UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 FORM
        10-QSB
 
 QUARTERLY
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE
        SECURITIES EXCHANGE ACTOF 1934
 
 For
                  the fiscal quarter ended:
              Commission
                  file number:September
                  30, 2006
              000-50709
 
 NOWAUTO
        GROUP, INC.
 (Exact
        name of registrant as specified in its charter)
 
 Nevada
              77-0594821(State
                  or other jurisdiction
              (I.R.S.
                  Employerof
                  incorporation)
              Identification
                  No.)
  2090
        East University, Suite 112, Tempe, Arizona 85281
 (address
        of principal executive offices, including zip code)
 
 (480)
        990-0007
 (Registrant's
        telephone number, including area code)
 
 Indicate
        by check mark whether the Registrant (1) has filed all reports to be filed
        by
        Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
        12 months (or for such shorter period that the Registrant was required to
        file
        such reports,) and (2) has been subject to such filing requirements for the
        past
        90 days. Yes x NO o
  Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule 12b-2 of the Exchange Act). Yes o No x
 
 Indicate
        the number of shares outstanding of each of the issuer's classes of common
        stock, as of he latest practicable date.
  Title
                  of Each Class
              Outstanding
                  at September 30, 2006Common
                  Stock, par value $0.001 per share
              9,789,677
  
 **NowAuto
                    Group, Inc****Consolidated
                    Condensed Balance
                    Sheets**
 
 September
                  30,
              
              June
                  30,2006
              
              2006AssetsCurrent
                  AssetsCash
              
              
              30,826
              
              
              27,433Accounts
                  Receivable - Net
              
              
              2,162,180
              
              
              1,582,495Inventory
              
              
              847,232
              
              
              624,898Other
                  Current Assets
              
              
              111,663
              
              
              95,6463,151,900
              
              
              2,330,472Long
                  Term Notes Receivable
              
              
              2,698,471
              
              
              2,592,988Equipment
                  - Net
              
              
              93,823
              
              
              40,733Goodwill
              
              
              928,497
              
              
              1,022,1476,872,691
              
              
              5,986,340Liabilities
                  and Stockholders' EquityCurrent
                  LiabilitiesAccounts
                  Payable
              
              
              267,060
              
              
              406,002Taxes
                  Payable
              
              
              326,964
              
              
              391,757Line
                  of Credit
              
              
              1,619,204
              
              
              1,168,414Accrued
                  Payroll Payable
              
              
              52,343
              
              
              56,303Other
                  Loans
              
              
              136,690
              
              
              146,554Total
                  Current Liabilities
              
              
              2,402,261
              
              
              2,169,030Long
                  Term Notes Payable
              
              
              1,818,405
              
              
              1,312,157Total
                  Liabilities
              
              
              4,220,665
              
              
              3,481,186Stockholders'
                  EquityCommon
                  Stock, authorized100,000,000
                  shares, $0.001 par value;Issued
                  and outstandingSeptember
                  30, 2006 9,843,046 shares;Paid
                  in Capital
              
              
              4,575,474
              
              
              4,575,474Retained
                  Earnings/(Deficit)
              
              
              (1,923,448
              )
              
              (2,070,319
              )Total
                  Stockholder's Equity
              
              
              2,652,026
              
              
              2,505,1546,872,691
              
              
              5,986,340




**NowAuto
                    Group, Inc**Consolidated
                    Condensed Statements of
                    Operations
  3
                    months
                
                3
                    monthsEnded
                
                EndedSeptember
                    30,
                
                September
                    30,2,006
                
                2,005(unaudited)
                
                (unaudited)IncomeVehicle
                    & Finance Income
                
                
                1,729,130
                
                
                4,112,018Cost
                    of Goods Sold
                
                
                945,858
                
                
                3,033,401Gross
                    Profit/Loss
                
                
                783,271
                
                
                1,078,617ExpensesSelling
                    Costs
                
                
                121,501General
                    and Administrative
                
                
                514,899
                
                
                767,765Write
                    off of ReservesProfit
                    before Income Taxes
                
                
                146,871
                
                
                310,852Provision
                    for Income Tax
                
                
                50,845
                
                
                100,136NOL
                    Carry Forward
                
                
                -50,845Net
                    Income (Loss)
                
                
                146,871
                
                
                210,716Basic
                  and DilutedNet
                    (Loss) per Common Share
                
                
                0.02
                
                
                0.02Weighted
                  Average number of Common Shares Outstanding
                
                
                9,789,677
                
                
                9,707,661
  
  NowAuto
                    Group, IncConsolidated
                    Stockholders' Equity
  Paid
                    in
                
                Subscriptions
                
                Accumulated
                
                TotalShares
                
                Amount
                
                Capital
                
                Receivable
                
                Deficit
                
                EquityBalance
                    June 30, 2005
                
                
                8,157,662
                
                
                8,157
                
                
                3,523,116
                
                
                0
                
                
                (1,628,393
                )
                
