---

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

FORM 10-QSB

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

For the Quarterly Period ended June 30, 2006

Commission File No. 033-28188

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

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

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 [   ]

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

Common shares outstanding as of July 31, 2006:
25,660,326

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

June 30, 2006

(Stated in U.S. Dollars)

(Unaudited)





---

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

|                                                            |   | June
      30, |   |   | December 31, |  
|----------------------------------------------------------- | - | -------------- | - | - | ------------ | -
|                                                            |   | 2006           |   |   | 2005         |  
|                                                            |   |                |   |   |              |  
|ASSETS                                                      |   |                |   |   |              |  
|                                                            |   |                |   |   |              |  
|Current                                                     |   |                |   |   |              |  
|Cash                                                        | $ | 102            |   | $ | 581          |  
|Prepaid expenses                                            |   | 41,667         |   |   | 141,667      |  
|                                                            |   |                |   |   |              |  
|                                                            |   | 41,769         |   |   | 142,248      |  
|                                                            |   |                |   |   |              |  
|Equipment                                                   |   | -              |   |   | 1,601        |  
|Deferred
      investment costs  Notes 3, 5 and 7          |   | 1              |   |   | 1            |  
|                                                            |   |                |   |   |              |  
|                                                            | $ | 41,770         |   | $ | 143,850      |  
|                                                            |   |                |   |   |              |  
|                                                            |   |                |   |   |              |  
|LIABILITIES                                                 |   |                |   |   |              |  
|                                                            |   |                |   |   |              |  
|Current                                                     |   |                |   |   |              |  
|Accounts payable  Note 7                                   | $ | 85,961         |   | $ | 108,022      |  
|Due to related parties
       Note 7                       |   | 63,496         |   |   | 50,991       |  
|Loans payable  Note 4                                      |   | 279,608        |   |   | 199,304      |  
|                                                            |   |                |   |   |              |  
|                                                            |   | 429,065        |   |   | 358,317      |  
|                                                            |   |                |   |   |              |  
|STOCKHOLDERS DEFICIENCY                                    |   |                |   |   |              |  
|                                                            |   |                |   |   |              |  
|Capital Stock  Note 5                                      |   |                |   |   |              |  
|Class A Convertible
      Preferred stock, $0.001 par value |   |                |   |   |              |  
|10,000,000
      authorized, 198,000 outstanding            |   | 198            |   |   | 198          |  
|Class B Preferred
      stock, $0.001 par value             |   |                |   |   |              |  
|10,000,000
      authorized, none outstanding               |   |                |   |   |              |  
|Common stock, $0.001
      par value                        |   |                |   |   |              |  
|100,000,000
      authorized                                |   |                |   |   |              |  
|25,660,326 outstanding (2005: 25,660,326 outstanding)       |   | 25,659         |   |   | 25,659       |  
|Additional paid-in capital                                  |   | 7,720,356      |   |   | 7,720,356    |  
|Deficit accumulated during the development stage            |   | (8,133,508     | ) |   | (7,960,680   | )
|                                                            |   |                |   |   |              |  
|                                                            |   | (387,295       | ) |   | (214,467     | )
|                                                            |   |                |   |   |              |  
|                                                            | $ | 41,770         |   | $ | 143,850      |  

SEE ACCOMPANYING NOTES

---

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

Cumulativefrom February28, 1989 (DateThree months ended
      
    
      Six months ended
      
    
      of Inception) toJune 30,
      
    
      June 30,
      
    
      June 30,2006
      
    
    2005
      
    
    2006
      
    
    2005
      
    
      2006General and Administrative ExpensesAccounting and audit fees
    $
    8,217
      
    $
    15,057
      
    $
    18,042
      
    $
    32,241
      
    $
      185,389Amortization
    
    -
      
    
    172
      
    
    120
      
    
    343
      
    
      3,616Automobile
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      565Business promotion
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      213Communications
    
    612
      
    
    12,039
      
    
    2,217
      
    
    14,649
      
    
      98,357Consulting fees  Note 7
    
    56,556
      
    
    62,562
      
    
    113,054
      
    
    113,125
      
    
      2,377,926Interest
       Note 7
    
    5,655
      
    
    3,587
      
    
    9,400
      
    
    13,348
      
    
      81,365Investor relations
    
    -
      
    
    5,943
      
    
    -
      
    
    12,117
      
    
      91,385Legal
      fees
    
    420
      
    
    6,595
      
    
    5,272
      
    
    20,400
      
    
      154,839Management fees  Note 7
    
    8,009
      
    
    -
      
    
    10,500
      
    
    -
      
    
      163,872Office
      and general  Note 7
    
    310
      
    
    1,078
      
    
    826
      
    
    1,786
      
    
      138,177Regulatory fees
    
    1,806
      
    
    1,115
      
    
    2,141
      
    
    1,293
      
    
      20,821Rent 
      Note 7
    
    5,340
      
    
    4,823
      
    
    10,538
      
    
    9,715
      
    
      85,115Transfer agent fees
      (recovery)
    
    490
      
    
    (4,184
      )
    
    865
      
    
    3,395
      
    
      38,847Travel
    
    -
      
    
    6,812
      
    
    -
      
    
    22,449
      
    
      103,478Non-cash compensation charge
    
    -
      
    
    6,300
      
    
    -
      
    
    19,400
      
    
      455,735Loss before the following:
    
    (87,415
      )
    
    (121,899
      )
    
    (172,975
      )
    
    (264,261
      )
    
      (3,999,700
      )Unauthorized distribution
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      (69,116
      )Termination fee
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      (792,000
      )Gain (loss) on foreign
      exchange
    
    (8,931
      )
    
    356
      
    
    (8,141
      )
    
    (174
      )
    
      (16,480
      )Gain on
      settlement of debt
    
    9,769
      
    
    -
      
    
    9,769
      
    
    -
      
    
      25,233Loss on disposal of
      equipment
    
    (1,481
      )
    
    -
      
    
    (1,481
      )
    
    -
      
    
      (1,481
      )Write-down of deferred investmentcosts  Note 3
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      (34,209
      )Write-down of advances torelated party
    
    -
      
    
    -
      
    
    -
      
    
    -
      
    
      (606,337
      )Net
      loss for the period
    $
    (88,058
      )
    $
    (121,543
      )
    $
    (172,828
      )
    $
    (264,435
      )
    $
      (5,494,090
      )Basic loss per share
    $
    (0.00
      )
    $
    (0.00
      )
    $
    (0.01
      )
    $
    (0.01
      )Weighted average number of commonshares outstanding
    
