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, 2012
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: | Nisar Square, Benyas Centre Office No. 207 |
P.O. Box 40088, | |
Dubai, United Arab Emirates | |
Registrants telephone number | 009 714 223 1189 |
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. | Yes | ( X ) | No | ( ) |
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 22, 2012: | 27,610,326 |
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 industrys 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:
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 managements 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, 2012
(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, | December 31, | |||||
2012 | 2011 | |||||
ASSETS | ||||||
Current | ||||||
Cash | $ | 1,783 | $ | 161 | ||
$ | 1,783 | $ | 161 | |||
LIABILITIES | ||||||
Current | ||||||
Accounts payable Note 5 | $ | 558,905 | $ | 566,958 | ||
Loans payable Note 2 | 942,984 | 876,664 | ||||
TOTAL LIABILITIES | 1,501,889 | 1,443,622 | ||||
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 3, 4 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 27,610,326 issued (2011: 27,610,326 issued) |
27,610 |
27,610 |
||||
Additional paid-in capital | 7,765,583 | 7,765,583 | ||||
Deficit accumulated during the development stage | (10,085,299 | ) | (10,028,654 | ) | ||
(2,292,106 | ) | (2,235,461 | ) | |||
$ | 1,783 | $ | 161 |
Nature of Operations and Ability to Continue as a Going Concern
Note 1
Commitments Notes 2 and 5
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
INTERIM STATEMENTS OF OPERATIONS |
(Stated in U.S. Dollars) |
(Unaudited) |
Cumulative from | |||||||||
February 28, | |||||||||
1989 (Date of | |||||||||
Inception) to | |||||||||
Three months ended March 31, | March 31, | ||||||||
2012 | 2011 | 2012 | |||||||
General and Administrative Expenses | |||||||||
Accounting and audit fees | $ | 25,320 | $ | 15,000 | $ | 500,401 | |||
Amortization | - | - | 3,616 | ||||||
Communications | 215 | 222 | 107,437 | ||||||
Consulting fees Note 4 and 5 | - | - | 3,419,546 | ||||||
Interest Notes 2 and 5 | 15,836 | 14,182 | 585,574 | ||||||
Investor relations | - | - | 91,385 | ||||||
Legal fees | - | - | 166,684 | ||||||
Management fees Note 5 | - | - | 546,325 | ||||||
Office and general Note 5 | 48 | 89 | 145,381 | ||||||
Regulatory fees | 5,828 | 914 | 58,243 | ||||||
Rent Note 5 | - | - | 135,615 | ||||||
Transfer agent fees | 375 | 375 | 47,883 | ||||||
Travel | - | - | 112,770 | ||||||
Loss on disposal of equipment | - | - | 1,481 | ||||||
Write-down of advances to related party | - | - | 606,337 | ||||||
Operating loss | (47,622 | ) | (30,782 | ) | (6,528,678 | ) | |||
Unauthorized distribution | - | - | (69,116 | ) | |||||
Termination fee | - | - | (792,000 | ) | |||||
Loss on foreign exchange | (9,023 | ) | (5,189 | ) | (47,110 | ) | |||
Gain on settlement of payables | - | - | 25,233 | ||||||
Write-down of deferred costs | - | - | (34,210 | ) | |||||
Net loss for the period | $ | (56,645 | ) | $ | (35,971 | ) | $ | (7,445,881 | ) |
Basic and diluted loss per share | $ | (0.00 | ) | $ | (0.00 | ) | |||
Weighted average common shares outstanding | 27,610,326 | 27,610,326 |
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
INTERIM STATEMENTS OF CASH FLOWS |
(Stated in U.S. Dollars) |
(Unaudited) |
Cumulative from | |||||||||
February 28, 1989 | |||||||||
Three months ended | (Date of Inception) to | ||||||||
March 31, | March 31, | ||||||||
2012 | 2011 | 2012 | |||||||
Operating Activities | |||||||||
Net loss for the period | $ | (56,645 | ) | $ | (35,971 | ) | $ | (7,445,881 | ) |
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 | - | - | 2,478,554 | ||||||
Gain on settlement of payables | - | - | (25,233 | ) | |||||
Interest accrued on loans | 15,836 | 14,182 | 222,234 | ||||||
Legal fees | - | - | 25,000 | ||||||
Loss on disposal of equipment | - | - | 1,481 | ||||||
Management fees | - | - | 7,000 | ||||||
Stock-based compensation | - | - | 736,053 | ||||||
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: | |||||||||
Prepaid expenses | - | 213 | - | ||||||
Accounts payable | (8,053 | ) | (1,958 | ) | 696,850 | ||||
Net cash used in operating activities | (48,862 | ) | (23,534 | ) | (1,600,117 | ) | |||
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 | 50,484 | 23,446 | 1,074,215 | ||||||
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 | 50,484 | 23,446 | 2,247,544 | ||||||
Increase (decrease) in cash during the period | 1,622 | (88 | ) | 1,783 | |||||
Cash, beginning of the period | 161 | 236 | - | ||||||
Cash, end of the period | $ | 1,783 | $ | 148 | $ | 1,783 | |||
Supplementary disclosure of cash flows: | |||||||||
Cash paid for Interest | $ | - | $ | - | $ | 93,859 |
Non-cash Transactions Note 4
SEE ACCOMPANYING NOTES
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, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
Deficit | |||||||||||||||
Accumulated | |||||||||||||||
Additional | During the | ||||||||||||||
Common Stock | Paid-In | Development | |||||||||||||
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 | ) | ||||||||
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 | 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 | ) |
Contd
SEE ACCOMPANYING NOTES
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, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
Deficit | |||||||||||||||
