UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended September 30, 2012.
o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from
to
.
Commission file number: 000-26927
WWA GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada
77-0443643
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
700 Lavaca Street, Suite 1400 Austin, Texas 78701
(Address of principal executive offices) (Zip Code)
(480) 505-0070
(Registrant’s telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Yes þ No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes þ No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act:
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act): Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date. The number of shares outstanding of the issuer’s common stock, $0.001 par value (the
only class of voting stock), at November 14, 2012, was 23,841,922.
TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
Item1.
Financial Statements:
3
Condensed Consolidated Balance Sheets as of
4
September 30, 2012(Unaudited) and December 31, 2011 (audited)
Condensed Unaudited Consolidated Statements of Income for the
5
three and nine months ended September 30, 2012 and September 30, 2011
Condensed Unaudited Consolidated Statements of Cash Flows for the
6
nine months ended September 30, 2012 and September 30, 2011
Notes to Condensed Unaudited Consolidated Financial Statements
7
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
17
Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
23
Item 4.
Controls and Procedures
23
PART II-OTHER INFORMATION
Item 1.
Legal Proceedings
24
Item 1A.
Risk Factors
24
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
26
Item 3.
Defaults Upon Senior Securities
26
Item 4.
Mine Safety Disclosures
26
Item 5.
Other Information
26
Item 6.
26
27
Index to Exhibits
28
2
PART I – FINANCIAL INFORMATION
ITEM 1.
As used herein, the terms “WWA Group”, “we,” “our,” and “us” refer to WWA Group, Inc., a Nevada
corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited
financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of operations for the periods presented.
The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the full year.
3
WWA GROUP, INC.
Condensed Consolidated Balance Sheets
September 30,
December 31,
Assets
2012
2011
(Unaudited)
(Audited)
Current assets:
Cash
$
2,350
$
49,010
Receivables, net
-
-
Advances to suppliers
-
-
Inventories
-
-
Prepaid expenses
-
32,406
Notes receivable
-
-
Other current assets
7,260
14,719
Total current assets
9,610
96,136
Property and equipment, net
-
-
Goodwill
-
181,250
Notes receivable
-
-
Investment in related party entity
-
-
Total Assets
$
9,610 $
277,386
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payables
$
- $
27,856
Accrued expenses
6,697
170,563
Line of credit
-
-
Short Term Debt - Notes Payable
-
361,840
Current maturities of long-term debt
-
-
Total current liabilities
6,697
560,259
Long-term debt
$
- $
-
Total liabilities
6,697
560,259
Commitments and contingencies
$
- $
-
Stockholders' equity:
Common stock, $0.001 par value, 50,000,000 shares
authorized; 23,841,922 and 22,591,922 shares
Respectively issued and outstanding
23,842
22,592
Additional paid-in capital
4,472,830
4,449,080
Retained earnings
(4,493,758)
(4,650,299)
Non-controlling interest
-
(104,247)
Total stockholders' equity (deficit):
2,913
(282,874)
Total liabilities and stock holders' equity
$
9,610 $
277,386
See accompanying condensed notes to consolidated reviewed financial statements.
4
WWA GROUP, INC.
Consolidated Statements of Income
Three months
Ended Sept. 30
Nine months
Ended Sept. 30
Unaudited
Unaudited
Unaudited
Unaudited
2012
2011
2012
2011
Revenues from commissions and services
$
-
$
-
$
-
$
-
Revenues from sales of equipment
-
-
-
-
Revenues from Ship Charter
-
-
-
-
Total revenues
$
-
$
-
$
-
$
-
Direct costs - commissions and services
-
-
-
-
Direct costs - sales of equipment
-
-
-
-
Gross profit
$
-
$
-
$
-
$
-
Operating expenses:
General, selling and administrative
9,228
4,833
76,153
19,517
expenses
Salaries and wages
-
-
-
-
Selling expenses
-
-
-
-
Depreciation and amortization expense
-
-
-
-
Total operating expenses
$
9,228
$
4,833
$
76,153
$
19,517
$
(9,228)
$
(4,833)
$ (76,153)
$ 19,517)
(Loss) income from operations
Other income (expense):
Interest expense
-
-
-
-
Impairment of Notes receivables
-
-
-
(1,711,003)
Gain (loss) on Equity investment
-
(20,106)
105,168
(404,956)
Interest income
-
48,345
-
48,345
Other income (expense)
10,000
0
10,565
(2)
Total other income (expense)
10,000
28,239
211,733
(2,067,615)
Income before income taxes
773
23,407
135,579
(2,087,132)
Provision for income taxes
$
-
$
-
$
-
$
-
Net income (loss) from operations
$
773
$ (23,407)
$ 135,579
$ (2,087,132)
Basic earnings (loss) per common share
$
0.00
$
0.001
$
0.01
$
(0.09)
Diluted earnings per common share
$
-
$
-
$
-
$
-
Weighted average shares - Basic
23,841,922
22,591,922
23,841,922
22,591,922
Weighted average shares - Diluted
23,841,922
22,591,922
23,121,119
22,591,922
Net Income (Loss)
$
773
$ (23,407)
$ 135,579
$ (2,087,132)
Other Comprehensive income (loss)
$
-
$
-
$
-
$
-
Total Comprehensive income (loss)
$
773
$ (23,407)
$ 135,579
$ (2,087,132)
See accompanying condensed
notes to consolidated reviewed
financial statements.
5
WWA GROUP, INC.
Condensed Consolidated Statements of Cash Flow
(Unaudited)
Nine Months Ended Sept. 30,
2012
2011
Cash flows from operating activities:
Net income ( loss)
$
135,579 $
(2,087,132)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization
-
-
(Gain) loss on disposition of assets
-
-
(Gain) loss on equity investment
(105,168)
404,956
Difference in retained earnings due to non-consolidation of IDVC
20,961
-
Changes in operating assets and liabilities:
Decrease (Increase) in:
Accounts receivable
-
-
Advance to suppliers
-
-
Inventories
-
-
Prepaid expenses
32,406
-
Other current assets
7,459
48,345
Impairment of notes receivable
-
1,711,003
Increase (decrease) in:
Auction proceeds payable
-
-
Accounts payable
(27,856)
-
Accrued liabilities
(163,866)
(18,750)
Net cash used in operating activities
(100,485)
(38,269)
Cash flows from investing activities:
Purchase of property and equipment
-
-
(Increase) decrease in not receivable
-
33,000
(Increase) decrease in goodwill
181,250
-
(Increase) decrease in non-controlling interest
104,247
-
Proceeds from sale of fixed assets
-
-
Net cash provided by investing activities
285,497
33,000
Cash flows from financing activities:
Increase (decrease) in line of credit
-
-
Payments/Proceeds from short-term notes payable
(361,840)
2,144
Debt settlement by issuance of equity investment
105,168
-
Debt settlement by issuance of common stock
25,000
-
Net cash provided by (used in) financing activities
(231,672)
2,144
Net decrease in cash and cash equivalents
(46,660)
(3,125)
Cash and cash equivalents at beginning of year
49,010
3,835
Cash and cash equivalents at end of period
$
2,350
$
710
See accompanying condensed notes to consolidated reviewed financial statements.