    25,660,326
      
    
    24,781,675
      
    
    25,660,326
      
    
    22,987,765


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 |  
|                                                         |  | Six months ended |   |   | (Date of Inception) |  
|                                                         |  | June 30,         |   |   | to June 30,         |  
|                                                         |  | 2006             |   |   | 2005                |   |   | 2006              |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Operating Activities                                     |  |                  |   |   |                     |   |   |                   |  
|Net loss for the period                                  |  | (172,828         | ) | $ | (264,435            | ) | $ | (5,494,090        | )
|Adjustments to reconcile net
      loss to net cash used |  |                  |   |   |                     |   |   |                   |  
|in operating activities:                                 |  |                  |   |   |                     |   |   |                   |  
|Amortization                                             |  | 120              |   |   | 343                 |   |   | 3,616             |  
|Communications                                           |  | -                |   |   | 8,000               |   |   | 28,000            |  
|Consulting fees                                          |  | 100,000          |   |   | 113,125             |   |   | 2,244,887         |  
|Gain on
      settlement of debt                         |  | (9,769           | ) |   | -                   |   |   | (25,233           | )
|Legal fees                                               |  | -                |   |   | 8,617               |   |   | 25,000            |  
|Management
      fees                                    |  | -                |   |   | -                   |   |   | 7,000             |  
|Write-down of advances to related party                  |  | -                |   |   | -                   |   |   | 606,337           |  
|Write-down
      of deferred investment costs            |  | -                |   |   | -                   |   |   | 34,209            |  
|Loss on disposal of equipment                            |  | 1,481            |   |   | -                   |   |   | 1,481             |  
|Non-cash
      compensation charge                       |  | -                |   |   | 19,400              |   |   | 455,735           |  
|Termination fees                                         |  | -                |   |   | -                   |   |   | 792,000           |  
|Changes in non-cash items:                               |  |                  |   |   |                     |   |   |                   |  
|Prepaid expenses                                         |  | -                |   |   | 1,960               |   |   | -                 |  
|Accounts payable                                         |  | (22,061          | ) |   | 23,076              |   |   | 239,431           |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Net cash used in
      operating activities              |  | (103,057         | ) |   | (89,914             | ) |   | (1,081,627        | )
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Investing Activities                                     |  |                  |   |   |                     |   |   |                   |  
|Organization costs                                       |  | -                |   |   | -                   |   |   | (750              | )
|Acquisition of capital assets                            |  | -                |   |   | -                   |   |   | (4,347            | )
|Deferred investment costs                                |  | -                |   |   | -                   |   |   | (34,210           | )
|Due to/from related parties, net                         |  | 12,505           |   |   | 9,885               |   |   | 63,496            |  
|Advances to related party                                |  | -                |   |   | -                   |   |   | (606,337          | )
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Net cash provided by (used in) investing activities      |  | 12,505           |   |   | 9,885               |   |   | (582,148          | )
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Financing Activities                                     |  |                  |   |   |                     |   |   |                   |  
|Loans payable                                            |  | 90,073           |   |   | (18,314             | ) |   | 633,074           |  
|Proceeds from issuance of
      common stock             |  | -                |   |   | 76,153              |   |   | 1,032,631         |  
|Payment of offering costs                                |  | -                |   |   | -                   |   |   | (27,270           | )
|Additional paid-in capital                               |  | -                |   |   | -                   |   |   | 25,442            |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Net cash provided by financing activities                |  | 90,073           |   |   | 57,839              |   |   | 1,663,877         |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Increase (decrease) in cash during the
      period      |  | (479             | ) |   | (22,190             | ) |   | 102               |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Cash, beginning of the period                            |  | 581              |   |   | 22,987              |   |   | -                 |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Cash, end of the period                                  |  | 102              |   | $ | 797                 |   | $ | 102               |  
|                                                         |  |                  |   |   |                     |   |   |                   |  
|Supplementary disclosure of cash
      flows:            |  |                  |   |   |                     |   |   |                   |  
|Cash paid
      for Interest                             |  | -                |   | $ | 10,403              |   | $ | 17,054            |  
|Non-cash Transactions  Note 6                           |  |                  |   |   |                     |   |   |                   |  

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
Development Stage Company)INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS
DEFICIENCY For the period from February 28, 1989 (Date of Inception) to June
30, 2006 (Stated in U.S. Dollars)(Unaudited)

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

Contd

SEE ACCOMPANYING NOTES

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)INTERIM CONSOLIDATED
STATEMENTS OF STOCKHOLDERS DEFICIENCY For the period from February 28, 1989
(Date of Inception) to June 30, 2006(Stated in U.S.
Dollars)(Unaudited)

|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  | Deficit     |   |  |          |  
|----------------------------------------- |  | --------------- |  |  | ------------ |  |  | --------- |  |  | ----------- |  |  | ---------- | - |  | ----------- | - |  | -------- | -
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  | Accumulated |   |  |          |  
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  | Additional |   |  | During the  |   |  |          |  
|                                          |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In   |  |  | Development |  |  |            |  
|                                          |  | Shares          |  |  | Par Value    |  |  | Shares    |  |  | Par Value   |  |  | Capital    |   |  | Stage       |   |  | Total    |  
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1995                |  | -               |  |  | -            |  |  | 116,695   |  |  | 116         |  |  | 108,956    |   |  | (110,500    | ) |  | (1,428   | )
|Net loss                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (9,068      | ) |  | (9,068   | )
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance December 31, 1996                 |  | -               |  |  | -            |  |  | 116,895   |  |  | 116         |  |  | 108,956    |   |  | (119,568    | ) |  | (10,496  | )
|Issuance of stock for cash -
      $0.011 |  | -               |  |  | -            |  |  | 2,000,000 |  |  | 2,000       |  |  | 19,300     |   |  | -           |   |  | 21,300   |  
|Contributed capital                       |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | 600        |   |  | -           |   |  | 600      |  
|Net loss                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (22,261     | ) |  | (22,261  | )
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1997                |  | -               |  |  | -            |  |  | 2,116,695 |  |  | 2,116       |  |  | 128,856    |   |  | (141,829    | ) |  | (10,857  | )
|Issuance of stock services                |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|- at $0.001                               |  | -               |  |  | -            |  |  | 7,000,000 |  |  | 7,000       |  |  | -          |   |  | -           |   |  | 7,000    |  
|- at $0.01                                |  | -               |  |  | -            |  |  | 620,000   |  |  | 620         |  |  | 5,580      |   |  | -           |   |  | 6,200    |  
|Net loss                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (52,308     | ) |  | (52,308  | )
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1998                |  | -               |  |  | -            |  |  | 9,736,695 |  |  | 9,736       |  |  | 134,436    |   |  | (194,137    | ) |  | (49,965  | )
|Net loss                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (35,995     | ) |  | (35,995  | )
|                                          |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|Balance, December 31, 1999                |  | -               |  |  | -            |  |  | 9,736,695 |  |  | 9,736       |  |  | 134,436    |   |  | (230,132    | ) |  | (85,960  | )
|Issuance of stock for cash                |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
|pursuant to a private placement           |  |                 |  |  |              |  |  |           |  |  |             |  |  |            |   |  |             |   |  |          |  
| at $0.30                                |  | -               |  |  | -            |  |  | 1,133,334 |  |  | 1,133       |  |  | 338,867    |   |  | -           |   |  | 340,000  |  
|Issue of stock for finders fee            |  | -               |  |  | -            |  |  | 50,000    |  |  | 50          |  |  | (50        | ) |  | -           |   |  | -        |  
|Net loss                                  |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | -          |   |  | (336,431    | ) |  | (336,431 | )
|Non-cash compensation charge              |  | -               |  |  | -            |  |  | -         |  |  | -           |  |  | 78,707     |   |  | -           |   |  | 78,707   |  

