UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2006

Commission File Number: 001-31347

S3 INVESTMENT COMPANY, INC.

(Exact name of registrant specified in its charter)

California 33-0906297

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

43180 Business Park Drive #202, Temecula, CA 92590

(Address of principal executive offices)

(951) 587-3618

(Registrant’s telephone number, including area code)

N/A

(former name, former address and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ X ] No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ X ] No

APPLICABLE ONLY TO CORPORATE ISSUERS:

The Registrant had 2,300,000,000 shares of its common stock, $0.001 par value per share, 11,750,000 shares of its Series B Preferred Stock, $0.001 par value per share and 1,000,000 shares of its Series C Preferred Stock, $0.001 par value per share outstanding as of November 17, 2006.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.


S3 Investment Company, Inc.
Balance Sheet
(unaudited)
ASSETS
			September 30,
			2006
Current Assets
	Cash	$	38,165
	Prepaid expense		66,132
	Accounts receivable		781,929
	Advances		15,861
	Investments (Note 3)		661,200
	Contracts receivable, net of allowance (Note 4)		-
Total Current Assets			1,563,287
Property - office equipment net of depreciation			16,868
Other Assets
	Goodwill (Note 5)		1,167,432
Total Other Assets			1,167,432
	Total Assets	$	2,747,587
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts payable	$	616,531
	Accrued interest		2,500
	Line of credit		26,000
	Contingent liabilities (Note 6)		360,383
	Stock payable (Note 7)		110,000
	Notes payable (Note 8)		143,450
Total Current Liabilities			1,258,864
	Total Liabilities		1,258,864

Minority Interest (Note 9)			566,235

Stockholders' Equity
	Preferred Stock, Authorized 100,000,000 Shares, $0.001 Par Value, 12,750,000		12,750
	Common Stock, Authorized 9,900,000,000 Shares, $0.001 Par Value, 2,100,000,000 Shares Issued and Outstanding (Note 10)		2,100,000
	Additional Paid in Capital		5,031,669
	Subscription receivable		(15,491)
	Retained deficit		(6,206,440)
Total Stockholders' Equity			922,488
	Total Liabilities and Stockholders' Equity	$	2,747,587

The accompanying notes are an integral part of these consolidated financial statements.


S3 Investment Company, Inc.
Statements of Operations
(unaudited)
		For the Three Months Ended September 30,
		2006		2005
Revenues	$	744,924	$	170,993
Total Revenues		744,924		170,993
Cost of Materials		619,152		100,532
Gross Profit		125,772		70,461

Operating Expenses
Administrative fees		45,000		30,000
Consulting		1,830		-
Depreciation expense		79		79
Interest expense		39		-
Investor relations		9,270		11,250
Payroll expenses		69,038		117,456
Professional fees		75,164		67,021
General & Administrative expense		111,826		87,485
Total Operating Expenses		312,246		313,291
Net Operating Gain (Loss)		(186,474)		(242,830)
Other Income (Expense)
Forgiveness of debt		-		645,777
Unrealized loss on investment		(22,800)		-
Total Other Expense		(22,800)		645,777
Income (Loss) Before Income Taxes		(209,274)		402,947
Less Minority Interest		19,614		(293,706)
Income Tax Expense		-		-
Net Gain (Loss)	$	(189,660)	$	109,241
Net loss per share	$	(0.00009)	$	0.0001
Weighted Average Shares Outstanding		2,055,434,783		1,673,490,514

The accompanying notes are an integral part of these consolidated financial statements.


