UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2008
Commission File No. 033-28188
Registrant name:
|
Strategic Internet Investments, Incorporated
|
|
|
State of incorporation:
|
Delaware
|
|
|
IRS Employer Identification:
|
84-1116458
|
|
|
Address of principal executive offices:
|
Suite 250, 1090 West Georgia Street
|
|
Vancouver, BC
|
|
Canada V6E 3V7
|
|
|
Issuers telephone number
|
604-684-8662
|
Check whether the issuer (1) filed all reports
required to be filed by Section 13
or 15(d) of the Exchange Act
during the past 12 months, and (2) has been
subject to such filing
requirements for the past 90 days.
|
Yes
|
( X )
|
No
|
(
)
|
|
|
|
|
|
Indicate by check mark whether the registrant is a
smaller reporting company
(as defined in Rule 12b-2 of the Exchange
Act).
|
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 June 30, 2008:
|
27,610,326
|
|
|
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, 2008
(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,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash
|
$
|
1,265
|
|
$
|
65
|
|
Prepaid expenses Note 4
|
|
77,320
|
|
|
55,400
|
|
|
|
|
|
|
|
|
|
|
78,585
|
|
|
55,465
|
|
|
|
|
|
|
|
|
Deferred
investment costs Notes 2 and 4
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
|
|
$
|
78,586
|
|
$
|
55,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts payable Note 6
|
$
|
458,327
|
|
$
|
383,551
|
|
Loans payable Note 3
|
|
446,997
|
|
|
393,742
|
|
|
|
|
|
|
|
|
|
|
905,324
|
|
|
777,293
|
|
|
|
|
|
|
|
|
STOCKHOLDERS DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock Notes 3, 4, 5 and 6
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
27,610,326
outstanding (2007: 26,860,326 outstanding)
|
|
27,610
|
|
|
26,860
|
|
Additional paid-in capital
|
|
8,442,684
|
|
|
8,132,795
|
|
Deficit
accumulated during the development stage
|
|
(9,297,230
|
)
|
|
(8,881,680
|
)
|
|
|
|
|
|
|
|
|
|
(826,738
|
)
|
|
(721,827
|
)
|
|
|
|
|
|
|
|
|
$
|
78,586
|
|
$
|
55,466
|
|
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1989 (Date of
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
Inception) to
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting and audit
fees
|
$
|
21,274
|
|
$
|
12,828
|
|
$
|
27,094
|
|
$
|
26,449
|
|
$
|
269,942
|
|
Amortization
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,616
|
|
Communications
|
|
481
|
|
|
301
|
|
|
1,359
|
|
|
709
|
|
|
103,811
|
|
Consulting fees Note 6
|
|
27,430
|
|
|
32,949
|
|
|
62,430
|
|
|
57,390
|
|
|
2,638,523
|
|
Interest Notes 3 and
6
|
|
20,845
|
|
|
7,565
|
|
|
30,234
|
|
|
14,866
|
|
|
273,592
|
|
Investor relations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
91,385
|
|
Legal fees
|
|
1,658
|
|
|
-
|
|
|
1,658
|
|
|
-
|
|
|
161,747
|
|
Management fees Note 6
|
|
46,125
|
|
|
46,350
|
|
|
92,250
|
|
|
92,700
|
|
|
481,637
|
|
Office and general
Note 6
|
|
126
|
|
|
518
|
|
|
213
|
|
|
950
|
|
|
141,645
|
|
Regulatory fees
|
|
1,580
|
|
|
1,358
|
|
|
1,714
|
|
|
2,389
|
|
|
27,017
|
|
Rent Note 6
|
|
6,000
|
|
|
5,280
|
|
|
12,000
|
|
|
10,560
|
|
|
129,855
|
|
Transfer agent fees (recovery)
|
|
375
|
|
|
250
|
|
|
(1,100
|
)
|
|
870
|
|
|
42,293
|
|
Travel
|
|
-
|
|
|
445
|
|
|
-
|
|
|
445
|
|
|
110,031
|
|
Loss on disposal of equipment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,481
|
|
Non-cash compensation
charge Note 4
|
|
215,128
|
|
|
10,218
|
|
|
215,128
|
|
|
30,654
|
|
|
700,103
|
|
Write-down of advances to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related party
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
606,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before the following:
|
|
(341,022
|
)
|
|
(118,062
|
)
|
