**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM        10-QSB**

 

*(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, 2007**. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| o | Transition report under Section 13 or 15(d) of the                        Securities Exchange Act of 1934 for the transition period from to                        . |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Commission file number:**000-26927**

 

**WWA        GROUP, INC.**

(Exact        name of small business issuer as specified in its charter)

 

 

| **Nevada**

(State or other jurisdiction of

incorporation or organization) | **77-0443643**

(I.R.S. Employer

Identification No.) |
|-----------------------------------------------------------------------------|-------------------------------------------------------|

 

 

**2465 West 12th Street, Suite 2 Tempe, Arizona        85281**

(Address        of principal executive office) (Zip Code)

 

**(480) 505-0700**

(Issuer’s telephone number)

 

Check        whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d)        of the Exchange Act during the past 12 months (or for such shorter period that the        registrant was required to file such reports), and (2) has been subject to such filing        requirements for the past 90 days.

 

|   | Yes | X | No |
|--------|-----|---|----|

 

Indicate by        check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the        Exchange Act).

|   | Yes | No | X |
|--------|-----|----|---|

 

The number        of outstanding shares of the registrant’s common stock, $0.001 par value (the only        class of voting stock), as of November 14, 2007 was 18,431,922.

1

         

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**TABLE OF CONTENTS**

**           **Page**    **PART I.**     **ITEM 1.                    FINANCIAL STATEMENTS**  3   Unaudited Balance Sheet as of September                            30, 2007  4   Unaudited Statements of Income for the                            three and nine months ended September 30, 2007 and 2006  5   Unaudited Statement of Cash Flows for nine                            months ended September 30, 2007 and 2006  6   Notes to the Unaudited Financial                            Statements  7            **ITEM 2. MANAGEMENT'S DISCUSSION                            AND ANALYSIS**  10  **ITEM 3.                    CONTROLS AND PROCEDURES**  15 **PART II.**     **ITEM 1.                    LEGAL PROCEEDINGS**  16  **ITEM 2.                    UNREGISTERED SALES OF EQUITY SECURITIES**  16  **ITEM 3.                    DEFAULTS UPON SENIOR SECURITIES**  16  **ITEM 4.                    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**  16  **ITEM 5.                    OTHER INFORMATION**  16  **ITEM 6.                    EXHIBITS**  16  **SIGNATURES**  17 **INDEX TO                    EXHIBITS**  18 **
**            2        **

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**ITEM 1.****FINANCIAL STATEMENTS**

|   | **** | **** |
|--------|------|------|

 

As used        herein the terms “WWA Group,” “we,” “our”, and        “us” refer to WWA Group, Inc., a Nevada corporation, unless otherwise        indicated. In the opinion of management, the accompanying unaudited financial statements        included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring        accruals) necessary for a fair presentation of the results of operations for the periods        presented. The results of operations for the periods presented are not necessarily        indicative of the results to be expected for the full year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

         

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| **WWA GROUP, INC.**                                             |                                          |
|-----------------------------------------------------------------|-----------------------------------------------|
| **Consolidated Balance Sheets**                                 |                                          |
|                                                            | **Unaudited**

                          |   | **Audited** |
| **Assets**                                                      | **September 30, 2007**                        |   | **December 31, 2006** |
| Current assets:                                                 |                                          |   |   |
| Cash                                                            | $ 7,023,851                                   |   | $ 2,625,570 |
| Marketable securities                                           | 10,500                                        |   | 10,500 |
| Receivables, net                                                | 3,791,669                                     |   | 2,388,091 |
| Inventories                                                     | 4,032,678                                     |   | 2,158,294 |
| Prepaid expenses                                                | 634,803                                       |   | 156,404 |
| Deposit on purchase                                             | 658,243                                       |   | 125,902 |
| Notes receivable                                                | 3,497,580                                     |   | 1,191,237 |
| Other current assets                                            | 636,761                                       |   | 319,603 |
|                                                            |                                          |   |   |
| Total current assets                                            | 20,286,085                                    |   | 8,975,600 |
|                                                            |                                          |   |   |
| Property and equipment, net                                     | 4,876,835                                     |   | 4,274,616 |
| New Leasehold Improvement-CWIP                                  | 651,550                                       |   | 0 |
| Investments in related party entity                             | 62,500                                        |   | 62,500 |
| Investment in unconsolidated entity                             | 1,500,000                                     |   | 1,500,000 |
|                                                            |                                          |   |   |
|                                                            | $ 27,376,971                                  |   | $ 14,812,717 |
|                                                            |                                          |   |   |
| **Liabilities and Stockholders'                        Equity** |                                          |   |   |
|                                                            |                                          |   |   |
| Current liabilities:                                            |                                          |   |   |
| Auction proceeds payable                                        | $ 11,967,171                                  |   | $ 6,904,235 |
| Accounts payable                                                | 3,683,716                                     |   | 1,505,459 |
| Accrued expenses                                                | 409,256                                       |   | 280,580 |
| Line of credit                                                  | 3,130,569                                     |   | 1,668,233 |
| Current maturities of long-term debt                            | 840,316                                       |   | 123,339 |
|                                                            |                                          |   |   |
| Total current liabilities                                       | 20,031,028                                    |   | 10,481,847 |
|                                                            |                                          |   |   |
| Long-term debt                                                  | 1,184,552                                     |   | 89,412 |
|                                                            |                                          |   |   |
| Total liabilities                                               | 21,215,580                                    |   | 10,571,259 |
|                                                            |                                          |   |   |
| Commitments and contingencies                                   | 0                                             |   | 0 |
|                                                            |                                          |   |   |
| Stockholders' equity:                                           |                                          |   |   |
| Common stock, $0.001 par value, 50,000,000                      |                                          |   |   |
| shares authorized; 18,431,922 and 16,670,803                    |                                          |   |   |
| shares issued and outstanding, respectively                     | 18,432                                        |   | 16,671 |
| Additional paid-in capital                                      | 2,703,629                                     |   | 1,537,998 |
| Retained earnings                                               | 3,439,331                                     |   | 2,686,790 |
|                                                            |                                          |   |   |
| Total stockholders' equity:                                     | 6,161,392                                     |   | 4,241,459 |
|                                                                 |                                               |  |  |  |

