SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

(Mark One)

S ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

£ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to________________

Commission file number  000-51529

S2C Global Systems, Inc.

(Name of small business issuer in its charter)

Nevada	13-4226299
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1650-1188 West Georgia, Vancouver, BC, Canada	V6E 4A2
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number   604-629-2461

Securities registered under Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which registered

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

(Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  £

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

SEC 2337 (12-05)

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

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 S    No £

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.              S

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

State issuer’s revenues for its most recent fiscal year.  $988

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

The aggregate market value of the issuer’s voting stock held as of April 10, 2008 by non-affiliates of the issuers was $1,639,865 based on the closing price of the registrant’s common stock.  ($0.03 per share)

Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

Yes £     No £

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.   As of April 10, 2007, there were  68,337,707 shares of common stock, $.001 par value issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes £ ; No S

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PART I

Item 1.

Description of Business.

Our History

We were formed as a Nevada corporation on March 19, 2001; originally under the name of Sun Vacation Club Inc. on November 21, 2002 the name was changed to United Athletes, Inc. On February 8, 2005, after a reverse merger with S2C Global Systems Inc. (a private British Columbia corporation) we changed our name to S2C Global Systems, Inc. with the intent to focus on developing, marketing and distributing their 5-gallon bottled water vending and loading systems.  S2C Global Systems (S2C-Private) the private company was incorporated May 2004 after acquiring the intellectual property rights from Will Benedikt et al for his early version of the 5-gallon vending system. S2C-Private continued with the development of the system and market preparation with the Company assuming this role in February, 2005. S2C has generated minimal sales or revenues and only from its initial market tests.

S2C designs, manufactures, promotes and markets distribution/logistics systems for pre-packaged 5-gallon bottled water. S2C promotes itself through its website at www.s2cglobal.com and a series of corporate/retail packages available through the Company. The Company has established a specific mechanical system, the “Aquaduct System”, related to the operation and promotion of pre-packaged water.  Currently, S2C is in the final development stages to bring its distribution/logistic system to market.

The Company installed the second generation prototype of the Aquaduct for testing in Verona, Ontario, Canada in 2005. At the same time it had the second prototype of the same design reverse engineered for the purpose of mass production and concluded the design was not efficient for mass production. The Company completed engineering/design on a third revision March 2007. The current design incorporates off the shelf components and is modular in order to facilitate global procurement and assembly. The units developed in 2007 were market tested throughout 2007 with all changes incorporated into final drawings for procurement and additional patents going forward.

The Company installed the unit tested in Verona into Montreal (Laval) in the last quarter of 2006 this original prototype is unreliable and costly to keep operational, it will be replaced upon mass production ensuing. The two units developed as the third revision were installed in Vancouver (Surrey and Richmond BC.  All three units experienced light sales resulting in the income reported.  The company originally launched its concept by accepting only its proprietary bottles in its return function, after turning away hundreds of customers as of November 2007 the company reprogrammed its Vancouver Aquaducts to accept all 18.9 Litre bottles for return.  

The truck and in-plant components of the Aquaduct system utilize the same technologies as those incorporated in the Aquaduct vending unit; they have been designed and will be built upon confirmation of the last of 10 working Aquaducts in any of the aforementioned Markets.

The Company accumulated a deficit in excess of $3,100,000 in developing the Company to this point. The Company expects to develop an assembly plant in Dallas Texas and focus on placing the S2C Aquaducts into the Houston market. This will require a minimum investment of $900,000 dollars to complete this next phase.

The S2C System

In an attempt to address the growing market for bottled water and to capitalize on the low labor costs of vending, S2C has developed a proprietary product delivery system.  S2C designs, develops and distributes mechanical systems, including vending systems that automate the distribution from suppliers to consumers of bulk food products.  Bulk food products include items sold in larger quantities up to 5 gallons (18 litres) and/or 47 pounds (22.3 Kg).  Any product that is capable of being packaged in a cylindrical container, typically liquid or granular in nature can be delivered via the S2C System.  Water is the first consumer product the Company is promoting it will be supplied to the Aquaducts through existing packagers/distributors of 5-gallon water.

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The S2C Aquaduct is a modular vending unit capable of accepting empty 5-gallon recyclable plastic jugs and distributing full 5-gallon recyclable plastic jugs.  The Aquaduct is intended to act as a replacement to in store retail distribution systems.  Most grocery store chains in North American sell 5-gallon bottled water.  The Aquaduct is intended to be a replacement system for those systems currently in place.

Current systems employed by producers, distributors and retailers of 5-gallon bottled water are labor intensive. Staff unload/load 5-gallon bottled water from the production line to warehousing, from warehousing to trucks, from trucks to transfer stations, from transfer stations to smaller trucks from these trucks to the home, offices and retailers. The retailers then unload the trucks to storage from storage to the store floor, from the store floor to customer’s cars. The returned empty bottles go through a reverse cycle of that previously described. Bottles are moved using a combination of fork lift operators, laborers and drivers. The S2C System eliminates all of the labor involved except for the truck driver; the number of drivers is reduced overall because of just in time inventory management, the Aquaducts storage capabilities and better logistics. The labor is not needed with the S2C System because machines move the bottles through the Aquaduct racking system, into the trucks and eventually into the Aquaducts.

The S2C System is a three part system comprised of:  (1) an in plant system that takes the prepackaged goods from the line into an integrated storage/loading system; (2) an integrated truck storage/loading system; and (3) a retail vending unit. The vending unit sits in an accessible parking lot where an individual can drive up in their car, stop in front of the unit, retrieve their empty 5-gallon water jug if they have one, touch the ATM/POS Screen, select the transaction they want i.e. return or no return, swipe their bank card, enter their pin, place the return bottle in the return door, retrieve the full bottle, put it in the car and drive away. The truck system has a drop down over and under conveyor that hooks up at the plant or Aquaduct loading door on one end and to the continuous loop racking system in the truck. Full bottles push empty bottles either out of the Aquaduct or out of the truck. The Plant system runs from the production line through the continuous loop racking system all the way to the loading doors using a system of conveyors.

S2C owns the technology for the S2C System and intends to generate revenue by selling the consumer product to the end user and licensing its technologies.  S2C does not intend to operate any manufacturing facilities but rather intends to subcontract or joint venture with existing manufacturing companies or assembly companies.  S2C obtained the rights to the original patent application with the United States Patent Office for its proprietary S2C System and will continue to secure additional patents, copyrights and trademarks as they are made available.

Governmental Regulation

S2C may be affected by jurisdictional regulators in regards to the following:

1.

Financial transaction equipment – the Point of Sale (POS) equipment in order to offer credit card, debit card and prepaid cash card payment options. Bank and financial regulators establish protocols for electronic funds transfer, equipment used in the transfer process must be certified by the provider of the transfer network.  This can affect the cost of each vending unit, operating costs and delays in supply.

2.

Vending equipment licenses – typically vending equipment is licensed at the state or municipal level and regulated through zoning bylaws as to where the equipment can and cannot be installed.  This will limit availability as to where S2C can install its equipment and may limit access to certain markets.

3.

Food handling regulation – a variety of governmental regulations govern food safety and handling.  For S2C, the prime concern is safe storage of the products it intends to sell in the vending system.  Each of the vending units must be tamper proof and climate controlled to insure safe distribution.

4.

Transportation regulation – various regulations dictate the size of shipments on public highways.  S2C’s Aquaduct vending unit has been designed to comply with North American transport regulation with regard to size and weight so they may be freely shipped to market without restriction.

4

5.

Electrical and mechanical product standards – a variety of public safety departments dictate electrical and mechanical standards to ensure product safety.  Safety underwritings such as Underwriters Laboratories (UL) or Canadian Standards Association (CSA) are required on some components used in the Aquaduct. The Company intends to use UL/CSA approved components where required. Where underwriter’s labels are absent or additional inspection is required under local jurisdiction the appropriate approvals will be obtained prior to installation. The Company’s inability to obtain an underwriting or certification from a required laboratory or association will limit the ability to place the S2C Systems in the market.  The Aquaduct currently has electrical certification from the Electrical Safety Authority, a body responsible for public electrical safety in Ontario, Canada.

Competition

The Company’s research indicates there are no existing automated vending systems in existence for pre-packaged 5-gallon bottled water; however there are several vending systems for u-fill bulk bottled water. These include Glacier Water (AMEX-HOO) and Culligan.

The existing distribution system used by Danone Waters of North America is similar to that used by most bottler/distributors it consists of bottle handling robots, fork lifts, pallet /racking systems, warehousing, freight trucks, transfer stations, delivery trucks and in store racking. The existing in plant systems require significant capital to setup, manpower to operate, and other significant operating costs such as fuel. S2C’s Aquaduct system can eliminate the cost of the fork lifts and operators, robots, pallets/racking, delivery trucks and operators and the transfer stations. Estimates by S2C’s management put the distribution costs under the Aquaduct system as much as 65% lower than the existing distribution costs.

Currently, 5-gallon pre-packaged bottle water is available at grocery stores, big box stores, and gas stations in racks, the customer buying the water has to carry his empty bottle through the store to the customer service counter to get a credit note, pick up a new bottle in the store and carry the 42 pound bottle back to his car, the Aquaduct system sits in a single parking stall, at any of these locations or a variety of others where consumers can drive right up to the machine offering a competitive level of convenience.  The Aquaducts ability to compete for these locations will come down to having the space for the Aquaduct and the drive up convenience for loading and unloading.

