----

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| (Mark      one)                                                                                                                                                                          |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| [X]           Quarterly      report under Section 13 or 15(d) of the Securities Exchange Act of      1934                         |
|                                                                                                                                                       |
| For      the quarterly period ended September 30, 2006                                                                                                                              |
|                                                                                                                                                       |
| [   ]           Transition      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 |
|                                                                                                                                                       |
| For      the transition period from ___________ to  ____________                                                                                                                         |
|                                                                                                                                                       |
| Commission      File Number:  0-11582                                                                                                                                          |
|                                                                                                                                                       |
| AUTO UNDERWRITERS OF      AMERICA, INC. (Exact      Name of Small Business Issuer as Specified in its    Charter)                                                                        |
|                                                                                                                                                       |
| California (State      or Other Jurisdiction of  Incorporation      or Organization)                                                                                                     | 94-2915849 (IRS      Employer  Identification      No.) |
|                                                                                                                                                       |
| 2670      South White Road  Suite      241 San Jose, CA      95148 (Address      of Principal Executive Offices)                                                                         | (408)      270-3587 (Issuer’s      Telephone Number) |
|                                                                                                                                                       |
| (Former      Name, Former Address and Former Fiscal Year, if Changed Since Last      Report)                                                                                             |

----

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----

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| AUTO      UNDERWRITERS OF AMERICA, INC.   TABLE      OF CONTENTS |
|-----------------------------------------------------------------------|

|                                                                                                                     |                                                                                      | PAGE         |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|--------------|
|                                                                                                                     |                                                                                      |         |
| PART I.                                                                                                                  | FINANCIAL INFORMATION                                                                     |         |
|                                                                                                 |                                                                  |         |
| Item 1.                                                                                                                  | Financial Statements                                                                      |         |
|                                                                                                 |                                                                  |         |
|                                                                                                                     | Balance      Sheets as of September 30, 2006 and June 30,      2006                  | 3            |
|                                                                                                 |                                                                  |         |
|                      | Statements of Operations for the Three Months Ended      September 30, 2006 and 2005 | 4            |
|                                                                                                 |                                                                  |         |
|                                                                                                                     | Statements of Cash Flows for the Three Months Ended      September 30, 2006 and 2005 | 5            |
|                                                                                                 |                                                                  |         |
|                                                                                                                     | Notes      to Financial Statements                                                        | 6      - 14  |
|                                                                                                 |                                                                  |         |
| Item 2.                                                                                                                  | Management’s Discussion and Analysis of Financial      Condition                    | 15      - 17 |
|                                                                                                 |                                                                  |         |
| Item 3.                                                                                                                  | Controls and Procedures                                                                   | 17           |
|                                                                                                 |                                                                  |         |
| PART II.                                                                                                                 | OTHER INFORMATION                                                                         |         |
|                                                                                                 |                                                                  |         |
| Item 1.                                                                                                                  | Legal      Proceedings                                                                    | 20           |
|                                                                                                 |                                                                  |         |
| Item 2.                                                                                                                  | Unregistered Sales of Equity Securities and Use of      Proceeds                          | 20           |
|                                                                                                 |                                                                  |         |
| Item 3.                                                                                                                  | Default Upon Senior Securities                                                            | 21           |
|                                                                                                 |                                                                  |         |
| Item 4.                                                                                                                  | Submission of Matters to a Vote of Security      Holders                                  | 21           |
|                                                                                                 |                                                                  |         |
| Item 5.                                                                                                                  | Other      Information                                                                    | 22           |
|                                                                                                 |                                                                  |         |
| Item 6.                                                                                                                  | Exhibits                                                                                  | 22           |

----

 Part I 

 Item 1. 