S3 Investment Company, Inc.
Statements of Stockholders' Equity (Deficit)
					Additional		Retained
	Preferred Stock		Common Stock		Paid in	Subscription	Earnings	Minority
	Shares	Amount	Shares	Amount	Capital	Receivable	(Deficit)	Interest
Balance, June 30, 2003	-	$ -	22,709,197	$ 22,709	$ 2,986,639	$ -	$ (3,269,195)	$ -
January 2004 - stock issued for services	-	-	300,000	300	74,700	-	-	-
January 2004 - stock issued for satisfaction of debt	-	-	820,000	820	128,780	-	-	-
March 2004 - stock issued for conversion of debentures including finance charge	-	-	13,910,490	13,911	715,089	-	-	-
April 2004 - stock issued for cash	-	-	300,000	300	2,700	-	-	-
Net (loss) for the year ended June 30, 2004	-	-	-	-	-		(1,362,885)	-
Balance, June 30, 2004	-	-	38,039,687	38,040	3,907,908	-	(4,632,080)	-
July, through Dec 04 - stock issued for conversion of debentures	-	-	189,200,000	189,200	542,699	-	-	-
Beneficial Conversion expense related to convertible debentures	-	-	-	-	277,482	-	-	-
October 2004 - acquisition of Redwood Capital	12,000,000	12,000	-	-	108,000	-	-	-
October 2004- restricted stock issued for retirement of debt	-	-	4,730,000	4,730	(4,730)	-	-	-
December 2004- acquisition of Sino	-	-	18,092,745	18,093	23,520	-	-	-
Oct, 04 through June 05 - stock issued for cash	-	-	1,354,250,000	1,354,250	225,984	(339,399)	-	-
Net Income for the year ended June 30, 2005							(1,806,568)	-
Balance June 30, 2005	12,000,000	12,000	1,604,312,432	1,604,313	5,080,863	(339,399)	(6,438,648)	-
August, 2005 stock issued for cash	-	-	80,000,000	80,000	-		-	-
Cash received for stock subscription	-	-	-	-	-	339,399	-	-
S8 stock issued for services	-	-	100,000,000	100,000	25,000	-	-	-
Restricted stock issued for subscription receivable	-	-	115,687,568	115,687	(75,197)	(40,491)	-	-
Restricted stock issued for cash	-	-	100,000,000	100,000	-	-	-	-
Preferred Stock issued to officer	1,000,000	1,000	-	-	9,000	-	-	-
Contribution of accrued interest by shareholders	-	-	-	-	21,753	-	-	-
Net Income (Loss) for the year ended June 30, 2006	-	-	-	-	-	-	421,868	585,849
Balance June 30, 2006	13,000,000	13,000	2,000,000,000	2,000,000	5,061,419	(40,491)	(6,016,780)	585,849
S3 stock issued for services (unaudited)	-	-	100,000,000	100,000	(29,500)	-	-	-
Cash received for stock subscription (unaudited)	-	-	-	-	-	25,000	-	-
Cancellation of preferred stock (unaudited)	(250,000)	(250)	-	-	(250)	-	-	-


Net Income (Loss) for the period ended September 30, 2006 (unaudited)	-	-	-	-	-	-	(189,660)	(19614)
Balance September 30, 2006 (unaudited)	12,750,000	$ 12,750	2,100,000,000	$ 2,100,000	$ 5,031,669	$ (15,491)	$ (6,206,440)	$ 566,235
The accompanying notes are an integral part of these consolidated financial statements.


S3 Investment Company, Inc.
Statements of Cash Flows (unaudited)


		For the Three Months Ended September 30,
		2006		2005

Cash Flows from Operating Activities:
Net Gain (Loss)	$	(189,660)	$	109,241
Adjustments to Reconcile Net Loss to Net Cash Provided by Operations:
Depreciation and amortization		79		79
Stock issued for services		95,000		-
Debt forgiveness		-		(645,777)
Unrealized loss on investments		22,800		-
Minority interest		(19,614)		293,706
Changes in Operating Assets and Liabilities:
Increase in deposits		-		(2,486)
(Increase) decrease in prepaid expenses		(24,838)		71,401
Increase in receivables		(247,998)		-
Increase in accounts payable		212,218		(91,769)
Net Cash Provided (Used) by Operating Activities		(152,013)		(265,605)
Cash Flows from Investing Activities:
Purchase of office equipment		(1,241)		(2,723)
Net Cash Used by Investing Activities		(1,241)		(2,723)
Cash Flows from Financing Activities:
Issuance of common stock for cash		-		419,399
Net Cash Provided by Financing Activities		-		419,399
Increase (decrease) in Cash		(153,254)		151,071
Cash and Cash Equivalents at Beginning of Period		191,419		91,018
Cash and Cash Equivalents at End of Period	$	38,165	$	242,089
Supplemental cash flow information:
Cash Paid For:
Interest	$	-	$	-
Income Taxes	$	-	$	-
Non-Cash Investing and Financing Activities:
Stock issued for Services	$	100,000	$	-