6
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE A – ORGANIZATION AND BASIS OF PRESENTATION
WWA Group, Inc., (“WWA Group”) operated through October 31, 2010 in Jebel Ali, Dubai, United Arab
Emirates (U.A.E) under a trade license from the Jebel Ali Free Zone Authority. Operations consisted of
auctioning off used and new heavy construction equipment, transportation equipment and marine
equipment, the majority of which on a consignment basis. During the year ended December 31, 2011,
subsequent to October 31, 2010 WWA Group’s operations primarily consisted of focusing on developing
its subsidiary, and assisting in the growth of its investment entity.
On October 31, 2010, WWA Group sold its 100% interest in its wholly owned subsidiaries, World Wide
and Crown to Seven International Holdings, Ltd. (“Seven”), a Hong Kong based investment company for
an assumption by Seven of all the assets and liabilities of the World Wide subject to certain exceptions.
The disposition did not affect WWA Group’s interest in Asset Forum, LLC., its ownership of proprietary
on-line auction software or its equity interest in Infrastructure Developments Corp. (“Infrastructure”).
On April 14, 2010, Intelspec International, Inc. (“Intelspec”), our former minority owned unconsolidated
subsidiary, concluded an agreement with Infrastructure, a publicly traded company, pursuant to which
Intelspec became a subsidiary of Infrastructure. WWA Group acquired an approximately 22% interest in
Infrastructure as a result of the transaction. In July 2010, WWA Group sold 4,000,000 shares of
Infrastructure at a value of $320,000 reducing WWA Group’s investment to 17.75%. Further on
November 21, 2011 WWA Group acquired 165,699,842 shares of common stock of Infrastructure on
conversion of WWA Group’s convertible promissory note. On December 31, 2011 WWA Group owned
63.38% of Infrastructure making it a controlling shareholder of Infrastructure causing Infrastructure’s
financials to be consolidated with those of WWA Group, Inc. However, as of September 30, 2012 WWA
Group’s shareholding in Infrastructure has decreased to 29.62% due to certain debt settlements amounting
to a disposition of an aggregate of 67,509,667 IDVC shares. Since WWA Group is no longer a controlling
shareholder it no longer consolidates its accounts with that of Infrastructure as of September 30, 2012.
WWA Group includes the accounts of its wholly owned subsidiary, Asset Forum LLC.
The consolidated financial statements present the financial position, results of operation, changes in
stockholder’s equity and cash flows of WWA Group and its subsidiaries. All significant inter-company
balances and transactions have been eliminated.
NOTE B – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and liabilities in the normal course of business. Accordingly, they
do not include any adjustments relating to the realization of the carrying value of assets or the amounts
and classification of liabilities that might be necessary should WWA Group be unable to continue as a
going concern. WWA Group has accumulated losses and working capital and cash flows from operations
are negative which raises doubt as to the validity of the going concern assumptions. These financials do
not include any adjustments to the carrying value of the assets and liabilities, the reported revenues and
expenses and balance sheet classifications used that would be necessary if the going concern assumption
were not appropriate; such adjustments could be material.
7
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of WWA Group and its subsidiaries is presented to assist
in understanding WWA Group’s financial statements. The financial statements and notes are
representations of WWA Group’s management who is responsible for the integrity and objectivity of the
financial statements. These accounting policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial statements.
Basis of Presentation
The consolidated financial statements present the financial position, results of operation, changes in
stockholder’s equity and cash flows of WWA Group and its subsidiaries. All significant inter-company
balances and transactions have been eliminated. Investments in entities in which WWA Group can
exercise significant influence, but does not own a majority equity interest or otherwise control, are
accounted for using the equity method and are included as investments in equity interests on the
consolidated balance sheets. Effective July 1, 2009, WWA Group adopted the Accounting Standards
Codification (the “Codification”), as issued by the FASB. The Codification became the single source of
authoritative generally accepted accounting principles (“GAAP”) in the U.S.
Cash and Cash Equivalents
WWA Group considers all highly liquid investments purchased with maturity of three months or less to
be cash equivalents.
As of September 30, 2012, there were no cash and cash equivalents held with a bank as compensating
balance against borrowing arrangements.
Concentration of Credit Risk
WWA Group’s financial instruments that are exposed to concentrations of credit risk consist primarily of
cash and cash equivalents, accounts receivable, and investments. WWA Group’s cash and cash
equivalents are maintained with high-quality international banks and financial institutions. WWA Group
believes no significant concentration of credit risk exists with respect to these cash investments.
WWA Group routinely assesses the financial strength of its customers and provides an allowance for
doubtful accounts as necessary. Credit losses have been minimal to date.
Accounts Receivable and Allowance for Doubtful Accounts
WWA Group grants credit terms in the normal course of business to its customers. Accounts receivables
are stated at the amount management expects to collect from outstanding balances after discounts and bad
debts, taking into account credit worthiness of customers and history of collection.
The allowance for doubtful accounts is based on specifically identified amounts that management
believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be
required. No allowance for doubtful accounts is provided as company is collecting amount without
default.
8
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory
Inventories consist of equipment to be sold in auctions and otherwise, stated at the lower of cost or
market. The cost is determined by specific identification method. Cost includes purchase price, freight,
insurance, duties and other incidental expenses incurred in bringing inventories to their present location
and condition. WWA Group records a reserve if the fair value of inventory is determined to be less than
the cost.
Property and Equipment
Property and equipment are stated at cost less depreciation and provision for impairment where
appropriate. Depreciation expense is computed using the straight-line method over estimated useful lives
of three to five years except for the vessel in which case the estimated useful life is twenty years. Gains
and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of
disposal. All repair and maintenance costs are expensed as incurred.
Impairment of Long-Lived Assets
WWA Group reviews long-lived assets such as property, equipment, investments and definite-lived
intangibles for impairment annually and whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. As required by Statement FASB Accounting Standard
Codification 360, WWA Group uses an estimate of the future undiscounted net cash flows of the related
asset or group of assets over their remaining economic useful lives in measuring whether the assets are
recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the
asset. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash
flows that are independent of other groups of assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value, less the estimated costs to sell. In addition, depreciation of the asset
ceases. During the nine months period ended September 30, 2012, no significant impairment of long-lived
assets was recorded.
