SOURCE: S3 Investment Company

November 09, 2006 10:18 ET

S3 Investment Company Announces Settlement and Cancellation of Warrant Agreement With La Jolla Cove Investors

TEMECULA, CA -- (MARKET WIRE) -- November 9, 2006 -- S3 Investment Company, Inc. (OTCBB: SEIHE), a holding company with two subsidiaries doing business in the China market, today announced the cancellation of a financing agreement with La Jolla Cove Investors, under which S3 issued warrants to purchase shares of the company's common stock in exchange for capital that La Jolla Cove Investors was to provide to fund the long-term growth of S3 and its subsidiaries.

"While our original agreement with La Jolla Cove Investors was done at a time when S3 needed to ensure that it had the capital resources to properly fund the growth of its subsidiary operations, the potentially toxic characteristics of the financing agreement prompted S3 management to seek its cancellation," stated Jim Bickel, chief executive officer of S3 Investment Company. "In the period since this agreement was signed, S3 has been presented with significantly more advantageous financing opportunities, and we have decided to pursue those as part of our comprehensive efforts to grow value in the company and upgrade its position in the U.S. public markets. We appreciate the cooperation of La Jolla Cove in reaching this agreement, as well as throughout our longstanding and successful business relationship."

Under the terms of a settlement agreement reached by S3 Investment Company and La Jolla Cove Investors, S3 will issue a promissory note in the amount of $100,000 as repayment for the $100,000 in capital that La Jolla Cove advanced to S3. S3 will also issue to La Jolla Cove Investors 100,000,000 shares of restricted common stock and La Jolla Cove Investors will retain the 100,000,000 restricted shares issued on June 2, 2006 as collateral against an advance on the warrant shares.

Detailed information regarding this agreement is included in a Current Report on Form 8-K filed with the Securities and Exchange Commission.

"We are extremely pleased to have completed this settlement agreement, which removes the major impediment to filing the annual report. The derivative impact of the financing agreement with La Jolla Cove, while not affecting the bottom line numbers of our subsidiary operations, would have had a significantly negative impact of S3's total numbers. As a result of this settlement, we expect to have the annual report filed in the next several days," added Mr. Bickel.

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About S3 Investment Company

S3 Investment Company, Inc. (http://www.s3investments.com) is a holding company with two subsidiaries doing business in the China market. S3 holds a 100% equity interest in Redwood Capital (http://www.redwoodcapinc.com), 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 (http://www.sinouje.com), 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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