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 September 30, 2012
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.
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 November 19, 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
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
September 30, 2012
(Stated in U.S.
Dollars)
(Unaudited)
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM BALANCE SHEETS
(Stated in U.S. Dollars)
(Unaudited)
|
|
September 30,
2012 |
|
|
December 31,
2011 |
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash |
$ |
870 |
|
$ |
161 |
|
|
|
|
|
|
|
|
|
$ |
870 |
|
$ |
161 |
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable – Note 5 |
$ |
582,146 |
|
$ |
566,958 |
|
Loans payable – Note 2 |
|
992,621 |
|
|
876,664 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
1,574,767 |
|
|
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 |
|
(10,159,090 |
) |
|
(10,028,654 |
) |
|
|
|
|
|
|
|
|
|
(2,365,897 |
) |
|
(2,235,461 |
) |
|
|
|
|
|
|
|
|
$ |
870 |
|
$ |
161 |
|
Nature
of Operations and Ability to Continue as a Going Concern – Note 1
Commitments
– Notes 2 and 5
Subsequent
Events – Note 6
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
(Unaudited)
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
Cumulative from February 28,
1989 (Date of Inception) to September 30,
|
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting and audit fees |
$ |
9,397 |
|
$ |
9,634 |
|
$ |
53,559 |
|
$ |
54,230 |
|
$ |
528,640 |
|
Amortization |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,616 |
|
Communications |
|
215 |
|
|
203 |
|
|
643 |
|
|
645 |
|
|
107,865 |
|
Consulting fees – Notes 4 and 5 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,419,546 |
|
Interest – Notes 2 and 5 |
|
16,823 |
|
|
15,229 |
|
|
48,893 |
|
|
44,105 |
|
|
618,631 |
|
Investor relations |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
91,385 |
|
Legal fees |
|
2,975 |
|
|
- |
|
|
2,975 |
|
|
- |
|
|
169,659 |
|
Management fees – Note 5 |
|
1,000 |
|
|
- |
|
|
1,000 |
|
|
- |
|
|
547,325 |
|
Office and general – Note 5 |
|
108 |
|
|
1,739 |
|
|
223 |
|
|
1,868 |
|
|
145,556 |
|
Regulatory fees |
|
4,609 |
|
|
4,618 |
|
|
11,973 |
|
|
10,105 |
|
|
64,388 |
|
Rent – Note 5 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
135,615 |
|
Transfer agent fees |
|
375 |
|
|
375 |
|
|
1,125 |
|
|
1,125 |
|
|
48,633 |
|
Travel |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
112,770 |
|
Loss on disposal of equipment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,481 |
|
Write-down of advances to related party |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
606,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
(35,502 |
) |
|
(31,798 |
) |
|
(120,391 |
) |
|
(112,078 |
) |
|
(6,601,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unauthorized distribution |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(69,116 |
) |
Termination fee |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(792,000 |
) |
Gain (loss) on foreign exchange |
|
(9,256 |
) |
|
17,506 |
|
|
(10,046 |
) |
|
10,548 |
|
|
(48,133 |
) |
Gain on settlement of payables |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
25,233 |
|
Write-down of
deferred investment costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(34,210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period |
$ |
(44,758 |
) |
$ |
(14,292 |
) |
$ |
(130,436 |
) |
$ |
(101,530 |
) |
$ |
(7,519,673 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
shares
outstanding |
|
27,610,326 |
|
|
27,610,326 |
|
|
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)
|
|
Nine months ended
September 30, |
|
|
Cumulative from
February 28, 1989
(Date of
Inception) to
September 30, |
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
Operating
Activities |
|
|
|
|
|
|
|
|
|
Net loss for the period |
$ |
(130,436 |
) |
$ |
(101,530 |
) |
$ |
(7,519,673 |
) |
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 |
|
48,893 |
|
|
44,105 |
|
|
255,291 |
|
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 |
|
- |
|
|
322 |
|
|
- |
|
Accounts payable |
|
15,188 |
|
|
(5,194 |
) |
|
720,093 |
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities |
|
(66,355 |
) |
|
(62,297 |
) |
|
(1,617,609 |
) |
|
|
|
|
|
|
|
|
|
|
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 |
|
67,064 |
|
|
62,326 |
|
|
1,090,794 |
|
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 |
|
67,064 |
|
|
62,326 |
|
|
2,264,123 |
|
|
|
|
|
|
|
|
|
|
|
Increase
in cash during the period |
|
709 |
|
|
29 |
|
|
870 |
|
Cash,
beginning of the period |
|
161 |
|
|
236 |
|
|
- |
|
Cash,
end of the period |
$ |
870 |
|
$ |
265 |
|
$ |
870 |
|
|
|
|
|
|
|
|
|
|
|
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 September 30, 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 |
|
|
(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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
…Cont’d
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 September 30, 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 $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
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 September 30, 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 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 |
) |
…Cont’d
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 September 30, 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 |
|
|
- |
|
|
- |
|
|
- |
|
|
(130,436 |
) |
|
(130,436 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2012 |
|
|
27,610,326 |
|
$ |
27,610 |
|
$ |
7,765,583 |
|
$ |
(10,159,090 |
) |
$ |
(2,365,897 |
) |
SEE ACCOMPANYING NOTES
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 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 September 30, 2012, the
Company had not yet achieved profitable operations, has an accumulated deficit
of $10,159,090 since its inception, has a working capital deficiency of $1,573,897
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 $81,000