Contd

SEE ACCOMPANYING NOTES

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)INTERIM CONSOLIDATED
STATEMENTS OF STOCKHOLDERS DEFICIENCY For the period from February 28, 1989
(Date of Inception) to June 30, 2006(Stated in U.S.
Dollars)(Unaudited)

|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  | Deficit     |   |  |            |  
|----------------------------------------------------- |  | --------------- |  |  | ------------ |  |  | ---------- |  |  | ----------- |  |  | ---------- | - |  | ----------- | - |  | ---------- | -
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  | Accumulated |   |  |            |  
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  | Additional |   |  | During the  |   |  |            |  
|                                                      |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In    |  |  | Development |  |  |            |  
|                                                      |  | Shares          |  |  | Par Value    |  |  | Shares     |  |  | Par Value   |  |  | Capital    |   |  | Stage       |   |  | Total      |  
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|Balance December 31, 2000                             |  | -               |  |  | -            |  |  | 10,920,029 |  |  | 10,919      |  |  | 551,960    |   |  | (566,563    | ) |  | (3,684     | )
|Issuance of stock for services -
      at $0.50       |  | -               |  |  | -            |  |  | 328,356    |  |  | 328         |  |  | 163,851    |   |  | -           |   |  | 164,179    |  
|- at $1.55                                            |  | -               |  |  | -            |  |  | 13,383     |  |  | 13          |  |  | 20,731     |   |  | -           |   |  | 20,744     |  
|- at $3.50                                            |  | -               |  |  | -            |  |  | 366,667    |  |  | 367         |  |  | 1,282,964  |   |  | -           |   |  | 1,283,331  |  
|Issuance of
      stock for cash pursuant to a        |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|private placement               
      - at $0.30     |  | -               |  |  | -            |  |  | 883,332    |  |  | 883         |  |  | 264,117    |   |  | -           |   |  | 265,000    |  
|Issuance of
      stock pursuant to the               |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|exercise of warrants            
      - at $2.00     |  | -               |  |  | -            |  |  | 28,800     |  |  | 29          |  |  | 57,571     |   |  | -           |   |  | 57,600     |  
|Less: Issue
      costs                               |  | -               |  |  | -            |  |  | -          |  |  | -           |  |  | (17,858    | ) |  | -           |   |  | (17,858    | )
|Net loss                                              |  | -               |  |  | -            |  |  | -          |  |  | -           |  |  | -          |   |  | (2,296,406  | ) |  | (2,296,406 | )
|Non-cash compensation charge                          |  | -               |  |  | -            |  |  | -          |  |  | -           |  |  | 136,378    |   |  | -           |   |  | 136,378    |  
|                                                      |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|Balance, December 31, 2001                            |  | -               |  |  | -            |  |  | 12,540,567 |  |  | 12,539      |  |  | 2,459,714  |   |  | (2,862,969  | ) |  | (390,716   | )
|Issuance of stock for prepaid
      consulting        |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  | -           |   |  |            |  
|- at $0.35                                            |  | -               |  |  | -            |  |  | 80,000     |  |  | 80          |  |  | 27,920     |   |  | -           |   |  | 28,000     |  
|Issuance of stock for deferred
      investment       |  |                 |  |  |              |  |  |            |  |  |             |  |  |            |   |  |             |   |  |            |  
|costs                               
      - at $0.05 |  | -               |  |  | -            |  |  | 1,300,000  |  |  | 1,300       |  |  | 63,700     |   |  | -           |   |  | 65,000     |  
|Issuance of stock for services -
      at $0.05       |  | -               |  |  | -            |  |  | 100,000    |  |  | 100         |  |  | 4,900      |   |  | -           |   |  | 5,000      |  
|- at $0.055                                           |  | -               |  |  | -            |  |  | 60,000     |  |  | 60          |  |  | 3,240      |   |  | -           |   |  | 3,300      |  
|- at $0.10                                            |  | -               |  |  | -            |  |  | 105,000    |  |  | 105         |  |  | 10,395     |   |  | -           |   |  | 10,500     |  
|- at $0.148                                           |  | -               |  |  | -            |  |  | 27,000     |  |  | 27          |  |  | 3,973      |   |  | -           |   |  | 4,000      |  
|- at $0.20                                            |  | -               |  |  | -            |  |  | 175,000    |  |  | 175         |  |  | 34,825     |   |  | -           |   |  | 35,000     |  
|- at $0.209                                           |  | -               |  |  | -            |  |  | 17,143     |  |  | 17          |  |  | 3,583      |   |  | -           |   |  | 3,600      |  
|- at $0.35                                            |  | -               |  |  | -            |  |  | 120,000    |  |  | 120         |  |  | 41,880     |   |  | -           |   |  | 42,000     |  
|Issuance of stock for debt     
      - at $0.20      |  | -               |  |  | -            |  |  | 458,135    |  |  | 458         |  |  | 91,169     |   |  | -           |   |  | 91,627     |  
|- at $0.209                                           |  | -               |  |  | -            |  |  | 222,751    |  |  | 223         |  |  | 46,156     |   |  | -           |   |  | 46,379     |  
|Net loss                                              |  | -               |  |  | -            |  |  | -          |  |  | -           |  |  | -          |   |  | (214,758    | ) |  | (214,758   | )

