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:December
                  31, 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 [ ]








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





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.


Title
                  of Each Class
              Outstanding
                  at December 31, 2006Common
                  Stock, par value $0.001 per share
              9,831,717







**NowAuto
                  Group, Inc****Consolidated
                  Condensed Balance Sheets**AssetsDecember
                  31,
              
              September
                  30,2006
              
              2006Current
                  AssetsCash
              
              
              45,977
              
              
              30,826Accounts
                  Receivable - Net
              
              
              2,067,787
              
              
              2,162,180Inventory
              
              
              635,187
              
              
              847,232Other
                  Current Assets
              
              
              81,305
              
              
              111,6632,830,257
              
              
              3,151,900Long
                  Term Notes Receivable
              
              
              3,620,788
              
              
              2,698,471Equipment
                  - Net
              
              
              92,244
              
              
              93,823Goodwill
              
              
              928,497
              
              
              928,4977,471,787
              
              
              6,872,691Liabilities
                  and Stockholders' EquityCurrent
                  LiabilitiesAccounts
                  Payable
              
              
              422,694
              
              
              267,060Taxes
                  Payable
              
              
              279,921
              
              
              326,964Line
                  of Credit
              
              
              1,708,200
              
              
              1,619,204Accrued
                  Payroll
              
              
              70,978
              
              
              52,343Other
                  Loans
              
              
              174,547
              
              
              136,690Total
                  Current Liabilities
              
              
              2,656,339
              
              
              2,402,261Long
                  Term Notes Payable
              
              
              2,797,207
              
              
              1,818,405Total
                  Liabilities
              
              
              5,453,546
              
              
              4,220,665Stockholders'
                  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)
              
              
              (2,704,104
              )
              
              (1,923,448
              )Total
                  Stockholder's Equity
              
              
              2,018,241
              
              
              2,652,0267,471,787
              
              
              6,872,691




**NowAuto
                    Group, Inc****Consolidated
                    Condensed Statements of Operations**3
                    months
                
                3
                    months
                
                6
                    months
                
                6
                    monthsEnded
                
                Ended
                
                Ended
                
                EndedDecember
                    31,
                
                December
                    31,
                
                December
                    31,
                
                December
                    31,2006
                
                2,005
                
                2006
                
                2005(unaudited)
                
                (unaudited)
                
                (unaudited)
                
                (unaudited)IncomeVehicle
                    & Finance Income
                2,230,859
                
                1,150,179
                
                3,950,629
                
                5,121,078Cost
                    of Goods Sold
                1,568,409
                
                856,912
                
                2,467,369
                
                3,663,180Gross
                    Profit/Loss
                662,450
                
                293,267
                
                1,483,259
                
                1,457,898ExpensesSelling
                    Costs
                698,769
                
                153,194
                
                862,556
                
                440,014General
                    and Administrative
                597,465
                
                798,769
                
                1,008,115
                
                1,237,554Write
                    off of Reserves
                
                
                213,887
                
                
                
                213,887Profit
                    before Income Taxes
                (633,785)
                
                (872,583)
                
                (387,411)
                
                (433,556)Provision
                    for Income Tax
                50,845
                
                
                
                50,845NOL
                    Carry Forward
                (50,845)
                
                
                
                (50,845)Net
                    Income (Loss)
                (633,785)
                
                (872,583)
                
                (387,411)
                
                (433,556)Earnings
                    Per Share
                (0.06)
                
                (0.11)
                
                (0.04)
                
                (0.08)







**NowAuto
                  Group, Inc**
              ****
              ******Consolidated
                  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
                  Income (Loss)
              
              
              
              
              
              
              
              
              (486,914)
              
              (486,914)Balance
                  December 31, 2006
              9,843,046
              
              9,777
              
              4,565,696
              
              0
              
              (2,557,233)
              
              2,018,240









**NowAuto
                  Group, Inc**
              ******Consolidated
                  Statements of Cash Flows**3
                  months
              
              3
                  monthsended
              
              endedDecember
                  31,
              
              December
                  31,2006
              
              2005Operating
                  ActivitiesNet
                  Income (Loss)
              
              
              (633,785
              )
              
              (1,088,124
              )Adjustments
                  to reconcile Net Income(Loss) to Net Cashused
                  in Operating
                  ActivitiesSignificant
                  Non-Cash TransactionsCommon
                  Stock for
                  services
              
              
              
              
              