|
(442,980
|
)
|
|
(237,982
|
)
|
|
(5,783,015
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unauthorized
distribution
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(69,116
|
)
|
Termination fee
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(792,000
|
)
|
Gain (loss) on foreign
exchange
|
|
(1,184
|
)
|
|
(10,638
|
)
|
|
1,488
|
|
|
(11,593
|
)
|
|
(30,647
|
)
|
Gain on write-down of debt
|
|
-
|
|
|
-
|
|
|
25,942
|
|
|
-
|
|
|
51,175
|
|
Write-down of deferred
investment costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 4
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(34,209
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss for the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
period
|
$
|
(342,206
|
)
|
$
|
(128,700
|
)
|
$
|
(415,550
|
)
|
$
|
(249,575
|
)
|
$
|
(6,657,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
27,107,579
|
|
|
26,404,282
|
|
|
26,983,952
|
|
|
26,183,530
|
|
|
|
|
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) to
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
$
|
(415,550
|
)
|
$
|
(249,575
|
)
|
$
|
(6,657,812
|
)
|
Adjustments to reconcile net loss to net cash
used in
|
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
-
|
|
|
-
|
|
|
3,616
|
|
Beneficial conversion feature on convertible debt
|
|
11,161
|
|
|
-
|
|
|
128,561
|
|
Communications
|
|
-
|
|
|
-
|
|
|
28,000
|
|
Consulting fees
|
|
62,430
|
|
|
14,600
|
|
|
2,433,584
|
|
Gain on
write-down of debt
|
|
(25,942
|
)
|
|
-
|
|
|
(51,175
|
)
|
Interest accrued on loans
|
|
6,072
|
|
|
14,866
|
|
|
85,159
|
|
Legal fees
|
|
-
|
|
|
-
|
|
|
25,000
|
|
Loss on disposal of equipment
|
|
-
|
|
|
-
|
|
|
1,481
|
|
Management
fees
|
|
-
|
|
|
-
|
|
|
7,000
|
|
Non-cash compensation charge
|
|
215,128
|
|
|
30,654
|
|
|
700,103
|
|
Termination
fees
|
|
-
|
|
|
-
|
|
|
792,000
|
|
Write-down of deferred investment costs
|
|
-
|
|
|
-
|
|
|
606,337
|
|
Write-down
of advances to related party
|
|
-
|
|
|
-
|
|
|
34,209
|
|
Changes in non-cash items:
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
-
|
|
|
(2,200
|
)
|
|
-
|
|
Accounts
payable
|
|
100,718
|
|
|
118,325
|
|
|
622,213
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
(45,983
|
)
|
|
(73,330
|
)
|
|
(1,241,724
|
)
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Organization costs
|
|
-
|
|
|
-
|
|
|
(750
|
)
|
Acquisition of capital assets
|
|
-
|
|
|
-
|
|
|
(4,347
|
)
|
Deferred investment costs
|
|
-
|
|
|
-
|
|
|
(34,210
|
)
|
Advances to related party
|
|
-
|
|
|
-
|
|
|
(606,337
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
-
|
|
|
-
|
|
|
(645,644
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Loans payable
|
|
47,183
|
|
|
16,381
|
|
|
715,304
|
|
Due to related parties
|
|
-
|
|
|
-
|
|
|
15,526
|
|
Proceeds from issuance of common stock
|
|
-
|
|
|
50,000
|
|
|
1,162,631
|
|
Payment of offering costs
|
|
-
|
|
|
-
|
|
|
(30,270
|
)
|
Additional
paid-in capital
|
|
-
|
|
|
-
|
|
|
25,442
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
by financing activities
|
|
47,183
|
|
|
66,381
|
|
|
1,888,633
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash during the period
|
|
1,200
|
|
|
(6,949
|
)
|
|
1,265
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of
the period
|
|
65
|
|
|
10,822
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of the
period
|
$
|
1,265
|
|
$
|
3,873
|
|
$
|
1,265
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flows:
|
|
|
|
|
|
|
|
|
|
Cash paid for Interest
|
$
|
13,000
|
|
$
|
-
|
|
$
|
30,054
|
|
Non-cash Transactions Note 5
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, 2008
|
(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