Accumulated | |||||||||||||||
Additional | During the | ||||||||||||||
Common Stock | Paid-In | Development | |||||||||||||
Shares | Par Value | Capital | Stage | Total | |||||||||||
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 | ||||||||||
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 $ .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 | ) |
Contd
SEE ACCOMPANYING NOTES
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, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
Deficit | |||||||||||||||
Accumulated | |||||||||||||||
Additional | During the | ||||||||||||||
Common Stock | Paid-In | Development | |||||||||||||
Shares | Par Value | Capital | 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 | ) | ||||||||
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 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 STATEMENTS OF CHANGES IN CAPITAL DEFICIT |
For the period from February 28, 1989 (Date of Inception) to March 31, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
Deficit | |||||||||||||||
Accumulated | |||||||||||||||
Additional | During the | ||||||||||||||
Common Stock | Paid-In | Development | |||||||||||||
Shares | Par Value | Capital | Stage | Total | |||||||||||
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 | ) | ||||||||
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 | ) | ||||
Net loss | - | - | - | (56,645 | ) | (56,645 | ) | ||||||||
Balance, March 31, 2012 | 27,610,326 | $ | 27,610 | $ | 7,765,583 | $ | (10,085,299 | ) | $ | (2,292,106 | ) |
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
March 31, 2012 |
(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, 2012, the Company had not yet achieved profitable operations, has an accumulated deficit of $10,085,299 since its inception, has a working capital deficiency of $1,500,106 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. Management anticipates that it requires approximately $81,000 over the twelve months ended March 31, 2013 to continue operations as well as the Company estimates it will accrue interest expenses of $66,000 over the next 12 months on loans due to related parties. In addition to funding the Companys general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,501,889. 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 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 twelve months ended March 31, 2013, 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, 2011, included in the Companys 10-K Annual Report as filed with the United States Securities and Exchange Commission. |
|
The results of operations for the periods ended March 31, 2012 are not indicative of the results that may be expected for the full year. |
1
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
March 31, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
2. | Loans Payable |
March 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
a) | Loan payable to a company controlled by a director of the Company including accrued interest of $8,750 (December 31, 2011 - $8,298). The loan is unsecured, bearing interest at 12% per annum and is repayable on demand. |
$ | 15,551 | $ | 15,100 | ||||
|
|||||||||
b) | Loans payable to companies controlled by directors of the Company. The loans are unsecured, non-interest bearing, and repayable upon demand. |
294,972 | 244,487 | ||||||
|
|||||||||
c) | Loan payable to a company controlled by a director of the Company, including accrued interest payable of $86,514 (December 31, 2011 - $80,426), 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. |
250,280 | 244,192 | ||||||
|
|||||||||
d) | Loan payable to a company controlled by a director of the Company, including accrued interest of $126,972 (December 31, 2011 - $117,676), 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. |
382,181 | 372,885 | ||||||
$ | 942,984 | $ | 876,664 |
2
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
March 31, 2012 |
(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 Companys 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. |
|
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 |
|
In previous periods, the Company granted share purchase options to directors, employees, and consultants of the |
|
Company at 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. |
|
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. |
|
During the three month periods ended March 31, 2012 and 2011 the Company did not grant any stock options to directors, employees, or consultants. |
|
During the period ended March 31, 2012, 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, 2010 | 3,175,000 | $ | 0.15 | 2.42 years | $ | - | ||||||
Cancelled during the period | (50,000 | ) | $ | 0.15 | 2.42 years | - | ||||||
Options outstanding at December 31, 2011 | 3,125,000 | $ | 0.15 | 1.42 years | $ | - | ||||||
Cancelled during the period | - | - | ||||||||||
Options outstanding at March 31, 2012 | 3,125,000 | $ | 0.15 | 1.17 years | $ | - |
3
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
March 31, 2012 |
(Stated in U.S. Dollars) |
(Unaudited) |
3. | Capital Stock (contd) Stock-based Compensation (contd) |
As at March 31, 2012, the Company had share purchase options outstanding as follows: |
Number of Options | Exercise Price | Expiry Date | |
3,125,000 | $0.15 | June 1, 2013 |
As at March 31, 2012 and December 31, 2011 all of the outstanding share purchase options were exercisable.