Contd

SEE ACCOMPANYING NOTES

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)INTERIM CONSOLIDATED
STATEMENTS OF STOCKHOLDERS DEFICIENCY For the period from February 28, 1989
(Date of Inception) to June 30, 2006(Stated in U.S.
Dollars)(Unaudited)

|                                                       |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  | Deficit     |   |  |            |  
|------------------------------------------------------ |  | --------------- |  |  | ------------ |  |  | ---------- | - |  | --------------- | - |  | ---------- | - |  | ----------- | - |  | ---------- | -
|                                                       |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  | Accumulated |   |  |            |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |                 |   |  | Additional |   |  | During the  |   |  |            |  
|                                                       |  | Preferred Stock |  |  | Common Stock |  |  | Paid-In    |   |  | Development     |   |  |            |  
|                                                       |  | Shares          |  |  | Par Value    |  |  | Shares     |   |  | Par
      Value |   |  | Capital    |   |  | Stage       |   |  | Total      |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|Balance, December 31, 2002                             |  | -               |  |  | -            |  |  | 15,205,596 |   |  | 15,204          |   |  | 2,791,455  |   |  | (3,077,727  | ) |  | (271,068   | )
|Non-cash compensation charge                           |  | -               |  |  | -            |  |  | -          |   |  | -               |   |  | 53,500     |   |  | -           |   |  | 53,500     |  
|Issue of stock for
      services          at $0.14   |  | -               |  |  | -            |  |  | 1,450,000  |   |  | 1,450           |   |  | 201,550    |   |  | -           |   |  | 203,000    |  
|Issue of stock for cash pursuant to a
      private    |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|placement                            
       at $0.10 |  | -               |  |  | -            |  |  | 65,000     |   |  | 650             |   |  | 64,350     |   |  | -           |   |  | 65,000     |  
|Net loss                                               |  | -               |  |  | -            |  |  | -          |   |  | -               |   |  | -          |   |  | (1,208,941  | ) |  | (1,208,941 | )
|Issued for termination fee                             |  | 198,000         |  |  | 198          |  |  | -          |   |  | -               |   |  | 791,802    |   |  | -           |   |  | 792,000    |  
|                                                       |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|Balance, December 31, 2003                             |  | 198,000         |  |  | 198          |  |  | 17,305,596 |   |  | 17,304          |   |  | 3,902,657  |   |  | (4,286,668  | ) |  | (366,509   | )
|Non-cash compensation charge                           |  | -               |  |  | -            |  |  | -          |   |  | -               |   |  | 161,450    |   |  | -           |   |  | 161,450    |  
|Issue of stock for cash
      pursuant to the exercise |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|of share
      purchase warrants      at $0.10        |  | -               |  |  | -            |  |  | 320,000    |   |  | 320             |   |  | 31,680     |   |  | -           |   |  | 32,000     |  
| at $0.05                                             |  | -               |  |  | -            |  |  | 643,715    |   |  | 644             |   |  | 31,542     |   |  | -           |   |  | 32,186     |  
|Issue of stock for cash pursuant to the exercise       |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|of share purchase options        
      at $0.25      |  | -               |  |  | -            |  |  | 205,000    |   |  | 205             |   |  | 51,045     |   |  | -           |   |  | 51,250     |  
|Issue of stock for debt             
      at $0.05   |  | -               |  |  | -            |  |  | 563,000    |   |  | 563             |   |  | 29,437     |   |  | -           |   |  | 30,000     |  
| at $0.06                                             |  | -               |  |  | -            |  |  | 825,364    |   |  | 825             |   |  | 47,712     |   |  | -           |   |  | 48,537     |  
| at $0.30                                             |  | -               |  |  | -            |  |  | 50,000     |   |  | 50              |   |  | 14,950     |   |  | -           |   |  | 15,000     |  
|Issuance of stock for
      services     at $2.00     |  | -               |  |  | -            |  |  | 10,000     |   |  | 10              |   |  | 19,990     |   |  | -           |   |  | 20,000     |  
| at $0.35                                             |  | -               |  |  | -            |  |  | 350,000    |   |  | 350             |   |  | 122,150    |   |  | -           |   |  | 122,500    |  
|Cancellation of stock
      issued for deferred        |  |                 |  |  |              |  |  |            |   |  |                 |   |  |            |   |  |             |   |  |            |  
|Investment costs               
       at $0.05       |  |                 |  |  |              |  |  | (1,300,000 | ) |  | (1,300          | ) |  | (63,700    | ) |  | -           |   |  | (65,000    | )
|Net loss                                               |  | -               |  |  | -            |  |  | -          |   |  | -               |   |  | -          |   |  | (517,324    | ) |  | (517,324   | )

Contd

SEE ACCOMPANYING NOTES

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)INTERIM CONSOLIDATED
STATEMENTS OF STOCKHOLDERS DEFICIENCY For the period from February 28, 1989
(Date of Inception) to June 30, 2006(Stated in U.S.
Dollars)(Unaudited)

