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Microcap & Penny Stocks : S3 Investment Company Inc

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From: SCOOBEY-DO4/19/2007 12:00:40 PM
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The following are question and S3's Public and Investor Relation's response:

As much as we would like to address each of the questions below in great detail, some of them would require comments about information that has not yet been addressed publicly by S3. Obviously, we cannot comment beyond the information that has been released by the Company, due to disclosure limitations, as much as we might like to. That said, we hope to clarify some of the issues below that have been addressed publicly by S3.


1. On the March 13, 2007 Wavelit conference call, Jim Bickel announced that Redwood Capital had two clients under contract. Then on April 4, 2007, Jim Bickel said in a press release that Redwood had signed a reverse merger contract with Shandong Green Paper Co. Is the Shandong contract in addition to the two clients that Jim Bickel said were under contract during the Wavelit conference call? Will press releases be issued for the additional one or two clients that Redwood has under contract?

Shandong Green Paper is one of the two new clients that Redwood Capital has under contract. We expect to announce the next client, assuming all of the proper agreements are in place, in the near future. Others are in the due diligence process, and we would expect a percentage of them to follow as well.


2. In 2005, S3 Investment issued two press releases announcing new Redwood client reverse mergers. The reverse mergers were for Xinger Copper dated August 2, 2005 and Jaso Holding dated September 8, 2005. These reverse mergers were never completed and shareholders were never told why they were terminated. Why should S3 investors expect the Shandong reverse merger to be completed?

There are no guarantees that any of the reverse merger clients that come under contract will ultimately result in a completed reverse merger. So far, one client has successfully completed the process. The Company has stated that it wants to have a robust pipeline of clients, each of which has been properly screened before reaching contract stage, so that the success rate will be very high. That is why they have been working on the screening system, due diligence and bolstering their internal capabilities over the past several months, rather than just signing new clients left and right. Mr. Bickel believes that the Redwood subsidiary is now well-positioned to sign numerous quality clients and assist them through the reverse merger process. China is a unique business environment, but management strongly believes that there is an abundant supply of private Chinese companies that would make excellent U.S. public companies, and they expect to make as many of those Redwood clients as possible.

On a related note, some clients may stall during the process, then go through some development and be ready to re-institute the process. The Redwood Capital business is very much about developing relationships, and once those have been established, clients that are not fully prepared initially may still successfully complete reverse mergers in the future.


3. In the same Conference call, Jim Bickel said that SINO will announce a new product line at the CMEF. Will SINO have a booth at the CMEF? If yes, which floor and hall will the booth be on?

SINO UJE did have a booth at the CMEF show. As with other trade events, they usually have a joint booth with the distributors they represent. We expect to have pictures of SINO UJE at the CMEF in a May 2007 newsletter, so you should see pictures in the next couple of weeks. We will ask for the location of the booth and include it with the pictures.

4. Jim Bickel attended a meeting titled “American League Forum K.FORUM angel investment project’ as a representative for Redwood Capital . Along with Jim Bickel, were four officers from Merrimanco, two officer from CFOInc and two officers from Diamics, from what I can tell. On March 29, 2007, Keiretsu Forum announced its “members\’ investment in Diamics, Inc.” Is Redwood Capital currently working with/for Diamics?

There has been no announcement of a client with that name, so until something is released by the Company, we cannot confirm that Diamics is a Redwood client. Mr. Bickel does regularly attend Keiretsu Forum events, so it would appear to be a possibility.

5. On March 28, 2007, Jim Bickel announced the appointment of Bruce Ruberg as CFO and Secretary. It was said that with Bruce Ruberg’s appointment, the accounting function would be brought “in-house”. Does Bruce Ruberg replace the Javelin Advisory service or will his $5,000 monthly fee be in additional to the Javelin Advisory's $15,000 per month fee? Will Bruce Ruberg be employed part or full time? The press release reports that Bruce Ruberg is under the employee agreement, but then it goes on to say he is entitled to a fee for services, which is more a term used for a independent contractor. Which is he?

Yes, Mr. Ruberg and his staff does replace Javelin Advisory Group. We will have to check on the employee/contractor question. Bruce has a staff that he brings with him, so it may be a type of hybrid between the two. We will get back to you.

6. With the current S3 Investment, Inc share price trading at $0.015. Will S3 use some of the money from Redwood and/or SINO’s operation to begin buying back S3 Investment’s outstanding common shares to lower the outstanding common share count?

There are no plans for a stock buy-back program at this time, and from what we have seen over the last 6 months or so, it would appear that S3 shareholders will be better served by the Company successfully executing its expansion efforts to bolster revenues and increase stability. The revenues and profitability shown in the Company's first consolidated financial statements (for the 2006 fiscal year) were definitely good news, but the Company is looking to ensure long-term stability and the potential for return for S3 shareholders by increasing those numbers significantly. By closing 2-3 Redwood Capital transactions per year and expanding SINO UJE distribution business (including the launch of Abaxis products in China), Jim feels confident that this can be done. Once the Company has successfully expanded to the point that it can continue to grow organically (hopefully with the assistance of a multimillion dollar bank credit line), the Board may consider a buy-back program or something similar. However, since they have not expressed any such intention, we would have to consider this just speculation at this point.

Please feel free to contact us with any additional questions or follow-ups.

Best regards,

Public and Investor Relations
S3 Investment Company, Inc.
Investors 951-587-8072
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