Employees

S2C’s employees are its President, Roderick Bartlett, its Chief Financial Officer, Harold Forzley, an office administrator and an Operations Manager.  As required, the Company hires independent contractors or out sources to appropriate companies.

Item 2.

Description of Property.

We have offices located at 1650-1188 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4A2.  We occupy approximately 1,500 square feet as a sub tenant on a lease that expires February 2010. The Company has a lease to December 31, 2007 for warehouse space in Surrey B.C. which was renegotiated through February 2009  We have a lease for one parking stall at each of three location being Mega Centre Notre Dame, Montréal, Quebec, Strawberry Hill Mall Surrey, British Columbia and Landsdowne Center, Richmond, British Columbia and one in Houston, Texas.

Item 3.

Legal Proceedings.

None.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

5

PART II

Item 5.

Market for Common Equity and Related Stockholder Matters.

Our common stock is listed on the OTC Bulletin Board under the symbol STWG.  There is currently little or no trading volume for our securities.  At April 10, 2008, the Company had approximately 249 disclosed shareholders owning 68,337,707 shares of its issued and outstanding common stock.

	CLOSING BID		CLOSING ASK
2007	High	Low	High	Low
January 3 through March 30	.18	.072	.185	.08
April 2 through June 29	.131	.07	.14	.08
July 2 through September 28	.094	.027	.095	.03
October 1 through December 31	.065	.025	.07	.03.

	CLOSING BID		CLOSING ASK
2006	High	Low	High	Low
January 3 through March 31	.18	.04	.21	.10
April 3 through June 30	.15	.06	.18	.11
July 3 through September 29	.12	.04	.17	.12
October 2 through December 29	.13	.03	.19	.10

The above quotations, as provided by Pink Sheets, LLC, represent prices between dealers and do not include retail mark-up, markdown or commission.  In addition, these quotations do not represent actual transactions.

S2C has not paid any dividends since its inception, and it is not likely that any dividends on its common stock will be declared at any time in the foreseeable future.  Any dividends will be subject to the discretion of the Company’s Board of Directors, and will depend upon, among other things, the operating and financial condition of S2C its capital requirements and general business conditions.  Our ability to pay dividends is also subject to limitations imposed by Nevada law. Under Nevada law, dividends may be paid to the extent that a corporation’s assets exceed its liabilities and it is able to pay its debts as they become due in the usual course of business.  There can be no assurance that any dividends on S2C common stock will be paid in the future.

Item 6.

Management’s Discussion and Analysis or Plan of Operation.

The following discussion of our financial condition and results of operations should be read in conjunction with the Financial Statements and the related Notes included elsewhere in this report on Form 10-KSB. Descriptions of all documents incorporated by reference herein or included as exhibits hereto are qualified in their entirety by reference to the full text of such documents so incorporated or referenced. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those under “Risk Factors That May Affect Future Results” and elsewhere in this report.

Executive Summary and Outlook for Fiscal Year 2008

S2C Global’s 2007 year was focused on completing our development stage, while 2008 is set as our transition year where S2C becomes a fully operating company based out of Dallas Texas.

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Product Development:  We identify the three components of the S2C Global Aquaduct System as follows: the retail vending system, the wholesaler’s in-truck delivery system, and the producer’s in-plant live racking system.  

During 2007 we prepared for the 2008 roll out of the S2C Aquaduct System by developing our retail vending system for cost effective mass production and installation intended for a variety of venues. This process included beta testing two units in Vancouver, BC to identify design, service and consumer issues.

The results from 2007 are a more compact, simpler version of the S2C Aquaduct. This version has a smaller footprint 4’ X 14’ (old 8.6’X16’) with two lanes versus the original three lane design. One lane to dispense 5 Gallon (18.9 L), the other to dispense 2.5 Gallon (9 L) pre-packaged bottled water.  At this size 6 units will fit in a container or on a truck and are easily unloaded with a HIAB drastically reducing shipping and installation costs by thousands of dollars. These smaller units carry 180 bottles versus the 192 bottles the larger units held. When a location demonstrates excessive demand on one unit a second unit can be installed beside it or in the immediate area to double up the capacity. Servicing the 2 lane unit is extremely easy compared to the issues of servicing the inside lane of a 3 lane unit.

The human interface is now a Point of Sale (POS) interface (similar to a gas pump or parking lot ticket dispenser) that directs a Vending Machine Controller (VMC). For the US market we have completed negotiations with Verizon wireless resulting in little or no cost for our wireless modems and significantly reduced data charges. The resulting cost reductions bring the S2C Aquaduct well within the original costing model of $25,000 US dollars per installed unit. The design is better suited to the broader small format real estate location (gas bars, community shopping centers) giving S2C Global a more versatile roll out strategy, including overseas markets.

Reducing costs and environmental impact are the goals of the supplier to consumer (S2C) system, the closer the finished product is to the consumer the more effective the system becomes. S2C has continued to work with Convergitech, Inc. a company focused on water technologies. Starting with Houston, TX they have agreed to build micro-bottling plants at the center of twenty to forty S2C Aquaducts. Each plant will provide pure bottled water from the air in both the 2.5 and 5 gallon formats utilizing the S2C plant and truck system.  

Sales & Marketing:

System Distribution. Rather than sell the Aquaduct system outright, we elected to disseminate our equipment at our own expense. This approach gives us ownership of the residual earnings rather than a one time sale. Securing locations for lease in retail shopping centre parking lots is critical to this process. Building relationships with national and regional property managers gives us an ongoing supply of locations. The fourth quarter of 2007 was dedicated to this process resulting in one lease being secured in Houston, TX 1^st quarter 2008.  

Since our consumer tests we are concentrating our efforts on one market at a time starting with Houston, TX after identifying the Houston-Dallas and San Diego-San Francisco corridors as significant markets for our business. We signed our first lease in The Woodlands (Greater Houston, Texas) with TMJ Properties a regional property management firm. Centro Properties has supplied us with a list of properties for the Houston Market and lease terms have been negotiated to go forward. Weingarten Realty Investors has identified several qualifying properties for the Company to install additional S2C Aquaducts once our first installation in Houston is complete to their satisfaction.

The four machines that were built through the Company’s development stage are currently located in Montreal, QC (1), Vancouver, BC (2) and Houston, TX (1) representing over three-hundred thousand dollars of the Company’s assets and its technology.  In the process of consolidating efforts the Montreal machine and eventually the Vancouver machines will all be relocated into the Texas marketplace.

7

Water Sales Overall sales of bottled water as reported by the International Bottled Water Association and Beverage Marketing Corporation continued to grow through 2007, total bottled water volume was 8.8 billion gallons, a 6.9 percent increase over 2006, and the 2007 bottled water per capita consumption of 29.3 gallons increased nearly two gallons, from 27.6 gallons per capita the previous year.  Additionally, the wholesale dollar sales for bottled water exceeded $11.7 billion in 2007, a 7.8 percent increase over the $10.8 billion in 2006. ¹ Half of these volumes typically as reported by Nestle’s and E-zine² are in the bulk categories (2.5 and 5 gallon).

Corporate Sales. “The bottled water industry is under increased scrutiny for a number of its practices. Something so seemingly healthy is the antithesis of “green.” The bottling process is very inefficient: Nestlé, for example, reports that it requires 1.86 liters of water to produce one liter of bottled water. The landfill of plastic bottles—more than 75% of bottles are never recycled—has environmentalists up in arms. The fuel usage and emissions that arise from trucking so many billions of gallons of water around the country (and shipping water around the world) has a negative environmental impact. Finally, communities that have aquifers (underground sources of water) find large water companies moving into their towns to pump and sell their water.”³  The S2C AquaDuct system addresses all of the environmental impact issues stated above and after completing a first stage roll out in Houston will be in a position to aggressively secure Corporate sales.  To accelerate product distribution the Company intends to form joint ventures with established partners.  In the United States non-disclosures have been signed and financial plans discussed with “O Premium Waters” of Mesa, Arizona the largest bottler in the state and Aqua Pure Bottled Water, Inc. in conjunction with Automatic Vending Services Inc of Asheboro, North Carolina.

Investor Relations.  The Company now has 68,337,707 shares issued and outstanding of which Twenty–Five ( 25,488,862) Million are on deposit and free trading.

Forty to Fifty Thousand shares typically trade daily in the three to four cent range providing the Company with a market capitalization of two and half (2.5) million dollars.  

The corporate relations team keeps in close contact with the known shareholders with regular frequency, keeping them informed about the progress of the company. Informational press releases are disseminated through wire services in a timely manner and the website is constantly updated to present as much information about the company as is practical. No investor relations firms are currently under contract or contemplated rather the Company is now focusing its efforts on broker by broker relationships throughout the United States.

Finance and Administration. The Company has continued to keep its overhead costs to a minimum while it looks to finalize a funding that will take it through to its operating status.

As part of establishing the Company as an Operating Company the Company has identified that its markets will be best served from the United States. In preparation of moving the operations to the United States the Company’s management reviewed several American cities with the view of establishing its own assembly plant and its new head-office. The Dallas-Fort Worth area was identified as the optimum location to achieve the most cost effective dissemination of the AquaDuct system. As part of this process a new Chief Financial Officer is being sought that is US based and several candidates are under review.