|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   | Deficit     |   |   |          |  
|------------------------------------------------------ |  | --------------- |  | - | ------------ |  |  | ---------- |  | - | ----------- |  | - | ---------- |  | - | ----------- | - | - | -------- | -
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   | Accumulated |   |   |          |  
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   | Additional |  |   | During the  |   |   |          |  
|                                                       |  | Preferred Stock |  |   | Common Stock |  |  | Paid-In    |  |   | Development |  |   |            | 
|                                                       |  | Shares          |  |   | Par Value    |  |  | Shares     |  |   | Par Value   |  |   | Capital    |  |   | Stage       |   |   | Total    |  
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   |             |   |   |          |  
|Balance, December 31, 2004                             |  | 198,000         |  | $ | 198          |  |  | 18,972,675 |  | $ | 18,971      |  | $ | 4,348,913  |  | $ | (4,803,992  | ) | $ | (435,910 | )
|Non-cash compensation
      charge                     |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | 25,700     |  |   | -           |   |   | 25,700   |  
|Issue of
      stock for cash pursuant to the exercise |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   |             |   |   |          |  
|of
      share purchase warrants      at $0.07        |  | -               |  |   | -            |  |  | 75,820     |  |   | 76          |  |   | 5,232      |  |   | -           |   |   | 5,308    |  
|
      at $0.10                                       |  | -               |  |   | -            |  |  | 357,760    |  |   | 357         |  |   | 35,418     |  |   | -           |   |   | 35,775   |  
|
      at $0.11                                       |  | -               |  |   | -            |  |  | 299,724    |  |   | 300         |  |   | 31,270     |  |   | -           |   |   | 31,570   |  
|
      at $0.21                                       |  | -               |  |   | -            |  |  | 16,803     |  |   | 17          |  |   | 3,483      |  |   | -           |   |   | 3,500    |  
|Issue of stock for debt            
        at $0.39  |  | -               |  |   | -            |  |  | 635,901    |  |   | 636         |  |   | 249,524    |  |   | -           |   |   | 250,160  |  
|Issuance of stock for services   
        at $0.25    |  | -               |  |   | -            |  |  | 950,000    |  |   | 950         |  |   | 236,550    |  |   | -           |   |   | 237,500  |  
|
      at $0.36                                       |  | -               |  |   | -            |  |  | 100,000    |  |   | 100         |  |   | 35,900     |  |   | -           |   |   | 36,000   |  
|
      at $0.50                                       |  | -               |  |   | -            |  |  | 121,000    |  |   | 121         |  |   | 60,379     |  |   | -           |   |   | 60,500   |  
|
      at $0.54                                       |  | -               |  |   | -            |  |  | 20,000     |  |   | 20          |  |   | 10,680     |  |   | -           |   |   | 10,700   |  
|
      at $0.84                                       |  | -               |  |   | -            |  |  | 50,000     |  |   | 50          |  |   | 41,950     |  |   | -           |   |   | 42,000   |  
|Issuance of stock dividend       
       at $0.65     |  | -               |  |   | -            |  |  | 4,060,643  |  |   | 4,061       |  |   | 2,635,357  |  |   | (2,639,418  | ) |   | -        |  
|Net loss                                               |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | -          |  |   | (517,270    | ) |   | (517,270 | )
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   |             |   |   |          |  
|Balance, December 31, 2005                             |  | 198,000         |  |   | 198          |  |  | 25,660,326 |  |   | 25,659      |  |   | 7,720,356  |  |   | (7,960,680  | ) |   | (214,467 | )
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   |             |   |   |          |  
|Net loss                                               |  | -               |  |   | -            |  |  | -          |  |   | -           |  |   | -          |  |   | (172,828    | ) |   | (172,828 | )
|                                                       |  |                 |  |   |              |  |  |            |  |   |             |  |   |            |  |   |             |   |   |          |  
|Balance, June 30, 2006                                 |  | 198,000         |  | $ | 198          |  |  | 25,660,326 |  | $ | 25,659      |  | $ | 7,720,356  |  | $ | (8,133,689  | ) | $ | (387,295 | )

SEE ACCOMPANYING NOTES

---

STRATEGIC INTERNET INVESTMENTS, INCORPORATED(A
Development Stage Company)NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS June 30, 2006 (Stated in U.S. Dollars) (Unaudited)

|1. | Interim Reporting and Continuance of
    Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company is in the development stage and is 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 (Note
      5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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, 2005, as filed with the United States Securities and Exchange
      Commission.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The results of operations for the six months ended June
      30, 2006 are not indicative of the results that may be expected for the
      full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These financial statements have been prepared in
      accordance with generally accepted accounting principles applicable to a
      going concern, which assumes that the Company will be able to meet its
      obligations and continue its operations for its next twelve months.
      Realization values may be substantially different from carrying values as
      shown and these financial statements do not give effect to adjustments
      that would be necessary to the carrying values and classification of
      assets and liabilities should the Company be unable to continue as a going
      concern. At June 30, 2006, the Company had not yet achieved profitable
      operations, has accumulated losses of $8,133,508 since its inception, has
      a working capital deficiency of $387,296 and expects to incur further
      losses in the development of its business, all of which casts substantial
      doubt about the Companys ability to continue as a going concern. The
      Companys ability to continue as a going concern is dependent upon its
      ability to generate future profitable operations and/or to obtain the
      necessary financing to meet its obligations and repay its liabilities
      arising from normal business operations when they come due. Management has
      no formal plan in place to address this concern but considers that the
      Company will be able to obtain additional funds by equity financing and/or
      related party advances, however there is no assurance of additional
      funding being available. The Company has historically satisfied its
      capital needs primarily by issuing equity securities. Management plans to
      continue to provide for its capital needs during the year ended December
      31, 2006 by issuing equity securities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1. | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These interim consolidated financial statements included
      the accounts of the Company and its wholly- owned subsidiaries Strategic
      Internet Investment Canada Inc. and 3851630 Canada Inc. Both of these
      subsidiary companies are dormant and were incorporated by the Company in
      March 2001. All significant inter-company transactions were
    eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | Deferred Investment Costs Note 5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Deferred investment costs consist of consultants fees
      and payments to reimburse Star Leisure and Entertainment Inc. with respect
      to the acquisition of Gulf Star World Development W.L.L., net of a write-
      down to a nominal value of $1.00.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

1

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|3. | Loans Payable
|-- | -------------

