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S3 INVESTMENT COMPANY, INC.
Notes to the Financial Statements
December 31, 2004

NOTE 1 - NATURE OF ORGANIZATION

This summary of significant accounting policies of S3 Investment Company, Inc. is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

a. Organization and Business Activities

S3 Investment Company, Inc. ("the Company" or "SEIH") was incorporated under the laws of the State of California. It was originally incorporated with the name of Retail Windows, Inc. on April 19, 2000 to engage in any lawful activity as shall be appropriate under laws of the State of California. On June 30, 2001 the Company amended its Articles of Incorporation to change its name to Axtion Foods, Inc. Prior to April 2003, Axtion Foods, Inc. was engaged in the development, manufacturing and distribution of health bars and health drinks. The business plan was not fully implemented and on April 16, 2003 Axtion Foods, Inc. changed its name to S3I Holdings, Inc. and acquired 100% of the issued and outstanding capital stock of Securesoft Systems, Inc., a Delaware corporation, making Securesoft Systems, Inc (Securesoft) a wholly-owned subsidiary of the Company.

Securesoft Systems, Inc. was incorporated in September 1999. Securesoft develops, markets and sells enterprise compliance and risk management software solutions enabling clients to ensure that privacy, ebusiness and security policies remain aligned with regulatory requirements, and an organization's business strategies and performance goals. The Securesoft software provides a structured approach that combines knowledge of current business processes and systems, an understanding of related legislation and the use of cohesive teams that are experienced with the issues and objectives surrounding compliance. Securesofts implementation services include compliance gap analysis, risk management, cost benefit analysis, implementation strategies and monitoring.

On April 12, 2004 the Company's Board of Directors elected to be regulated as a business investment company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies", which are loosely defined as any domestic company which is not publicly traded or that has assets less than $4 million.

In June of 2004 the office was moved to Temecula, California and administrative changes were made to help cut overhead and concentrate on adding portfolio companies that are cash flow positive. The Company entered into a management agreement with Javelin Advisory Group, Inc. to provide administrative support. On October 12, 2004 the Company changes it's name to S3 Investment Company, Inc. to properly reflect the nature of its business.

NOTE 2 - CONVERTIBLE DEBENTURES

During the quarter ended December 31, 2004, the Company raised $277,482 of operating capital in the form of convertible debentures. The debentures have varying terms of 60 days to 90 days, accrue interest at 8% per annum, and convert at a discount of 50% of the closing bid for the Company's common stock on the date of conversion. All convertible debentures are convertible at the option of the holder or the Company and automatically convert into common stock in the event of bankruptcy or liquidation. During the quarter ended December 31, 2004, $363,032 of debentures was converted into 117,250,000 shares of common stock.

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Subsequent to the end of December 31, 2004 the Company has not issued or converted any additional convertible debentures and has a balance outstanding of $34,700.

NOTE 3 - EQUITY TRANSACTIONS

During the quarter ended December 31, 2004, the Company issued 142,000,000 shares of common stock for cash of $320,450 and a subscription receivable of $92,901.

The Company issued 12,000,000 shares of preferred stock for 100% of the outstanding shares of Redwood Capital, Inc. Redwood Capital, Inc. is a Nevada Corporation that engages in the investment banking business primarily in China.

The Company issued 3,000,000 shares of preferred stock for 100% of the outstanding shares of TSParners, Inc. TSPartners , Inc. is a Nevada corporation that was acquired to provide marketing and management support for Securesoft.. Securesoft and TSPartner, Inc will be combined to form a new company named Secure System Solutions, Inc. that will develop and market compliance software to the medical and financial industry.

The Company 51% of Sino UJE, Ltd, a Hong Kong company from YaSheng. The Company issued 18,092,745 restricted shares of common stock, which is equal to 4.9% of the outstanding shares of the Company as of December 31, 2004. The Company has agreed to maintain YaSheng's ownership level at 4.9%. Upon issuance of additional shares in the market the Company will issue additional restricted shares to YaSheng to maintain their 4.9% ownership. Sino UJE, LTD is a distribution company for western-manufactured medical and industrial products into the Asian markets.

