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 March 31, 2013

Commission File Number: 033-28188

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware	84-1116458
State of incorporation	IRS Employer Identification

24 First Avenue East, STE C
P.O. Box 918
Kalispell, Montana 59903
Address of principal executive offices

406-552-1170
Registrant’s telephone number

Indicate by 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  [X]   No  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [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  [  ]

Common shares outstanding as of May 9, 2013: 35,159,391

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Part I – Financial Information

Forward Looking Statements.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These risks include, by way of example and not in limitation:

• results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future real estate development results will not be consistent with our expectations;
• real estate development risks, including risks related to accidents, equipment breakdowns, labour disputes or other unanticipated difficulties or interruptions in development construction;
• the potential for delays in development activities or the completion of feasibility studies;
• risks related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses;
• risks related to commodity price fluctuations;
• the uncertainty of profitability based upon our history of losses;
• risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned development projects;
• risks related to environmental regulation and liability;
• risks that the amounts reserved or allocated for environmental compliance, reclamation, control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
• risks related to tax assessments;
• political and regulatory risks associated with real estate development; and
• other risks and uncertainties related to our prospects, properties and business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

The Company intends that such forward-looking statements be subject to the Safe Harbors for such statements.  Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock. As used in this report, the terms “we”, “us”, “our”, the “Company” and “Strategic” mean Strategic Internet Investments, Incorporated, unless otherwise indicated.

---

 

1. Financial Statements

STRATEGIC INTERNET INVESTMENTS, INCORPORATED

(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS

March 31, 2013

(Stated in U.S. Dollars)

(Unaudited)

---

 

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

		March 31, 2013			December 31, 2012
ASSETS
Current
Cash	$	546		$	1,937
	$	546		$	1,937
LIABILITIES
Current
Accounts payable – Note 5	$	182,084		$	577,913
Loans payable – Note 2		1,080,657			1,018,945
TOTAL LIABILITIES		1,262,741			1,596,858
Class A Convertible Preferred stock, $0.001 par value
10,000,000 authorized, 198,000 outstanding – Note 3		792,000			792,000
CAPITAL DEFICIT
Capital Stock – Notes 2. 3, and 5
Class B Preferred stock, $0.001 par value
10,000,000 authorized, none outstanding
Common stock, $0.001 par value
100,000,000 authorized
33,959,391 issued (2012: 27,610,326 issued)		33,958			27,610
Stock to be issued – Note 3		19,680			63,250
Additional paid-in capital		10,248,244			8,159,402
Stock issued for services not yet rendered – Note 3		(181,500	)		-
Deficit accumulated during the development stage		(12,174,577	)		(10,637,183	)
		(2,054,195	)		(2,386,921	)
	$	546		$	1,937

Nature of Operations and Ability to Continue as a Going Concern – Note 1
Commitments – Notes 2

---

 

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

		Three months ended March 31,						Cumulative from February 28, 1989 (Date of Inception) to  March 31,
		2013			2012			2013
General and Administrative Expenses
Accounting and audit fees	$	1,367		$	25,320		$	537,783
Amortization		-			-			3,616
Communications		1,340			215			109,419
Consulting fees – Note 4 and 5		103,530			-			3,758,796
Interest – Notes 2 and 5		17,303			15,836			653,184
Investor relations		-			-			91,385
Legal fees		50			-			170,266
Management fees – Note 4 and 5		45,650			-			815,383
Office and general – Note 5		256			48			145,858
Regulatory fees		1,914			5,828			68,287
Rent – Note 5		-			-			135,615
Transfer agent fees		680			375			49,688
Travel		-			-			122,770
Loss on disposal of equipment		-			-			1,481
Write-down of advances to related party		-			-			606,337
Operating loss		(172,090	)		(47,622	)		(7,269,868	)
Unauthorized distribution		-			-			(69,116	)
Termination fee		-			-			(792,000	)
Loss on foreign exchange		(547	)		(9,023	)		(40,441	)
Loss on settlement of payables – Note 3		(1,364,757	)		-			(1,339,524	)
Write-down of deferred costs		-			-			(34,210	)
Net loss for the period	$	(1,537,394	)	$	(56,645	)	$	(9,535,159	)
Basic and diluted loss per share	$	(0.05	)	$	(0.00	)
Weighted average common shares outstanding		30,502,678			27,610,326

---

 