 

|   |  

$ 27,376,971 |   |  

$ 14,812,717 |
|--------|----------------------|--------|----------------------|

| See accompanying condensed notes to consolidated reviewed                        financial statements. |
|--------------------------------------------------------------------------------------------------------|

 

4

             

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| **WWA GROUP, INC.**                                                |
|--------------------------------------------------------------------|
| **Consolidated Statements of Income**                              |
|                                                               |   |   |
|                                                               | **Three months ended Sept. 30** | **Nine months ended Sept. 30** |
|                                                               | **Unaudited 2007** | **Unaudited 2006** | **Unaudited 2007** | **Unaudited 2006** |
|                                                               |   |   |   |   |
| Revenues from commissions and services                             | $ 1,558,061 | $ 1,522,389 | $ 5,315,352 | $ 5,377,818 |
| Revenues from sales of equipment                                   | 3,813,483 | 1,772,347 | 12,837,527 | 6,486,393 |
| Revenues from ship charter                                         | 318,542 | 460,000 | 1,223,542 | 1,360,000 |
|                                                               |   |   |   |   |
| Total revenues                                                     | 5,690,087 | 3,754,736 | 19,376,421 | 13,224,211 |
|                                                               |   |   |   |   |
| Direct costs - commissions and services                            | 761,507 | 659,812 | 2,331,236 | 2,175,763 |
| Direct costs - sales of equipment                                  | 3,522,558 | 1,749,790 | 1,1750,600 | 6,325,587 |
|                                                               |   |   |   |   |
| Gross profit                                                       | 1,406,022 | 1,345,134 | 5,294,585 | 4,722,861 |
| Operating expenses:                                                |   |   |   |   |
| General, selling and administrative expenses                       | 708,243 | 499,684 | 2,297,052 | 1,901,238 |
| Salaries and wages                                                 | 422,197 | 397,744 | 1,294,021 | 1,149,884 |
| Selling expenses                                                   | 47,021 | 79,403 | 184,416 | 163,895

                          |
| Depreciation and amortization expense                              | 199,636 | 198,539 | 529,233 | 513,948 |
|                                                               |   |   |   |   |
| Total operating expenses                                           | 1,377,098 | 1,175,369 | 4,304,722 | 3,728,965 |
|                                                               |   |   |   |   |
| Income from operations                                             | 28,925 | 169,765 | 989,862 | 993,896 |
| Other income (expense):                                            |   |   |   |   |
| Interest expense                                                   | (166,544) | (27,621) | (364,003) | (133,990) |
| Interest income                                                    | 30,421 | 11,072 | 72,502 | 72,218 |
| Other income                                                       | 24,351 | 24,933 | 54,181 | 119,838 |
|                                                               |   |   |   |   |
| Total other income(expense)                                        | (111,772) | 8,384 | (237,321) | 58,066 |
|                                                               |   |   |   |   |
| Income before income taxes                                         | (82,847) | 178,148 | 752,542 | 1,051,962 |
| Provision for income taxes                                         | - | - | - | - |
|                                                               |   |   |   |   |
| Net income                                                         | $ (82,847) | $ 178,148 | $ 752,542 | $ 1,051,962 |
|                                                               |   |   |   |   |
| Basic and diluted earnings per common share                        |  

$ 0.00 |  

$ 0.01 |  

$ 0.04 |  

$ 0.06 |
| Weighted average shares - basic and                        diluted | 17,258,431 | 16,670,803 | 17,130,7326 | 16,259,038 |

 

 

See accompanying condensed        notes to consolidated reviewed financial statements.

 

5

         

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|                                                                                |  

                          |  

                          |  

                          |  

                          |
|-------------------------------------------------------------------------------------|----------------------------------------|----------------------------------------|----------------------------------------|----------------------------------------|
|                                                                                |                                   |                                   |                                   |                                   |
|  

                         

**WWA GROUP, INC.**                         |                                   |
| **Consolidated Statements of Cash Flow**                                            |                                   |
|                                                                                |  