The accompanying notes are an integral part of these consolidated financial statements.

S3 INVESTMENT COMPANY, INC.

Notes to the Consolidated Financial Statements

September 30, 2006 and 2005

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.

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. a wholly-owned subsidiary, was incorporated in September 1999. Securesoft developed and marketed enterprise compliance and risk management software solutions, but discontinued operations in the last quarter of the fiscal year ended June 30, 2005. It subsequently filed for bankruptcy protection under Chapter 7 of the Universal Commercial Code.

On April 12, 2004 the Company's Board of Directors elected to be regulated as a business development company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company was 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. Based on the BDC format, Securesoft became the 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 Chairman of the Company’s Board of Directors, 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. On October 12, 2004 the Company changes its name to S3 Investment Company, Inc. to properly reflect the nature of its business.

In August 2005, the Board of Directors determined that the Company’s continued focus on operations outside the United States, and the limited nature of the Company’s portfolio, did not lend itself to the structure of a business development company nor require reporting under the Investment Company Act of 1940. Further, the Company’s management had several discussions with the Securities and Exchange Commission during which the Commission expressed the opinion that the Company’s capital structure was in violation of certain provisions of the Investment Company Act of 1940; namely, that the Company’s preferred stock was issued in violation of Section 18 and convertible debentures were issued in violation of Section 61. On August 26, 2005, the Board of Directors approved a motion to withdraw the Company’s election to be treated as Business Development Company under the 1940 Act and on April 5, 2006 the Company’s shareholders approved the withdrawal petition. On April 6, 2006, the Company filed an N-54C, which formally withdrew the Company’s BDC election.

As a result of the Company’s BDC withdrawal, the Company now files consolidated financial statements that include each of its controlled subsidiaries (See Changes in Accounting Practices below).

The consolidated financial statements include the accounts of S3 Investment Company, Inc., Redwood Capital, Inc. and Sino UJE, Ltd. All material inter-company accounts and transactions have been eliminated in the consolidation.

Withdrawal as a Business Development Company

On April 12, 2004, the Company filed an election with the U.S. Securities and Exchange Commission to become a business development company pursuant to Section 54 of the Investment Company Act of 1940. On August 26, 2005, the Board of Directors unanimously approved the proposal to withdraw the Company’s election to be treated as a business development company (“BDC”) as soon as practicable so that it could begin conducting business as an operating company rather than as a business development company subject to the Investment Company Act. On April 5, 2006, the holders of a majority of the outstanding shares of the Company’s common stock approved the proposal to withdraw the Company’s election to be treated as a BDC, and on April 6, 2006, a Notification of Withdrawal was filed with the Securities and Exchange Commission. The change in the Company’s status eliminates the Company’s ability to utilize the “fair value” method of accounting for subsidiaries that is required of investment companies.

Significant change in method of accounting

The election to withdraw the Company’s election as a BDC under the Investment Company Act has resulted in a significant change in the Company’s required method of accounting. Investment company financial statement presentation and accounting utilizes the “fair value method of accounting” for recording ownership in portfolio or subsidiary companies. This treatment requires that BDCs value their investments at market value as opposed to historical cost. With the Company’s withdrawal from the Investment Company Act, the required financial statement presentation and accounting for securities held will be either the equity method or consolidation of accounting depending on the classification of the investment and the Company’s ownership percentage.