Investment in Equity Interest
WWA Group has approximately a 29.62% shareholding in its equity investment in Infrastructure as of
September 30, 2012. During the year ended December 31, 2010 the company had maintained the accounts
under the equity method of accounting whereby WWA Group recorded its proportionate share of the net
income or loss of the equity interest up to June 30, 2010. On November 21, 2011WWA Group converted
its Notes Receivable into an equity investment and received 165,699,842 shares increasing its interest to a
63% interest in Infrastructure. Since WWA Group became a majority share holder of Infrastructure as of
November 21, 20111 it consolidated its financials with those of Infrastructure as of December 31, 2011
and March 31, 2012. As of September 30, 2012 WWA Group no longer consolidates its accounts with
those of Infrastructure due the decrease in its interest and the full impairment of its remaining equity
investment in Infrastructure.
9
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investment in Related Party
WWA Group did not have any investment in related party as of September 30, 2012. Until October 31,
2010 WWA Group accounted for its equity investment in a foreign affiliate using the fair value
measurement principles. WWA Group reviews its investments annually for impairment and records
permanent impairments as a loss on the income statement.
Revenue Recognition
Revenues from commissions and services consist of revenues earned in WWA Group’s capacity as agent
for consignors of equipment, incidental interest income, internet and proxy purchase fees, and handling
fees on the sale of certain lots. All commission revenue is recognized when the auction sale is complete,
the equipment is delivered to the buyer, and WWA Group has determined that the auction proceeds are
collectible. Revenues from sales of equipment originate from the auctioned sale of equipment inventory
owned by WWA Group. WWA Group recognizes the revenue from such sales when the auction has been
completed, the equipment has been delivered to the purchaser, and collectability is reasonably assured.
All costs of goods sold are accounted for under direct costs.
Revenues from sales of equipment originate from the auctioned and private sale of equipment inventory
owned by the Company. WWA Group recognizes the revenue from such sales when the sale has been
invoiced, the equipment has been delivered to the purchaser, and collectability is reasonably assured. All
costs of goods sold are accounted for under direct costs
Income Taxes
Deferred income taxes are determined based on the differences between the financial reporting and tax
bases of assets and liabilities and are measured using the currently enacted tax rates and laws. WWA
Group records a valuation allowance against particular deferred income tax assets if it is more likely than
not that those assets will not be realized. The provision for income taxes comprises WWA Group’s
current tax liability and change in deferred income tax assets and liabilities.
Significant judgment is required in evaluating WWA Group’s uncertain tax positions and determining its
provision for income taxes. WWA Group establishes reserves for tax-related uncertainties based on
estimates of whether, and the extent to which, additional taxes will be due. These reserves are established
when WWA Group believes that certain positions might be challenged despite its belief that its tax return
positions are in accordance with applicable tax laws. WWA Group adjusts these reserves in light of
changing facts and circumstances, such as the closing of a tax audit, new tax legislation, or the change of
an estimate. To the extent that the final tax outcome of these matters is different than the amounts
recorded, such differences will affect the provision for income taxes in the period in which such
determination is made. The provision for income taxes includes the effect of reserve provisions and
changes to reserves that are considered appropriate, as well as the related net interest and penalties.
10
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Share-Based Compensation
For stock-based awards granted on or after January 1, 2006, WWA Group records stock-based
compensation expense based on the grant date fair value, estimated in accordance with the provisions of
ASC 718 and ASC 505-50.
Under the 2006 Benefit Plan of WWA Group, Inc., WWA Group may issue stock, or grant options to
acquire, up to 2,500,000 shares of WWA Group's common stock to employees or other individuals
including consultants or advisors, who render services to WWA Group or our subsidiaries. As of
December 31, 2011 1,250,000 registered securities remained available for issuance or grant under the
Plan. On June 6, 2012 WWA Group authorized and approved the issuance of remaining 1,250,000
common shares available pursuant to the Plan valued at $0.02 a share.
.
Foreign Exchange
WWA Group’s reporting currency is the United States dollar. WWA Group’s functional currency is also
the U.S. Dollar. (“USD”) Transactions denominated in foreign currencies are translated into USD and
recorded at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are translated into USD
at the foreign exchange rates prevailing at the balance sheet date. Realized and unrealized foreign
exchange differences arising on translation are recognized in the income statement.
11
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value Measurements
Effective July 1, 2008, WWA Group adopted new fair value accounting guidance. The adoption of the
guidance was applied to long-lived assets such as property, equipment, investments and definite-lived
intangibles. The guidance defines fair value as the price that would be received from selling an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining the fair value measurements for assets and liabilities required or permitted to be
recorded at fair value, WWA Group considers the principal or most advantageous market in which WWA
Group would transact business and considers assumptions that market participants would use when
pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s
categorization within the fair value hierarchy is based upon the lowest level of input that is significant to
the fair value measurement. The guidance establishes three levels of inputs that may be used to measure
fair value:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active
markets); or model-derived valuations in which all significant inputs are observable or can be derived
principally from or corroborated by observable market data for substantially the full term of the assets or
liabilities.
Level 3 — Unobservable inputs to the valuation methodology those are significant to the measurement of
fair value of assets or liabilities.
All of WWA Group’s available-for-sale investments and non-marketable equity securities are subject to a
periodic impairment review. Investments are considered to be impaired when a decline in fair value is
judged to be other-than-temporary. This determination requires significant judgment. For publicly traded
investments, impairment is determined based upon the specific facts and circumstances present at the
time, including a review of the closing price over the previous six months, general market conditions and
WWA Group’s intent and ability to hold the investment for a period of time sufficient to allow for
recovery. For non-marketable equity securities, the impairment analysis requires the identification of
events or circumstances that would likely have a significant adverse effect on the fair value of the
investment, including revenue and earnings trends, overall business prospects and general market
conditions in the investees’ industry or geographic area. Investments identified as having an indicator of
impairment are subject to further analysis to determine if the investment is other-than-temporarily
impaired, in which case the investment is written down to its impaired value.
12
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income per Common Share
The computation of basic earnings per common share is based on the weighted average number of shares
outstanding during each year. The computation of diluted earnings per common share is based on the
weighted average number of shares outstanding during the year, plus the common stock equivalents that
would arise from the exercise of stock options and warrants outstanding, using the treasury stock method
and the average market price per share during the year. As of September 30, 2012 there were no
outstanding common stock equivalents.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles in
United States of America requires management to make estimates and assumptions that affect the
reported amounts 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 reporting period.
Actual results could differ from those estimates.
Recent accounting pronouncements
We have examined all recent accounting pronouncements and believe that none of them will have a
material impact on the financial statements of WWA Group.
