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					                                                                                                   by Sergiu Lisnic, CFA

                                                                                                            July 15, 2004

                         WWA GROUP. INC.: OTC BB "WWAG.OB"
                                                 Rating: Speculative Buy
                                             12 month target price: $2.20/share
Financial Summary                                                 US$ ’000               2003     2004E      2005E
52-Week Range                                       $0.25-2.20    Revenue                6,234    10,052      13,310
Recent Price (7/15/04)                                 $1.01      Gross Profit           3,663     6,132      8,186
Market Cap                                           $16.12M      EBITDA                  816      2,619      3,800
Current Shares Outstanding                           15.97M       Operating Income        577      2,095      2,781
Float                                                  7.8M       Pre-tax Income          594      2,040       2,715
Avg. Daily Trading Volume (3 m)                        1,045      Net Income              594      1,725       1,792
Insider Holdings                                      51.15%      Cash                   5,006     4,743      5,020
Institutional Holdings                                  N/A       Total Assets           11,835    19,971     22,597
LTM Revenues                                         $7.05M       Total Liabilities      11,204    17,116     17,950
LTM EPS                                               $0.04       Total Debt              343       1,015       800
FY 2003 Revenues                                         $6.23M   Shareholders’ Equity     631     2,855       4,647
1Q 2004 Revenues                                         $1.67M   Debt/Equity             54%       36%         17%
Fiscal Year-End                                       12/31       ROE                     94%      60%        39%
Current Book Value (per share)                        $0.04       ROA                      5%       9%         8%
Employees (full time + part time)                     31+2        EPS                    $0.04     $0.11      $0.11
Next reporting date                                Aug 10, 2004   PE                     27.60     9.80       9.72
Source: Yahoo! Finance, SEC filings, Analyst Estimates

We are initiating coverage of WWAG with a Speculative Buy rating. The rationale for this
rating is based on very strong industry fundamentals, the quality of WWAG management and
its strategic decision to expand internationally. WWAG recent financial performance
demonstrates the quality of its services and its ability to provide superior growth. WWAG is
currently trading at a 41% discount to its peers based on its FY04E sales and at a discount of
60% based on its FY04E net income. We believe that the company is currently undervalued
our price target of $2.20 is calculated as an average of PE, PSR and DCF valuations. At the
same time, however, this rapidly growing company will have to face significant risks related
to its ability to manage that growth and the uncertainties regarding the pace of growth. In
addition, the company has a small market cap and trading is thin. Taking all the above into
account, we rate the stock as a speculative buy.

Company Background
WWAG is an international equipment auction company located in United Arab Emirates; it organizes
unreserved auctions on a consignment basis for the sale of used equipments for construction, industrial and
transportation purposes. WWAG was formed as a result of a reverse merger between a U.S. company and a
UAE company that had the business. WWAG was first incorporated in 1996 in Nevada, as Conceptual
Technologies, Inc. In 1998 it changed its name to NovaMed Inc to reflect the acquisition of a medical device
manufacturer and retailer. The medical device business was stopped in 2000. In 2003 NovaMed, Inc. entered
into a stock exchange agreement with WWA Dubai Ltd and took the name of WWAG Group, Inc. to reflect its
new business direction.

WWAG maintains a permanent auction site at its headquarters in Dubai, United Arab Emirates and that is
where historically it organized the majority of its auctions. Along with this site the company manages a
business office in Arizona and representative offices in Australia, the Netherlands, Singapore, Hong Kong and

South Africa. An auction site in Phoenix, Arizona will be opened in Q4FY04. WWAG also holds interests in
unreserved auction businesses in Jakarta, Indonesia, and Australia through joint ventures with local registered
auction companies. In Australia and Netherlands WWAG manages auctions for a scaled fee. Up to date these
sites have not provided any fees but the company expects that with increasing brand name recognition,
auctions in those territories will become larger and will start generating fees. The company is also negotiating
a joint venture in Guangzouh China and intends to start another joint venture in the Middle East.

WWAG has the first right to acquire these international partners in which it holds a minority interest. Being
already a shareholder, it is in the position to correctly evaluate these companies and assess the benefits of such
future acquisitions. The strategy of international expansion through joint ventures provides a safe and flexible
means of growing without significant start-up cash outlays; it is a first step towards becoming one of the most
important listed auction organizers in the world.

WWAG is an organizer of unreserved auctions. This type of auctions is characterized by the fact that there is no
minimum or reserve price – each object supplied for the auction is sold to the highest bidder on the auction
day. WWAG focuses its operations on selling for the consignor rather than competing with the bidders and
trading on its own. In this way it eliminates conflicts between its own interests and those of buyers or sellers.
By contract consignors are prohibited to bid on their own consigned items at the auction or to unfold any
operations that could artificially manipulate the auction selling price.

This practice is in contrast with classic auctioneers that are trading a great part of the auction items for their
own accounts. The major difference here is risk. WWAG is not exposed to significant price risk as it does not
purchase a large amount of equipment for its own account; it only generates a fixed or a sliding scale
commission on the sale. Classic auctioneers, instead, expose themselves to price risk as they guarantee a selling
price (theoretically based on very good knowledge on the market) and as a result they require a larger price
discount from the primary seller of the equipment. However, due to unexpected factors a classic auctioner may
have to sell the auctioned items at a price less than it was purchased for. This way a classic auctioneer must
have superior knowledge of the market for the many potentially auctioned items and provides a more certain
price to sellers – but it does that at a price. Unreserved auctioneers charge a lower fee, and a company like
WWAG provides a cheaper means of auctioning used equipment both for buyers and sellers.