Effect

As an operating company, the Company must consolidate its financial statements with subsidiaries, thus eliminating the fair value reporting required by BDC’s. As a result, in accordance with FAS 154, the accompanying financial statements have been presented on an operating and consolidated basis for all periods presented on a retrospective basis. The effect to the statement of operations for the prior period based on the consolidated comparison are as follows:

The statement of operations for the year ended September 30, 2005 has been adjusted to include the subsidiaries Sino UJE and Redwood Capital, which were included only as portfolio companies carried at their fair market value in the September 30, 2005 annual report previously filed. As a result of consolidating these entities, operating expenses increased by $245,084, and the other expense decreased by $666,487. Combined, these changes resulted in September 30, 2005 loss of $66,995 becoming a profit $109,241.

NOTE 2 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s current assets exceed current liabilities by approximately $304,423, but the Company has had recurring operating losses for the past several years resulting in an accumulated deficit of $6,206,440 at September 30, 2006. The Company has discontinued the operations of one of its subsidiaries so as to eliminate continued losses from that source. Generated revenues from sales and profits of its two other subsidiary companies will supplement and eventually replace money raised through financing. These factors combined, raise substantial doubt about the Company’s ability to continue as a going concern. Management has taken various steps to revise its operating and financial requirements, which it believes will be sufficient to provide the Company with the ability to continue its operations for the next twelve months.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – MARKETABLE SECURITIES

Pursuant to SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities” management determines the appropriate classification of investment securities at the time they are acquired and evaluates the appropriateness of such classification at each balance sheet date. The classification of those securities and the related accounting policies are as follows:

Trading securities: Trading securities are held for resale in anticipation of short-term (generally 90 days or less) fluctuations in market prices. Trading securities, consisting primarily of actively traded equity securities, are stated at fair value. Realized and unrealized gains and losses are included in income.

Available-for-sale-securities: Available-for-sale securities consist of marketable equity securities not classified as trading securities. Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders' equity.

Dividends on marketable equity securities are recognized in income when declared. Realized gains and losses are determined on the basis of the actual cost of the securities sold.

The Company’s wholly-owned subsidiary, Redwood Capital, provides investment banking services to Chinese companies seeking access to U.S. and foreign capital. Redwood receives, as payment for services, both cash consideration and stock in the respective entity. The stock received is carried as an investment and reflects the value of the stock on the date received. Any impairment of value due to declining stock price is recorded as “unrealized loss.” Realized gains or losses are recorded on disposition of the stock. At September 30, 2006, the Company’s investment consisted of 90,722 shares of Fushi International, Inc. (OTC: FSIN), which was originally recorded at the issue price of $0.10 per share, or $907,220. During the year ended June 30, 2006, the Company recorded an unrealized loss of $0.0246 per share, or $223,220, to reflect the closing bid price of Fushi International, Inc. stock on June 30, 2006. As of the quarter ended September the Company recorded an additional unrealized loss of $22,800 to reflect the closing bid price of $0.07 per share as of September 30, 2006.

NOTE 4 – CONTRACTS RECEIVABLE

The Company’s wholly-owned subsidiary, Redwood Capital, generated commission income of $145,000 for investment banking services. As of September 30, 2006 the fee had not been collected. As a result the Company has taken an allowance of $145,000 and is showing $0.00 as a net receivable. The client has delayed the payment of the fee so Redwood Capital and a Chinese partner have taken them to court in China. Redwood Capital expects the amount to be collected.

NOTE 5 – GOODWILL

Goodwill represents the excess of cost over fair value of net assets acquired through acquisitions. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142 issued in June 2001, goodwill recorded by the Company has not been amortized and will be evaluated on an annual basis, or sooner if deemed necessary, in connection with other long-lived assets, for potential impairment.

As previously discussed, during the fiscal year ending Jun 30, 2005, the Company acquired the business and all related assets of Sino UJE, Ltd. and Redwood Capital, Inc., unrelated companies. The purchase price of $161,613 was satisfied by the Company issuing common and preferred stock. The acquisition was an arm’s length transaction and has been accounted for using the purchase method.