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: |
Number of | Weighted | ||||||||||||||
Preferred | Number of | Average Price | |||||||||||||
Year | Shares | Common Shares | Per Share | Total | |||||||||||
1995 | Consulting fee | - | 50,000 | $ | 0.03 | $ | 1,500 | ||||||||
1998 | Management fee | - | 7,000,000 | $ | 0.001 | 7,000 | |||||||||
1998 | Consulting fee | - | 620,000 | $ | 0.01 | 6,200 | |||||||||
2000 | Finders fee | - | 50,000 | $ | 0.001 | 50 | |||||||||
2001 | Consulting fee | - | 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 | |||||||||
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.
4
STRATEGIC INTERNET INVESTMENTS, INCORPORATED |
(A Development Stage Company) |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
March 31, 2012 |
(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: |
Cumulative from | ||||||||||
February 28, | ||||||||||
1989 (Date of | ||||||||||
Inception) to | ||||||||||
Three months ended March 31, | March 31, | |||||||||
2012 | 2011 | 2012 | ||||||||
Consulting fees | $ | - | $ | - | $ | 249,043 | ||||
Interest | 15,836 | 14,182 | 437,810 | |||||||
Management fees | - | - | 546,325 | |||||||
Office and general | - | - | 26,944 | |||||||
Rent | - | - | 130,232 | |||||||
$ | 15,836 | $ | 14,182 | $ | 1,390,354 |
At March 31, 2012, accounts payable includes $459,150 (December 31, 2011 - $456,972) due to directors of the Company and companies controlled by directors of the Company in respect of unpaid management fees, consulting fee and expenses incurred on behalf of the Company.
At March 31, 2012, accounts payable also includes $15,527 (December 31, 2011 - $15,527) of 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 were each paid $7,500 per month, plus taxes where applicable, for management services. These agreements were for a 24-month period and expired on December 31, 2008. Effective September 12, 2008, one of the agreements was terminated and the other was not renewed subsequent to December 31, 2008. Pursuant to these agreements, accounts payable includes $321,057 of unpaid management fees. 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.
6. | Subsequent Event |
Subsequent to March 31, 2012 the Company received an additional loan of $4,000 from a company controlled by a director of the Company. This loan is unsecured, non-interest bearing, and repayable upon demand. |
5
2. |
Managements 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 located in Bahrain and Turkey. The Company will continue to explore new investment opportunities, including real estate development projects, during its 2012 fiscal year. | |
Our estimated cash expenses over the next twelve months are as follows: |
Accounting, audit, and legal fees | $ | 65,000 | |
General and administrative expenses | 3,000 | ||
Regulatory and transfer agent fees | 13,000 | ||
$ | $81,000 |
The Company also estimates it will accrue interest expenses of $66,000 over the next 12 months on loans due to related parties. It is not anticipated the interest will be paid in cash during 2012, 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 Companys general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,501,889. 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 Companys 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, 2012, the Company incurred general and administrative expenses totaling $47,622 compared to $30,782 during the same period of the previous year.