Conclusion. The Company is at the transition point of going from a development stage company to an operating stage company. The Company has created opportunities both domestically and internationally that will establish S2C Global as a leader in retail technologies specifically as they relate to bottled water.

Results of Operations

Twelve Months Ended December 31, 2007 Compared with Twelve Months Ended December 31, 2006

__________________________

¹ http://www.finewaters.com/Newsletter/April_2008/2007_US_Bottled_Water_Sales_Statistics.asp

² http://ezinearticles.com/?Bottled-Water-Statistics&id=408764

³ http://blog.thenibble.com/2007/12/03/trends-bottled-water-news-blues/

8

Consolidated Results of Operations

Total Revenues. Total revenues increased to $988 in the twelve months ended December 31, 2007 from $-0-in the twelve months ended December 31, 2006.

Cost of Revenues. The Cost of Revenues increased to $196 for the twelve months ended December 31, 2007 compared to $-0- for 2006.

Total Operating Expenses

General and Administrative. General and administrative expenses consist primarily of salaries and related costs for our executive, administrative, finance and management personnel, as well as support services and professional service fees. These expenses increased from $723,927 in the twelve months ended December 31, 2006 to $1,143,583 in the twelve months ended December 31, 2007. The increase in general and administrative expenses primarily was driven by increased management  and consulting expense, increased repairs and maintenance and increased wages and benefits.

Our general and administrative expenses as a percentage of total revenues did not change significantly in the fiscal 2007.

Loss from Operations

Total Loss from Operations. Our loss from operations was $879,217 in fiscal 2007 while our loss from operations was $712,729 in fiscal 2006.

Income Tax Benefit (Expense)

As of December 31, 2007 we had loss carry-forwards of approximately $1,185,000 due to the taxable losses generated to that date.  Future tax benefits, which may arise as a result of applying these deductions to taxable income, have not been recognized in the Financial Statements.

Liquidity and Capital Resources

We have financed our operations to date primarily through the sale of equity and debt securities as we generated negative cash flow from operations prior to fiscal 2006 and for the twelve months ended December 31, 2007. Our principal liabilities at December 31, 2007 consisted of accounts payable, loans payable, demand promissory notes and convertible promissory notes.

Net cash used in operating activities was ($438,342) in fiscal 2007 compared with net cash used in operating activities of ($278,687) in fiscal 2006.

Net cash provided by financing activities was $362,985 in the twelve months ended December 31, 2006 compared with $523,695 of cash provided by financing activities in the twelve months ended December 31, 2007. The cash provided by financing activities in the twelve months ended December 31, 2007 was due to $65,087 from a loan, ($61,892) from loans payable and demand promissory notes repaid and $520,500 from the sale of shares. In the twelve months ended December 31, 2006, financing activities raised $15,000 from convertible notes issued, $5,400 from loan payable, and $188,965 from the sale of shares.

We expect our future liquidity position to meet our anticipated cash needs for working capital and capital expenditures, for at least the next 12 months to be met by raising capital. Since the cash generated from our operations is insufficient to satisfy our cash needs, we are required to raise additional capital. Because we will raise additional funds through the issuance of equity securities, our stockholders may experience significant dilution. Furthermore, additional financing may not be available when we need it or, if available, financing may not be on terms favorable to us or to our stockholders. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services. In addition, we may be unable to take advantage of business opportunities or respond to competitive pressures. Any of these events could have a material and adverse effect on our business, results of operations and financial condition.

9

Special Note Regarding Forward-Looking Statements

Statements in this report expressing our expectations and beliefs regarding our future results or performance are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve a number of substantial risks and uncertainties. When used in this Form 10-Q, the words “anticipate,” “may,” “could,” “plan,” “believe,” “estimate,” “expect” and “intend” and similar expressions are intended to identify such forward-looking statements.

Such statements are based upon management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. Actual results may differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to the following:

•

changes in business and economic conditions and other adverse conditions in our markets;

•

increased competition;

•

our inability to achieve and maintain profitability;

•

merchandising and marketing strategies;

•

inventory performance;

•

changes in consumer preferences or fashion trends;

•

seasonality of the retail and direct-marketing businesses;

•

significant increases in paper, printing and postage costs;

•

litigation that may have an adverse effect on the financial results or reputation of the Company;

•

reliance on third-party suppliers;

•

our ability to successfully implement our operating, marketing, acquisition and expansion strategies; and

•

natural disasters and terrorist attacks.

Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and we cannot assure you that our future results, levels of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as may be required by law.

Changes in Securities.

Unless otherwise noted all Securities were sold or offered without registration in reliance on the exemption provided by Section 4(2) and/or Rule 506, Regulation D and/or Regulation S of the Securities Act.  No broker was involved and no commissions were paid in any transaction

On February 6, 2007, the Company issued 850,000 common shares in exchange for consulting services at a value of $0.10 per share.

On February 28, 2007, pursuant to a compensation agreement, the Company issued 250,000 common shares shares in exchange for consulting services at a value of $0.08 per share.

On March 6, 2007, the Company issued 120,000 common shares in exchange for consulting services at a value of $0.12 per share.

10

On March 29, 2007, the Company issued 30,000 common shares in exchange for consulting services at a value of $0.13 per share.

On March 29, 2007, pursuant to compensation agreements, the Company issued 1,100,000 common shares in exchange for consulting and management services at a value of $0.08 per share.

On May 2, 2007, pursuant to compensation agreements under an S8 registration, the Company issued 250,000 common shares in exchange for consulting services at a value of $0.08 per share.

On May 10, 2007 the Company cancelled 400,000 common shares previously issuedunder an S8 registration in February 2007 at a value of $0.10 per share upon the termination of a consulting agreement.

On June 26, 2007, pursuant to compensation agreements, the Company issued under an S8 registration 1,350,000 common shares in exchange for consulting services at a value of $0.08 per share.

On June 26, 2007 the Company issued under an S8 registration 60,000 common shares in exchange for consulting services at a value of $0.13 per share.

On June 29, 2007, the Company issued 639,296 units at $0.10 per unit in exchange for settlement of loans.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of six months at an exercise price of $0.25.

On June 29, 2007, the Company issued under an SB-2 Registration Statement; 7,800,000 units at $0.05 per unit.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of one year at an exercise price of $0.10 plus a second warrant to purchase an additional common share for a period of two years at an exercise price of $0.15.

On June 29, 2007 the Company issued 179,119 common shares in exchange for settlement of accounts payable at $0.10 per share.

On June 29, 2007 the Company issued 200,000 common shares in exchange for settlement of accounts payable at $0.10 per share.

On June 29, 2007, the Company issued 1,117,540 common shares in exchange for two convertible promissory notes in the principal amounts of $45,000 and $46,930 (or CDN$50,000) that were due on September 30, 2007 including interest. The shares were valued at $0.10 per share.   

On September 24, 2007, the Company issued 100,000 common shares under an S8 registration in exchange for consulting services at a value of $0.13 per share.

On September 24, 2007, pursuant to compensation agreements, the Company issued under an S8 registration 1,350,000 common shares in exchange for consulting services at a value of $0.08 per share.

On September 28, 2007, under a SB-2 registration statement;  the Company issued 500,000 units at $0.05 per unit.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of one year at an exercise price of $0.10 plus a second warrant to purchase an additional common share for a period of two years at an exercise price of $0.15.

On October 26, 2007 the Company issued 100,000 common shares in exchange for consulting services at a value of $0.035 per share.

On October 26, 2007 the Company issued 200,000 common shares in exchange for consulting services at a value of $0.05 per share.

On November 30, 2007 the Company issued 100,000 common shares in exchange for consulting services at a value of $0.035 per share.

On December 4, 2007 the Company issued 200,000 common shares in exchange for repair and maintenance services at $0.05 per share.

11

On December 4, 2007 the Company issued under an S8 registration 200,000 common shares in exchange for consulting services at a value of $0.05 per share.

On December 21, 2007 the Company issued 1,000,000 common shares for cash proceeds of $0.035 per share.

On December 21, 2007 the Company issued 192,500 common shares for cash proceeds of $0.052 per share.

On December 21, 2007, the Company received the proceeds to issue 1,164,625 common shares pursuant to a private placement agreement for cash proceeds at $0.052 per share.

On December 21, 2007, pursuant to compensation agreements, the Company issued under an S8 registration 1,100,000 common shares in exchange for consulting services at a value of $0.08 per share.

On December 21, 2007 the Company issued under an S8 registration 90,000 common shares in exchange for consulting services at a value of $0.13 per share.

On December 21, 2007, pursuant to compensation agreements, the Company issued under an S8 registration 850,000 common shares in exchange for consulting services at a value of $0.034 per share.

On December 21, 2007 the Company issued under an S8 registration 25,000 common shares in exchange for consulting services at a value of $0.05 per share.

Item 7.

Financial Statements.

The financial statements of the Company appear at the end of this report beginning with the Index to Financial Statements on page F-1.

Item 8.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 8A(T). Controls and Procedures.  

Evaluation of Disclosure Controls and Procedures.  Our management, with the participation of our President, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our President concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Annual Report on Internal Control over Financial Reporting.  Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

12

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations.  Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties.  Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control.  Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our management, with the participation of the President, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.  Based on this evaluation, our management, with the participation of the President, concluded that, as of December 31, 2007, our internal control over financial reporting was not effective.

