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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

[ X ]Quarterly Report Under Section 13 Or 15(d) Of The
Securities Exchange Act Of 1934For the quarterly period ended December
31, 2006

[ ] Transition Report Under Section 13 Or 15(d) Of The
Securities Exchange Act For the transition period from ________to
________

COMMISSION FILE NUMBER000-50163

AQUA SOCIETY, INC.(Exact
name of small business issuer as specified in its charter)

|NEVADA                                           | 52-2357931                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

Konrad - Adenauer Strasse 9-13 45699 Herten,
Germany(Address of principal executive offices)

011-49-6031-791-760Issuer's telephone
number

Not ApplicableFormer name, former address and former
fiscal year, if changed since last report

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ X ]No [ ]

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

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As of February
20, 2007 the Issuer had 118,178,323 Shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes [
] No [X]

1

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

2

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AQUA SOCIETY, INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006

(Stated in US Dollars)

(Unaudited)

---

|AQUA SOCIETY, INC.                      
|----------------------------------------
|INTERIM CONSOLIDATED BALANCE SHEETS     
|December 31, 2006 and September 30, 2006
|(Stated in US Dollars)                  
|(Unaudited)                             

|                                                                     |   | December 31, |   |   | September 30, |  
|-------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|ASSETS                                                               |   | 2006         |   |   | 2006          |  
|                                                                     |   |              |   |   |               |  
|Current                                                              |   |              |   |   |               |  
|Cash                                                                 | $ | 108,837      |   | $ | 187,432       |  
|Accounts receivable  trade                                          |   | 76,838       |   |   | 143,039       |  
|
      other  Note 4                                               |   | 59,367       |   |   | -             |  
|Government value added tax receivable                                |   | 97,631       |   |   | 217,919       |  
|Inventory                                                            |   | 332,389      |   |   | 306,569       |  
|Loans receivable                                                     |   | 1            |   |   | 1             |  
|                                                                     |   |              |   |   |               |  
|                                                                     |   | 675,063      |   |   | 854,960       |  
|Investments  Note 3                                                 |   | 2            |   |   | 2             |  
|Patents and patent rights                                            |   | 193,485      |   |   | 193,485       |  
|Equipment                                                            |   | 53,811       |   |   | 65,343        |  
|                                                                     |   |              |   |   |               |  
|                                                                     | $ | 922,361      |   | $ | 1,113,790     |  
|                                                                     |   |              |   |   |               |  
|LIABILITIES                                                          |   |              |   |   |               |  
|                                                                     |   |              |   |   |               |  
|Current                                                              |   |              |   |   |               |  
|Accounts payable and accrued liabilities 
      Note 4              | $ | 527,018      |   | $ | 537,271       |  
|Loans payable  Notes 4 and
      5                                  |   | 3,165,735    |   |   | 2,377,099     |  
|                                                                     |   |              |   |   |               |  
|                                                                     |   | 3,692,753    |   |   | 2,914,370     |  
|                                                                     |   |              |   |   |               |  
|STOCKHOLDERS DEFICIENCY                                             |   |              |   |   |               |  
|                                                                     |   |              |   |   |               |  
|Common stock, $0.001 par value  Notes
      6 and 8                 |   |              |   |   |               |  
|300,000,000 shares authorized                                        |   |              |   |   |               |  
|118,178,323 shares issued
      and outstanding (September 30, 2006: |   |              |   |   |               |  
|118,178,323 shares)                                                  |   | 118,179      |   |   | 118,179       |  
|Additional paid-in capital                                           |   | 28,690,854   |   |   | 28,609,612    |  
|Accumulated other comprehensive loss                                 |   | (246,705     | ) |   | (150,368      | )
|Accumulated deficit                                                  |   | (31,332,720  | ) |   | (30,378,003   | )
|                                                                     |   |              |   |   |               |  
|                                                                     |   | (2,770,392   | ) |   | (1,800,580    | )
|                                                                     |   |              |   |   |               |  
|                                                                     | $ | 922,361      |   | $ | 1,113,790     |  

SEE ACCOMPANYING NOTES

---

|AQUA SOCIETY, INC.                                   
|-----------------------------------------------------
|INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS        
|for the three months ended December 31, 2006 and 2005
|(Stated in US Dollars)                               
|(Unaudited)                                          

|                                              |   | 2006        |   |   | 2005        |  
|--------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                              |   |             |   |   |             |  
|Sales                                         | $ | 25,441      |   | $ | 782,242     |  
|Less: cost of goods sold                      |   | 580         |   |   | 593,010     |  
|                                              |   |             |   |   |             |  
|                                              |   | 24,861      |   |   | 189,232     |  
|                                              |   |             |   |   |             |  
|General and administrative expenses:          |   |             |   |   |             |  
|Accounting and audit fees                     |   | 73,443      |   |   | 57,121      |  
|Advertising and promotion                     |   | 19,329      |   |   | 58,187      |  
|Amortization                                  |   | 5,899       |   |   | 6,584       |  
|Bad debts                                     |   | 28,431      |   |   | 43,685      |  
|Bank charges and interest                     |   | 117         |   |   | 85          |  
|Consulting fees                               |   | 36,634      |   |   | 177,085     |  
|Development costs  Note
      4              |   | 268,919     |   |   | 412,455     |  
|Filing fees                                   |   | 867         |   |   | 121         |  
|Interest                                      |   | 57,256      |   |   | 57,088      |  
|Legal fees  Note 4                           |   | 130,228     |   |   | 36,264      |  
|Management fees  Note 4                      |   | 57,988      |   |   | 124,857     |  
|Office and miscellaneous                      |   | 23,270      |   |   | 66,274      |  
|Rent                                          |   | 26,154      |   |   | 28,917      |  
|Salaries and benefits                         |   | 154,052     |   |   | 96,888      |  
|Stock-based compensation                      |   | 57,242      |   |   | -           |  
|Transfer agent                                |   | 225         |   |   | 815         |  
|Travel  Note 4                               |   | 39,524      |   |   | 80,478      |  
|Write down of patents                         |   | -           |   |   | 8,994       |  
|Write down of inventory                       |   | -           |   |   | 63,928      |  
|                                              |   |             |   |   |             |  
|                                              |   | (979,578    | ) |   | (1,319,826  | )
|                                              |   |             |   |   |             |  
|Operating loss before other item              |   | (954,717    | ) |   | (1,130,594  | )
|                                              |   |             |   |   |             |  
|Other item:                                   |   |             |   |   |             |  
|Interest income                               |   | -           |   |   | 5,292       |  
|                                              |   |             |   |   |             |  
|Net loss for the period                       |   | (954,717    | ) |   | (1,125,302  | )
|                                              |   |             |   |   |             |  
|Other comprehensive loss                      |   |             |   |   |             |  
|Foreign currency adjustment                   |   | (96,337     | ) |   | (2,551      | )
|                                              |   |             |   |   |             |  
|Comprehensive loss for the period             | $ | (1,051,054  | ) | $ | (1,127,853  | )
|                                              |   |             |   |   |             |  
|Basic loss per share                          | $ | (0.01       | ) | $ | (0.01       | )
|                                              |   |             |   |   |             |  
|Weighted average number of shares outstanding |   | 118,178,323 |   |   | 115,771,988 |  