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

		Three months ended March 31,						Cumulative from February 28, 1989 (Date of Inception) to March 31,
		2013			2012			2013
Operating Activities
Net loss for the period	$	(1,537,394	)	$	(56,645	)	$	(9,535,159	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization		-			-			3,616
Beneficial conversion feature on convertible debt		-			-			239,662
Communications		-			-			28,000
Consulting fees		103,530			-			2,626,934
Loss on settlement of payables		1,364,757			-			1,339,524
Interest accrued on loans		17,303			15,836			289,844
Legal fees		-			-			25,000
Loss on disposal of equipment		-			-			1,481
Management fees		34,400			-			59,800
Stock-based compensation		-			-			1,129,871
Termination fees		-			-			792,000
Write-down of deferred costs		-			-			34,210
Write-down of advances to related party		-			-			606,337
Changes in non-cash item:
Accounts payable		(28,395	)		(8,053	)		687,465
Net cash used in operating activities		(45,800	)		(48,862	)		(1,671,416	)
Investing Activities
Organization costs		-			-			(750	)
Acquisition of equipment		-			-			(4,347	)
Deferred costs		-			-			(34,210	)
Advances to related party		-			-			(606,337	)
Net cash used in investing activities		-			-			(645,644	)
Financing Activities
Loans payable		44,409			50,484			1,144,277
Due to related parties		-			-			15,526
Proceeds from issuance of common stock		-			-			1,162,631
Payment of offering costs		-			-			(30,270	)
Additional paid-in capital		-			-			25,442
Net cash provided by financing activities		44,409			50,484			2,317,606
Increase (decrease) in cash during the period		(1,391	)		1,622			546
Cash, beginning of the period		1,937			161			-
Cash, end of the period	$	546		$	1,783		$	546
Supplementary disclosure of cash flows:
Cash paid for Interest	$	-		$	-		$	93,859

Non-cash Transactions – Note 4

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Shares			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			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			-			(87,575	)		(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	)
Balance, December 31, 1995			116,695			116			-			108,956			-			(110,500	)		(1,428	)
Net loss			-			-			-			-			-			(9,068	)		(9,068	)

…Cont’d

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Stock			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			Stage			Total
Balance December 31, 1996			116,695		$	116		$	-		$	108,956		$	-		$	(119,568	)	$	(10,496	)
Issuance of stock for cash	- at $0.011		2,000,000			2,000			-			19,300			-			-			21,300
Contributed capital			-			-			-			600			-			-			600
Net loss			-			-			-			-			-			(22,261	)		(22,261	)
Balance, December 31, 1997			2,116,695			2,116			-			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
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

…Cont’d

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Stock			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			Stage			Total
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 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	)
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	)

…Cont’d

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Stock			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			Stage			Total
Balance, December 31, 2003			17,305,596		$	17,304		$	-		$	3,110,855		$	-		$	(4,286,668	)	$	(1,158,509	)
Non-cash compensation charge			-			-			-			161,450			-			-			161,450
Issue of stock for cash pursuant to the exercise of 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 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	)
Balance, December 31, 2004			18,972,675			18,971			-			3,557,111			-			(4,803,992	)		(1,227,910	)
Non-cash compensation charge			-			-			-			25,700			-			-			25,700
Issue of stock for cash pursuant to the exercise of 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	)

…Cont’d

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Stock			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			Stage			Total
Balance, December 31, 2005			25,660,326		$	25,660		$	-		$	6,928,553		$	-		$	(7,960,680	)	$	(1,006,467	)
Issue of stock for cash pursuant to a private placement	- at $0.40		200,000			200			-			79,800			-			-			80,000
Issue of stock for finder’s 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	)
Balance, December 31, 2006			25,960,326			25,960			-			7,083,053			-			(8,362,335	)		(1,253,322	)
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			26,860,326			26,860			-			7,340,993			-			(8,881,680	)		(1,513,827	)
Issuance of stock for services	- at $0.07		750,000			750			-			51,250			-			-			52,000
Non-cash compensation charge			-			-			-			251,078			-			-			251,078
Beneficial conversion feature on convertible debt			-			-			-			122,262			-			-			122,262
Net loss			-			-			-			-			-			(723,811	)		(723,811	)
Balance, December 31, 2008			27,610,326			27,610			-			7,765,583			-			(9,605,491	)		(1,812,298	)
Net loss			-			-			-			-			-			(154,805	)		(154,805	)
Balance, December 31, 2009			27,610,326			27,610			-			7,765,583			-			(9,760,296	)		(1,967,103	)
Net loss			-			-			-			-			-			(134,729	)		(134,729	)

