United States 
      SECURITIES AND EXCHANGE COMMISSION 
      Washington, D.C. 20549
      FORM 10-K[ X ]
      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2004Commission File
      Number001-31347S3 Investment Company, Inc.
      (Exact Name of Registrant as Specified in Its Charter) California
      
      33-0906297(State or other jurisdiction of
      incorporation or organization)
      
      (IRS Employer Identification No.)43180
      Business Park Dr., Suite 202 Temecula, CA 92590(Address of
      principal executive offices)(909) 587-3618      
       (Issuers telephone number, including area code)S3I Holdings, Inc.(Former name or former address, if changed since last report) Securities registered pursuant to
  Section 12(g) of the Exchange Act: Common Stock, $0.001 par value(Title of Class) Check
  whether the Issuer (1) 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.
  Yes [ ] No [X]
    Check if there is no disclosure of delinquent filers in
  response to Item 405 of Regulation S-X contained in this form, and no
  disclosure will be contained, to the best of registrant's knowledge, in
  definitive proxy or information statements incorporated by reference in Part
  III of this Form 10-K or any amendment to this Form 10-K. [ ]
    The aggregate market value of the voting stock held by non
  affiliates computed by reference to the price at which the stock was sold, or
  the average bid and asked prices of such stock as September 27, 2004 was
  $.011, based on the last sale price of $0.011 as reported on the bulletin
  board.
    The Registrant had 130,239,687 shares of common stock, $0.001
  par value, outstanding as of October 13, 2004 1  S3 Investment Company, Inc. TABLE OF CONTENTS PAGE NUMBERPART I
      
      
      3ITEM 1.
      
      BUSINESS
      3Description of Business
      3Company StrategyITEM 2.
      
      DESCRIPTION OF PROPERTY
      4ITEM 3.
      
      LEGAL PROCEEDINGS
      4ITEM 4.
      
      SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS
      5PART II
      
      
      5ITEM 5.
      
      MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS
      5Market Information
      5Holders
      6Dividends
      6ITEM 6.
      
      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      6ITEM 7.
      
      FINANCIAL STATEMENTS
      9ITEM 8.
      
      CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS
      9PART III
      
      
      9ITEM 9.
      
      DIRECTORS AND EXECUTIVE OFFICERS,
      PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
      EXCHANGE ACT
      9ITEM 10.
      
      EXECUTIVE COMPENSATION
      11Remuneration Paid to Executives
      11Remuneration Paid to Directors
      11Employment Agreements
      11Employee Benefits
      11ITEM 11.
      
      SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT
      12ITEM 12.
      
      CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS
      12ITEM 13.
      
      CONTROLS AND PROCEDURES
      13ITEM 14.
      
      EXHIBITS AND REPORTS ON FORM 8-K
      13ITEM 15.
      
      PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
      14Relationship with Independent
      Auditors
      14Audit Fees
      14Audit-Related Fees
      14Tax Fees
      14SIGNATURES
      14 2  PART I Forward Looking StatementsThis document includes statements that may constitute forward-looking
  statements made pursuant to the Safe harbor provisions of the Private
  Securities Litigation reform Act of 1995. The Company would like to caution
  certain readers regarding certain forward-looking statements in this documents
  and in all if its communications to shareholders and others, on managements
  projections, estimates and all other communications. Statements that are based
  on managements projections, estimates and assumptions are forward-looking
  statements, the words believe, expect, anticipate, intend and similar
  expressions generally identify forward-looking statements. While the Company
  believes in the veracity of all statements made herein, forward-looking
  statements are necessarily based upon a number of estimates, and assumptions
  that, while considered reasonable by the Company, are inherently subject to
  significant business, economic and competitive uncertainties and contingencies
  and know and unknown risks. Many of the uncertainties and contingencies can
  affect events and the Company's actual results and could cause its actual
  results to differ materially from this expressed in any forward-looking
  statements made by, or on behalf, of the Company. 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 subsidiary, was
  incorporated in September 1999. Securesoft develops, markets and sells
  enterprise compliance and risk management software solutions enabling clients
  to ensure that privacy, ebusiness and security policies remain aligned with
  regulatory requirements, and an organization's business strategies and
  performance goals. The Securesoft software provides a structured approach that
  combines knowledge of current business processes and systems, an understanding
  of related legislation and the use of cohesive teams that are experienced with
  the issues and objectives surrounding compliance. Securesofts implementation
  services include compliance gap analysis, risk management, cost benefit
  analysis, implementation strategies and monitoring.
    On April 12, 2004 the Company's Board of Directors elected to
  be regulated as a business investment company under the Investment Company Act
  of 1940. As a business development company ("BDC"), the Company is required to
  maintain at least 70% of its assets invested in "eligible portfolio
  companies", which are loosely defined as any domestic company which is not
  publicly traded or that has assets less than $4 million. As of September 30,
  2004 the Company's sole portfolio investment was Securesoft Systems, Inc., of
  which it owned 100% of the capital stock.
    In June of 2004 the office was moved to Temecula, California
  and administrative changes were made to help cut overhead and concentrate on
  adding portfolio companies that are cash flow positive. Continued efforts in
  this regard have culminated in the resignation of Wayne Yamamoto as Chief
  Executive Officer and the appointment of Chris Bickel as Chief Executive
  Officer in September of 2004. On October 12, 2004 the Company changes it's
  name to S3 Investment Company, Inc. to properly reflect the nature of its
  business. Investment Strategy
    S3 Investment Company, Inc. intends to make strategic
  investments in cash-flow positive companies with perceived growth potential.
  The Investment Committee has adopted a charter wherein these two criteria 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 S3I can acquire at least a 51% ownership
  interest in the outstanding capital of the portfolio company. 3  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
    The Company presently has one portfolio investment:
  Securesoft Systems, Inc., a Delaware company specializing in the development,
  and marketing of compliance and risk management software solutions. The
  Company owns 100% of the common stock of Securesoft Systems, Inc., which it
  acquired in exchange for 20,076,644 shares of the Company's common stock on
  April 16, 2003. As of June 30, 2004, the Company's investment in Securesoft
  Systems, Inc. was valued at $0.00 in recognition of Securesoft's history of
  losses and current liabilities
  SECURESOFT SYSTEMS, INC.
    During the last fiscal year, ending June 30, 2004, Securesoft
  experienced a severe decline in sales. This was due to management dropping its
  sales effort and trying to make changes to its software. As a result the
  software product became unstable and sales were not possible. New management
  was brought in and focus was placed on the development of new software
  (immunity 2.0), which is not yet finished at this time. Delays associated with
  the development of this new software program added to the lack of revenues.
  