                1,902,880Stock
                    Scribed
                
                
                
                
                
                
                
                
                
                
                
                1,005,500
                
                
                
                
                
                1,005,500Purchase
                    of Global-E Investments
                
                
                1,550,000
                
                
                1,550
                
                
                (1,550
                )
                
                
                
                
                
                
                
                0Stock
                    for services
                
                
                50,000
                
                
                50
                
                
                24,950
                
                
                
                
                
                
                
                
                25,000Stock
                    for services
                
                
                20,000
                
                
                20
                
                
                5,180
                
                
                
                
                
                
                
                
                5,200Common
                    shares issued for cash
                
                
                26,923
                
                
                
                
                
                3,500
                
                
                
                
                
                
                
                
                3,500Common
                    shares issued for cash
                
                
                38,461
                
                
                
                
                
                5,000
                
                
                
                
                
                
                
                
                5,000Net
                    (Loss)
                
                
                
                
                
                
                
                
                1,005,500
                
                
                (1,005,500
                )
                
                (441,926
                )
                
                (441,926
                )Balance,
                    June 30, 2006
                
                
                9,843,046
                
                
                9,777
                
                
                4,565,696
                
                
                0
                
                
                (2,070,319
                )
                
                2,505,154Net
                    (Loss)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                146,871
                
                
                146,8719,843,046
                
                
                9,777
                
                
                4,565,696
                
                
                0
                
                
                (1,923,448
                )
                
                2,652,025
  
  NowAuto
                    Group, IncConsolidated
                    Condensed Stockholders'
                    Equity
  3
                    months
                
                3
                    monthsended
                
                endedSeptember
                    30,
                
                September
                    30,2006
                
                2005Operating
                    ActivitiesNet
                    Income
                
                
                146,871
                
                
                210,716Significant
                    Non-Cash TransactionsDepreciation/Amortization
                    Expense
                
                
                6,627
                
                
                11,743Changes
                    in assets and liabilities(Increase)/Decrease
                    in Receivables
                
                
                (579,685
                )
                
                (1,939,149
                )(Increase)/Decrease
                    in Inventory
                
                
                (222,334
                )
                
                (150,098
                )(Increase)/Decrease
                    in Other Current Assets
                
                
                (16,017
                )
                
                (40,406
                )(Increase)/Decrease
                    in LT Notes Receivable
                
                
                (105,483
                )(Increase)/Decrease
                    in Contract Reserves
                
                
                
                
                
                (213,887
                )(Decrease)/Increase
                    in Accounts Payable
                
                
                (138,942
                )
                
                341,875(Decrease)/Increase
                    in Other Liabilities
                
                
                (77,017
                )
                
                331,712Net
                    Cash (Used) by Operating Activities
                
                
                (985,980
                )
                
                (1,447,494
                )Investing
                    ActivitiesPurchase
                    of Fixed Assets
                
                
                (59,343
                )
                
                (64,341
                )Disposal
                    of assets
                
                
                93,65034,307
                
                
                (64,341
                )Financing
                    ActivitiesStock
                    Subscriptions Sold/Paid
                
                
                
                
                
                1,135,500Payments
                    on Shareholder loans
                
                
                
                
                
                (94,500
                )Bank
                    loan
                
                
                955,066955,066
                
                
                1,041,000Net
                    Increase/(Decrease) in Cash
                
                
                3,393
                
                
                (470,835
                )Cash,
                    Beginning of Period
                
                
                27,433
                
                
                736,91030,826
                
                
                266,075Supplemental
                    Information:Period
                    interest
                
                
                79,455Income
                    Taxes paid
                
                
                0
  
  Note
        1.
        ORGANIZATION AND BUSINESS
 
 NowAuto,
        Inc. (the Company) was organized in the state of Nevada on August 19, 1998
        under
        the name WH Holdings, Inc. On June 8, 2004 the name was changed to Automotive
        Capital Group, Inc and the Company increased its authorized common stock.
        On
        August 31, 2004 the name was changed to NowAuto, Inc.
 
 The
        Company focuses mainly on the "Buy Here/Pay Here" segment of the used car
        market. The Company primarily sells 1999 and newer model year used vehicles.
        Many of the Company's customers have limited financial resources and would
        not
        qualify for conventional financing as a result of limited credit histories
        or
        past credit problems. As of June 30, 2006, the Company had four operating
        lots
        located in metropolitan Phoenix and Tucson, Arizona. The Company also has
        a
        wholly owned subsidiary, Navicom GPS, Inc., which markets GPS tracking
        units.
 
 On
        July
        21, 2005 the Company was purchased by Global-E Investments, Inc. Since Global-E
        was a non-operating company, this purchase was accounted for as a
        recapitalization stock exchange reverse acquisition. This means that for
        legal
        purposes the continuing entity is Global-E Investments, Inc. and for
        historically accounting purposes the accounting records of Now Auto will
        be
        shown. Global-E Investments has changed its name to NowAuto Group,
        Inc.
 