Specifically, management identified the following control deficiencies.  (1) The Company has not properly segregated duties as its President initiates, authorizes, and completes all transactions.  The Company has not implemented measures that would prevent the President from overriding the internal control system.  The Company does not believe that this control deficiency has resulted in deficient financial reporting because the President is aware of his responsibilities under the SEC’s reporting requirements and personally certifies the financial reports.  In addition, the Company engaged a financial consultant to review all financial transactions to determine that they have been properly recorded in the financial statements. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.  The Company does not think that this control deficiency has resulted in deficient financial reporting because the Company has implemented a series of manual checks and balances to verify that previous reporting periods have not been improperly modified and that no unauthorized entries have been made in the current reporting period.

Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is reliable.

Item 8B.  Other Information

There are no further disclosures. No information was required to be disclosed in a Form 8-K during the fourth quarter 2007.

PART III

Item 9.

Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.

The following table sets forth as of April 10, 2008, the name, age, and position of each executive officer and director and the term of office of each director of the Corporation.

Name	Age	Position	Director or Officer Since
Roderick C. Bartlett	51	Chief Executive Officer,	February 2005
		President and Director
Harold Forzley	55	Chief Financial Officer	September 2005
		and Director
Alejandro Bautista	51	Director	February 2005
Tina VanderHeyden	53	Director	October 2006
Mark Lambert	52	Director	October 2006

13

All officers hold their positions at the will of the Board of Directors.  All directors hold their positions for one year or until their successors are elected and qualified.

Set forth below is certain biographical information regarding the Company’s executive officers and directors:

Roderick C. Bartlett.  Mr. Bartlett has been involved in the Aquaduct for the past four years with the preceding 10 years in business development and his own ventures including a real estate development company, Triple R Developments, LTD (1991-2001) of which he was the President and majority shareholder. His public company experience includes the Reverse Take Over (RTO) of a Canadian Public Company, Claddagh Gold (August 1998 to August 2001). Mr. Bartlett through the RTO established a resort management company Resorts Unlimited Management (TSX-RUM) of which he was CEO and President.  From December 2001 to April 2004, Mr. Bartlett was Vice President Sales and Marketing of ActionView International (OBTCC-AVWI). -Mr. Bartlett went on to accept the position of Director, President and CEO of Quest Oil Corporation (OTCBB-QOIL) which he held from February 2004 until June 30, 2005.  Mr. Bartlett is responsible for the day to day operations and planning of S2C. Mr. Bartlett’s business experience over the past five years included business planning and execution, mergers and acquisitions, corporate finance, corporate governance, product development, resource development, project management, marketing strategies and execution.  

Harold Forzley.  Mr. Forzley earned a BA Commerce while attending at Simon Fraser University and a Chartered Accountant designation while employed at Thorne Riddell (now KPMG). After an eight year tenure with Thorne Riddell, Mr. Forzley spent the next 20 years building a variety of companies primarily in the mining sector. . Mr. Forzley has spent the past five years in his own consultancy, providing financial/business advice to a variety of small businesses including a private furniture manufacturing firm based in mainland China.  In September 2005, Mr. Forzley joined the board and became an officer of a mineral exploration company, Sonora Gold Corp. In September 2006, Mr. Forzley joined the board and became an officer of a mineral exploration company, Grande Portage Resources Ltd.

Alejandro Bautista.  Mr. Bautista has a degree in Business Administration from Instituto Technologico Y De Estudios Superiores De Monterrey, with over 25 years of senior management experience in plant operations, international market development, import, export, sales, marketing and public relations. From 1985 to 1987, Mr. Bautista was the executive director and was fundamental in the growth of Grupo Industrias Petrus S.A.  Mr. Bautista was a founding investor in the private company S2C Global Systems and has been instrumental in organizing a potential relationship with Durosa, SA, a mass production facility in Monterey, Mexico. From 1989 through 2000, Mr. Bautista spent as the head of a family manufacturing business, Granitos Naturales S.A. and Granitos Naturales of North American, Inc. which is based in Laredo, Texas. His business experience during this period included import and export, manufacturing, marketing, administration and finance.  Since 2000, Mr. Bautista is the owner and CEO of Promotora Activa De Puebla, a land development business in Mexico.

Tina VanderHeyden. Tina Vanderheyden is renowned as the co-producer of Andrew Lloyd Webber's The Phantom of the Opera and CATS; productions that dominated Toronto and Canada's commercial theatre scene for 15 years. In addition to her work as a promoter and producer of theatre, concerts and events, Tina assists corporate, institutional and private sector clients meet their fundraising, marketing and sales goals. Tina is currently the Director of Development for the Canadian Film Centre and serves on a number of Boards, including Allura International Inc.

Mark Lambert. Mark Lambert is a senior level executive focused in the water industry having spent 9 years with US Filter Corporation one of the leading water technologies companies (now Siemens Water Technologies) and 6 with Water Industry Solutions. Mark Lambert is skilled in profit and loss management, strategic planning, finance, operations and distribution, sales and marketing leadership. Mr. Lambert is an adept strategist with solid negotiation and financial modeling skills, international business acumen including 2 years overseas assignment.

To the knowledge of management, during the past five years, no present or former directors, executive officer or person nominated to become a director or an executive officer of the Company:

14

(1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations or other minor offences);

(3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities:

(i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, or engaging in or continuing any conduct or practice in connection with such activity;

(ii) engaging in any type of business practice; or

(iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

(4) was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity.

(5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated

(6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal Commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

Compliance with Section 16

Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors of the Company and persons who own more than ten percent of a registered class of its equity securities to file reports of ownership and changes in their ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission, and forward copies of such filings to the Company. Based on the copies of filings received by the Company during the most recent fiscal year the directors, officers, and beneficial owners of more than ten percent of the equity securities of the Company registered pursuant to Section 12 of the Exchange Act have filed on a timely basis all required Forms 3, 4, and 5 and any amendments thereto.

Item 10. Executive Compensation.

The following table sets forth certain summary information concerning the compensation paid or accrued for each of the Registrant’s last three completed fiscal years to the Registrant’s or its principal subsidiaries chief executive officers and each of its other executive officers that received compensation in excess of $100,000 during such period (as determined at December 31, 2007, the end of the Registrant’s last completed fiscal year).

15

SUMMARY COMPENSATION TABLE
Name and principal position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non- Equity Incentive Plan Compensation ($)	Non-qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Roderick Bartlett, CEO	2005	-0-	-0-	200,000	-0-	-0-	-0-	-0-	200,000
	2006	-0-	-0-	140,000	-0-	-0-	-0-	-0-	140,000
	2007	-0-	-0-	152,000	-0-	-0-	-0-	-0-	152,000
Cameron King, CFO	2005	-0-	-0-	125,000	-0-	-0-	-0-	-0-	125,000
Harold Forzley, CFO	2005	-0-	-0-	82,500	-0-	-0-	-0-	-0-	82,500
	2006	-0-	-0-	70,000	-0-	-0-	-0-	-0-	70,000
	2007	-0-	-0-	120,000	-0-	-0-	-0-	-0-	120,000

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in Cash Compensation set out above which would in any way result in payments to any such person’s termination of employment with the Company or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

Compensation of Directors

There are no written agreements to compensate any of the directors for their services, however during the year the company paid directors 25,000 common shares per quarter for their services in acting as a director of the company.

NAME	NUMBER OF SHARES RECEIVED
Roderick Bartlett	100,000
Harold Forzley	100,000
Alejandro Bautista	100,000
Tina VanderHeyden	100,000
Mark Lambert	100,000

Item 11.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth as of April 10, 2008, the name and the number of shares of the Registrant’s Common Stock, par value .001 per share, held of record or beneficially by each person who held of record, or was known by the Registrant to own beneficially, more than 5% of the 68,337,707 issued and outstanding shares of the Registrant’s Common Stock, and the name and shareholdings of each director and of all officers and directors as a group.

16

Title of	Name and Address of	Amount and Nature of	Percentage of Class
Class	Beneficial Owner	Beneficial Ownership
Common	Roderick Bartlett (1) (3)	6,640,523	9.72%
	1650-1188 W. Georgia St.
	Vancouver, British Columbia
	Canada  V6E 4A2
Common	Harold Forzley (1)	3,753,000	5.49%
	1650-1188 W. Georgia St.
	Vancouver, British Columbia
	Canada  V6E 4A2
Common	Alejandro Bautista (2)	2,425,000	3.55%
	40 Eton Green
	San Antonio, Tx
	78257
Common	Tina VanderHayden (2)	275,000	0.40%
	78 Pricefield Rd.,
	Toronto, Ontario
	Canada  M4W 1Z9
Common	Mark Lambert  (2)	125,000	0.18%
	1451 Santa Fe Dr.
	Encinitas, CA  92024
Total Officer and Directors as		12,218,523	19.34%
A Group – Five people

(1) Officer and director.

(2) Director

(3)  These shares are held in the name of BPYA 966 Holdings, Ltd.,and 0685797 BC Ltd, companies owned and controlled by Mr. Bartlett.

There are no contracts or other arrangements that could result in a change of control of the Company.

Item 12.  Certain Relationships and Related Transactions.

Our policy is that a contract or transaction either between the Company and a director, or between a director and another company in which he is financially interested is not necessarily void or void-able if the relationship or interest is disclosed or known to the board of directors and the stockholders are entitled to vote on the issue, or if it is fair and reasonable to our company.  