The following table summarizes the estimated fair value of the assets acquired and equity assumed at the date of acquisition. The purchase price allocation is based upon management’s best estimate of the relative fair values of the identifiable assets acquired and liabilities assumed.


Net assets acquired:
Goodwill	$	1,167,432
Net assets acquired		1,167,432

Net liabilities assumed:
Common stock	$	100,000
Retained loss		(3,061,586)
Paid in capital		1,955,766

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company continues to carry an accrued liability of $360,383 for legal contingencies that were incurred by Securesoft Systems, Inc. in the past. Securesoft has discontinued operations and filed for bankruptcy protection under Chapter 7 of the Universal Commercial Code, but there are pending liabilities that may be incurred. This amount was reviewed and deemed proper in regard to the legal cases pending against the Company.

The pending liabilities and cases involving S3 Investment Company, Inc. and/or Securesoft Systems, Inc are listed below:

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. Securesoft is seeking relief under bankruptcy protection, and does not anticipate incurring any liability on this matter.

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 agreed to a settlement in the amount of $183,000, which is being paid over 24 months.

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. On June 15, 2006, the Company agreed to settle the suit for $42,000, which is being paid over 24 months.

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 and subsequently paid $146,000 as payment in full on the judgment.

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. Securesoft is seeking relief under bankruptcy protection, and does not anticipate incurring any additional liability on this matter.

Employment agreements

The Company does not currently have any employment agreements in place. It does, however, have a management contract in place with Javelin Advisory Group for administrative services. The contract is for 12 months at $15,000 per month and includes most administrative services including bookkeeping, public relations, SEC compliance, and record maintenance. It also has a contract for $2,500 with Gemini Communications to provide public relations services. These services will provide all administrative and public relations functions and will eliminate all other overhead and fixed costs associated with administrative personnel.

NOTE 7 – STOCK PAYABLE

Subsequent to the quarter ended September 30, 2006, the Company issued 100,000,000 shares of restricted common stock as part of the consideration for the cancellation of 4,000,000,000 warrants. The value of the shares issued at the time the agreement was written was $110,000 and this has been recorded as a stock payable as of September 30, 2006.

NOTE 8 – NOTES PAYABLE

The Company executed a note payable with a private third party for $95,000 during May 2000. The note bears interest at 8% per year and matured May 2001. The Company has made ongoing payments against the note and presently has a balance owed of $29,700, which is shown as a current liability in the accompanying financial statements. Subsequent to the quarter ended September 30, 2006, the Company agreed to repay $100,000 as part of the consideration for the cancellation of 4,000,000,000 warrants. The Company executed a promissory note for the $100,000 that is due in four equal monthly payments of $25,000 starting on February 1, 2007 and ending on May 1, 2007. If any monthly payment is not paid within ten days of its due date, interest shall accrue on the balance due, from the date of the note, at the rate of 9% per annum. Sino UJE, Ltd also recorded a note payable due to a private party for $13,750.

NOTE 9 – MINORITY INTEREST

The Company previously acquired a 51% ownership interest in Sino UJE, a Hong Kong corporation with operations throughout China. The accompanying consolidated financial statements have been prepared reflecting adjustments necessary to reflect the minority interest held by third parties. As a result, $566,235 which is 49% of the profit of Sino UJE, LTD, has been deducted from the operating profit of Sino and has been recorded on the balance sheet as minority interest.

NOTE 10 – STOCK

Common Stock

The Company has 9,900,000,000 shares of common stock authorized, of which 2,100,000,000 shares were issued and outstanding as of September 30, 2006. During the quarter ending September 30, 2006, the Company had the following common stock transactions:

100,000,000 shares of common stock were issued for $100,000 in services under an S-8 registration.

