SIII Strategic Internet Investment (CE)

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

FORM 10-KSB

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

For the fiscal year ended December 31, 2007

Commission File No. 033-28188

Strategic Internet Investments, Incorporated
(Name of small business issuer in its charter)

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

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

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 ( )

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  ( X )

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

Issuer’s revenues for its most recent fiscal year. Nil

Aggregate market value of the voting common equity held by non-affiliates as of March 31, 2008: $1,707,515

Common shares outstanding as of March 31, 2008: 26,860,326

Transitional Small Business Disclosure Format. Yes ( ) No ( X )

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.

PART I

Part II

Market information
The Company's common shares are quoted and traded on the US OTC Bulletin Board under the symbol "SIII". The range of high and low bid quotations for each quarter within the last two fiscal years, as reported by Yahoo Finance (www.yahoo.com), was as follows:

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

Holders of common equity
As at December 31, 2007 there were approximately 128 holders of record of the common shares of Strategic.

Dividends
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.

Except for the above mentioned stock dividend, the Company has not declared or paid per share cash distributions or dividends on its common stock in the last two fiscal years. Future distributions or dividends on the common stock, if any, will be determined by the Company's Board of Directors and will depend upon the Company's results of operations, financial condition, capital requirements and other factors.

Securities authorized for issuance under equity compensation plans

2002 Stock Award Plan

In 2002, the Company’s board of directors approved a stock award plan. The plan provides both for the direct award or sale of shares, and for the grant of options to purchase shares. Shares may be awarded in consideration of services rendered to the Company. The Company may also grant a 30-day right to purchase shares at a price of not less than 90% of the fair market value of the shares.

Under the plan directors, employees and consultants may be granted incentive stock options to purchase common stock of the Company at a price of not less than 100% of the fair market value of the stock. The total number of shares awarded under the plan must not exceed 15% of the outstanding common stock of the Company. Certain changes in the capital structure of the Company, such as a stock split or stock dividend, may result in an appropriate adjustment to the number and/or the price of shares issuable under the plan. The plan expires on July 1, 2017.

Sales of Securities Without Registration Under the Securities Act of 1933

On March 11, 2005, the Company issued 4,060,643 common shares, net of escrowed shares, pursuant to a common stock dividend declared by the Board of Directors on February 14, 2005, payable to the shareholders of record as of March 4, 2005. In connection with this stock dividend, pursuant to the terms of stock option, convertible debenture, and stock warrant agreements the number of units or shares issuable under those agreements shall be increased by 20% and the exercise or conversion price shall be decreased by 20%. These shares are restricted under Rule 144.

On November 15, 2002 the Company entered into a Convertible Loan Facility Agreement with Icon Management Ltd. (“Icon”) whereby the Company would, from time to time, borrow operating funds from Icon, at an interest rate of ten percent (10%), repayable on demand. The lender has the right to convert all or part of the principal sum and interest into units at a conversion rate which is calculated at a discount to the average closing market price for ten days preceding a loan advance or conversion of interest. Each unit consists of one common share of the Company and one non-transferable share purchase warrant, expiring 2 years from the conversion date, exercisable at the applicable conversion rate. Certain loans made under this agreement had specific maturity dates, thereby limiting to 2 years the lender’s right to convert all or part of the principal sum into units. During the year ended December 31, 2004, Icon converted $48,537 of the loan into 825,364 units of the Company, including warrants exercisable at an average price of $0.06 per share, expiring at various dates between December 31, 2004 and March 31, 2006. On December 31, 2004, Icon exercised warrants to purchase 643,715 shares. During the year ended December 31, 2005, Icon converted $227,140 of the loan plus accrued interest of $23,020, into 635,901 units of the Company, including warrants exercisable at an average price of $0.39 per share, expiring at various dates between April 1, 2005 and January 31, 2007. During the period ended September 30, 2005, Icon also exercised warrants to purchase a further 420,107 shares for cash proceeds of $43,153. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On March 13, 2003 the Company completed an offering of 650,000 units of its share capital to one accredited investor at a price of $0.10 per unit, each unit consisting of one share of common stock and one common stock share purchase warrant. Each common stock purchase warrant gives the investor the right to purchase one additional share of common stock at any time during the first two years at a price of $0.10 per share. Total cash proceeds of $65,000 were allocated to working capital. In July 2004, 320,000 of the warrants were exercised, and 320,000 shares were issued for cash proceeds of $32,000. During the year ended December 31, 2005, the investor exercised the remaining warrants to purchase a further 330,000 shares for cash proceeds of $33,000. These shares were issued pursuant to an exemption from registration under Section 4(6) of the Securities Act of 1933. Sale or transfer of the shares by the investor shall be in accordance with the provisions of Regulation S, or pursuant to registration under the Securities Act of 1933 or pursuant to an available exemption from registration. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On August 10, 2003 the Company entered into a Convertible Loan Facility Agreement with Star Leisure & Entertainment Inc. (“Star Leisure”), a company controlled by a Director and Officer of Strategic, whereby the Company would, from time to time, borrow operating funds from Star Leisure, at an interest rate of ten percent (10%), repayable on demand. The lender has the right to convert all or part of the principal sum into units at a conversion rate which is calculated at a discount to the average closing market price for ten days preceding a loan advance. Each unit consists of one common share of the Company and one 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. At December 31, 2005, Star Leisure had advanced a total of $103,206 and accrued interest of $25,100. During the year