SEE ACCOMPANYING NOTES

---

|AQUA SOCIETY, INC.                                   
|-----------------------------------------------------
|INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS        
|for the three months ended December 31, 2006 and 2005
|(Stated in US Dollars)                               
|(Unaudited)                                          

|                                               |   | 2006     |   |   | 2005       |  
|---------------------------------------------- | - | -------- | - | - | ---------- | -
|                                               |   |          |   |   |            |  
|Cash flows used in Operating Activities        |   |          |   |   |            |  
|Net loss for the period                        | $ | (954,717 | ) | $ | (1,125,302 | )
|Items not affecting cash:                      |   |          |   |   |            |  
|Amortization                                   |   | 5,899    |   |   | 6,584      |  
|Stock-based compensation                       |   | 57,242   |   |   |            |  
|Write-down
      of patents                    |   | -        |   |   | 8,994      |  
|Write-down of inventory                        |   | -        |   |   | 63,928     |  
|Interest
      imputed on loans payable        |   | 24,000   |   |   | -          |  
|Changes in non-cash working capital items:     |   |          |   |   |            |  
|Accounts
      receivable                      |   | 10,882   |   |   | (126,415   | )
|Government value added tax
      receivable    |   | 126,004  |   |   | 12,329     |  
|Inventory                                      |   | (13,251  | ) |   | 9,748      |  
|Accounts payable and accrued
      liabilities |   | (23,954  | ) |   | 526,835    |  
|                                               |   |          |   |   |            |  
|                                               |   | (767,895 | ) |   | (623,299   | )
|                                               |   |          |   |   |            |  
|Cash flows used in Investing Activities        |   |          |   |   |            |  
|Equipment disposal                             |   | 5,634    |   |   | 48,178     |  
|Repayment of loans receivable                  |   | -        |   |   | (68,388    | )
|                                               |   |          |   |   |            |  
|                                               |   | 5,634    |   |   | (20,210    | )
|                                               |   |          |   |   |            |  
|Cash flows from Financing Activity             |   |          |   |   |            |  
|Increase in loans payable                      |   | 677,508  |   |   | 174,408    |  
|                                               |   |          |   |   |            |  
|Effect of exchange rates on cash               |   | 6,158    |   |   | (7,730     | )
|                                               |   |          |   |   |            |  
|Decrease in cash during the period             |   | (78,595  | ) |   | (476,831   | )
|                                               |   |          |   |   |            |  
|Cash, beginning of the period                  |   | 187,432  |   |   | 658,949    |  
|                                               |   |          |   |   |            |  
|Cash, end of the period                        | $ | 108,837  |   | $ | 182,118    |  

SEE ACCOMPANYING NOTES

---

|AQUA SOCIETY, INC.                                                        
|--------------------------------------------------------------------------
|INTERIM STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)                   
|for the period May 13, 2004 (Date of Inception) to December
      31, 2006
|(Stated in US Dollars)                                                    
|(Unaudited)                                                               

|                                           |  | Common Stock |   |   |           |   |   |            |  |  | Accumulated      |   |   |               |   |   |             |  
|------------------------------------------ |  | ------------ | - | - | --------- | - | - | ---------- |  |  | ---------------- | - | - | ------------- | - | - | ----------- | -
|                                           |  |              |   |   |           |   |   | Additional |  |  |                  |   |   |               |   |   | Other       |  
|                                           |  |              |   |   |           |   |   | Paid-in    |  |  | Special Warrants |   |   | Comprehensive |   |   | Accumulated |  
|                                           |  | Number       |   |   | Par Value |   |   | Capital    |  |  | Number           |   |   | Amount        |   |   | Gain (Loss) |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Capital stock issued for cash              |  | 1            |   | $ | 31,042    |   | $ | -          |  |  | -                |   | $ | -             |   | $ | -           |  
|Contribution of assets                     |  | -            |   |   | -         |   |   | 25,056     |  |  | -                |   |   | -             |   |   | -           |  
|Pursuant to the acquisition of Aqua        |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Society GmbH                               |  | 10,000,000   |   |   | 10,000    |   |   | -          |  |  | 34,000,000       |   |   | 34,000        |   |   | -           |  
|Exchange of shares                         |  | (1           | ) |   | (31,042   | ) |   | -          |  |  | -                |   |   | -             |   |   | -           |  
|Outstanding shares of Company              |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|prior to acquisition                       |  | 69,908,000   |   |   | 69,908    |   |   | -          |  |  | -                |   |   | -             |   |   | -           |  
|Unrealized loss on translation             |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | (997        | )
|Net loss for the period                    |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | -           |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Balance, September 30, 2004                |  | 79,908,000   |   |   | 79,908    |   |   | 25,056     |  |  | 34,000,000       |   |   | 34,000        |   |   | (997        | )
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Issued for cash:                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Pursuant to private placement - at $2.40   |  | 416,666      |   |   | 417       |   |   | 999,583    |  |  | -                |   |   | -             |   |   | -           |  
|-
      at $1.98                           |  | 1,232,322    |   |   | 1,233     |   |   | 2,438,766  |  |  | -                |   |   | -             |   |   | -           |  
|Pursuant to exercise of options - at $1.70 |  | 215,000      |   |   | 215       |   |   | 365,285    |  |  | -                |   |   | -             |   |   | -           |  
|Conversion of special warrants             |  | 34,000,000   |   |   | 34,000    |   |   | -          |  |  | (34,000,000      | ) |   | (34,000       | ) |   | -           |  
|Stock-based compensation                   |  | -            |   |   | -         |   |   | 22,480,000 |  |  | -                |   |   | -             |   |   | -           |  
|Unrealized gain on translation             |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | 89,594      |  
|Net loss for the year                      |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | -           |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Balance, September 30, 2005                |  | 115,771,988  |   |   | 115,773   |   |   | 26,308,690 |  |  | -                |   |   | -             |   |   | 88,597      |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Pursuant to private placement - at $1.04   |  | 1,160,960    |   |   | 1,161     |   |   | 1,206,237  |  |  | -                |   |   | -             |   |   | -           |  
|-
      at $0.88                           |  | 1,245,375    |   |   | 1,245     |   |   | 1,094,685  |  |  | -                |   |   | -             |   |   | -           |  
|Unrealized loss on translation             |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | (238,965    | )
|Net loss for the period                    |  | -            |   |   | -         |   |   | -          |  |  | -                |   |   | -             |   |   | -           |  
|                                           |  |              |   |   |           |   |   |            |  |  |                  |   |   |               |   |   |             |  
|Balance, September 30, 2006                |  | 118,178,323  |   |   | 118,179   |   |   | 28,609,612 |  |  | -                |   |   | -             |   |   | (150,368    | )