|
)
|
Contd
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, 2008
|
(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
|
-
|
|
|
-
|
|
116,695
|
|
|
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
|
|
Contd
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, 2008
|
(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
|
)
|
Contd
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, 2008
|
(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
|
|
-
|
|
|
-
|
|
650,000
|
|
|
650
|
|
|
64,350
|
|
|
-
|
|
|
65,000
|
|
Net loss
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,208,941
|
)
|
|
(1,208,941
|
)
|
Issued for termination fee
|
|
- at $4.00
|
|
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
|
)
|
Contd
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, 2008
|
(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
|
|
|
358
|
|
|
35,417
|
|
|
-
|
|
|
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
|
|
|
25,660
|
|
|
7,720,355
|
|
|
(7,960,680
|
)
|
|
(214,467
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of stock for cash pursuant to a private placement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.40
|
|
-
|
|
|
-
|
|
200,000
|
|
|
200
|
|
|
79,800
|
|
|
-
|
|
|
80,000
|
|
Issue of stock for finders fee
|
|
at $0.40
|
|
-
|
|
|
-
|
|
100,000
|
|
|
100
|
|
|
39,900
|
|
|
-
|
|
|
40,000
|
|
Share issue costs
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
(43,000
|
)
|
|
-
|
|
|
(43,000
|
)
|
Beneficial conversion feature on
convertible debt
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
77,800
|
|
|
-
|
|
|
77,800
|
|
Net loss
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(401,655
|
)
|
|
(401,655
|
)
|
Contd
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, 2008
|
(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, 2006
|
|
|
|
198,000
|
|
|
198
|
|
25,960,326
|
|
|
25,960
|
|
|
7,874,855
|
|
|
(8,362,335
|
)
|
|
(461,322
|
)
|
Issue of stock for cash pursuant to a
private placement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.25
|
|
-
|
|
|
-
|
|
200,000
|
|
|
200
|
|
|
49,800
|
|
|
-
|
|
|
50,000
|
|
Issuance of stock for services
|
|
at $0.20
|
|
-
|
|
|
-
|
|
700,000
|
|
|
700
|
|
|
139,300
|
|
|
-
|
|
|
140,000
|
|
Non-cash compensation charge
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
29,240
|
|
|
-
|
|
|
29,240
|
|
Beneficial conversion feature on
convertible debt
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
39,600
|
|
|
-
|
|
|
39,600
|
|
Net loss
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(519,345
|
)
|
|
(519,345
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
|
198,000
|
|
|
198
|
|
26,860,326
|
|
|
26,860
|
|
|
8,132,795
|
|
|
(8,881,680
|
)
|
|
(721,827
|
)
|
Issuance of stock for services
|
|
at $0.07
|
|
-
|
|
|
-
|
|
750,000
|
|
|
750
|
|
|
51,250
|
|
|
-
|
|
|
52,000
|
|
Non-cash compensation charge
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
247,478
|
|
|
-
|
|
|
247,478
|
|
Beneficial conversion feature on
convertible debt
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
11,161
|
|
|
-
|
|
|
11,161
|
|
Net loss
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(415,550
|
)
|
|
(415,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2008
|
|
|
|
198,000
|
|
$
|
198
|
|
27,610,326
|
|
$
|
27,610
|
|
$
|
8,442,684
|
|
$
|
(9,297,230
|
)
|
$
|
(826,738
|
)
|
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
1.
|
Nature of Operations and Ability to Continue as a
Going Concern
|
|
|
|
Strategic Internet Investments, Incorporated (the
Company) is in the development stage and is devoting its efforts to
developing real estate projects in the Middle East.