**Nine months ended Sept. 30** |                                   |
|                                                                                | **2007 unaudited**                     |                                   | **2006 unaudited**                     |                                   |
| **Cash flows from operating activities:**                                           |                                   |                                   |                                   |                                   |
| Net income                                                                          | $ 752,542                              |                                   | $ 1,051,963                            |                                   |
| Adjustments to reconcile net income to net cash                                     |                                   |                                   |                                   |                                   |
| provided by operating activities                                                    |                                   |                                   |                                   |                                   |
| Depreciation and amortization                                                       | 529,233                                |                                   | 438,948                                |                                   |
| (Gain)Loss on disposition of Assets                                                 | (8,417)                                |                                   | 82,759                                 |                                   |
| Fair Value of options granted                                                       | 142,339                                |                                   | 146,637                                |                                   |
| Share Issue Expenses                                                                | 75,324                                 |                                   | 0                                      |                                   |
| Loss On Consolidated Entity                                                         | 0                                      |                                   | (5,735)                                |                                   |
| (Gain) Loss On Securities                                                           | 0                                      |                                   | 250,000                                |                                   |
| Changes in operating Assets and Liabilities:                                        |                                   |                                   |                                   |                                   |
| Decrease (increase) in:                                                             |                                   |                                   |                                   |                                   |
| Accounts receivable                                                                 | (1,403,578)                            |                                   | 8,193                                  |                                   |
| Inventories                                                                         | (1,874,385)                            |                                   | (1,413,563)                            |                                   |
| Prepaid expenses                                                                    | (478,399)                              |                                   | (189,539)                              |                                   |
| Other current assets                                                                | (317,158)                              |                                   | (117,360)                              |                                   |
| Other assets                                                                        | (532,341)                              |                                   | (767,895)                              |                                   |
| Increase (decrease) in:                                                             |                                   |                                   |                                   |                                   |
| Auction proceeds payable                                                            | 5,062,935                              |                                   | 386,849                                |                                   |
| Accounts payable                                                                    | 2,178,256                              |                                   | (216,507)                              |                                   |
| Accrued liabilities                                                                 | 128,676                                |                                   | 161,509                                |                                   |
| Net cash provided by (used                        in)operating activities           | 4,255,028                              |                                   | (183,741)                              |                                   |
|  

**Cash flows from investing activities:**                                   |                                   |                                   |                                   |                                   |
| Purchase of property and equipment                                                  | (1,839,277)                            |                                   | (3,780,015)                            |                                   |
| Proceeds from sale of Fixed Assets                                                  | 64,692                                 |                                   | 0                                      |                                   |
| (Increase) Decrease in note receivable                                              | (2,306,343)                            |                                   | 2,570,233                              |                                   |
|                                                                                |                                   |                                   |                                   |                                   |
| Net cash provided by (used in) investing                        activities          | (4,080,928)                            |                                   | (1,209,782)                            |                                   |
|  

**Cash flows from financing activities:**                                   |                                   |                                   |                                   |                                   |
| Increase (Decrease) in line of Credit                                               | 1,462,335                              |                                   | (1,769,903)                            |                                   |
| Payments/Proceeds of long-term debt                                                 | 1,812,117                              |                                   | (117,730)                              |                                   |
| Proceeds from issuance of common stock                                              | 949,729                                |                                   | 350,000                                |                                   |
| Net cash provided by (used                        in)financing activities           | 4,224,181                              |                                   | (1,537,633)                            |                                   |
|  

Net Increase (decrease) in cash and cash                        equivalents |  

4,398,281                      |                                   |  

(2,931,156)                    |                                   |
|  

Cash and cash equivalents at beginning of year                              |  

2,625,570                      |                                   |  

8,539,958                      |                                   |
|                                                                                     |                                        |                                        |                                        |                                        |  |  |  |  |

 

|  

Cash and cash equivalents at end of period                                                             |  

$ 7,023,851 |   |  

$ 5,608,802 |
|----------------------------------------------------------------------------------------------------------------|---------------------|--------|---------------------|
|  

See accompanying condensed notes to consolidated reviewed                        financial statements. |                |   |

 

6

 

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| **WWA GROUP, INC.** |   |
|---------------------|--------|

**CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**September 30, 2007**

 

**Note        1 – Organization and Basis of Presentation**

 

WWA Group,        Inc., (the “Company”), through a subsidiary, operates in Jebel Ali, Dubai,        United Arab Emirates under a trade license from the Jebel Ali Free Zone Authority. The        Company’s operations primarily consist of the auctioning of used and new heavy        construction equipment, transportation equipment and marine equipment, the majority of        which is on a consignment basis.

 

WWA Group,        Inc. includes the accounts of WWA Group, Inc. and its wholly owned subsidiary World Wide        Auctioneers, Ltd. (“WWA”), a company incorporated in the territory of the        British Virgin Islands on March 20, 2000, which operates in Dubai, U.A.E.

 

On August        8, 2003, the Company and WWA executed a stock exchange agreement, whereby the Company        agreed to acquire 100% of the issued and outstanding shares of WWA, in exchange for        13,887,447 shares of the Company’s common stock. Because the owners of WWA became the        principal shareholders of the Company through the merger, WWA is considered the acquirer        for accounting purposes and this merger is accounted for as a reverse acquisition or        recapitalization of WWA. Subsequent to the merger, the Company changed its name to        “WWA Group, Inc.”

 

The        accompanying unaudited financial statements have been prepared by management in accordance        with the instructions in Form 10-QSB and, therefore, do not include all information and        footnotes required by generally accepted accounting principles and should, therefore, be        read in conjunction with the Company’s Form 10-KSB for the year ended December 31,        2006. These statements do include all normal recurring adjustments which the Company        believes necessary for a fair presentation of the statements. The interim operations are        not necessarily indicative of the results to be expected for the full year ended December        31, 2007.