S2C borrowed a total of $87,907.41 under convertible notes from 0685797 BC Ltd., d/b/a Trigate Financial Corporation, a company 50% owned and controlled by our President, Mr. Roderick Bartlett and 50% owned and controlled by a shareholder, Cameron King.  The notes are unsecured and bear interest at a rate of 15% per annum.  Prior to December 31, 2006, the notes were convertible into shares of common stock of the Company at a rate of $.10.  The conversion feature of the notes has expired as at December 31 2006 and they are no longer convertible. The company has also borrowed money under Demand Promissory Notes for $81,673.77 that accrues interest at 12% per annum.  These notes were settled in July 2007 with the issuance of common stock.

At December 31, 2007 there was a total of $68,550 (2006 – $142,090) included in accounts payable for amounts owing to companies controlled by current and former directors of the Company.

17

Item 13.  Exhibits

Exhibit	Title	Location
Exhibit 3(i)	Amended and Restated Articles of Incorporation	*
Exhibit 3(ii)	Amended and Restated Bylaws	*
Exhibit 14	Code of Ethics	**
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Attached
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Attached
32.1	Certification of the Principal Executive Officer  pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**	Attached
32.2	Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**	Attached

* Incorporated by reference. Previously filed with our amended Registration Statement on Form 10-SB with the Securities and Exchange Commission on November 14, 2005.

** Incorporated by reference.  Previously filed with our Form 10-KSB with the Securities and Exchange Commission on March 31, 2006.

*** The Exhibit attached to this Form 10-KSB shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 14. Principal Accountant Fees and Services

Audit Fee

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal account for the audit of the Company’s annual financial statement and review of financial statements included in the Company’s 10-QSB reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $13,000 for audit services and $5,800 for non-audit services fiscal year ended 2006 and $20,000 and $9,000 for non-audit services for fiscal year ended 2007.

Audit-Related Fees

There were no fees for other audit related services for fiscal year ended 2007 and 2006.

Tax Fees

There were no fees for tax compliance, tax advice and tax planning for the fiscal years 2007 and 2006.

All Other Fees

There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

18

We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee.  Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.  We do not rely on pre-approval policies and procedures.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

S2C GLOBAL SYSTEMS, INC.

Date: April 15, 2008	/s/ Roderick Bartlett
	Roderick Bartlett
	Chief Executive Officer
Date: April 15, 2008	/s/ Harold Forzley
	Harold Forzley
	Chief Financial Officer

In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	/s/ Roderick Bartlett
Date: April 15, 2008	Roderick Bartlett
	Director
	/s/ Harold Forzley
Date: April 15, 2008	Harold Forzley
	Director
	/s/ Alejandro Bautista
Date: April 15, 2008	Alejandro Bautista
	Director
	/s/ Tina Vanderheyden
Date: April 15, 2008	Tina VanderHeyden
	Director
	/s/ Mark Lambert
Date: April 15, 2008	Mark Lambert
	Director

19

S2C Global Systems, Inc.

 (A Development Stage Enterprise)

Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

F-1

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statement of Stockholders’ Equity (Deficiency)	F-6
Consolidated Statements of Cash Flows	F-8
Notes to the Consolidated Financial Statements	F-9

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders of

S2C Global Systems, Inc.

(a Development Stage Enterprise)  

Vancouver, Canada

We have audited the consolidated balance sheets of S2C Global Systems, Inc. (a development stage enterprise) as at December 31, 2007, and 2006, and the consolidated statements of operations, stockholders’ equity (deficiency), and cash flows for each of the years ended December 31, 2007 and 2006 and cumulative from inception on May 6, 2004 to December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatements.  The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2007 and 2006 and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006 and cumulative from incorporation on May 6, 2004 to December 31, 2007 in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to financial statements, the Company is in the development stage, and has no permanently established source of revenue and is dependent on its ability to raise capital from shareholders or other sources to sustain operations.  These factors, along with other matters as set forth in Note 1, raise substantial doubt that the Company will be able to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MacKay LLP             

Vancouver, Canada.

April 10, 2008

Chartered Accountants

F-3

S2C GLOBAL SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
(Presented in US dollars)
			December 31		December 31
			2007		2006
ASSETS
Current
	Cash	$	10,287	$	4,661
	Due from government agencies		13,186		-
	Prepaid expenses		1,479		-
			24,952		4,661
Equipment (Note 3)			320,160		233,401
		$	345,112	$	238,062
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current
	Accounts payable and accrued liabilities (Note 13)	$	253,007	$	430,199
	Loans payable (Note 4)		16,557		15,400
	Demand promissory notes (Note 5)		25,077		86,969
	Convertible promissory notes (Note 6)		24,238		129,090
			318,879		661,658
Stockholders' Equity (Deficiency)
	Preferred stock, 25,000,000 shares authorized, $0.001 par value
	no shares issued		-		-
	Common stock, 200,000,000 shares authorized, $0.001 par value
	66,472,452 (2006 - 45,754,372) shares outstanding (Note 7)		66,472		45,754
	Additional paid-in capital		3,091,859		1,783,531
	Deficit accumulated during the development stage		(3,132,098)		(2,252,881)
			26,233		(423,596)
		$	345,112	$	238,062
Going concern (Note 1)
Commitments (Note 12)
Subsequent events (Note 15)
On behalf of the Board
______________________ Director       ______________________ Director
The accompanying notes are an integral part of these consolidated financial statements.

F-4

S2C GLOBAL SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Statements Of Operations
(Presented in US dollars)
			Cumulative
			from inception
			May 6, 2004 to		Year ended		Year ended
			December 31		December 31		December 31
			2007		2007		2006
Sales		$	1,577	$	988	$	-
Cost of sales			692		196		-
Gross profit			885		792		-
Administrative expenses
	Accounting and legal		169,215		53,083		55,609
	Advertising and promotion		53,815		10,927		26,003
	Amortization		64,456		31,481		23,075
	Auto and travel		107,951		36,072		24,870
	Bank charges and interest		51,382		14,042		24,712
	Foreign exchange loss		71,419		36,098		24,448
	Insurance		9,803		5,341		2,262
	Management and consulting		2,080,459		647,511		419,184
	Office expenses		44,810		11,204		6,453
	Rent		122,871		65,388		32,653
	Repairs and maintenance		63,995		50,556		13,439
	Research and development		270,395		-		-
	Shareholder services		64,686		39,402		12,269
	Telephone		54,131		21,699		14,061
	Transfer fees		20,757		7,568		7,423
	Wages and benefits		159,744		114,003		37,466
			3,409,889		1,144,375		723,927
Loss before other income			(3,409,004)		(1,143,583)		(723,927)
Other income
	Forgiveness of debt		275,564		264,366		11,198
	Interest earned		1,342		-		-
			276,906		264,366		11,198
Net and comprehensive loss		$	(3,132,098)	$	(879,217)	$	(712,729)
Weighted average number of shares					54,086,736		39,973,882
	outstanding - basic and diluted
Loss per share - basic and diluted				$	(0.02)	$	(0.02)
The accompanying notes are an integral part of these consolidated financial statements.

F-5

S2C GLOBAL SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Statement Of Stockholders' Equity (Deficiency)
(Presented in US dollars)
							Deficit
							Accumulated
					Additional		During the
	Number of		Par		Paid-in		Development
	shares		value		Capital		Stage		Total
Issued for subscriptions receivable	12,750,000	$	12,750	$	(6,375)	$	-	$	6,375
Issued for cash and subscriptions
receivable	2,250,000		2,250		222,750		-		225,000
Issued for cash	220,668		221		25,211		-		25,432
Net loss for the period	-		-		-		(387,005)		(387,005)
Balance, December 31, 2004	15,220,668		15,221		241,586		(387,005)		(130,198)
Issued on conversion of convertible
promissory notes at $0.062 per share;
granted February 2, 2005 (Note 7)	1,266,666		1,267		77,768		-		79,035
Issued on reverse takeover
acquisition of United Athletes, Inc.
on February 2, 2005	15,095,490		15,095		(15,095)		-		-
Issued for cash at $0.25 per share	85,422		85		21,270		-		21,355
Issued for cash at $0.10 per share	125,000		125		12,375		-		12,500
Issued in settlement of accounts
payable at $0.10	175,000		175		17,325		-		17,500
Issued pursuant to management and
consulting agreements at $0.25	2,175,000		2,175		541,575		-		543,750
Issued for cash at $0.25 per share	257,000		257		63,993		-		64,250
Net loss for the year	-		-		-		(1,153,147)		(1,153,147)
Balance, December 31, 2005	34,400,246		34,400		960,797		(1,540,152)		(544,955)
Issued in settlement of accounts
payable at $0.25	6,000		6		1,494		-		1,500
Issued for cash at $0.125 per share	560,000		560		69,440		-		70,000
Issued pursuant to management and
consulting agreements at $0.05	2,920,000		2,920		113,080		-		116,000
Issued for services at $0.05 per share	100,000		100		4,900		-		5,000
Issued in settlement of accounts
payable at $0.125	25,000		25		3,100		-		3,125
Issued for cash at $0.125 per share	144,000		144		17,856		-		18,000
Issued for services at $0.14 per share	50,000		50		6,950		-		7,000
Issued for services at $0.07 per share	5,120,000		5,120		353,280		-		358,400
Issued upon conversion of convertible
debt (Note 7)	171,526		172		16,981		-		17,153
Issued for services at $0.10 per share	100,000		100		9,900		-		10,000
Issued for cash at $0.10 per share	1,009,650		1,010		99,955		-		100,965
Issued in settlement of debt  at $0.10
per share	547,950		547		54,248		-		54,795
Issued for services at $0.12 per share	585,000		585		69,615		-		70,200
Issued for services at $0.13 per share	15,000		15		1,935		-		1,950
Net loss for the year	-		-		-		(712,729)		(712,729)
Balance, December 31, 2006	45,754,372	$	45,754	$	1,783,531	$	(2,252,881)	$	(423,596)
Continued…
The accompanying notes are an integral part of these consolidated financial statements.