| |    |                                                                             |   | June 30, |  |   | December 31, | 
| | -- | --------------------------------------------------------------------------- | - | -------- |  | - | ------------ | 
| |    |                                                                             |   | 2006     |  |   | 2005         | 
| |    |                                                                             |   |          |  |   |              | 
| | a) | Loan payable to a company controlled by
      a director of the Company     |   |          |  |   |              | 
| |    | including accrued interest of $1,073 (December
      31, 2005: $406) The    |   |          |  |   |              | 
| |    | loan is unsecured, bearing interest at 12%
      per annum and is           |   |          |  |   |              | 
| |    | repayable on demand.                                                        | $ | 7,874    |  | $ | 7,426        | 
| |    |                                                                             |   |          |  |   |              | 
| | b) | Loan payable to a shareholder including
      accrued interest of $3,734    |   |          |  |   |              | 
| |    | (December 31, 2005: $3,376 ) was forgiven
      by the lender.              |   | -        |  |   | 9,411        | 
| |    |                                                                             |   |          |  |   |              | 
| | c) | Loans payable to companies controlled by
      directors of the Company.    |   |          |  |   |              | 
| |    | The loans are unsecured, non-interest bearing,
      repayable upon         |   |          |  |   |              | 
| |    | demand, in Canadian funds in the amount
      of Cdn$22,110.                |   | 19,899   |  |   | 44,638       | 
| |    |                                                                             |   |          |  |   |              | 
| | d) | Loan payable to a company controlled by
      a director of the Company     |   |          |  |   |              | 
| |    | including accrued interest of $998 (December
      31, 2005: $732) The      |   |          |  |   |              | 
| |    | loan is unsecured, bearing interest at 10%
      per annum and is           |   |          |  |   |              | 
| |    | repayable upon demand.                                                      |   | -        |  |   | 9,522        | 
| |    |                                                                             |   |          |  |   |              | 
| | e) | Loan payable to a company controlled by
      a director of the Company,    |   |          |  |   |              | 
| |    | including accrued interest of $951 (December
      31, 2005: $Nil),         |   |          |  |   |              | 
| |    | pursuant to a Convertible Loan Agreement.
      Interest is calculated at   |   |          |  |   |              | 
| |    | 10% per annum and is repayable upon demand.
      The lender may at         |   |          |  |   |              | 
| |    | anytime convert the principal sum plus accrued
      interest into 682,365  |   |          |  |   |              | 
| |    | 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 $0.10 per share.         |   | 66,459   |  |   | -            | 
| |    |                                                                             |   |          |  |   |              | 
| | f) | Loans payable to a company controlled by
      a director of the            |   |          |  |   |              | 
| |    | Company, including accrued interest of $32,470
      (December 31,          |   |          |  |   |              | 
| |    | 2005: $25,100 ), pursuant to Convertible
      Loan Agreements. Interest is |   |          |  |   |              | 
| |    | calculated at 10% per annum and is repayable
      upon demand. The         |   |          |  |   |              | 
| |    | lender may at anytime convert the principal
      sum of $49,700 plus       |   |          |  |   |              | 
| |    | accrued interest into 416,248 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 $0.12 per share. The lenders
      rights to convert the        |   |          |  |   |              | 
| |    | remaining balance of these loans into units
      of the Company have       |   |          |  |   |              | 
| |    | expired.                                                                    |   | 185,376  |  |   | 128,307      | 
| |    |                                                                             |   |          |  |   |              | 
| |    |                                                                             | $ | 217,795  |  | $ | 199,304      | 

2

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|4. | Capital Stock Note 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | 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 June 30, 2006, the share purchase
      options outstanding are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                                            |                    |           | Weighted      
| | ------------------------------------------ | ------------------ | --------- | --------------
| |                                            |                    |           | Average       
| |                                            | Expiry             | Shares    | Exercise Price
| |                                            |                    |           |               
| |                                            | September 5, 2008  | 1,752,000 | $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 June 30, 2006 |                    | 2,010,000 | $0.22         

At June 30, 2006, all of the
outstanding share purchase options were exercisable.

3

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|5. | Capital Stock Note 4  (contd)                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                    
|   | Commitments  (contd)                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                    
|   | Stock-based Compensation  (contd)                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                    
|   | As no options were granted during the period ending June
      30, 2006, the total non-cash compensation charge determined is NIL (2005 -
      NIL). The stock options have a graded vesting schedule, the total
      compensation cost recognized is as follows:

Cumulative fromFebruary 28,1989 (Date ofThree months ended
    
    
      Six months ended
    
    
      Inception) toJune 30,
    
    
      June 30,
    
    
      June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
      2006Total non-cash compensationcharge vested
    
    -
    
    $
    9,100
    
    
    -
    
    $
    25,000
    
    $
      955,657Employees non-cashcompensation charge
    
    -
    
    
    (2,800
    )
    
    -
    
    
    (5,600
    )
    
      (499,922
    )Consultants non-cash compensationcharge recognized
    
    -
    
    $
    6,300
    
    
    -
    
    $
    19,400
    
    $
      455,735


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

Cumulativefrom February28, 1989 (DateThree months ended
      
    
      Six months ended
      
    
    of Inception) toJune 30,
      
    
      June 30,
      
    
    June 30,2006
      
    
    2005
      
    
    2006
      
    
    2005
      
    
    2006Net loss
    As reported
    $
    (88,058
      )
    $
    (121,543
      )
    $
    (172,828
      )
    $
    (264,435
      )
    $
    (5,494,090
      )Pro-forma
    $
    (88,058
      )
    $
    (124,343
      )
    $
    (172,828
      )
    $
    (270,035
      )
    $
    (5,994,012
      )Basic loss per share
    As reported
    $
    (0.00
      )
    $
    (0.00
      )
    $
    (0.01
      )
    $
    (0.01
      )
    
    -Pro-forma
    $
    (0.00
      )
    $
    (0.01
      )
    $
    (0.01
      )
    $
    (0.01
      )
    
    -


4

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|5. | Capital Stock Note 4  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Commitments  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Stock-based Compensation  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The fair value of each option grant was estimated on the
      date of the grant using the Black-Scholes option pricing model. The
      Black-Scholes option pricing model requires the input of highly subjective
      assumptions including the expected price volatility. Changes in the
      subjective input assumptions can materially affect the fair value estimate
      and therefore the Black-Scholes model does not necessarily provide a
      reliable single measure of the fair value of the Companys share purchase
      options.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | At June 30, 2006, the following share purchase warrants
      were outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | Number of Warrants | Exercise Price | Expiry Date      
| | ------------------ | -------------- | -----------------
| |                    |                |                  
| | 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 
| |                    |                |                  
| | 284,827            |                |                  

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

Acquisition of Gulf Star World
Development W.L.L.

By a letter of agreement dated July 11,
2002, amended October 10, 2002, May 10, 2003 and September 30, 2003, and June
30, 2004 and July 11, 2005, the Company agreed to purchase 80% of the
outstanding shares of Gulf Star World Development W.L.L. (Gulf Star), a
Bahrain corporation, from Star Leisure & Entertainment Inc. (Star
Leisure). Star Leisure is controlled by a director of the Company and is based
in British Columbia, Canada. Gulf Star is the 100% owner and developer of the
residential and tourist project known as the Dream Island Resort, located on the
north coast of Bahrain at Manama City.

