2

 

3

 

4

 

 

6

 

 

 

Services

 

Cleanfield will initially provide a range of conversion services, including conversion of gasoline engines to CNG and the replacement of diesel engines or gasoline engines for which no EPA/CARB conversion process exists with CNG engines. Diesel-to-CNG conversions will be provided when EPA/CARB-approved processes become available. Cleanfield also provides consulting services for public or private entities that wish to convert fleets of vehicles to CNG. These packages typically involve fleet conversion, establishment of strategically located fueling points, and assistance in maximizing the benefits offered by a broad but complex range of federal and state incentive programs.

 

Competition

 

Asset Forum

 

Asset Forum competes with auction companies worldwide for Internet buyers. There are numerous on-line auctioneers of used equipment and property, mainly based in the U.S. and Japan, including Ritchie Brothers Auctioneers, Inc. and Iron Planet, which offer live on-line bidding at their on-line and physical auctions. We believe that buyer acceptance of on-line equipment and property auctions have reached a point where significant net returns are possible. We believe that while there is significant competition from on-line auction companies, we expect that our unique software features used by Asset Forum will help us successfully penetrate a niche in the on-line major equipment market.

 

Infrastructure

 

Southeast Asian Competitors and Prospective Competitors

 

Since 2009 Infrastructure has been active in the Southeast Asian construction and project management business. This activity has generated sufficient experience to analyze current and prospective competition.  To date this competition has come almost exclusively from large local and regionally based construction firms, typically based in Thailand. The following companies have emerged as consistent competitors for projects pursued by Infrastructure’s in key markets:

 

• Thailand – Burke Construction; Romchat Development Co, Ltd.; Civil 9; NSM
• Cambodia – ENDEC; Burke Construction; Romchat Development Co, Ltd.; Civil9
• Indonesia – Burke Construction; Imembra

 

Infrastructure’s competitive position against these companies is built around the fact that these companies are typically structured as regional equivalents of the very large international construction firms.  They typically maintain large headquarters facilities with extensive staffs needed to support bidding and operations on a very wide range of local and international contracts.  This structure increases their overhead cost and diminishes their ability to field competitive proposals. 

 

Infrastructure’ competitive strategy in dealing with these companies is to maintain an extremely lean corporate structure with minimal staff, facility, and asset depreciation costs, and to focus on a rigorous process of project selection, targeting only those projects it is most likely to win and reducing the staff time required for bid preparation. Infrastructure maintains a very low cost structure, but its high level of expertise and extensive experience with U.S. government contracting and other projects with rigorous technical specifications enables it to submit bids with a level of technical qualification that other small companies with equivalent cost structures cannot match. Infrastructure’s principal competitive advantages

---

7

are:

 

• International standard technical expertise;
• A low-cost structure enabling us to bid lower than competitors without compromising margins;
• Service delivery, including the ability to deliver personnel, processes, systems and technology on an “as needed, where needed, when needed” basis with the required local content and presence;
• Highest standard health, safety, and environmental practices;
• Technological sophistication; and
• Extensive experience in developing nations and high-risk environments.

 

Alternative Fuels Competition

 

The CNG conversion business in certain areas of the U.S. is highly competitive. Companies with greater financial resources, existing staff and labor forces, and experience are in a better position than Infrastructure to compete for conversion bids. However, Cleanfield has unique advantages in the market having teamed up with Go Natural, including:

 

• three-year/100,000 mile warranty
• Complete turnkey solutions for fleet managers to switch to natural gas
• CFE conversions are approved by the EPA and the air resource board of California
• CFE conversion is a partnership with U-Fix-It mechanics that offers us a low cost high quality facility with minimal overhead cost, U-Fix-It operates a 22-bay secure facility centrally located in Tempe very close to the 101 of the 202 freeways.

 

This pattern provides obvious profitable locations for future stations. Experience with existing stations indicates that profitability is already possible at today’s vehicle density, suggesting strong growth potential as CNG adoption increases.

 

Integration of fleet conversion with provision of public CNG fueling infrastructure provides additional opportunity: in-house sales to fleet vehicles provide an immediate revenue source for the fueling facility, while public use provides strong growth potential.

 

The compressor is an integral part of any CNG filling station, whether for home, fleet, or commercial use. Go Natural is developing a new breed of natural gas compressors running on hydraulics instead of rotary driven motors. These compressors have several distinct advantages over conventional compressors:

 

• The reduced speed compressor moves at 35 – 50 Strokes per minute compared to conventional technology running over 1,000 RPM. This reduces friction caused damage and will increase the life of the system.
• Most of the rotary driven compressors require crank case lubrication. The Go Natural design is oil free, eliminating the need for coalescing filtration to eliminate injector failure.
• An auto-cycling system keeps all electronic valves separated from the hydraulic power unit. This allows the compressor to avoid using explosion proof motors and controls, which reduces cost significantly
• Use of a modular design allows repairs to be easily accomplished in the field by the users. This reduces maintenance cost.
• The modular design also allows for the customer to start out wi th a small unit then add additional units as demand increases without having to replace the initial investment.
• Used in parallel they provide redundancy to the station so the station is never out of operation if a compressor goes down.

8

 

 

Private sector projects, including infrastructure, oil & gas, disaster relief, insurance funded damage rehabilitation, low income and high end residential projects, mining projects and commercial buildings are growing in number as Southeast Asian regional economies expand at above average rates. These markets are determined to be relatively open to new qualified bidders and Infrastructure will continue to seek opportunities to win contracts in these markets.