…Cont’d

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF CHANGES IN CAPITAL DEFICIT
For the period from February 28, 1989 (Date of Inception) to March 31, 2013
(Stated in U.S. Dollars)
(Unaudited)

															Stock			Deficit
									Common						Issued for			Accumulated
									Stock			Additional			Services			During the
			Common Stock						to be			Paid-In			not yet			Development
			Stock			Par Value			Issued			Capital			Rendered			Stage			Total
Balance, December 31, 2008			27,610,326		$	27,610		$	-		$	7,765,583		$	-		$	(9,605,491	)	$	(1,812,298	)
Net loss			-			-			-			-			-			(154,805	)		(154,805	)
Balance, December 31, 2009			27,610,326			27,610			-			7,765,583			-			(9,760,296	)		(1,967,103	)
Net loss			-			-			-			-			-			(134,729	)		(134,729	)
Balance, December 31, 2010			27,610,326			27,610			-			7,765,583			-			(9,895,025	)		(2,101,832	)
Net loss			-			-			-			-			-			(133,629	)		(133,629	)
Balance, December 31, 2011			27,610,326			27,610			-			7,765,583			-			(10,028,654	)		(2,235,461	)
Stock to be issued for consulting and management services			-			-			63,250			-			-			-			63,250
Non-cash compensation charge			-			-			-			393,819			-			-			393,819
Net loss			-			-			-			-			-			(608,529	)		(608,529	)
Balance, December 31, 2012			27,610,326			27,610			63,250			8,159,402			-			(10,637,183	)		(2,386,921	)
Issuance of stock for debts	- at $0.33		5,249,065			5,248			-			1,726,942			-			-			1,732,190
Stock to be issued for consulting and management services			-			-			19,680			-			-			-			19,680
Issuance of stock for consulting and management services	- at $0.33		1,100,000			1,100			(63,250	)		361,900			(181,500	)		-			118,250
Net loss			-			-			-			-			-			(1,537,394	)		(1,537,394	)
Balance, March 31, 2013			33,959,391		$	33,958		$	19,680		$	10,248,244		$	(181,500	)	$	(12,174,577	)	$	(2,054,195	)

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

1.	Nature of Operations and Ability to Continue as a Going Concern

The Company is in the development stage and is devoting its efforts to exploring new investment opportunities, including real estate development projects.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. 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 March 31, 2013, the Company had not yet achieved profitable operations, has an accumulated deficit of $12,174,577 since its inception, has a working capital deficiency of $1,262,195 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. Management anticipates that it requires approximately $85,000 over the twelve months ended March 31, 2014 to continue operations as well as the Company estimates it will accrue interest expenses of $73,000 over the next 12 months on loans due to related parties. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,262,741. To the extent that cash needs are not achieved from operating cash flow and existing cash on hand, the Company will be required to raise necessary cash through shareholder loans, equity issuances and/or other debt financing. Amounts raised will be used to continue the development of the Company's investment activities, and for other working capital purposes.

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available. The Company has historically satisfied its capital needs primarily by issuing equity securities. Management plans to continue to provide for its capital needs during the twelve months ended March 31, 2014, by issuing equity securities and/or related party advances.

The accompanying unaudited interim 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, 2012, included in the Company’s 10-K Annual Report as filed with the United States Securities and Exchange Commission.

The results of operations for the period ended March 31, 2013 are not indicative of the results that may be expected for the full year.