| Auto  Underwriters of America,    Inc. |
|----------------------------------------|
| Balance      Sheets  (Unaudited)       |

|                                                                                                |   | (RESTATED)               |      |   |               |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|--------|--------------------|--------|
| Assets:                                                                                             |   | September      30,  2006 |      |   | June      30, 2006 |   |
| Cash      and cash equivalents                                                                      |   | $                        | 34,001    |   |               | $      | 4,161 |   |
| Finance      receivables, net of allowance $2,250,031and $2,417,300,      respectively              |   |                     | 7,405,146 |   |               |   | 8,430,105 |   |
| Other      receivables                                                                              |   |                     | 29,280    |   |               |   | 47,022 |   |
| Property      and equipment, net of accumulated depreciation $69,536 and $59,646,      respectively |   |                     | 128,262   |   |               |   | 138,152 |   |
| Inventory                                                                                           |   |                     | 861,790   |   |               |   | 285,135 |   |
| Prepaid      and other assets                                                                       |   |                     | 35,215    |   |               |   | 63,502 |   |
| Deferred      financing cost                                                                        |   |                     | 226,758   |   |               |   | 261,595 |   |
| Total      assets                                                                                   |   | $                        | 8,720,452 |   |               | $      | 9,229,672 |   |

| Liabilities      and stockholders’ equity (deficit): |   |   |       |   |   |   |
|------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Accounts      payable and accrued liabilities              |   | $      | 790,612    |   |   | $      | 1,048,670 |   |
| Drafts      payable and floor plan liabilities             |   |   | 216,505    |   |   |   | - |   |
| Other      notes payable                                   |   |   | 1,761,944  |   |   |   | 2,590,695 |   |
| Senior      debts - revolving line of credit               |   |   | 8,527,982  |   |   |   | 9,013,025 |   |
| Deferred      sales tax                                    |   |   | 736,825    |   |   |   | 794,990 |   |
| Advances      from related parties                         |   |   | 674,995    |   |   |   | 677,794 |   |
| Total      liabilities                                     |   |   | 12,708,863 |   |   |   | 14,125,174 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Commitments      and contingencies                         |   |   |       |   |   |   |   |   |

| Stockholders’      equity/(deficit):                                                                                                            |   |   |        |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Preferred      stock: no par value: 10,000,000 authorized 423,020 issued and      outstanding                                                    |   |   | 909,492     |   |   |   | - |   |
| Common      stock: no par value: 100,000,000 authorized issued and outstanding:      6,418,570 and    6,018,570      respectively |   |   | 8,002,498   |   |   |   | 5,768,364 |   |
| Retained      deficit                                                                                                                                 |   |   | (12,900,401 | )      |   |   | (10,663,868 | ) |
| Total      stockholders’ equity/(deficit)                                                                                                       |   |   | (3,988,411  | )      |   |   | (4,895,504 | ) |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      liabilities and stockholders’ equity/(deficit)                                                                                       |   | $      | 8,720,452   |   |   | $      | 9,229,672 |   |

----

| Auto  Underwriters of America,    Inc.                      |
|-------------------------------------------------------------|
| Statements      of Operations                               |
| For      the three months ended September 30, 2006 and 2005 |
| (Unaudited)                                                 |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (RESTATED) |       |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
|                                                                                                                                       |   | 2006       |       |   | 2005   |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |       |       |   |   |   |
| Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $          | 862,990    |   |   | $      | 5,490,278 |   |
| Interest      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       | 390,437    |   |   |   | 535,949 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |       | 19,972     |   |   |   | 185,097 |   |
| Total      revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |       | 1,273,398  |   |   |   | 6,211,324 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Costs      and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       |       |   |   |   |   |   |
| Cost      of sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | 566,397    |   |   |   | 3,526,713 |   |
| Selling,      general and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       | 715,337    |   |   |   | 1,220,188 |   |
| Provision      for credit losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |       | 213,267    |   |   |   | 1,122,379 |   |
| Discount      on sales of receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |       | -          |   |   |   | 78,455 |   |
| Depreciation      and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | 103,103    |   |   |   | 15,804 |   |
| Interest      expense – warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |       | 561,045    |   |   |   | - |   |
|              Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |       | 387,759    |   |   |   | 289,950 |   |
| Total      costs and expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |       | 2,546,908  |   |   |   | 6,253,489 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Loss      before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |       | (1,273,510 | )      |   |   | (42,165 | ) |
| Provision      for income tax benefit (expense)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |       | -          |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Net      loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $          | (1,273,510 | )      |   | $      | (42,165 | ) |
| Preferred      deemed dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |       | (963,074   | )      |   |   | - |   |
| Net      loss available to common stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $          | (2,236,584 | )      |   | $      | (42,165 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Loss      per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Basic      and diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $          | (0.37      | )      |   | $      | (0.01 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |       |   |   |   |   |   |
| Weighted      average number of shares outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |       |       |   |   |   |   |   |
| Basic      and diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |       | 6,060,328  |   |   |   | 6,020,053 |   |