                                                                             

Infrastructure’s demonstrated capacity to perform work in this region and our physical presence in Thailand provide it with a solid base for regional expansion. Nonetheless, Infrastructures has suspended bidding in the region at this time due to low project margins and increased competition.

 

Alternative Fuels Market

 

CNG is entrenched in a variety of states, notably Arizona, southern California, Colorado, Utah and Louisiana. Cleanfield believes CNG use will predictably expand out from these core areas and along corridors linking these areas. For this reason, Infrastructure selected the Southwestern United States as its initial target market, beginning in Arizona. CNG is already a significant market presence in nearby California and Utah. As a major corridor between these early adopters, Arizona is well situated to be the next takeoff point in CNG adoption, providing an ideal ground-floor opportunity. Competition remains limited, giving Cleanfield the opportunity to establish its presence early and build a base for subsequent expansion, rather than entering the already competitive markets of Utah and Southern California.

 

Arizona is also in the midst of an effort to position itself as a major center for alternative energy development, building from a dominant position in the solar energy industry and expanding into other alternative energy fields. Cleanfield has been granted membership to the exclusive Valley of the Sun Clean Cities Coalition through 2012. The coalition is a group of public agencies and prominent corporations committed to expanding alternative energy use. Coalition members already operate nearly 7,000 alternative fuel vehicles and displace some 30 million gallons of petroleum fuel annually with alternative fuels such as natural gas, biodiesel, propane, ethanol, and electricity. According to a 2010 survey, this represents 10% of the annual consumption of alternative transportation fuel in the U.S. Coalition members have set the target of having one million Alternative Fuel Vehicles in the U.S., with fleet operators in the coalition holding a mandate to reduce carbon footprints. Area companies participating in the initiative include:

 

• AT&T
• Coca-Cola
• Enterprise Holdings (Enterprise, Alamo, National)
• FedEx
• Frito-Lay
• General Electric
• OSRAM Sylvania
• PepsiCo
• Rider Trucks
• Schwan’s Staples
• Thyssen/Krupp elevators
• UPS
• Verizon

 

Approximately 58% of Arizona’s population lives in cities of 100,000 or more, the highest ratio in the U.S. This population concentration makes it easy to reach a large percentage of the populace with a network of strategically located facilities.

10

 

 

In additional to Arizona, Cleanfield is beginning to focus on areas in and around the gas-rich states of Oklahoma and Texas, which are being heavily promoted and rapidly adopting CNG for vehicles. Louisiana will likely be Cleanfield's jumping off point in the area as the company has been making inroads to landing conversion contracts there in recent months.

 

Patents, Trademarks, Licenses, Franchises,

Concessions, Royalty Agreements and Labor Contracts

 

We currently have no patents, trademarks, concessions, or labor contracts.  Our proprietary software is safeguarded by the terms and conditions of our development agreement with the software developer which includes our exclusive ownership of the software and confidentiality provisions.

 

Governmental and Environmental Regulation

 

Doing Business with Nationals of Countries identified by the U.S. as State Sponsors of Terrorism

 

The U.S State Department and the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) has identified Iran, Sudan and Syria as state sponsors of terrorism, and forbade the sale of goods or services by U.S. persons or companies to these countries or to agents of the respective governments of these countries. On April 27, 2007 WWA Group received a “cease and desist” order from OFAC proscribing the sale of equipment or services, or facilitating the sale of equipment or services to persons with registered addresses in Iran, Syria or Sudan. WWA Group has never sold equipment at auction or delivered equipment to countries or to agents of the respective governments of those countries that OFAC has identified as state sponsors of terrorism. However, we had in the past sold equipment to private individuals or companies resident in Iran, Sudan or Syria who may have, on their own accord, have exported such purchased equipment to their country of residence. Since May of 2007 until the disposition of World Wide Auctioneers in October of 2010, in compliance with the OFAC “cease and desist” order, we enforced a strict policy of prohibiting the sale of equipment to any persons or companies that  register to bid using addresses in Iran, Sudan or Syria. On January 13, 2012 we received a Cautionary Letter from OFAC as a final enforcement response to apparent violations in lieu of a civil penalty.

 

Climate Change Legislation and Greenhouse Gas Regulation
 
Many studies over the past couple decades have indicated that emissions of certain gases contribute to warming of the Earth’s atmosphere. In response to these studies, many nations have agreed to limit emissions of “greenhouse gases” or “GHGs” pursuant to the United Nations Framework Convention on Climate Change, and the “Kyoto Protocol.” Although the United States did not adopt the Kyoto Protocol, several states have adopted legislation and regulations to reduce emissions of greenhouse gases. Additionally, the United States Supreme Court has ruled, in Massachusetts, et al. v. EPA, that the EPA abused its discretion under the Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources. As a result of the Supreme Court decision the EPA issued a finding that serves as the foundation under the Clean Air Act to issue other rules that would result in federal greenhouse gas regulations and emissions limits under the Clean Air Act, even without Congressional action. Finally, acts of Congress, particularly those such as the “American Clean Energy and Security Act of 2009” approved by the United States House of Representatives, as well as the decisions of lower courts, large numbers of states, and foreign governments could widely affect climate change regulation. Nonetheless, even in the event climate legislation or regulation is effected, we do not believe that developments would have a material adverse effect on our business, financial condition, and results of operations.

 

 

We believe that WWA Group is in compliance in all material respects with all laws, rules, regulations and requirements that affect its business.

 

11

 

 

Employees

 

At December 31, 2011, WWA Group has no full-time employees. Asset Forum employs no full-time employees. Infrastructure has two full-time employees and numerous contractors. Our management expects to continue to use consultants, attorneys, and accountants as necessary, to complement services rendered by our employees.