|
|
|
|
These unaudited interim consolidated 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, 2008, the Company had not yet
achieved profitable operations, has accumulated losses of $9,297,230 since
its inception, has a working capital deficiency of $826,739 and expects to
incur further losses in the development of its business, all of which
casts substantial doubt about the Companys ability to continue as a going
concern. The Companys 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, 2008, by issuing equity securities.
|
|
|
|
The accompanying unaudited interim consolidated financial
statements have been prepared by 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, 2007, as filed with the
United States Securities and Exchange Commission.
|
|
|
|
The results of operations for the six months ended June
30, 2008 are not indicative of the results that may be expected for the
full year.
|
|
|
2.
|
Deferred Investment Costs
Note 4
|
|
|
|
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, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
|
|
|
June
30,
|
December 31,
|
|
|
|
2008
|
2007
|
|
|
|
|
|
|
a)
|
Loan payable to a company controlled by a director of the
Company including accrued interest of $3,176 (December 31, 2007: $2,605).
The loan is unsecured, bearing interest at 12% per annum and is repayable
on demand.
|
$ 9,978
|
$ 9,407
|
|
|
|
|
|
|
b)
|
Loans payable to companies controlled by directors of the
Company. The loans are unsecured, non-interest bearing, and repayable upon
demand.
|
38,499
|
19,217
|
|
|
|
|
|
|
c)
|
Loans payable to a company controlled by a director of
the Company including accrued interest of $61,015 (December 31, 2007:
$53,123). The loans are unsecured, bearing interest at 10% per annum, and
repayable upon demand.
|
164,221
|
156,329
|
|
|
|
|
|
|
d)
|
Loans payable to a company controlled by a director of
the Company, including accrued interest payable of $8,986 (December 31,
2007: $14,341), pursuant to Convertible Loan Agreements. The loan is
unsecured, bearing interest at 10% per annum and is repayable on demand.
The lender may at anytime convert the principal sum into units of the
Company. Each unit will consist of one common share plus one common share
purchase warrant. The principal sum of $163,630 may be converted into
2,320,858 units. Conversion of these loans and resulting associated
warrants to equity will be based on the conversion price set at the time
the principal amount was drawn ranging from $0.05 to $0.23. During the
period ended June 30, 2008 an amount of $11,161 (December 31, 2007:
$39,600) was recognized as the intrinsic value of the beneficial
conversion feature of these loans and this amount was included in interest
expense.
|
172,616
|
150,071
|
|
|
|
|
|
|
e)
|
Loan payable to a company controlled by a director of the
Company, including accrued interest of $11,983 (December 31, 2007:
$9,018), pursuant to Convertible Loan Agreements. The loan is unsecured,
bearing interest at 10% per annum and is repayable on demand. The lender
may at anytime convert the principal sum into units of the Company. Each
unit will consist of one common share plus one common share purchase
warrant. The principal sum of $49,700 may be converted into 416,248 units.
Conversion of this loan and resulting associated warrants to equity will
be based on the conversion price set at the time the principal amount was
drawn at $0.12.
|
61,683
|
58,718
|
|
|
|
|
|
|
|
|
$
446,997
|
$
393,742
|
2
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
4.
|
Capital Stock
Notes 3, 5 and 6
|
|
|
|
Capital Stock
|
|
|
|
On June 1, 2008, the Company issued 750,000 common shares
to two consultants for consulting services to be provided over a twelve
month period, valued at $52,000. The Company determined the fair value of
the shares issued using the market price on the share issuance date. At
June 30, 2008, $47,667 is recorded as prepaid.
|
|
|
|
On May 24, 2007, the Company issued a total of 700,000
shares to two consulting firms for investor relations consulting services
to be provided over a twelve month period, valued at $140,000. The Company
determined the fair value of the shares issued using the market price on
the share issuance date. At June 30, 2008, $20,400 is recorded as
prepaid.
|
|
|
|
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
|
|
|
|
Consultants Incentive Bonus
|
|
|
|
Pursuant to a Consulting Agreement, as an incentive
bonus, the Company is committed to issue 100,000 common shares on June 1,
2009, providing the consultant continues to provide services to the
company during the 12 months prior to that date.