----

| Auto  Underwriters of America,    Inc.                      |
|-------------------------------------------------------------|
| Statements      of Cash Flows                               |
| For      the three months ended September 30, 2006 and 2005 |
| (Unaudited)                                                 |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | (RESTATED) |       |    |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|---------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2006       |       |    | 2005   |   |
| Operating      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |    |   |   |
| Net      loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $          | (1,273,510 | )       |   | $      | (42,165 | ) |
| Adjustments      to reconcile net loss to net cash used in operating      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |       |       |    |   |   |   |   |
| Depreciation      and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |       | 103,103    |    |   |   | 15,804 |   |
| Bad      debt expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |       | 35,000     |    |   |   | - |   |
| Imputed      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |       | 10,015     |    |   |   | - |   |
| Warrant      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       | 561,045    |    |   |   | - |   |
| Discount      on sale of finance receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |       | -          |    |   |   | 78,455 |   |
| Change      in finance receivables, net:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |       |       |    |   |   |   |   |
| Finance      receivables originations and purchased, net ofpayments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |       | 337,494    |    |   |   | (3,300,472 | ) |
| Provision      for credit losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       | 213,267    |    |   |   | 1,122,379 |   |
| Inventory      acquired in repossession                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |       | 474,198    |    |   |   | 917,865 |   |
| Subtotal      finance receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |       | 1,024,959  |    |   |   | (1,260,228 | ) |
| Changes      in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |       |       |    |   |   |   |   |
| Deferred      financing cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |       | (52,361    | )  |   |   | (39,375 | ) |
| Accounts      receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |       | 17,742     |    |   |   | (682,332 | ) |
| Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |       | (576,655   | )       |   |   | (588,569 | ) |
| Prepaid      and other expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | (6,714     | )       |   |   | (20,828 | ) |
| Accounts      payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |       | (258,008   | )       |   |   | 619,994 |   |
| Drafts      payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |       | 216,505    |    |   |   | - |   |
| Deferred      sales taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |       | (58,165    | )       |   |   | 201,554 |   |
| Net      cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       | (257,044   | )       |   |   | (1,717,690 | ) |
|                                                                                                                                                 |   |       |       |    |   |   |   |   |
| Investing      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |    |   |   |   |   |
| Purchase      of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |       | -          |    |   |   | (3,564 | ) |
| Sale      (purchase) of finance receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |       | -          |    |   |   | (170,576 | ) |
| Proceeds      from sale of finance receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | -          |    |   |   | 1,146,174 |   |
| Net      cash provided by investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | -          |    |   |   | 972,034 |   |
|                                                                                                                                                                                                   |   |       |       |    |   |   |   |   |
| Financing      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |    |   |   |   |   |
| Proceeds      from (repayments to) related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       | (2,799     | )       |   |   | (1,000 | ) |
| Proceeds      from revolving credit facilities, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |       | (485,043   | )       |   |   | 486,146 |   |
| Repayments      on other notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |       | (134,766   | )       |   |   | (28,252 | ) |
| Proceeds      from sale of Series A Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |       | 909,492    |    |   |   | 382,500 |   |
| Net      cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       | 286,884    |    |   |   | 839,394 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       |       |    |   |   |   |   |
| Increase      (decrease) in cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       | 29,840     |    |   |   | (93,738 | ) |
| Cash      at beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       | 4,161      |    |   |   | 68,112 |   |
| Cash      at end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $          | 34,001     |    |   | $      | 161,850 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       |       |    |   |   |   |   |
| Cash      paid for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |       |       |    |   |   |   |   |
| Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $          | 377,744    |    |   | $      | 289,950 |   |
| Income      tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |       | -          |    |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |       |       |    |   |   |   |   |
| Non-cash      supplemental disclosures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |       |       |    |   |   |   |   |
| Preferred      deemed dividend                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $          | 963,074    |    |   |   | - |   |
| Common      stock issued to repay debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $          | 700,000    |    |   |   | - |   |