 

Reports to Security Holders

 

WWA Group’s annual report contains audited financial statements. We are not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to our security holders unless a request is made for such delivery. We file all of our required reports and other information with the Securities and Exchange Commission (the “Commission”). The public may read and copy any materials that are filed by WWA Group with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The statements and forms filed by us with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at http://www.sec.gov.

 

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.

 

A significant percentage of corporate control lies in the hands of one shareholder.

 

Asia8, Inc. owns and controls voting power over a significant number of WWA Group’s issued and outstanding shares. The concentration of such a large percentage of our stock in the hands of one shareholder may have a disproportionate effect on the voting power of minority shareholders on any and all matters presented to WWA Group’s shareholders.

 

 

 

 

 

 

12

 

 

Our internal controls over financial reporting may not be considered effective, 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. Since we are unable to continue to assert that our internal controls are effective, 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.

 

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.

 

 

 

 

 

 

 

 

 

 

 

14

 

 

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 1B.        UNRESOLVED STAFF COMMENTS

 

Not applicable.

 

ITEM 2.          PROPERTIES

 

WWA Group currently maintains limited executive office space at 700 Lavaca Street, Suite 1400, Austin, Texas 78701 for which it pays rent of $60 a month on a recurring basis

 

WWA Group does not believe that it will need to maintain a larger office at any time in the foreseeable future in order to carry out its operations.

 

ITEM 3.                      LEGAL PROCEEDINGS

 

OFAC Pre-Penalty Notice

 

On August 5, 2009 WWA Group, Inc. received a Pre-Penalty Notice (“Notice’) from the Office of Foreign Assets Control (“OFAC”). The Notice was issued based on OFAC’s belief that WWA Group has engaged in certain transactions prohibited by Executive Order(s) and or Regulations promulgated pursuant to the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq. in connection with the facilitation of auction related services to Iran and Sudan. The perceived violations initially caused OFAC to seek a civil monetary penalty of $4,665,600 be imposed on WWA Group subject to adjustment based on evidence presented in response to the Notice. On January 13, 2012 WWA Group received a Cautionary Letter from OFAC as a final enforcement response to apparent violations in lieu of a civil penalty.

 

ITEM 4.          (REMOVED AND RESERVED)

 

Removed and reserved.

 

 

 

 

 

15

 

 

 

PART II

 

ITEM 5.          MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

 

WWA Group’s common stock is quoted on the Over the Counter Bulletin Board, a service maintained by the Financial Industry Regulatory Authority (FINRA), under the symbol “WWAG”. Trading in the common stock over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. These prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions. The high and low bid prices for the common stock for each of the quarters listed below are as follows:

 

 

Capital Stock

 

The following is a summary of the material terms of WWA Group’s capital stock. This summary is subject to and qualified by our articles of incorporation and bylaws.

 

Common Stock

 

As of April 13, 2012, there were 884 shareholders of record holding a total of 22,591,922 shares of fully paid and non-assessable common stock of the 50,000,000 shares of common stock, par value $0.001, authorized. The board of directors believes that the number of beneficial owners is substantially greater than the number of record holders since shares of our outstanding common stock are held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

 

Preferred Stock

 

WWA Group has not authorized shares of preferred stock.

 

Warrants

 

WWA Group has no share purchase warrants.

 

16

 

 

 

Stock Options

 

WWA Group has no stock options.

 

Transfer Agent and Registrar

 

WWA Group’s transfer agent and registrar is Interwest Transfer Company, 1981 E. Murray-Holladay Road, Holladay, Utah, 84117–5164. Interwest’s phone number is (801) 272-9294.

 

Purchases of Equity Securities made by the Issuer and Affiliated Purchasers

 

None.

 

Recent Sales of Unregistered Securities

 

None.

 

ITEM 6.          SELECTED FINANCIAL DATA

 

Not required.

 

ITEM 7.          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.While the sale of World Wide in 2010 eliminated virtually all of our outstanding liabilities and resulted in a net profit in that period to WWA Group, the resultant loss of income producing activities is formidable. We expect that WWA Group will continue without income into 2012 when management believes revenues will be restored with the commercialization of the Asset Forum internet platform which matches buyers with sellers of construction equipment and real estate around the world. The uncertainty associated with OFAC was resolved in January of 2012 so the formerly hindered development of Asset Forum now has a way forward.

 

 

 

17

 

Meanwhile, we have agreed to assist in the management of World Wide during a transitional period that will extend until December 31, 2012 for which assistance we are to receive a management fee. Over this transitional period we will (i) train management, (ii) promote operating efficiencies in Dubai, and (iii) consult as to the use of lower cost venues including on-line auctions and smaller equipment auctions.

 

Asset Forum

 

WWA Group’s business strategy going forward is to build Asset Forum into a global internet hub for the buying and selling of assets. Management has long recognized the trend towards a web based marketplace that utilizes contemporary technology to safely bring buyers and sellers together. Asset Forum is the necessary outcrop of that trend.

 

Asset Forum is an Arizona based company that provides an international listing service that matches sellers with buyers for heavy equipment and real estate. We have supplemented Asset Forum's distinctive listing service with our on-line auction software to perform the actual bidding and selling function of items for   on-line auction. The Asset Forum business model is based on advertising assets for sale in a “free listing by owner” format that provides listing services for owners over a broad range of asset categories. The platform includes a unique forum function that enables the viewer to post comments on the items displayed and permits buyers to deal directly with sellers which we have enhanced with our proprietary on line bidding and search engine software. Asset Forum’s combination of open forum, owner direct and customized auctions in one marketplace for buyers and sellers attracted thousands of asset listings in 2011.