SEE ACCOMPANYING NOTES

---

Continued

|AQUA SOCIETY, INC.                                                        
|--------------------------------------------------------------------------
|INTERIM STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)                   
|for the period May 13, 2004 (Date of Inception) to December
      31, 2006
|(Stated in US Dollars)                                                    
|(Unaudited)                                                               

|                                        | Common Stock |             |  |   |           |  |   |            | Accumulated |  |                  |  |   |               |  |  
|--------------------------------------- | ------------ | ----------- |  | - | --------- |  | - | ---------- | ----------- |  | ---------------- |  | - | ------------- |  | -
|                                        |              |             |  |   |           |  |   | Additional |             |  |                  |  |   |               |  |  
|                                        |              |             |  |   |           |  |   | Paid-in    |             |  | Special Warrants |  |   | Comprehensive |  |  
|                                        |              | Number      |  |   | Par Value |  |   | Capital    |             |  | Number           |  |   | Amount        |  |  
|                                        |              |             |  |   |           |  |   |            |             |  |                  |  |   |               |  |  
|                                        |              |             |  |   |           |  |   |            |             |  |                  |  |   |               |  |  
|Stock-based compensation                |              | -           |  |   | -         |  |   | 57,242     |             |  | -                |  |   | -             |  |  
|Unrealized loss on translation          |              | -           |  |   | -         |  |   |            |             |  | -                |  |   | -             |  |  
|Contribution of interest  Note
      5 |              | -           |  |   | -         |  |   | 24,000     |             |  | -                |  |   | -             |  |  
|Net loss for the period                 |              | -           |  |   | -         |  |   | -          |             |  | -                |  |   | -             |  |  
|                                        |              |             |  |   |           |  |   |            |             |  |                  |  |   |               |  |  
|Balance, December 31, 2006              |              | 118,178,323 |  | $ | 118,179   |  | $ | 28,690,854 |             |  | -                |  | $ |               |  | $

SEE ACCOMPANYING NOTES

---

|AQUA SOCIETY, INC.                                    
|------------------------------------------------------
|NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2006                                     
|(Stated in US Dollars)                                
|(Unaudited)                                           

|Note 1 | Interim Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | While information presented
        in the accompanying interim consolidated financial statements is unaudited,
        it includes all adjustments, which are, in the opinion of management,
        necessary to present fairly the financial position, results of operations
        and cash flows for the interim periods presented. All adjustments are
        of a normal recurring nature. The accompanying interim consolidated financial
        statements do not include all information and footnote disclosures required
        for an annual set of financial statements prepared under generally accepted
        accounting principles in the United States of America. The accompanying
        interim consolidated financial statements should be read in conjunction
        with the Companys September 30, 2006 audited consolidated financial
        statements. Operating results from the period ended December 31, 2006
        are not necessarily indicative of the results that can be expected for
        the year ending September 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Note 2 | Nature and Continuance
        of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | These interim consolidated
        financial statements have been prepared in accordance with generally accepted
        accounting principles applicable to a going concern, which assumes that
        the Company will be able to meet its obligations and continue its operations
        for the next twelve months. Realization values may be substantially different
        from carrying values as shown and these financial statements do not give
        effect to adjustments that would be necessary to the carrying values and
        classification of assets and liabilities should the Company be unable
        to continue as a going concern. At December 31, 2006, the Company had
        not yet achieved profitable operations, has accumulated losses of $31,332,720
        since its inception, has a working capital deficiency of $3,017,690 and
        expects to incur further losses in the development of its business, all
        of which casts substantial doubt about the Companys ability to continue
        as a going concern. The Companys ability to continue as a going
        concern is dependent upon its ability to generate future profitable operations
        and/or to obtain the necessary financing to meet its obligations and repay
        its liabilities arising from normal business operations when they come
        due. Management considers that the Company will be able to obtain additional
        funds by equity financing and/or related party advances; however there
        is no assurance of additional funding being available.

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 2                       
|(Unaudited)                                           

|Note 3 | Investments                                                                                                                                                                                                
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                            
|       | i)                                                                                                                                                                                                         
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       | ii)                                                                                                                                                                                                        
|       |                                                                                                                                                                                                            
|Note 4 | Related Party Transactions Note 7                                                                                                                                                                         
|       |                                                                                                                                                                                                            
|       | The Company incurred the following amounts charged
      by directors of the Company, the brother of a director of the Company and
      a law firm of which a former director of the Company is a partner:

| |                   |   | Three months ended | 
| | ----------------- | - | ------------------ | 
| |                   |   | December 31,       | 
| |                   |   | 2006               | 
| |                   |   |                    | 
| | Development costs | $ | 88,013             | 
| | Legal fees        |   | -                  | 
| | Management fees   |   | 57,988             | 
| | Travel            |   | -                  | 
| |                   |   |                    | 
| |                   | $ | 146,001            | 

Accounts receivable  other includes $59,367 related
  to an advance to a former officer of the Company.

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 3                       
|(Unaudited)                                           

|Note 4 | Related Party Transactions Note 7
       (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Included in accounts payable
        and accrued liabilities is $77,498 (September 30, 2006: $79,358) due to
        directors of the Company and a former director of the Company. These amounts
        are unsecured, non-interest bearing and have no specific terms for repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Included in loans payable
        is $1,527,238 (September 30, 2006: $1,441,507) due to a law firm of which
        a former director of the Company is a partner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 5 | Loans Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Of the total loans outstanding
        at December 31, 2006, $950,886 (September 30, 2006: $883,822) bear interest
        at 7.5% per annum, are secured by accounts receivable of GmbH and are
        repayable on or before December 31, 2006, $773,403 (September 30, 2006:
        $743,675) are non-interest bearing, secured by accounts receivable of
        GmbH and are repayable on or before December 31, 2006, $1,319,261 (September
        30, 2006: $634,276) are non-interest bearing, unsecured and due on demand,
        and $122,185 (September 30, 2006: $115,326) of loans payable bear interest
        of 7.5% per annum, are unsecured and are repayable on or before December
        31, 2006. The loans due on or before December 31, 2006 were not repaid
        and are consequently in default. The company has imputed interest on the
        non-interest bearing loans at 10% per annum for a total of $24,000 during
        the three months ended December 31, 2006.                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 6 | Capital Stock
        Note 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Commitments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Share Purchase Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On December 21, 2006, the
        Company adopted a second stock incentive plan (the 2006 Stock Option
        Plan) to provide incentives to employees, directors, officers and
        permitted consultants. The 2006 Stock Plan provides for the issuance of
        up to 7,000,000 options with a term to be determined by the plan administer
        or, if not so established, ten years. The maximum aggregate number of
        shares that may be optioned under the 2006 Stock Option Plan will be increased
        effective the first day of each of the Companys fiscal quarters
        (adjustment date), beginning with the fiscal quarter commencing
        April 1, 2007 by an amount equal to the lesser of i) 15% of the outstanding
        shares on the first day of the applicable quarter less a) the number of
        shares of common stock that may be optioned and sold under the plan prior
        to the adjustment date and b) the number of shares of common stock that
        may be optioned and sold under any other stock option plan in effect as
        of the adjustment date or ii) such lesser number of shares of common stock
        as may be determined by the Board.