----

| Auto  Underwriters of America,      Inc. |
|------------------------------------------|
| Notes      to Financial Statements       |
| (Unaudited)                              |

| Balance      Sheets                                                               |   | As      Previously Reported |        |   | Effect      of Restatement |   |       | As      Restated |   |
|-----------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|----------------------------|--------|------------|------------------|--------|
| Assets                                                                            |   |                        |        |   |                       |   |       |             |   |
|    Prepaid      and other current assets                           |   |                        | 70,215      |   |                       |   | (35,000    | )                |   |   | 35,215 |   |
| Total      assets                                                                 |   |                        | 8,755,452   |   |                       |   | (35,000    | )                |   |   | 8,720,452 |   |
|                                                                              |   |                        |        |   |                       |   |       |             |   |   |   |   |
| Liabilities      and Stockholders’ Deficit                                  |   |                        |        |   |                       |   |       |             |   |   |   |   |
|    Liabilities                                                     |   |                        |        |   |                       |   |       |             |   |   |   |   |
|       Accounts      payable and accrued liabilities |   |                        | (767,851    | )      |                       |   | (22,761    | )                |   |   | (790,612 | ) |
|       Deferred      sales tax                       |   |                        | (681,440    | )      |                       |   | (55,385    | )                |   |   | (736,825 | ) |
|    Total      liabilities                                          |   |                        | (12,630,717 | )      |                       |   | (78,146    | )                |   |   | (12,708,863 | ) |
|                                                                              |   |                        |        |   |                       |   |       |             |   |   |   |   |
|    Stockholders’      equity/(deficit)                       |   |                        |        |   |                       |   |       |             |   |   |   |   |
|       Common      stock                             |   |                        | (6,468,364  | )      |                       |   | (1,534,134 | )                |   |   | (8,002,498 | ) |
|       Retained      deficit                         |   |                        | 11,253,121  |   |                       |   | 1,647,280  |             |   |   | 12,900,401 |   |
|    Total      stockholders’ equity/(deficit)                 |   |                        | 3,875,265   |   |                       |   | 113,146    |             |   |   | 3,988,411 |   |

| Statements of      Operations                  |   | As      Previously Reported |     |   | Effect      of Restatement |   |       | As      Restated |   |
|------------------------------------------------|--------|-----------------------------|----------|--------|----------------------------|--------|------------|------------------|--------|
| Selling,      general and administrative       |   |                        | 602,200  |   |                       |   | 113,146    |             |   |   | 715,337 |   |
| Interest      expense – warrants         |   |                        | -        |   |                       |   | 561,045    |             |   |   | 561,045 |   |
| Interest      expense – other            |   |                        | 377,744  |   |                       |   | 10,015     |             |   |   | 387,759 |   |
| Net      loss                                  |   |                        | (589,313 | )      |                       |   | (684,206   | )                |   |   | (1,273,510 | ) |
| Preferred      deemed dividends                |   |                        | -        |   |                       |   | (963,074   | )                |   |   | (963,074 | ) |
| Net      loss available to common stockholders |   |                        | (589,313 | )      |                       |   | (1,647,271 | )                |   |   | (2,236,584 | ) |
| Loss      per share – basic and diluted  |   |                        | (0.09    | )      |                       |   | (0.28      | )                |   |   | (0.37 | ) |