ended December 31, 2005, $81,206 of the loans matured, and the right to convert this principal amount into units expired. On January 31, 2006 the right to convert the remaining loan principal of $22,000 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. At December 31, 2007, the Star Leisure loan principal was $49,700 and had accrued interest of $9,018. The loan principal is convertible into 416,248 units at conversion price of $0.12 as set at the time the principal was borrowed. Star Leisure has not converted any part of the principal sums advanced or accrued interest into units as of December 31, 2007. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On November 30, 2003, the Company issued 198,000 Class A Convertible Preferred Shares ⁽¹⁾ at a deemed value of $4.00 per share to settle a termination fee of $792,000. This termination fee is to a former contractor who was to perform planning services for the Company that were subsequently assigned to another contractor. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On January 31, 2004, the Company issued 1,137,500 Class A Convertible Preferred Shares ⁽¹⁾ at a deemed value of $4.00 per share, as payment for technical planning services to be performed by the Arkan Group for Projects of Dammam, Saudi Arabia. The total value of the technical planning services contract is $4,550,000. These shares were issued in escrow and were to be released over time as work on the Dream Island Project progressed. In December 2004 this contract was terminated, and the escrowed shares were cancelled. For accounting purposes, these shares were not considered issued and outstanding in 2004 as the escrow condition was never met during the year. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

In May 2004, the Company issued 50,000 common shares at a deemed price of $0.30 per share, for a total deemed consideration of $15,000 in settlement of a loan, pursuant to a Debt Settlement Agreement. 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 were held in escrow and were to be released subject to the Company obtaining certain future financial goals, however these goals were never achieved and the shares were subsequently cancelled. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S, however they are restricted under Rule 144.

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 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.

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.

In January 2005, the Company issued 141,000 common shares at a deemed price of $.50 per share, for a total deemed consideration of $70,500, pursuant to various consulting agreements for legal, computer, and financial services. These transactions are with offshore non-U.S. persons; accordingly, these securities are exempt from registration pursuant to Regulation S.

The Company issued 50,000 common shares in January 2005, at a deemed price of $0.84 per share, for a total deemed consideration of $42,000, pursuant a Promotional and Capital Funding Agreement for financial and investor relation

services. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S, however they are restricted under Rule 144.

The Company also issued 400,000 common shares in January 2005, at a deemed price of $0.25 per share, for a total deemed consideration of $100,000, pursuant a Promotional and Capital Funding Agreement for financial and investor relation services. Of these shares, 250,000 were held in escrow and were to be released subject to the Company obtaining certain future financial goals, however these goals were never achieved and the shares were subsequently cancelled. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S, however they are restricted under Rule 144.