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 4                       
|(Unaudited)                                           

|Note 6 | Capital Stock Note 8  (contd)                                                                                          
|------ | --------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                           
|       | Commitments:  (contd)                                                                                                   
|       |                                                                                                                           
|       | Share Purchase Options  (contd)                                                                                         
|       |                                                                                                                           
|       | A summary of the stock options outstanding as at
      December 31, 2006 and changes during the period is presented below:

| |                                           |  |            |  |   | Weighted | 
| | ----------------------------------------- |  | ---------- |  | - | -------- | 
| |                                           |  |            |  |   | Average  | 
| |                                           |  |            |  |   | Exercise | 
| |                                           |  | Shares     |  |   | Price    | 
| |                                           |  |            |  |   |          | 
| | Options outstanding at September 30, 2006 |  | 7,535,000  |  | $ | 1.70     | 
| | Granted                                   |  | 4,500,000  |  | $ | 0.40     | 
| |                                           |  |            |  |   |          | 
| | Options outstanding at December 31, 2006  |  | 12,035,000 |  | $ | 1.21     | 
| |                                           |  |            |  |   |          | 
| | Options exercisable at December 31, 2006  |  | 7,535,000  |  |   |          | 

A summary of stock options outstanding
  at December 31, 2006, is as follows:

| |            | Exercise |                 
| | ---------- | -------- | ----------------
| | Number     | Price    | Expiry Date     
| |            |          |                 
| | 562,500    | $0.40    | April 1, 2009   
| | 562,500    | $0.40    | July 1, 2009    
| | 562,500    | 0.40     | October 1, 2009 
| | 7,535,000  | $1.70    | October 15, 2009
| | 562,500    | $0.40    | January 1, 2010 
| | 562,500    | $0.40    | April 1, 2010   
| | 562,500    | $0.40    | July 1, 2010    
| | 562,500    | $0.40    | October 1, 2010 
| | 562,500    | $0.40    | January 1, 2011 
| |            |          |                 
| | 12,035,000 |          |                 

The Company used the Black-Scholes option
  pricing model to compute estimated fair value at each of the grant dates.

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 5                       
|(Unaudited)                                           

|Note 6 | Capital Stock Note 8 (contd)                                                                                                                                                                                                                                                                                                                                                                                              
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Commitments (contd)                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Share Purchase Options  (contd)                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The Black-Scholes option-pricing
        model requires the input of highly subjective assumptions including the
        expected price volatility. Changes in the subjective input assumptions
        can materially affect the fair value estimate and therefore the Black-Scholes
        model does not necessarily provide a reliable single measure of the fair
        value of the Companys share purchase options.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The Company used the Black-Scholes
        option pricing model to compute the estimated fair value of the options
        granted during the three months ended December 31, 2006, based on the
        following assumptions:                                                                                                                                                                                              

| | Risk-free interest rate                   | 4.84%     
| | ----------------------------------------- | ----------
| | Dividend yield rate                       | 0.00%     
| | Price volatility                          | 159.23%   
| | Weighted average expected life of options | 2.03 years
| | Weighted average fair value               | $0.36     

The Company recognized stock-based compensation
  of $57,242 during the three months ended December 31, 2006.

Share Purchase Warrants

As at December 31, 2006, a total of 2,406,335
  share purchase warrants exercisable into 2,406,335 common shares were outstanding
  as follows:

| |           |  | Exercise |                 
| | --------- |  | -------- | ----------------
| | Number    |  | Price    | Expiry Date     
| |           |  |          |                 
| | 1,169,960 |  | $1.30    | February 9, 2008
| | 1,245,375 |  | $1.10    | June 15, 2008   
| |           |  |          |                 
| | 2,406,335 |  |          |                 

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 6                       
|(Unaudited)                                           

|Note 7 | Commitments
|------ | -----------
|       |            
|       | i)         
|       |            
|       |            
|       |            
|       |            

| | September 30, 2007 | $ | 80,960 | 
| | ------------------ | - | ------ | 
| | 2008               |   | 12,144 | 
| |                    |   |        | 
| |                    | $ | 93,104 | 

| | ii) | Management/Consulting Contracts
| | --- | -------------------------------
| |     |                                
| |     | a)                             
| |     |                                
| |     | b)                             
| |     |                                
| |     | c)                             

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 7                       
|(Unaudited)                                           

|Note 7 | Commitments (contd)
|------ | ---------------------
|       |                      
|       | ii)                  
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      
|       |                      

---

|Aqua Society, Inc.                                    
|------------------------------------------------------
|Notes to the Interim Consolidated Financial Statements
|December 31, 2006                                     
|(Stated in US Dollars)  Page 8                       
|(Unaudited)                                           

|Note 8 | Subsequent Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Subsequent to December 31, 2007, the Company
        approved a private placement offering of 7,500,000 units at $0.30 per
        unit with each unit consisting of one share of the Companys common
        stock and one-half share purchase warrant for total proceeds of $2,250,000.
        Each share purchase warrant entitles the holder to purchase one additional
        share of the Companys common stock at $0.35 per share for a period
        of one year from the date of issuance of the units.

---

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.

Cautionary Statement Regarding Forward-Looking
Statements

Certain statements contained in this Quarterly Report
constitute "forward-looking statements". These statements, identified by words
such as plan, "anticipate," "believe," "estimate," "should," "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Management's Discussion
and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. We do
not intend to update the forward-looking information to reflect actual results
or changes in the factors affecting such forward-looking information. We advise
you to carefully review the reports and documents we file from time to time with
the United States Securities and Exchange Commission (the SEC), particularly
our Annual Reports on Form 10-KSB and our Current Reports on Form 8-K.

As used in this Quarterly Report, the terms "we", "us", "our",
the Company and Aqua Society mean Aqua Society, Inc. unless otherwise
indicated. All dollar amounts in this Quarterly Report are in U.S. dollars
unless otherwise stated.

INTRODUCTION

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the three
month period ended December 31, 2006 and changes in our financial condition from
September 30, 2006. This discussion should be read in conjunction with the
Managements Discussion and Analysis or Plan of Operation included in our Annual
Report on Form 10-KSB for the year ended September 30, 2006.

We were incorporated under the laws of the State of Nevada on
March 2, 2000, under the name V G Tech, Inc.

On September 22, 2004, we completed the acquisition of Aqua
Society GmbH (Aqua GmbH). Prior to our acquisition of Aqua GmbH, we were in
the business of providing services in the areas of digital graphics and special
effects. Upon completing the acquisition of Aqua GmbH, we abandoned this digital
imaging business. We are now in the business of designing and developing applied
technologies, and providing consulting services, in the areas of heating,
ventilation, air conditioning, refrigeration, water purification, waste water
treatment, and, our latest business segment, energy (collectively, the Aqua
Business).