Warrants

On June 2, 2006, the Company issued warrants to purchase 4 billion shares of common stock at an exercise price of the greater of 80% of the five lowest trading days over the twenty days prior to exercise, or $0.0005. The Company was required to register the shares underlying these warrants and received $100,000 from the warrant holder as a prepayment. Subsequent to the quarter ended September 30, 2006, the Company, entered into an agreement with the holder of the warrants to cancel the warrant and guaranty. (See note 7 and 11)

Preferred Stock

The Company has 100,000,000 shares of preferred stock authorized, of which 12,750,000 shares are outstanding in two different designated series.

Series B Preferred Stock, of which 15,000,000 shares are designated and 11,750,000 shares are outstanding, the Series B Preferred Stock does not have voting rights and can be converted into shares of common stock on a 1:1 basis. In lieu of voting rights, the Series B Preferred Stock is entitled to elect two directors at each shareholder meeting.

Series C Preferred Stock, of which 1,000,000 shares are designated and 1,000,000 shares are outstanding, was issued to James Bickel, Chief Executive Officer, in May 2006 as consideration for personally guaranteeing an advance on a warrant purchase agreement. The Series C Preferred Stock entitle the holder to 1,000 votes per share on all shareholder matters and expire once the personal guarantee is removed.

NOTE 11 – RELATED PARTY TRANSACTION

Management Agreement

On June 1, 2006, the Company entered into a twelve-month management agreement with Javelin Advisory Group, Inc., to furnish the Company with clerical and record keeping services. Javelin Advisory Group, Inc. performs, or oversees the performance of, the Company’s required administrative services. These services eliminate virtually all overhead costs and free up present staff to concentrate on revenue generating activities. The Company is currently on a month to month agreement with Javelin Advisory Group and has not renewed the contract that expired in January 2006. The Company’s Chief Financial Officer and Secretary, Kenneth Wiedrich, is a full-time employee of Javelin and receives no specific compensation from S3 Investment Company for services performed. The Company shares its corporate headquarters with Javelin, which is included as part of the monthly fee.

Note 12 – SEGMENT AND RELATED INFORMATION

We operate several business segments with multiple products and services, and our consolidated subsidiaries are organized geographically into reporting segments operating in China with headquarters in the United States.

As of and for the quarter ended September 30, 2006:


		Revenue		Operating Profit/(Loss)		Depreciation & Amortization		Investment Losses in Associated Companies		Accounts Receivable		Goodwill		Net Property & Equipment		Total Assets		Net Assets
United States	$	-0-	$	(80,265)	$	0	$	-	$	-	$	1,167,432	$	1,062	$	1,238,368	$	541,374
China		744,924		(109,395)		79		-		781,929		-		15,806		1,509,368		381,111
Total	$	744,924	$	(189,660)	$	79	$	-	$	781,929	$	1,167,432	$	16,868	$	2,747,587	$	922,485

NOTE 13 – SUBSEQUENT EVENTS

Subsequent to the quarter ended September 30, 2006, the Company agreed to the cancellation of 4,000,000,000 warrants that were issued on June 2, 2006. As consideration to the holder of the warrants, the Company agreed to repay $100,000 to the warrant holder that had advanced to the Company under the warrant contract and issue 100,000,000 shares of restricted common stock. The Company executed a promissory note for the $100,000 that is due in four equal monthly payments of $25,000 starting on February 1, 2007 and ending on May 1, 2007. If any monthly payment is not paid within ten days of its due date, interest shall accrue on the balance due, from the date of the note, at the rate of 9% per annum. In addition, the warrant holder will retain the 100,000,000 shares of common stock previously issued as collateral against the monies advanced. As a result of this transaction the Company recorded, $210,000 as a financing expense for the value of the shares issued and reclassified the $100,000 previously received as a promissory note payable. These entries were recorded as of June 30, 2006.

Subsequent to the quarter ending September 30, 2006 the Company, in addition the above issuance, has issued 100,000,000 shares of S-8 stock for services rendered.

Item 2. Management’s Discussion and Analysis or Plan of Operation.

General

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.’s operations were discontinued during the fiscal year ended June 30, 2005.