              25,000Depreciation/Amortization
                  Expense
              
              
              2,681
              
              
              25,506Changes
                  in assets and liabilities(Increase)/Decrease
                  in Receivables
              
              
              94,392
              
              
              (1,571,951
              )(Increase)/Decrease
                  in Inventory
              
              
              212,045
              
              
              (145,229
              )(Increase)/Decrease
                  in Other Current Assets
              
              
              30,358
              
              
              (2,471
              )(Decrease)/Increase
                  in Accounts Payable
              
              
              154,214
              
              
              156,963(Decrease)/Increase
                  in Other Liabilities
              
              
              8,412
              
              
              939,268Net
                  Cash
                  (Used) by Operating Activities
              
              
              (131,683
              )
              
              (1,661,038
              )Investing
                  ActivitiesPurchase
                  of
                  Fixed Assets
              
              
              (1,103
              )
              
              (26,689
              )Long
                  Term Notes Receivable
              
              
              (922,318
              )(923,421
              )
              
              (26,689
              )Financing
                  ActivitiesStock
                  Subscriptions Sold/Paid
              
              
              
              
              
              1,005,500Bank
                  loan
              
              
              1,070,2551,070,255
              
              
              1,005,500Net
                  Increase/(Decrease) in Cash
              
              
              15,151
              
              
              (682,227
              )Cash,
                  Beginning of Period
              
              
              30,826
              
              
              736,91045,977
              
              
              54,683Supplemental
                  Information:Period
                  interest
              
              
              173,123
              
              
              7,852Income
                  Taxes paid
              
              
              0
              
              
              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 December 31, 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
      years


Leasehold
      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 $148,547 and $23,377
      for the quarters ended December 31, 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
      December 31, 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 December 31, 2006 the Company was
      holding financed contracts. These are shown below.


December
                  31,
              
              December
                  31,2006
              
              2005Financed
                  Contracts Receivable
              
              $
              5,278,899
              
              $
              1,620,045Allowance
                  for
                  doubtful accounts
              
              
              (30,984
              )
              
              (165,244
              )Financed
                  Contracts-net
              
              $
              5,247,915
              
              $
              1,454,801




**Note
      4. PROPERTY AND EQUIPMENT**


A
          summary
          of equipment and accumulated depreciation as follows:
 December
                    31,
                
                
                September
                    30,2006
                
                
                2006Furniture,
                    fixtures and Equipment
                
                $
                39,416
                
                $
                39,416Leasehold
                    improvements
                
                
                56,987
                
                
                55,884Computers
                    & Software
                
                
                12,292
                
                
                12,292Less
                    accumulated depreciation
                
                
                (16,450
                )
                
                (13,769
                )Net
                    Equipment
                
                $
                92,244
                
                $
                98,823


**Note
      5. GOODWILL**





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 December 31, 2006 was as follows:


Year
                  Ending June 30,
              
              2006
              
              2005$
              928,497
              
              $
              1,628,482


The
      change in Goodwill reflects the impairment of Sunburst Goodwill recorded on
      June
      30, 2006.





**Note
      6. INCOME TAXES**





The
      provision for income taxes for the fiscal quarters ended December 31, 2006
      and
      2005 were as follows below. A valuation account has been set up in the amount
      of
      the deferred asset.





Quarter
                  ended December 31,
              
              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.





On
      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 Equity


Accounts
                  Payable
              
              $
              11,744Payroll
              
              
              908Sales
                  Tax Payable
              
              
              364Loan
              
              
              15,000Total
                  Liabilities
              
              
              28,016Net
                  Equity
              
              
              1,447Total
                  Liabilities andStockholders
                  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
              
              
              100,000Non
                  Compete Covenant
              
              
              5,000Goodwill
              
              
              375,000Escrow
                  Costs
              
              
              1,735Total
                  Investment
              
              $
              751,735


**Note
      9. NAVICOM**





The
      Company has two segments, its cars sales and its GPS unit sales (Navicom).
      Currently, Navicom is in the process of changing its product brand and business
      model. Great effort has been made to seek a GPS product with more cost effective
      feature sets that will better serve its customers. During this search, daily
      operations at Navicom have been on hiatus. It is expected that operations will
      resume in the next quarter.





**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 December 31, 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 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, 2006 reflects a substantial net loss. The Company
      did
      report a profit for the year ended June 30, 2006, before impairment of Goodwill.
      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. Theodore Valenzuela serves as the COO. He receives an annual salary
      of $140,000. The other officer currently receives salary 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 December 31, 2006 the Company had 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 six months ended December 31,
      2006
      estimated credit losses as a percentage of contracts were 16.3%. 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.