 

**Note 2        – Summary of Significant Accounting Policies**

*Net        Earnings Per Common Share*- The computation of basic earnings per        common share is based on the weighted average number of shares outstanding during each        period. The computation of diluted earnings per common share is based on the weighted        average number of shares outstanding during the period, plus the common stock equivalents        that would arise from the exercise of stock options and warrants outstanding, using the        treasury stock method and the average market price per share during the period. There are        no common stock equivalents at September 30, 2007.

*Revenue        Recognition*- Revenues from commissions and services consist of        revenues earned in the Company’s capacity as agent for consignors of equipment,        incidental interest income, internet and proxy

 

purchase        fees, and handling fees on the sale of certain lots. All commission revenue is recognized        when the auction sale is complete and the Company has determined that the auction proceeds        are collectible.

 

Revenue        from shipping operations is originated from chartering of vessel MV Iron Butterfly on a        long term charter at a daily rate agreed upon.

 

7

 

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**WWA        GROUP, INC.**

**CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**September 30, 2007**

**Note 2        – Summary of Significant Accounting Policies - (continued)**

 

Revenues        from sales of equipment originate from the auctioned and private sale of equipment        inventory owned by the Company. The Company recognizes the revenue from such sales when the        sale has been invoiced, and collectability is reasonably assured. All costs of goods sold        are accounted for under direct costs.

 

***Stock-Based Compensation***

         

Effective        January 1, 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based        Payment”, which establishes accounting for equity instruments exchanged for employee        services. Under the provisions of SFAS 123(R), stock-based compensation cost is measured at        the grant date, based on the calculated fair value of the award, and is recognized as an        expense over the employees’ requisite service period (generally the vesting period of        the equity grant). Before January 1, 2006, the Company accounted for stock-based        compensation to employees in accordance with Accounting Principles Board Opinion No. 25,        “Accounting for Stock Issued to Employees,” and complied with the disclosure        requirements of SFAS No. 123, “Accounting for Stock-Based Compensation”.         The Company adopted FAS 123(R) using the modified prospective method, which requires        the Company to record compensation expense over the vesting period for all awards granted        after the date of adoption, and for the unvested portion of previously granted awards that        remain outstanding at the date of adoption.  Accordingly, financial statements for the        periods prior to January 1, 2006 have not been restated to reflect the fair value method of        expensing share-based compensation.  Adoption of SFAS No. 123(R) does not change the        way the Company accounts for share-based payments to non-employees, with guidance provided        by SFAS 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18,        “Accounting for Equity Instruments That Are Issued to Other Than Employees for        Acquiring, or in Conjunction with Selling, Goods or Services”.

 

In April        2006 the Company adopted The 2006 Benefit Plan of WWA Group, Inc. (the “Plan”),        considered by the board of directors in December 2005, which approved the registration of        2,500,000 shares of the common stock to be available for issuance under the        Plan.Since April 2006 through September 30, 2007, a total of        1,250,000 share options were granted to various consultants at an average price per share        of $0.50 of which 1,250,000 have been exercised. During the three and nine month periods        ended September 30, 2007 the Company recorded an option expense of $317,264 on applying the        Black-Scholes option valuation model and completing the required chart        information.

 

**Note 3        – Notes Receivable**

 

Notes        receivable amounted to $3,497,580 as on September 30, 2007 due to the Company from its        trading partners. Amounts in this category are due from regular consignors and sellers, its        Australian auction partner and a UAE based mining and crushing company in which WWA Group        owns an equity interest.

 

8

 

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**WWA        GROUP, INC.**

**CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**September 30, 2007**

 

**Note 4        – Income Taxes**

 

WWA        operates in the Jebel Ali Free Zone of Dubai, which is an income tax free zone. Therefore,        the profits of WWA are not taxable in Dubai. During the fourth quarter of 2004, the Company        determined that undistributed earnings from Dubai will be reinvested in the business        indefinitely and that such earnings will not be distributed to the Company. Therefore, in        accordance with APB Opinion No. 23,*Accounting for Income Taxes -        Special Areas*, no income tax provision has been recorded for the        undistributed earnings.

**Note 5        - Estimates**

 

The        preparation of financial statements in conformity with accounting principles generally        accepted in the United States of America requires management to make estimates and        assumptions that affect certain reported amounts. Accordingly, actual results could differ        from those estimates.

**Note 6        – Risks Related to Our Business and Stock**

 

Due to the        proximity of Iran, Sudan and Syria to our auction site, sales records and statistics on        regional spending on used construction equipment, there is reason to believe that some        percentage of the equipment sold at our auctions ultimately ends up in Iran, Sudan or        Syria. The U.S. State Department or OFAC could impose fines upon us or cause us to restrict        certain of our sales based on this possibility. Any such action could have a negative        impact on our reputation which might decrease shareholder value.

 

 

 

 

 

 

 

9

         

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| **ITEM 2.** | **MANAGEMENT’S DISCUSSION AND ANALYSIS** |
|-------------|------------------------------------------------|

 

**General** 

 

The        following discussion and analysis of our financial condition and results of operation        should be read in conjunction with the financial statements and accompanying notes and the        other financial information appearing elsewhere in this report. WWA Group’s fiscal        year end is December 31.

 

**Discussion and Analysis**

WWA        Group’s business strategy is to increase cash flow from operations to generate net        income to reduce payables and expand operations to new auction sites. WWA Group intends to        focus on formalizing new joint venture relationships, management arrangements, new wholly        owned facilities, and expanded auctions as the means by which to increase net cash flow.        Our new auction site in Jebel Ali is larger and capable of holding more equipment than our        current site, eliminating the previous restraint on growth. Nonetheless, our business        development strategy is prone to significant risks and uncertainties certain of which can        have an immediate impact on our efforts to increase positive net cash flow and deter future        prospects for the expansion of its business.