Revenues for an organizer of auctions come mainly from commissions in the form of fees or fixed/sliding
percentages of the gross auction proceeds from consigned equipment. WWAG also generates revenues from
different fees and charges related to shipping, transportation, handling and clearing applicable to certain
consigned equipment as well as interest income on notes receivables.

WWAG’s main auctioned objects include construction and earthmoving equipment, such as wheel loaders,
cranes, trucks and trailers, tractors, excavators, generators. Historically, WWAG has organized several very
large equipment auctions a year with numerous buyers and sellers. Aside from these items that historically
accounted for the majority of auctioned items, WWAG intends to expand its activity into light vehicles, boats
and motorcycles. These items would not generate as large a revenue per auction, but auctions for these items
could be organized on a more frequent basis and provide additional revenues streams to the company.

WWAG is one of the leaders in modern auction technology as it has live on-line bidding in partnership with
GoIndustry, along with its new video presentation and wireless electronic bidding system. Moreover, WWAG is
developing its own proprietary systems designed to enhance the best features of existing auction technology to
increase the competitiveness of its services.

The advantages of auction business over classic dealing/brokerage.
Auctioning is not the only selling channel for buyers and sellers; however it does have certain advantages that
are likely to support its continuous popularity. Auctioneers are usually able to attract a very larger number of
buyers and have a more diverse client base. Industrial equipment auctioneers have no restrictions in selling a
particular line or brand – an auction may have in one place equipment that would otherwise be available after
making numerous visits to various brand dealers. The auctions are also organized for larger geographical areas
than brokers could cover, so consignors may receive a better price for their equipments. The advertising that
auctioneers unfold is more intense and there is a higher degree of transparency regarding the formation of

One of the WWAG’s comparative advantages is that the majority of products they are auctioning are
transportable to other geographic locations and could be used in multiple industries. Auction participants come
from different parts of the world because it does not matter to them where to buy from as long as the total
price, including transportation and handling, is lower. Of course, multiple auctions in various parts of the
world increase both the visibility of WWAG and the degree of interest from participants – sellers get to have
more selling channels while buyers get to choose an auction from which it is cheaper to transport the
equipment to where it is needed.

In addition to unreserved auctions occasionally WWAG unfolds classic auctioneer operations on its own
account. However, this practice is not customary to the company and WWAG only enters into such agreements
when the price risk is minimal and the advantages are evident.

Product mix
WWAG reports and classifies its revenues into two segments: “revenues for commissions and services” and
“revenues from sales of equipment”. Around 90% of revenues come from commission and the balance comes
from sales of owned equipment. We do not expect that this product mix to change significantly in the future
based on the current management philosophy.
                Revenue mix
                            $, thousands              2002         %         2003          %
                Commissions and services             3,421       90.1%       5,521       88.6%
                Sales of equipment on its own         378        9.9%         713        11.4%
                Total revenues                       3,799      100.0%       6,234      100.0%
                Source: SEC filings

Customer base and Customer Service
WWAG has auctioned more than 18,000 items from 1,500 consignors to more than 3,000 purchasers since
company inception until Dec’03. Such a large number of buyers and sellers indicates that the company faces
low risk both on the credit side and from the customer concentration point of view. The ability of management
to create and maintain an ever-increasing database with potential buyers and sellers, as well as superior service
provided to them are key to continuous growth. These relations will make or break the success of undergoing
international expansion of the company. We are glad to see that in its SEC filings management describes
various ways in which it sees it can provide superior service to auction participants such as:
    • Fully enclosed air-conditioned bidding arena with glass viewing windows during summer season ;
    • Plasma TV screen presentation of items to be sold, with dual currency live asking price displays;
    • Wireless electronic bidding buttons that bidders can use if they prefer to keep their buying strategy
        discreet from the other attending public bidders, with high bidder number appearing on the plasma TV
    • Video auctions of late arriving imported equipment after each physical auction.

The two-digit growth (in the mid sixties) of WWAG revenues in FY03 is as a sign that the company can provide
superior customer service and at retain old customers while acquiring new ones. Moreover, the company
intends to develop an in-house web-auction capacities that will provide superior differentiated services to
customers at reduced cost.

Recent and Upcoming auctions
In 2004 WWAG held three auctions and has announced another four major auctions of those 14 scheduled for
the entire year. The one large auction held in Q1Y04 has generated most of the $1.5M in revenues announced
by WWAG for that quarter. The most recent auction held by the company in June 2004 was a record high event

worth $23.8M and with an additional $2.35M coming from the fifth company video auction held during the
same period.