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

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

On May 5, 2006 the Company entered into a Convertible Loan Facility Agreement with CMB Investments Ltd. (“CMB”), a company controlled by a Director 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 into units at a conversion rate which is calculated at a discount to the average closing market price for ten days preceding a loan advance. Each unit consists of one common share of the Company and one share purchase warrant, expiring 2 years from the conversion date, exercisable at the applicable conversion rate. At December 31, 2007, the CMB loan principal was $135,866 and had accrued interest of $14,341. The loan principal is convertible into 1,762,858 units. Conversion of this loan and associated warrants to equity will be at a price ranging from $0.05 to $0.23. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On October 11, 2006 the Company completed a private placement of 200,000 common shares at $0.40 per share for total proceeds of $80,000. In connection with this financing, the Company paid cash of $3,000 and issued 100,000 common shares as finder’s fees. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

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

In May 2007 the Company entered into two Consulting Agreements for financial consulting services for a period of 12 months. Pursuant to these agreements, the Company issued 700,000 common shares at a deemed price of $0.20 per share, for a total deemed consideration of $140,000. These transactions are with offshore non-U.S. persons; accordingly, these securities are exempt from registration pursuant to Regulation S, however they are restricted under Rule 144.

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

Plan of Operation
The Company has an agreement to purchase 80% of the outstanding shares of Gulf Star World Development W.L.L. (“Gulf Star”), a Bahrain corporation, from Star Leisure & Entertainment Inc. (“Star Leisure”). Star Leisure is controlled by a director of the Company and is based in British Columbia, Canada. Gulf Star is the 100% owner and developer of the Dream Island Resort project.

To acquire 80% of Gulf Star, the Company must issue five million common shares at a price of $0.125 per share. The shares are to be issued over a three year period based on construction progress. In addition, the Company shall make

cash payments to Star Leisure totaling $100,000 to cover a portion of hard costs accumulated by Star Leisure in progressing the Dream Island Project. At December 31, 2003 the Company had paid $34,210, with the balance of $65,790 to be paid by August 31, 2008.

On March 13, 2006, the Ministry of Finance, Bahrain (“MOFB”) notified Gulf Star that due to a lack of progress and failure to advance the project in a timely basis, the MOFB intends to seek termination of the lease contract for the Dream Island site. The Company, Gulf Star, and Star Leisure intend to oppose the action by the MOFB. However, due to the uncertainty of the future viability of the Dream Island project, management has written-down the associated deferred development costs to a nominal value of $1.00 at December 31, 2005.

The Dream Island project in Bahrain 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, is to be paid by the issuance of 1,268,750 Class A Convertible Preferred Shares in the capital of the Company at a deemed price of $4.00 per share to Robodh Contracting Establishment, Manama, Bahrain. The total value of the Dredging and Reclamation Works contract is $5,075,000.

In August 2004, limited construction commenced on the Dream Island Project. This initial phase of work consists of the construction of a temporary causeway to provide access from the coast to the offshore site of the future island location. Large haulage trucks transported and dumped quarry stone to create the temporary causeway from which access will be 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.

In January 2007 The Company has entered into a Letter of Intent (“LOI”) with MEC-Narmont Grup Insaat San. Ve. Tic. Ltd. (“MEC-Narmont”), Al Habeeb & Al Mokairesh Commercial Brokers LLC (“Habeeb”), Mideast Development Company Inc. (“MidDevCo”) and certain property owners (the Landowners”), to potentially acquire by option up to a 100% indirect interest in the Renaissance Residence Project (the “Renaissance Project”) in Antalya, Turkey by purchasing the outstanding shares of a Turkish company (“TurkCo”) that will be incorporated to hold and own 100% of the Renaissance Project, subject only to certain payments to the landowners. MidDevCo is controlled by a director of the Company.