Implementation of our growth model will include expanding our lower cost        auction methods, such as on-line auctions, video auctions and transportation equipment only        auctions, all of which can be held on a more frequent basis than the larger equipment        auctions. While smaller in size, these auctions will not interfere with or detract from WWA        Group’s major equipment auctions, and the economics of scale at the Dubai facility        are efficient for this purpose. We have also expanded higher margin owned-equipment        trading, and buyer and seller services such as shipping and transport. Our ownership of a        shipping company and control over a large volume of equipment being moved around the world        by our regular consignors provides vertical integration opportunities that could combine        auction services with the ability to meet shipping needs.

 

Our        financial condition and results of operations depends primarily upon the volume of        industrial equipment auctioned, the prices we obtain at auction for such equipment, and the        commission rates we can attract from the consignor. Industrial equipment prices        historically have been volatile and are likely to continue to be volatile in the future,        and the commission rates in WWA Group’s primary market are subject to competition.        This price volatility and commission rate pressure can immediately affect our available        cash flow which can in turn impact the availability of net cash flow for future capital        expenditures. Our future success will depend on our ability to increase the size of our        auctions and the number of our auctions while optimizing commissions and prices realized at        auction. Should we be unable to increase gross auction sales and obtain competitive pricing        at auction then we can expect a reduction in revenue which may in turn affect the        profitability of our business.

 

10

         

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**Results of Operations**

 

During        the period from January 1, 2007 through September 30, 2007, WWA Group was engaged in        conducting un-reserved auctions for industrial equipment from its auction site located in        the Jebel Ali Free Trade Zone, Dubai, United Arab Emirates. Our regular operations also        included trading equipment for our own account, and consolidation of ship charter revenue        and expenses. WWA Group expects that over the next twelve months it will continue to hold        industrial equipment auctions at established sites and anticipates the opening of new        jointly managed auction locations. WWA Group also expects continued expansion of its        equipment trading operations in the next 12 months.

For the        three months ended September 30, 2007, WWA Group realized a diminished profit from        operations than that amount generated from operations in the comparable three month period        ended September 30, 2006. The lower operating profit for the current period can be        attributed to rent expenses paid for both our prior location and our new location in the        same month during our transition to a new auction yard in July 2007; the loss of        approximately $140,000 in ship charter revenue in the period due to dry docking;        significant ship repair expenses during the dry-docking; and share issue commission        expenses of $75,005 in the period.

WWA Group        believes that the immediate key to growing its net profit from operations is to increase        the number and size of its auctions that are scheduled through the remainder of this year        and to increase the profit from our owned equipment trading activities. However, there is        no assurance that an increase in the number and size of auctions will generate sufficient        revenue from operations or that trading in our own equipment will result in net income in        future periods.

WWA        Group’s business development strategy is prone to significant risks and uncertainties        certain of which can have an immediate impact on its efforts to realize positive net cash        flow and deter future prospects for the expansion of its business.

 

**Quarters Ended September 30, 2007 and 2006**

 

***Revenue***

 

Revenue for        the three months ended September 30, 2007 was $5,690,087 as compared to revenue of        $3,754,736 for the three months period ended September 30, 2006, an increase of 52%.        Revenue for the Nine months ended September 30, 2007 increased to $19,376,421 from        $13,224,211 for the nine months period ended September 30, 2006, an increase of 47%. The        increase in revenues over the nine month period can be primarily attributed to an increase        in the sale of equipment which rose from $6,486,393 for the period ended September 30, 2006        to $12,837,527 for the period ended September 30, 2007, an increase of 98%. Revenue from        commission and services during the nine month period ended September 30, 2007 however        decreased marginally to $5,315,352 from $5,377,818 during the nine months period ended        September 30, 2006.

 

***Gross        Profit***

 

Gross        profit for the three months ended September 30, 2007 was $1,406,022 as compared to gross        profit of $1,345,134 for the three months ended September 30, 2006, an increase of 5%. The        increase in gross profit over the comparative periods can be primarily attributed to the        increase in revenue associated with the commission and services and a higher trading        margin. Gross margins from the sale of equipment have historically ranged from 2% to 8%,        while gross margins from auction commission revenue have historically ranged from 40% to        60%.

 

11

         

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***Expenses***

 

Expenses        for the three months ended September 30, 2007 were $1,377,098 as compared to expenses of        $1,175,369 for the three months ended September 30, 2006, an increase of 17%. The growth in        expenses over the comparative periods can be attributed in part to increases in land rent        expense, salaries, mailing costs and communication expenditures. The increase in expenses        for the period was also a result of sales commission paid on sale of common stock, and        increased ship repair expense. WWA Group expects that direct costs in combination with        selling, general and administrative expenses may rise with the increase in the number and        size of auctions to be held over the next three months. However, revenue growth is expected        to outpace any increases in expenses

Depreciation and amortization expenses for the three months ended September        30, 2007 and September 30, 2006 were $199,636 and $198,539 respectively. Depreciation and        amortization expenses are expected to continue to increase as WWA Group acquires additional        assets. The anticipated construction of our new physical facility in late 2007 will add to        our future depreciation expense.