NOTE 4 - CONTINGENT LIABILITIES

The Company has recorded an accrued expense of $670,383 for legal contingencies that were incurred by Securesoft Systems, Inc. in the past.

NOTE 5- SUBSEQUENT EVENTS

Stock Issuances

Subsequent to December 31, 2004, the Company issued 15,000,000 shares of common stock for cash of $28,206.

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

GENERAL

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts and may contain forward-looking statements that involve a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management. Potential risks and uncertainties include, among other factors, general business conditions, government regulations, manufacturing practices, competitive market conditions, success of the Company's business strategy, delay of orders, changes in the mix of products sold, availability of suppliers, concentration of sales in markets and to certain customers, changes in manufacturing efficiencies, development and introduction of new products, fluctuations in margins, timing of significant orders, and other risks and uncertainties currently unknown to management.

CRITICAL ACCOUNTING POLICIES

The Company's financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of long-lived and intangible assets, and the realizability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

Valuation Of Long-Lived And Intangible Assets

The recoverability of long lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of" as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset.

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of December 31, 2004, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

Valuation of Investments

As required by ASR 118, the investment committee of the company is required to assign a fair value to all investments. To comply with Section 2(a)(41) of the Investment Company Act and Rule 2a-4 under the Investment Company Act, it is incumbent upon the board of directors to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available have been considered and to determine the method of arriving at the fair value of each such security. To the extent considered necessary, the board may appoint persons to assist them in the determination of such value, and to make the actual calculations pursuant to the board's direction. The board must also, consistent with this responsibility, continuously review the appropriateness of the method used in valuing each issue of security in the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings of such intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair.
 

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No single standard for determining "fair value...in good faith" can be laid down, since fair value depends upon the circumstances of each individual case. As a general principle, the current "fair value" of an issue of securities being valued by the board of directors would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on a multiple of earnings, or a discount from market of a similar freely traded security, or yield to maturity with respect to debt issues, or a combination of these and other methods. Some of the general factors which the directors should consider in determining a valuation method for an individual issue of securities include: 1) the fundamental analytical data relating to the investment, 2) the nature and duration of restrictions on disposition of the securities, and 3) an evaluation of the forces which influence the market in which these securities are purchased and sold. Among the more specific factors which are to be considered are: type of security, financial statements, cost at date of purchase, size of holding, discount from market value of unrestricted securities of the same class at time of purchase, special reports prepared by analysis, information as to any transactions or offers with respect to the security, existence of merger proposals or tender offers affecting the securities, price and extent of public trading in similar securities of the issuer or comparable companies, and other relevant matters.

The board has arrived at the following valuation method for its investments. Where there is not a readily available source for determining the market value of any investment, either because the investment is not publicly traded, or is thinly traded, and in absence of a recent appraisal, the value of the investment shall be based on the following criteria:

1. Total amount of the Company's actual investment ("AI"). This amount shall include all loans, purchase price of securities, and fair value of securities given at the time of exchange.

2. Total revenues for the preceding twelve months ("R").

3. Earnings before interest, taxes and depreciation ("EBITD")

4. Estimate of likely sale price of investment ("ESP")

5. Net assets of investment ("NA")

6. Likelihood of investment generating positive returns (going concern).

The estimated value of each investment shall be determined as follows:

• Where no or limited revenues or earnings are present, then the value shall be the greater of the investment's a) net assets, b) estimated sales price, or c) total amount of actual investment.
• Where revenues and/or earnings are present, then the value shall be the greater of two point five times (2.5x) revenues or six times (6x) earnings, plus the greater of the net assets of the investment or the total amount of the actual investment.
• Under both scenarios, the value of the investment shall be adjusted down if there is a reasonable expectation that the Company will not be able to recoup the investment or if there is reasonable doubt about the investments ability to continue as a going concern.