| Statements of Cash      Flows                  |   | As      Previously Reported |       |   | Effect      of Restatement |   |     | As      Restated |   |
|------------------------------------------------|--------|-----------------------------|------------|--------|----------------------------|--------|----------|------------------|--------|
| Net      cash used in Operating Activities     |   |                        | (1,226,159 | )      |                       |   | (969,115 | )                |   |   | (257,044 | ) |
| Net      cash provided by Financing Activities |   |                        | 1,255,999  |   |                       |   | 969,115  |             |   |   | 286,884 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                   |                           | September      30 |       |   | June      30                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------------|------------|--------|--------------------------------|--------|
| Finance      receivables                                                                                                                                                                                                                                                                                                                                                                               |                           | $                 | 9,655,177  |   |                           | $      | 10,847,405 |   |
| Less:      allowance for credit losses                                                                                                                                                                                                                                                                                                                                                                 |                           |              | (2,250,031 | )      |                           |   | (2,417,300 | ) |
|                                                                   |                           |              |       |   |       |   |                       |   |
| Finance      receivables, net                                                                                                                                                                                                                                                                                                                                                                          |       | $                 | 7,405,146  |   |                           | $      | 8,430,105 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                   |                           | 2007   |      |   | 2006                           |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|-----------|--------|--------------------------------|--------|
| Balance      at beginning of the period                                                                                                                                                                                                                                                                                                                                                                |                           | $      | 2,417,300 |   |                           | $      | 2,323,089 |   |
| Provision      for credit losses                                                                                                                                                                                                                                                                                                                                                                       |                           |   | 213,267   |   |                           |   | 5,056,597 |   |
| Recoveries                                                                                                                                                                                                                                                                                                                                                                                             |                           |   | 474,198   |   |                           |   | 3,343,683 |   |
| Net      charge-offs                                                                                                                                                                                                                                                                                                                                                                                   |                           |   | (854,734  | )      |                           |   | (8,306,069 | ) |
|                                                                   |                           |   |      |   |       |   |   |   |
| Balance      at end of year                                                                                                                                                                                                                                                                                                                                                                            |       | $      | 2,250,031 |   |                           | $      | 2,417,300 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                   |                           | September      30, 2006 |    |   | June      30,  2006            |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------------------|---------|--------|--------------------------------|--------|
| Accounts      payable                                                                                                                                                                                                                                                                                                                                                                                  |                           | $                       | 327,233 |   |                           | $      | 289,081 |   |
| Payroll      and related taxes                                                                                                                                                                                                                                                                                                                                                                         |                           |                    | 171,342 |   |                           |   | 372,641 |   |
| Recourse      obligation                                                                                                                                                                                                                                                                                                                                                                               |                           |                    | 175,000 |   |                           |   | 152,440 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                  |                           |                    | 117,037 |   |                           |   | 234,508 |   |
|                                                                   |                           |                    |    |   |       |   |                       |   |
| Total      liabilities                                                                                                                                                                                                                                                                                                                                                                                 |       | $                       | 790,612 |   |                           | $      | 1,048,670 |   |

----

| Lender                                                                                                                         |                           | Facility  Amount                                                                                                         |                           | Interest  Rate                                                                                                           |                           | Maturity                                                                                                                 |                           | September      30, 2006                                                                                                  |                           | June 30,      2006  Balance                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|                       |                           |                      |                           |                      |                           |                      |                           |                      |                           |                      |
| Oak      Rock Financial, LLC                                                                                                   |       | $ 9,000,000                                                                                                         |       | Prime      + 7%                                                                                                          |       | March      31, 2007                                                                                                      |       | $  8,527,982                                                                                                   |       | $       9,013,025                                                                                                   |

|                                               |   | September      30,  2006 |      |   | June      30, 2006 |   |
|----------------------------------------------------|--------|--------------------------|-----------|--------|--------------------|--------|
| Unsecured      Convertible Promissory Notes        |   | $                        | 979,977   |   |               | $      | 990,000 |   |
|                                               |   |                     |      |   |               |   |   |   |
| Secured      Promissory Notes                      |   |                     | 250,000   |   |               |   | 1,000,000 |   |
|                                               |   |                     |      |   |               |   |   |   |
| Notes      Payable – Gunnels Interests, Inc. |   |                     | 505,477   |   |               |   | 590,243 |   |
|                                               |   |                     |      |   |               |   |   |   |
| Notes      Payable – Other                   |   |                     | 26,490    |   |               |   | 26,490 |   |
|                                               |   |                     |      |   |               |   |   |   |
|                                               |   | $                        | 1,761,944 |   |               | $      | 2      ,590,695 |   |