        Upcoming auctions
                  Location                             Date                   Items to be sold/Type of items
                  Netherlands                      July 16, 2004                        Equipment
                 Perth, Australia                 August 11, 2004                       Equipment
                   Dubai, UAE                  September 7-8th, 2004                    Equipment
                     Jakarta                           2004                             Equipment

Recent auctions
      Location                      Period/Date            Gross Auction         Registered     Items sold/Type of
                                                          Sales ($ million)       Bidders               items
Dubai, UAE                     June 8th – 10th , 2004            23.8               400       Equipment
Dubai UAE                      March 13th -15th, 2004            23.0                410      Equipment
On-line video auction               March 15th, 2004               2.2               n.a.     Equipment
Dubai UAE                   December 13th - 15th, 2003           19.0                n.a.     Equipment
Jakarta, IAM Auctions       December 12th - 13th, 2003             5.5               n.a.     Equipment
Australia                        November 7th, 2003              7.65                250      471 items / equipment
Dubai UAE                     October 11th - 13th, 2003          23.0               430       1,400 items/ equipment
Dubai, UAE                       July 27th - 28th 2003            15.1               350      Equipment
Dubai, UAE                        June 1st - 3rd, 2003            19.2              400       Equipment
Dubai, UAE                       April 8th - 10th, 2003           15.1              400       Equipment
Jakarta, IAM Auctions       February 21th – 22th, 2003             3.2              200       Equipment
Dubai, UAE                  December 17th - 19th, 2002           13.8                310      Equipment
Jakarta, IAM Auctions              October 31th, 2002              2.8               225      465 items/ equipment
Dubai, UAE                    October 8th - 10th, 2002            11.5              330       Equipment
Dubai, UAE                       September 7th, 2002              n.a.               150      190 / cars and trucks
Jakarta, IAM Auctions        August 28th – 29th , 2002             4.1              220       600/ heavy equipment

Dubai, UAE                             July 27th, 2002            n.a.               150      220 / cars and trucks
Dubai, UAE                      May 21st - 23rd, 2002            11.2                350      Equipment
Jakarta, IAM Auctions          April 24th – 25th, 2002            5.2                220      550 items / equipment
Dubai, UAE                      March 4th - 7th, 2002            14.5                400      Equipment
Jakarta, IAM Auctions      October 31st - Nov.1st, 2001            7.3               200      600 items / equipment
Dubai, UAE                    October 9th – 12th, 2001          13.35                300      1400 items /heavy equip.
Netherlands                              June 15, 2001             5.1               225      450 items

WWAG has also stated its intention to expand its focus to the Chinese market through a joint venture and it is
going to target the Asian market for expansion in 2004 and beyond.

Industry Outlook
The international market for used industrial equipment is highly fragmented and increasingly competitive.
This equipment is sold through various channels, such as specialized distributors, auctioneers, etc. As
mentioned in RBA’s1 annual report for 2003, industry analysts estimate that there is approximately $1 trillion
of used industrial equipment of the type sold by RBA and WWAG in circulation worldwide, and that around
$100 billion of that equipment changes ownership each year. A part of this exchange takes place through
auctions, however it seems to be rather small. RBA, the unquestioned auction market leader, makes up for less
than 2% of the estimated annual sales market for industrial equipment. As there are no market participants
with a dominant position, it is likely that new entrants can enjoy superior rates of growth with reduced
competitive threats from the larger players.

On a regional level the picture is similar – high fragmentation and relatively small degree of development. The

1Ritchie Bros Auctioneers – the largest auctioning company in the world and the main competitor of WWAG in the world
and the region – see competition.
region WWAG originates from is developing intensively. The continuously increasing oil prices during the last
three years created a lot of spare cash and stimulated construction and development both for the oil industry
and other unrelated industries. Certain regional governments use oil cash to expand their industrial base, for
instance by promoting tourism. These policies involve a lot of construction work which requires in turn a lot of
equipment, of the type sold through WWAG. As reported by the company, if the combined gross sales of
equipment auctioneers in Dubai in 2000 were $33M, then by 2003 this figure increased six fold to $200M. The
potential for growth for WWAG is almost unlimited as the company estimates that “approximately $5B worth
of used construction, transportation and industrial equipment (including second hand cars and other light
vehicles) changed hands in Dubai in 2003.”2 Additional increases are likely to stem from development money
and reconstruction of Iraq.

Expected Market Growth Rate in Construction Equipment Industry (%) by Region3
      6.0%                          5.5 %
                                                                                            2002 v s. 2003
      5 .0%
                                                                                            2003 v s. 2004
      4.0%                                                              3.7 %


                                                                1 .0%
      1 .0%
                              US%                                 Canada %         Other Worldwide %
     -1 .0%


According to the results of the survey conducted by Association of Equipment Manufacturers (“AEM”) which
covered 63 different machine product types, 2004 promises to be a really good year for construction
equipment. More new equipment will be needed in 2004 both in the US and in the rest of the world. This need
will lead some companies to buy new equipment and sell the old one, others will be buying directly used one,
but in any case it will mean more business for auctioneers. Moreover, the increase in equipment production
orders is expected to continue over an extended period, having in mind that the world economy is beginning to
recover. The highest growth is expected in the US region, but the “other world” is also showing healthy signs of
growth and by all means the Gulf region will is likely to outpace the growth of the “other world” category
because of the specific political and economic attention the region is currently getting.