The Board of Directors of the Company, using the above formula, has valued the Company's investments at $4,552,887. The Board has not retained independent appraisers to assist in the valuation of the portfolio investments because the cost was determined to be prohibitive for the current levels of investments.

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COMPANY STRATEGY

S3 Investment Company, Inc. ("the Company" or "SEIH") was incorporated under the laws of California under the name of Retail Windows, Inc. on April 19, 2000 to engage in any lawful activity as shall be appropriate under laws of the State of California. On June 30, 2001 the Company amended its Articles of Incorporation to change its name to Axtion Foods, Inc. Prior to April 2003, Axtion Foods, Inc. was engaged in the development, manufacturing and distribution of health bars and health drinks. The business plan was not fully implemented and on April 16, 2003 Axtion Foods, Inc. changed its name to S3I Holdings, Inc. and pursuant to the Share Exchange Agreement (Agreement) closed the definitive agreement to acquire all of the issued and outstanding capital stock of Securesoft Systems, Inc., a Delaware corporation, making Securesoft Systems, Inc (Securesoft) a wholly-owned subsidiary of the Company, and exchanging all of Securesoft's capital stock for shares of Company's authorized but un-issued shares of common stock as provided in Agreement.

Securesoft Systems, Inc. a wholly owned subsidiary, was incorporated in September 1999. Securesoft develops, markets and sells enterprise compliance and risk management software solutions enabling clients to ensure that privacy, ebusiness and security policies remain aligned with regulatory requirements, and an organization's business strategies and performance goals. The Securesoft software provides a structured approach that combines knowledge of current business processes and systems, an understanding of related legislation and the use of cohesive teams that are experienced with the issues and objectives surrounding compliance. Securesofts implementation services include compliance gap analysis, risk management, cost benefit analysis, implementation strategies and monitoring.

On April 12, 2004 the Company's Board of Directors elected to be regulated as a business investment company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies", which are loosely defined as any domestic company which is not publicly traded or that has assets less than $4 million.

In June of 2004 the office was moved to Temecula, California and administrative changes were made to help cut overhead and concentrate on adding portfolio companies that are cash flow positive. Continued efforts in this regard have culminated in the resignation of Wayne Yamamoto as Chief Executive Officer and the appointment of Chris Bickel as Chief Executive Officer in September of 2004. On October 12, 2004 the Company changes it's name to S3 Investment Company, Inc. to properly reflect the nature of its business.

During the quarter ended December 31, 2004 The Company made three new portfolio Investments. TSPartner, Inc. was acquired and merged with Securesoft, Systems, Inc. and the resulting company was named Secure System Solutions, Inc. This acquisition was made to strengthen and expand the compliance software business. Because of Chris Bickel's experience with and knowledge of the Chinese business community Sino UJE, LTD., a Hong Kong company and Redwood Capital, Inc., a privately held investment advisory group, were acquired. Chris Bickel originally organized Sino and he is very familiar with the opportunities that exist for Sino in the China market place. Redwood Capital, Inc. was acquired because of its presence in China and its connections with the Chinese investment banking market.

Investment Strategy

S3 Investments Company, Inc. intends to make strategic investments in cash-flow positive companies with perceived growth potential. The Investment Committee has adopted a charter wherein these two criteria will be weighed against other criteria including strategic fit, investment amount, management ability, etc. In principle, the Company will prefer to make investments in companies where the Company can acquire at least a 51% ownership interest in the outstanding capital of the portfolio company, or exert some other management control.

As a Business Development Company, the Company is required to have at least 70% of its assets in "eligible portfolio companies." It is stated in the Investment Committee Charter that the Company will endeavor to maintain this minimum asset ratio.