13
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE D – INVESTMENTS
Investment in Equity Interest
In December 2006, WWA Group acquired a 32.5% interest in Power Track Projects, FZE (“PTP”) for a
consideration of $1,786,000. PTP is a Dubai, UAE entity which operates a rock crushing and stone quarry
in Ras Al Khaimah, UAE. The ownership interest was increased to approximately 35% in 2007. In
October 2008, WWA Group’s shares of PTP were exchanged for shares of Intelspec International, Inc
(“Intelspec”). The exchange resulted in the WWA Group’s ownership of 32% of Intelspec. In December
2009, Intelspec raised additional equity financing through issuance of stock thus resulting in a reduction
of WWA Group’s ownership interest to 30%. In April 2010 Intelspec was acquired by Infrastructure,
setting WWA Group’s ownership interest in Infrastructure at 22%. In July 2010, WWA Group sold 4
million shares of Infrastructure at a value of $320,000 reducing WWA Group’s investment to 17.75%.
As of December 31, 2009 WWA Group owned a 30% equity interest in Intelspec International, Inc.
WWA Group accounted for its interest in Intelspec using the equity method of accounting whereby
WWA Group recorded its proportionate share of the net income or loss attributable to the equity interest.
In April 2010 Intelspec was acquired by Infrastructure, a publicly traded company, which acquisition
reduced WWA Group's equity interest to 24%. In July 2010, WWA Group sold shares of its common
stock in a private transaction, further reducing WWA Group’s ownership interest to 18%.
On November 21, 2011 WWA Group converted its Notes Receivable due from Infrastructure to equity as
a result of which as of December 31, 2011 WWA Group owned approximately 63% of the common stock
of Infrastructure. Since WWA Group became the majority shareholder of Infrastructure as of November
21, 2011 its financials as of December 31, 2011 and March 31, 2012 were consolidated with those of
WWA Group Inc for reporting purposes.
On June 30, 2012 WWA Group divested itself of 67,509,667 shares of Infrastructure in a series of debt
settlement agreements, which settlements decreased WWA Group’s equity interest in Infrastructure to
29.62%.
NOTE E – SHORT TERM BORROWINGS AND LINES OF CREDIT
WWA Group has no short term borrowings from unrelated entities as of September 30, 2012
14
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE F – STOCK OPTIONS
Under FASB Accounting Standard Codification 718, WWA Group estimates the fair value of each stock
award at the grant date by using the Black-Scholes option pricing model. There were no grants of stock
awards during 2011 and in 2010. WWA Group recorded no expense for 2011 an 2010 for the fair value of
the stock options granted.
The following weighted average assumptions were used for grants made during the year ended December
31, 2008:
Dividend yield of zero percent for all periods; expected volatility of 58.20% and 63.76%; risk-free
interest rates of 2.24% and 3.94% and expected lives of 1.0 and 2.0, respectively.
A summary of the status of WWA Group's stock options as of December 31, 2010 and changes during the
years ended December 31, 2011 and 2010 is presented below:
Weighted
Weighted
Number of
Average
Average
Options
Exercise
Grant Date
Price
Fair Value
Outstanding December 31,
2007
576,973
$ 1.00
$ 0.23
Granted
100,000
$ 0.36
$ 0.17
Expired
-
$ 0.00
$ 0.00
Exercised
-
$ 0.00
$ 0.00
Outstanding December 31,
676,973
$ 0.36
$ 0.17
2008
Exercisable
676,973
$ 0.36
$ 0.17
Granted
-
$ 0.00
$ 0.00
Exercised
-
$ 0.00
$ 0.00
Expired
(676,973)
$ 0.36
$ 0.17
Outstanding December 31,
2009 & 2010 and 2011
-
$ 0.00
$ 0.00
NOTE G – RELATED PARTY TRANSACTIONS
As of September 30, 2012 WWA Group has no related party investments.
15
WWA GROUP, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2012
NOTE H – COMMITMENTS AND CONTINGENCIES
Contingencies
WWA Group may become or is subject to investigations, claims or lawsuits ensuing out of the conduct of
its business. WWA Group is currently not aware of any such items, except those discussed below, which
it believes could have a material effect on its financial position.
NOTE I- CONSOLIDATION AND MINORITY INTERESTS
As of September 30, 2012 WWA group has not consolidated the accounts of Infrastructure due to full
impairment of its equity investment in IDVC.
NOTE J- SUBSEQUENT EVENTS
WWA Group evaluated its September 30, 2012 financial statements for subsequent events through
the date the financial statements were originally issued. Other than the events noted below, WWA
Group is not aware of any subsequent events which would require recognition or disclosure in the
financial statements.
16
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other
parts of this current report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this current report. Our fiscal year end is December 31.
Discussion and Analysis
The sale of WWA Group’s physical auction business effective October 31, 2010 and ongoing discussions
with OFAC during 2011 as to the possibility that a debilitating penalty might be levied against us
significantly impacted our business operations as of December 31, 2011. Although the uncertainty
associated with OFAC was resolved in January of 2012 and the sale of World Wide eliminated virtually
all of our outstanding liabilities, the resultant loss of income producing activities continues to be
formidable.
Our consolidation with Infrastructure Developments, Inc. (“Infrastructure’) in November of 2011 on
converting debt to equity did not live up to expectations that the synergies present in the respective
companies would generate the activity necessary to move forward. On June 30, 2012 WWA Group
decreased its equity position in Infrastructure to that of a minority shareholder through a series of debt
settlements intended to relieve WWA Group of outstanding debt obligations. The divestiture of
Infrastructure shares caused us to abandon any consolidation of our accounts with those of Infrastructure
as of June 30, 2012.
We have discontinued efforts to commercialize the operations of Asset Forum, LLC due to the highly
competitive nature of online auction platforms and the limited capital we have available to compete in this
space.
Business
WWA Group’s current operations are focused around the marketing and sale of “Wing Houses” in North
America, the Middle East and parts of South-East Asia as a distributor pursuant to an agreement with the
Renhe Group. The units are marketed as mobile offices or living space that fold into a standard container
with all ISO fittings in place for easy transport.
Wing Houses can be placed anywhere with a swing lift and opened into 80 square meters of a living or
working environment within four to five hours for a wide range of applications, including
Living space
Office space
On site showrooms
Restaurants
Worker accommodation
Forward operations base.
17
Although WWA Group is yet to conclude a sale of a Wing House it has generated over one hundred leads
since April and has quoted approximately ten people with prices. WWA Group expects to issue formal
invoices and realize sales of the Wing House any day now
Summit Digital, Inc.
On July 12, 2012 the board of directors of WWA Group caused the corporation to enter into a Share
Exchange Agreement to acquire all of the issued and outstanding shares of Summit Digital, Inc.