    The Immunity 2.0 software is being developed with the intent
  to market to larger health care facilities, as well as to companies in the
  financial, banking, and insurance industries. Companies within these
  industries are required by law to comply with a number of federal regulations.
  Immunity 2.0 can be used as a compliance program across regulations and across
  industries. Completion of the new software is scheduled for November of 2004.
  The most recent management change has stepped up its efforts to form
  partnerships and marketing alliances so that when the new product is ready for
  the market the market will be ready for it. The focus of the company will be
  to find reseller and distribution partners who will be able to sell Immunity
  2.0 as part of their overall compliance solution. This will add value to our
  reseller and distribution partners, as well as provide a revenue stream for
  Securesoft, without adding additional overhead to our operational budget.
  Securesoft plans to focus its initial efforts in the healthcare industry,
  before branching out to the insurance and financial sectors. 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. ITEM 2. DESCRIPTION OF PROPERTY
    S3 Investment, 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 be dismissed within the next month based on
  the facts. S3I Holdings, Inc was plaintiff in a case entitled S3I Holdings,
  Inc. v. Fink. S3I Holdings filed a complaint in October 10, 2003 for
  injunctive relief, misrepresentation and fraud. The action was taken to stop
  the illegal sale of stock. The action was taken too late and the sale of stock
  took place. Any amount that would have been due Fink was more than offset by
  the stock sale. 4  S3I
  Holdings, Inc. and Securesoft were named defendants in a case entitled Radford
  v. Yamamoto, Berlandier, S3I, Securesoft and Grant. Radford filed complaint on
  February 10, 2004 alleging nonpayment of back wages. Defendants answered the
  complaint on July 9,2004. Stipulated mediation before an arbitrator will be
  completed by November 29, 2004. The Company feels the claim is baseless and
  that it will receive a favorable ruling.
    Securesoft was named defendant in a case entitled Kim
  Anderson v. Securesoft Systems, Inc. Securesoft failed to answer complaint and
  a Court Judgment was awarded in favor of the defendant in the amount of
  $66,323.92. This amount is for back office rent. The Company is seeking to
  settle with the plaintiff for a lesser amount.
    S3I Holdings was named defendant in a case entitled
  Professional Traders Fund, LLC v. S3I Holdings, Inc, and Luke Zouvas. A
  judgment was rendered against S3I and Zouvas by the Supreme Court of the State
  of New York for the amount of $274,239.60. The court is at this time reviewing
  this judgment based on the fact that the award to the plaintiff was based on
  forged documents. The Company and its counsel are confident that this judgment
  will be dismissed.ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    A special meeting of shareholders of S3 Investments Company,
  Inc. was held on October 12, 2003 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 MATTERSMarket 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, 2004, 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 Close6/30/2003
    1.78
    1.40
    1.509/30/2003
    1.70
    0.55
    0.7512/31/2003
    2.30
    0.20
    0.373/31/2004
    0.39
    0.16
    0.166/30/2004
    0.19
    0.015
    0.015
 5  Holders of
  recordAs of June 30, 2004 there were approximately 154 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.
    From July 1, 2003 through October 13, 2004 the following
  unregistered securities were issued:
    Between December 1, 2003 and June 30, 2004 the company issued
  convertible debentures in the amount of $729,000.00. All debentures are due
  within six months of issue and carry a rate of interest of eight percent (8%)
  per year on the unpaid principal. The holders of the debentures are entitled,
  at their option, to convert the principal amount of these debentures plus
  accrued interest into shares of the Company's common stock at a price per
  share equal to a 50% discount to current market. In the event of bankruptcy
  all debentures convert to shares of common stock.
    Between April 1, 2004 and June 30, 2004 the company issued
  13,910490 shares of common stock upon the conversion of $249,000.00 of these
  convertible debentures. The stock was issued under a regulation E exemption.
    Between July 1, 2004 and October 13, 2004 the company issued
  82,200,000 shares of common stock upon the conversion of $470,000.00 of these
  convertible debentures. The stock was issued under a regulation E exemption.
    As of June 30, 2004 S3 Investment Company, Inc had 38,039,687
  shares of common stock outstanding. ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    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 one portfolio
  investment, Securesoft Systems, Inc. No additional portfolio investments were
  made this past year. Management anticipates making additional portfolio
  investments as opportunities present themselves in the coming year. 6  Currently, there are no commitments for material expenditures. It should be
  noted that the Company's auditors Chisholm & Associates 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. Liquidity and Capital Resources
    The Company's financial statements present an impairment in
  terms of liquidity. As of June 30, 2004 the Company had $121,391 in current
  assets and the Company's total assets exceeded total liabilities by
  approximately $303,512. The Company has accumulated $609,924 of net
  operating losses through June 30, 2004, which may 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, 2004 the Company had a net loss
  of $609,924 compared to a net loss of $674,162 for six months ended June 30, 2003
  and a $56,569 profit for the year ended December 31, 2002. During the
  fiscal year, ending June 30, 2004, Secursoft experienced a severe decline in
  sales. This was due to a number of factors not the least of which was
  destabilizing the software product itself. Focus and effort was then placed on
  the development of new software, which is scheduled for completion in November
  2004. 
    The new software, Immunity 2.0, is compliance and risk
  management software that will be marketed to larger health care facilities, as
  well as to companies in the financial, banking, and insurance industries. The
  marketing effort will focus on working with resellers and distribution
  partners who will sell Immunity 2.0 as part of their overall compliance
  solution. By partnering with these marketing specialists we can generate
  revenue without having to develop own marketing team. This will allow us to
  keep overhead low and allow us to concentrate on product enhancement and
  service implementation.  7  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 FutureWe have historically lost money. The combined loss for the year ending June
  30, 2004 was approximately $609,924 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. We Will Need to Raise Additional Capital to Finance Operations
  Our operations have relied almost entirely on external financing to fund our
  operations. Such financing has historically come from a combination of
  borrowings and from the sale of common stock and assets to third parties. We
  will need to raise additional capital to fund our anticipated operating
  expenses and future expansion. Among other things, external financing will be
  required to cover our operating costs. We cannot assure you that financing
  whether from external sources or related parties will be available if needed
  or on favorable terms. The sale of our common stock to raise capital may cause
  dilution to our existing shareholders. Our inability to obtain adequate
  financing will result in the need to curtail business operations. Any of these
  events would be materially harmful to our business and may result in a lower
  stock price. 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, 2004 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 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. 8  Our Officers
  and Directors Have the Ability to Exercise Significant Influence Over Matters
  Submitted for Stockholder Approval and Their Interests May Differ From Other
  StockholdersOur 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 ApprovalAlthough 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 7. FINANCIAL STATEMENTSSee the financial statements annexed to this report. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
  Not applicable. PART III. ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONSThe executive officers and directors of the Company as of October 1, 2004 are
  as follows: 
  Name Age Position Chris L. Bickel
        41
        Chief Executive
        OfficerKenneth C Wiedrich
        58
        Chief Financial
        OfficerScott Waddell
        38
        SecretaryDennis Keating
        38
        DirectorTheodore Tanski
        57
        DirectorChris Berlandier
        35
        Director
 9  The business experience
  of each of the persons listed above is as follows: 
  Chris Bickel, CEO - 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 Wiedrich, CFO - Mr. Wiedrich 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. Wiedrich has
  experience in the use of several automated accounting systems including MAS90,
  Peachtree, and QuickBooks. Mr. Wiedrich 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. Wiedrich was involved in
  raising money through a private placement and the long term financing for
  Ri-Tech. 
  Scott Waddell, Secretary - Mr. Waddell holds a Masters in Business
  Administration from the University of California, Irvine's Graduate School of
  Management. His business experience includes an Account Executive position in
  which he was top sales producer for a multibillion dollar NYSE-listed
  communications company. While serving as Product Manager for a computer and
  imaging products technology company, Mr. Waddell was responsible for the
  management of marketing programs for a number of product lines and handled
  strategic analysis, business plan development, and the implementation of web
  marketing programs. As buyer for the largest global wholesale producer of
  technology products and supply chain management services with 2003 net sales
  of over $22 billion, Mr. Waddell researched competitive models, conducted
  price analysis and negotiated the selection of components for the launch of a
  worldwide frameworks initiative.
  Dennis Keating, Director - Mr. Keating is the founder of SunRidge Financial
  Group, an estate and financial planning company, which currently manages over
  $145 million in client assets. He is the Southwest Regional Compliance manger
  for 1st Discount Brokerage Incorporated covering New Mexico, Arizona and
  Southern California. 1st Discount is a national firm and member of the NASD
  MSRB and SITC. Mr. Keating graduated with honors from the California
  Polytechnic University, Pomona and has an extensive background in finance,
  real estate and law.
  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. 
  Christopher Berlandier, Director - Mr. Berlandier is an experienced executive
  manager with a rich business and information technology background who
  currently serves on the Board of Directors for two public companies. For more
  than fifteen years, Mr. Berlandier has initiated, managed, and participated in
  all areas of management, information technology, software product development,
  system architecture, and product marketing, while founding or co-founding four
  new technology-related companies. As co-founder, CEO, CTO, and Director for
  Securesoft Systems, S3I holdings' first subsidiary company, Mr. Berlandier
  created the strategic vision to transform company from a start-up to an
  Enterprise Security Solution and managed the development of the business plan,
  financial forecasts, and funding activities. Previously, Mr. Berlandier
  co-founded and served as CEO, CTO and Director of a software development
  company providing alternative distribution system to the travel industry.MeetingsDuring the year ended June 30, 2004 the Board of Directors met on six
  occasions. Each incumbent Director attended at least 75% of the total number
  of meetings of the Board of Directors. 10  Compensation Of
  DirectorsOur independent directors are compensated $1,000 each per
  month for services provided as a Director. Only one of the directors was paid
  for his services during the year and it was only for part of the year. 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 10. EXECUTIVE COMPENSATIONSummary Compensation Table
    The following table sets forth the annual and long-term
  compensation for services in all capacities for the year ended June 30, 2004
  paid to Wayne Yamamoto, our Chief Executive Officer during fiscal 2004. No
  other executive officers received compensation exceeding $100,000 during the
  year ended June 30,2004. Summary Compensation TableAnnual
    Compensation
    Long Term
    CompensationAwardsName and Principal
    Position
    