over the twelve months ended September 30, 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 Company’s
general, administrative and corporate expenses the Company is obligated to
address its current obligations totalling $1,574,767. 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 September
30, 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 Company’s 10-K Annual Report as filed with
the United States Securities and Exchange Commission. |
|
The results of operations for the periods
ended September 30, 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
September 30, 2012
(Stated in U.S. Dollars)
(Unaudited)
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
a) |
Loan
payable to a company controlled by a director of the Company including
accrued interest of $9,700 (December 31, 2011 - $8,298). The loan is
unsecured, bearing interest at 12% per annum and is repayable on demand. |
$ |
16,501 |
|
$ |
15,100 |
|
|
|
|
|
|
|
|
|
|
|
b) |
Loans
payable to companies controlled by directors of the Company. The loans are
unsecured, non-interest bearing, and repayable upon demand. |
|
311,552 |
|
|
244,487 |
|
|
|
|
|
|
|
|
|
|
|
c) |
Loan
payable to a company controlled by a director of the Company, including
accrued interest payable of $99,219 (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. |
|
262,985 |
|
|
244,192 |
|
|
|
|
|
|
|
|
|
|
|
d) |
Loan
payable to a company controlled by a director of the Company, including
accrued interest of $146,374 (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. |
|
401,583 |
|
|
372,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
992,621 |
|
$ |
876,664 |
|
2
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2012
(Stated in U.S. Dollars)
(Unaudited)
|
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. |
|
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. |
|
In previous periods,
the Company granted share purchase options to directors, employees, and
consultants of the Company at the closing price of the Company’s common stock
on the date of the grants. The options have been granted with a term of 5
years. |
|
The 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
Company’s share purchase options. |
|
During the nine month
periods ended September 30, 2012 and 2011 the Company did not grant any stock
options to directors, employees, or consultants. |
|
During
the period ended September 30, 2012, the change in share purchase options
outstanding are as follows: |
|
|
|
Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted
Average
Remaining
Contractual Life |
|
|
Aggregate
Intrinsic
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 |
|
$ |
- |
|
|
Options
outstanding at September 30, 2012 |
|
3,125,000 |
|
$ |
0.15 |
|
|
0.67 years |
|
$ |
- |
|
3
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2012
(Stated in U.S. Dollars)
(Unaudited)
3. |
Capital
Stock – (cont’d) |
|
Stock-based
Compensation – (cont’d) |
|
As
at September 30, 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 September 30,
2012 and December 31, 2011 all of the outstanding share purchase options were
exercisable. |
|
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 |
|
|
|
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
September 30, 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: |
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
Cumulative from February 28,
1989 (Date of Inception) to September 30, |
|
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting fees |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
249,043 |
|
|
Interest |
|
16,823 |
|
|
15,229 |
|
|
48,893 |
|
|
44,105 |
|
|
470,867 |
|
|
Management fees |
|
1,000 |
|
|
- |
|
|
1,000 |
|
|
- |
|
|
547,325 |
|
|
Office and general |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
26,944 |
|
|
Rent |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
130,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,823 |
|
$ |
15,229 |
|
$ |
49,893 |
|
$ |
44,105 |
|
$ |
1,424,411 |
|
|
At
September 30, 2012, accounts payable includes $462,013 (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 fees and expenses
incurred on behalf of the Company. |
|
At
September 30, 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. |
|
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 remuneration for the
management services the Company agreed to issue 320,000 restricted common
shares to the Director, plus pay the Director $20 per hour for time spent on
the affairs of the Company, pursuant to which the company has paid or accrued
management fees of $1,000 (2011 – Nil). In addition, the Company agreed to
grant the Director 320,000 share purchase options. As of September 30, 2012 the
shares had not been issued and the share purchase options had not been granted. |
|
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. |
5
STRATEGIC INTERNET INVESTMENTS, INCORPORATED
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2012
(Stated in U.S. Dollars)
(Unaudited)
|
Subsequent to September
30, 2012, the Company: |
|
a) |
Received additional
loans of $10,000 from a company controlled by a director of the Company. These
loans are unsecured, non-interest bearing, and repayable upon demand. |
|
b) |
Cancelled the
pre-existing 3,125,000 share purchase options outstanding at September 30, 2012. |
|
c) |
Granted 4,140,000 share
purchase options to directors and consultants at an exercise price of $0.10 per
common share, expiring on October 15, 2017. |
|
d) |
Entered into three
Debt Settlement and Subscription Agreements to issue a total of 5,249,065
restricted shares of Common stock of the Company at $0.07 per share as
settlement of September 30, 2012 accounts payable due to directors of the
Company and companies controlled by directors of the Company in respect of
unpaid management fees and consulting fees debts totaling $350,207, plus a $17,220
debt owed to an arm’s length creditor. These shares have not yet been issued. |
|
e) |
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, and 480,000 restricted common shares to the Consultant.