(“Summit”) from the sole shareholder thereof in exchange for shares of our common stock. The Share
Exchange Agreement (“Agreement”) provides that the sole shareholder of Summit will exchange 100
shares or one hundred percent (100%) of the issued and outstanding shares of Summit for ninety nine
million (99,000,000) shares or eighty percent (80%) of WWA Group. The Agreement further provides for
the appointment of two new members to WWA Group’s board of directors. Summit is a multi-system
operator that provides cable television, high speed internet and related services to rural communities in
the United States.
Shareholders holding a majority of WWA Group issued and outstanding shares approved the Agreement
on September 15, 2012. WWA Group expects to conclude the transaction in the fourth quarter of this year
pending the distribution of a information statement to its shareholders.
Summit is focused on acquiring existing underutilized Cable systems in rural, semi-rural and gated
community markets, aggregating them into a single Multi-System Operator structure and creating growth
by upgrading management, improving efficiency, cutting costs, and fully exploiting the opportunities
presented by bundling multiple services such as basic TV, premium TV, pay-per-view, broadband
Internet, and voice telephony. These bundled service packages have become the industry standard in
major urban markets served by major Cable providers, but systems in Summit’s target market typically
lag behind in adopting them, offering a substantial opportunity to increase penetration and per-customer
revenue by offering these comprehensive service packages. Summit may at times build new Cable
systems or wireless infrastructure to serve areas where no infrastructure is in place, but the primary intent
is to acquire underutilized existing systems.
Summit believes that other value-added services delivered through Cable infrastructure, such as pay-per-
view events, digital video and digital video recording, and high-definition TV also represent significant
potential revenue streams that have not been effectively exploited by its acquisition targets.
Summit intends to take decisive steps to streamline management, improve efficiency, and reduce costs in
systems it acquires using the following areas of emphasis:
Any debt that is attached to these systems by the prior ownership will be restructured
Billing, collection, call center and scheduling services will be centralized, significantly reducing
costs for each system.
Head end technicians located at corporate headquarters will direct employees and monitor their
performance, standardizing and service practices and quality control.
Theft by potential subscribers who attempt to steal services can have a significant impact on the
viability of rural cable systems. Measures to prevent theft will be installed, including regular
audits conducted by our own installers as well as independent contractors.
Equipment purchasing will be combined to achieve economies of scale and reduce costs.
Structured management systems stressing continuous documentation, performance evaluation,
and action to address weaknesses will be installed, addressing a common management deficiency
in small single-system operators.
18
Many small to medium sized single-system operators of the type common in rural and semi-rural America
have not been developed to their full capacity, for two primary reasons.
Many of these systems were overburdened with debt that was incurred on the initial construction
of their cable systems. Overly optimistic projections and unrealistic performance expectations
not backed up by appropriate technology and management expertise, combined with lack of an
established basis for prediction in many markets led system owners to take on excessive debt,
which enabled their entry to the business but also left them unable to sustain their business
profitably.
The technology that supports the upgraded services that Summit intends to provide has only
recently become cost-effective for smaller rural systems. Even with today’s superior and less
expensive technology, small individual cable systems rarely have the economies of scale or the
financing necessary to effectively exploit these technologies. Summit’s knowledgeable technical
team and ability to combine equipment purchases will provide the knowledge and the leverage
with suppliers that are needed to effectively introduce these technologies.
Summit believes, based on extensive interviews and contacts with management at local systems, that the
managers and owners of many of these systems are interested in acquisition on favorable terms by an
MSO built around the principle of maximizing the potential of these systems. Based on interviews with
small system managers, Summit believes that many of these systems can be acquired in exchange for a
combination of cash and Summit stock.
Once systems have been acquired, Summit will upgrade them to support broadband Internet and voice
telephony and aggressively market these combined services both to existing subscribers and non-
subscribers within the system footprint. Existing cash flows, cash flows from acquired systems, and
acquisition terms allowing payment as systems are built out. Summit does not intend to incur debt or sell
shares to finance system upgrades.
Summit intends to add an additional revenue stream to its acquired Cable systems through its capacity to
insert local advertising, known as interstitials, to Cable TV content. Summit has the right to insert local
advertising into programming from major networks such as CNN, ESPN, Fox News and many others.
This ad insertion is accomplished through an interface between the network and Summit’s system, with
the network providing cue tones that open time slots for Summit’s advertisers. Again, this is a revenue
opportunity not currently exploited by the Cable systems Summit seeks to acquire, and upgrading systems
to accommodate this form of advertising presents a significant opportunity to generate additional revenue
from existing infrastructure.
Summit’s business strategy is to acquire systems meeting viability criteria, aggregate them in a multiple
system operator format, improve management, reduce costs, and add revenue by aggressively promoting
high-value services such as high speed broadband internet and pay-per-view TV and by adding
advertising income to the system revenue mix. Summit will not surrender controlling interest in systems
it acquires and will not incur long-term debt to acquire systems or upgrade acquired systems. Summit
believes that it can substantially increase both its subscriber base and its revenue per subscriber by
following this strategy.
19
Results of Operations
During the nine month period ended September 30, 2012, WWA Group (i) abandoned efforts to
commercialize Asset Forum LLC, (ii) decreased its equity interest in Infrastructure to that of a minority
shareholder, (iii) continued to lend management assistance on a temporary basis to World Wide
Auctioneers (Dubai); (iv) increased marketing efforts of Wing House units; (v) entered into an Agreement
to acquire Summit; and (vi) satisfied continuous public disclosure requirements.
Net Income (Loss)
Net income for the three month period ended September 30, 2012 was $773 as compared to a net income
of $23,407 for the three month period ended September 30, 2011. Net income for the nine month period
ended September 30, 2012 was $135,579 as compared to a net loss of $2,087,132 for the nine month
period ended September 30, 2011. The transition to net income in the current three and nine month
comparative periods can be attributed to gains on equity investment and other income. WWA Group
anticipates that it will continue to realize net income as general and administrative expenses stabilize and
expected revenue from the sale of Wing Houses is realized.
Operating Expenses
Operating expenses for the three month period ended September 30, 2012 are $9,228 as compared to
operating expenses of $4,833 for the three month period ended September 30, 2011. The increase in
operating expenses over the comparative periods is attributed to the professional expenses, director’s fees
and expenses associated with marketing the Wing Houses. WWA Group anticipates that operating
expenses will increase during 2012 as greater effort is made to sell Wing Houses on a global basis.
Other Income/Expenses
Other income for the three month period ended September 30, 2012 was $10,000 as compared to other
income of $28,239 for the three month period ended September 30, 2011. Other income for the nine
month period ended September 30, 2012 was $211,733 as compared to other expense of $2,067,615 for
the nine month period ended September 30, 2011. Other income in the current three and nine month
periods can be attributed to gains on equity investment, reversal of liabilities and management fees.