On a per type of equipment basis, the highest increases are likely to come from earthmoving equipment and
bituminous equipment, as illustrated in the table below:

2   WWAG 10-K filing with SEC for 2003

Expected Market Growth by Type of Product and Region
                                                 US%                                 Canada %                       Other Worldwide %
          Type of Equipment          2003 vs. 2002   2004 vs. 2003        2003 vs. 2002   2004 vs. 2003     2003 vs. 2002      2004 vs. 2003
Earthmoving Equipment                    4.9                7.2                6.5               6.5             3.9                5.2
Lifting Equipment                       -7.0                2.4                4.5               1.8             -2.7               2.3
Bituminous Equipment                    -1.5                7.1               -3.0               5.6             -5.6               2.8
Concrete & Aggregate Equipment          -7.0                3.0               0.0                2.4              1.1               2.8
Light Equipment                          1.1                5.1               0.8                2.4             0.3                3.3
Attachments & Components                 0.6                6.4                2.2               3.5             -0.1               3.1
Miscellaneous                            0.3                3.8                0.7               3.3              3.7               2.3
          Total Industry               -0.4%               5.5%              1.0%               3.7%            0.3%               3.4%
 Source: Association of Equipment Manufacturers 4

Factors Affecting Future Construction Equipment Business
                                                       2004                                                     2005
                                    most                        less                        most                         less
                                                 Neutral                      spread                      Neutral                    spread
                                  important                   important                   important                    important

Consumer Confidence                 41%         27%       29%         12%                   34%           27%            27%          7%
Interest Rates                      35%         38%       21%         14%                   32%           32%            21%         11%
General Economy                     54%          21%      24%         30%                   52%           16%            23%         29%
Housing Starts                      34%         25%       35%         -1%                   30%           26%            30%          0%
Excess Industry Inventory           40%         22%       30%         10%                   31%           29%            24%          7%
Highway Bill                        43%          21%      32%         11%                   40%           23%            26%         14%
Credit Availability                 38%          31%      21%         17%                   32%           31%            22%         10%
Strength of the Dollar              35%          31%      25%         10%                   32%           29%            23%          9%
Rental Company Situations           40%          16%      35%          5%                   31%           20%            33%         -2%
 Source: Association of Equipment Manufacturers5
 Note: the spread was calculated as difference between the most important and              less important percentages to measure
         how much there are more arguments pro than against one factor.

It is noteworthy to mention that equipment manufactures consider business climate, level of interest rates and
credit availability as their main success factors. We consider that these factors are likely to be favorable and
that WWAG will get additional business both in its primary region and elsewhere in the world.

WWAG is competing directly with other auctioneers engaged in worldwide resale of heavy equipment and
indirectly with a large number of dealers and brokers. The pressure from dealers and brokers is currently
considered to be more significant as only a small part of the transactions with used equipment is getting
through auctions. Taking into account the fact that the dealer and broker companies still perceive high
commissions for resale transactions, we appreciate that WWAG has a competitive price advantage.

Ritchie Bros Auctioneers Inc (RBA) is the strongest and most visible auction industry player. Its gross auction
sales of in FY03 were $1.56B and the company estimates that this amount is more than the total for the next 40
largest players combined6. The tremendous success and growth of RBA over the last 25 years is indicative of
how much potential the industry can offer to a craft player. In its FY03 annual report RBA stated that it
averaged an annual revenue growth of 13.4% over a period of 25 years. At this rate a company grows 3.5 times
in ten years and over 23 times in 25 years. And having in mind that RBA’s current share of the market is
approximately 1.56% (as the total market for used industrial equipment is estimated at $100B p.a.) there still is
room for growth for all players. But whereas RBA is developing intensively, getting more from the same

6   RBA annual report 2003
regions, WWAG will develop for a period of time extensively, getting more just from starting to cover new
areas. This extensive growth in the next two-three years is likely to generate a superior rate of return.

Despite RBA’s longer experience, WWAG proved to be skillful at gaining market share. If in 2001 WWAG
auctioned $25M worth of equipment in the Dubai market as compared to RBA’s $45M, then by 2003 WWAG
auctioned $89M vs. RBA $105M, showing that WWAG experienced a higher rate of revenue growth and came
close to RBA’s sales. Morever, during the period Dec03-Mar04 WWAG actually sold more equipment than RBA
in the same region and it has proven its ability to become the market leader at home.

Regional governments, especially Saudi Arabia, organize periodically small auctions of construction
equipment. WWAG management sees no threat from these auctioneers as they usually intend to target local
buyers and rarely compete for WWAG’s potential clients.

Worldwide, WWAG is a new entrant with many competitors but with an aggressive growth policy, opening new
auction site in various countries as discussed above. It is not the first one in those markets and it does not have
the advantage of the “home field” – it will have to face competition from players already established in those
regions. However, as the business transcends borders both in terms of buyers and sellers of equipment, we
expect that WWAG has already accumulated a certain degree of recognition and visibility among buyers and
sellers that will help it succeed. Aside from RBA, there seem to be very few companies who made a focused
effort on becoming a large player with wide international presence. The local players will have a disadvantage
to internationals, because they are able to provide a more limited pool of buyers and sellers to their potential
customers. At a certain point the large players start to realize economies of scale, as seen in RBA’s margin of
around 20%, while WWAG currently manages to get around 6-10%.