    Year
    
    Salary
    
    Bonus
    
    Other Annual
    Compensation
    
    Restricted Stock
    Award(s)
    
    Securities Underlying
    Options
    
    All Other CompensationWayne Yamamoto
    
    2003
    
    $-0-
    
    $-0-
    
    $-0-
    
    --
    
    --
    
    --Chief Executive
    Officer(1)
    
    2004
    
    $69,000
    
    $-0-
    
    $-0-
    
    --
    
    --
    
    --
 (1) Mr. Yamamoto became
  Chief Executive Officer effective as of April 11, 2003 and remained in this
  capacity until September of 2004. 
  (2) There were no stock options granted during the year ended June 30, 2004.
  There were no stock options outstanding as of June 30, 2004.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 $20,000.00
  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 officers liability insurance.Compliance With Section 16(a) of the Securities Act of 1934
    Section 16(a) of the Securities Exchange Act of 1934 requires
  directors and executive officers, and persons who own more than 10% of a
  registered class of our equity securities to file with the Securities and
  Exchange commission initial reports of ownership and reports of changes in
  ownership of Common Stock and other of our equity securities. Officers,
  directors and greater than 10% shareholders are required by SEC regulations to
  furnish the Company with copies of all Section 16(a) forms they file. To our
  knowledge, none of the officers and directors of the company have filed the
  required reports with respect to our stock. 11  ITEM 11.
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth information, to the best
  knowledge of the Company, as of June 30, 2004 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)
    --------------------------
    Title of Class
    ---------------------
    Amount
    Owned
    -------------------------
    Percentage
    of Class (2)
    ----------------Christopher Berlandier
    Director
    Common
    4,250,000
    3.3%Dennis Keating
    Director
    Common
    -0-Theodore Tanski, Sr.
    Director
    Common
    -0-Chris L. Bickel
    CEO
    Common
    -0-Kenneth C. Wiedrich
    CFO
    Common
    -0-Scott Waddel
    Secretary
    Common
    -0-All Directors and Officers as a group
    4,250,000
    Common
    3.3% (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 130,239,687 outstanding shares of
  common as of October 13, 2004. ITEM 12. 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. 12  ITEM 13.
  CONTROLS AND PROCEDURESEvaluation 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 14. EXHIBITS AND REPORTS ON FORM 8-K
  (a)(1)(2) Financial Statements. See index to financial statements and
  supporting schedules.
  (a)(3) Exhibits.
  The following exhibits are filed as part of this statement:
    The exhibits listed below are required by Item 601 of
  Regulation S-B. Each management contract or compensatory plan or arrangement
  required to be filed as an exhibit to this Form 10-K has been identified. Exhibit No.
      Description
      Location3.1
      Articles
      of Incorporation
      Incorporated by reference to corresponding Exhibit previously filed.3.2
      Bylaws
      Incorporated by reference to corresponding Exhibit previously filed.4.1
      Form of
      Common Stock Certificate
      Incorporated by reference to corresponding Exhibit previously filed.99.1
      CEO
      Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to
      Sections 302 and 906 of the Sarbanes-Oxley Act of 2002
      Filed
      herewith.99.2
      CFO
      Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to
      Sections 302 and 906 of the Sarbanes-Oxley Act of 2002
      Filed
      herewith.
 (b) Reports on Form 8-K
  Form 8-K filed on July 3, 2003 in which the Company amended the 8-Kfiled on
  April 16, 2004. The original 8-K notified the SEC of the acquisition of
  Securesoft.
  Form 8-K filed on October 21, 2003 in which the Company notified the SEC that
  the Board of Directors had appointed a new chairman of the Board of Directors.
  Also, that two members of the Board of Directors has resigned, and that one
  new Director had been appointed leaving two members of the board.
  Form 8-K filed on May 8, 2004 in which the Company notified the SEC that three
  independent directors were being added to fill vacancies on the board.
  Form 8-K filed on June 18, 2004 in which the Company notified the SEC that it
  had accepted the resignation of Art Malone, Jr. from the Board of Directors.
  No appointment was made to fill the vacancy on the board.
  Form 8-K filed on September 11, 2004 in which the Company notified the SEC
  that the Board of Directors had approved the designation of five million
  (5,000,000) shares of Series B preferred stock, with each share being
  equivalent to the voting power of 100 shares of common stock. Also that
  4,730,000 shares of Series B preferred be issued to two individuals in
  exchange for equivalent shares of Series A Preferred stock, which give the two
  individuals the voting control of the company. Also the Board of Directors
  accepted the resignation of Wayne Yamamoto as a member of the board and as
  Chief Executive Officer. Also the Board of Directors appointed Chris Bickel as
  Interim Chief Executive Officer and Shane Traveller as Interim Chief Financial
  Officer. No appointment was made to fill the vacancy on the board. 13  Form 8-k filed on
  October 1, 2004 in which the Company notified the SEC that the Board of
  Directors changed the name of the Company to S3 Investment Company, Inc. Also
  the Board of Directors accepted the resignation of Shane Traveller as a member
  of the Board of Directors and as Interim Chief Financial Officer. Also the
  Board of Directors appointed Theodore Tanske, Sr. as an independent member of
  the Board of Directors. Ken Wiedrich was appointed as the interim Chief
  financial Officer. Chris Bickel was appointed as the Chief Executive Officer
  and the interim status was removed.ITEM 15. PRINCIPAL ACCOUNTANT 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 2004 and reviews of the financial statements
  included in the Company's Forms 10-KSB for fiscal 2003 were approximately
  $16,472.58 and $22,605.80, respectively. Audit Related Fees
  NoneTax Fees
  NoneAll Other Fees
  The aggregate fees billed by the Company's auditors for all other non-audit
  services rendered to the Company, such as attending meetings and other
  miscellaneous financial consulting in fiscal 2004 and 2003 were $0 and $0,
  respectively. SIGNATURESIn accordance with Section 13 or 15 (d) of the Exchange Act. The
  Registrant caused this report to be signed on its behalf by the undersigned,
  