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Portfolio Investments

In addition to Securesoft, which became the first portfolio company, the Company acquired Redwood Capital, Inc., Sino UJE LTD and TSPartner, Inc as portfolio companies during the quarter ended December 31, 2004. These acquisitions represent just a part of the on going focus of acquiring portfolio investments that increase the value of the company.

During the quarter ended December 31, 2004 the company signed an agreement with TSPartner, a leader in healthcare information technology, for distribution of the Securesoft HIPAA compliance products and services. TSPartner, a nationwide distributor of healthcare services, served as the master distributor of the Securesoft compliance software solution and made significant progress in the sales and implementation of the compliance software in the healthcare industry. As a result of this success and relationship that was developed, the Company acquired TSPartner just prior to the quarter ending December 31, 2004, in exchange for restricted S3 Investment Company stock and future funding of the TSPartner operation.

It was intended from the beginning that TSPartner and Securesoft Systems would be combined into a single operating entity. Subsequent to the quarter ended December 31, 2004 the two companies were merged and given the new name of Secure Systems Solutions, Inc. This new company will not only market and implement the Securesoft compliance software but also distribute other business process solutions and professional services to the healthcare and financial industries.

Redwood Capital, Inc., a privately-held investment advisory group, was acquired during the quarter ended December 31, 2004. S3 Investment acquired 100% of Redwood Capital, Inc. to participate in the fast growing investment banking market in China. Redwood Capital specializes in Investment Banking for privately-held Chinese companies and has offices in China and the United States.

The Company acquired 51% of the common stock of Sino UJE, LTD, a Hong Kong corporation during the quarter ended December 31, 2004. Sino has and extensive distribution network in China. It distributes medical and industrial supplies for a group of Original Equipment Manufacturers (OEM's) in Europe and the US that are exclusively represented in China by Sino. Sino was acquired from YaSheng for 4.9% of the outstanding stock of the company as of December 31, 2004.

Currently, there are no additional commitments for material expenditures. It should be noted that the Company's auditors Chisholm, Bierwolf & Nilson have expressed in their audit opinion letter accompanying the financial statements for the year ended June 30, 2004 that there is substantial doubt about the Company's ability to continue as a going concern.

RESULTS OF OPERATIONS

Quarter ended December 31, 2004 compared to quarter ended December 31, 2003

During the quarter ended December 31, 2004, the Company incurred net income of $454,371 compared to a loss of $498,308 for the same quarter of 2003. The Company enjoyed a profit for the current quarter due to an unrealized gain of $2,889,783. This unrealized gain more than offset the high cost of the equity financing agreement that the company had in place during the quarter as well an expense recorded for legal contingencies of $670,383. Convertible debentures were converted at rates 50% below the market. Convertible debentures in the amount of $642,782 for the six month period ending December 31, 2004 were converted and resulted in a financing cost of $1,644,833. Operating expenses were $116,220 and $248,041 for the quarters ended December 31, 2004 and 2003, respectively. The reduced expenses this quarter compared to the same quarter a year ago is due mainly to the companies restructuring to reduce its overhead by outsourcing some of the administrative functions.

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Interest expense for the quarter ended December 31, 2004 was $3,976, compared to $8,600 for the quarter ended December 31, 2003

Liquidity and Capital Resources

The accompanying financial statements have been prepared in conformity with principles of accounting applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has become profitable this fiscal year due to an unrealized gain.. The Company still requires additional capital to meet its operating requirements. Management plans to increase cash flows through the sale of securities (see following paragraph below) and, through sales of Securesoft's compliance software solution. The acquisition of TSPartners, and its merger with Securesoft, will greatly increase the ability of the Company to meet its revenue projections. There are no assurances that such plans will be successful. No adjustments have been made to the accompanying financial statements as a result of this uncertainty.