The Renaissance Project is a real estate development project that will be located on an 8.762 hectare parcel of land near the Antalya Airport and Lara Beach in Antalya, Turkey. It will consist of three multi-storey buildings with over 200 residential units. In recent years, the Gulf of Antalya, with a coastal strip of some 200 km with bays and coves of exceptional beauty filled with the crystal clear waters of the Mediterranean, has become one of the most popular tourist resorts in Turkey.

The LOI contemplates that the Company will assist in designing a financing plan for the Renaissance Project and the Company will be granted two options to purchase up to 100% of the outstanding shares of TurkCo. An “Initial Option” will allow the Company to purchase up to thirty 30% of the outstanding shares of TurkCo. Upon full exercise of the Initial Option, the Company shall be entitled to exercise a “Second Option”to purchase the remaining outstanding shares of TurkCo. Compensation to be paid to the shareholders of TurkCo shall, at the choice of the Company, be paid either in cash or by issuing common shares of the Company. Any issuance of common shares of the Company would occur as of the date of the Option exercise notice, under a Restricted Rule 144 Reg. S share issuance.

In June 2007 this LOI was terminated and replaced with a second LOI with the same terms and conditions as the first LOI, except some of the parties to the agreement changed. This second LOI was also terminated; none of the parties provided nor fulfilled any terms of the LOI, and no formal agreement was ever signed.

In January 2008 the Company entered into a Letter of Intent (“LOI”) with certain property owners (“Landowners”), and Al Habeeb & Al Mokairesh Commercial Brokers LLC (“Habeeb”), and G7 Entertainment Ltd. (“G7”) and Muzaffer Ataman (“Ataman”). The Company has the potential to acquire by option up to a 100% indirect interest in the Port Renaissance Project (the “Port Residence Project”) in Calkaya, near Kundu Antalya, Turkey by purchasing the

outstanding shares of a Turkish company (“Calkaya TurkCo”) that will be incorporated to hold and own 100% of the Port Residence Project.

The Port Residence Project is a real estate development project located on 16.5 acres of land and when completed will consist of eleven multi-storey buildings with 396 residential units. Construction of three of the buildings, Phase 1, has commenced and is expected to be complete in one year’s time, subject to securing funding.

Under the LOI the Company will be granted two options to purchase up to 100% of the outstanding shares of Calkaya TurkCo. An “initial option”will allow the Company to purchase up to 30% of the outstanding shares of Calkaya TurkCo. Upon full exercise of the initial option, the Company shall be entitled to exercise a “second option”to purchase the remaining outstanding shares of Calkaya TurkCo.

Compensation to be paid to the shareholders of Calkaya TurkCo shall, at the choice of the Company, will be paid either in cash or by issuing common shares of the Company. Any issuance of common shares of the Company would occur as of the date of the Option Exercise Notice, under a Restricted Rule 144 Reg. S share issuance. The shares would be issued at the higher value of either USD $2.00 per share, or the discounted market price of the Company shares, as quoted on the OTC:BB whereby the “Discounted Market Price”is defined by calculating the previous 10 day average closing share price from the exercise date in question, and reducing that price by a 25% discount.

G7 is a related party to the Company. Mr. Abbas Salih, Director and controlling shareholder of the Company, is also the controlling shareholder of G7, owning a 51% interest in G7 and therefore, the contemplated agreement outlined above is a non-arms length transaction.

The LOI is subject to the completion of a formal agreement.

The financial statements have been prepared on a going concern basis. The Company has accumulated a deficit of $8,881,680 since inception and at December 31, 2007 has a working capital deficiency of $721,828. 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.

Management believes that the close connections and contacts it has made in the Middle East, especially the efforts of its Chairman, Mr. Abbas Salih, who has been stationed predominately in Saudi Arabia and Bahrain for the past year to oversee the project, will be of immense value in completing other essential contracts during the course of this project.

The Company's plan during the next quarter and for the balance of 2007 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.

