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AttorneyAtLaw
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作者：AttorneyAtLaw 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
应当鼓励苗苗的行为，我小我不怕，我年轻我有资本。STAY Hungry, STAY Foolish.
ITEM 1.
DESCRIPTION OF BUSINESS
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.
Further in connection with the Share Exchange Agreement, the controlling shareholders of the Company surrendered their stock in exchange for transfer of all right, title and interest to the sports nutrition products developed by the company since its inception. In accordance with the agreement, it was the intention of the parties that the company would acquire all of the issued and outstanding capital stock of Securesoft in exchange solely for the number of shares of the Company’s authorized but un-issued common stock and that the exchange qualify as a tax-free reorganization under section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and related sections there under； and the exchange qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933 and under the applicable securities laws of each state or jurisdiction where the shareholders reside.
Securesoft Systems, Inc. a wholly owned portfolio investment, was incorporated in September 1999. Securesoft develops, markets and sells enterprise compliance and risk management software solutions, the operations were discontinued in the last quarter of the fiscal year ended June 30, 2005.
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. As of June 30, 2005, the Company’s has two portfolio investments which are Redwood Capital, Inc. and Sino UJE, LTD.
On August 31, 2005 the Company filed a 14A Preliminary Proxy Statement with the Securities and Exchange Commission requesting shareholder votes on a proposal that would authorize the Board of Directors to withdraw the Company’s election to be treated as a business development company. The Securities Exchange Commission is presently reviewing this filing, the definitive proxy statement has not yet been filed, and the date and time for the meeting of the stockholders to vote on this action has not yet been set.
Securesoft became the Company’s first portfolio company. The Company added two new portfolio Investments in November, 2004: Sino UJE, LTD., a Hong Kong company, and Redwood Capital, Inc., a privately held investment advisory group. Chris Bickel, the CEO of the Company, was the original founder though no longer owner of Sino and was therefore 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.
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In October, 2004 the company signed an agreement with TSPartner for distribution of the Securesoft HIPAA compliance products and services. TSPartner represented itself as a nationwide distributor of healthcare services. 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. In February, 2005 it was discovered that TSPartner had misrepresented its financial condition and the acquisition was unwound. This unwinding resulted in the write down of assets of $1,642,705 and the restatement of the Company’s financial statement filed on form 10Q on February 14, 2005.
It was further decided in the quarter ended March 31, 2005 that, without a viable distribution partner and additional investment, the Secursoft investment was not worth the amount of money that had been invested in it. The Board of Directors’ investment committee determined that the investment should be written down to $100,000 to represent the fair value of the investment. The valuation was based on the value the Securesoft product has on a licensing fee arrangement with outside companies that would install and service the product with their clients. The value of the investment was written down to $0.00 in the quarter ended June 30, 2005 because Securesoft had not pursued any licensing agreements and had ended all business activity.
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 name to S3 Investment Company, Inc. to properly reflect the nature of its business.
Investment Strategy
S3 Investments Company, Inc. intends to make strategic investments in developing companies with perceived growth potential. The Investment Committee has adopted a charter wherein these two criteria a weighed against other criteria including strategic fit, investment amount, management ability, etc. In principle, the Company will prefer to make investments in companies where S3 Investment Company can acquire at least a 51% ownership interest in the outstanding capital of the portfolio company.
As a Business Development Company, the Company is required to have at lease 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.
Portfolio Investments
In addition to Securesoft, which became the first portfolio company, the Company acquired Redwood Capital, Inc., and Sino UJE 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.
In October 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 represented itself as a nationwide distributor of healthcare services. The Company then 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. In December 2004, it was discovered that TSPartner had misrepresented its financial condition and the acquisition was unwound. This unwinding resulted in $1,642,705 write down of net assets with a corresponding reduction of unrealized gains.
It was further decided during the quarter ended March 31, 2005 that without a viable distribution partner and additional investment the Secursoft investment was not worth the amount of money that had been invested in it. So rather than carry the investment at cost it was determined by the Board of Directors investment committee that the investment should be written down to $100,000. This $100,000 valuation is based on the value the Securesoft product has on a licensing fee arrangement with outside companies that would install and service the product with their clients. The value of the investment has been written down to $0.00 in the quarter ended June 30, 2005 because the Company has not pursued any licensing agreements and has ended all business activity of the Securesoft.