WWA Group is yet to realize revenue from the operation of Asset Forum yet the model for generating income from this type of web based sales facility exists. Management plans to increase awareness of Asset Forum from a database of former clients garnered from many years in the physical auction business and from a host of prospective new clients used to being able to buy and sell through existing electronic sales facilities. The transition of new visitors to the Asset Forum website will be accomplished by marketing the site through trade journals, magazines, websites and trade shows. Once a critical mass of buyers and sellers, yet to be determined, has been reached management intends to include an income producing component onto the site.

 

Management expects that the income producing component will be based on commissions earned from sellers on the actual sale of assets listed for on line auction on Asset Forum’s web site.  Commissions will range from 2% to 12% depending on the value of the item sold and negotiations with the seller(s).  Asset Forum will also charge a buyer’s premium ranging from 1% to 7% depending on the value of the item.  Seller’s commissions and buyer’s premiums will comprise the bulk of revenue generated.  Asset Forum’s seller’s commission and buyer’s premiums are generally lower on average than the industry standards being charged by competing models. Other revenue can be generated by the gross profit margin earned by items bought by Asset Forum for its own account, and sold at on line auction.  In certain cases, Asset Forum will also negotiate with a seller to take a percentage of the sold price amount over a certain minimum selling price, rather than a seller’s commission.   

 

Infrastructure

 

WWA Group maintains a consolidated 57.6% equity interest in Infrastructure, a project management company due to the conversion of a promissory note due into shares of Infrastructure on November 21, 2011.  We believe that despite competitive pricing pressures, a significant number of projects fall within the criteria expressed by Infrastructure and that alternative fuel conversions will become widespread as fuel prices rise and fueling infrastructure becomes available.

 

18

 

Since each of WWA Group and Infrastructure share common management we believe that there exists an opportunity to utilize our international presence and existing relationships to assist Infrastructure in procuring new projects and managing existing ones. Management recognizes that Infrastructure’s success is critical to any gain on its investment. The effect being we work with Infrastructure on an as needed basis to provide any assistance that might be required and within our ability to assist.

 

WWA Group’s business development strategy is prone to significant risks and uncertainties which are having an immediate impact on its efforts to realize net cash flow from the development of Asset Forum. Further, we have a limited history of generating income from our equity investments and are yet to realize any return on our investment in Infrastructure. Should WWA Group be unable to generate income or reduce expenses to the point where it can meet operating expenses through debt or equity financing, which can in no way be assured, WWA Group’s ability to continue its business operations will remain in jeopardy.

 

Results of Operations

 

During the year ended December 31, 2011, WWA Group (i) maintained Asset Forum, (ii) acquired a consolidated majority interest in Infrastructure, (iii) concluded the OFAC matter, and (iii) satisfied continuous public disclosure requirements.

 

The results of operations presented herein for the years ended December 31, 2011 and 2010 present WWA Group and (i) its wholly owned subsidiary, Asset Forum LLC, a company founded by WWA Group in the state of Nevada on January 7, 2010, (ii) Infrastructure Development Corp., and (iii) World Wide and its operating subsidiaries as discontinued operations and accordingly do not include details of revenue, gross profits, or operating expenses related to World Wide or its operating subsidiaries during such periods.

 

Net Loss

 

Net loss for the year ended December 31, 2011, increased to $4,499,299 from $1,660,570 for the year ended December 31, 2010, an increase of 171%. The increase in net loss over the comparative periods is primarily due to impairment of its notes receivables and the conversion of WWA Group’s investment in IDVC into equity.  The equity in Infrastructure was valued at year end 2011 at the lower of cost or market, and as such, the recent losses incurred by Infrastructure resulted in a book value of the equity much lower than the amount of debt converted.  WWA Group anticipates that it will continue to realize net losses through 2012 or until such time as Asset Forum realizes revenue or WWA Group realizes a return on its 57.6% equity purchase in Infrastructure.

 

Revenue

 

Revenue for the year ended December 31, 2011 was nil as compared to $84,770 for the year ended December 31, 2010. The decrease in revenues over the comparative periods can be attributed to the elimination of revenues from commissions, services and revenues from sales of equipment prior to the disposition of World Wide Auctioneers.WWA Group does not expect to realize revenue until such time as it can develop Asset Forum into a commercial platform.

 

Gross Loss (Profit)

 

Gross profit for the year ended December 31, 2011 was nil as compared to a gross profit of $6,753 for the year ended December 31, 2010. The transition to gross loss over the comparative periods can be primarily attributed to the elimination of revenue from commissions and services from sale of equipment. WWA Group does not expect to realize gross profits until such time as Asset Form produces revenue.

19

 

 

Operating Expenses

 

Operating expenses for the year ended December 31, 2011 decreased to $126,816 from $207,638 for the year ended December 31, 2010, a decrease of 39%. The decrease in expenses over the comparative periods can be primarily attributed to management’s imposition of operating efficiencies. The major components of operating expenses are (i) general and administrative expenses, including professional fees, rent expense, travel and entertainment, representation expense, insurance, bank charges, and maintenance expenses, (ii) salaries and wages, (iii) selling expenses, and (iv) depreciation and amortization. WWA Group anticipates that operating expenses will increase in future periods as the development of Asset Forum moves forward.

 

Depreciation and amortization expenses for the year ended December 31, 2011 was $0 as compared to $18,827 for the year ended December 31, 2010. Depreciation and amortization expenses are not anticipated in future periods until such time as capital is invested in business operations.

 

Other Expenses

 

Other expenses for the year ended December 31, 2011 increased to $4,384,594 from $270,929 for the year ended December 31, 2010, due to an impairment of notes receivables and impairment of investments in Infrastructure due to acquisition of 63.38% share holding in Infrastructure.