|
|
|
|
Stock Option Plan
|
|
|
|
The Companys 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
|
|
|
|
On June 1, 2008, the Company granted 3,825,000 share
purchase options to directors and consultants of the Company entitling
them to acquire 3,825,000 common shares at $0.15 per share, the closing
price of the Companys common stock on the date of the grants. The options
have been granted with a term of 5 years. In conjunction with the issuance
of these new options, those same directors and consultants agreed to the
cancellation of 1,931,000 previously issued share purchase
options.
|
|
|
|
The fair value of each option grant was estimated on the
date of the grant using the Black-Scholes option valuation model. The
Black-Scholes option valuation 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 Companys share
purchase options.
|
3
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
4.
|
Capital Stock
Notes 3, 5 and 6
(contd)
|
|
|
|
Commitments (contd)
|
|
|
|
Stock-based Compensation (contd)
|
|
|
|
The fair value of each option grant was estimated on the
date of the grant using the Black-Scholes option valuation model with the
following assumptions:
|
|
2008
|
2007
|
|
|
|
Expected dividend yield
|
0.0%
|
0.0%
|
Expected volatility
|
171%
|
167%
|
Risk-free Interest Rate
|
3.35%
|
4.68%
|
Expected term in
years
|
5
|
5
|
The expected volatility is calculated
based on the Companys historical share price.
During the period ended June 30, 2008,
the change in share purchase options outstanding are as follows:
|
|
|
Weighted
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
Average
|
|
|
Aggregate
|
|
|
|
|
Exercise
|
|
Remaining
|
|
|
Intrinsic
|
|
|
Shares
|
|
Price
|
|
Contractual Life
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2006
|
1,962,000
|
|
$0.23
|
|
1.76 years
|
|
$
|
392,400
|
|
Granted during the
year
|
125,000
|
|
$0.35
|
|
4.00
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2007
|
2,087,000
|
|
$0.23
|
|
0.96 years
|
|
$
|
-
|
|
Granted during the year
|
3,825,000
|
|
$0.15
|
|
4.92 years
|
|
|
|
|
Forfeited during
the period
|
(2,051,000
|
)
|
$0.23
|
|
0.56
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at June 30, 2008
|
3,861,000
|
|
$0.15
|
|
4.88
years
|
|
$
|
-
|
|
4
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
4.
|
Capital Stock
Notes 3, 5 and 6 (contd)
Commitments (contd) Stock-based Compensation (contd)
|
|
|
|
At June 30, 2008, the Company had share purchase options
outstanding as follows:
|
Number of Options
|
Exercise Price
|
Expiry Date
|
36,000
|
$0.21
|
September 5, 2008
|
3,825,000
|
$0.15
|
June
1, 2013
|
3,861,000
|
|
|
At June 30, 2008 all of the outstanding
share purchase options were exercisable.
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:
|
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.
|
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, 2008. 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.
5
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
4.
|
Capital Stock
Notes 3, 5 and 6
(contd)
|
|
|
|
|
|
Commitments (contd)
|
|
|
|
|
|
Acquisition of Gulf Star World Development W.L.L.
(contd)
|
|
|
|
|
|
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
into escrow 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 to be released from escrow in stages as the dredging contract
progresses. No value was recorded for these shares due to the contingent
nature of their release from escrow. During the year ended December 31,
2006, these shares were cancelled as, although work had commenced on the
Dream Island Project, there has not yet been sufficient progress to
warrant issuance of the shares.
|
|
|
|
|
|
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.
|
|
|
|
|
|
Acquisition of Port Residence Project
|
|
|
|
|
|
The Company entered into a letter of intent dated January
7, 2008, to purchase 100% of the outstanding shares of a Turkish company
(TurkCo) to be formed and, thereby, acquiring a 100% interest in the Port
Residence Project, a real estate development project, in Calkaya, Turkey,
as follows:
|
|
|
|
|
|
a)
|
The Company shall be granted the option to purchase, on a
pro-rata basis, up to 30% of the outstanding shares of TurkCo for
compensation as described below (the Initial Share Purchase Option). The
Company may exercise the share purchase option based upon construction
progress of the Project as follows:
|
|
|
|
|
|
|
i)
|
Upon construction expenditures equal to or greater than
33% of the total budgeted cost, 10% of the outstanding shares of TurkCo
may be purchase by the Company.