Effective December 27, 2004, we changed our name to Aqua
Society, Inc. to better reflect the nature of our current business
operations

Recent Corporate Developments

The following significant corporate developments have occurred
since our fiscal year ended September 30, 2006:

|1. | After the completion of our 2006 fiscal year, we
      completed the construction of a demonstration prototype of our
      EnergyMission / Yellow Box technology. A media event to showcase this
      demonstration model was held at our facilities on December 21, 2006. This
      demonstration unit will be used by us for marketing and demonstration
      purposes as well as for research and development.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

---

|2. | On December 21, 2006, our Board of Directors approved and
      adopted our 2006 Stock Option Plan (the 2006 Option Plan). Under the
      2006 Option Plan, options may be granted for a maximum of 7,000,000 shares
      of our common stock. The maximum number of shares that may be optioned
      under the 2006 Option Plan will increase each fiscal quarter, beginning
      with the fiscal quarter commencing April 1, 2007, by an amount equal to
      15% of the total increase in the number of shares of common stock
      outstanding or such lesser amount as may be determined by our Board of
      Directors.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | A summary of our 2006 Option Plan is set forth in our
      Current Report on Form 8-K filed with the SEC on December 29, 2006. The
      full text of the 2006 Option Plan is attached as Exhibit 10.1 to our
      Current Report on Form 8-K filed with the SEC on December 29, 2006, and is
      incorporated by reference herein.                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3. | Also on December 21, 2006, our Board of Directors
      approved the grant of options under the 2006 Option Plan for 2,500,000
      shares of our common stock at an exercise price of $0.40 per share to Mr.
      Terberg and options to purchase an aggregate of 2,000,000 shares of our
      commons stock to Mr. van der Zee, also at a price of $0.40. The options
      granted to each of Mr. Terberg and Mr. van der Zee vest in equal quarterly
      instalments, commencing on April 1, 2007 and expiring 2 years after the
      applicable vesting date.                                                              

Changes to the Board of Directors and Executive
Officers

In addition to the above corporate developments, there have
been a number of changes to our Board of Directors and executive officers since
the end of our 2006 fiscal year.

Effective October 31, 2006, Robert Terberg replaced Petrus
Lodestijn as our Chief Executive Officer, President, Chief Financial Officer,
Treasurer and Secretary and also as a member of our Board of Directors. Also
effective on October 31, 2006, our Board of Directors was expanded by the
appointment of Hubert Hamm as a director of the Company and by the appointment
of Hugo van der Zee as the Chairman of the Companys Board of Directors.

PLAN OF OPERATION

During the next twelve months, we will focus: (1) on the design
and construction of products ordered from us; (2) on further developing the
market for our products; and (3) on continuing to develop and improve our
products. Specifically, our plan of operation for the next twelve months
involves the following:

|1. | Design and Construction of Ordered
      Units:During the next twelve months, we will work on the
      design and construction of the waste heat power generation, AquaMission
      and ThermoMobil units for which we have received orders.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                               
|2. | Market Development Activities:Over
      the next twelve months we intend to do the following in an effort to
      continue developing a market for our products and services:                                                               
|   |                                                                                                                                                                                                                                               
|   | (a)                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                               
|   | (b)                                                                                                                                                                                                                                           

4

---

| |     | the Netherlands. This production facility is expected to
      enable us to significantly expand our production capabilities from the
      limited facilities located in Herten, Germany. The Dutch Subsidiary is
      expected to be based in Zevenaar, near Arnhem, in the east of the
      Netherlands.                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (c) | We will continue to attempt to market the AquaMission
      combined air-conditioning and drinking water product in geographic
      locations with high ambient temperatures and relative humidity but without
      readily available sources of fresh water, such as the Persian Gulf and the
      Middle East. Three demonstration models of the AquaMission are currently
      on location in the Middle East. We are currently in the process of seeking
      new sales agents for our products in the Middle East.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | We will continue to try and generate sales in the Middle
      East using these demonstration models.                                                                                                                                                                                                                                                                                                                                                                                                                       

In addition to these activities, we may
also seek to increase brand awareness through various advertising activities and
sponsorships.

|3. | Product Development Activities:During the next twelve months, we will also continue to work on
      further developing and improving our existing products in an effort to
      increase their marketability. As part of these efforts, we have developed
      and built a demonstration model of our Yellow Box technology.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|   | We are also in the process of constructing a high-tech
      climate room that will allow us to simulate the worlds various humidity
      and temperature zones. This climate room will assist us in optimizing
      our AquaMission unit for different geographic
locations.                                           

We anticipate spending approximately $2,000,000 in pursuing our
  plan of operation over the next twelve months. As of December 31, 2006, the
  date of our most recently available financial statements, we had a working capital
  deficit of $3,017,690. As such, we do not have sufficient working capital to
  meet our expected needs over the next twelve months. Although we have recently
  begun to earn revenues, we have not yet earned a net profit and we do not expect
  to achieve profitability in the near future as we expect to continue to incur
  substantial product development, marketing and operating expenses. We are likely
  to continue to need substantial additional financing in order to implement our
  plan of operation. Our management expects that any additional financing that
  we obtain will likely be in the form of equity financing.

Our actual expenditures and business plan may differ from the
one stated above. Our Board of Directors may decide not to pursue this plan. In
addition, we may modify the plan based on available financing.

RESULTS OF OPERATIONS

First Quarter Summary

|                                    | Three Months Ended |             
|----------------------------------- | ------------------ | ------------
|                                    | December 31        | Percentage  
|                                    | 2006               | 2005        
|Revenue                             | $25,441            | $782,242    
|Cost of Goods Sold                  | (580)              | (593,010)   
|General and Administrative Expenses | (979,578)          | (1,319,826) 
|Other Items                         | Nil                | (5,292)     
|Net Loss                            | $(954,717)         | $(1,125,302)

5

---

Revenues

During our last fiscal year, we earned revenues from HVAC&R
and energy optimization consulting services, and from equipment sales made in
connection with the provision of those services. However, we do not have a
long-term history of earning revenues and, as a result, we are unable to
accurately forecast future revenues. Readers are cautioned that our past
operating results may not be indicative of future performance.

During the fiscal year ended December 31, 2006, our revenue
decreased by 96.7% as compared to the same period ended in 2005. Since their
appointment in October, 2006, our new executive officers and directors have been
conducting a company wide review of our operations. During this period, we
scaled back our HVAC&R and energy optimizing consulting activities. As a
result, our revenues decreased substantially.

During the next twelve months, we intend to concentrate our
resources on developing the market for our ThermoMobil, AquaMission and
EnergyMission/Yellow Box products, as we believe that these products will
provide us with the greatest opportunity for future profitability. As a result,
we may continue to scale back the HVAC&R and energy optimization consulting
services that we have provided in the past.

Although we have received orders for our ThermoMobil,
AquaMission and EnergyMission/Yellow Box products, we have not yet earned any
revenues from the sale of those products, and there are no assurances that we
will be able earn such revenues in the future.