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

2.	Loans Payable

				March 31,			December 31,
				2013			2012
	a)	Loan payable to a company controlled by a director of the Company including accrued interest of $10,702 (December 31, 2012 - $10,198).  The loan is unsecured, bearing interest at 12% per annum and is repayable on demand.	$	17,503		$	17,000
	b)	Loans payable to companies controlled by directors of the Company.  The loans are unsecured, non-interest bearing, and repayable upon demand.		365,035			320,625
	c)	Loan payable to a company controlled by a director of the Company, including accrued interest payable of $112,496 (December 31, 2012 - $105,848), pursuant to a Convertible Loan Agreement.  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. Each warrant is exercisable for a period of 2 years from the date of conversion at a price ranging from $0.05 to $0.23. The principal sum of $163,766 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.  Upon conversion of this loan, the $73,685 fair value of the warrants will be recognized as an interest expense and credited to additional paid-in capital.		276,262			269,614
	d)	Loan payable to a company controlled by a director of the Company, including accrued interest of $166,648 (December 31, 2012 - $156,497), pursuant to a Convertible Loan Agreement.  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.  Each warrant is exercisable for a period of 2 years from the date of conversion at a price ranging from $0.05 to $0.12. The principal sum of $255,209 may be converted into 4,526,436 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 ranging from $0.05 to $0.12. Upon conversion of this loan, the $113,338 fair value of the warrants will be recognized as an interest expense and credited to additional paid-in capital.		421,857			411,706
			$	1,080,657		$	1,018,945

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

3.	Capital Stock

Class A Convertible Preferred Shares

The Class A convertible preferred shares issued in 2003 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.

The aggregate liquidation value of the Class A convertible preferred shares is $792,000. A merger or consolidation of the Company that results in the Company’s stockholders immediately prior to the transaction not holding at least 50% of the voting power of the surviving entity shall be deemed a liquidation event.

Shares issued

2013

During the period ended March 31, 2013, the Company issued common shares as follows:

a)

On August 21, 2012 the Company entered into a Management Services Agreement with a director (the “Director”) and an arm’s length consultant (the “Consultant”), for a term of 12 months commencing on October 1, 2012.  As partial remuneration for the management and consulting services the Company agreed to issue 320,000 restricted common shares to the Director, and 480,000 restricted common shares to the Consultant. For services received in the year ended December 31, 2012, the Company recognized share based compensation of $46,000. The shares to be issued were valued upon the quoted market price at December 31, 2012. These shares were issued February 19, 2013 at $0.33 per share based on the quoted market price on that date.  For services received in the period ended March 31, 2013, the Company recognized share based compensation of $86,000. For the remaining 6 months of services to be rendered under this agreement, the Company has recorded an amount of $132,000 as contra equity to recognize the services receivable as the services are received.

b)

On August 21, 2012 the Company entered into a Consulting Services Agreement with an arm’s length consultant (the “Consultant”), for a term of 12 months commencing on October 1, 2012. As partial remuneration for the consulting services the Company agreed to issue 300,000 restricted common shares to the Consultant. For services received in the year ended December 31, 2012, the Company recognized share based compensation of $17,250. The shares to be issued were valued upon the quoted market price at December 31, 2012. These shares were issued February 19, 2013 at $0.33 per share based on the quoted market price on that date. For services received in the period ended March 31, 2013, the Company recognized share based compensation of $32,250.  For the remaining 6 months of services to be rendered under this agreement, the Company has recorded an amount of $49,500 as contra equity to recognize the services receivable as the services are received.

c)

On February 19, 2013 the Company issued a total of 5,249,065 restricted common shares at $0.33 per share as settlement of accounts payable due to a director of the Company, a company controlled by a director of the Company, in respect of unpaid management and consulting fee debts totaling $350,215, plus a $17,220 debt owed to an arm’s length creditor.  Of this accounts payable settled, $321,057 was  pursuant to the two Management Services Agreements. as settlement of accounts payable totaling $367,433 resulting in a loss on settlement of payables in the amount of $1,364,757. The accounts payable settlement included: $165,019 due to a director of the Company for previous year’s management fees; $185,194 due to a company controlled by a director of the Company for previous year’s management fees, consulting fees, and office expenses, plus a $17,220 debt owed to an arm’s length creditor.

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

3.	Capital Stock – (cont’d)

Shares issued – (cont’d)

2012

No shares were issued during the period ended March 31, 2012.

Shares to be issued

On March 15, 2013 the Company entered into two Consulting Services Agreements with two arm’s length consultants (the “Consultants”), for a term of 12 months commencing on March 15, 2013. As remuneration for the consulting services the Company agreed to issue 600,000 restricted common shares to each Consultant. For services received in the period ended March 31, 2013, the Company has recognized share based compensation of $19,680. The shares to be issued were valued upon the quoted market price at March 31, 2013 and subsequent to the period end the shares are to be re-measured until their issuance date.

Stock Option Plan

The Company’s board of directors approved a stock option plan. Under the plan directors, employees and consultants may be granted options to purchase common stock of the Company at a price of not less than 100% of the fair market value of the stock. The total number of options granted must not exceed 15% of the outstanding common stock of the Company. The plan expires on July 1, 2017.