  thereunto duly authorized. Dated: October 25, 2004
      S3 Investment Company, Inc.By:/s/ Chris L. Bickel
      Chris L. Bickel
      Chief Executive Officer In accordance with the
  Exchange Act, this report has been signed below by the following persons on
  behalf of the Registrant and in the capacities and on the dates indicated. SIGNATURE
      TITLE
      DATE/s/ Dennis Keating 
      Dennis Keating
      Director
      October 25, 2004/s/ Theodore Tanski 
      Theodore Tanski
      Director
      October 25, 2004/s/ Chris Berlandier 
      Chris Berlandier
      Director
      October 25, 2004 14  S3 Investment Company, Inc.
  a California Corporation
  CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Chris
  L. Bickel, certify that: 1. I have reviewed this
  annual report on Form 10-K of S3 Investment Company, Inc.;
  2. Based on my knowledge, this annual 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 annual report; 
  3. Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this annual report; 
  4. The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 
  a) designed such disclosure controls and procedures to ensure that material
  information relating to the registrant, including its consolidated
  subsidiaries, is made known to us by others within those entities,
  particularly during the period in which this annual report is being prepared;
  
  b) evaluated the effectiveness of the registrant's disclosure controls and
  procedures as of a date within 90 days prior to the filing date of this annual
  report (the "Evaluation Date"); and 
  c) presented in this annual report our conclusions about the effectiveness of
  the disclosure controls and procedures based on our evaluation as of the
  Evaluation Date; 
  5. The registrant's other certifying officers and I have disclosed, based on
  our most recent evaluation, to the registrant's auditors and the audit
  committee of registrant's board of directors (or persons performing the
  equivalent functions): 
  a) all significant deficiencies in the design or operation of internal
  controls which could adversely affect the registrant's ability to record,
  process, summarize and report financial data and have identified for the
  registrant's auditors any material weaknesses in internal controls; and 
  b) any fraud, whether or not material, that involves management or other
  employees who have a significant role in the registrant's internal controls;
  and 
  6. The registrant's other certifying officers and I have indicated in this
  annual report whether there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses. Date: October 25, 2004/s/ Chris L. Bickel
  Chris L. Bickel
  Chief Executive Officer 15  S3 Investment Company, Inc.
  a California Corporation
  CERTIFICATION OF CHIEF FINANCIAL OFFICER I,
  Kenneth C. Wiedrich, certify that: 1. I have reviewed this
  annual report on Form 10-K of S3 Investment Company, Inc.;
  2. Based on my knowledge, this annual 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 annual report; 
  3. Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this annual report; 
  4. The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 
  a) designed such disclosure controls and procedures to ensure that material
  information relating to the registrant, including its consolidated
  subsidiaries, is made known to us by others within those entities,
  particularly during the period in which this annual report is being prepared;
  