Income Tax Expense (Benefit)
WWA Group has a prospective income tax benefit resulting from a net operating loss carry-forward and
start up costs that will offset any future operating profit.
Impact of Inflation
WWA Group believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
We had a working capital surplus of $2,913 as of September 30, 2012. At September 30, 2012, our
current assets were $9,610, which consisted of $2,350 in cash and $7,260 in other current assets. Our total
assets were $9,610. Our current and total liabilities were $6,697, which amount consisted of accrued
expenses. Our total stockholders’ equity at September 30, 2012 was $2,913.
20
Cash flow used in operating activities for the nine month period ended September 30, 2012 was $100,485
as compared to $38,269 for the nine month period ended September 30, 2011. The change in cash flow
used in operating activities between the periods can be attributed to net income, the gain on equity
investments, prepaid expenses, and other current assets offset by accounts payable and accrued liabilities.
We expect to continue to use cash flows in operating activities for the balance of 2012.
Cash flow provided by investing activities for the nine month period ended September 30, 2012 was
$285,497 as compared to $33,000 for the nine month period ended September 30, 2011. Net cash flow
provided by investing activities in the current nine month period is attributed to a decrease in the goodwill
associated with Infrastructure and a decrease in a non-controlling interest. We expect to use cash flows in
investing activities going forward as we intend to expand our business.
Cash flow used in financing activities was $231,672 for the nine month period ended September 30, 2012
as compared to cash flow provided by financing activities of $2,144 for the nine month period ended
September 30, 2011. Cash flow used in financing operations in the current nine month period can be
attributed to payments against short term notes payable offset by debt settlement through the divestiture
of equity investment and debt settlement through the issuance of common stock. We expect to generate
cash flows from financing activities in the near term to maintain operations.
Our current assets are insufficient to conduct business over the next twelve (12) months. We will have to
seek at least $50,000 in debt or equity financing over the next twelve months to maintain operations and
cannot determine at this time what added amount might be required when we conclude the acquisition of
Summit. WWA Group has no current commitments or arrangements with respect to, or immediate
sources of funding. Further, no assurances can be given that funding is available. Our shareholders are the
most likely source of new funding in the form of loans or equity placements though none have made any
commitment for future investment and we have no agreement formal or otherwise. Our inability to obtain
sufficient funding will have a material adverse affect on our ability to generate revenue and our ability to
continue operations.
WWA Group does not intend to pay cash dividends in the foreseeable future.
WWA Group had no commitments for future capital expenditures that were material at September 30,
2012.
WWA Group has no defined benefit plan or contractual commitment with any of its officers or directors.
WWA Group had no lines of credit or other bank financing arrangements as of September 30, 2012.
WWA Group has no current plans for the purchase or sale of any plant or equipment.
WWA Group has no current plans to make any changes in the number of employees, except in connection
with the anticipated acquisition of Summit.
Off Balance Sheet Arrangements
As of September 30, 2012, WWA Group has no significant off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources
that is material to stockholders.
21
Future Financings
We anticipate continuing to rely on debt or equity sales of our shares of common stock in order to
continue to fund our business operations. There is no assurance that we will achieve any additional sales
of our equity securities or arrange for debt or other financing to fund our plan of operations.
Critical Accounting Policies
In Note B to the audited consolidated financial statements for the years ended December 31, 2011 and
2010 included in WWA Group’s Form 10-K, we discuss those accounting policies that are considered to
be significant in determining the results of operations and our financial position. We believe that the
accounting principles utilized by us conform to accounting principles generally accepted in the United
States of America.
The preparation of financial statements requires management to make significant estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these
judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our
estimates, including those related to bad debts, inventories, intangible assets, warranty obligations,
product liability, revenue, and income taxes. We base our estimates on historical experience and other
facts and circumstances that are believed to be reasonable, and the results form the basis for making
judgments about the carrying value of assets and liabilities. The actual results may differ from these
estimates under different assumptions or conditions. With respect to revenue recognition, we apply the
following critical accounting policies in the preparation of its financial statements
Forward Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Results of Operations and Description of Business, with the
exception of historical facts, are forward looking statements. A safe-harbor provision may not be
applicable to the forward-looking statements made in this current report. Forward-looking statements
reflect our current expectations and beliefs regarding our future results of operations, performance, and
achievements. These statements are subject to risks and uncertainties and are based upon assumptions and
beliefs that may or may not materialize. These statements include, but are not limited to, statements
concerning:
our anticipated financial performance;
the sufficiency of existing capital resources;
our ability to fund cash requirements for future operations;
uncertainties related to the growth of our subsidiaries’ businesses and the acceptance of their
products and services;
the volatility of the stock market; and
general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated, including the
factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to
advise readers not to place any undue reliance on the forward looking statements contained in this report,
which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to
update or revise these forward-looking statements to reflect new events or circumstances or any changes
in our beliefs or expectations, other than is required by law.
22
Going Concern
WWA Group’s auditors have expressed an opinion as to its ability to continue as a going concern as a
result of recurring losses from operations. WWA Group’s ability to continue as a going concern is
subject to its ability to realize a profit from operations and /or obtain funding from outside sources.
Management’s plan to address WWA Group’s ability to continue as a going concern includes obtaining
funding from the private placement of debt or equity and realizing revenues from its business activities.
Management believes that it will be able to obtain funding to enable WWA Group to continue as a going
concern through the methods discussed above, though there can be no assurances that such methods will
prove successful
Recent Accounting Pronouncements
Please see Note C to our consolidated financial statements.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by WWA Group’s
management, with the participation of the chief executive officer and the chief financial officer, of the
effectiveness of WWA Group’s disclosure controls and procedures (as defined in Rules 13a-15(e) under
the Securities Exchange Act of 1934 (“Exchange Act”)) as of September 30, 2012. Disclosure controls
and procedures are designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the Commission’s rules and forms, and that such information is accumulated and
communicated to management, including the chief executive officer and the chief financial officer, to
allow timely decisions regarding required disclosures.
Based on that evaluation, WWA Group’s management concluded, as of the end of the period covered by
this report, that WWA Group’s disclosure controls and procedures were effective in recording,
processing, summarizing, and reporting information required to be disclosed, within the time periods
specified in the Commission’s rules and forms, and such information was accumulated and communicated
to management, including the chief executive officer and the chief financial officer, to allow timely
decisions regarding required disclosures.
Changes in Internal Controls over Financial Reporting
During the period ended September 30, 2012, there has been no change in internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect our internal control over
financial reporting.
23
PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
None.
ITEM 1A.
RISK FACTORS
WWA Group’s operations and securities are subject to a number of risks. Below we have identified and
discussed the material risks that we are likely to face. Should any of the following risks occur, they will
adversely affect our operations, business, financial condition and/or operating results as well as the future
trading price and/or the value of our securities.