Stock-based Compensation

The fair value of each option grant is 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 Company’s share purchase options.

On October 15, 2012, the Company granted 4,140,000 share purchase options to directors, employees, and consultants of the Company at $0.10 per share, which was $0.13 lower than the Company’s common stock price on the date of grant. All options have been granted with a term of 5 years, expiring on October 15, 2017.

Of these 4,140,000 share purchase options granted in fiscal 2012, 2,940,000 share purchase options were subsequently cancelled in November 2012. The cancelled options were originally issued to one arm’s length consultant and two directors. The Company re-issued the 2,940,000 options to the same parties at $0.12 per share on January 16, 2013, being the closing price of the Company’s common stock on that date, with a term of 5 years expiring on January 16, 2018. In accordance with U.S.A. generally accepted accounting principles these re-issued options were treated as a change in the expiry date and exercise price of the original options granted on October 15, 2012. The modification of these options did not result in any additional charges to compensation expenses.

During the three month periods ended March 31, 2013, expect as noted above, the Company did not grant any stock options to directors, employees, or consultants. No options were granted in the period ended March 31, 2012.

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

3.	Capital Stock – (cont’d)

Stock-based Compensation – (cont’d)

During the period ended March 31, 2013, the change in share purchase options outstanding are as follows:

		Options		Weighted Average Exercise Price			Aggregate Intrinsic Value
	Options outstanding at December 31, 2011	3,125,000	$	0.15		$	-
	Granted during the year	4,140,000	$	0.10		$	-
	Cancelled during the year	(6,065,000)	$	0.15		$	-
	Options outstanding at December 31, 2012	1,200,000	$	0.10		$	-
	Granted during the period	2,940,000	$	0.12		$	-
	Options outstanding at March 31, 2013	4,140,000	$	0.11		$	1,242,000

As at March 31, 2013, the Company had share purchase options outstanding as follows:

	Number of Options	Exercise Price	Expiry Date
	1,200,000	$0.10	October 15, 2017
	2,940,000	$0.12	January 16, 2018
	4,140,000

As at March 31, 2013 and December 31, 2012 all of the outstanding share purchase options were exercisable.

---

 

STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

4.	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:

	Year			Number of Preferred Shares	Number of Common Shares	Weighted Average Price 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 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 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
	2013		Debt settlement	-	5,249,065	$0.33	1,732,191
	2013		Consulting fees	-	780,000	$0.33	257,400
	2013		Management fees	-	320,000	$0.33	105,600
				198,000	26,938,408		$8,625,916

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

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STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2013
 (Stated in U.S. Dollars)
(Unaudited)

5.	Related Party Transactions

The Company was charged the following by stockholders, directors, by companies controlled by directors and/or stockholders of the Company, and by companies with directors in common:

			Three months ended March 31,						Cumulative from February 28, 1989 (Date of Inception) to March 31,
			2013			2012			2013
	Consulting fees	$	-		$	-		$	341,371
	Interest		17,303			15,836			505,419
	Management fees		45,650			-			730,179
	Office and general		-			-			26,944
	Rent		-			-			130,232
		$	62,953		$	15,836		$	1,734,145

At March 31, 2013, accounts payable includes $112,058 (December 31, 2012 - $461,755) due to directors of the Company and companies controlled by directors of the Company in respect of unpaid management fees, consulting fees and expenses incurred on behalf of the Company.

At March 31, 2013, accounts payable also includes $15,527 (December 31, 2012 - $15,527) of expenses for operating costs paid on behalf of the Company by companies with directors in common.

On August 21, 2012 the Company entered into a Management Services Agreement with a director (the “Director”) and an arm’s length consultant (the “Consultant”), for a term of 12 months commencing on October 1, 2012. As partial remuneration for the management services the Company agreed to issue 320,000 restricted common shares to the Director. The Company also agreed to pay the Director $20 per hour for time spent on the affairs of the Company, pursuant to which during the period ended March 31, 2013, the Company has paid or accrued management fees of $1,100 (2012 – $Nil). For services received in December 31, 2012, the Company also recognized share based compensation of $18,400. As of December 31, 2012 the shares had not been issued. These shares were issued February 19, 2013 at $0.33 per share based on the quoted market price on that date. During the period ended March 31, 2013, the Company recognized management fees expense of $34,400 (March 31, 2012 - $Nil) with respect to the shares issued. There remains 6 months of services to be rendered under this agreement; accordingly the Company has recorded a $52,800 charge to Capital Deficit. In addition, the Company agreed to grant the Director 320,000 share purchase options, and recognized compensation expense of $Nil (December 31, 2012 - $73,184).