  b) evaluated the effectiveness of the registrant's disclosure controls and
  procedures as of a date within 90 days prior to the filing date of this annual
  report (the "Evaluation Date"); and 
  d) presented in this annual report our conclusions about the effectiveness of
  the disclosure controls and procedures based on our evaluation as of the
  Evaluation Date; 
  5. The registrant's other certifying officers and I have disclosed, based on
  our most recent evaluation, to the registrant's auditors and the audit
  committee of registrant's board of directors (or persons performing the
  equivalent functions): 
  a) all significant deficiencies in the design or operation of internal
  controls which could adversely affect the registrant's ability to record,
  process, summarize and report financial data and have identified for the
  registrant's auditors any material weaknesses in internal controls; and 
  c) any fraud, whether or not material, that involves management or other
  employees who have a significant role in the registrant's internal controls;
  and 
  6. The registrant's other certifying officers and I have indicated in this
  annual report whether there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses. Date: October 25, 2004/s/ Kenneth C. Wiedrich
  Kenneth C. Wiedrich
  Chief Financial Officer 16  Exhibit 99.1 CERTIFICATION Pursuant
  to Section 906 of the Corporate Fraud Accountability Act of 2002 (18 U.S.C.
  Section 1350, as adopted), Chris L. Bickel, Chief Executive Officer of S3
  Investment Company, Inc. (the "Company"), hereby certifies that, to the best
  of his knowledge: 1. the Annual Report on
  Form 10-K of the Company for the fiscal year ended June 30, 2004 (the Report)
  fully complies with the requirements of Section 13(a) or 15(d) of the
  Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
  2. the information contained in the Report fairly presents, in all material
  respects, the financial condition and results of operations of the Company. Dated: October 25, 2004/s/Chris L. Bickel
  Chris L. Bickel
  CHIEF EXECUTIVE OFFICER 17  Exhibit 99.2 CERTIFICATION Pursuant
  to Section 906 of the Corporate Fraud Accountability Act of 2002 (18 U.S.C.
  Section 1350, as adopted), Kenneth C. Wiedrich, Chief Financial Officer of S3
  Investment Company, Inc. (the "Company"), hereby certifies that, to the best
  of his knowledge: 1. the Annual Report on
  Form 10-K of the Company for the fiscal year ended June 30, 2004 (the Report)
  fully complies with the requirements of Section 13(a) or 15(d) of the
  Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
  2. the information contained in the Report fairly presents, in all material
  respects, the financial condition and results of operations of the Company. Dated: October 25, 2004/s/Kenneth C. Wiedrich
  Kenneth C. Wiedrich 
  CHIEF FINANCIAL OFFICER 18  S3 INVESTMENT
  COMPANY, INC.(Formerly Axtion Foods, Inc.) Financial Statements June 30, 2004       C O N T E N T S  Independent Auditors'
    Report......................................................................
    3Balance Sheet .................................................................................................
    4Statement of
    Operations...............................................................................
    5Statements of
    Stockholders' Equity ............................................................
    6Statements of Cash
    Flows..............................................................................
    7Notes to the Financial
    Statements................................................................
    8    INDEPENDENT AUDITOR'S REPORT To the Board of
  Directors and Stockholders of
  S3 Investment Company, Inc. 
  Temecula, CA
  We have audited the accompanying balance sheet of S3 Investment Company, Inc. 
  as of June 30, 2004 and the related statements of operations, stockholders'
  equity and cash flows for the year then ended and for the six months ended
  June 30, 2004 and the year ended December 31, 2002. These financial statements
  are the responsibility of the Company's management. Our responsibility is to
  express an opinion on these financial statements based on our audits. 
  We conducted our audits in accordance with generally accepted auditing
  standards of the Public Company Accounting Oversight Board (United States).
  Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of
  material misstatement. An audit includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the financial statements. An audit
  also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial
  statement presentation. We believe that our audits provide a reasonable basis
  for our opinion.
  In our opinion, the financial statements referred to above present fairly, in
  all material respects, the financial position of S3 Investment Company, Inc. 
  as of June 30, 2004, and the results of its operations and its cash flows for
  the six months ended June 30, 2004 and the years ended December 31, 2002 and
  2001 are in conformity with generally accepted accounting principles of the
  Public Company Accounting Oversight Board (United States).
  The accompanying financial statements have been prepared assuming that the
  Company will continue as a going concern. As discussed in Note 2, the Company
  has had recurring operating losses and is dependent on financing to continue
  operations, which raises substantial doubt about its ability to continue as a
  going concern. Management's plans in regard to those matters are also
  described in Note 2. The financial statements do not include any adjustments
  that might result from the outcome of this uncertainty./s/Chisholm, Bierwolf & Nilson
  Chisholm, Bierwolf & Nilson, LLC
  Bountiful, Utah
  October 22, 2004  3


S3I Holdings,
    Inc.(Formerly Axtion Foods, Inc.)
    Consolidated Balance SheetASSETSJune 30,
    2004Current AssetsCash
    $
    121,391Total Current Assets
    
    121,391Equipment, Net
    
    -Other AssetsInvestments
    
    716,436Total Other Assets
    
    716,436Total Assets
    $
    837,827LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent LiabilitiesAccounts Payable
    $
    25,381Accrued Expenses
    
    28,934Convertible Debentures
    
    480,000Total Current Liabilities
    
    534,315Total Liabilities
    
    534,315Stockholders' EquityPreferred Stock, Authorized 10,000,000
    Shares, No Par Value, Shares Issued and Outstanding 0
    
    -Common Stock,  Authorized
    100,000,000 Shares, No Par Value, Shares Issued and Outstanding 37,519,687
    
    1,094,139Discount on Stock
    
    (180,703)Retained Earnings (Deficit)
    
    (609,924)Total Stockholders' Equity
    
    303,512Total Liabilities and Stockholders'
    Equity
    $
    837,827The accompanying
    notes are an integral part of these consolidated financial statements.
    4








S3I Holdings,
    Inc.(Formerly Axtion Foods, Inc.)
    Statements of OperationsFor the Year
    Ended
    June 30,
    
    
    For the Six
    Months Ended
    June 30,
    
    
    For the
    Year Ended
    December 31,2004
    
    
    2003
    
    
    2002Revenues
    $
    -
    
    $
    287,004
    
    $
    2,499,843Cost of Sales
    
    -
    
    
    11,985
    
    
    231,646Gross Profit (Loss)
    
    -
    
    
    275,019
    
    
    2,268,197Operating ExpensesGeneral &
    Administrative
    
    100,990
    
    
    937,148
    
    
    2,167,337Total Operating
    Expenses
    
    100,990
    
    
    937,148
    
    
    2,167,337Net Operating Income (Loss)
    
    (100,990)
    
    
    (662,129)
    
    
    100,860Other Income (Expense)Interest Income
    
    -
    
    
    25
    
    
    43Financing Costs
    
    (480,000)
    
    
    -
    
    
    -Interest Expense
    
    (28,934)
    
    
    (11,258)
    
    
    (43,774)Other Income
    (Expense)
    
    -
    
    
    -
    
    
    240Total Other Income (Expense)
    
    (508,934)
    
    
    (11,233)
    
    
    (43,491)Income (Loss) Before Income Taxes
    
    (609,924)
    
    
    (673,362)
    
    
    57,369Income Tax Expense
    
    -
    
    
    800
    
    
    800Net Income (Loss)
    $
    (609,924)
    
    $
    (674,162)
    
    $
    56,569Net Income (Loss) Per Share
    $
    (0.02)
    
    $
    (0.03)
    