 Note
        2.
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles
        of Consolidation
 
 The
        consolidated financial statements include the accounts of NowAuto Group,
        Inc.
        and its subsidiary. All significant inter-company accounts and transactions
        have
        been eliminated. The Company operates on a June 30 fiscal year.
 
 Use
        of
        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 the reported amount of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements, and the reported amounts of revenues and expenses
        during the period. Actual results could differ from those
        estimates.
 
 Concentration
        of Risk
 
 The
        Company provides financing in connection with the sale of substantially all
        of
        its vehicles. Periodically, the Company maintains cash in financial institutions
        in excess of the amounts insured by the federal government.
  
 
 Cash
        Equivalents
 
 The
        Company considers all highly liquid debt instruments purchased with maturities
        of three months or less to be cash equivalents.
 
 The
        Company originates installment sale contracts from the sale of used vehicles
        at
        its dealerships. Finance receivables are collateralized by vehicles sold
        and
        consist of contractually scheduled payments from installment
        contracts.
 
 Used
        Car Inventory
 
 Inventory
        consists of used vehicles and is valued at the lower of cost or market on
        a
        specific identification basis. Vehicle reconditioning costs are capitalized
        as a
        component of inventory. Repossessed vehicles are recorded at fair value,
        which
        approximates wholesale value. The cost of used vehicles sold is determined
        using
        the specific identification method.
 
 Equipment
 
 Property
        and equipment are stated at cost. Expenditures for additions, renewals and
        improvements are capitalized. Costs of repairs and maintenance are expensed
        as
        incurred. Leasehold improvements are amortized over the shorter of the estimated
        life of the improvement or the lease period. The lease period includes the
        primary lease term plus any extensions that are reasonably assured. Depreciation
        is computed principally using the straight-line method generally over the
        following estimated useful lives:
 
 Furniture,
                  fixtures and equipment
              3
                  to 7 yearsLeasehold
                  improvements
              5
                  to 15 years
  Property
        and equipment are reviewed for impairment whenever events or changes in
        circumstances indicate the carrying amount of an asset may not be recoverable.
        Recoverability of assets to be held and used is measured by a comparison
        of the
        carrying amount of an asset to future undiscounted net cash flows expected
        to be
        generated by the asset. If such assets are considered to be impaired, the
        impairment to be recognized is measured by the amount by which the carrying
        values of the impaired assets exceed the fair value of such assets. Assets
        to be
        disposed of are reported at the lower of the carrying amount of fair value
        less
        costs to sell.
  
 
 Sales
        Tax
 
 The
        Company pays sales taxes to local and state governmental agencies on vehicles
        sold. Calculations for sales taxes are made on an accrual basis. Vehicle
        repossessions are allowed as a deduction from taxable sales in the month
        of
        repossession. Customers often make their down payments in periodic increments
        over a period of four to six weeks. The Company does not report the sale
        for
        sales tax purposes until the down payments are fully paid. This is congruent
        with industry standard and complies with state tax codes. The Company is
        current
        with its filings of reports. The Company does owe back sales taxes. Arrangements
        have been made with all taxing authorities and the company is in full compliance
        with all of them.
 
 Income
        Taxes
 
 Income
        taxes are accounted for under the liability method. Under this method, deferred
        tax assets and liabilities are determined based on differences between financial
        reporting and tax bases of assets and liabilities and are measured using
        the
        enacted tax rates expected to apply in the years in which these temporary
        differences are expected to be recovered or settled.
 
 Revenue
        Recognition
 
 Revenues
        from the sale of used vehicles are recognized when the sales contract is
        signed,
        the customer has taken possession of the vehicle and, if applicable, financing
        has been approved.
 
 Revenue
        from GPS units devices is recognized when a unit has been ordered and shipped.
        Revenue from access time purchased is recognized ratably over the term of
        the
        access contracts. Access terms can vary from one month to 36 months. A Deferred
        Revenue account is set up for any access time paid for but not yet
        earned.
 
 Advertising
        Costs
 
 Advertising
        costs are expensed as incurred and consist principally of radio, television
        and
        print media marketing costs. Advertising costs amounted to $68,106 and $10,547
        for the quarters ended September 30, 2005 and 2006, respectively.
 
 Earnings
        per Share
 
 Basic
        earnings per share are computed by dividing net income by the average number
        of
        common shares outstanding during the period. Diluted earnings per share takes
        into consideration the potentially dilutive effect of common stock equivalents,
        such as outstanding stock options and warrants, which if exercised or converted
        into common stock would then share in the earnings of the Company.
 In
        computing diluted earnings per share, the Company utilizes the treasury stock
        method and anti-dilutive securities are excluded.
 