As of September 30, 2012 the shares had not been issued. |
|
f) |
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. As of September 30, 2012 the shares had not been issued. |
6
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. |
|
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 2012 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. |
|
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
Company’s general, administrative and corporate expenses the Company is obligated
to address its current obligations totalling $1,574,767. 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. |
|
During the quarter
ended September 30, 2012, the Company incurred general and administrative
expenses totaling $35,502 compared to $31,798 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 September 30, 2012 when compared to the three month period
ended September 30, 2011 was primarily due to: |
|
a) |
The 2012 accountingand audit fees is $9,397compared to $9,634 in the 2011 period. The $237 decrease in accounting andaudit fees from 2012 to 2011 is mainly due to a slight reduction in the timespent and corresponding charges by these professionals. |
|
b) |
Management feesincreased $1,000 in 2012 as the Company entered into an agreement with adirector to provide certain administrative services. During the comparative2011 period there were no management services incurred. |
|
c) |
Interest on loansincreased by $1,594, this is attributed to the compounding effect of thequarterly interest calculation as the Company has not been making any paymentson these debts. |
|
d) |
Legal fees increasedby $2,975 in 2012. In 2012 the Company retained a lawyer to assist with thepreparation of various agreements entered into during the quarter. During thecomparative 2011 period there were no legal services incurred. |
|
e) |
The 2011 office andgeneral expenses included late fees charged by certain vendors on unpaidinvoices. The Company did not incur similar charges in 2012, and this expensecategory declined accordingly. |
|
f) |
Regulatoryfees relate to fees charged by EDGAR/SEDAR regulatory filing service providersfor making submissions to the regulatory authorities. In the 2012 Q3 periodthere was only a small decrease in these |
|
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 September 30,
2012, the Company had total current assets of $870 and total liabilities of $1,574,767.
The Company had cash of $870 and a working capital deficiency of $1,573,897 as
of September 30, 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 Company’s general, administrative and corporate expenses the
Company is obligated to address its current obligations totaling $1,574,767. 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 nine month
period ended September 30, 2012 was $66,355 as compared to cash used by
operating activities for the same period in 2011 of $62,297. The increase
in cash used in operating activities was primarily due to increases in: consulting,
legal, and regulatory fees, and foreign exchange losses; partially offset by an
increase in accounts payable. |
|
The Company has the
following loans outstanding as of September 30, 2012: |
|
A $16,501 loan payable
to a company controlled by a director of the Company including accrued interest
of $9,700 (December 31, 2011 - $8,298). The loan is unsecured, bearing
interest at 12% per annum and is repayable on demand. |
|
$311,552 loans payable
to companies controlled by directors of the Company. These loans are unsecured,
non-interest bearing, and repayable upon demand. |
|
A $262,985 loan
payable to a company controlled by a director of the Company, including accrued
interest payable of $99,219 (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 $401,583
loan payable to a company controlled by a director of the Company, including
accrued interest of $146,374 (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. |
|
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 September 30,
2012, we had cash of $870 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 Company’s general, administrative and corporate
expenses the Company is obligated to address its current obligations totalling $1,574,767.
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 September 30, 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. |
|
As of September
30, 2012,
we had cash of $870 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 Company’s general, administrative and corporate expenses the
Company is obligated to address its current obligations totaling $1,574,767.
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 September 30, 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 September
30, 2012 that have materially affected or are reasonably likely to materially
affect, our internal control over financial reporting. |
Part II – Other Information
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 September 30, 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 September
30, 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 September 30, 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 September 30, 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 September
30, 2012. |
3. |
Defaults Upon Senior
Securities |
4. |
Submission of Matters
to a Vote of Security Holders |
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: |
November
19, 2012 |
|
/s/
Abbas Salih |
|
|
|
|
Abbas
Salih, CEO, CFO, Director |