Investment Merits

WWAG Financial results for both FY03 and Q1-FY04
Revenue for FY03 increased to $6.2M which is 64% up from FY02, primarily as a result of the increasing
number of auctions held in Dubai from 4 in 2002 to 5 in 2003, increases in revenue per auction and increases
in the number of auction sites. Gross profit during the same period increased from 55% to 59%, while
operating income reached $0.58M up from $0.07M. Net income reached $0.59M in FY03 up from $0.27M in
FY02. During Mar’04 WWAG successfully completed its largest un-reserved construction equipment auction
since its inception in 2000 – gross auction sales exceeded $23 million and additional $2.2 million gross
auction sales were produced during the 4th video auction, held similarly in Mar’04. In Jun’04 the company held
another record breaking auctions, reaching this time gross sales of $23.8M, with additional $2.35M coming
from the video auction. Q1FY04 gross auction proceeds translated into revenues of nearly $1.7 million and net
income of $0.09M. We expect that Q2FY04 auction will allow the company to reach sales of $2.3M and net
income of $0.03 per share for Q2FY04.

Management plans
WWAG is planning to increase further the number of auction sites and is studying opportunities to establish
new joint ventures and management arrangements with foreign auction companies. It is in the process of
increasing the number of its own auction locations, which will allow it to increase the number of auctions held
and the amount of revenues earned. One joint venture is currently under negotiation in China and the company
believe that there is strong potential for the Asian markets. Additionally, the Middle East, provides numerous
business opportunities.

WWAG intends to expand worldwide in areas that are underserved by the cheap unreserved auctions and is
planning to organize more auctions specialized in reselling transportation equipment. The advantage of these
smaller auctions leads to the possibility of organization them more often. By contrast, the large equipment
auctions are organized irregularly and are a source of economies of scale. The company also intends to set up
its in-house software development team in Dubai to develop and maintain Auction project management
software. This will allow the company to reduce expenses with outside providers and increase its
differentiation, as well as to more meaningfully address a promising market niche.

WWAG also intends to develop a wider range of adjacent services for consignors and buyers, especially those
related to logistics and transportation. WWAG’s permanent customer base will allow management in 2-3 years
to design products combining auctioning services with transportation and handling. The company is intending
to buy fixed asses of up to $3M in order to be able to provide a more complete scale of services to auction
participants, increasing both customer satisfaction and its revenues.

Market potential and business opportunities
As discussed above, the market WWAG is operating in is huge and despite the large number of players, there
are numerous niches and limited competition because the market lacks uniformity and is very fragmented. We
see numerous opportunities for WWAG to grow both worldwide and at home, provided it high quality of

One such business opportunity in the region, where WWAG is emerging as a leader, is the construction of Doha
Airport in Qatar. This is a $6B construction project scheduled till 2015. Another opportunity stems from the
recent award of large construction contracts in Qatar for the 2006 Asia Games. According to the U.A.E
Contractors' Association, the Dubai construction market is the second largest sector after oil and gas7. With
plans to develop Dubai as a major tourism centre and regional business and manufacturing base, this growth is
set to continue. The specific auctioning market shows exponential rates of growth: gross sales by equipment
auctioneers in Dubai grew from $33 million in 2000 when WWAG was just entering the market to nearly $200
million in 2003.

Riyadh Convention Center stated that Saudi Arabia’s infrastructure and public sector building plan amounting
around $35 billion is to be accomplished during next five years. Saudi Arabia also expects to start on several
projects related to power and energy production and distribution. The value of these projects is in excess of
$100B8. Also significant business opportunities will come from rebuilding Iraq. Initially the G-7 countries, the
U.N and the World Bank were willing to assist Iraq reconstruction with more than $100 billion, but this sum is
still questionable. It could be considered as a real opportunity those $610 million9 stipulated in the Iraqi 2004
state budget for capital and reconstruction expenditures and 18.6 billion from U.S. Government to rebuild
Iraq. All these development projects require a lot of construction work done with the help of equipment that
can be purchased through auctions organized by WWAG.

Other investment considerations
We should mention that WWAG conducts operations with an in-built “hedge mechanism” against fluctuations
of business cycles of the world economy. Trading of used equipments proved to be profitable because the
demand and supply for these products exists during economic recovery phase as well as during slowdowns.
During the recovery the supply stems from companies willing to replace the depreciated equipment and the
demand comes from companies willing to use these secondhand equipments as the economy motivates
business starts. On the other hand, during downtrends, demand comes from the companies looking for cheaper
equipment to leverage their profitability and the supply is generated by divestitures and bankruptcies. This way
WWAG is busy irrespective of the phase the economy it is passing through. Thus, WWAG shares could serve a
good tool for diversification when the overall capital market is falling.

Also, being so small relating to the overall market and the market not being dominated by large players, a
company like WWAG can easily disregard the market trend and increase its sales in a down market or increase
its sales by more than the market by providing superior value to its customers.