 Stock
        Option Plans
 
 As
        of
        September 30, 2006 the Company had no employee stock ownership
        plan.
  
 
 Repossession
        Accrual
 
 The
        repossession accrual represents the amount of the loss expected to be
        experienced upon repossession of cars adjusted by the actual loss experienced.
        The company believes that it is more profitable to keep the customer in the
        car.
        Great effort has been made to accomplish this goal and the need for repossession
        accruals is reduced.
  Note
        3.
        FINANCE AND ACCOUNTS RECEIVABLES - NET
 
 Financed
        Contract Receivable-net
 
 The
        Company originates installment sale contracts from the sale of used vehicles
        at
        its lots. These installment sale contracts typically a) include interest
        rates
        of 29.99% per annum, b) are collateralized by the vehicle sold and c) provide
        for payments over a period of 36 months. At June 30, 2005, the Company was
        not
        holding any of its own contracts. As of September 30, 2006 the Company was
        holding financed contracts. These are shown below.
 September
                    30,
                  2006
                
                June
                    30,
                  2006Financed
                      Contracts Receivable
                
                $
                4,153,493
                
                $
                3,844,182Allowance
                    for doubtful accounts
                
                
                (47,213
                )
                
                (100,000
                )Financed
                      Contracts-net
                
                $
                4,106,280
                
                $
                3,744,182
 Accounts
        Receivable - Net
 
 The
        Company's subsidiary Navicom maintains a trade accounts receivable and
        allowance for doubtful accounts as follows:
 
 September
                  30,
                2006
              
              June
                  30,
                2006Accounts
                  Receivable
              
              $
              441,431
              
              $
              432,071Less:
                  Allowance for Doubtful Accounts
              
              
              (769
              )
              
              (769
              )Net
                  Accounts Receivable
              
              $
              423,662
              
              $
              431,302Total
                  Receivables net
              
              $
              4,529,942
  Note
        4.
        PROPERTY AND EQUIPMENT
 
 A
        summary
        of equipment and accumulated depreciation as follows:
 
 September
                  30,
              
              June
                  30,2006
              
              2006Furniture,
                  fixtures and Equipment
              
              $
              39,416
              
              $
              272,567Leasehold
                  improvements
              
              
              55,884
              
              
              100,000Computers
                  & Software
              
              
              12,292Less
                  accumulated depreciation
              
              
              (13,769
              )
              
              (12,314
              )Net
                  Equipment
              
              $
              93,823
              
              $
              360,253
 
  
 
 Note
        5.
        GOODWILL (Including Recent Purchases)
 
 During
        the fiscal year ending June 30, 2005, the Company purchased the rights to
        three
        used car lots and its subsidiary Navicom Corporation. Details of these purchases
        are in a subsequent note. The company performed an analysis of its booked
        Goodwill compared to the present value of projected future profits for the
        next
        five years. Based on that analysis the recorded Goodwill will hold its value.
        The recorded Goodwill on September 30, 2006 was as follows:
 
 Quarter ending September
                  30,
              
              
              2006
              
              
              2005Navicom
                  purchase
              
              $
              214,401
              
              $
              214,401Mesa
                  Lot Purchase
              
              
              498,028
              
              
              498,028Tucson
                  Lot Purchase
              
              
              212,318
              
              
              164,318Sunburst
                  Lot Purchase
              
              
              3,750
              
              
              751,735Total
              
              $
              928,497
              
              $
              1,628,482
 
 
 In
        the
        above figures the purchase of the Sunburst lot is included in the Goodwill
        amount as of September 30, 2006.
 
 Note
        6.
        INCOME TAXES
 
 The
        provision for income taxes for the fiscal quarters ended September 30, 2006
        and
        2005 were as follows below. A valuation account has been set up in the amount
        of
        the deferred asset.
 
 Quarter
                  ended September 30,
              
              
              2006
              
              
              2005Provision
                  for income taxes:Current
                  taxes payable
              
              $
              0
              
              $
              0Change
                  in the deferred tax asset (net of the valuation account)
              
              
              0
              
              
              0Total
              
              $
              0
              
              $
              0
  Note
        7.
        STOCKHOLDERS' EQUITY
 
 Common
        Stock
 
 NowAuto,
        Inc. (the Company) was organized in the state of Nevada on August 19, 1998
        under
        the name WH Holdings, Inc. On June 8, 2004 the name was changed to Automotive
        Capital Group, Inc and the Company increased its authorized common stock
        to
        100,000,000 shares with a par value of $0.001. On August 31, 2004 the name
        was
        changed to NowAuto, Inc.
  
 
 One
        June
        30, 2004 had 14,984,544 shares outstanding. During the twelve months ended
        June
        30, 2005 the Company issued an additional 21,490,995 issued for the purchase
        of
        new lots and services rendered. 13,333,333 shares were cancelled. In the
        period
        ending June 30, 2006 1,685,384 shares were issued for capital purchases and
        services rendered. No shares have been issued since that date.
 