During the period ended March 31, 2013, the Company paid or accrued management fees of $10,150 (March 31, 2012 - $Nil) to a director and officer of the Company.

On February 19, 2013 the Company issued a total of 5,003,065 restricted common shares at $0.33 per share as settlement of accounts payable totaling $350,215 resulting in a loss on settlement of these related party payables in the amount of $1,300,797. The accounts payable settlement included: $165,019 due to a director of the Company for 2007 and 2008 management fees; and $185,194 due to a company controlled by a director of the Company for 2007 and 2008 management fees, consulting fees, and office expenses.

---

 

2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited interim financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report.  

Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles (“GAAP”).

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 has been devoting its business efforts to real estate development projects.  The Company will continue to explore new investment opportunities, including real estate development projects, during its 2013 fiscal year.

On August 20, 2012, Strategic Internet Investments, Incorporated (“SIII”) signed a Letter of Intent (the "LOI") with G7 Entertainment Limited (“G7”), a private company controlled by Mr. Abbas Salih, a director and officer of SIII. The LOI sets out the terms and conditions that will allow SIII to acquire certain real estate assets located in the United Kingdom (“UK”). The assets are held under contractual rights by G7 as outlined within various Joint Venture Agreements (the "JV Agreements ") between G7 and four UK corporations. The JV Agreements outline the terms and conditions of the formation of a joint venture between G7 and the respective real estate owners whereby G7 intends to facilitate the refinancing of existing mortgages in exchange for a 60% interest in each Joint Venture, which Joint Venture will hold title to the real estate assets.

The LOI outlines the terms and conditions whereby SIII can purchase a 100% interest in the assets at a discounted price (the “SIII Purchase Price”) to the Fair Market Price. The Fair Market Price is to be determined by a mutually acceptable, independent professional real estate evaluator experienced in evaluating the type of assets to be purchased by SIII. The LOI states that the SIII Purchase Price will be equal to the fair market price, as outlined above, minus a discount that will be calculated to be 25% of the total equity contained within the assets (equity Fair Market Price less outstanding mortgage(s) and/or other existing debt of the of the Assets).

The LOI allows for ongoing due diligence which is in process and the completion of a formal purchase agreement between the respective parties.

SIII intends to fund the acquisition of the assets by securing funding by way of equity and or debt financing and cannot predict with any certainty that such funding efforts will be successful and therefore provides a cautionary statement that the success of the contemplated acquisition cannot be assured.

On February 20, 2013, SIII signed a Memorandum of Understanding (the "MOU") with the following parties: Gary Keeley, Anjum Ahmed, Kevin O’Brien, Milton Thompson and G7 Entertainment Limited (“G7”), a non-arms length private British Columbia Corporation majority controlled by Mr. Abbas Salih, a director and officer of SIII. The MOU sets out the terms and conditions that will allow SIII to acquire up to a majority 80% interest in a private company that will be formed as Special Purpose Vehicle (the “SPV”), in return for funding up to USD $4 million of the SPV’s initial business development.

The SPV will acquire the exclusive worldwide intellectual property (IP) licensing rights, permitting it to design, manufacture (outsourced), market and license out secure RFiD (Radio Frequency Identification) patented security authorization systems developed and patented by Mr. Milton Thompson.

SIII intends to fund the SPV’s business development by securing funding by way of equity and or debt financing and cannot predict with any certainty whether such funding efforts will be successful, and therefore provides a cautionary statement that the success of the contemplated acquisition cannot be assured.

---

 

Our estimated cash expenses over the next twelve months are as follows:

Accounting, audit, and legal fees	$	66,000
General and administrative expenses		4,000
Regulatory and transfer agent fees		15,000
	$	85,000

The Company also estimates it will accrue interest expenses of $73,000 over the next 12 months on loans due to related parties. It is not anticipated the interest will be paid in cash during 2013, and therefore interest has been excluded from the above list of cash expenses.