8   WWAG’s management

                                    M Cap        Price    EPS          P/E         EPS       P/E       Sales       P/S     Sales    P/S
      Company              Tckr
                                   30/6/04    30/6/04     ttm          Ttm      2004E      2004E       2003       2003     2004E   2004E
WWAG                      WWAG       16.61       1.04     0.04*      24.96         0.11      9.80       6.2        2.66     10      1.65
Ritchie Bros Auction         RBA      994        29.11   1.00     29.02   1.13  25.76                   162         6.13    171     5.81             AAC       37         0.65   0.00      NA     NA     NA                      2         22.87    NA      NA
Greg Manning Auctions      GMAI       408        15.30   0.67     22.70   NA     NA                     182         2.24    NA      NA
Sotheby’s Hlds               BID     1,000       15.96   0.24     67.63   0.30  53.20                   385        2.60     386     2.59
                                                  NON-AUCTION SELLERS OF EQUIPMENT
MSC Indust Direct          MSM       2,210       32.84   0.90     36.45   1.17  28.07                   878        2.52     976     2.26
Fastenal                   FAST      4,310       56.83   1.23     46.24   1.52  37.39                  1040        4.14    1,200    3.59
Rush Enterprises          RUSHB       194         2.96   0.71     4.20    0.79   3.75                   886        0.22     963     0.20

Peer group average                                                  34.37                  29.63                   5.82            2.89
Peer average excl. outlier                                          27.72                  23.74                   3.53            2.82

S&P 500                      SPX     91656      1140.84   48.48        23.53       63.67   17.92       337.53      3.38     NA      NA
Source: Baseline, Yahoo! Finance, Analyst Estimates               *Data for FY03

Despite a very large number of auctioneers worldwide, not many of them are listed and provided comparable
data. From the table above we can see that WWAG is favorably priced in terms of PE ratio when we compare it
to the industry: based on its EPS for 2003 WWAG is trading at x 25.0, which is a 10% discount to the adjusted
industry average for the larger comparative pool. WWAG is trading at a 14% discount to RBA, its most
important and directly comparable competitor. Shifting focus from the past to the future, we see strong price
appreciation potential as the WWAG forward PE ratio is trading at a significant discount to its peers. WWAG is
currently trading at only x 9.8 it FY04E EPS, while the average for the pool is x 23.7, that is a discount of
almost 60%.

The PSR multiple for WWAG on 2003 data is 2.7 which is 25% discount to the average and it is less than ½ of
what RBA is trading at. The forward multiple on FY04 sales is 1.65 which is it a discount of 41% to the average
for the pool and a discount of 72% to RBA’s multiple. Of course, there is some justification for the discounts
applied to WWAG sales which are smaller and less diversified geographically when compared to its peers,
however the magnitude of these discounts suggests strong price appreciation potential for the stock in the
short-to-medium term.

Based on data above, we believe that the price of the stock will experience significant increases as the company
moves on with its expansion plans and shows double digit revenues and net income increases throughout the
year. Our financial projections indicate that by the end of Q1FY05 WWAG will have earned $0.10 per share,
and we estimate that that the price of the stock at that time will be around:

                    EPS $0.13 Q2FY04-Q1FY05                        x           20 PE ratio         =      $2.60 per share

For this calculation we have assumed that the average PE ratio for the industry will be 25 and that the company
will be trading at a discount of 20% to industry average mainly due to its smaller size and thin trading. Of
course, it is possible that, taking into account the continuous superior growth opportunities of the company,
the market will credit it with higher multiples, and a prospective investor should have in mind that the
calculation above is rather conservative.

At the same time, our projections show that the company will have earned $0.71 sales per share by end of
Q1FY05. Therefore, the expected price at that time is calculated as:

                    $0.71 Sales per share Q2FY04-Q1FY05 x                       2.8 PSR ratio =               $1.99 per share

For this calculation we have assumed that the normal ratio for the industry would be around 3.5 – on the one
hand RBA is trading at a much higher ratio of 5.58 and on the other hand the larger but less comparable pool
has an average of 3.4. Taking a 20% discount to the industry ratio, we arrived to x 2.8 sales. This is also the
ratio that WWAG is credited with today and it is likely to keep it throughout the year.

A DCF Calculation would point out to a similar price band:                       Discounting rate calculation
                                                                                 Average Beta (peers):  0.64
                                                                                 Risk Free Rate:        4.00%
                                                                                 Equity Risk Premium:   7.00%
                                                                                 Small Cap Premium:     3.00%

                                                                                 Discounting rate        11.48%

 Fiscal                     Sales         Net
           Net sales                                   NI Margin        Depr            CAPEX           FCF       Years
  Year                     Growth       income
 2004E     10,052,394                  1,724,547         17.2%         317,464         (4,914,457) (2,872,446)      0
 2005E     13,309,977        32%       1,791,763         13.5%         745,797         (200,000)    2,337,560      0.5
 2006E     15,313,109        15%       2,360,592         15.4%         745,797        (2,000,000) 1,106,389        1.5
 2007E     17,610,076        15%       2,729,562         15.5%         745,797         (200,000)    3,275,359      2.5
 2008E     20,251,587        15%       3,240,254         16.0%         745,797         (200,000)    3,786,051      3.5
TOTAL                                                                                              14,697,735

                                          10.5%             11.5%              12.5%
Present value of FCF at end Q2 FY05     10,884,506        10,601,803         10,330,318

 Discounted Terminal Value
 Discount Rate/ Constant growth rate        10.5%                    11.5%                   12.5%
                3.0%                      25,194,122               20,864,689              17,532,789
                4.0%                      29,082,104               23,654,086              19,600,334
                5.0%                      34,389,057               27,304,408              22,220,700