 

Discontinued Operations

 

Loss from the discontinued operations of World Wide and Crown for the year ended December 31, 2011 decreased to $0 from $439,531 for the year ended December 31, 2010.

 

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 deficit of $282,873 as of December 31, 2011 as compared to a working capital surplus of $3,101,453 as of December 31, 2010. At December 31, 2011, our current assets were $96,136, which consisted of $49,010 in cash, $32,406 in prepaid expenses, and $14,719 in other current assets. Our total assets were $277,386 which included current assets and goodwill of $181,250. Our current and total liabilities were $560,259. Our total stockholders’ liability at December 31, 2011 was $282,874.

 

Cash flows provided by operating activities for the year ended December 31, 2011, were $11,274 as compared to cash flows used in operating activities for the year ended December 31, 2010 of $4,709,314. The change to cash flow provided by operating activities in the year ended December 31, 2011 can be attributed primarily to the impairment of notes receivable and investment, other current assets, accounts payable and accrued liabilities offset by net loss. We do not expect to continue to provide cash flows from operations in 2012.

 

20

 

 

 

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.

 

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 the activities of Asset Forum. 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 for recent accounting pronouncements.

 

Stock-Based Compensation

 

We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.

 

We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

 

ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required.

 

ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Our audited financial statements for the years ended December 31, 2011 and 2010 are attached hereto as F-1 through F-23.

 

WWA GROUP, INC. AND SUBSIDIARIES

Years Ended December 31, 2011 and 2010

 

Contents

 

 

                                                                                                                         Page

 

Report of Independent Registered Public Accounting Firm                  F-2

 

Consolidated Balance Sheets                                                             F-3                

 

Consolidated Statements of Income                                                   F-4

 

Consolidated Statement of Stockholders’ Equity                                 F-5

 

Consolidated Statements of Cash Flows                                            F-6

 

Notes to Consolidated Financial Statements                                       F-7                                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-1

 

Pinaki & Associates LLC

Certified Public Accountants

625 Barksdale Rd., Ste# 113

Newark, DE  19711

   Phone: 408-896-4405 | pmohapatra@pinakiassociates.com

 

To the Board of Directors

WWA Group, Inc.

700 Lavaca Street, Suite 1400

Austin, Texas 78701

 

We have audited the accompanying consolidated balance sheets of WWA Group, Inc. and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity and cash flows for the years ended December 31, 2011 and 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The Company's financial statements as of December 31, 2010 and the year then ended were audited by other auditors whose report thereon, dated  April 14, 2011, expressed an unqualified opinion on those statements. The predecessor auditors reported on those financials before they were restated. As of the date of issuance of this report, the predecessor auditors have ceased operations with respect to public entities.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WWA Group, Inc. and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity and cash flows for the years ended December 31, 2011 and 2010, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has suffered recurring losses from operations that raises a substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Pinaki & Associates, LLC

 

Pinaki & Associates, LLC

Hayward, CA

April 12, 2012

 

F-2

 

 

 

 

 

 

 

 

\\\\

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

F-5

 

 

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”) in which it currently holds a consolidated 63.38% equity position.

 

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^st, 2011 WWA Group owned 63.38% of Infrastructure making it a controlling shareholder of Infrastructure causing the Infrastructure financials to be consolidated with those of WWA Group, Inc.  Therefore, the financials of Infrastructure as of December 31, 2011 has been consolidated with WWA group Inc.

 

WWA Group includes the accounts of (i) its wholly owned subsidiary, Asset Forum LLC, a company founded by WWA Group in the state of Nevada on January 7, 2010, and (ii) Infrastructure.

 

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.

 

 

 

F-7

 

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 December 31, 2011 and 2010, 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.

 

 

F-8

 

 

 

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Investment in Related Party

 

WWA Group did not have any investment in related party as of December 31, 2011 and December 31, 2010. 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. For the years ended December 31, 2011 and 2010 the loss on equity investment includes $2,475,661 and $29,900 respectively of impairment charge. 

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-10

 

 

 

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

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 to Infrastructure to equity as a result of which as of December 31, 2011 WWA Group owns approximately 63% of common stock of Infrastructure. WWA Group recorded a gain of $0 for the year ended December 31, 2011 and $47,353 for the year ended December 31, 2010. As WWA Group has become majority share holder of Infrastructure as of November 21, 2011, the financials of Infrastructure as of December 31, 2011 has been consolidated with WWA Group Inc for reporting purpose.

 

 

 

NOTE E – NOTES RECEIVABLE

 

Notes receivable as of December 31, 2010 include $2,442,003 of advances provided to Intelspec International Inc, US an affiliate which operates an International project management company in Thailand, Cambodia and rock crushing and stone quarry in UAE.  The notes bear no interest and are payable on demand. During 2011 WWA Group converted this Notes Receivable to Common Stock of Infrastructure.

 

 

NOTE F – SHORT TERM BORROWINGS AND LINES OF CREDIT

 

WWA Group has short term borrowings from unrelated entities. The notes are unsecured, are due upon demand, and require payment of interest at a monthly rate of 2% to 3%, to be added to the principal loan amount. The notes payable represents the total borrowings of $361,840 and $7,000 under the note as of December 31, 2011 and 2010, respectively. The interest expense on these borrowings amounted to $0 and $318,282 in the years ended December 31, 2011 and 2010, respectively.