 NOTE
        8.
        COMPANY ACQUSITIONS
 
 Navicom
        Corporation
 
 On
        September 3, 2004 The Company issued 536,002 shares valued at $214,401 to
        purchase Navicom Corporation. Listed below is the balance sheet of Navicom
        at
        the date of purchase:
 
 AssetsCash
              
              $
              1,689Accounts
                  Receivable
              
              
              26,223Furniture
                  & Fixtures
              
              
              1,551Total
                  Assets
              
              $
              29,463
 
  
 
 Liabilities
                  and Stockholders EquityAccounts
                  Payable
              
              $
              11,744Payroll
              
              
              908Sales
                  Tax Payable
              
              
              364Loan
              
              
              15,000Total
                  Liabilities
              
              
              28,016Net
                  Equity
              
              
              1,447Total
                  Liabilities and Stockholders Equity
              
              $
              29,463
  NowAuto
        Mesa Car Lot
 
 On
        October 18, 2004 the Company assumed the lease and lot operations of a used
        car
        lot located in Mesa, Arizona. The Company issued 430,126 shares of common
        stock
        valued at $86,025 and $412,003 accounts receivable in the form of auto financing
        contracts for a total purchase price of $498,028.
 
 NowAuto
        Tucson Car Lot
 
 The
        Company assumed the lease of a used car lot located in Tucson, Arizona during
        May 2005. The Company issued $164,318 worth of accounts receivable in the
        form
        of auto financing contracts for the purchase.
 
 Sunburst
        Lot
 
 On
        January 17, 2005 the Company agreed to purchase the lot lease and name use
        (Sunburst) from Sunburst Car Company, Inc. The agreement was revised and
        finalized on March 30, 2005 and the Company paid $751,735 cash as described
        below. The Company took possession of the lot on July 7, 2005.
 
 Equipment
                  & fixtures
              
              $
              250,000Leasehold
                  Improvement
              
              
              100,000No
                  Compete Covenant
              
              
              5,000Goodwill
              
              
              375,000Escrow
                  Costs
              
              
              1,735Total
                  Investment
              
              $
              751,735
  Note
        9.
        SEGMENT REPORTING
 
 The
        Company has two segments, its cars sales and its GPS unit sales
        (Navicom).
  Following
        is an analysis of these segments for the three months ended June 30,
        2006.
  
  Cars
                
                GPS
                    Units
                
                TotalSales
                
                
                1,719,770
                
                
                9,360
                
                
                1,729,130Cost
                    of Goods Sold
                
                
                941,245
                
                
                4,613
                
                
                945,858Gross
                    Profit
                
                
                778,524
                
                
                4,747
                
                
                783,271Selling
                    Cost
                
                
                121,501
                
                
                
                
                
                121,501Administrative
                    Expenses
                
                
                410,650
                
                
                104,250
                
                
                514,899Net
                    Profit(Loss)
                
                
                246,374
                
                
                (99,503
                )
                
                146,871EPS
                    before taxes
                
                
                0.03
                
                
                (0.01
                )
                
                0.02
  Navicom
        is analyzing multiple GPS tracking platforms for potential marketable
        products.
  Note
        10.
        STOCK OPTIONS AND WARRANTS
 
 Currently
        the Company has no outstanding options or warrants.
 
 Note
        11.
        COMMITMENTS AND CONTINGENCIES
 
 Facility
        Leases
 
 The
        Company leases certain car lots and office facilities under various operating
        leases. Lot leases are generally for periods from one to three years and
        may
        contain multiple renewal options. As of June 30, 2006, the aggregate rentals
        due
        under such leases, including renewal options that are reasonably assured,
        are as
        follows:
 
 2006
              
              $
              237,6792007
              
              
              257,0102008
              
              
              257,0102009
              
              
              257,0102010
              
              
              257,010
 
 Note
        12.
        THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
 Below
        is
        a listing of the most recent accounting standards SFAS 150-154 and their
        effect on the Company.
 
 Statement
        No. 150 Accounting for Certain Financial Instruments with Characteristics
        of both Liabilities and Equity (Issued 5/03)
 
 This
        Statement establishes standards for how an issuer classifies and measures
        certain financial instruments with characteristics of both liabilities and
        equity.


Statement
      No. 151 Inventory Costs-an amendment of ARB No. 43, Chapter 4 (Issued 11/04)





This
      statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing,
      to
      clarify the accounting for abnormal amounts of idle facility expense, freight,
      handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter
      4, previously stated that "...under some circumstances, items such as idle
      facility expense, excessive spoilage, double freight and re-handling costs
      may
      be so abnormal ass to require treatment as current period charges...." This
      Statement requires that those items be recognized as current-period charges
      regardless of whether they meet the criterion of "so abnormal." In addition,
      this Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the normal capacity of the production
      facilities.





