaction is with an offshore
      non-U.S. person; accordingly, these securities are exempt from registration
      pursuant to Regulation S, however they are restricted under Rule 144.                                                                                                                                                       
|  
|   | The Company also issued 400,000 common shares in January 2005,
      at a deemed price of $0.25 per share, for a total deemed consideration
      of $100,000, pursuant a Promotional and Capital Funding Agreement for
      financial and investor relation services. Of these shares, 250,000 are held
      in escrow and are to be released subject to the Company obtaining certain
      future financial goals. This transaction is with an offshore non-U.S. person;
      accordingly, these securities are exempt from registration pursuant to Regulation
      S, however they are restricted under Rule 144.
|  
|   | (1) Refer to the Notes of the Interim Consolidated Financial
      Statements for the Class A Convertible Preferred Shares terms of conversion
      and rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|3. | Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|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)
      Certifications - CEO | Exhibit
      31.1
| | 601-(31)      | Rule 13a-14(a)/15d-14(a) Certifications
      - CFO | Exhibit 31.2      
| | 601-(32)      | Section 1350 Certifications
      - CEO             | Exhibit 32.1      
| | 601-(32)      | Section 1350 Certifications - CFO                   | 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

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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 20, 2005 |  | /s/  Ralph Shearing                         
|      |              |  | Ralph Shearing, CEO, Director               
|      |              |  |                                             
|Date: | May 20, 2005 |  | /s/  Abbas Salih                            
|      |              |  | Abbas Salih, CFO, Director                  

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