Off-balance sheet arrangements
As of the date of this Annual Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the company's financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement, or other contractual arrangement to which an entity unconsolidated with the Company is a party under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Developm ent Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 AND 2006
( Stated in U.S. Dollars )

	BDO Dunwoody LLP	#604 –750 West Pender Street
	Chartered Accountants	Vancouver, BC, Canada V6C 2T7
		Telephone: (604) 689-0188
		Fax: (604) 689-9773

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheet of Strategic Internet Investments, Incorporated (the “Company”, a Development Stage Company) and subsidiaries as of December 31, 2007 and the related consolidated statements of operations, cash flows and stockholders’deficiency for the year then ended and for the period from the inception of the development stage, February 28, 1989 to December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the Company for the period from the inception of the development stage, February 28, 1989 to December 31, 2006. Such statements are included in the cumulative inception to December 31, 2007 totals of the statements of operations, cash flows and stockholders' deficiency and reflect a net loss of 91% of the related cumulative totals. Those financial statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amount for the period from the inception of the development stage, February 28, 1989 to December 31, 2006 included in the cumulative totals, is based solely upon the report of the other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, these consolidated financial statements referred to above present fairly, in all material respects, the financial position of Strategic Internet Investments, Incorporated and subsidiaries as of December 31, 2007 and the results of their operations and their cash flows for the year then ended and for the period from inception of the development stage February 28, 1989 to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is in the development stage, has not yet achieved profitable operations and is dependent on its ability to raise capital from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. These factors, along with other matters as set forth in Note 1, raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

(signed) “BDO Dunwoody LLP”

Chartered Accountants

Vancouver, Canada
March 24, 2008

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheet of Strategic Internet Investments, Incorporated (A Development Stage Company) and subsidiaries as of December 31, 2006 and the related consolidated statements of operations, cash flows and stockholders’deficiency for each of the years ended December 31, 2006 and for the period from inception of the development stage, February 28, 1989 to December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements referred to above present fairly, in all material respects, the financial position of Strategic Internet Investments, Incorporated and subsidiaries as of December 31, 2006, and the results of their operations and their cash flows for the year ended December 31, 2006 and for the period from inception of the development stage, February 28, 1989 to December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is in the development stage, has not yet achieved profitable operations and is dependent on its ability to raise capital from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. These factors, along with other matters as set forth in Note 1, raise substantial doubt that the Company will be able to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

F-2

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

Nature of Operations and Ability to Continue as a Going Concern –Note 1
Commitments –Notes 4, 5, 7, and 11
Subsequent Events –Notes 5 and 11

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-3

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

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-4

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

Non-cash Transactions –Note 6

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-5

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

… Cont’d

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-6

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

… Cont’d

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-7

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

… Cont’d

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-8

STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

… Cont’d

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-9

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

… Cont’d

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-10

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’DEFICIENCY
For the period from February 28, 1989 (Date of Inception) to December 31, 2007
( Stated in U.S. Dollars )

SEE ACCOMPANYING NOTES AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

F-11

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-12

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-13

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-14

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-15

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-16

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-17

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

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

During the previous two years ended December 31, 2007, the change in share purchase options outstanding are as follows:

At December 31, 2007, of the total outstanding share purchase options, 2,062,000 (2006: 1,962,000) were exercisable.

F-18

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

Commitments –(cont’d)

Stock-based Compensation –(cont’d)

The unvested options will only vest and be exercisable at a future date as follows:

Share Purchase Warrants

During the previous two years ended December 31, 2007, the changes in share purchase warrants outstanding are as follows:

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

By a letter of agreement dated July 11, 2002, amended October 10, 2002, May 10, 2003 and September 30, 2003, June 30, 2004, July 11, 2005 and August 9, 2006, the Company agreed to purchase 80% of the outstanding shares of Gulf Star World Development W.L.L. (“Gulf Star”), a Bahrain corporation, from Star Leisure & Entertainment Inc. (“Star Leisure”). Star Leisure is controlled by a director of the Company and is based in British Columbia, Canada. Gulf Star is the 100% owner and developer of the residential and tourist project known as the Dream Island Resort, located on the north coast of Bahrain at Manama City.

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

F-19

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

F-20

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )

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

F-21

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007 and 2006
( Stated in U.S. Dollars )