----

----

|                               |   | Number      of Common Stock Shares |      |   | Weighted      Average Exercise Price |   |
|------------------------------------|--------|------------------------------------|-----------|--------|--------------------------------------|--------|
| Balance      at June 30, 2005      |   |                               | 0         |   |                                 |   | - |   |
|   Granted                |   |                               | 1,250,000 |   |                                 | $      | 1.10 |   |
| Balance      at June 30, 2006      |   |                               | 1,250,000 |   |                                 |   | 1.10 |   |
|   Granted                |   |                               | 361,510   |   |                                 |   | 3.65 |   |
|   Cancelled              |   |                               | (422,000  | )      |                                 |   | 1.00 |   |
| Balance      at September 30, 2006 |   |                               | 1,189,510 |   |                                 |   | 1.91 |   |

|    Exercise      Price |   |   Number      Outstanding |   | Weighted      Average Remaining  Contractual      Life (Years) |
|----------------------------------|--------|--------------------------------|--------|----------------------------------------------------------------|
| $1.00                            |   | 578,000                        |   | 4.50                                                           |
| 1.50                             |   | 250,000                        |   | 4.42                                                           |
| 1.75                             |   | 150,000                        |   | 4.84                                                           |
| 5.00                             |   | 211,510                        |   | 5.67                                                           |
|                             |   | 1,189,510                      |   |                                                           |

----

----

----

| ·   | Unsecured Convertible      Promissory Notes – During the fiscal year ended June 30, 2007,      notes totaling $933,000 were converted into common stock and the balance      of $57,000 was returned to theinvestors. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|               |                                                                                                                                                                    |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Secured Promissory Notes –      Outstanding notes totaling $250,000 were fully repaid in      October/November 2006 and $50,000 was repaid in November      2007. |

| ·   | Short-term Bridge Loans –      On or about June 8, 2007, Auto Underwriters sold $1,100,000 in      Secured Promissory Notes in a private placement to a limited number of      accredited investors. The offer and sale was conducted on behalf of the      Company by a NASD-licensed broker-dealer who served as managing dealer      (the “Managing Dealer”)and received a sales commission of 6%, a due      diligence fee of 1% and a non-accountable expense allowance of 3% of the      gross proceeds. In addition to the cash payment, we also issued to the      Managing Dealer a five year warrant to purchase 110,000 shares of our      common stock at an exercise price of $1.50 per share.  The Secured      Promissory Notes consist of: (i) Secured Promissory Notes which have in      the aggregate a principal amount of $1,100,000 bearing interest at a rate      of 10% per annum (issuable in individual notes in $100,000 increments)      (the “Note”); (ii) for each $100,000 Note, a five-year warrant to purchase      15,000 shares of common stock of the Company at an exercise price of $2.50      per share with piggyback registration rights and cashless exercise and net      issuance provisions (the “Bridge Warrant”); and (iii) possibly, for each      $100,000 Note, a five-year warrant with the same terms as the Bridge      Warrant to purchase 15,000 shares of the common stock of the Company for      every 30 days that the Company fails to repay the Note (the “Liquidated      Damages Warrant”) (the Bridge Warrant and the Liquidated Damages Warrant      may be referred to collectively as the “Warrants”).  There were      165,000 warrants issued with the Secured Promissory Notes. In November      2007, the Company repaid $302,500 of the notes leaving a balance of      $797,500. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