The Company presently has two subsidiaries: Redwood Capital, Inc. and Sino UJE, LTD.

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 an 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, a ratio that must be maintained until July of 2008.

Plan of Operation

On April 12, 2004 the Company’s filed an election with the U.S. Securities Exchange Commission to become a business development company (“BDC”) pursuant to Section 54 of the Investment Company Act of 1940. On August 26, 2005, the Board of Directors unanimously approved a proposal to withdraw the Company’s election to be treated as a business development company as soon as practicable so that the Company could begin conducting business as an operating company rather than as a business development company subject to the Investment Company Act. On April 5, 2006, a Special Meeting of the S3 Investment Company shareholders was held to consider and vote upon a proposal to authorize the Company’s Board of Directors to withdraw the Company’s election to be treated as a BDC and the proposal was approved. On April 6, 2006 a Notification of Withdrawal was filed with the Securities Exchange Commission so that the Company could begin conducting business as an operating company rather than a BDC subject to the Investment Company Act.

During the fiscal year ended June 30, 2006, Redwood Capital completed a reverse merger transaction with Dalian Fushi Enterprise Group, Co., Ltd. Redwood Capital has received fees and stock for the services that were performed in arranging this transaction. Redwood Capital has a number of other clients in the pipeline and through its present and future deal flow will be able to repay the $523,206 that has been advanced to them by the Company as well as contribute a significant dividend to the Company.

Sino UJE, Ltd. has become cash positive and anticipates in the coming fiscal year commencing the repayment of the credit line of $436,080 that has been advanced to them by the Company.

Results of Operations

Three months ended September 30, 2006 compared to three months ended September 30, 2005

During the three months ended September 30, 2006, the Company experienced a net loss of $189,660 or approximately ($0.00009) per share compared to a net gain of $109,241 or approximately $0.0001 per share for the same period last year. The Company generated $744,924 of revenue in the three month period ended September 30, 2006 compared to $170,993 of revenue for the same period ended September 30, 2005.

Liquidity and Capital Resources

As of September 30, 2006 the Company had working capital of $304,423. The Company has accumulated $6,206,440 of net operating losses through September 30, 2006, which may be used to reduce taxes in future years through 2026. 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. Under continuing operations 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 operations of its present 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.

Our auditors issued a "going concern" opinion in Note 2 of our June 30, 2006 financial statements, indicating we do not have established revenues sufficient to cover our operating costs and to allow us to continue as a going concern. If the operating plans of the two subsidiaries are unsuccessful and we are unable to obtain any suitable financing, our ability to continue as a going concern is doubtful.

Item 3. Control and Procedures.

(a) Evaluation of disclosure controls and procedures.

James Bickel who serves as Company’s chief executive officer, after evaluating the effectiveness of S3 Investments’ disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) as of a date within 90 days of the filing date of this quarterly report (the "Evaluation Date") concluded that as of the Evaluation Date, S3 Investments’ disclosure controls and procedures were adequate and effective to ensure that material information relating to S3 Investment and its unconsolidated investments would be made known to him by others within those entities, particularly during the period in which this quarterly report was being prepared.

(b) Changes in internal controls.

There were no significant changes in S3 Investments’ internal controls or in other factors that could significantly affect Company’s disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.

ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

S3 Investment Company, Inc., S3I Holdings, Inc. and Securesoft were named defendants in a case entitled Villella V. Yamamoto, Berlainder, et al. Villella, the former CEO and director of S3I Holding and officer of SecureSoft, filed the complaint in the amount of $1,315,000 on April 13, 2005. The claim is for alleged back pay of $500,000, a promissory note of $115,000 and special damages of $700,000. 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 claims are without merit. However, in the interest of economics the Company is currently seeking to negotiate a settlement but if none can be reached it will vigorously defend itself.S3I Holdings, Inc. and Securesoft were named defendants in a case entitled Radford v. Yamamoto, Berlandier, S3I, Securesoft and Grant. Radford, the daughter of Mr. Villella and former employee. of Securesoft, filed complaint on February 10, 2004 alleging nonpayment of back wages and penalaty in the amount of $75,000. 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 Appeal of the State of California Fourth Appellate District, Division One, to compel mediation before an arbitrator. On October 25, 2005, the Court of Appeal denied the Company’s motion to compel arbitration. The Company’s outside legal counsel believes that the ruling of the Court of Appeals is factually and legally flawed. The Company believes that Radford’s claims are without merit and intends to vigorously defend itself.