Statement
      No. 152 Accounting for Real Estate Time-Sharing Transactions (an amendment
      of FASB Statements No. 66 and 67)





This
      Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate,
      to reference the financial accounting and reporting guidance for real estate
      time-sharing transactions that is provided in AICPA Statement of Position (SOP)
      04-2, Accounting for Real Estate Time-Sharing Transactions.





This
      Statement also amends FASB Statement No. 67, Accounting for Costs and Initial
      Rental Operations of Real Estate Projects, states that the guidance for (a)
      incidental operations and (b) costs incurred to sell real estate projects does
      not apply to real estate time-sharing transactions. The accounting for those
      operations and costs are subject to the guidance in SOP 04-2.





Statement
      No. 153 Exchanges of Non-monetary Assets (an amendment of APB Opinion No.
      29)





The
      guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is
      based on the principle that exchanges of non-monetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in that Opinion,
      however, includes certain exceptions to the principle. This Statement amends
      Opinion 29 to eliminate the exception for non-monetary exchanges of similar
      productive assts and replaces it with a general exception for exchanges of
      non-monetary assets that do not have commercial substance. A non-monetary
      exchange has commercial substance if the future cash flows of the entity are
      expected to change significantly as a result of the exchange.





Statement
      No. 154 - Accounting Changes and Error Corrections (a replacement of APB Opinion
      No. 20 and FASB Statement No. 3)










This
      Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement
      No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes
      the requirements for the accounting for and reporting of a change in accounting
      principle. This Statement applies to all voluntary changes in accounting
      principle. It also applies to changes required by an accounting pronouncement
      in
      the unusual instance that the pronouncement does not include specific transition
      provisions. When a pronouncement includes specific transition provisions, those
      provisions should be followed.





The
      adoption of these new Statements is not expected to have a material effect
      on
      the Company's current financial position, results or operations, or cash
      flows.





Note
      13.
      GOING CONCERN





The
      accompanying financial statements have been prepared assuming that the company
      will continue as a going concern. The Company sustained a material loss in
      the
      year ended June 30, 2005. This loss has continued through June 30, 2006. This
      raised substantial doubt about the Company's ability to continue as a going
      concern. The financial statements do not include any adjustments that might
      result from this uncertainty.





Management
      has made efforts to improve the profitability of the Company by increasing
      the
      margins on cars sold. They have also hired new finance and accounting personnel
      to better track the Company's profitability and negotiate selling contracts.
      Investor funds have been solicited to maintain cash flows until the Company
      becomes profitable. The quarter ended December 31, 2005 reflected a substantial
      net loss. The Company did report a profit for the year ended June 30, 2006;
      however, the Company needs to attract equity investors to continue in existence.
      No assurance can be made that these investors will be forthcoming.




Note
      14.
      Compensation of Officers





Scott
      Miller, CEO entered into an agreement with the company on January 20, 2005
      for
      $250,000 as a retention bonus. The company has been unable to honor the full
      agreement. Currently, Mr. Miller receives a salary of $130,000 per year. He
      drives a company-owned vehicle most of the time as does other company
      management. The other officers currently receive salaries of less than $100,000.





Note
      15.
      Contract Financing





During
      the quarter ended March 31, 2006 the Company initiated relations with a new
      finance company to finance installment contracts from customers. The monies
      advanced are based upon the contract price and vary per car. The individual
      car
      is used as collateral for the advanced funds. Substantially all of the
      installment contracts financed requires the Company's customers to make their
      monthly payments via ACH (automatic account withdrawal). The Company pays a
      variable interest rate over the Prime Rate for its financing. The finance
      company receives all of the payments from the customers, removes its portion
      (interest and principal) and then makes the remainder available for the Company
      to pull from when needed. The Company retains ownership of these contracts
      and
      is active in the collection of delinquent accounts from these contracts. The
      Company also has contracts, which it administers itself.





Item
      2.
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations





The
      following discussion should be read in conjunction with the Company's consolidated
      financial statements and notes thereto appearing elsewhere in this report.





Forward-looking
      Information


The
        Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
        for
        certain forward-looking statements. Certain information included in this
        Quarterly Report on Form 10-QSB contains, and other materials filed or to
        be
        filed by the Company with the Securities and Exchange Commission (as well
        as
        information included in oral statements or other written statements made
        or to
        be made by the Company or its management) contain or will contain,
        forward-looking statements within the meaning of Section 21E of the Securities
        Exchange Act of 1934, as amended, and Section 27A of the Securities Act of
        1933,
        as amended. The words "believe," "expect," "anticipate," "estimate," project"
        and similar expressions identify forward-looking statements, which speak
        only as
        of the date the statement was made. The Company undertakes no obligation
        to
        publicly update or revise any forward-looking statements. Such forward-looking
        statements are based upon management's current plans or expectations and
        are
        subject to a number of uncertainties and risks that could significantly affect
        current plans, anticipated actions and the Company's future financial conditions
        and results. As a consequence, actual results may differ materially from
        those
        expressed in any forward-looking statements made by or on behalf of the Company
        as a result of various factors. Any forward-looking statements are made pursuant
        to the Private Securities Litigation Reform Act of 1995 and, as such, speak
        only
        as of the date made.
 