As of December 31, 2004, the Company had total cash and current assets of $26,452 and current liabilities of $755,660. The majority of the liabilities are due to the recorded expense of $670,383 for legal contingencies. The Company generated cash for operations through the issuance of common stock and convertible debentures. Commencing December 1, 2003, the Company began issuing subordinated convertible debentures. The debentures bore interest at 8%, matured sixty (60) days from the date of issuance, and were convertible into common stock at a discount to market of 50% from the closing bid price on the date of conversion. Through December 31, 2004, a total of $752,482 ($277,482 this quarter) had been raised under these terms and $752,482 ($302,732 this quarter) had been converted. There was a debt incurred on June 1, 2001 of $71,000 that was unpaid and a convertible debenture was issued for $95,000 to pay the debt in the quarter ending September 30, 2004. During the Quarter ended December 31, 2004 $60,300 was converted leaving a balance due as of December 31, 2004 of $34,700. On April 12, 2004, the Company filed a notification with the Securities and Exchange Commission of its intent to raise capital through the issuance of securities exempt from registration under Regulation E of the Securities Act of 1933. This exemption allows the Company to sell up to $5,000,000 of securities exempt from registration. Through December 31, 2004, the Company raised $1,165,833 of which $413,351 was from the cash sale of securities and $752,482 was from convertible debentures ($277,482 this quarter) through the issuance of 358,092,745 (277,342,745 this quarter) shares of common stock through the use of the Regulation E exemption. Subsequent to December 31, 2004 the company has raised another $28,206 through cash sale of 15,000,000 shares of common stock.

There is no assurance that the Company will be able to raise any additional funds through the sale of securities or through the issuance of convertible debentures or that any funds made available will be adequate for the Company to continue as a going concern. Further, if the Company is not able to generate positive cash flow from operations, or is unable to secure adequate funding under acceptable terms, there is substantial doubt that the company can continue as a going concern.

RISKS AND UNCERTAINTIES

An investment in the Company involves a high degree of risk. In addition to matters discussed elsewhere in this report, careful consideration should be given to the following risk factors. This report contains certain forward-looking statements that involve risks and uncertainties. Our actual results could be substantially different from the results we anticipate in these forward-looking statements because of one or more of the factors described below and/or elsewhere in this report. If any of these risks were to actually occur, our business, results of operations and financial condition would likely suffer materially. The risks outlined below are those which management believes are material to an understanding of our business and the risks inherent in it, but such list is not exclusive of every possible risk, which may impact the Company and its shareholders in the future. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also appear or increase in significance, and could therefore impair our projected business results of operations and financial condition.

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Risks Related to Our Business

Our future operating results are subject to a number of risks, including our ability or inability to implement our strategic plan and to raise sufficient financing as required. Inability of our management to guide growth effectively, including implementing appropriate systems, procedures and controls, could have a material adverse effect on our business, financial condition and operating results.

Our future growth depends on the development of our present portfolio companies and the addition of portfolio companies that are cash flow positive and can contribute to the overall growth of the Company. The Companies present portfolio companies are well positioned to contribute to revenue growth in the coming quarter and beyond. Change in revenue or expense projections or even changes in the industry that cannot be adjusted to could adversely affect performance. Additionally the Company has a plan to implement acquisitions and is presently evaluating several companies to see if they will fit the criteria that have been established. The future performance of the companies to be acquired will determine if these evaluations were correct. And although part of the process is to evaluate the history of the companies to determine stability in their respective industries there is no assurance that this stability will continue.

We require additional funds to support our business operations.

We require additional capital in order to implement our current business plan as contemplated in this report. S3 Investment Company intends to attempt to raise funds during the second fiscal quarter of 2005 through the issuance of convertible debentures and the sale stock exempt from registration to accredited investors. If we are unable to raise the necessary capital we require, which we estimate to be a minimum of $500,000 and not more than $2,000,000, then we may not be able to operate our business in the manner described in this report. Our inability to raise the funds we require, when we require them and on terms that are reasonably acceptable to our management, would have a materially adverse effect upon our ability to maintain and grow our business.