Redwood Capital, Inc., a privately-held investment advisory group, was acquired during November, 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 November, 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 5% of the outstanding stock of the company. The Company was notified by a staff attorney at the Securities and Exchange Commission ("Commission") that the agreement the Company entered into with YaSheng Group is resulted in the creation of "senior
4
securities" as defined by the Investment Company Act of 1940. The Staff of the Commission believes that the agreement stipulating YaSheng Group to maintain a 5% non-dilutive interest in the common stock of the Company gives YaSheng Group a senior position. This interpretation by the Commission could create instances where the Company would not be in compliance with Section 18 of the Investment Company Act of 1940 which requires that the Company maintain net assets to senior security coverage of at least 200%.
Employees
Exclusive of Securesoft operations, S3 Investment Company, Inc. presently has two employees who serve in administrative positions. Management intends to hire additional employees only as needed and as funds are available. In such cases compensation to management and employees will be considered with prevailing wages for services rendered.
Compliance with the Sarbanes-Oxley Act of 2002
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide variety of new regulatory requirements on publicly held companies and their insiders. Many of these requirements will affect us. For example:
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Our chief executive officer and chief financial officer must now certify the accuracy of the financial statements contained in our periodic reports；
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Our periodic reports must disclose our conclusions about the effectiveness of our controls and procedures；
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Our periodic reports must disclose whether there were significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses； and
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We may not make any loan to any director or executive officer and we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will continue to monitor our compliance with all future regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.
Code Of Ethics, Audit Committee Charter And Investment Committee Charter
The Board of Directors of the Company adopted a Code of Ethics, an Audit Committee Charter and an Investment Committee Charter.
The Code of Ethics in general prohibits any officer, director or advisory person (collectively, "Access Person") of the Company from acquiring any interest in any security which the Company (i) is considering a purchase or sale thereof, (ii) is being purchased or sold by the Company, or (iii) is being sold short by the Company. The Access Person is required to advise the Company in writing of his or her acquisition or sale of any such security. S3 Investment Company’s code of ethics is filed as an exhibit to this Form 10-K.
The primary responsibility of the Audit Committee is to oversee the Company's financial reporting process on behalf of the Company's Board of Directors and report the result of their activities to the Board. Such responsibilities shall exclude but shall not be limited to, the ｓｅｌｅｃｔion, and if necessary the replacement of the Company's independent auditors, review and discuss with such independent auditors and the Company's internal audit department (i) the overall scope and plans for the audit, (ii) the adequacy and effectiveness of the accounting and financial controls, including the Company's system to monitor and manage business risks, and legal and ethical programs, and (iii) the results of the annual audit, including the financial statements to be included in the Company's annual report on Form 10-K. S3 Investment Company’s audit committee charter is filed as an exhibit to this Form 10-K.
The Investment Committee shall have oversight responsibility with respect to reviewing and overseeing the Company's contemplated investments and portfolio companies and investments on behalf of the Board and shall report the results of their activities to the Board. Such Investment Committee shall (i) have the ultimate authority for and responsibility to evaluate and recommend investments, and (ii) review and discuss with management (a) the performance of portfolio companies, (b) the diversity and risk of the Company's investment portfolio, and, where appropriate, make recommendations respecting the role or addition of portfolio investments and (c) all solicited and unsolicited offers to purchase portfolio companies. S3 Investment Company’s investment committee charter is filed as an exhibit to this Form 10-K.
ITEM 2.
DESCRIPTION OF PROPERTY
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S3 Investments, Inc. subleases approximately 2,337 square feet in Temecula, CA which serves as the headquarters for both S3 Investment Company, Inc. and Securesoft Systems, Inc. The Company uses this space on a month-to-month basis as part of its management contract with Javelin Advisory Group.
Management believes that its facilities are adequate for its present business.
ITEM 3.
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 eventually be dismissed in early 2006. 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.