Risks Related to WWA Group’s Business
WWA Group has a history of uncertainty about continuing as a going concern.
WWA Group’s audits for the periods ended December 31, 2011 and 2010 expressed substantial doubt as
to its ability to continue as a going concern due to recurring losses from operations. Unless WWA Group
is able to overcome our dependence on successive financings and generate net revenue from operations,
its ability to continue as a going concern will be in jeopardy.
Our chief executive officer does not offer his undivided attention to WWA Group due to his dual
responsibilities.
Our chief executive officer does not offer his undivided attention to our business as he also serves as the
chief executive officer of Asia8, Inc and as a director of Infrastructure Developments Corp. His
responsibilities cause him to divide his time between the three entities. The division of time however does
not necessarily indicate a division of interests since Asia8 is a shareholder of WWA Group and WWA
Group is a shareholder of Infrastructure. Nonetheless, his varied responsibilities may compromise WWA
Group’s ability to successfully conduct its business operations.
WWA Group is dependent upon key personnel.
WWA Group’s performance and operating results are substantially dependent on the continued service
and performance of our officers and directors. We intend to hire additional technical, sales, managerial
and other personnel as we move forward with our business model. Competition for such personnel is
intense, and there can be no assurance that we can retain our key employees, or that we will be able to
attract or retain highly qualified personnel in the future. The loss of the services of any of our key
employees or the inability to attract and retain the necessary personnel could have a material adverse
effect upon our business, financial condition, operating results, and cash flows.
Our business is subject to governmental regulations.
International, national and local standards set by governmental regulatory authorities set the regulations
by which products are certified across respective territories. Further, climate change legislation and
greenhouse gas regulation is becoming increasingly ubiquitous. The products that we intend to distribute
are subject to such regulation in addition to national, state and local taxation. Although we believe that we
can successfully distribute our products within current governmental regulations it is possible that
regulatory changes could negatively impact our operations and cause us to diminish or cease operations.
24
Risks Related to WWA Group’s Stock
The market for our stock is limited and our stock price may be volatile.
The market for our common stock has been limited due to low trading volume and the small number of
brokerage firms acting as market makers. Because of the limitations of our market and volatility of the
market price of our stock, investors may face difficulties in selling shares at attractive prices when they
want to. The average daily trading volume for our stock has varied significantly from week to week and
from month to month, and the trading volume often varies widely from day to day.
We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may
continue to negatively impact our financial performance.
We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002,
as well as related rules implemented by the Commission, which control the corporate governance
practices of public companies. Compliance with these laws, rules and regulations, including compliance
with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has
substantially increased our expenses, including legal and accounting costs, and made some activities more
time-consuming and costly.
Our internal controls over financial reporting may not be considered effective in future periods, which
conclusion could result in a loss of investor confidence in our financial reports and in turn have an
adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our
management on our internal controls over financial reporting. Such report must contain, among other
matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end
of the year, including a statement as to whether or not our internal controls over financial reporting are
effective. This assessment must include disclosure of any material weaknesses in our internal controls
over financial reporting identified by management. Shouldwe be unable to continue to assert that our
internal controls are effective in future periods, our investors could lose confidence in the accuracy and
completeness of our financial reports, which in turn could cause our stock price to decline.
WWA Group does not pay dividends.
WWA Group does not pay dividends. We have not paid any dividends since inception and have no
intention of paying any dividends in the foreseeable future. Any future dividends would be at the
discretion of our board of directors and would depend on, among other things, future earnings, our
operating and financial condition, our capital requirements, and general business conditions. Therefore,
shareholders should not expect any type of cash flow from their investment.
WWA Group will require additional capital funding.
WWA Group will require additional funds in the form of additional equity offerings or debt placements,
to maintain operations. Such additional capital may result in dilution to our current shareholders. Further,
our ability to meet short-term and long-term financial commitments will depend on future cash. There can
be no assurance that future income will generate sufficient funds to enable us to meet our financial
commitments.
25
If the market price of our common stock declines as the selling security holders sell their stock, selling
security holders or others may be encouraged to engage in short selling, depressing the market price.
The significant downward pressure on the price of the common stock as the selling security holders sell
material amounts of common stock could encourage short sales by the selling security holders or others.
Short selling is the selling of a security that the seller does not own, or any sale that is completed by the
delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock
at a lower amount than the price at which they sold it short. Significant short selling of a company’s stock
creates an incentive for market participants to reduce the value of that company’s common stock. If a
significant market for short selling our common stock develops, the market price of our common stock
could be significantly depressed.
WWA Group’s common stock is currently deemed to be “penny stock”, which makes it more difficult
for investors to sell their shares.
WWA Group’s common stock is and will be subject to the “penny stock” rules adopted under section
15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed
on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per
share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been
operating for three or more years). These rules require, among other things, that brokers who trade penny
stock to persons other than “established customers” complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning trading in the security,
including a risk disclosure document and quote information under certain circumstances. Many brokers
have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such securities is limited. If WWA
Group remains subject to the penny stock rules for any significant period, it could have an adverse effect
on the market, if any, for WWA Group’s securities. If WWA Group’s securities are subject to the penny
stock rules, investors will find it more difficult to dispose of WWA Group’s securities.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4.
MINE AND SAFETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page
28 of this Form 10-Q, and are incorporated herein by this reference.
26
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WWA Group, Inc.
Date
/s/ Eric Montandon
November 14, 2012
By: Eric Montandon
Its: Chief Executive Officer
/s/ Digamber Naswa
November 14, 2012
By: Digamber Naswa
Its: Chief Financial Officer and Principal Accounting Officer
27
Exhibit
Description
3.1.1*
Articles of Incorporation of WWA Group (Conceptual Technologies, Inc.) filed with the Nevada Secretary of
State on November 26, 1996 (incorporated herein by reference from the Form SB-2 filed with the
Commission on December 26, 2007).
3.1.2*
Certificate of Amendment of the Articles of Incorporation of WWA Group (Conceptual Technologies, Inc.)
filed with the Nevada Secretary of State on August 29, 1997 (incorporated herein by reference from the Form
SB-2 filed with the Commission on December 26, 2007).
3.1.3*
Certificate of Amendment of the Articles of Incorporation of WWA Group (NovaMed Inc.) filed with the
Nevada Secretary of State on May 8, 1998 (incorporated herein by reference from the Form SB-2 filed with
the Commission on December 26, 2007).
3.1.4*
Certificate of Amendment to the Articles of Incorporation of WWA Group filed with the Nevada Secretary of
State on September 25, 2003 (incorporated herein by reference from the Form SB-2 filed with the
Commission on December 26, 2007).