F-6

S2C GLOBAL SYSTEMS, INC.
(A Development Stage Enterprise)
Statement Of Stockholders' Equity (Deficiency)
(Presented in US dollars)
							Deficit
							Accumulated
					Additional		During the
	Number of		Par		Paid-in		Development
	shares		value		Capital		Stage		Total
Issued pursuant to management
and consulting agreements
at $0.08 per share	2,950,000	$	2,950	$	233,050	$	-	$	236,000
Issued for services at $0.10 per share	450,000		450		44,550				45,000
Issued for services at $0.12 per share	120,000		120		14,280		-		14,400
Issued for services at $0.13 per share	90,000		90		11,610		-		11,700
Issued for cash at $0.05 per share	7,800,000		7,800		382,200		-		390,000
Issued upon conversion of convertible
debt at $0.10 per share (Note 6)	1,117,540		1,118		110,636		-		111,754
Issued in settlement of debt at $0.10
per share	1,018,415		1,018		100,824		-		101,842
Issued for services at $0.13 per share	100,000		100		12,900		-		13,000
Issued pursuant to management
and consulting agreements
at $0.08 per share	1,350,000		1,350		106,650		-		108,000
Issued for cash at $0.05 per share	500,000		500		24,500		-		25,000
Issued for services at $0.035 per share	100,000		100		3,400		-		3,500
Issued for services at $0.05 per share	200,000		200		9,800		-		10,000
Issued for services at $0.035 per share	100,000		100		3,400		-		3,500
Issued for services at $0.05 per share	200,000		200		9,800		-		10,000
Issued for services at $0.05 per share	200,000		200		9,800		-		10,000
Issued for cash at $0.035 per share	1,000,000		1,000		34,000		-		35,000
Issued for cash at $0.052 per share	1,357,125		1,357		69,143		-		70,500
Issued pursuant to management
and consulting agreements
at $0.08 per share	1,100,000		1,100		86,900		-		88,000
Issued pursuant to management
and consulting agreements
at $0.13 per share	90,000		90		11,610		-		11,700
Issued pursuant to management
and consulting agreements
at $0.034 per share	850,000		850		28,050		-		28,900
Issued pursuant to management
and consulting agreements
at $0.05 per share	25,000		25		1,225		-		1,250
Net loss for the year	-		-		-		(879,217)		(879,217)
Balance, December 31, 2007	66,472,452	$	66,472	$	3,091,859	$	(3,132,098)	$	26,239
The accompanying notes are an integral part of these consolidated financial statements.

F-7

S2C GLOBAL SYSTEMS, INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Presented in US dollars)
				Cumulative
				from inception
				May 6, 2004 to		Year ended		Year ended
				December 31		December 31		December 31
				2007		2007		2006
Cash provided by (used in):
Operating Activities
	Net loss for the period		$	(3,132,098)	$	(879,217)	$	(712,729)
	Adjustments to net loss to cash provided by operating activities
		Amortization		64,456		31,481		23,075
		Shares issued for management and consulting		1,707,250		594,950		568,550
		Forgiveness of debt		(275,564)		(264,366)		(11,198)
		Foreign exchange loss		71,393		36,072		24,448
	Changes in operating assets and liabilities
		Receivables		(13,186)		(13,186)		-
		Prepaid expenses		(1,479)		(1,479)		-
		Accounts payable and accrued liabilities		399,926		57,403		(170,833)
				(1,179,302)		(438,342)		(278,687)
Financing Activities
	Loans payable			80,487		65,087		5,400
	Demand promissory notes issued (repaid)			19,782		(61,892)		153,620
	Convertible notes issued			207,433		-		15,000
	Shares issued for cash			1,119,171		520,500		188,965
				1,426,873		523,695		362,985
Investing Activity
	Purchase of equipment			(237,284)		(79,727)		(83,765)
Net increase in cash during the development stage				10,287		5,626		533
Cash, beginning of period				-		4,661		4,128
Cash, end of period			$	10,287	$	10,287	$	4,661
Supplemental cash flow information
	Interest paid		$	-	$	-	$	-
	Income taxes paid		$	-	$	-	$	-
Non-cash financing and investing activities
	Financing
	Shares issued for accounts payable		$	60,037	$	37,912	$	4,625
	Shares issued for promissory notes		$	183,702	$	111,754	$	71,948
	Shares issued for loans		$	63,930	$	63,930	$	-
The accompanying notes are an integral part of these consolidated financial statements.

F-8

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

1.

Nature of Operations

The Company was organized by filing articles of incorporation with the Secretary of State of the State of Nevada on March 19, 2001 as Sun Vacation Club, Inc.  There were no operations as Sun Vacation Club, Inc. and on December 4, 2002 the company changed its name to United Athletes, Inc.  Although numerous attempts were made to find funding for the Company substantial enough to support operations, in late 2003 management decided to suspend operations and discontinue attempts to raise equity capital. Effective February 2, 2005, the Company changed its name to S2C Global Systems, Inc.

S2C Global Systems Inc., a private company, was incorporated on May 6, 2004 in the Province of British Columbia under certificate BC0694405.  The main business is the development, manufacture, and marketing of a water dispensing and recycling system for sales in Canada.

S2C Global Systems USA, Inc., a private company, was incorporated on November 27, 2006 in the State of Nevada.  The main business is the marketing of the Company’s water dispensing and recycling system for sales in the USA.

The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.

The Company has historically maintained its ability to finance its operation through attracting private investment. The Company believes it can continue to raise the necessary capital for operational growth from private individuals and corporations known to the Company. The Company further intends on utilizing whatever rights it may have to do a public offering of its common stock to raise additional funds for market expansion. The Company’s plans also include the dissemination of its Aquaduct product that will generate revenue by selling 5-gallon bottled water for profit. The Aquaduct product will be primarily financed through a lease financing program.

2.

Significant Accounting Policies

a)

Development stage company

The Company is considered to be in the Development stage as defined in Statement of Financial Accounting Standards No. 7.   

b)

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, S2C Global Systems Inc., a British Columbia, Canada corporation, and S2C Global Systems USA, Inc., a Nevada corporation.  All significant inter-company transactions have been eliminated.

F-9

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

2.

Significant Accounting Policies (continued)

c)

Research and development

In accordance with Statement of Accounting Standards No. 2 the Company expenses all research and development costs as incurred.   

d)

Equipment

Equipment is recorded at historical cost and amortized at the following annual rates:

Computer equipment	45%
Bottles	20%
Vending equipment	10%

Additions during the year are amortized at one half their normal rate, and no amortization is taken in the year of disposal.  

e)

Foreign currency translation

The Company’s functional and reporting currency is the United States Dollar.  Monetary assets and liabilities are translated at period end exchange rates; other assets and liabilities have been translated at the rates prevailing at the date of transaction. Revenue and expense items, except for amortization, are translated at the average rate of exchange for the year.  Amortization is converted using rates prevailing at dates of acquisition. Gains and losses from foreign currency translation are included in the statement of operations.

f)

Basic and diluted loss per share

Basic loss per share is calculated using the weighted-average number of shares outstanding during the period.  

Basic loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period.  The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted loss per share is the same as basic loss per share, as the inclusion of common stock equivalents would be anti-dilutive.

g)

Financial instruments

All significant financial assets, financial liabilities, and equity instruments of the Company are either recognized or disclosed in the consolidated financial statements together with information relevant for making a reasonable assessment of future cash flows, interest rate risk, and credit risk.  Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise, only available information pertinent to fair value has been disclosed.

F-10

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

2.

Significant Accounting Policies (continued)

h)

Income taxes

Income taxes are provided for using the liability method of accounting.  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.  The adoption of FIN 48 has not had any effect on the Company's financial position, results of operations or cash flows.

i)

Cash and cash equivalents

For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid debt instruments with maturities of three months or less when purchased to be cash equivalents.

j)

Stock-Based Compensation

The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004) "Share-Based Payment" ("SFAS 123 (R) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.”). SFAS 123 (R) supersedes the Company's previous accounting under Accounting Principles Board Opinion No.25, "Accounting for Stock Issued to Employees" ("APB 25") for the periods beginning fiscal 2006.

All stock-based awards are measured and recognized using the fair-value method as determined by the Black-Scholes option pricing model.  Awards that the Company has the ability to settle with stock are recorded as equity, whereas awards that the Company is required to settle or has the practice of settling in cash are recorded as liabilities.  Compensation expense is recognized in the statement of operations over the vesting period.

Awards of common shares are recorded at fair value as determined by the trading price at the date of the agreement to issue shares.

k)

Estimates

The preparation of consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.

F-11

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

2.

Significant Accounting Policies (continued)

l)

Revenue recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, when title and risk of ownership have passed, the sales price is fixed or determinable, and collection is probable. Generally for sales of bottled water this will be at the point of sale as all sales are final, there is no right of return, and sales are for cash.