S3 Investment Company, Inc., S3I Holdings, Inc. and Securesoft were named defendants in a case entitled Villella V. Yamamoto, Berlainder, et al. Villella filed the complaint on April 13, 2005. Notice of service was not properly given to S3I until August of 2005. S3I filed a cross-complaint for damages against Villella on September 20, 2005. The Company feels that Villella’s claim is baseless and that it will receive a favorable ruling on both the original complaint as well as the cross-complaint.
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 was to have been completed on November 17, 2004. However, Radford filed a motion to have the case moved to state court for adjudication. On June 7, 2005 the Company filed a motion with the Court of Apeal of the State of California Fourth Appellate District, Division One, to compel mediation before an arbitrator. The appeal is currently in process and will most likely decided before end of year 2005. The Company feels that 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 currently making monthly payments to satisfy this judgment as agreed by Kim Anderson.
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 Company settled in May 2005.
Securesoft was named a defendant in a case entitled Bortorn Petrini & Copely, LLP V. Sercuresoft Systems, Inc. Borton filed the complaint on August 1, 2005 in order to collect legal fees that they claim were generated in defending Securesoft in the arbitration matter known as I-Sol V. Securesoft Systems, Inc. The Company is presently seeking a settlement with the plaintiff for a lesser amount.
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 government’s 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 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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A special meeting of shareholders of S3 Investments Company, Inc. was held on October 12, 2004 where the following actions were taken by a majority vote of shareholders:
1. The Company's Articles of Incorporation were amended:
a)
To authorize 2,020,000,000 shares of capital stock of the company, of which 2 billion will relate to common stock, subject to further designation by the Board of Directors of the company, and 20 million will relate to preferred stock, subject to further designation by the Board of Directors of the Company.
b)
To change the name of the corporation to S3 Investment Company, Inc.
c)
To permit action upon the written consent of less than all shareholders of the Company.
d)
To authorize the Company’s Board of Directors, without the consent of the stockholders of the corporation, to adopt any recapitalization affecting the outstanding shares of capital stock of the corporation by effecting a forward or reverse split of all of the outstanding shares of any class of capital stock of the corporation, with appropriate adjustments to the corporation’s capital accounts, provided that the recapitalization does not require any amendment to the Articles of Incorporation of the corporation
PART II
ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Market Information
The Company’s Common Stock is traded on the OTCBB (Over-The-Counter Bulletin Board) under the symbol “SEIH”. The following table sets forth the trading history of the Common Stock on the Bulletin Board for each quarter since April 2003 through June 30, 2005, as reported by Dow Jones Interactive. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Quarter Ending Quarterly High Quarterly Low Quarterly Close
6/30/2003 1.78 1.40 1.50
9/30/2003 1.70 0.55 0.75
12/31/2003 2.30 0.20 0.37
3/31/2004 0.39 0.16 0.16
6/30/2004 0.19 0.015 0.015
9/30/2004 0.014 0.009 0.011
12/31/2004 0.006 0.005 0.005
3/31/2005 0.003 0.002 0.002
6/30/2005 0.002 0.001 0.001
Holders of record
As of June 30, 2005 there were approximately 163 holders of record of the Company’s common stock.
Dividends
The Company has never paid a cash dividend on its common stock. Payment of dividends is at the discretion of the Board of Directors. The Board of Directors plans to retain earnings, if any, for operations and does not intend to pay dividends in the foreseeable future.
Recent Sales of Unregistered Securities
Except as otherwise noted, the securities described in this Item 5 were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933. Each such issuance was made pursuant to individual contracts which are discrete from one another and are made only with persons who were sophisticated in such transactions and who had knowledge of and access to sufficient information about the Company to make an informed investment decision. Among the information provided was the fact that the securities issued were restricted securities. No commissions were paid in connection with the transactions described below unless specifically noted.
As of June 30, 2005 S3 Investment Company, Inc had 1,684,312,432 shares of common stock outstanding.
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ITEM 6.