F-14

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

 

NOTE G – 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:

 

 

F-15

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

NOTE H – INCOME TAXES

 

 

 

 

 

At December 31, 2011, WWA Group has approximately $2.1 million of federal and $1.6 million of state net operating loss carry forwards to offset future taxable income. The federal carry forwards begin expiring in 2023 and the state carry forwards begin expiring in 2010. Utilization of these net operating losses is dependent upon the tax laws in effect at the time such losses can be utilized. The losses will be limited based upon future changes in ownership.

 

WWA Group has determined that undistributed earnings from Worldwide Dubai will be reinvested in the business indefinitely and that such earnings will not be distributed to the U.S. parent. Therefore, in accordance with FASB Accounting Standard Codification, ASC 740-30, Accounting for Income Taxes - Special Areas, no income tax provision has been recorded for the undistributed earnings.

 

 

 

NOTE I – RELATED PARTY TRANSACTIONS

 

As of December 31, 2011 WWA Group has no related party investments.

 

As of December 31, 2011 WWA Group had $0 ($2,442,003 in 2010) in advances provided to Intelspec International Inc, an affiliate. (Also see Note E).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-16

 

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

NOTE J – 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.

 

OFAC Pre-penalty Notice

 

On August 5, 2009 WWA Group, Inc. received a Pre-Penalty Notice (“Notice’) from the Office of Foreign Assets Control (“OFAC”). The Notice was issued based on OFAC’s belief that WWA Group has engaged in certain transactions prohibited by Executive Order(s) and or Regulations promulgated pursuant to the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq. in connection with the facilitation of auction related services to Iran and Sudan. The perceived violations have caused OFAC to propose a civil monetary penalty of $4,665,600 to be imposed on WWA Group subject to adjustment based on evidence presented in response to the Notice.

 

The Notice process permits WWA Group to contact OFAC by telephone to initiate settlement discussions or otherwise provide a written response to the perceived violations within the permitted notice period prior to the issuance of a Penalty Notice.

The Office of Foreign Assets Control (OFAC) has issued a Cautionary Letter instead of pursuing a civil penalty in connection with the company’s involvement in the provision of auction related services to individuals located in Iran and Sudan on or about June 1, 2003 to on or about June 19, 2006.

The Cautionary Letter represents OFAC’s final enforcement response to apparent violations by WWA Group but does not constitute a final agency determination as to whether a violation of either the Iranian Transactions Regulations, 31 C.F.R. part 560 or the Sudanese Sanctions Regulations, 31 C.F.R. part 538 actually occurred. Nothing in the Cautionary Letter precludes OFAC from seeking further action in the future should additional information warrant renewed attention.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-17

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

 

NOTE K – SEGMENT INFORMATION

 

WWA Group has adopted FASB Accounting Standard Codification Topic 280, "Disclosure about Segments of an Enterprise and Related Information." WWA Group once conducted its operations principally in auctions of heavy equipment through World Wide and in ship chartering through Crown.

 

a) Certain financial information concerning WWA Group's operations in different segments is as follows:

 

 

 

(b) Information of geographic area of revenue:

 

F-18

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

NOTE L - DISCONTINUED OPERATIONS

 

On October 31, 2010 WWA Group sold its 100% interest in its wholly owned subsidiaries, World Wide Auctioneers and Crown Diamond Holdings to Seven International Holding Ltd. at a consideration of $10.

 

The analysis of the total loss on disposal, carrying values of assets and liabilities disposed, and the net cash inflow from the disposal is as shown below.

 

The results of the discontinued operations and the cash flows from discontinued operations in the financial year ended December 31, 2010 and the comparative results have been restated accordingly.

 

a)      The result of the discontinued operations are as follows:

 

 

b)      Cash flows from discontinued operations

 

F-19

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

NOTE M –RESTATEMENT OF FINANCIAL STATEMENTS

 

Before re-audit and restatement of WWA Group’s financial statements as of December 31, 2010 and for the year then ended, the financials were audited by other auditor whose report thereon expressed an unqualified opinion on those reports.

 

WWA Group has restated the statement operations for the years ended December 31, 2010 to include the impact of discontinued operations.

                                                                  

Condensed Consolidated Statement of Operations for the year ended December 31, 2010:

 

 

                                                                                

                                                                                                                   

 

 

 

 

F-20

 

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

NOTE-N- CONSOLIDATION AND MINORITY INTERESTS (Continued)

Consolidation

 

Following are the Infrastructure financials for consolidation with WWA Group:

 

Infrastructure Balance Sheet as on

 

 

Consolidated Statement of Operation For the period from November 21, 2011 to December 31, 2011

 

F-22

 

 

 

WWA GROUP, INC. AND SUBSIDIARIES

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010 (RESTATED)

 

 

 

 

NOTE-N- CONSOLIDATION AND MINORITY INTERESTS (Continued)

Consolidated Statement of Operation For the period from November 21, 2011 to December 31, 2011

 

Minority Interest

This note gives details of the WWA Group’s minority interests and shows the movements during the year:

 

 

NOTE O - SUBSEQUENT EVENTS

 

WWA Group evaluated its December 31, 2011 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.

 

F-23

 

ITEM 9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.       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) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of December 31, 2011. 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 ineffective 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 not accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

 

Management’s Report on Internal Control over Financial Reporting

 

The management of WWA Group is responsible for establishing and maintaining adequate internal control over financial reporting. WWA Group’s internal control over financial reporting is a process, under the supervision of the chief executive officer and the chief financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of WWA Group’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

 

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of WWA Group’s assets;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of WWA Group’s assets that could have a material effect on the financial statements.

 

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

 

24

 

WWA Group’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment did not identify any material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.