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 office rent. The Company is currently making monthly payments to satisfy this judgment as agreed by Kim Anderson.

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 $53,355 in legal fees that the firm claims 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.

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, an independent contractor hired to provide public relations services. 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.

On December 7, 2004, SecureSoft Systems, Inc. and S3 Investment Company, Inc. were named as defendants in a claim before the Labor Commissioner, State of California by the plaintiff, Karen Davenport. Davenport, the daughter in-law of Fred Villella, claims to have been an employee of SecureSoft during 2003. The Company denies this claim and sought to defend itself in the administrative proceedings. On October 18, 2005, the Labor Commissioner, State of California, entered a decision against both SecureSoft and the Company and awarded Davenport $48,792 for past due wages. The Company strongly disagrees with the commissioner’s decision and is contemplating how best to respond, which includes the possibility of an appeal or seeking protection under SecureSoft’s filing under Chapter 7 of the U.S. Bankruptcy Law.

During the fiscal year ended September 30, 2006, SecureSoft, Systems, Inc. elected to file for protection under Chapter 7 of the U. S. Bankruptcy law on October 14, 2005. A number of the above listed claims would fall under this protection and as a result may reduce the amount of the claims.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the quarter ending September 30, 2006, the Company issued 100,000,000 shares of common stock for $100,000 in services under an S-8 registration.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

An annual meeting of shareholders of S3 Investment Company was held on July 13, 2006. Proxies for the meeting were solicited pursuant to Regulation 14A. The following four matters were voted upon, and approved, by the shareholders:

1) To authorize ten billion shares of capital stock of the Company, of which 9,900,000,000 shares will relate to Common stock and 100 million shares will relate to preferred stock, subject to further designation by the Board of Directors of the Company.

2) To elect to the Board of Directors three (3) directors (Chris Bickel, Gary Nerison and Douglas Perkins, to serve until the next Annual Meeting of Stockholders of the Company or until their successors are elected and qualify, subject to their prior death, resignation or removal; and

3) The appointment of Chisholm, Bierwolf & Nilson as the Company’s independent public accountants for the fiscal year ending June 30, 2006.

4) The appointment of Parsons Law Firm as the Company’s general counsel.

Item 5. Other Information.

None

Item 6. Exhibits.

The exhibits listed below are required by Item 601 of Regulation S-K. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-QSB has been identified.


Exhibit No.	Description	Location
3.1	Articles of Incorporation	Incorporated by reference to corresponding Exhibit previously filed.
3.2	Bylaws	Incorporated by reference to corresponding Exhibit previously filed.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

S3 INVESTMENT COMPANY, INC.

By:/s/ James Bickel

James Bickel

Chief Executive Officer

Dated: November 20, 2006

EXHIBIT 31.1

SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James Bickel, certify that:

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

2. Based on my knowledge, this 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 report;

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

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

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

(a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 20, 2006

By: /s/ James Bickel

James Bickel, Chief Executive Officer

EXHIBIT 31.2

SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Kenneth C. Wiedrich, certify that:

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

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 20, 2006

By: /s/ Kenneth C. Wiedrich

Kenneth C. Wiedrich, Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of S3 Investment Company, Inc (the "Company") on Form 10-QSB for the period ending September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James Bickel, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ James Bickel

James Bickel

Chief Executive Officer

November 20, 2006

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of S3 Investment Company, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kenneth C. Wiedrich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ Kenneth C. Wiedrich

Kenneth C. Wiedrich

Chief Financial Officer

November 20, 2006