SELECTED FINANCIAL DATA
Financial Position as of June 30:
2005 2004 2003 2002 2001
Total asset $ 920,503 $ 837,827 $ 200,302 $ 92,541 $ 4,905
Total liabilities $ 485,002 $ 534,315 $ 460,149 $ 26,886 $ 9,300
Net assets $ 435,501 $ 303,512 ($ 259,847) $ 65,655 ($ 4,395)
Net asset value per outstanding share $ 0.0003 $ 0.008 ($ 0.011) $ 0.004 ($ 0.0002)
Shares outstanding, end of fiscal year 1,604,312,432 38,039,687 22,709,197 14,622,197 20,000,000
Operating Data for year ended June 30(1):
2005 2004 2003 2002 2001
Total investment income $ 21,889 - $ 287,004 $ 13,362 -
Total expenses $ 1,134,722 $ 609,924 $ 960,391 $ 68,671 $ 4,134
Net operating (loss) income ($2,279,840) ($ 609,924) ($ 673,362) ($ 86,938) ($4,134)
Total tax expense (benefit) - - $ 800 $ 800 $ 800
Net realized (loss) from investments ($1,167,007) - - - -
(1) The Company began operating as a Business Development Company on April 12, 2004, all prior period figures are based on the operations of Securesoft, Inc in 2003 and 2002.
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.
Plan of Operation
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.
As of April 28, 2004, management has recognized that there is a deficiency in liquidity. Such deficiency has been noted in the notes to the financial statements and the audit opinion. To remedy this situation, the Board of Directors authorized management to file Form 1-E with the Commission notifying of its intent to sell up to $5 million of the Company’s common stock under a Regulation E exemption.
S3 Investment Company, Inc. presently has three portfolio investment, Securesoft Systems, Inc., Sino UJE, LTD, and Redwood Capital, Inc. Management anticipates making additional portfolio investments as opportunities present themselves in the coming year.
Currently, there are no commitments for material expenditures. It should be noted that the Company’s auditors Chisholm, Bierwolf & Nilson, LLC have expressed in their audit opinion letter that there is substantial doubt about the Company’s ability to continue as a going concern.
In October of 2004, S3 Investment Company, Inc. signed a management contract with Javelin Advisory Group to provide administrative services. Javelin will provide services such as accounting, public relations, and various other administrative functions as well as office rent. This service will eliminate virtually all overhead costs plus it will free up present staff to concentrate on revenue generating activities.
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General and Administrative Expenses
General and administrative expenses (“G&A”) were $313,237 for the 12 months ended June 30, 2005, compared to $100,990 for the 12 months ended June 30, 2004, an increase of $212,337. The increase in G&A is due primarily due to increased activity in acquiring new portfolio companies.
Liquidity and Capital Resources
The Company’s financial statements present an impairment in terms of liquidity. As of June 30, 2005 the Company had $485,002 in current liabilities which exceeded current assets by approximately $436,507. The Company has accumulated $2,889,764 of net operating losses through June 30, 2005, which may be used to reduce taxes in future years through 2022. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carry-forwards. The potential tax benefit of the net operating loss carry-forwards have been offset by a valuation allowance of the same amount. The Company has not yet established revenues to cover its operating costs. Management believes that the Company will soon be able to generate revenues sufficient to cover its operating costs through the acquisition of operating subsidiaries. In the event the Company is unable to do so, and if suitable financing is unavailable, there is substantial doubt about the Company’s ability to continue as a going concern.
Results of Operation
For the year ended June 30, 2005 the Company had a net loss of $2,279,840 compared to a net loss of $609,924 for year ended June 30, 2004. The majority of this loss has to do with the write off of the Securesoft loan. All efforts to market the Securesoft product have been unsuccessful and the Secursoft operation has been shut down.
ITEM 7A. QAUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
RISK FACTORS
We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
We Have Historically Lost Money and Losses May Continue in the Future
We have historically lost money. The loss for the 2005 fiscal year was approximately $3,647,191 and future losses are likely to occur. Accordingly, we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. No assurances can be given that we will be successful in reaching or maintaining profitable operations.
There is Substantial Doubt About Our Ability to Continue as a Going Concern Due to Recurring Losses and Working Capital Shortages, Which Means that We May Not Be Able to Continue Operations Unless We Obtain Additional Funding
The report of our independent accountants on our June 30, 2005 financial statements included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages. Our ability to continue as a going concern will be determined by our ability to obtain additional funding. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our Common Stock May Be Affected By Limited Trading Volume and May Fluctuate Significantly
Prior to this offering, there has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall
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economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.