    $
    0.00Weighted Average Shares Outstanding
    
    25,774,121
    
    
    19,475,322
    
    
    14,622,197The accompanying notes
are an integral part of these consolidated financial statements.
5


|S3I Holdings, Inc.                                                                         
|-------------------------------------------------------------------------------------------
|(Formerly Axtion Foods, Inc.)                                                              
|Consolidated Statements of Stockholders' Equity (Deficit)                                  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Balance, December 31, 2002                                                                 
|                                                                                           
|January 2003 - stock issued for services at                                                
|$0.25 per share                                                                            
|                                                                                           
|January 2003 - stock issued for exercise                                                   
|of stock options at  $0.50 per share                                                       
|                                                                                           
|April 2003 - stock issued for debt conversion                                              
|including accrued interest at $0.25 per share                                              
|                                                                                           
|April 2003 - stock options granted for                                                     
|accrued wages                                                                              
|                                                                                           
|April 2003 - reverse acquisition adjustment                                                
|                                                                                           
|June 2003 - stock options granted for services                                             
|                                                                                           
|Net income (loss) for the six months ended                                                 
|June 30, 2003                                                                              
|                                                                                           
|Balance, June 30, 2003                                                                     
|                                                                                           
|January 2004 - stock issued for services                                                   
|                                                                                           
|January 2004 - stock issued for satisfaction of debt                                       
|                                                                                           
|March 2004 - stock issued for conversion of debentures                                     
|including finance charges                                                                  
|                                                                                           
|April 2004 - stock issued for cash                                                         
|                                                                                           
|April 2004 - Change in accounting procedure adjustment:                                    
|reporting as a Business Development Company                                                
|                                                                                           
|Net (loss) for the year ended                                                              
|June 30, 2004                                                                              
|                                                                                           
|Balance, June 30, 2004                                                                     
|                                                                                           
|                                                                                           
|                                                                                           
|The accompanying notes are an integral part of these consolidated financial
    statements.
|6                                                                                          



|S3I Holdings, Inc.(Formerly Axtion Foods, Inc.)
    Consolidated Statements of Cash Flows
|-----------------------------------------------------------------------------------------
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash Flows
    from Operating Activities:                                                
|Net Income (Loss)                                                                        
|Adjustments to Reconcile Net Loss to
    Net Cash Provided by Operations:                
|Depreciation and
    Amortization                                                        
|Stock Issued for Services                                                                
|Stock Issued for Debt
    Financing Cost                                                 
|Stock Options Granted for
    Services                                                   
|Changes in Operating Assets and
    Liabilities:                                         
|(Increase) Decrease in:                                                                  
|Accounts Receivable                                                                      
|Inventory                                                                                
|Increase (Decrease) in:                                                                  
|Accounts Payable                                                                         
|Accrued Expenses                                                                         
|                                                                                         
|Net Cash Provided (Used)
    by Operating Activities                                     
|                                                                                         
|Cash Flows from Investing Activities:                                                    
|Payments for
    investments                                                             
|Payments for
    Software Development Costs                                              
|Payments for
    Deposits                                                                
|Payments for
    Equipment                                                               
|                                                                                         
|Net Cash Provided
    (Used) by Investing Activities                                     
|                                                                                         
|Cash Flows from Financing Activities:                                                    
|Proceeds from
    Issuance of Common Stock                                               
|Proceeds from
    Issuance of Notes
    Payable &  Convertible Debentures                
|Principal Payments on Notes Payable
    & Convertible Debentures                         
|                                                                                         
|Net Cash Provided
    (Used) by Financing Activities                                     
|                                                                                         
|Increase (Decrease) in Cash                                                              
|Cash and Cash Equivalents at Beginning
    of Period                                     
|                                                                                         
|Cash and Cash Equivalents at End of
    Period                                           
|                                                                                         
|Cash Paid For:                                                                           
|Interest                                                                                 
|                                                                                         
|Income Taxes                                                                             
|                                                                                         
|Non-Cash Investing and Financing Activities:                                             
|Stock Issued for
    Services                                                            
|                                                                                         
|Stock Options
    Granted for Services                                                   
|                                                                                         
|Stock Issued for
    Convertible Debentures and Accrued Interest                         
|                                                                                         
|Stock Option
    Granted for Accrued Wages                                               
|                                                                                         
|Stock issued for
    debt satisfaction                                                   
|                                                                                         
|Assumption of
    Debentures from Secure Soft                                            
|                                                                                         
|The accompanying notes
are an integral part of these consolidated financial statements.  

7

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S3I Holdings, Inc.( Formerly Axtion Foods, Inc.)
  Notes to the Financial Statements
  June 30, 2004

NOTE 1 - Summary of Significant Accounting Policies

> a. Organization
>   S3I Holdings, Inc. (the Company), was organized under the laws
>   of the State of California in April 2000. The original name of the Company was
>   Rental Windows, Inc. which was subsequently changed on August 10, 2001 to
>   Axtion Foods, Inc. (Axtion). In June 2001, the Company adopted a business plan
>   to distribute nutritional foods and supplements. In March 2003, while in the
>   development stage, this business plan ceased.
>   On April 16, 2003, Axtion completed an agreement and plan of share exchange
>   with SecureSoft Systems, Inc. (SecureSoft), a private California corporation
>   and changed its name to S3I Holdings, Inc.. Pursuant to the
>   agreement, the Company exchanged 15,727,197 shares of common stock for all of
>   the outstanding shares of common stock of SecureSoft. In addition to the share
>   exchange, the Company cancelled 20,000,000 shares of common stock. The
>   management of Axtion resigned and was replaced by the management of
>   SecureSoft. The acquisition has been recorded as a reverse acquisition whereby
>   SecureSoft is the accounting survivor and Axtion is the legal survivor;
>   therefore, the historical financial statements presented prior to the
>   acquisition are those of SecureSoft. 
>   The financial statements for the period ended June 30, 2003 are consolidated
>   with SecureSoft. However on April , 2004, the company registered with the
>   Securities and Exchange Commission as a Business Development Company. In so
>   doing has effected a change in accounting principle ( see below) and no longer
>   consolidates it's financial statements with SecureSoft. Therefore the
>   financial statements at June 30, 2004 are unconsolidated. The Company is
>   currently engaged as an investment company developing its various business
>   interest, specifically SecureSoft's business of developing HIPPA compliance
>   software. 
>   b. Accounting Method 
>   The Company recognizes income and expense on the accrual basis of accounting.
>   
>   c. Revenue Recognition
>   For the period June 30, 2003 and December 31, 2002, revenue from the sale of
>   software and consulting is recognized when an agreement is made, delivery is
>   complete, no significant obligations remain unfulfilled and collection of the
>   receivable is probable. In instances where a significant obligation exists,
>   revenue recognition is delayed until the obligation has been satisfied. 
>   d. Cash and Cash Equivalents
>   The Company considers all highly liquid investments with maturities of three
>   months or less to be cash equivalents.
>   e. Investments
>   The company has recorded it's investment in SecureSoft at cost which
>   approximates the Fair Market Value.