The volume of transactions and business activities has changed little compared to the prior year. The changes in our general and administrative expenses for the three month period ended March 31, 2012 when compared to the three month period ended March 31, 2011 was primarily due to:
a) |
The 2012 accounting and audit fees is $25,320 compared to $15,000 in the 2011 period. The $10,320 increase in accounting and audit fees from 2012 to 2011 due to a general increase in the fees charged by the consultants and professionals who provide these services. In addition, there has been an increase in the amount of time spent by these consultants and professionals to ensure the Company is in compliance with the increased reporting requirement imposed by regulatory authorities. In 2012 more of these fees were incurred in Q1 compared to 2011 when these fees were mostly incurred in Q2. |
b) |
Interest on loans increased by $1,654, this is attributed to the compounding effect of the quarterly interest calculation as the Company has not been making any payments on these debts. | |
c) |
Regulatory fees increased $4,914 due to an increase in the fees charged by EDGAR/SEDAR regulatory filing service providers for making submissions to the regulatory authorities. In 2011 this included new charges for submission of financial data in a new XBRL format as required by SEC regulations. In 2012 more of these fees were incurred in the Q1 period compared to 2011 when these fees were mostly incurred in Q2. |
During the three month period ended March 31, 2012, the Company incurred general and administrative expenses totaling $47,622 compared to $30,782 during the same period of the previous year.
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, 2012, the Company had total current assets of $1,783 and total liabilities of $1,501,889. The Company had cash of $1,783 and a working capital deficiency of $1,500,106 as of March 31, 2012 compared to cash on hand of $161 and a working capital deficiency of $1,443,461, for the year ended December 31, 2011. We anticipate that we will incur approximately $81,000 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 Companys general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $1,501,889. 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 three month period ended March 31, 2012 was $48,862 as compared to cash used by operating activities for the same period in 2011 of $23,534. The increase in cash used in operating activities was primarily due to increases in: accounting and audit fees, and regulatory fees; partially offset by a foreign exchange gain and a decrease in accounts payable.
The Company has the following loans outstanding as of March 31, 2012:
A $15,551 loan payable to a company controlled by a director of the Company including accrued interest of $8,750 (December 31, 2011 - $8,298). The loan is unsecured, bearing interest at 12% per annum and is repayable on demand.
$294,972 in loans payable to companies controlled by directors of the Company. These loans are unsecured, non-interest bearing, and repayable upon demand.
A $250,280 loan payable to a company controlled by a director of the Company, including accrued interest payable of $86,514 (December 31, 2011 - $80,426), 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 $382,181 loan payable to a company controlled by a director of the Company, including accrued interest of $126,972 (December 31, 2011 - $117,676), 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, 2012, we had cash of $1,783 and we estimate that we will require approximately $81,000 to fund our business operations over the next twelve months. In addition to funding the Companys general, administrative and corporate expenses the Company is obligated to address its current obligations totalling $1,501,889. 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 do not have sufficient funds for planned operations and we will be required to raise additional funds for operations after that date.
These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the Note 1 of our March 31, 2012 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, 2012, we had cash of $1,783 and we estimate that we will require approximately $81,000 to fund our business operations over the next twelve months. In addition to funding the Companys general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $1,501,889. Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations after that date. 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, 2012, 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 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, 2012 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. |
Part II Other Information
1. |
Legal Proceedings |
None
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, 2012, 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, 2012. 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, 2012, 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, 2012. 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, 2012. | ||
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 22, 2012 | /s/ Abbas Salih | |
Abbas Salih, CEO, CFO, Director |
Exhibit 31.1
CERTIFICATION |
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
I, Abbas Salih, certify that:
(1) I have reviewed this Form 10-Q Interim Report for the period ended March 31, 2012 of Strategic Internet Investments, Incorporated;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
(4) The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
(5) The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: | May 22, 2012 | /s/ Abbas Salih | |
Abbas Salih, Director, CEO, CFO |
Exhibit 32.1
CERTIFICATION |
Pursuant to 18 U.S.C. Section 1350 |
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
In connection with the Annual Report of Strategic Internet Investments, Incorporated (the "Company") on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"). I, Abbas Salih, Director of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 22, 2012 | /s/ Abbas Salih | |
Abbas Salih, Director, CEO, CFO |
Capital Stock
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Capital Stock [Text Block] |
As at March 31, 2012 and December 31, 2011 all of the outstanding share purchase options were exercisable. |