Operating Costs and Expenses

Our operating expenses for the quarterly period ended December
31, 2006 consisted of the following:

|                          | Three Months Ended |           
|------------------------- | ------------------ | ----------
|                          | December 31        | Percentage
|                          | 2006               | 2005      
|Accounting and audit fees | $73,443            | $57,121   
|Advertising and promotion | 19,329             | 58,187    
|Amortization              | 5,899              | 6,584     
|Bad debts                 | 28,431             | 43,685    
|Bank charges and interest | 117                | 85        
|Consulting fees           | 36,634             | 177,085   
|Development costs         | 268,919            | 412,455   
|Filing fees               | 867                | 121       
|Interest                  | 57,256             | 57,088    
|Legal fees                | 130,228            | 36,264    
|Management fees           | 57,988             | 124,857   
|Office and miscellaneous  | 23,270             | 66,274    
|Rent                      | 26,154             | 28,917    
|Salaries and benefits     | 154,052            | 96,888    
|Stock-based compensation  | 57,242             | Nil       
|Transfer agent            | 225                | 815       

6

---

|Travel                                    | 39,524   | 80,478     | (50.9)% 
|----------------------------------------- | -------- | ---------- | --------
|Write down of patents                     | Nil      | 8,994      | (100.0)%
|Write down of inventory                   | Nil      | 63,928     | (100.0)%
|Total General and Administrative Expenses | $979,578 | $1,319,826 | (25.8)% 

Our general and administrative expenses decreased by $340,248,
or 25.8%, during the three month period ended December 31, 2006 as compared to
2005. This decrease in our general and administrative expenses was primarily
generated as a result of the efforts of our current management to streamline our
operations. During the next few months, we expect that our general and
administrative expenses will continue to fluctuate somewhat as we continue to
review and overhaul our current operations.

Management fees decreased by $66,869, or 53.6%, during the
quarter ended December 31, 2006, primarily because of the termination of a
management services contract under which we had been obligated to pay management
fees of EUR 20,000 per month to a law firm of which a former officer and
director is a partner. Also, during the last fiscal quarter, we scaled back some
of our product development activities as our management conducted a company wide
assessment of our operations. As a result, development costs, and consulting
fees associated with our development activities, also decreased significantly
during our last fiscal quarter. Office and travel expenses also decreased
primarily as a result of our efforts to streamline our operations. Also
contributing to the overall decrease in our general and administrative expenses
from the quarter ended December 31, 2005 was the fact that, during our December
31, 2005 fiscal quarter, we recognized one-time patent and inventory write down
charges totaling $72,922. No patent or inventory write down charges were
recognized for the period ended December 31, 2006.

Offsetting the above decreases were significant increases in
accounting and audit fees, legal fees and salaries and benefits. The increase in
legal fees relates primarily to amounts incurred in connection with the
negotiation of our patent licensing agreement with Ecoenergy Patent GmbH and in
connection with the restructuring of our operations by our new management. The
events giving rise to the additional amounts spent on legal fees are not
expected to be ongoing. Accounting and auditing fees increased as a result of an
increase in the amounts charged by our consulting accountants and by our
independent auditors. The increase in salaries and benefits was a result of the
hiring of two additional non-management employees.

Also, during the period ended December 31, 2007, we recorded
stock-based compensation expenses of $57,242 on account of stock options granted
to certain of our officers and directors during the period. No options or other
stock-based compensation were granted during the period ended December 31,
2005.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

|                                  | At                | At                 | Percentage           
|--------------------------------- | ----------------- | ------------------ | ---------------------
|                                  | December 31, 2006 | September 30, 2006 | Increase / (Decrease)
|Current Assets                    | $675,063          | $854,960           | (21.0)%              
|Current Liabilities               | (3,692,753)       | (2,914,370)        | 26.7%                
|Working Capital Surplus (Deficit) | $(3,017,690)      | $(2,059,410)       | 46.5%                

7

---

Included in current liabilities are a total of $1,527,238
payable to a law firm of which one of our former officers and directors, is a
partner. We are currently in negotiations with the former officer and director
for the settlement of the amounts owed to him and his law firm.

Cash Flows

|                                        | Three Months Ended December 31
|--------------------------------------- | ------------------------------
|                                        | 2006                          
|Cash Flows used in Operating Activities | $(767,895)                    
|Cash Flows used in Investing Activities | 5,634                         
|Cash Flows from Financing Activities    | 677,508                       
|Effects of Foreign Exchange Rates       | 6,158                         
|Net Decrease in Cash During Period      | $(78,595)                     

During the period ended December 31, 2006, we obtained financing
  in the form of a EUR 500,000 loan. This loan is unsecured, non-interest bearing
  and payable upon demand.

Total loans payable at December 31, 2006 consist of the
following amounts:

| | (a) | $950,886, bearing interest at a rate of 7.5% per annum,
      secured by accounts receivable and repayable on or before December 31,
      2006;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                 
| | (b) | $773,403, non-interest bearing, secured by accounts
      receivable and repayable on or before December 31, 2006;                              
| |     |                                                                                                                                                 
| | (c) | $122,185, bearing interest a rate of 7.5% per annum,
      unsecured and payable on or before December 31, 2006; and                            
| |     |                                                                                                                                                 
| | (d) | $1,319,261, non-interest bearing, unsecured and due on
      demand.                                                                            

The amounts payable on or before December 31, 2006 have not yet
been repaid and are past due. We are currently in negotiations with our
creditors for the settlement and repayment of amounts owed to them.

As at December 31, 2006 we had cash in the amount of $108,837
and a working capital deficit of $3,017,690. We anticipate spending
approximately $2,000,000 over the next 12 months in pursuing our plan of
operation. We will require substantial additional financing in the next few
months in order to pursue our current plan of operation.

Although we earned revenues during our fiscal year ended
September 30, 2006, we did not earn significant revenues during the fiscal
quarter ended December 31, 2006 and we have not yet achieved profitability. Our
future financial results are uncertain due to a number of factors, many of which
are outside of our control. These factors include, but are not limited to:

| | (a) | our ability to commercially market our ThermoMobil and
      AquaMission products;                               
| | --- | -----------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                  
| | (b) | our ability to develop a commercially marketable
      EnergyMission/Yellow Box product;                         
| |     |                                                                                                                  
| | (c) | our ability to raise additional capital necessary to
      implement our business strategy and plan of operation;
| |     |                                                                                                                  
| | (d) | our ability to compete with other existing technologies;
      and                                               

8

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| | (e) | the success of any marketing and promotional campaign
      which we conduct for our products once development is
  complete.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

Due to the uncertainty regarding our future revenues and
profitability, we expect that the majority of additional financing that we
obtain, if any, will likely be in the form of equity financing. Our management
does not expect sufficient debt financing to be available to us through
traditional sources at this stage of our business.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to our stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in Note 3 to the interim financial statements included in this
Quarterly Report.

Principles of Consolidation

The consolidated financial statements include the accounts of
Aqua Society, Inc and our wholly owned subsidiary, Aqua Society GmbH, a German
limited liability company (Aqua GmbH). All inter-company transactions have
been eliminated.

Foreign Currency Translation

Our functional currency is United States dollars. Our
subsidiary, Aqua GmbH, uses the Euro as its functional currency. Accordingly,
assets and liabilities of Aqua GmbH are translated into US dollars at the
exchange rate in effect at the balance sheet date and capital accounts are
translated at historical rates. Income statement accounts are translated at the
average rates of exchange prevailing during the period. Translation adjustments
arising from the use of differing exchange rates from period to period are
included in the Accumulated Other Comprehensive Gain/(Loss) account in
Stockholders Equity.