3.2*
Bylaws of WWA Group adopted on November 12, 1996 (incorporated herein by reference from the Form
SB-2 filed with the Commission on December 26, 2007).
10.1*
Stock Exchange Agreement between WWA Group and World Wide Auctioneers, Inc. dated August 5, 2003
(incorporated herein by reference from the Form 8-K filed with the Commission on August 25, 2003).
10.2*
Purchase Agreement between World Wide Auctioneers, Ltd., Geoffrey Greenless and Crown Diamond
Holdings, Inc. dated June 30, 2006 (incorporated herein by reference from the Form 8-K filed with the
Commission on July 19, 2006).
10.3*
Share Purchase Agreement between World Wide Auctioneers, Ltd. and Steven Edward Rogers dated
December 20, 2006 (incorporated herein by reference from the Form 8-K filed with the Commission on
February 15, 2007).
10.4*
Share Purchase Agreement by and between WWA Group and Seven International Holdings, Ltd., dated
effective October 31, 2010 (incorporated herein by reference from the Form 8-K filed with the Commission
on November 12, 2010).
14*
Code of Ethics adopted March 28, 2004 (incorporated herein by reference from the Form 10-KSB filed with
the Commission on March 30, 2005).
21*
Subsidiaries of WWA Group (incorporated herein by reference from the Form 10-Q filed with the
Commission on August 17, 2012).
23.2*
Consent of Independent Registered Public Accounting Firm (incorporated herein by reference from the Form
10-K filed with the Commission on April 16, 2012)
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101. INS
XBRL Instance Document†
101. PRE
XBRL Taxonomy Extension Presentation Linkbase†
101. LAB
XBRL Taxonomy Extension Label Linkbase†
101. DEF
XBRL Taxonomy Extension Label Linkbase†
101. CAL
XBRL Taxonomy Extension Label Linkbase†
101. SCH
XBRL Taxonomy Extension Schema†
*
Incorporated by reference from previous filings of the Company.
†
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed”
or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of
1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act
of 1934, and otherwise is not subject to liability under these sections.
28
Exhibit 31 (a)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eric Montandon certify that:
1. I have reviewed this report on Form 10-Q of WWA Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: November 14, 2012
/s/ Eric Montandon
Eric Montandon
Chief Executive Officer
Exhibit 31 (b)
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Digamber Naswa certify that:
1. I have reviewed this report on Form 10-Q of WWA Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: November 14, 2012
/s/ Digamber Naswa
Digamber Naswa
Chief Financial Officer
Exhibit 32 (a)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the report on Form 10-Q of WWA Group, Inc. for the quarterly period ended
September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Eric
Montandon, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-
Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) This report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in this report fairly represents, in all material respects, the financial
condition of the registrant at the end of the period covered by this report and results of operations
of the registrant for the period covered by this report.
Date: November 14, 2012
/s/ Eric Montandon
Eric Montandon
Chief Executive Officer
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not
be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of this report),
irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and will
be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon
request.
Exhibit 32 (b)
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the report on Form 10-Q of WWA Group, Inc. for the quarterly period ended
September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof, I,
Digamber Naswa, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) This report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in this report fairly represents, in all material respects, the financial
condition of the registrant at the end of the period covered by this report and results of operations
of the registrant for the period covered by this report.
Date: November 14, 2012
/s/ Digamber Naswa
Digamber Naswa
Chief Financial Officer
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not
be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of this report),
irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and will
be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon
request.
|
Note 3 - Summary of Significant Accounting Policies: Use of Estimates (Tables)
|
9 Months Ended |
|---|---|
|
Sep. 30, 2012
|
|
| Tables/Schedules | |
| Use of Estimates |
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles in United States of America requires management to make estimates and assumptions that affect the reported amounts 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 reporting period. Actual results could differ from those estimates. |
|
Note 3 - Summary of Significant Accounting Policies: Income Taxes (Policies)
|
9 Months Ended |
|---|---|
|
Sep. 30, 2012
|
|
| Policies | |
| Income Taxes |
Income Taxes
Deferred income taxes are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. WWA Group records a valuation allowance against particular deferred income tax assets if it is more likely than not that those assets will not be realized. The provision for income taxes comprises WWA Group’s current tax liability and change in deferred income tax assets and liabilities. Significant judgment is required in evaluating WWA Group’s uncertain tax positions and determining its provision for income taxes. WWA Group establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when WWA Group believes that certain positions might be challenged despite its belief that its tax return positions are in accordance with applicable tax laws. WWA Group adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation, or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. |
|
Note 4 - Investments
|
9 Months Ended |
|---|---|
|
Sep. 30, 2012
|
|
| Notes | |
| Note 4 - Investments |
NOTE 4 – INVESTMENTS
Investment in Equity Interest
In December 2006, WWA Group acquired a 32.5% interest in Power Track Projects, FZE (“PTP”) for a consideration of $1,786,000. PTP is a Dubai, UAE entity which operates a rock crushing and stone quarry in Ras Al Khaimah, UAE. The ownership interest was increased to approximately 35% in 2007. In October 2008, WWA Group’s shares of PTP were exchanged for shares of Intelspec International, Inc (“Intelspec”). The exchange resulted in the WWA Group’s ownership of 32% of Intelspec. In December 2009, Intelspec raised additional equity financing through issuance of stock thus resulting in a reduction of WWA Group’s ownership interest to 30%. In April 2010 Intelspec was acquired by Infrastructure, setting WWA Group’s ownership interest in Infrastructure at 22%. In July 2010, WWA Group sold 4 million shares of Infrastructure at a value of $320,000 reducing WWA Group’s investment to 17.75%.
As of December 31, 2009 WWA Group owned a 30% equity interest in Intelspec International, Inc. WWA Group accounted for its interest in Intelspec using the equity method of accounting whereby WWA Group recorded its proportionate share of the net income or loss attributable to the equity interest. In April 2010 Intelspec was acquired by Infrastructure, a publicly traded company, which acquisition reduced WWA Group's equity interest to 24%. In July 2010, WWA Group sold shares of its common stock in a private transaction, further reducing WWA Group’s ownership interest to 18%.
On November 21, 2011 WWA Group converted its Notes Receivable due from Infrastructure to equity as a result of which as of December 31, 2011 WWA Group owned approximately 63% of the common stock of Infrastructure. Since WWA Group became the majority shareholder of Infrastructure as of November 21, 2011 its financials as of December 31, 2011 and March 31, 2012 were consolidated with those of WWA Group Inc for reporting purposes.
On June 30, 2012 WWA Group divested itself of 67,509,667 shares of Infrastructure in a series of debt settlement agreements, which settlements decreased WWA Group’s equity interest in Infrastructure to 29.62%.
|