Our Common Stock is Traded on the "Over-the-Counter Bulletin Board," Which May Make it More Difficult For Investors to Resell Their Shares Due to Suitability Requirements
Our common stock is currently traded on the Over the Counter Bulletin Board (OTCBB) where we expect it to remain for the foreseeable future. Broker-dealers often decline to trade in OTCBB stocks given that the market for such securities is often limited, the stocks are more volatile, and the risk to investors are greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.
We Could Fail to Retain or Attract Key Personnel
Our future success depends, in significant part, on the continued services of Chris Bickel our Chief Executive. We cannot assure you that we would be able to find an appropriate replacement for key personnel. Any loss or interruption of our key personnel's services could adversely affect our ability to develop our business plan. We have no employment agreements or life insurance on Mr. Bickel.
California Law and Our Charter May Inhibit a Takeover of Our Company That Stockholders May Consider Favorable
Provisions of California law, such as its business combination statute, may have the effect of delaying, deferring or preventing a change in control of our company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.
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 have the ability to appoint a majority 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.
RISKS RELATED TO OUR OPERATION AS A
BUSINESS DEVELOPMENT COMPANY
We May Change Our Investment Policies Without Further Shareholder Approval
Although we are limited by the Investment Company Act of 1940 with respect to the percentage of our assets that must be invested in qualified investment companies, we are not limited with respect to the minimum standard that any investment company must meet, nor the industries in which those investment companies must operate. We may make investments without shareholder approval and such investments may deviate significantly from our historic operations. Any change in our investment policy or ｓｅｌｅｃｔion of investments could adversely affect our stock price, liquidity, and the ability of our shareholders to sell their stock.
Our Investments May Not Generate Sufficient Income to Cover Our Operations
We intend to make investments into qualified companies that will provide the greatest overall return on our investment. However, certain of those investments may fail, in which case we will not receive any return on our investment. In addition, our investments may not generate income, either in the immediate future, or at all. As a result, we may have to sell additional stock, or borrow money, to cover our operating expenses. The effect of such actions could cause our stock price to decline or, if we are not successful in raising additional capital, we could cease to continue as a going concern.
ITEM 8.
FINANCIAL STATEMENTS
See the financial statements annexed to this report.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
10
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Based on an evaluation under the supervision and with the participation of the our management as of a date within 90 days of the filing date of this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, are effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken. However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there is no certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless of how remote.
ITEM 9B.
OTHER INFORMATION
Not applicable.
PART III.
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company as of September 30, 2005 are as follows:
Name Age Position
Chris L. Bickel 42 Chief Executive Officer and Chairman of the Board
Kenneth C. Weidrich 59 Chief Financial Officer and Secretary
Brad Smith 40 Executive Vice President
Theodore Tanski 58 Director
The business experience of each of the persons listed above is as follows:
Chris Bickel, CEO and Chairman - Mr. Bickel has over 20 years in International Operations and Sales and Marketing management positions with both public and private companies, with significant experience in the production and distribution of a wide range of products, markets and technology in most of the industrial and commercial markets around the world. While working at FTSE-listed and NASDAQ-listed companies, Mr. Bickel held a wide range of positions in sales, marketing and operations management. During his tenure as Director of Sales and Marketing for a semiconductor detector manufacturing company, the customer base was converted from Research and Development institutions to an Original Equipment Manufacturer (OEM) clientele that included GE, Toshiba, Philips, Hitachi, and Siemens. While President of a privately-held Japanese company, Mr. Bickel set up direct offices and employees in the USA and Europe while managing the regulatory approvals process and set up distribution throughout the world and managed dozens of pre-approval clinical trials and clinical tests in hospitals in the USA, Europe and Asia. Mr. Bickel is currently President of SINO UJE Ltd. a non-stocking distributor that sells and services western designed and manufactured high-tech products to markets in China and COO of Nicholas Investment Company, a subsidiary of YaSheng Group, a diversified agricultural and industrial conglomerate.