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

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

5

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|5. | Capital Stock Note 4  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Commitments  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Acquisition of Gulf Star World Development W.L.L. 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In addition, the Company shall make cash payments to Star
      Leisure totaling $100,000 to cover a portion of hard costs accumulated by
      Star Leisure in progressing the Dream Island Project. During the year
      ended December 31, 2003, the Company paid $34,210 as partial payment
      toward the $100,000 payment. The remaining balance of $65,790 is due on or
      before August 31, 2006. 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 June 30, 2006, no value has been recorded for the shares,
      as although work has commenced on the Dream Island Project, there has not
      yet been sufficient progress to warrant a release of escrowed shares. An
      agents fee of 0.5% of the value of the shares released will be
      payable.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company also engaged a consultant to act as an
      advisor in respect to the above noted acquisition. The company issued
      1,300,000 common shares during the year ended December 31, 2002, which
      were deposited into escrow and were to be released on the basis of the
      progress of the Dredging and Reclamation Contract noted above. During the
      year ended December 31, 2002, these shares were recorded at their
      estimated fair value of $65,000, and had been deferred with other related
      investment costs pertaining to the acquisition of Gulf Star. During the
      year ended December 31, 2004 the agreement with this consultant was
      terminated, and the 1,300,000 common shares were returned to the Company
      for cancellation.                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Pursuant to an agreement dated October 20, 2003, during
      the year ended December 31, 2004 the Company issued 1,137,500 Class A
      convertible preferred shares of the Company at a deemed value of $4 per
      share for Technical Planning services for the Dream Island Project. These
      shares were issued in escrow, and were to be released over time as work on
      the project progressed. In December 2004 this agreement was terminated,
      and the 1,137,500 preferred shares were returned to the Company for
      cancellation.                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On March 13, 2006, the Ministry of Finance, Bahrain
      (MOFB) notified Gulf Star that due to a lack of progress and failure to
      advance the project in a timely basis, the MOFB intends to seek
      termination of the lease contract for the Dream Island site and have Gulf
      Star pay all associated expenses incurred for the enforcement thereof. In
      addition, the MOFB has indicated that it reserves the right to claim
      damages towards all losses it has incurred and all gains denied. The
      Company, Gulf Star, and Star Leisure intend to oppose the action by the
      MOFB. However, due to the uncertainty of the future viability of the Dream
      Island project, management has written-down the associated deferred
      investment costs to a nominal value of $1.00.                                                                                                                                

6

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (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  |   | Weighted        |  |   |           |  
| | -------------------------------------------- |  | --------- |  |  | ---------- | - | --------------- |  | - | --------- | -
| |                                              |  | Preferred |  |  | Common     |   | Average Price   |  |   |           |  
| |                                              |  | Shares    |  |  | Shares     |   | Per
      Share |  |   | Total     |  
| |                                              |  |           |  |  |            |   |                 |  |   |           |  
| | 1995 Consulting fee                          |  | -         |  |  | 50,000     |   | $0.03           |  | $ | 1500      |  
| | 1998 Management fee                          |  | -         |  |  | 7,000,000  |   | $0.001          |  |   | 7,000     |  
| | 1998 Consulting fee                          |  | -         |  |  | 620,000    |   | $0.01           |  |   | 6,200     |  
| | 2000 Finders fee                             |  | -         |  |  | 50,000     |   | $0.001          |  |   | 50        |  
| | 2001 Consulting fee                          |  | -         |  |  | 708,406    |   | $2.07           |  |   | 1,468,254 |  
| | 2002 Deferred investment cost                |  | -         |  |  | 1,300,000  |   | $0.05           |  |   | 65,000    |  
| | 2002 Consulting fee                          |  | -         |  |  | 684,143    |   | $0.19           |  |   | 131,400   |  
| | 2002 Debt settlement                         |  | -         |  |  | 680,886    |   | $0.20           |  |   | 138,006   |  
| | 2003 Consulting fee                          |  | -         |  |  | 1,450,000  |   | $0.14           |  |   | 203,000   |  
| | 2003 Termination fee                         |  | 198,000   |  |  | -          |   | $4.00           |  |   | 792,000   |  
| | 2004 Loan conversion                         |  | -         |  |  | 825,364    |   | $0.06           |  |   | 48,537    |  
| | 2004 Loan settlement                         |  | -         |  |  | 613,000    |   | $0.07           |  |   | 45,000    |  
| | 2004 Consulting fee                          |  | -         |  |  | 360,000    |   | $0.40           |  |   | 142,500   |  
| | 2004 Deferred investment cost (cancellation) |  | -         |  |  | (1,300,000 | ) | $0.05           |  |   | (65,000   | )
| | 2005 Communications                          |  | -         |  |  | 56,000     |   | $0.50           |  |   | 28,000    |  
| | 2005 Consulting fees                         |  | -         |  |  | 1,135,000  |   | $0.29           |  |   | 333,700   |  
| | 2005 Legal fees                              |  | -         |  |  | 50,000     |   | $0.50           |  |   | 25,000    |  
| | 2005 Loan conversion                         |  | -         |  |  | 635,901    |   | $0.39           |  |   | 250,160   |  
| | 2005 Stock dividend                          |  | -         |  |  | 4,120,643  |   | $0.64           |  |   | 2,678,418 |  
| |                                              |  |           |  |  |            |   |                 |  |   |           |  
| |                                              |  | 198,000   |  |  | 19,039,343 |   |                 |  | $ | 6,298,725 |  

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

7

---

**STRATEGIC INTERNET INVESTMENTS,
INCORPORATED**(A Development Stage Company)NOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS June 30, 2006 (Stated in U.S. Dollars)
(Unaudited)

|7. | Related Party Transactions Note 4                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                  
|   | The Company was charged the following by shareholders,
      directors, by companies controlled by directors and/or shareholders of the
      Company, and by companies with directors in
common:

Cumulative fromFebruary 28,1989 (Date ofThree months ended
    
    
    Six months ended
    
    
    Inception) toJune 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006Consulting fees
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    35,670Interest
    
    5,655
    
    
    3,587
    
    
    9,400
    
    
    13,348
    
    
    51,358Management fees
    
    8,010
    
    
    -
    
    
    10,500
    
    
    -
    
    
    163,872Office and general
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    26,944Rent
    
    5,340
    
    
    4,823
    
    
    10,538
    
    
    9,715
    
    
    79,732$
    19,005
    
    $
    8,410
    
    $
    30,438
    
    $
    23,063
    
    $
    357,576


On May 5, 2006, the Company entered
into a Convertible Loan Agreement with a company controlled by a director of the
Company. Under the terms of the Convertible Loan Agreement, interest is
calculated at 10% per annum, is secured by a convertible debenture and the
lender may at anytime convert the principal sum and accrued interest into units
of the Company. Each unit will consist of one common share and one common share
purchase warrant, expiring two years from the conversion date. At May 5, 2006,
loans, accrued interest, cash advances and accounts payable, were consolidated
under this new agreement, resulting in a new convertible loan payable in the
amount of $65,507.