To date we have funded our operations primarily with loans from shareholders and issue new equity. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,262,741. To the extent that cash needs are not achieved from operating cash flow and existing cash on hand, the Company will be required to raise necessary cash through shareholder loans, equity issuances and/or other debt financing. Amounts raised will be used to continue the development of the Company's investment activities, and for other working capital purposes, which may be dilutive to existing shareholders. The Company currently has no agreement in place to raise funds for current liabilities and no guarantee can be given that we will be able to raise funds for this purpose on terms acceptable to the company.  Failure to raise funds for general, administrative and corporate expenses and current liabilities could result in a severe curtailment of the Company’s operations.

Any advance in the real estate development strategy set-out herein will require additional funds.  These funds may be raised through equity financing, debt financing or other sources which may result in further dilution of the shareholders percentage ownership in the company. See “Future Financing” below.

Results of Operations

During the quarter ended March 31, 2013, the Company incurred general and administrative expenses totaling $172,090 compared to $47,622 during the same period of the previous year.

The volume of transactions and business activities has changed little compared to the prior year. The significant changes in our general and administrative expenses for the three month period ended March 31, 2013 when compared to the three month period ended March 31, 2012 was primarily due to:

a)

The 2013 accounting and audit fees is $1,367 compared to $25,320 in the 2012 period. The $23,953 decrease in accounting and audit fees from 2013 to 2012 is mainly due to a timing difference in the dates the auditors performed their annual audit of the Company’s financial statements.

b)

Consulting fees relate to two consultants engaged in October 2012 to provide corporate development services and two consultants engaged in March 2013 to provide public relations and promotional services. These consultants were remunerated, in whole or in part by, the issuance of restricted common shares and stock options. The consulting fees for the period ended March 31, 2013 were $103,530; there were no consulting agreements in the comparative 2012 fiscal period and no fees incurred.

c)

Management fees relate to a consultant engaged in October 2012 to provide general management and administrative services. This consultant was remunerated by the issuance of restricted common shares and stock options, plus a fee of $20 per hour for time spent directly managing the Company’s affairs. In addition, in January 2013, the Company agreed to pay a director/officer a monthly management stipend. The management fees for the period ended March 31, 2013 were $45,650; there were no management agreements in the comparative 2012 fiscal period and no fees incurred.

d)

Interest on loans increased by $1,467, this is attributed to the compounding effect of the quarterly interest calculation as the Company has not been making any payments on these debts.

e)

Regulatory fees relate to fees charged by EDGAR/SEDAR regulatory filing service providers for making submissions to the regulatory authorities, as well as fees paid to the regulators themselves. In the 2013 Q1 period there was a $3,914 decrease in these fees primarily due to a timing difference on the payment for the filing of the Company’s 2013 10-K report compared to the 2012 10-K report.

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Funding for operating and investing activities was provided by both non-interest and interest bearing advances and loans from related parties, including directors of the Company, and companies controlled by these directors.

As of March 31, 2013, the Company had total current assets of $546 and total liabilities of $1,262,741. The Company had cash of $546 and a working capital deficiency of $1,262.195 as of March 31, 2013 compared to cash on hand of $1,937 and a working capital deficiency of $1,594,921, for the year ended December 31, 2012.  We anticipate that we will incur approximately $85,000 for cash operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $1,262,741. To the extent that cash needs are not achieved from operating cash flow and existing cash on hand, the Company will be required to raise necessary cash through shareholder loans, equity issuances and/or other debt financing. Amounts raised will be used to continue the development of the Company's investment activities, and for other working capital purposes. Accordingly, we will need to obtain additional financing in order to continue our planned business activities.

Cash used in operating activities for the period ended March 31, 2013 was $45,800 as compared to cash used by operating activities for the same period in 2012 of $48,862.  The decrease in cash used in operating activities was primarily due to decreases in regulatory fees.

The Company has the following loans outstanding as of March 31, 2013:

A $17,503 loan payable to a company controlled by a director of the Company including accrued interest of $10,702 (December 31, 2012 - $17,000).  The loan is unsecured, bearing interest at 12% per annum and is repayable on demand.

A $365,035 loans payable to companies controlled by directors of the Company. These loans are unsecured, non-interest bearing, and repayable upon demand.

A $276,262 loan payable to a company controlled by a director of the Company, including accrued interest payable of $112,486 (December 31, 2012 - $105,848), pursuant to a Convertible Loan Agreement.  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 $163,766 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.  Upon conversion of this loan, warrants with a fair value of $73,685 will be recognized as an interest expense and credited to additional paid-in capital.