Ken Weidrich, CFO and Secretary – Mr. Weidrich has over 33 years of experience in operational accounting and finance functions in a variety of businesses within the service, construction and manufacturing industries. Mr. Weidrich has experience in the use of several automated accounting systems including MAS90, Peachtree, and QuickBooks. Mr. Weidrich has experience with government cost accounting methods and all related government acquisition regulations. In his capacity as the Chief Financial Officer for RI-Tech, Inc., he was responsible for the day to day administrative functions of the company, as well as all accounting and financial aspects of the business. Mr. Weidrich was involved in raising money through a private placement and the long term financing for Ri-Tech.
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Brad Smith, Executive Vice President - Mr. Smith has an extensive background in legal and contractual matters and a wide range of business experience in and outside of the US. Brad is fluent in Japanese and business conversant in Chinese and will immediately participate in the Companies subsidiaries SINO UJE and Redwood Capital and their business in China. Mr. Smith has fifteen years experience in business development, international trade, finance, competitive business intelligence and intellectual property consulting. Previously, he was co-founder and Chief Operating Officer of IP Intelligence, LLC, a consulting firm providing intellectual property services. He has an M.B.A. in International Management from Thunderbird, The American Graduate School of International Management. Mr. Smith earned a J.D. from Gonzaga University School of Law and completed Santa Clara University School of Law's International Law Program held in Tokyo, Japan.
Theodore Tanski, Director – Mr. Tanski us a highly accomplished financial and marketing professional with over 30 years experience in investments and client services. Ted is currently Executive Vice President and a partner in Beaconsfield Financial Services, Inc., a full-service brokerage and investment banking firm, a position he has held since 1988. Mr. Tanski has extensive experience in a wide range of financial markets as both an investment banker and broker/dealer that includes underwriting, private placements, corporate financing, financial research, partnership and corporate portfolio management. Prior to his tenure with Beaconsfield, Mr. Tanski was a vice president with Shearson Lehman Brothers where he managed personal and corporate investment portfolios with a focus on international markets. Mr. Tanski holds a B.S. degree from the University of Pittsburgh.
Meetings
During the year ended June 30, 2005 the Board of Directors met on six occasions. Each incumbent Director attended at least 70% of the total number of meetings of the Board of Directors.
Compensation Of Directors
Our independent directors are compensated $2,000 each per month for services provided as a Director. Our independent directors received no other consideration in exchange for their services to the company, nor did they perform any service that would fall outside the scope of their duties as directors.
ITEM 11.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term compensation for services in all capacities for the years ended June 30, 2005, June 30, 2004 and June 30, 2003 paid to Wayne Yamamoto, Chris Bickel and Brad Smith. Effective September 11, 2005, Wayne Yamamoto voluntarily resigned as chief executive officer and Chris Bickel was appointed chief executive officer. Effective January 11, 2005, Brad Smith was appointed Executive Vice President. No other executive officers received compensation exceeding $100,000 during the year ended June 30, 2005.
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Summary Compensation Table
Annual Compensation Long Term Compensation
Awards
Name and Principal Position
Year
Salary
Bonus Other
Annual
Compensation Restricted
Stock
Award(s) Securities
Underlying
Options
All Other
Compensation
Wayne Yamamoto 2003 $-0- $-0- $-0- －－ －－ －－
Chief Executive Officer 2004 $69,000 $-0- $-0- －－ －－ －－
2005 $18,000 $-0- $-0- －－ －－ －－
Chris Bickel
Chief Executive Officer 2005 $135,000 $-0- $-0- －－ －－ －－
Brad Smith
Executive Vice President 2005 $40,000 $-0- $-0- －－ －－ －－
Employment Agreements
The Company does not currently have any employment agreements in place. It does have a management contract in place with Javelin Advisory Group for administrative services. The contract is for 12 months at $10,000.00 per month. This service will provide all administrative functions and will eliminate all other overhead and fixed costs associated with administrative personnel.