 Overview
 
 Since
        2004, NowAuto Group, Inc., a Nevada corporation (the "Company") is a publicly
        held retailer focused on the "Buy Here/Pay Here" segment of the used vehicle
        market. The Company generally sells 1999 and newer model-year used vehicles
        and
        provides financing for substantially all of its customers. Many of the Company's
        customers have limited financial resources and would not qualify for
        conventional financing as a result of limited credit histories or past credit
        problems. As of September 30, 2006 the Company has four stores, all of
        which are located in the State of Arizona.
  
  The
        market for used vehicle sales in the United States is significant. Used vehicle
        retail sales typically occur through franchised new vehicle dealerships that
        sells used vehicles, or independent used vehicle dealerships. The Company
        operates in the "Buy Here/Pay Here" segment of the independent used vehicle
        sales and finance market. Buy Here/Pay Here dealers sell and finance used
        vehicles to individuals with limited credit histories or past credit problems.
        Buy Here/Pay Here dealers typically offer their customers certain advantages
        over more traditional financing sources, such as broader and more flexible
        credit terms, attractive payment terms, including scheduling payments on
        a
        weekly or bi-weekly basis to coincide with a customer's payday, and the ability
        to make payments in person, an important feature to individuals who may not
        have
        checking accounts. In turn, interest rates on vehicle loans provided by the
        Company are generally higher than those offered to individuals who purchase
        from
        other new or used vehicle dealers or who have better credit
        histories.
 
 The
        Company's primary focus is on collections. The Company is responsible for
        its
        own collections through its internal collection department with supervisory
        involvement of the corporate office. For the three months ended September
        30,
        2006 estimated credit losses as a percentage of contracts were 6%. The Company
        intends to increase the focus of store management on credit quality and on
        collections. In addition to the experience of store management and the seasoning
        of the customer base, credit losses are also impacted, to some degree, by
        economic conditions in the markets in which the Company serves. In recent
        months, energy costs have risen at a rate much faster than the general rate
        of
        inflation. While the Company believes the most significant factor affecting
        credit losses is the proper execution (or lack thereof) of its business
        practices, the Company also believes that higher energy and fuel costs have
        a
        negative impact on collection results.
 
 Hiring,
        training and retaining qualified personnel are critical to the Company's
        success. The number of trained managers the Company has at its disposal will
        limit the rate at which the Company adds new stores. Excessive turnover,
        particularly at the store manager level, could impact the Company's ability
        to
        add new stores. During the twelve months ended June 30, 2006 the Company
        added
        resources to train and develop personnel. The Company expects to continue
        to
        invest in the development of its workforce.
 
 The
        Company also offers GPS tracking services through its NaviCom GPS, Inc.
        subsidiary that allows users, including vehicle dealers and others, to locate,
        track and monitor motor vehicles and other personal property. Originally
        organized as a reseller of GPS products for the Company's Buy Here/Pay Here
        operations and a small group of external customers, NaviCom GPS, Inc.
        specializes in tracking and monitoring solutions for fleet management, law
        enforcement and finance applications as well as tracking vehicles.
  
  Three
        Months Ended September 30, 2006 vs. Three Months Ended September 30,
        2005
  Revenue
        from financed vehicles generally fall in a price range of $7,000 to $9,000.
        Vehicle and finance sales represented 99% of revenue for the period and NaviCom
        GPS, Inc. is less than 1%.
 
 The
        Company's gross profit as a percentage of sales during the three months ended
        September 30, 2006 was 45% vs. 26% for the period ended September 30,
        2005.
 
 General
        and administrative expenses as a percentage of sales were 36% for the three
        months ended September 30, 2006 and 18% for the period ended September 30,
        2005.
Because
        the Company now retains its own contracts, it created a collections department,
        the cost of which represents the increase in general and administrative
        expenses.Regulatory oversight expenses may affect this as the Company
        grows.
 
 Financial
        Condition
  The
        following sets forth the major balance sheet accounts of the Company as of
        the
        dates specified.
 
