SOURCE: S3 Investment Company

November 16, 2006 09:22 ET

S3 Investment Company Files Annual Report With First Consolidated Financial Statement

Company Reports Revenues and Profits of Subsidiaries Operating in China

TEMECULA, CA -- (MARKET WIRE) -- November 16, 2006 -- S3 Investment Company, Inc. (OTCBB: SEIHE), a holding company with two subsidiaries doing business in the China market, today announced the filing of its 10-KSB Annual Report with audited year-end financial results for the fiscal year ended June 30, 2006. As a result of the filing, S3 expects that the "E" will be removed from its stock symbol in the next few days, and the company will again trade under the symbol SEIH.

The 10-KSB reports total revenues of $3,779,563 and a gross profit of $2,415,008 for the twelve-month period ending June 30, 2006, as compared to $93,028 total revenues and a $79,198 gross profit for same period last year. S3 reported a net operating gain of $737, 099 as compared to a net operating loss of $2,014,314 for the 2005 fiscal year. The net gain from operations for the period was $421,869, as compared to a loss of $1,806,568 for the same period last year.

"This annual report shows dramatic improvement over the company's previous year's performance, and we are pleased to have completed this filing so that our shareholders can see detailed information on S3's financial condition," stated Jim Bickel, chief executive officer of the company. "The consolidated financial statements for S3 include net income of over $2.5 million for our SINO UJE subsidiary and over $1 million for our Redwood Capital subsidiary. There was over $1 million in profit company-wide, and each of our subsidiaries was individually profitable for the year."

"The fact that SINO UJE is a distributor in China, which requires the use of agents for the import and sale of foreign goods, some of the revenue numbers were reported as lower than we believe accurately reflects the total revenues generated by this subsidiary. Still, the financial performance for SINO UJE is clearly very strong for the year. Beyond the 2006 numbers, a primary goal of S3 is to provide the resources that will allow SINO UJE to continue to grow its revenues and profits in future years by increasing the number of product lines it can carry and orders it can fill. As for Redwood Capital, even with just one completed client transaction for 2006, it generated seven figure revenues and became profitable for the year," commented Mr. Bickel.

"This report is important for a variety of reasons, not the least of which is that it gives us the opportunity to reiterate to shareholders that S3 management is focused squarely on financial performance. Our primary goal beyond this annual report is to develop S3 as a company that has a stock price commensurate with its true value and that is a function of revenues, profits and the totality of its financial performance. We hope our shareholders will begin to reap the benefits of this effort and that we can build value well beyond what is seen in this first consolidated financial report," added Mr. Bickel.

The 2006 10-KSB Annual Report is the first filing that includes consolidated financial information on S3 including the audited financial statements of its subsidiaries since the company withdrew its election to be regulated as a business development company, pursuant to the Investment Company Act of 1940. There had been a delay in filing the annual report for several weeks while S3 negotiated the settlement of a financing and warrant agreement with La Jolla Cove Investors.

With the annual report filed, S3 expects to complete and file its 10-QSB for the first fiscal quarter within the next several days.

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About S3 Investment Company

S3 Investment Company, Inc. ( is a holding company with two subsidiaries doing business in the China market. S3 holds a 100% equity interest in Redwood Capital (, which assists private Chinese companies in accessing U.S. capital markets by utilizing a network of investment banking relationships, and a 51% equity interest in SINO UJE (, a non-stocking distributor of medical and industrial high-tech products to markets throughout China. SINO UJE has been granted exclusive distribution rights in China to medical and industrial products manufactured by leading companies in Europe, North America and Japan. These products are marketed to end-users, including major Chinese hospitals and private companies in a variety of fields, as well as original equipment manufacturers (OEMs), such as Phillips, Siemens and GE, that package the products with their technologies.

Any statements contained herein related to future events are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on forward-looking statements. S3 Investment Company, Inc. undertakes no obligation to update any such statements to reflect actual events.

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