3.

Equipment

						December 31, 2007
				Accumulated		Net Book
		Cost		Amortization		Value
Computer equipment	$	2,610	$	2,100	$	510
Bottles		21,681		5,861		15,820
Vending equipment		360,325		56,495		303,830
	$	384,616	$	64,456	$	320,160

						December 31, 2006
				Accumulated		Net Book
		Cost		Amortization		Value
Computer equipment	$	2,610	$	1,683	$	927
Bottles		20,513		2,051		18,462
Vending equipment		243,252		29,240		214,012
	$	266,375	$	32,974	$	233,401

4.

Loans Payable

There are three loans payable for $16,557 (2006 – $15,400) due on demand, unsecured, and without interest; accordingly, fair value cannot be reliably determined.  Of the three loans payable, two loans totalling $6,557 (CDN$6,500) are due to directors.

5.

Demand Promissory Notes

At December 31, 2007, the Company has issued three promissory notes which are due to a company controlled by the Company’s president and chief executive officer.  All are due on demand, with interest at 12% per annum totalling $25,077.  The amount reported includes accrued interest.

F-12

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

6.

Convertible Promissory Notes

a)

On August 10, 2006, the Company issued one unsecured convertible promissory note for $5,000.  The note bears interest at a rate of 15% per annum and was originally due on August 10, 2007 which has been extended to August 10, 2008.   The note is now convertible on or before August 10, 2008 into units of the Company with each unit consisting of one common share at $0.15 per share and a one year share purchase warrant with an exercise price of $0.30. As the market price of the shares was less than the conversion price on the issue date of the convertible note, no value was allocated to the conversion feature.

b)

On August 21, 2006, the Company issued one unsecured convertible promissory note for $10,000. The note bears interest at a rate of 15% per annum and was originally due on August 21, 2007 which has been extended to August 21, 2008.   The note is now convertible on or before August 21, 2008 into units of the Company with each unit consisting of one common share at $0.15 per share and a one year share purchase warrant with an exercise price of $0.30. As the market price of the shares was less than the conversion price on the issue date of the convertible note, no value was allocated to the conversion feature.

c)

During the period ended December 31, 2004, the Company issued one unsecured convertible promissory note for US$45,000.  Prior to December 31, 2005 the note was convertible at a rate of one common share for each US$0.01 of principal and accrued interest; however on November 8, 2005 the conversion term was changed to US$0.10 of principal and accrued interest, this option was not exercised. The note bears interest at a rate of 15% per annum and was due on December 31, 2006. As the market price of the shares was less than the conversion price on the date of the amendment no value was allocated to the conversion feature. During the current year, $38,974 of the note was converted into common shares with the balance of $6,026 converted in January 2008.

7.

Common Shares

On February 2, 2005, the Company issued 1,266,666 common shares upon the conversion of nine convertible notes payable at $0.062 per shares.

Pursuant to the terms of the reverse takeover acquisition of United Athletes, Inc. on February 2, 2005, the Company issued 15,095,490 common shares with no value attributed.

On June 13, 2005, the Company issued 1,400,000 common shares in exchange for consulting and management services at $0.25 per share.

On June 13, 2005, the Company issued 175,000 common shares in exchange for settlement of accounts payable at $0.10 per share.

On June 13, 2005, the Company issued 85,422 common shares for cash proceeds of $0.25 per share.

On August 10, 2005, the Company issued 225,000 common shares in exchange for consulting services at $0.25 per share.

On September 15, 2005, the Company issued 300,000 common shares in exchange for consulting services at $0.25 per share.

On September 15, 2005, the Company issued 141,000 common shares for cash proceeds of $0.25 per share.

F-13

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

7.

Common Shares (continued)

On October 5, 2005, the Company issued 250,000 common shares in exchange for consulting services at $0.25 per share.

On October 18, 2005, the Company issued 16,000 common shares for cash proceeds of $0.25 per share.

On October 28, 2005, the Company issued 100,000 common shares for cash proceeds of $0.25 per share.

On November 11, 2005, the Company issued 125,000 common shares for a subscription received in February of 2005 of $12,500 or at $0.10 per share.

On January 6, 2006, the Company issued 6,000 common shares in exchange for settlement of accounts payable at $0.25 per share.

On February 9, 2006, the Company received the proceeds to issue 560,000 units at $0.125 per unit, each unit comprised of one common share and one warrant to purchase an additional common share for a period of one year at an exercise price of $0.25.  The shares were issued on March 29, 2006.

On February 17, 2006, the Company issued 3,070,000 common shares at a value of $0.05 per share in regards to the commitments noted in Note 12 for management and consulting services accrued in the year ended December 31, 2005.

On February 17, 2006, the Company issued 100,000 common shares in exchange for consulting services at a value of $0.05 per share.

On March 22, 2006, the Company cancelled 150,000 common shares previously issued in July of 2005 at a value of $0.25 per share upon the termination of a consulting agreement.

On May 2, 2006, the Company issued 25,000 common shares in exchange for settlement of accounts payable at $0.125 per share.

On May 31, 2006, the Company issued 144,000 units at $0.125 per unit for gross proceeds of $18,000. Each unit comprised one common share and one warrant to purchase one additional common share for a period of one year until May 31, 2007, at an exercise price of $0.25.  

On June 2, 2006, the Company issued 50,000 common shares in exchange for consulting services at a value of $0.14 per share.

On June 9, 2006, the Company issued 100,000 common shares in exchange for consulting services at a value of $0.07 per share.

On June 30, 2006, pursuant to the compensation agreements dated April 1, 2006, the Company issued 2,535,000 common shares in exchange for consulting services at a value of $0.07 per share (see Note 12).

On August 1, 2006, the Company issued 250,000 common shares in exchange for consulting services at a value of $0.07 per share.

F-14

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

7.

Common Shares (continued)

On September 29, 2006, the Company issued 171,526 common shares in exchange for a convertible promissory note in the principal amount of CDN$16,500 (US$15,000) that was due on September 1, 2006 as full settlement including interest.  The shares were valued at $0.10 per share.

On September 29, 2006, the Company issued 100,000 common shares in exchange for consulting services at a value of $0.10 per share.

On September 29, 2006, the Company issued 1,557,600 units at $0.10 per unit for gross proceeds of $155,760 with $100,965 paid in cash and $54,795 as a settlement of a promissory note. Each unit comprised one common share and one warrant to purchase one additional common share for a period of one year until September 30, 2007 at an exercise price of $0.25.

On September 30, 2006, pursuant to the compensation agreements dated April 1, 2006, the Company issued 1,267,500 common shares in exchange for consulting services at a value of $0.07 per share (see Note 12).

On December 11, 2006, pursuant to the compensation agreements dated April 1, 2006, the Company issued 1,267,500 common shares in exchange for consulting services at a value of $0.07 per share (see Note 12).

On December 11, 2006, the Company issued 135,000 common shares in exchange for consulting services at a value of $0.12 per share.

On December 11, 2006, the Company issued 15,000 common shares in exchange for consulting services at a value of $0.13 per share.

On December 27, 2006, the Company issued 100,000 common shares in exchange for consulting services at a value of $0.12 per share.

On December 30, 2006, the Company issued 350,000 common shares in exchange for consulting and management services at a value of $0.12 per share.

On December 31, 2006, the Company cancelled 300,000 common shares previously issued in exchange for consulting services valued at $0.07 per share.

On February 6, 2007, the Company issued 850,000 common shares in exchange for consulting services at a value of $0.10 per share.

On February 28, 2007, pursuant to a compensation agreement, the Company issued 250,000 common shares in exchange for consulting services at a value of $0.08 per share.

On March 6, 2007, the Company issued 120,000 common shares in exchange for consulting services at a value of $0.12 per share.

On March 29, 2007, the Company issued 30,000 common shares in exchange for consulting services at a value of $0.13 per share.

On March 29, 2007, pursuant to compensation agreements, the Company issued 1,100,000 common shares in exchange for consulting and management services at a value of $0.08 per share.

F-15

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

7.

Common Shares (continued)

On May 2, 2007, pursuant to compensation agreements, the Company issued 250,000 common shares in exchange for consulting services at a value of $0.08 per share.

On May 10, 2007 the Company cancelled 400,000 common shares previously issued in February 2007 at a value of $0.10 per share upon the termination of a consulting agreement.

On June 26, 2007, pursuant to compensation agreements, the Company issued 1,350,000 common shares in exchange for consulting services at a value of $0.08 per share.

On June 26, 2007 the Company issued 60,000 common shares in exchange for consulting services at a value of $0.13 per share.

On June 29, 2007, the Company issued 639,296 units at $0.10 per unit in exchange for settlement of loans.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of six months at an exercise price of $0.25.

On June 29, 2007, the Company issued 7,800,000 units at $0.05 per unit.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of one year at an exercise price of $0.10 plus a second warrant to purchase an additional common share for a period of two years at an exercise price of $0.15.

On June 29, 2007 the Company issued 179,119 common shares in exchange for settlement of accounts payable at $0.10 per share.

On June 29, 2007 the Company issued 200,000 common shares in exchange for settlement of accounts payable at $0.10 per share.

On June 29, 2007, the Company issued 1,117,540 common shares in exchange for two convertible promissory notes in the principal amounts of $45,000 and $46,930 (or CDN$50,000) that were due on September 30, 2007 including interest. The shares were valued at $0.10 per share.   