If we do raise the funds we require to grow the business, it could result in substantial dilution to our existing shareholders.

To the extent that any of our financing will be raised through sale of stock or the issuance of convertible debentures, stock will be issued at a discount to the market upon the sale of the stock and the conversion of the debt resulting in substantial dilution to our existing shareholders which is disproportionate to the value of the funds received by us in such transaction. There is no guarantee that additional financing will be available to us on acceptable terms when needed, or at all.

Our failure to effectively manage our growth could have a material adverse effect on our business.

We expect our business to grow rapidly. Such growth will place a significant strain on our management systems and resources. We will need to continue to improve our operational and financial systems and managerial controls and procedures, and we will need to continue to expand, train and manage our workforce.

If we are unable to retain key personnel or attract new personnel, it could have a material adverse effect on our business.

The loss of services of any of our key personnel or our inability to successfully attract and retain qualified personnel in the future would have a material adverse effect on our business. We do not maintain key person life insurance on any of our employees.

Our Officers and Directors Have the Ability to Exercise Significant Influence Over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other Stockholders.

Our executive officers and directors, in the aggregate, have the ability to nominate two (2) members to the Board of Directors. Accordingly, our directors and executive officers, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our Board for approval, including issuing common and preferred stock, and appointing officers, which could have a material impact on mergers, acquisitions, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these board members may differ from the interests of the other stockholders. Officers of S3 Investment and its subsidiaries have a combined ownership of 30,000,000 shares of the company

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Risks Related To Our Industry

Laws and regulations may prohibit or severely restrict our ability to raise capital.

Various government agencies in the United States and throughout the world regulate capital raising practices. If we are unable to continue our business in our existing manner then we may not be able to continue to operate our present companies and acquire additional portfolio investments, which would hamper or even cause our business to fail. Additionally, government agencies and courts may use their powers and discretion in interpreting and applying laws in a manner that limits our ability to operate or otherwise harm our business. Also, if any governmental authority brings a regulatory enforcement action against us that interrupts our ability to raise capital, or which results in a significant fine or penalty assessed against us, our business could suffer.

CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act"), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures within the 90 days prior to the filing date of this report. This evaluation was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Mr. Chris Bickel. Based upon that evaluation, the Company's Chief Executive Officer concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us and required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

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PART II.
Other Information

Item 1. Legal Proceedings

There are a number of cases pending involving S3 Investment Company, Inc. and/or Securesoft Systems, Inc. The following is a complete list.

Securesoft was named as a defendant in a case entitled I-Sol, Inc. V. Securesoft Systems, Inc. The matter was submitted to binding arbitration before a JAMS Judge of the Orange County Superior Court on August 15, 2003. Judgment was awarded to the plaintiff in the amount of $77,000.00. The Company is presently seeking a settlement with the plaintiff for a lesser amount.

S3I Holdings, Inc and Securesoft were named defendants in a case entitled Fink and Villella V. Yamamoto, Berlandier, Luke Zouvas, Mark Zouvas, S3I and Securesoft. Fink and Villella filed complaint on November 20, 2003 and filed amended complaint on April 16, 2004. S3I filed a counterclaim on May 18, 2004 against Villella and on August 16, 2004 Villella was dismissed out of the case. Fink has continued to pursue the action. The Company and its counsel feel that this case will be dismissed within the next month based on the facts. S3I Holdings, Inc was plaintiff in a case entitled S3I Holdings, Inc. v. Fink. S3I Holdings filed a complaint in October 10, 2003 for injunctive relief, misrepresentation and fraud. The action was taken to stop the illegal sale of stock. The action was taken too late and the sale of stock took place. Any amount that would have been due Fink was more than offset by the stock sale.