 

WWA Group identified the following material weakness:

 

Lack of Appropriate Independent Oversight.  The board of directors has not provided an appropriate level of oversight of the Company’s consolidated financial reporting and procedures for internal control over financial reporting since there are, at present, no independent director who could provide an appropriate level of oversight, including challenging management’s accounting for and reporting of transactions. Our lack of appropriate independent oversight has been a material weakness since inception due to the interested nature of those individuals who comprise our board of directors. We believe that this control deficiency did result in a restatement of our annual financial statements in 2010 which could have been prevented or detected by independent oversight. Accordingly we have determined that this control deficiency constitutes a material weakness.

 

WWA Group intends to remedy the material weaknesses by:

 

• Forming an audit committee made up of independent directors that will oversee management (we have begun this process by seeking out individuals who might act as independent directors).

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls over Financial Reporting

 

During the period ended December 31, 2011, 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.

 

9B.                   OTHER INFORMATION

 

None.

 

 

 

 

 

 

 

 

 

25

 

PART III

 

ITEM 10.        DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Officers and Directors

 

The following table sets forth the name, age and position of each director and executive officer of WWA Group:

 

 

 

Eric Montandon was appointed as an officer and director of WWA Group in August of 2003. He will serve until the next annual meeting of our shareholders and his successor is elected and qualified.

 

Business Experience:

 

Mr. Montandon joined the board of directors of Asia8, Inc., in 2000 and became its CEO and CFO. He and was instrumental in Asia8, Inc.’s acquisition and development of World Wide. His primary business focus has been on those two companies and WWA Group since 2003. In 1994 Mr. Montandon was involved in forming Momentum Asia, Inc., a design and printing operation in Subic Bay, Philippines. He operated this company as its CEO until the middle of 2000. Between 1988 and 1992 he worked for Winius-Montandon, Inc. as a commercial real estate consultant and appraiser in Phoenix, Arizona.

 

Officer and Director Responsibilities and Qualifications:

 

Mr. Montandon is responsible for the overall management of WWA Group and is involved in many of its day-to-day operations, finance and administration.

 

Mr. Montandon graduated from Arizona State University in 1988 with a Bachelor’s Degree in Business Finance. He has worked with early stage companies for the past two decades.

 

Other Public Company Directorships in the Last Five Years:

 

Over the last five years Mr. Montandon has been an officer and director of two public companies: Asia8, Inc., a holding company with a significant interest in WWA Group (from February 2000 to present) (chief executive officer, chief financial officer and director), and Net Telecommunications, Inc., formerly a telecommunications service provider (from September 2000 to present) (director).

 

Digamber Naswa was appointed as an officer and director of WWA Group in August of 2003. He will serve until the next annual meeting of our shareholders and his successor is elected and qualified.

 

26

 

 

Business Experience:

 

Mr. Naswa has been the financial controller of World Wide since 2002. Between 2000 and 2002 he was the financial controller of Trust Garment Factory, Ltd., a U.A.E.-based clothing manufacturer, exporter and importer. Between 1996 and 2000 he was the deputy general manager with Xpro India, Ltd. (a division of Cimmico Birla) an India-based producer of a wide range of plastic goods.

 

Officer and Director Responsibilities and Qualifications:

 

Mr. Naswa is responsible for managing the financial risks of WWA Group. He also provides our financial planning and our record keeper. He works with accountants to review financial reports and assists in the preparation of our annual and interim financial statements. He also is responsible for WWA Group’s periodic financial reporting to our CEO and the board of directors.

 

Mr. Naswa is a science graduate from the Kurukshetra University, India. He finished his Chartered Accountancy from the Institute of Chartered Accountants of India in 1984. He spent almost 20 years serving different industries in India and the United Arab Emirates in his various capacities as accounts officer, finance manager, deputy general manager and financial controller.

 

Other Public Company Directorships in the Last Five Years:

 

Over the last five years Mr. Naswa has not been an officer or director of any other public company.

 

Yogesh Saxena was appointed to our board of directors in April 2005. He will serve until the next annual meeting of our shareholders and his successor is elected and qualified.

 

Business Experience:

 

Mr. Saxena has been responsible for accounting with World Wide since 2005. Between 1999 and 2002 he was the finance controller of the Blitz Readymade Garments Factory Ltd., a U.A.E.-based clothing manufacturer and exporter. From 2003 to 2004 he served as general manager of finance with Ivory Garments Factory LLC, a Jordan-based garment manufacturing company.

 

Director Qualifications:

 

Mr. Saxena graduated with Degree in Commerce from the Rohtak University, India in 1981. He is also qualified as an Intermediate Chartered Accountant from Institute of Chartered Accountants of India and Institute of Company Secretaries of India.

 

Other Public Company Directorships in the Last Five Years:

 

Over the last five years Mr. Saxena has not been an officer or director of any other public company.

 

Term of Office

 

Our directors have been elected or appointed to the board of directors for a one year term or until the next meeting of our shareholders or until removed in accordance with our bylaws. Our executive officers were appointed by the board of directors and hold office at the discretion of the board.

 

 

27

 

 

Family Relationships

 

There are no family relationships between or among the directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

During the past ten years there are no events that occurred related to an involvement in legal proceedings that are material to an evaluation of the ability or integrity of any of WWA Group’s directors, persons nominated to become directors or executive officers.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Based solely upon a review of Forms 3, 4 and 5 furnished to WWA Group, WWA Group is unaware of any Section 16(a) Beneficial Ownership Reporting Compliance persons who, during the period ended December 31, 2011, failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act of 1934.

 

Code of Ethics

 

WWA Group has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions. WWA Group has incorporated a copy of its Code of Ethics as Exhibit 14 to this Form 10-K. Further, the WWA Group’s Code of Ethics is available in print, at no charge, to any security holder who requests such information by contacting us.