Deferred investment costs at June 30,
2006, included $1 (December 31, 2005: $1) charged by a related company in
respect to a cash payment required pursuant to an acquisition agreement (Note
6).

At June 30, 2006, accounts payable
includes $208 (December 31, 2005: $4,837) due to directors of the Company and
companies controlled by directors of the Company in respect of unpaid management
fees and expenses incurred on behalf of the Company.

At June 30, 2006 and December 31, 2005,
due to related parties are comprised of expenses for operating costs paid on
behalf of the Company by companies with directors in common. These amounts are
non-interest bearing, unsecured and there are no specific terms for
repayment.

8

---

|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 outstanding common shares 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 August 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On March 13, 2006, the Ministry of Finance, Bahrain
        (MOFB) notified Gulf Star that due to a lack of progress and
        failure to advance the project in a timely basis, the MOFB intends to
        seek termination of the lease contract for the Dream Island site. The
        Company, Gulf Star, and Star Leisure intend to oppose the action by the
        MOFB. However, due to the uncertainty of the future viability of the Dream
        Island project, management has written-down the associated deferred development
        costs to a nominal value of $1.00 at December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The financial statements have been prepared on a going
        concern basis. The Company has accumulated a deficit of $8,133,508 since
        inception, and at June 30, 2006 has a working capital deficiency of $387,296.
        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 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 Entertainment Ltd. (G7), a British Columbia, Canada registered corporation. G7 is controlled by directors of 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 2006 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 chief executive officer and chief financial officer evaluated the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based upon the evaluation, the Company's
chief executive officer and chief financial officer concluded that the Company's disclosure controls and procedures are effective.                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the quarterly period covered by this report, there were no changes in the Company's internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal
controls over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

---

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

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

On 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 September 30, 2005, the investor exercised
  the remaining warrants to purchase a further 330,000 shares for cash proceeds
  of $33,000. These shares were issued pursuant to an exemption from registration
  under Section 4(6) of the Securities Act of 1933. Sale or transfer of the shares
  by the investor shall be in accordance with the provisions of Regulation S,
  or pursuant to registration under the Securities Act of 1933 or pursuant to
  an available exemption from registration. This transaction is with an offshore
  non-U.S. person; accordingly, these securities are exempt from registration
  pursuant to Regulation S.

---

On August 10, 2003 the Company entered
into a Convertible Loan Facility Agreement with Star Leisure & Entertainment
Inc. (Star Leisure), a company controlled by a Director and Officer of
Strategic, whereby the Company would, from time to time, borrow operating funds
from Star Leisure, at an interest rate of ten percent (10%), repayable on
demand. The lender has the right to convert all or part of the principal sum and
interest into units at a conversion rate which is calculated at a discount to
the average closing market price for ten days preceding a loan advance or
conversion of interest. Each unit consists of one common share of the Company
and one non-transferable share purchase warrant, expiring 2 years from the
conversion date, exercisable at the applicable conversion rate. Certain loans
made under this agreement had specific maturity dates, thereby limiting to 2
years the lenders right to convert all or part of the principal sum into units.
As of January 31, 2006, all of the loans matured, and the right to convert this
principal amount into units expired. Under the terms of the Convertible Loan
Facility Agreement, any loans that mature without being converted or repaid
become due on demand. The lender retains the right to convert the total accrued
interest of $32,470 into units. Star Leisure has not converted any part of the
principal sums advanced or accrued interest into units as of June 30, 2006.
During the period ended June 30, 2006, pursuant to this agreement, the Company
received loan proceeds of $49,700, which is due on demand and is convertible
anytime into 416,248 units of the Company. Conversion of this loan and
associated warrants to equity will be at a rate of $0.12 per share. At June 30,
2006, Star Leisure had advanced a total of $152,906 and accrued interest of
$32,470. 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. In June 2005, this agreement was terminated, and
the escrowed 300,000 common shares, and escrowed 60,000 common dividend shares
were returned for cancellation.

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. 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.

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

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

On May 5, 2006 the Company entered into
a Convertible Loan Facility Agreement with CMB Investments Ltd. (CMB), a
company controlled by a Director and Officer of Strategic, whereby the Company
would, from time to time, borrow operating funds from CMB, at an interest rate
of ten percent (10%), repayable on demand. The lender has the right to convert
all or part of the principal sum and interest into units at a conversion rate
which is calculated at a discount to the average closing market price for ten
days preceding a loan advance or conversion of interest. Each unit consists of
one common share of the Company and one share purchase warrant, expiring 2 years
from the conversion date, exercisable at the applicable conversion rate. During
the period ended June 30, 2006; loans, accrued interest, cash advances and
accounts payable, were consolidated under this new agreement, resulting in a new
convertible loan payable in the amount of $65,507. At June 30, 2006, the CMB
loan principal was $65,507 and had accrued interest of $951. The loan principal
is convertible into 682,365 units. Conversion of this loan and associated
warrants to equity will be at a rate of $0.10 per share. This transaction is
with an offshore non-U.S. person; accordingly, these securities are exempt from
registration pursuant to Regulation S.

| | (1) | Refer to the Notes of the Interim Consolidated Financial
      Statements for the Class A Convertible Preferred Shares terms of
      conversion and rights.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Defaults Upon Senior Securities                          
|-- | ---------------------------------------------------------
|   |                                                          
|   |  None                                                   
|   |                                                          
|4. | Submission of Matters to a Vote of Security
      Holders
|   |                                                          
|   |  None                                                   

---

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

Table ofExhibit Items
      Description
      Exhibit601-3(i)
      Articles of Incorporation
      Note 1601-(3)(ii)
      Bylaws
      Note 1601-(3)(iii)
      Certificate of Amendment
      Note 1601-(10)
      Stock Award Plan
      Note 2601-(31)
      Rule 13a-14(a)/15d-14(a)
        Certification
      Exhibit 31601-(31)
      Rule 13a-14(a)/15d-14(a) Certification
      Exhibit 31601-(32)
      Section 1350 Certification
      Exhibit 32601-(32)
      Section 1350 Certification
      Exhibit 32


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


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: | July 31, 2006 |  | /s/ Ralph Shearing                          
|      |               |  | Ralph Shearing, CEO, Director               
|      |               |  |                                             
|      |               |  |                                             
|Date: | July 31, 2006 |  | /s/ Abbas Salih                             
|      |               |  | Abbas Salih, CFO, Director                  

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