Transactions undertaken in currencies other than the functional
currency of the entity are translated using the exchange rate in effect as of
the transaction date. Any exchange gains and losses would be included in the
Statement of Operations.

Patents, Patent Rights and Amortization

Patents and patent rights are recorded at cost. We provide for
the amortization of patents and patent rights on the straight-line basis over
their estimated economic lives, estimated to be 5 years. Amortization is
recorded upon the patents being awarded.

9

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RISKS AND UNCERTAINTIES

Need For Financing

We do not have sufficient financial resources to meet the
expected costs of our plan of operation and current liabilities over the next
twelve months. We have not yet achieved profitability. We are likely to continue
to need substantial additional financing in order to implement our long term
business plan. There is no assurance that we will be able to acquire sufficient
financing on terms acceptable to us or at all. If financing is not available or
obtainable, our ability to meet our financial obligations and pursue our plan of
operation will be substantially limited and investors may lose a substantial
portion or all of their investment

Limited Operating History, Risks Of A New Business
Venture

We are still in the process of developing our business and have
only recently begun to earn revenues. Readers are cautioned that our past
results may not be indicative of future performance.

Potential investors should be aware of the difficulties
normally encountered by a new enterprise and the high rate of failure of such
enterprises. The potential for future success must be considered in light of the
problems, expenses, difficulties complications and delays encountered in
connection with the development of a business in the area in which we intend to
operate and in connection with the formation and commencement of operations of a
new business in general. These include, but are not limited to, unanticipated
problems relating to research and development programs, marketing, approvals by
government agencies, competition and additional costs and expenses that may
exceed current estimates. There is no history upon which to base any assumption
as to the likelihood that we will prove successful, and there can be no
assurance that we will ever achieve profitable operations.

If We Are Unable To Achieve Market Acceptance For Our
Products, We Will Be Unable To Build Our Business

To date, we have completed technical development of our
EnergyMission/Yellow Box, ThermoMobil and AquaMission products. However, we have
only received a limited number of confirmed orders for these products. Our
future success will depend upon the acceptance of our existing products, and
other products that we develop, by the respective industries in which we intend
to market those products. Achieving such acceptance will require significant
investments in research and development and market development. The technologies
upon which our products and services are based are relatively new and are
evolving. Accordingly, in order to achieve commercial acceptance, we will have
to educate prospective clients about the uses and benefits of our products.

Even If We Are Able To Develop A Commercial Market For Our
Products, We May Not Have The Ability To Meet The Demand For Those
Products

We intend to complete the construction of the initial
AquaMission, ThermoMobil and EnergyMission/Yellow Box units ordered from us at
our facilities located in Herten, Germany. However, the size of these facilities
is limited.

We are currently in the process of establishing a wholly owned
subsidiary in the Netherlands, with which we intend to establish a larger scale
production facility. Further, we intend to seek supply contracts and/or joint
venture/licensing agreements with independent manufacturing companies to
manufacture our products on a large scale basis, however we have not yet entered
into any such contracts or agreements.

Our Operations May Be Subject to Extensive Government
Regulation

Our operations may be subject to extensive government
regulations in the United States, Europe and elsewhere. In order to sell our
products, we may have to satisfy numerous mandatory procedures,

10

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regulations, and safety standards established by international,
federal and state regulatory agencies. Although we currently comply with
stringent German regulations, there can be no assurance that we can successfully
comply with all present and future government regulations worldwide.

Risks of International Business Operations

Although we are incorporated in the United States, the majority
of our operating activities are conducted in Germany. Additionally, in the past,
we have targeted markets for our products in the Persian Gulf and other
developing parts of the world, such as Africa. As such, a significant portion of
our business depends upon our ability to establish and maintain successful
relationships with businesses and governments located outside of the United
States. If we are unable to establish and maintain such relationships, we may
not be able to implement our business plan or plan of operations.

In order to better manage the risks associated with our
international operations, our management has decided to focus their business
development efforts on markets near to our base of operations, such as Germany,
the Netherlands and the rest of Europe.

Rapid Technological Changes In Our Industry Could Make Our
Products Obsolete

The industry in which we intend to compete is characterized by
rapid technological change and intense competition. New technologies, products
and industry standards will develop at a rapid pace which could make our planned
products obsolete. Our future success will depend upon our ability to develop
and introduce product enhancements to address the needs of our customers.

Asserting And Defending Intellectual Property Rights May
Impact Results Of Operations

The success of our business may depend on our ability to
successfully defend our intellectual property rights. Future litigation may have
a material impact on our financial condition even if we are successful in
developing and marketing products. We may not be successful in defending or
asserting our intellectual property rights.

An adverse outcome in any litigation or interference proceeding
could subject us to significant liabilities to third parties and require us to
cease using the technology that is at issue or to license the technology from
third parties. In addition, a finding that any of our intellectual property
rights are invalid could allow our competitors to more easily and
cost-effectively compete. Thus, an unfavorable outcome in any patent litigation
or interference proceeding could have a material adverse effect on our business,
financial condition or results of operations.

The cost to us of any patent litigation or interference
proceeding could be substantial. Uncertainties resulting from the initiation and
continuation of patent litigation or interference proceedings could have a
material adverse effect on our ability to compete in the marketplace. Patent
litigation and interference proceedings could also absorb significant management
time.

We May Be Subject To Product Liability Lawsuits

We may be subject to product liability claims. Such claims may
absorb significant management time and could degrade our reputation and the
marketability of our products. If product liability claims are made with respect
to our products, we may need to recall the implicated product which could have a
material adverse effect on our business, financial condition and results of
operations. In addition, although we may maintain product liability insurance,
we cannot be sure that such insurance will be adequate to cover potential
product liability lawsuits. Insurance is expensive and in the future may not be
available on acceptable terms, if at all. If a successful product liability
claim or series of claims exceeds insurance coverage, it could have a material
adverse effect on our business, financial condition and results of
operations.

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If We Are Late In Filing Any Of Our Annual Or Quarterly
Reports During The Next Two Years, Our Common Stock May Become Ineligible For
Quotation On The OTC Bulletin Board, Which Would Negatively Affect The Market
For Our Shares And Our Ability To Obtain Additional Financing.

On November 16, 2005, the SEC approved certain changes to NASD
Rule 6530. As amended, NASD Rule 6530 provides that OTC Bulletin Board (OTCBB)
issuers who are late in filing their annual or quarterly reports three times
within a 24-month period will be ineligible for quotation on the OTCBB. In order
to regain eligibility under this rule, the issuer would need to timely file all
of its annual and quarterly reports due in a one year period. The amended NASD
Rule 6530 does not apply to annual or quarterly reports for periods ended before
October 1, 2005.