S3I Holdings, Inc. and Securesoft were named defendants in a case entitled Radford v. Yamamoto, Berlandier, S3I, Securesoft and Grant. Radford filed complaint on February 10, 2004 alleging nonpayment of back wages. Defendants answered the complaint on July 9,2004. Stipulated mediation before an arbitrator will be completed on November 17, 2004. The Company feels the claim is baseless and that it will receive a favorable ruling.

Securesoft was named defendant in a case entitled Kim Anderson v. Securesoft Systems, Inc. Securesoft failed to answer complaint and a Court Judgment was awarded in favor of the defendant in the amount of $66,323.92. This amount is for back office rent. The Company is seeking to settle with the plaintiff for a lesser amount.

S3I Holdings was named defendant in a case entitled Professional Traders Fund, LLC v. S3I Holdings, Inc, and Luke Zouvas. A judgment was rendered against S3I and Zouvas by the Supreme Court of the State of New York for the amount of $274,239.60. The court is at this time reviewing this judgment based on the fact that the award to the plaintiff was based on forged documents. The Company and its counsel are confident that this judgment will be vacated.

Federal Grand Jury Investigation - On June 8, 2004 United States federal agents executed criminal search warrants at the offices of the Company and at the residence of Mark Zouvas. Federal agents also served Federal grand jury subpoenas for documents on the Company and others. The Company produced over 2,500 pages of documents in response to the grand jury subpoena. The governments investigation centers on alleged misrepresentations and omissions of material facts in Company filings with the SEC and in Company releases, and alleged fraud in the sale of the Company's securities. No criminal charges have been filed against the Company or anyone else, and the status of the criminal investigation is unknown. The current Officers and members of the Board of Directors were not involved with the Company at the time of these alleged errors and omissions. The Company feels that there has been no wrong doing on its part and is confident that no charges will be filed against it.

Item 2. Changes in Securities

This quarter, 117,250,000 shares of common stock were issued in payment of $363,032 of convertible debentures under a Regulation E exemption.

During the quarter ended December 31, 2004 the Company issued 142,000,000 shares of common stock for the cash sale of $413,351 under a Regulation E exemption.

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Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

Item 5.01 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
On October 1, 2004 the Board of Directors accepted the resignation of Shane Traveller as a member of the Board and as Interim Chief Financial Officer. The Board of Directors appointed Theodore C. Tanski, Sr. to replace him as a member of the Board and also appointed Ken Wiedrich as the Interim Chief Financial Officer.

99.1 Chief Executive Officer Certification as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.

99.2 Chief Financial Officer Certification as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.

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In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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S3 INVESTMENT COMPANY, INC.
a California corporation
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Chris L. Bickel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of S3 Investment Company, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: February 9, 2005

/s/ Chris L. Bickel
CHRIS L. BICKEL
Chief Executive Officer

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S3 INVESTMENT COMPANY, INC.
a California corporation
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Kenneth C. Wiedrich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of S3 Investment Company, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: February 9, 2005

/s/ Kenneth C. Wiedrich
KENNETH C. WIEDRICH
Chief Financial Officer

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Exhibit 99.1

CERTIFICATION

Pursuant to Sections 302 and 906 of the Corporate Fraud Accountability Act of 2002 (18 U.S.C. Section 1350, as adopted), Chris L. Bickel, Chief Executive Officer of S3 Investment Company, Inc. (the "Company"), hereby certifies that, to the best of his knowledge:

1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended December 31, 2004 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 9, 2005

/S/ Chris L. Bickel
CHRIS L. BICKEL
Chief Executive Officer

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Exhibit 99.2

CERTIFICATION

Pursuant to Sections 302 and 906 of the Corporate Fraud Accountability Act of 2002 (18 U.S.C. Section 1350, as adopted), Kenneth C. Wiedrich, Chief Financial Officer of S3 Investment Company, Inc. (the "Company"), hereby certifies that, to the best of his knowledge:

1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended December 31, 2004 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 9, 2005

/S/ Kenneth C. Wiedrich
KENNETH C. WIEDRICH
Chief Financial Officer

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