 September
                  30,2006
              
              June 30,2006Accounts
                  Receivable (net)
              
              
              4,860,650
              
              
              4,175,483Inventory
              
              
              847,232
              
              
              624,898Equipment
              
              
              93,823
              
              
              40,733Goodwill
              
              
              928,747
              
              
              1,022,147Accounts
                  Payable
              
              
              267,060
              
              
              406,002Taxes
                  Payable
              
              
              326,964
              
              
              391,757
  
 
 Liquidity
        and Capital Resources
 
 The
        Company has not had any investments since September 30, 2005. Since the middle
        of August 2005 the company has also kept most of its contracts as opposed
        to
        selling the contracts to third parties. During the three month period ended
        March 31, 2006 the Company executed a finance agreement with an independent
        finance company to fund the Company's installment contracts. Without a source
        to
        finance or purchase the contracts the Company has only as its cash flow cash
        sales monthly payments from its contracts receivable portfolio.
 
 Critical
        Accounting Policies
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires the Company to
        make
        estimates and assumptions in determining the reported amounts of assets and
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from the Company's
        estimates. The Company believes the most significant estimate made in the
        preparation of the accompanying consolidated financial statements relates
        to the
        determination of is allowance for doubtful accounts, which is discussed
        below.
 
 The
        Company maintains an allowance for doubtful accounts on an aggregate basis
        at a
        level it considers sufficient to cover estimated losses in the collection
        of its
        finance receivables. The allowance doubtful accounts is based primarily upon
        recent historical credit loss experience, with consideration given to trends
        in
        the industry, delinquency levels, collateral values, economic conditions
        and
        collections practices. The allowance for doubtful accounts is periodically
        reviewed by management with any changes reflected in current operations.
        Although it is at least reasonably possible that events or circumstances
        could
        occur in the future that are not presently foreseen which could cause actual
        credit losses to be materially different from the recorded allowance for
        credit
        losses, the Company believes that it has given appropriate consideration
        to all
        factors and has made reasonable assumptions in determining the allowance
        for
        doubtful accounts.
 
 Recent
        Accounting Pronouncements
 
 In
        December 2004, The Financial Accounting Standards Board ("FASB") issued
        Statement of Financial Accounting Standards 123R, "Share-Based Payment" (SFAS
        123R), which is a revision of SFAS 123. SFAS 123R supersedes APB Opinion
        No. 25.
        Generally, the approach in SFAS 123R is similar to the approach described
        in
        SFAS 123, except that SFAS 123R requires all share-based payments to employees,
        including grants of employee stock options, to be recognized in the income
        statements based on fair values. Pro forma disclosure is no longer an
        alternative under SFAS 123R. SFAS 123R was originally issued with the
        implementation required for interim and annual periods beginning after June
        15,
        2005. One April 15, 2005 the Securities and Exchange Commission delayed the
        required effective date of SFAS 123R to the beginning of the first fiscal
        year
        that begins after June 15, 2005.
  
  The
        Company has a policy of immediate compliance with all new accounting standards.
        It has complied with these new requirements since the beginning of its prior
        fiscal year, July 1, 2004.
 
 Seasonality
 
 The
        Company's vehicle sales and finance business is seasonal in nature. The period
        October through December is historically the slowest period for vehicle sales.
        Many of the Company's operating expenses such as administrative personnel,
        rent
        and insurance are fixed and cannot be reduced during period of decreased
        sales.
        Conversely, the period January through May is historically the busiest time
        for
        vehicle sales as many of the Company's customers use income tax refunds as
        down
        payment on the purchase of a vehicle.
 
 Item
        3.
        Quantitative And Qualitative Disclosures about Market Risk
 
 As
        of
        March 31, 2006 the Company had obtained long term institutional financing
        in the
        form of collateral debt, and as such the Company's earnings are impacted
        by
        interest paid. Interest rates charged by the Company on the vehicles financed
        by
        the Company are fixed and are below lending rate regulations in the State
        of
        Arizona.
 
 Item
        4.
        Controls and Procedures
 
 The
        Company's management has evaluated the effectiveness of the design and operation
        of its financial and operating controls and procedures as of the end of the
        period covered by this quarterly
        report on Form 10-QSB, and, based on their evaluation have concluded that
        these
        controls and procedures were not effective as a result of weakness in the
        information technology ("IT") controls.
 
 During
        the twelve months ended June 30, 2006 the Company made a number of improvements
        in the IT area including (i) hiring a seasoned chief accountant; (ii) installing
        new software programs specific to the Company's business; and (iii) improving
        operational reporting procedures and controls. While the Company's management
        believes improvements have been made, as of the end of June 30, 2006 this
        new
        system is not totally functional. The Company intends to be totally operational
        by the end of the June 30, 2007 quarter.
  
  SIGNATURES
 
 Pursuant
          to the requirements of the Securities Exchange Act of 1934, the registrant
          has
          duly caused this report to be signed on is behalf by the undersigned thereunto
          duly authorized.
  NOWAUTO
                    GROUP, INC.Dated: November
                    16, 2006
                By:
                /s/ Scott
                  MillerScott
                  MillerChief
                    Executive Officer
 By:
                  /s/ Faith
                    ForbisFaith Forbis
                    Chief Financial
                      Officer