 

Board of Directors Committees

 

Our board of directors has established an audit committee comprised of Eric Montandon, Digamber Naswa and Yogesh Saxena. However, the audit committee is yet to adopt a definitive charter though it typically reviews, acts on, and reports to the board of directors with respect to various auditing and accounting matters. The matters typically considered by WWA Group’s audit committee include recommendations as to the performance of its independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, and internal accounting and financial control policies and procedures. Mr. Naswa, who is not considered “independent,” serves as our audit committee “financial expert” as these terms are defined by the applicable Commission rules. Certain stock exchanges currently require companies to adopt a formal written charter that establishes an audit committee that specifies the scope of an audit committee’s responsibilities and the means by which it carries out those responsibilities. In order to be listed on any of these exchanges, we will be required to adopt a definitive charter for our audit committee.

 

The board of directors has not established a compensation committee.

 

Directors Compensation

 

Directors receive no compensation for their services as directors. We do not anticipate adopting a provision for compensating directors in the foreseeable future.

 

 

 

28

 

 

 

ITEM 11.        EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

The objective of WWA Group’s compensation program is to incentivize our executive officers for services rendered with salaries. We utilize this form of compensation since we feel that this compensatory element is adequate to retain and motivate our executive officers. The amounts we have deemed appropriate to compensate our executive officers were determined in accordance with compensatory packages for similarly sized companies with common operations, though we have no specific formula to determine compensation. While we have determined that our current compensatory program is appropriately suited to accomplishing our current objectives, we may in the future expand our compensation program to include additional benefits as WWA Group realizes its objectives.

 

Compensation paid to our chief executive officer for the year ended December 31, 2011 was $0 as compared to $72,000 for the year ended December 31, 2010. The decrease in the current period can be attributed to the lack of revenue generating activities subsequent to the disposition of World Wide Auctioneers in the prior period.

 

Compensation paid to our chief financial officer for the year ended December 31, 2011 was $0 as compared to $104,000 for the year ended December 31, 2010. The decrease in the current period can be attributed to the lack of revenue generating activities subsequent to the disposition of World Wide Auctioneers in the prior period.

 

WWA Group expects to increase the compensation granted to each of its executive officers to include an increase in salary and compensation in the form of stock options in future periods.

 

Table

 

The following table provides summary information for 2011 and 2010 concerning cash and non-cash compensation paid or accrued by WWA Group to or on behalf of (i) the chief executive officer and the chief financial officer and (ii) any other employee to receive compensation in excess of $100,000.

 

 

Although WWA Group did adopt The 2006 Benefit Plan of WWA Group, Inc. in April of 2006, no stock compensation in any form has been granted to executive officers.

 

WWA Group has no employment agreements with its executive officers.

29

 

 

WWA Group has no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement.

 

WWA Group has no agreement that provides for payment to our executive officers at, following, or in connection with the resignation, retirement or other termination, or a change in control of WWA Group or a change in our executive officers responsibilities following a change in control.

 

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information concerning the ownership of WWA Group’s common stock as of April 13, 2012, with respect to (i) all directors; (ii) each person known by us to be the beneficial owner of more than 5% of our common stock; and (iii) our directors and executive officers as a group.

 

 

* Eric Montandon holds 300,000 shares of WWA Group common stock in his own name with Adderley Davis & Associates Ltd., and is considered the beneficial owner of the 3,966,482 shares held by Asia8, Inc., a publicly reporting company, since he acts a director and the chief executive officer of Asia8, Inc.

 

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in−laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed transaction which, in either case, has or will materially affect us.

 

Director Independence

 

Our common stock is listed on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Accordingly, we do not have any independent directors.

30

 

 

 

ITEM 14.        PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fees

 

Pinaki & Associates LLC (“Pinaki”) provided audit services to WWA Group in connection with its annual report for the fiscal year ended December 31, 2011 and December 31, 2010. The aggregate fees billed by Pinaki for our annual financial statements and a review of our quarterly financial statements in 2011 were $15,000 and the aggregate fees billed by Pinaki for our annual financial statements and review of our quarterly financial statements in 2010 were $39,000.

 

Audit Related Fees

 

Pinaki billed WWA Group no fees in 2011 or 2010 for professional services that are reasonably related to the audit or review of our financial statements that are not disclosed in “Audit Fees” above.

 

Tax Fees

 

Pinaki billed WWA Group no fees in 2011 or 2010 for professional services rendered in connection with the preparation of our tax returns and the provision of tax advice for the respective periods.

 

All Other Fees

 

Pinaki billed WWA Group no fees in 2011 or 2010 for other professional services rendered or any other services not disclosed above.

 

Audit Committee Pre-Approval

 

WWA Group’s Audit Committee pre-approved the engagement of Pinaki to act as its independent auditor for the fiscal years ended December 31, 2011 and December 31, 2010.  Pinaki performed all work only with their permanent full time employees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

PART IV

 

ITEM 15.        EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a) Consolidated Financial Statements

 

The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages F-1 through F-23, and are included as part of this Form 10-K:

 

            Financial Statements of WWA Group for the years ended December 31, 2011 and 2010:

 

Reports of Independent Registered Public Accounting Firms                 

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statement of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

                                                                                                                                                                                       

(b) Exhibits

 

The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 34 of this Form 10-K, and are incorporated herein by this reference.

 

(c) Financial Statement Schedules

 

We are not filing any financial statement schedules as part of this Form 10-K because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

 

 

 

 

32

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

                                                                                   

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.                      

 

33