 

***Net Loss (Income)***

 

Net loss        for the three months ended September 30, 2007 was $82,847 as compared to net income of        $178,148 for the three months period ended September 2006 .The transition to a net loss in        the current quarterly period as compared to net income in the prior quarterly period is        mainly attributable to decrease in revenue from ship charter, in addition to the increased        in interest and rental expenses. WWA Group expects to return to net income over the next        three months, with an increase in revenue from an expanded auction schedule.

Net income        for the nine months ended September 30, 2007 decreased to $752,542 from $1,051,962 for the        nine months ended September 30, 2006, a decrease of 28%, mainly attributable to the        increase in land rent, decrease in ship charter revenue of $141,458 and a share issue        expense of $75,005. WWA Group anticipates net income growth over the next three months,        based on our current accelerated auction schedule and increasing trading        activity. 

**Income Tax Expense (Benefit)** 

 

The Jebel        Ali Free Zone is an income tax free zone. Therefore, the profits of WWA Group are not        taxable in Dubai. WWA Group has determined that undistributed earnings from Dubai will be        reinvested in the business indefinitely and that such earnings will not be distributed to        the U.S. parent. Therefore, in accordance with APB Opinion No. 23,*Accounting for Income Taxes - Special Areas*, no        income tax provision has been recorded for the undistributed earnings. If, in the future,        WWA Group distributes such earnings to the U.S. parent, the earnings will be taxable at the        applicable U.S. tax rates.

 

**Impact of Inflation**

 

WWA Group        has been subject to a substantial increase in yard and staff housing rent expenses in the        last 2 years, which is a result of a tremendous demand for housing and land within the        UAE’s Free Zone. However, the general market is settling down, and we have agreements        in place to stabilize these costs in the future. Therefore, we believe that we can offset        future inflationary increases in operating costs by increasing revenue and improving        operating efficiencies.

 

**Liquidity and Capital Resources**

 

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Cash flow        provided by operating activities was $4,255,028 for the nine months ended September 30,        2007 as compared to cash flow used in operating activities for nine months ended September        30, 2006 of $183,741.The transition to cash flows provided by operating activities in the        nine months ended September 30, 2007, is primarily attributable to a significant increase        in auction proceeds payable and accounts payable. Anticipated increases in revenues and        decreases in accounts receivable are expected to provide more cash flow from operations in        future periods.

 

 

 

Cash flows        used in investing activities for the nine months ended September 30, 2007 were $4,080,928        as compared to cash flow used in investing activities of $1,209,782 for the nine months        ended September 30, 2006. Cash flow used in investing activities in the nine months ended        September 30, 2007 was primarily comprised of an increase in notes receivable of $2,306,343        from advances to trading partners and to the acquisition of additional property and        equipment $1,839,277, offset by cash flow provided from the sale of equipment        $64,692.

 

Cash flows        provided by financing activities were $4,224,181 for the nine months ended September 30,        2007 as compared to cash flow used in financing activities of $1,537,633 for the nine        months ended September 30, 2006. Cash flows provided by financing activities in the nine        months ended September 30, 2007 consisted primarily of proceeds of $949,729 from issuance        of common stock, proceeds of $1,812,117 from long term loans and working capital bank        financing of $1,462,335.

WWA Group        adopted The 2006 Benefit Plan of WWA Group, Inc. in April of 2006, which approved the        registration of 2,500,000 shares of the common stock to be available for issuance under the        Plan. Under the Plan, WWA Group may issue stock, or grant options to acquire up to        2,500,000 shares of WWA Group's common stock to employees. The board of directors, at its        own discretion may also issue stock or grant options to other individuals, including        consultants or advisors, who render services to WWA Group or our subsidiaries, provided        that the services rendered are not in connection with the offer or sale of securities in a        capital-raising transaction. Further, no stock may be issued, or options granted under the        benefit plan to consultants, advisors, or other persons who directly or indirectly promote        or maintain a market for WWA Group’s stock. Since adoption, WWA Group has granted        1,250,000 options to purchase shares of our common stock, of which 1,250,000 were exercised        as of September 30, 2007.

On        September 28, 2007 WWA concluded a broker assisted private placement of 1,153,927 units at        $0.65 per unit, each unit comprised of one (1) share and one half (1⁄2) purchase        warrant that enables the holder to purchase an additional share in exchange for two half        warrants at a purchase price of $1.00 per share for a period of two years subsequent to the        effective date of this resolution. As a result of the issuance of 1,153,927 restricted        shares of common stock valued at $0.65 a share in addition to delivering 576,964 share        purchase warrants, WWA has generated an additional capital of $750,053 in cash. The cost of        this private placement was $75,005 in cash commission and issuance of 57,697 commission        shares.

WWA Group        has a working capital surplus of $255,057 as of September 30, 2007, compared to a working        capital deficit of $1,506,247 as of December 31, 2006.

On        September 30, 2007 WWA Group had auction proceeds payable of approximately $11.97 million,        and accounts payable of approximately $3.7 million.WWA Group had $7,023,851 in cash and        $3,791,669 in accounts receivable as at September 30, 2007. WWA Group believes that it has        sufficient current assets and operational cash flow to meet its obligations. WWA Group has        funded its cash needs from inception

 

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through        operations, increasing its payables, and a series of debt transactions. WWA Group can        provide no assurance that it will be able to obtain additional financing, if needed, to        meet its current obligations. If WWA Group is unable to increase its cash flows from        operating activities or obtain additional financing, it may be required to delay payment of        accounts payable or auction proceeds payable, which could negatively impact WWA        Group’s ability to attract and retain consignors for future auctions.