From time to time, we have been late in filing our quarterly
and annual reports. If we are late in filing our annual or quarterly reports
three times within a 24-month period, we may become ineligible for quotation on
the OTCBB, which would negatively affect the market for our common stock. In
addition, if our common stock is no longer eligible for quotation on the OTCBB,
it may become more difficult for us to obtain additional equity financing as
shares of our common stock will be less attractive to potential investors.

ITEM 3. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, we have evaluated the effectiveness of our disclosure controls and
procedures as required by Exchange Act Rule 13a-15(b) as of the end of the
period covered by this report. Based on that evaluation, our principal executive
officer and principal financial officer has concluded that our disclosure
controls and procedures were not effective as we failed to timely file our
periodic reports with the SEC on a number of occasions during the past fiscal
year.

Our new management is in the process of taking measures to
improve our disclosure controls and procedures in an effort to ensure that the
information required to be disclosed is internally communicated and publicly
reported within the time periods specified in the SECs rules and forms. In
particular, we intend to engage outside consultants to assist us in the
preparation of our accounting records and financial statements and will attempt
to increase internal accountability and to clearly define internal communication
channels in an effort to remedy the deficiencies identified by our principal
executive officer and principal financial officer.

By working with our external consultants and our principal
independent accountants, our management believes that the financial statements
and the other information presented in this Quarterly Report are materially
correct.

There were no changes in our internal control over financial
reporting during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

12

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.

All unregistered sales of our equity securities completed
during our fiscal quarter ended December 31, 2006 have been previously reported
in the Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K that we
filed during that period.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

Compensatory Arrangements Of Certain Officers

Effective December 28, 2006, we entered into management
consulting services agreements with each of Robert Terberg, our current Chief
Executive Officer, President, Chief Financial Officer, Treasurer and Secretary,
and currently a member of our Board of Directors, and Hugo van der Zee,
currently the Chairman of our Board of Directors. The terms of our agreements
with Mr. Terberg and Mr. van der Zee are disclosed in our Annual Report filed
with the SEC on January 16, 2007.

ITEM 6. EXHIBITS.

|Exhibit |                                                                                                                                                                                                    
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                             
|3.1     | Restated Articles of
      Incorporation filed with the Nevada Secretary of State effective December
      27, 2004.(5)                                                                            
|3.2     | Bylaws, effective March 2, 2000.(1)                                                                                                                                                                
|10.1    | Share Purchase Agreement
      between Water-Capital-Holding Ltd., V G Tech, Inc., Aqua Society GmbH and
      Steve Livingston, dated for reference September 3, 2004.(2)                         
|10.2    | Agreement and Deed of Transfer between
      Water-Capital-Holding Ltd. and V G Tech, Inc. dated for reference
      September 22, 2004.(3)                                                        
|10.3    | Certified Translation of a
      Notarial Deed executed by Uwe Diestel and Aqua Society GmbH dated November
      30, 2004 regarding the purchase and sale of an interest in UFI-TEC
      GmbH.(5)
|10.4    | 2004 Stock Incentive Plan.(4)                                                                                                                                                                      

13

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|Exhibit |                                                                                                                                                                                                                                             
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                                      
|10.5    | Marketing & Promotion
      Agreement between Aqua Society GmbH, Sesam Business Consultancy and Moosa
      Abu Aisha.(6)                                                                                                                   
|10.6    | Management Consulting Contract between Aqua
      Society GmbH and Stamm & Lang Rechtsanwelte, executed December 13,
      2004.(7)                                                                                                         
|10.7    | Supplementary Agreement between
      Aqua Society GmbH and Stamm & Lang Rechtsanwelte, dated September 30,
      2005.(8)                                                                                                                  
|10.8    | Sales Agency Agreement between Aqua Society
      GmbH and Technical Supplies Center, Ltd. dated September 5, 2005.
      (7)                                                                                                               
|10.9    | Patent License Agreement
      between Ecoenergy Patent GmbH and Aqua Society GmbH, executed by Ecoenergy
      Patent GmbH on August 21, 2006, and by Aqua Society GmbH on September 30,
      2006 (translated from German to English).(9)
|10.10   | Attachment 1 to Patent License Agreement
      between Ecoenergy Patent GmbH and Aqua Society GmbH, executed by Ecoenergy
      Patent GmbH on August 21, 2006, and by Aqua Society GmbH on September 30,
      2006 (German Language).(9)  
|10.11   | 2006 Stock Option
      Plan.(10)                                                                                                                                                                                                           
|10.12   | Non-Qualified Stock Option Agreement between
      Aqua Society, Inc. and Robert Terberg dated effective as of December 21,
      2006.(10)                                                                                                 
|10.13   | Non-Qualified Stock Option
      Agreement between Aqua Society, Inc. and Hugo van der Zee dated effective
      as of December 21, 2006.(10)                                                                                               
|10.14   | Management Consulting Services Agreement
      between Aqua Society, Inc. and Robert Terberg dated effective as of
      December 28, 2006.(11)                                                                                             
|10.15   | Management Consulting Services
      Agreement between Aqua Society, Inc. and Hugo van der Zee dated effective
      as of December 28, 2006.(11)                                                                                           
|10.16   | Technical Consulting
      Agreement between Aqua Society GmbH and Dr. Oser Partner in Technik.                                                                                                                                             
|14.1    | Code of Ethics.(5)                                                                                                                                                                                                                          
|21.1    | List of Subsidiaries.(11)                                                                                                                                                                                                                   
|31.1    | Certification
      of Chief Executive Officer and Chief Financial Officer as adopted pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                      
|32.1    | Certification of Chief
      Executive Officer and Chief Financial Officer as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.                                                                                      

|(1)  | Filed as an exhibit to our Registration Statement on Form
      10-SB originally filed with the SEC on January 29, 2003, as
  amended.
|---- | --------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on September 10, 2004.                                 
|(3)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on September 28, 2004.                                 
|(4)  | Filed as an exhibit to our Registration Statement on Form
      S-8 filed with the SEC on January 12, 2005.                           
|(5)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      filed with the SEC on January 20, 2005.                                 
|(6)  | Filed as an exhibit to our Quarterly Report on Form
      10-QSB filed with the SEC on August 23, 2005.                               
|(7)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      filed with the SEC on January 18, 2006.                                 
|(8)  | Filed as an exhibit to our Amended Annual Report on Form
      10-KSB filed with the SEC on February 3, 2006.                         
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on October 6, 2006.                                    
|(10) | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on December 29, 2006.                                  
|(11) | Filed as an exhibit to our Annual Report on Form 10-KSB
      filed with the SEC on January 16, 2007.                                 

14

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SIGNATURES

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

|      |                   |     | AQUA SOCIETY, INC.                                                  
|----- | ----------------- | --- | --------------------------------------------------------------------
|      |                   |     |                                                                     
|      |                   |     |                                                                     
|Date: | February 20, 2007 | By: | /s/
      Robert Terberg                                            
|      |                   |     |                                                                     
|      |                   |     | ROBERT TERBERG                                                      
|      |                   |     | President, Chief Executive Officer and Chief Financial
      Officer
|      |                   |     | (Principal Executive Officer and Principal Accounting
      Officer)

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