 Enterprise Value (FCF + Terminal Value)
 Discount Rate/ Constant growth rate    10.5%                        11.5%                   12.5%
                3.0%                  30,722,478                   26,230,463              22,741,437
                4.0%                  34,610,460                   29,019,860              24,808,983
                5.0%                  39,917,413                   32,670,182              27,429,349

 Less Net debt:                        $ (3,574,097)
 Divided by Shares Outstanding:         16,501,403

 Equity value per share
 Discount Rate/ Constant growth rate        10.5%                    11.5%                    12.5%
                3.0%                        $2.08                    $1.81                     $1.59
                4.0%                         $2.31                   $1.98                     $1.72
                5.0%                        $2.64                    $2.20                    $1.88

 The DCF framework gives a bandwidth of $1.59-2.64 price per share. The average of the matrix above is $2.02
 and the median is $1.98. Our DCF assumptions might seem rather aggressive, but we believe that we have
 presented a growth case that can be accomplished given the investments planned. Also, the net income
 margin for WWAG can be further improved, as RBA, its most close competitor, has margins in the low 20s,
 while we assumed for the future a margin of 15-16%.

 Our price target for WWAG would take into account the three price approximations derived above: $2.6 for
 the PE ratio, $1.99 for the PS ratio and $2.02 for the DCF framework. An average of these prices indicates
 $2.20 as the likely price in a year from now.
Liquidity and Growth Management
The most significant risk we see for WWAG relates to the company itself; it needs to manage its own growth. It
reported negative working capital of approximately $304k at 03/31/04 up from $178k at 12/31/03. It is logical
that an expanding company needs more capital and in this case, as there are no significant CAPEX
requirements, the company has working capital shortages. However the company has to solve its immediate
liquidity problems by either securing long-term/ short-term debt or issuing additional securities. It is
important for the company to have sufficient resources in order for it to achieve the size and the price of stock
we have estimated in the current report. Relatively short operating history of the company and uncertainties
relating to the future growth pace of the company make it more difficult for us to make accurate estimates
about company performance and the future price of stock.

We have been informed that the company is planning a $1M debt issuance and is negotiating revolving bank
debt facilities of up t0 $3M, which will provide more stability in the short term. However we believe that the
company will need long-term financing either in the form of equity or long-term debt in excess of planned

Possible new market entries
Having in mind the attractiveness of the industry worldwide and in the region WWAG started in, it is likely that
other companies will gather resources to enter the industry and perhaps even get listed on an exchange in order
to get access to expansion capital. WWAG holds and manages only a limited number of auctions facilities, large
old and new players may try to operate specifically against WWAG in order to get some of its customers,
adversely affecting WWAG’s operations.

Armed conflicts and threat of terrorism
The intensification of armed conflicts and terrorist events in the region could diminish investors’ confidence
and limit the construction of new facilities in the neighbor countries. It seems, however, WWAG’s business
proved to be feasible and expanding even during these difficult times.

Eric Montandon - director
Eric Montandon was named as director of WWAG in August 2003. He is the founder of WWAG and at the
moment the major shareholder of WWAG. Prior he worked for Winius-Montandon, Inc. as a commercial real
estate consultant and appraiser in Phoenix, Arizona from 1988 until 1992. In 1994 he participated at the
development of Momentum Asia, Inc., serving as chief executive officer till 2000. Since 2000, Mr. Montandon
activates as officer and director of, Inc. holding the positions of chief executive officer, chief
financial officer and director; and director at Net Telecommunications, Inc.. Simultaneously he was involved in
the acquisition and development of WW Actioneers, Ltd. Mr. Montandon graduated from Arizona State
University in 1988 with a Bachelor’s Degree in Business Finance.

Carl van Lieshout - officer and director
Carl van Lieshout was named officer and director of WWAG in August 2003. Prior joining WW Auctioneers,
Ltd., Mr. Van Lieshout gathered sixteen years of appropriate experience with Machinehandel Leende BV, a
private business specialized in trading heavy equipment with facilities in Indonesia; Dubai and the
Netherlands. He speaks Dutch, German and English.

Digamber Naswa - officer and director
Digamber Naswa was named officer and director of WWAG in August 2003. Since 2002 activated as financial
controller at WW Auctioneers, Ltd.. He gathered more than 20 years of experience in different industries in
India and the United Arab Emirates in various capacities as accounts officer, finance manager, deputy general
manager and financial controller. During 2000-02 worked as deputy general manager at Xpro India, Ltd.. Mr.
Naswa holds a Chartered Accountancy from the Institute of Chartered Accountants of India since 1984. Mr.
Naswa is a graduate in science from the Kurukshetra University, India.

Sergiu Lisnic, CFA worked as an analyst for Evanston Capital Advisors for a year and a half subsequently served for two
years as a financial analyst in a gas distribution and a FMCG company. He was primarily responsible for financial
statement analysis, budgeting and reporting to shareholders. He earned the CFA title in September 2003.