WWA Group        has acquired a new yard facility during the quarter ending June 30, 2007 encompassing an        area of 90,000 Sq. meters from which around 15,000 Sq. meters is allocated for permanent        office premises .WWA Group has no current plans to make any significant changes in the        number of employees.

Since        earnings will be reinvested in operations, WWA Group does not expect to pay cash dividends        in the foreseeable future.

 

WWA Group        has no defined benefit plan or contractual commitment with any of its officers or        directors.

 

**Critical Accounting Policies**

In Note 2        to the audited consolidated financial statements for the years ended December 31, 2006 and        2005 filed on Form 10-KSB with the Securities and Exchange Commission, WWA Group discusses        those accounting policies that are considered to be significant in determining the results        of operations and its financial position. WWA Group believes that the accounting principles        utilized by it conform to accounting principles generally accepted in the United States of        America.

The        preparation of financial statements requires management to make significant estimates and        judgments that affect the reported amounts of assets, liabilities, revenues and expenses.        By their nature, these judgments are subject to an inherent degree of uncertainty. On an        on-going basis, WWA Group evaluates its estimates, including those related to bad debts,        inventories, intangible assets, warranty obligations, product liability, revenue, and        income taxes. WWA Group bases its estimates on historical experience and other facts and        circumstances that are believed to be reasonable, and the results form the basis for making        judgments about the carrying value of assets and liabilities. The actual results may differ        from these estimates under different assumptions or conditions.

With        respect to revenue recognition, WWA Group applies the following critical accounting        policies in the preparation of its financial statements

***Revenue Recognition***

 

Auction        Revenues earned in WWA Group’s capacity as agent for consignors of equipment are        comprised mainly of auction commissions in the form of flat selling fees or fixed or        sliding percentages of the gross auction sale price of any consigned equipment. The        majority of auction commissions are earned as a fixed rate of the gross selling price.        Auction Revenues also include any preparation, shipping, clearing, transport and handling        charges and fees applicable to certain items of consigned equipment; incidental interest        income; buyers’ commission applicable on certain sales of items. All revenue is        recognized when the auction sale is complete and we have determined that the auction        proceeds are collectible.

Trading        revenues are defined as gross proceeds on sales of WWA Group owned or underwritten        inventory sold at auction or privately. All costs of goods sold are accounted for under        direct costs. Trading revenue can be earned and direct costs can be incurred when WWA Group        guarantees a certain net level of proceeds to a consignor. This type of revenue includes a        percentage of proceeds in excess of the guaranteed amount. If actual auction proceeds are        less than the guaranteed amount, WWA Group can

 

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incur a net        loss on the sale. Therefore, sales of equipment on a guarantee contracts are to be treated        the same as inventory for accounting purposes. Our exposure from these guarantee contracts        can vary over each guarantee contract. Losses, if any, resulting from guarantee contracts        are recorded in the period in which the relevant auction is held.

Ship        chartering revenues are contractual in nature and similar to a lease. WWA Group charters        its cargo vessel to a freight forwarding company on a flat daily fee until the end of 2009.        The shipping company is responsible for all of the fuel costs and cargo related costs, and        the risks of receipt and delivery of the cargo. WWA Group recognizes its ship charter        revenues ratably over the term of the charter contract.

**Forward Looking Statements and Factors That May Affect Future Results        and Financial Condition**

 

The        statements contained in the section titled “*Results of        Operations”*and*“Description        of Business”*, with the exception of historical facts, are        forward looking statements within the meaning of Section 27A of the Securities Act. A        safe-harbor provision may not be applicable to the forward looking statements made in this        prospectus because of certain exclusions under Section 27A (b). Forward looking statements        reflect our current expectations and beliefs regarding our future results of operations,        performance, and achievements. These statements are subject to risks and uncertainties and        are based upon assumptions and beliefs that may or may not materialize. These statements        include, but are not limited to, statements concerning:

 

|   | - | our anticipated financial performance; |
|--------|---|----------------------------------------|

|   | - | the sufficiency of existing capital resources; |
|--------|---|------------------------------------------------|

|   | - | our ability to fund cash requirements for future                        operations; |
|--------|---|-------------------------------------------------------------------------------------|

|   | - | uncertainties related to the growth of our business and the                        acceptance of our products and services; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------|

|   | - | our ability to achieve and maintain an adequate customer                        base to generate sufficient revenues to maintain and expand                        operations; |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | the volatility of the stock market and; |
|--------|---|-----------------------------------------|

|   | - | General economic conditions. |
|--------|---|------------------------------|

 

WWA Group        wishes to caution readers that its operating results are subject to various risks and        uncertainties that could cause its actual results to differ materially from those discussed        or anticipated including the factors set forth in the section entitled        “*Risk Factors*” included        elsewhere in this report. WWA Group also wishes to advise readers not to place any undue        reliance on the forward looking statements contained in this report, which reflect its        beliefs and expectations only as of the date of this report. WWA Group assumes no        obligation to update or revise these forward looking statements to reflect new events or        circumstances or any changes in its beliefs or expectations, other that is required by        law.