|
|
|
|
|
|
|
ii)
|
Upon construction expenditures equal to or greater than
66% of the total budgeted cost, 10% (cumulative 20%) of the outstanding
shares of TurkCo may be purchase by the Company.
|
|
|
|
|
|
|
iii)
|
Upon construction expenditures equal to or greater than
100% of the total budgeted cost, 10% (cumulative 30%) of the outstanding
shares of TurkCo may be purchase by the Company.
|
|
|
|
|
|
b)
|
The shareholders of TurkCo shall grant a secondary option
to the Company to purchase on a pro-rata basis the remaining 70% of the
outstanding shares of TurkCo at the price as described below, (the Second
Share Purchase Option). The Second Share Purchase Option may only be
exercised by the Company upon full exercise of the Initial Share Purchase
Option, unless TurkCo agrees to allow an earlier exercise as requested by
the Company.
|
6
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
4.
|
Capital Stock
Notes 3, 5 and 6
(contd)
|
|
|
|
|
Commitments (contd)
|
|
|
|
|
Acquisition of Port Residence Project
(contd)
|
|
|
|
|
c)
|
Compensation of Initial and Second Share Purchase
Options:
|
|
|
|
|
|
The Company shall have the option to pay the full
exercise price of the Share Purchase Options either in cash, or by issuing
common shares of the Company at the higher value of either, $2.00 per
share or the discounted market price of the Companys share, as quoted on
the OTC:BB Stock Exchange where the Discounted Market Price is defined
by calculating the average previous 10 day closing price of the Company
shares as of the Exercise Date in question and reducing that price by
25%.
|
|
|
|
|
|
The letter of intent is subject to the completion of a
formal agreement.
|
7
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
5.
|
Non-Cash Transactions
|
|
|
|
Investing and financing activities that do not have a
direct impact on cash flows are excluded from the statements 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 Shares
|
|
|
Average Price
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Per
Share
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1995 Consulting fee
|
|
|
-
|
|
|
50,000
|
|
$
|
0.03
|
|
$
|
1,500
|
|
|
1998 Management fee
|
|
|
-
|
|
|
7,000,000
|
|
$
|
0.001
|
|
|
7,000
|
|
|
1998 Consulting fee
|
|
|
-
|
|
|
620,000
|
|
$
|
0.01
|
|
|
6,200
|
|
|
2000 Finders fee
|
|
|
-
|
|
|
50,000
|
|
$
|
0.001
|
|
|
50
|
|
|
2001 Consulting fee
|
|
|
-
|
|
|
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
|
|
$
|
0.65
|
|
|
2,678,418
|
|
|
2006 Finders fee
|
|
|
-
|
|
|
100,000
|
|
$
|
0.40
|
|
|
40,000
|
|
|
2007 Consulting fees
|
|
|
-
|
|
|
700,000
|
|
$
|
0.20
|
|
|
140,000
|
|
|
2008 Consulting
fees
|
|
|
-
|
|
|
750,000
|
|
$
|
0.07
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198,000
|
|
|
20,589,343
|
|
|
|
|
$
|
6,530,725
|
|
These amounts have been excluded from the investing and
financing activities of the statements of cash flows.
8
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
|
(A Development Stage Company)
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
June 30, 2008
|
(Stated in U.S. Dollars)
|
(
Unaudited
)
|
6.