*Six
      Months Ended December 31, 2006 vs. Six Months Ended December 31,
      2005*





Revenue
      for the six months ending December 31, 2006 was $3,950,629 verses revenue of
      $5,385,007 for the six months ended December 31, 2005. The decline in revenue
      was due primarily to discontinuation of the Company’s unprofitable public auto
      auction and relocation of the Company’s largest retail store during this
      period.





Revenue
      for the three months ended December 31, 2006 was $2,230,859 versus revenue
      of
      $1,272,989 for the three months ended December 31, 2005, an increase of
      approximately 75%. The increase in revenue was due primarily to higher vehicle
      sales and finance income.





The
      Company's gross profit as a percentage of sales during the six months ended
      December 31, 2006 was 38% vs. 26% for the six months ended December 31, 2005.
      The increase in gross profit margin was primarily due to the Company’s focus on
      higher margin vehicle finance sales and finance income.





During
      the three months ended December 31, 2006, the Company experienced higher than
      normal increase in bad debt expense due to higher than normal repossessions.
      While the Company believes that proper execution (or lack thereof) of its
      business practices is that most significant factor affecting credit losses,
      the
      Company also believes that general economic conditions, including but not
      limited to higher energy and fuel costs, adversely affected collection efforts
      and resulted in higher than normal vehicle repossessions during the quarter
      ended December 31, 2006.


General
      and administrative expenses as a percentage of sales were 26% for the six months
      ended December 31, 2006 and 24% for the period ended June 30, 2005. Because
      the
      Company now retains its own contracts, it created a collections department.
      Interest expense has increased substantially as a result of line of credit
      financing (See Note 15). The Company has also become more cost-effective in
      other areas. Thus, G&A costs have increased by only 2%.





Financial
      Condition


The
      following sets forth the major balance sheet accounts of the Company as of
      the
      dates specified.


December
                  2006
              
              December
                  2005Accounts
                  Receivable (net)
              
              
              5,688,575
              
              
              1,455,007Inventory
              
              
              635,187
              
              
              481,615Equipment
              
              
              92,244
              
              
              352,465Goodwill
              
              
              928,747
              
              
              1,628,482Accounts
                  Payable
              
              
              422,695
              
              
              486,388Taxes
                  Payable
              
              
              279,921
              
              
              408,826


As
      of
      June 30, 2005 the Company held no contracts. During the quarter ended September
      30, 2005 management made the decision to begin its own financing. This accounts
      for the increase in accounts receivable. Inventory rose as a result of increased
      sales. The Company had no significant increase in equipment purchase for the
      quarter. The increase noted is actually a transfer of assets. The Sunburst
      lot
      was purchased on July 7, 2005. As of that date $350,000 in fixed assets was
      transferred from other assets to equipment and depreciation was initiated.
      The
      increase in accounts payable was a result of increased volume of business and
      strained cash flow.








*Liquidity
      and Capital Resources*





During
      the twelve months ended June 30, 2006 the Company had investment equity
      infusions to shore up the lack of cash flow. 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. This has put a severe strain on the cash flow of the Company and has
      made it difficult to pay normal overhead expenses on an ongoing basis. 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 from its weekly auction and monthly payments
      from its contracts receivable portfolio. Currently, this cash flow stream is
      not
      adequate to meet weekly overhead cash needs.





*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 for doubtful accounts is based primarily
      upon
      recent historical credit loss experience, with consideration given to trends
      in
      the industry, delinquency levels, collateral values, and 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 annual report on Form 10-K, 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 December 31, 2006 this
      new system is not totally functional. The Company intends to be totally
      operational by the end of the December 31, 2007 quarter.













PART
        II
 Other
        Information
 
 Item
        1.
        Legal Proceedings
 None
 
 Item
        6.
        Exhibits
 
 31.1
        Rule
        13a-14(a) certification
 31.2
        Rule
        13a-14(a) certification
 32.1
        Rule
        Section 1350 certification





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:
                  February 14, 2007
              By:
              /s/ Scott
                MillerScott
                  Miller
                Chief
                  Executive Officer
  By:
                /s/ Faith
                  ForbisFaith
                    Forbis
                    Chief
                      Financial Officer




Exhibit
        Index
 
 31.1.
        Rule 13a-14(a) certification
 31.2.
        Rule 13a-14(a) certification
 32.1.
        Rule Section 1350 certification