 

| **ITEM 3.**   | **CONTROLS AND PROCEDURES** |
|-------------------------|-----------------------------|

|   | (a)   | Evaluation of disclosure controls and procedures. |
|--------|-----------------|---------------------------------------------------|

 

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Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we evaluated the effectiveness of the design and        operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and        15d-15(e) under the Securities Exchange Act of 1934, as of September 30, 2007. Based on        this evaluation, our principal executive officer and our principal financial officer        concluded that, as of the end of the period covered by this report, our disclosure controls        and procedures were effective and adequately designed to ensure that the information        required to be disclosed by us in the reports we file or submit under the Securities        Exchange Act of 1934 is recorded, processed, summarized and reported within the time        periods specified in applicable rules and forms.

| (b)   | Changes in internal controls over financial                        reporting. |
|-----------------|-------------------------------------------------------------------------------|

During the        quarter ended September 30, 2007 there has been no change in our internal control over        financial reporting that has materially affected, or is reasonably likely to materially        affect, our internal control over financial reporting.

 

**PART        II**

 

| **ITEM 1.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

None.

 

| **ITEM 2.** | **CHANGES IN SECURITIES AND USE OF PROCEEDS** |
|-------------|-----------------------------------------------|

 

None

 

| **ITEM 3.** | **DEFAULTS UPON SENIOR SECURITIES** |
|-------------|-------------------------------------|

 

None.

 

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                        HOLDERS** |
|-------------|--------------------------------------------------------------------------------|

 

None.

| **ITEM 5.** | **OTHER INFORMATION** |
|-------------|-----------------------|

 

None.

 

| **ITEM 6.** | **EXHIBITS** |
|-------------|--------------|

 

Exhibits        required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits        on page 18 of this Form 10-QSB, and are incorporated herein by this reference.

 

 

         

         

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**SIGNATURES**

 

In        accordance with the requirements of the Securities Exchange Act of 1934, the registrant        caused this report to be signed on its behalf by the undersigned, hereunto duly authorized,        this 14th day of November, 2007.

 

 

**WWA        Group, Inc.**

 

 

/s/ Eric        Montandon

| Eric Montandon |
|----------------|

Chief        Executive Officer and Director

 

 

/s/        Digamber Naswa

Digamber        Naswa

Chief        Financial Officer, Principal Accounting Officer and Director

 

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**INDEX        TO EXHIBITS**

 

| **EXHIBIT** | **PAGE** |
|-------------|----------|

| **NO.** | **DESCRIPTION** |
|---------|-----------------|

 

| 3(i)(a) | * | Articles of Incorporation of WWA Group formally known as                        Conceptual Technologies, |
|---------|---|----------------------------------------------------------------------------------------------------------|

Inc. a Nevada corporation dated November 26, 1996 (incorporated herein by        reference

from Exhibit No. 2(i) to WWA Group's Form 10SB12G/A as filed with the        Commission on November 29, 1999).

| 3(i)(b) | * | Certificate of Amendment of the Articles of Incorporation of                        WWA Group filed on |
|---------|---|--------------------------------------------------------------------------------------------------------|

August 29, 1997 (incorporated herein by reference from Exhibit 2(ii) of WWA        Group’s

Form 10SB12G/A as filed with the Commission on November 29,        1999).

| 3(i)(c) | * Certificate of Amendment of the Articles of                        Incorporation of WWA Group (incorporated herein by reference from Exhibit                        2(iii) of WWA Group’s Form 10SB12G/A as filed with the Commission on                        November 29, 1999). |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3(i)(d) * | Certificate of Amendment to the Articles of Incorporation of                        WWA Group (incorporated herein with reference from Exhibit 3(i)(d) of WWA                        Group’s Form 10-QSB as filled with the Commission on November 20,                        2003). |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3(ii) | * | Bylaws of WWA Group adopted on November 12, 1996                        (incorporated herein by

  |
|-------|---|---------------------------------------------------------------------------------------------------------|

reference from Exhibit 2(iv) of WWA Group's Form 10SB12G/A as        filed with the Commission on November 29, 1999).

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| 10(i) | * Stock Exchange Agreement between WWA Group and World                        Wide Auctioneers, Inc. dated August 5, 2003 (incorporated herein by                        reference from the Form 8-K filed with the Commission on August 25,                        2003). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(ii) * | Purchase Agreement between World Wide Auctioneers, Ltd.,                        Geoffrey Greenless and Crown Diamond Holdings, Inc. dated June 30, 2006                        (incorporated herein by reference from the Form 8-K filed with the                        Commission on July 19, 2006). |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(iii) | *  Share Purchase Agreement between World Wide                        Auctioneers, Ltd. and Steven Edward Rogers dated December 20, 2006                        (incorporated herein by reference from the Form 8-K filed with the                        Commission on February 15, 2007).                                      |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14 | *  Code of Ethics adopted March 28, 2004                        (incorporated herein by reference from the Form 10-KSB filed with the                        Commission on March 30, 2005). |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31(a) Attached Certification of the Chief Executive Officer pursuant to Rule        13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to        Section 302 of the Sarbanes-Oxley Act of 2002.

31(b) Attached Certification of the Chief Financial Officer pursuant to Rule        13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to        Section 302 of the Sarbanes-Oxley Act of 2002.

32(a) Attached Certification of the Chief Executive Officer pursuant to 18        U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of        2002.

| 32(b) Attached | Certification of the Chief Executive Officer pursuant to 18                        U.S.C. Section 1350 as adopted pursuant to Section 906 of the                        Sarbanes-Oxley Act of 2002. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

|   | * | Incorporated by reference from previous filings of WWA                        Group. |
|--------|---|--------------------------------------------------------------------------------------|