On September 24, 2007, the Company issued 100,000 common shares in exchange for consulting services at a value of $0.13 per share.

On September 24, 2007, pursuant to compensation agreements, the Company issued 1,350,000 common shares in exchange for consulting services at a value of $0.08 per share.

On September 28, 2007, the Company issued 500,000 units at $0.05 per unit.  Each unit is comprised of one common share and one warrant to purchase an additional common share for a period of one year at an exercise price of $0.10 plus a second warrant to purchase an additional common share for a period of two years at an exercise price of $0.15.

 On October 26, 2007 the Company issued 100,000 common shares in exchange for consulting services at a value of $0.035 per share.

On October 26, 2007 the Company issued 200,000 common shares in exchange for consulting services at a value of $0.05 per share.

On November 30, 2007 the Company issued 100,000 common shares in exchange for consulting services at a value of $0.035 per share.

F-16

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

7.

Common Shares (continued)

On December 4, 2007 the Company issued 200,000 common shares in exchange for repairs and maintenance services at $0.05 per share.

On December 4, 2007 the Company issued 200,000 common shares in exchange for consulting services at a value of $0.05 per share.

On December 21, 2007 the Company issued 1,000,000 common shares for cash proceeds of $0.035 per share.

On December 21, 2007 the Company issued 192,500 common shares for cash proceeds of $0.052 per share.

On December 21, 2007, the Company issued 1,164,625 common shares pursuant to a private placement agreement for cash proceeds at $0.052 per share.

On December 21, 2007, pursuant to compensation agreements, the Company issued 1,100,000 common shares in exchange for consulting services at a value of $0.08 per share.

On December 21, 2007 the Company issued 90,000 common shares in exchange for consulting services at a value of $0.13 per share.

On December 21, 2007, pursuant to compensation agreements, the Company issued 850,000 common shares in exchange for consulting services at a value of $0.034 per share.

On December 21, 2007 the Company issued 25,000 common shares in exchange for consulting services at a value of $0.05 per share.

8.

Options

At December 31, 2007, the Company had Nil (2006 – Nil) stock options outstanding.

9.

Warrants

At December 31, 2007, the Company had 16,600,000 (2006 – 2,442,600) warrants outstanding entitling the holders the right to purchase one common share for each warrant held as follows:

Number of Shares		Exercise Price	Expiry Date
7,800,000	$	0.10	June 29, 2008
7,800,000	$	0.15	June 29, 2009
500,000	$	0.10	September 28, 2008
500,000	$	0.15	September 28, 2009
16,600,000

F-17

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

10.

Financial Instruments

Currency risk is the risk to the Company's earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.

At December 31, 2007 the Company had the following financial assets and liabilities in Canadian dollars:

		USD equivalent		CDN Dollars
Cash	$	256	$	254
Accounts payable	$	200,012	$	198,272
Loans payable	$	6,557	$	6,500
Demand promissory notes	$	14,123	$	14,000

At December 31, 2007 US dollar amounts were converted at a rate of $0.9913 Canadian dollars to $1.00 US dollar.

11.

Income Taxes

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

		December 31, 2007		December 31, 2006
Loss before income taxes	$	(879,217)	$	(712,729)
Income tax recovery at statutory rates		(131,883)		(106,909)
Adjustment for varying tax jurisdiction		(36,618)		(57,512)
Non-deductible items for tax purposes		90,609		522
Unrecognized benefit of losses and tax pools		77,892		163,899
	$	-	$	-

The significant components of the Company’s future income tax assets are as follows:

		December 31, 2007		December 31, 2006
Future income tax assets
Non-capital losses available for future periods	$	348,000	$	508,000
Property and equipment		1,000		-
Other		76,000		-
		425,000		508,000
Valuation allowance		(425,000)		(508,000)
	$	-	$	-

At December 31, 2007 the Company has available non-capital losses of approximately $1,185,000 (2006 – $2,200,000) which may be carried forward to apply against future income.  These losses will expire commencing in 2014 through 2027.

F-18

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

11.

Income Taxes (continued)

Future tax benefits, which may arise as a result of applying these deductions to taxable income, have not been recognized in these accounts.

12.

Commitments

The Company has entered into consulting agreements as follows:

a)

Roderick Bartlett, on January 24, 2007, an agreement to act as President and CEO was entered into for the 2007 calendar year for 2,000,000 common shares to be issued at a deemed value of $0.08 per share with 500,000 shares issued on March 29, 2007, 500,000 shares issued on June 26, 2007, 500,000 issued on September 24, 2007, and 500,000 issued on December 21, 2007.

b)

  Trevor Reber, on January 24, 2007, an agreement to act as Commercial Operations Manager was entered into for the 2007 calendar year for a monthly salary of $5,500 to be paid each month, and 300,000 common shares to be issued at a deemed value of $0.08 per share with 75,000 shares issued on March 29, 2007, 75,000 shares issued on June 26, 2007, 75,000 issued on September 24, 2007, and 75,000 issued on December 21, 2007.

c)

Harold Forzley, on January 24, 2007, an agreement to act as Chief Financial Officer was entered into for the 2007 calendar year for 1,500,000 common shares to be issued at a deemed value of $0.08 per share with 375,000 shares issued on March 29, 2007, 375,000 shares issued on June 26, 2007, 375,000 issued on September 24, 2007, and 375,000 issued on December 21, 2007.

d)

Peter Miele, on January 24, 2007, an agreement to act as Head of Marketing was entered into for the 2007 calendar year for 600,000 common shares to be issued at a deemed value of $0.08 per share with 150,000 shares issued on March 29, 2007, 150,000 shares issued on June 26, 2007, 150,000 issued on September 24, 2007, and 150,000 issued on December 21, 2007.

e)

John Balanko, on January 24, 2007, an agreement to act as Head of Corporate Finance was entered into for the 2007 calendar year for 1,000,000 common shares to be issued at a deemed value of $0.08 per share with 250,000 shares issued on February 28, 2007, 250,000 shares issued on May 2, 2007, 250,000 issued on June 26, 2007, and 250,000 issued on September 24, 2007.

f)

The Company is committed to pay rent for premises at CDN$3,856 (equivalent to US$3,890) per month through to February 2010.

g)

The Company is committed to pay rent for an Aquaduct location at CDN$263 (equivalent to US$265) per month through to March 2008.

h)

The Company is committed to pay rent for an Aquaduct location at CDN$352 (equivalent to US$355) per month through to August 2008.

i)

The Company is committed to pay rent for a warehouse location at CDN$1,184 (equivalent to US$1,194) per month through to February 28, 2009.

j)

The Company is committed to pay rent for an Aquaduct location at $350 per month through December 31, 2008, at $403 per month in 2009.

k)

The Company has not renewed any of the management compensation agreements for 2008.

F-19

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

13.

Related Party Transactions

The related party transactions are as described in Notes 4, 5 and 12. At December 31, 2007 there was a total of $68,550 (2006 – $142,090) included in accounts payable for amounts owing to companies controlled by current and former directors of the Company.

14.

Segmented Information

Details on a geographic basis as at December 31, 2007 are as follows:

		December 31, 2007		December 31, 2006
Total Assets
USA	$	14,182	$	6,442
Canada		330,930		231,620
Total	$	345,112	$	238,062
Total Equipment
USA	$	14,182	$	6,387
Canada		305,978		227,014
Total	$	320,160	$	233,401
Net and Comprehensive Loss
USA	$	623,680	$	353,279
Canada		255,537		359,450
Total	$	879,217	$	712,729

15.

Subsequent Events

a)

Subsequent to December 31, 2007, the Company issued common shares as follows:

i.

750,000 shares issued as consideration for compensation and services rendered for an aggregate value of $34,750;

ii.

500,000 shares issued to directors of the Company as consideration for accrued directors’ fees for the year ended December 31, 2007, valued at $25,000;

iii.

555,000 shares issued for cash proceeds of $20,000 pursuant to a subscription agreement; and

iv.

60,255 share for settlement of debt valued at $6,026.

F-20

S2C GLOBAL SYSTEMS, INC.

(A Development Stage Enterprise)

Notes to the Consolidated Financial Statements

(Presented in US dollars)

December 31, 2007

15.

Subsequent Events (continued)

b)

On January 15th, 2008 the Company finalized a lease at OakRidge North Shopping Centre, The Woodlands, Texas with ORN Ltd. for a one year period ending December 31, 2008 at a rate of $250 per month plus additional rent of $0.50 per bottle sold over 500 bottles in any given month.  

16.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value, and expands fair value disclosures. The standard does not require any new fair value measurements. This standard is effective for fiscal years beginning after November 15, 2007. The adoption of this standard is not expected to have a material effect on the Company's financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115" ("SFAS No. 159"). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the Board's long-term measurement objectives for accounting for financial instruments. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007, although earlier adoption is permitted. Management has not determined the effect that adopting this statement would have on the Company's financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R),"Business Combinations" ("SFAS No. 141(R)"), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141(R) is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008.  Earlier adoption is prohibited and the Company is currently evaluating the effect, if any, that the adoption will have on its financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS No. 160"), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheet.  SFAS No. 160 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited and the adoption of this statement is not expected to have a material effect on the Company's financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”), changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The adoption of this statement is not expected to have a material effect on the Company's financial position, results of operations or cash flows.

F-21