8

---

S3I Holdings, Inc.( Formerly Axtion Foods, Inc.)
 Notes to the Financial Statements
  June 30, 2004

NOTE 1 - Summary of
Significant Accounting Policies (Continued)

> f. Property and
>   Equipment
>   Property and Equipment consists of the following at June 30, 2004:
>   Computers and Equipment
>       $
>       0Accumulated Depreciation
>       
>       0Total Property & Equipment
>       $
>       0The provision for
>   depreciation is calculated using the straight-line method over the estimated
>   useful lives of the assets. Depreciation expense for the year ended June 30,
>   2004, six months ended June 30, 2003 and for the year ended December 31, 2002
>   was $0, $6,819, and $8,795 respectively.
>   In accordance with SFAS No. 144, the Company records impairment of long-lived
>   assets to be held and used or to be disposed of when indicators of impairment
>   are present and the undiscounted cash flows estimated to be generated by those
>   assets are less than the carrying amount. As of June 30, 2004, no impairments
>   have been recognized.
>   g. Provision for Income Taxes
>   No provision for income taxes has been recorded due to net operating loss
>   carry forward totaling approximately $600,000 that will be offset against
>   future taxable income. These NOL carry forward begin to expire in the year
>   2019. 
>   Deferred tax assets and the valuation account is as follows at June 30, 2004:
>   Deferred tax asset:NOL carry forward
>       $
>       200,000Valuation allowance
>       
>       (200,000)Total
>       $
>       -

9

---

S3I Holdings, Inc.( Formerly Axtion Foods, Inc.)
  Notes to the Financial Statements
  June 30, 2004

NOTE 1 - Summary of
Significant Accounting Policies (Continued)

> h. Stock Options and
>   Warrants
>   As permitted by FASB Statement No. 123 "Accounting for Stock Based
>   Compensation" (SFAS No. 123),and amended under FASB Statement 148, "Accounting
>   for Stock Based Compensation-Transition and Disclosure"(SFAS No. 148), the
>   Company has elected to measure and record compensation cost relative to
>   employee stock option costs in accordance with Accounting Principles Board
>   ("APB") Opinion 25, "Accounting for Stock Issued to Employees," and related
>   interpretations and make pro forma disclosures of net income (loss) and basic
>   earnings (loss) per share as if the fair value method of valuing stock options
>   have been applied. Under APB Opinion 25, compensation cost is recognized for
>   stock options granted to employees when the option price is less than the
>   market price of the underlying common stock on the date of grant.
>   For purposes of the pro forma disclosures and to measure and record
>   consideration paid to non-employees in the form of stock options or warrants,
>   the Company applies "SFAS NO, 123", as amended under SFAS 148 which requires
>   the Company to estimate the fair value of each dilutive instrument (stock
>   options and warrants) award at the grant date by using the Black-Scholes
>   option pricing model.
>   i. Earnings (Loss) Per Share
>   The computation of earnings (loss) per share of common stock is based on the
>   weighted average number of shares outstanding at the date of the financial
>   statements. Fully dilutive earnings per share has not been presented because
>   it equals primary earnings per share.
> For the 
>       Year ended
>       June 30,
>       2004
>     
>     For the Six
>       Months Ended
>       June 30,
>       2003
>     
>     For the
>     Year ended
>     December 31, 
>     2002Income
>     (Loss) Numerator
>     
>     $
>     (609,924)
>     $
>     (674,162)
>     $
>     56,569Shares
>     (Denominator)
>     
>     
>     25,774,121
>     
>     19,475,322
>     
>     14,622,197Per
>     Share Amount
>     
>     $
>     (0.02)
>     $
>     (0.03)
>     $
>     0.00

10

---

> S3I Holdings,
>     Inc.( Formerly Axtion Foods, Inc.)
>     Notes to the Financial Statements
>     June 30, 2004
>     j. Use of Estimates in the Preparation of Financial Statements
>     The preparation of financial statements in conformity with generally
>     accepted accounting principles requires management to make estimates and
>     assumptions that affect reported amounts of assets and liabilities,
>     disclosure of contingent assets and liabilities at the date of the financial
>     statements and expenses during the reporting period. In these financial
>     statements, assets, liabilities and expenses involve extensive reliance on
>     management's estimates. Actual results could differ from those estimates.

NOTE 1 - Summary of
Significant Accounting Policies (Continued)

> k. Financial
>   Instruments
>   The recorded amounts for financial instruments, including cash equivalents,
>   receivables, investments, accounts payable and accrued expenses, and long-term
>   debt approximate their market values as of June 30, 2004. The Company has no
>   investments in derivative financial instruments.
>   .

NOTE 2 - Going Concern

> The accompanying
>   financial statements have been prepared assuming that the Company will
>   continue as a going concern. The Company has had recurring operating losses
>   and is dependent on financing to continue operation. The financial statements
>   do not include any adjustments that might result from the outcome of this
>   uncertainty. It is management's plan to continue to increase revenues of
>   SecureSoft through additional contracts to provide services. The Company will
>   also raise funds from investors as needed or negotiate loan instruments to
>   provide necessary capital.

NOTE 3 - Commitments
and Contingencies

> In June 2004, the
>   Company committed to an operating lease for office space. The lease requires a
>   monthly payment of $1,000 and is on a month to month basis.
>   Rent expense from operating leases for the six months ended June 30, 2003 and
>   for the years ended December 31, 2002 was $34,452, $43,530, and $107,085,
>   respectively.

11

---

S3I Holdings, Inc.( Formerly Axtion Foods, Inc.)
  Notes to the Financial Statements
  June 30, 2004

NOTE 4- Convertible
Debentures

> Convertible Debentures
>   are detailed as follows at June 30, 2004:

| | Convertible
        Debentures payable to a Limited Liability Entity, bears interest at 8%,
        unsecured, payable by February 1, 2005, converts to common stock at a
        rate of 50% of low bid | $ | 385,000 | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | 
| |                                                                                                                                                                                                          |   |         | 
| | Convertible
        Debenture payable to an individual, bears interest at 
        8%, unsecured, payable August 2004, converts to common stock at
        a rate of 75% of low bid                      | $ | 95,000  | 
| |                                                                                                                                                                                                          |   |         | 
| | Total Convertible Debentures                                                                                                                                                                             | $ | 480,000 | 
| |                                                                                                                                                                                                          |   |         | 

NOTE 5- STOCK OPTIONS

> Employee Stock Options:
>   The following tables summarize the information regarding employee stock
>   options at June 30, 2004:
>     Options
>         outstanding at December 31, 2003
>         
>         1,943,512Granted
>         
>         0Exercised
>         
>         (1,943,512)Forfeited
>         
>         -Options
>         outstanding at June 30, 2004
>         
>         0Weighted average
>         exercise price of options outstanding at June 30, 2004
>         $
>         0The Company applies
>     APB Opinion 25 and related Interpretations in accounting for its plan. No
>     expense has been recognized for the employee stock option plan for the six
>     months ended June 30, 2003 and for the years ended December 31, 2002. Had
>     compensation cost for the Company's stock-based compensation plan been
>     determined based on the fair value at the grant dates for awards under such
>     plan consistent with the method of "SFAS No. 123", the Company's net income
>     ( loss) and basic loss per common share would have been as indicated below:

12

---

> S3I Holdings,
>     Inc.( Formerly Axtion Foods, Inc.)
>     Notes to the Financial Statements
>     June 30, 2004



|                                         |   | For the Six
        Months Ended
        June 30, |   | For the Years
        Ended
        December 31,
|---------------------------------------- | - | ------------------------------------------------- | - | ------------------------------------------------
|                                         |   | 2003                                              |   | 2002                                            
|                                         |   |                                                   |   |                                                 
|Net Income (Loss)
        as reported    | $ | (674,162)                                         | $ | 56,569                                          
|Pro forma net loss                       |   | (674,162)                                         |   | 56,569                                          
|Basic loss per
        share as reported |   | (0.03)                                            |   | 0.00                                            
|Pro forma basic
        loss per share   |   | (0.03)                                            |   | 0.00                                            

NOTE 6 - STOCK OPTIONS
    (Continued)

> Employee Stock Options
>   (Continued):
>   The Company estimated the fair value of each stock option at the grant date by
>   using the Black-Scholes option pricing model based on the following
>   assumptions:
>   Risk free interest
>       rate
>       3% - 4%Expected life
>       5-10 YearsVolatility
>       0%Dividend yield
>       0.0Non-Employee Stock Options
>   The following tables summarize the information regarding non-employee stock
>   options outstanding at June 30, 2004:
>     Options
>         outstanding at December 31, 2003
>         
>         1,580,000Granted
>         
>         0Exercised
>         
>         -Forfeited
>         
>         (1,580,000)Options
>         outstanding at June 30, 2004
>         
>         0Weighted average
>         exercise price of non-employee options outstanding at June 30, 2004
>         $
>         0

13

---

> S3I Holdings,
>     Inc.( Formerly Axtion Foods, Inc.)
>     Notes to the Financial Statements
>     June 30, 2004

NOTE 6 - STOCK OPTIONS (Continued)

> Non-Employee Stock
>   Options (Continued):
>   The Company applies SFAS No. 123 for options issued to non-employees, which
>   requires the Company to estimate the fair value of each option issued at the
>   grant date by using the Black-Scholes pricing model with the following
>   assumptions:
>   Risk free interest
>       rate
>       3%Expected life
>       4-10 YearsVolatility
>       8.4%-11%Dividend yield
>       0.0As a result of applying
>   SFAS No. 123, the Company had an expense of $130,900, and $0 during the six
>   months ended June 30, 2003 and the year ended December 31, 2002, respectively.
>   The expense is included in the general and administrative amount in the
>   statement of operations.

NOTE 7 CHANGE IN
ACCOUNTING PRINCIPLE

> In April 2004, the
>   Company filed a form N-54 with the Securities and Exchange Commission to be
>   treated as a Business Development Company (BDC). As a BDC, the company records
>   its investments in other entities it holds an interest in, and does not
>   consolidate with any of the entities with which it holds ownership. The period
>   ended June 30, 2003 reports the consolidated financial statements of the
>   Company and SecureSoft its wholly owned subsidiary, however as of June 30,
>   2004 the company has valued the investment in SecureSoft at Fair Market Value,
>   and did not consolidate its assets, liabilities or operating activities with
>   SecureSoft.

NOTE 8 LEGAL ACTIONS

> The Company is involved
>   in the following legal actions:
>   Fink et al v. Yamamoto, et al., United States District Court for the southern
>   district of California, Case No. 03-CV-2465 (formerly San Diego Superior
>   Court, Case No. GIC821356)
>   On November 20, 2003, plaintiffs Joshua Fink and Fred Villella filed a
>   complaint for damages, injunctive relief and declaratory relief against
>   defendants Wayne Yamamoto, Chistopher Berlandier, Luke Zouvas, Mark Zouvas and
>   the Company in the San Diego Superior Court.
>   On May 18, 2004, the Company and defendants filed answers to the allegations,
>   and a counterclaim against Villella.
>   On August 16, 2004, pursuant to a stipulated order, Villella voluntarily
>   dismissed without prejudice his claims against the defendants, and the Company
>   and SecureSoft. The Company also dismissed its claim against Villella.

14

---

> S3I Holdings,
>     Inc.( Formerly Axtion Foods, Inc.)
>     Notes to the Financial Statements
>     June 30, 2004

NOTE 8 LEGAL ACTIONS
(Continued)

> The Company did not file
>   a couterclaim against Fink since it had previously filed a separate lawsuit
>   against Fink. No discovery has yet been conducted in the case. The Company
>   plans to vigorously defend itself in this matter, and is unable to evaluate
>   the likelihood of an unfavorable outcome.
>   Radford v. Yamamoto, et al., San Diego Superior Court, North County, Case No.
>   GIN035467.
>   On February 10, 2004, plaintiff Tamara Radford filed a complaint against
>   defendants Wayne Yamamoto, Christopher Berlandier, the Company, SecureSoft
>   Systems, Inc. and Robert Grant. The complaint alleges eleven causes of action
>   for alleged breach of written employment contract, breach of oral employment
>   contract, breach of the implied covenant and good faith and fair dealing,
>   fraud-intentional misrepresentation of fact, fraud, negligent
>   misrepresentation of fact, wrongful termination in violation of public policy
>   and labor codes.
>   On July 9, 2004, the defendants filed their answer to the complaint, and
>   generally denied the allegations. Plaintiff has propounded some written
>   discovery, but by agreement of the parties, the time to respond has been
>   extended indefinitely. The parties agreed to the appointment of a mediator by
>   the Court, and mediation is scheduled for November 17, 2004.
>   The Company plans to vigorously defend itself in this matter, and is unable to
>   evaluate the likelihood of an unfavorable outcome.
>   Professional Traders Fund, LLC v. S3I Holdings, Inc. Supreme Court of the
>   State of New York, County of Nassau, Civil Case No. 04-176, and San Diego
>   Superior Court, Case No. GIC835886.
>   On January 7, 2004, plaintiff Professional Traders Fund filed a complaint
>   against the Company and Luke C. Zouvas. The complaint alleged two causes of
>   action for fraud and negligent misrepresentations, and sought $68,400 in
>   general damages and unspecified punitive damages.
>   The Company and Luke Zouvas did not respond to the complaint, and the
>   plaintiff moved for a default judgment. On July 30, 2004, the Clerk entered a
>   default judgment against the Company and Luke Zouvas in the amount of
>   $274,239.60. Luke Zouvas has retained counsel in New York to file a motion to
>   set aside the default judgment. The Company plans to retain counsel in New
>   York to determine if it should file a similar motion.
>   The Company plans to vigorously defend itself in this matter and is unable to
>   evaluate the likelihood of an unfavorable outcome.
>   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.

15

---

> S3I Holdings,
>     Inc.( Formerly Axtion Foods, Inc.)
>     Notes to the Financial Statements
>     June 30, 2004

NOTE 8 LEGAL ACTIONS (Continued)

> It is believed that the
>   government's investigation concerns alleged misrepresentations and omissions
>   of material facts in Company filings with the Securities and Exchange
>   Commission and in Company press 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 current status of the criminal investigation is
>   unknown. 
>   The Company plans to vigorously defend itself in this matter and is unable to
>   evaluate the likelihood of an unfavorable outcome.

16

---