 Item 2 

| ·   | our      ability to continue operating as a going  concern; |
|--------------------|-------------------------------------------------------------|

| ·   | resolution      and payment of unpaid federal and state  taxes; |
|--------------------|-----------------------------------------------------------------|

| ·   | unfavorable      outcome with respect to pendinglitigation; |
|--------------------|-------------------------------------------------------------|

| ·   | general      economic and industryconditions; |
|--------------------|-----------------------------------------------|

| ·   | our      capital requirements and dependence on the sale of our equity      securities; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | the      liquidity of the Company’s common stock will be affected by the lack of,      or limited trading market; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | intense      industry competition; |
|--------------------|------------------------------------|

| ·   | our      ability to purchase installmentcontracts; |
|--------------------|----------------------------------------------------|

| ·   | the      creditworthiness of contractobligors; |
|--------------------|------------------------------------------------|

| ·   | shortages      in availability of qualifiedpersonnel; |
|--------------------|-------------------------------------------------------|

| ·   | legal      and financial implications of unexpected catastrophic      events; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | regulatory      or legislative changes effecting the automobile finance industry;      and |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | reliance      on, and the ability to attract, key  personnel. |
|--------------------|---------------------------------------------------------------|

----

| ·   | Our      ability to procure suitable lot locations at reasonable      costs. |
|--------------------|------------------------------------------------------------------------------|

| ·   | Our      ability to build our management strength to support the store      growth. |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | Our      ability to maintain competitive direct retail and direct lending      operations. |
|--------------------|--------------------------------------------------------------------------------------------|

----

|                                              |   | Three      Months ended  September      30, |       |
|---------------------------------------------------|--------|---------------------------------------------|------------|
|                                              |   | 2006                                        |       |   | 2005 |   |
| Operating      activities:                        |   |                                        |       |   |   |   |
| Net      loss                                     |   | $                                           | (1,273,510 | ) |   | $ | (42,165 | ) |
| Bad      debt expense                             |   |                                        | 35,000     |   |   |   | - |   |
| Imputed      interest                             |   |                                        | 10,015     |   |   |   | - |   |
| Warrant      expense                              |   |                                        | 561,045    |   |   |   | - |   |
| Depreciation      and amortization                |   |                                        | 103,103    |   |   |   | 15,804 |   |
| Discount      on sale of loans                    |   |                                        | -          |   |   |   | 78,455 |   |
| Changes      in finance receivables, net:         |   |                                        | 1,024,959  |   |   |   | (1,260,228 | ) |
| Changes      in operating assets and liabilities: |   |                                        | (717,656   | ) |   |   | (509,556 | ) |
| Net      cash used in operating activities        |   |                                        | (257,044   | ) |   |   | (1,717,690 | ) |
|                                              |   |                                        |       |   |   |   |   |   |
| Cash      provided by investing activities:       |   |                                        | -          |   |   |   | 972,034 |   |
| Cash      provided by financing activities:       |   |                                        | 286,884    |   |   |   | 839,394 |   |
| Increase      (decrease) in cash                  |   | $                                           | 29,840     |   |   | $ | (93,738 | ) |

----

 Item 3 

| ·   | The      current organization of the accounting department does not provide the      Company with the adequate skills to accurately account for and disclose      significant transactions or disclosures within the time periods as      specified by SEC rules andforms. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Substantive      matters are not being addressed appropriately by the Board resulting in      inadequate oversight from theBoard.  |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      process that the Company is currently using to monitor the ongoing quality      of internal controls performance, identify deficiencies and trigger timely      corrective action is not working  effectively. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There      is no adequate means of accurately capturing and recording certain      significant and complex business  transactions. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

----

----

 PARTII. 

 ITEM 1 

 ITEM 2 

----

 ITEM 3 

 ITEM 4 

----

 ITEM 5 

 ITEM 6 

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| SIGNATURES |
|------------|

|                                         | Auto      Underwriters of America, Inc.                                                    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                       |                                                                                       |
|                                                                                                                                                                                                                                       |                                                                                       |
|                                                                                                                                                                                                                                       | By:   /s/ Dean      Antonis                                                 |
|                                                                                                                                                                                                                                       | Dean      Antonis                                                                          |
|                                                                                                                                                                                                                                       | President      and Treasurer (Principal Executive,  Financial      and Accounting Officer) |