A $421,857 loan payable to a company controlled by a director of the Company, including accrued interest of $166,648 (December 31, 2012 - $156,497), pursuant to a Convertible Loan Agreement.  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 $255,209 may be converted into 4,526,436 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 ranging from $0.05 to $0.12. Upon conversion of this loan, warrants with a fair value of $113,338 will be recognized as an interest expense and credited to additional paid-in capital.

Going Concern

The unaudited financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any cash dividends and is unlikely to pay cash dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from related party advances, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of March 31, 2013, we had cash of $546 and we estimate that we will require approximately $85,000 to fund our business operations over the next twelve months.  In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,262,741. To the extent that cash needs are not achieved from operating cash flow and existing cash on hand, the Company will be required to raise necessary cash through shareholder loans, equity issuances and/or other debt financing. Amounts raised will be used to continue the development of the Company's investment activities, and for other working capital purposes. 

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Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the Note 1 of our March 31, 2013 unaudited financial statements. The financial statements do not include any adjustments that might result from the outcome of that uncertainty. The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.

Future Financings

As of March 31, 2013, we had cash of $546 and we estimate that we will require approximately $85,000 to fund our business operations over the next twelve months. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $1,262,741. Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations.  We anticipate continuing to rely on equity sales of our common shares or shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

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

As required by Rule 13(a)-15 under the Exchange Act, in connection with this quarterly report on Form 10-Q, under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated our disclosure controls and procedures as of March 31, 2013, our disclosure controls and procedures were ineffective. As of the date of this filing, we are still in the process of remediating such material weaknesses in our internal controls and procedures. Additionally, we are currently inactive as we seek new business opportunities.

It should be noted that while our management believes our disclosure controls and procedures provide a reasonable level of assurance, they do not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the 

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inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

There were no changes in our internal control over financial reporting during the period ended March 31, 2013 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – Other Information

1.     Legal Proceedings

On January 24, 2013,  a vendor filed a claim against the Company for unpaid filing services invoices in the amount of $5,124.00, plus court costs of $326.00. The Company disputes the charges by the vendor on two of the invoices. The full amount of all the unpaid invoices are included in accounts payable at March 31, 2013.

We know of no other material, active, or pending legal proceeding against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets. There are no proceedings in which any of our Company’s directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company’s interest.

1.A Risk Factors

Not applicable

2.     Unregistered Sales of Equity Securities

Sales of Securities Without Registration Under the Securities Act of 1933

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. On August 31, 2008 the Company entered into agreements to transfer previous advances and accrued interest to convertible loans under the Convertible Loan Facility Agreement. At March 31, 2013, the Star Leisure loan principal was $255,209. The loan principal is convertible into 4,526,436 units at conversion price ranging from $0.05 to $0.12 as set at the time the principal was borrowed.  Star Leisure has not converted any part of the principal sums advanced into units as of March 31, 2013. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

On May 5, 2006 the Company entered into a Convertible Loan Facility Agreement with CMB Investments Ltd. (“CMB”), a company controlled by a Director 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 March 31, 2013, the CMB loan principal was $163,766. 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 into units as of March 31, 2013. This transaction is with an offshore non-U.S. person; accordingly, these securities are exempt from registration pursuant to Regulation S.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during the period ended March 31, 2013.

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3.     Defaults Upon Senior Securities

          – None

4.     Submission of Matters to a Vote of Security Holders

          – None

5.     Other Information

          – None

6.     Exhibits

 

Table of Exhibit Items	Description	Exhibit
601-3(i)	Articles of Incorporation	Note 1
601-(3)(ii)	Bylaws	Note 1
601-(3)(iii)	Certificate of Amendment	Note 1
601-(10)	Stock Award Plan	Note 2
601-(31)	Rule 13a-14(a)/15d-14(a) Certifications	Exhibit 31.1
601-(32)	Section 1350 Certifications	Exhibit 32.1
Note 1:	Incorporated by reference to Form 10-KSB Annual Report for the year ending December 31, 2001
Note 2:	Incorporated by reference to Form 10-KSB Annual Report for the year ending December 31, 2002

SIGNATURES

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:	May 15, 2013		/s/ Abbas Salih
			Abbas Salih, CEO, CFO, Director

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