Indemnification
As permitted by the provisions of the General Corporation Law of the State of California, the Company has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation if such officer or director acted in good faith and in a manner reasonably believed to be in or not opposed to the best interest of the Company. Any such person may be indemnified against expenses, including attorneys’ fees, judgments, fines and settlements in defense of any action, suit or proceeding. The Company does not maintain directors and officer’s liability insurance.
Compliance With Section 16(a) of the Securities Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires S3 Investment Company's executive officers and directors, and persons who own more than ten percent (10%) of a registered class of S3 Investment Company 's equity securities, to file an initial report of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange Commission (the "SEC"). Such officers, directors and ten percent (10%) shareholders are also required by the SEC rules to furnish S3 Investment Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 5 were required for such persons, S3 Investment Company believes that its executive officers, directors and ten percent (10%) shareholders complied with all Section 16(a) filing requirements applicable to them through the fiscal year ended June 30, 2005, except for the following:
Chris Bickel filed a Form 3 report on May 9, 2005 to report ownership of 11,000,000 shares of S3 Investment Company Series B preferred stock.
Chris Bickel filed a Form 4 report on May 9, 2005 to report gifting 1,250,000 shares of S3 Investment Company Series B preferred stock on January 14, 2005.
Chris Bickel filed a Form 4 report on May 16, 2005 to report gifting 1,010,000 shares of S3 Investment Company Series B preferred stock on March 30, 2005.
Dennis Keating filed a Form 3 report on May 16, 2005 to report acquiring 255,000 shares of S3 Investment Company Series B preferred stock on March 30, 2005 it was gifted to him from Chris Bickel.
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Brad Smith filed a Form 3 report on May 16, 2005 to report acquiring 500,000 shares of S3 Investment Company Series B preferred stock on March 30, 2005 it was gifted to him from Chris Bickel.
Ken Weidrich filed a Form 3 report on June 9, 2005 to report no ownership position held, he was appointed Chief Financial Officer of the Company on October 1, 2004.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTER
The following table sets forth information, to the best knowledge of the Company, as of September 12, 2005 with respect to each person known by S3 Investment Company, Inc. to own beneficially more than 5% of the outstanding Common Stock, each director and officer, and all directors and officers as a group.
Name and Address(1) Number of Shares Beneficially Owned
Class Percentage of Class (2)
Chris Bickel
CEO and Chairman 3,817,000
8,400,000 Common
Series B Preferred *
70%
Kenneth Weidrich
CFO and Secretary -0-
-0- Common
Series B Preferred *
Brad Smith
Executive Vice President -0-
500,000 Common
Series B Preferred *
4%
Theodore Tanski, Sr. (3)
Director -0-
425,000 Common
Series B Preferred *
3%
All directors and executive officers
(4 persons) 3,817,000
8,825,000 Common
Series B Preferred *
77%
*Denotes less than 1%
(1) Unless indicated otherwise, the address for each of the above listed is c/o S3 Investment Company, Inc at 43180 Business Park Dr., Suite 202, Temecula, CA 92590.
(2) The above percentages are based on 1,634,312,432 shares of common stock and 12,000,000 shares of Series B Preferred Stock outstanding as of September 15, 2005.
(3) Sharon Tanski, the wife of Theodore Tanski, Sr. currently holds 425,000 shares of Series B Preferred Stock.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company’s officers and directors are subject to the doctrine of corporate opportunities only insofar as it applies to business opportunities in which the Company has indicated an interest, either through its proposed business plan or by way of an express statement of interest contained in the Company’s minutes. If directors are presented with business opportunities that may conflict with business interests identified by the Company, such opportunities must be promptly disclosed to the Board of Directors and made available to the Company. In the event the Board shall reject an opportunity that was presented to it and only in that event, any of the Company’s officers and directors may avail themselves of such an opportunity. Every effort will be made to resolve any conflicts that may arise in favor of the Company. There can be no assurance, however, that these efforts will be successful.
14
ITEM 14.
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
Audit Fees
The aggregate fees billed by the Company's auditors for the professional services rendered in connection with the audit of the Company's annual financial statements for fiscal 2005 and reviews of the financial statements included in the Company's Forms 10-K for fiscal 2004 were approximately $14,000 and $16,473, respectively.
作者：AttorneyAtLaw 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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