|
Related Party Transactions
Notes 3 and
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 from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 19889
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
(Date of Inception) to
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30, 2008
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting fees
|
$
|
-
|
|
$
|
11,660
|
|
$
|
-
|
|
$
|
29,150
|
|
$
|
64,820
|
|
|
Interest
|
|
20,845
|
|
|
7,565
|
|
|
30,234
|
|
|
14,866
|
|
|
125,827
|
|
|
Management fees
|
|
46,125
|
|
|
46,350
|
|
|
92,250
|
|
|
92,700
|
|
|
481,637
|
|
|
Office and general
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,944
|
|
|
Rent
|
|
6,000
|
|
|
5,280
|
|
|
12,000
|
|
|
10,560
|
|
|
124,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
72,970
|
|
$
|
70,855
|
|
$
|
134,484
|
|
$
|
147,276
|
|
$
|
823,700
|
|
|
At June 30, 2008, accounts payable includes $389,397
(December 31, 2007: $288,276) 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, 2008, accounts payable also includes $15,527
(December 31, 2007: $15,527) expenses for operating costs paid on behalf
of the Company by companies with directors in common.
|
|
|
|
The Company entered into two Management Services
Agreements dated January 1, 2007 with a director and a company controlled
by a director of the Company. Under the terms of these agreements they
will each be paid $7,500 per month, plus taxes where applicable, for
management services. These agreements are for a 24-month period expiring
on December 31, 2008. If the Company is unable to pay for the services,
the consultant may elect to settle any portion of outstanding amounts plus
interest with units of the Company. Each unit shall consist of one common
share and one share purchase warrant entitling the holder to purchase one
additional common share of the Company. The price for the units and
warrants will be determined based on a discount to the 10 day average
market price ranging from 50% to 60%, but no less than $0.05 per
share.
|
|
|
|
The Company also entered into a Consulting Services
Agreement with a company controlled by a director of the Company. Under
the terms of this agreement, the Company will pay $5,500 per month, plus
taxes where applicable, for consulting services. This agreement was
suspended in May 2007.
|
|
|
7.
|
Comparative Figures
|
|
|
|
Certain comparative figures for the period ended June 30,
2007, have been reclassified to conform to the financial statement
presentation adopted for the period ended June 30,
2008.
|
9
2.
|
Managements Discussion and Analysis of Financial
Condition and Results of Operations
|
|
|
|
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.
|
|
|
|
Plan of Operation
|
|
|
|
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.
|
|
|
|
In addition the Company entered into a Letter of Intent
to potentially acquire by option up to a 100% indirect interest in the
Port Residence Project is a real estate development project by purchasing
the outstanding shares of a Turkish company. The Renaissance Residence
Project is a real estate development project that will be located on a
16.5 acre parcel of land near Antalya, Turkey.
|
|
|
|
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. 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 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
Residence 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 years 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
$9,297,230 since inception and at June 30, 2008 has a working capital deficiency
of $826,739. 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 Company's plan during the next
quarter and for the balance of 2008 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 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.
3.
|
Quantitative and Qualitative Disclosures About Market
Risk
|
|
|
|
The Company has no market risk sensitive
instruments.
|
|
|
4.
|
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.
|
Unregistered Sales of Equity 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 lenders 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 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 lenders 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 June 30, 2008, the Star Leisure
loan principal was $49,700 and had accrued interest of $11,983. 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 June 30,
2008. This transaction is with an offshore non-U.S. person; accordingly, these
securities are exempt from registration pursuant to Regulation S.
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 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 June 30, 2008, the CMB loan principal was
$163,630 and had accrued interest of $8,986. The loan principal is convertible
into 2,320,858 units. Conversion of this loan and associated warrants to equity
will be at a price ranging from $0.05 to $0.23. CMB has not converted any part
of the principal sums advanced or accrued interest into units as of June 30,
2008. 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 finders 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
with a market 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.
In June 2008 the Company entered into
two Consulting Agreements for consulting services for a period of 12 months.
Pursuant to these agreements, the Company issued 750,000 common shares with a
market price of $0.07 per share, for a total deemed consideration of $52,000.
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 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
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
|
Strategic Internet Investments,
Incorporated
|
|
|
|
|
|
|
|
|
Date:
|
July
29, 2008
|
|
/s/
Ralph Shearing
|
|
|
|
Ralph Shearing, CEO, Director
|
|
|
|
|
|
|
|
|
Date:
|
July
29, 2008
|
|
/s/
Abbas Salih
|
|
|
|
Abbas Salih, CFO, Director
|
Grafico Azioni Strategic Internet Inves... (CE) (USOTC:SIII)
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