Spelman Research Associates, ltd, is an independent fee based research, publishing and distribution firm whose contract analyst adhere
to the ethics and standards of the Association for Investment Research Management. The views expressed in this research report reflect
the analyst’s personal views about the issuer and its securities. Opinions and recommendations contained in this report are submitted solely
for advisory and information purposes and are not intended as an offering or a solicitation to buy or sell the securities mentioned above.
The analysts are responsible only to the public and this report is not a service to the company. We received a fee of $19,500 from the
company for one year’s coverage. We do not inform any company in advance of the nature or conclusions of our analysts’ reports in
advance of paying the fee nor can a company withdraw from coverage before the expiration of the one year term. Neither the Analysts nor
the company own equity or debt securities of the companies on which our contract analysts report.

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5520 Fax: (212) 838 5350 Web: Email: <

                     WWA GROUP. INC.: OTC BB "WWAG.OB"
                               Financial Statement Summary and Projections

                    USD                            FY02             FY03              FY04E             FY05E             FY06E
             Income statement                  31-Dec-2002      31-Dec-2003        31-Dec-2004       31-Dec-2005       31-Dec-2006
Revenue from commissions and services               3,421,250        5,521,126          9,054,647       12,042,680        13,849,082
Revenue from sales of equipment                       377,987          712,677             997,748         1,267,297        1,464,027
Total revenues                                    3,799,237        6,233,803         10,052,394        13,309,977        15,313,109
Direct costs                                       1,702,009         2,571,106          3,920,434          5,124,341        5,818,981
Gross profit (loss)                               2,097,228        3,662,697           6,131,961        8,185,636         9,494,128
General, selling and administrative expenses        1,931,465        2,917,794          3,719,386         4,658,492         5,206,457
Depreciation and amortization expense                  97,030         167,830              317,464           745,797          745,797
Total operating expenses                          2,028,495        3,085,624          4,036,850         5,404,289         5,952,254
Income (loss) from operations                         68,733         577,073           2,095,111         2,781,347        3,541,873
Interest expense                                     (24,056)         (54,481)          (261,040)         (339,352)         (271,482)
Other income (expense)                                191,568           71,577             206,031           272,797          306,262
Total other income (expense)                          167,512           17,096            (55,009)          (66,555)           34,781
Income (loss) before income taxes                   236,245          594,169          2,040,102          2,714,792        3,576,654
Provision for income taxes                                  0                0           (315,555)        (923,029)       (1,216,062)
Net income                                          236,245          594,169           1,724,547         1,791,763        2,360,592
Key financials
Gross profit margin                                      55%               59%                61%              62%              62%
Net profit margin                                         6%                10%               17%               13%              15%
EBITDA                                                357,331           816,480        2,618,606          3,799,941        4,593,933
EBIDA margin                                              9%                13%              26%               29%              30%
Net capital                                        (509,937)            630,726         2,855,273         4,647,036        7,007,627
Aggregate indebtness                               9,086,294         11,204,243        17,116,034        17,950,144       18,942,454
Ratio (indebtness:net capital)                          N/M                   18                6                 4                0
ROE                                                     N/M                94%               60%               39%              34%
ROA                                                       3%                 5%                9%                8%               9%
Cash & cash equivalents/Total assets                     53%               42%               24%               22%                0%
Per share statistics
Basic and diluted earnings per
                                                        0.02               0.04               0.11              0.11             0.14
common share
Weighted average shares - basic and
                                                  13,888,000         14,261,000        16,257,540        16,745,266       17,247,624

                   USD                      FY02            FY03              FY04E            FY05E           FY06E
     Consolidated Balance Sheet          31-Dec-2002     31-Dec-2003       31-Dec-2004      31-Dec-2005     31-Dec-2006
Cash                                         4,579,212        5,006,042        4,742,906        5,019,796      5,937,935
Marketable securities                                0          172,000          157,000          157,000        157,000
Receivables, net                             3,215,272        5,000,615        8,041,916       10,647,982     12,250,487
Inventories                                     36,387          366,234          548,861          666,164        756,468
Prepaid expenses                                55,905            51,281         784,087          922,381        960,132
Related party receivables                       45,710            30,275               0                0              0
Notes receivable                               155,482          350,000          158,408                0              0
Other current assets                            23,221            35,532          20,649           20,649         20,649
Total current assets                         8,111,189        11,011,979      14,453,826       17,433,972     20,082,671

Property and equipment, net                   453,093            562,012       5,159,005        4,613,208       5,867,410
Investment in unconsolidated entity                 0           250,000         350,000          550,000                0
Other assets                                   12,075             10,978           8,476                0               0

TOTAL Assets                                 8,576,357        11,834,969      19,971,307       22,597,180     25,950,081

Liabilities & Shareholder's equity
Auction proceeds payable                    7,473,049          9,766,775       13,721,518      14,348,156      15,129,352
Accounts payable                              327,190            559,927        1,293,743       1,537,302       1,920,264
Accrued expenses                              515,836            534,536          686,264         864,686         892,838
Related party payables                        316,775                  0                0               0               0
Short term notes payable                      370,876           294,226                 0               0               0
Current maturities of long-term debt           33,789             34,271          214,508        200,000         200,000
Total current liabilities                   9,037,515         11,189,735      16,316,034       17,350,144      18,542,454

Long-term debt                                 48,779            14,508        800,000           600,000         400,000

TOTAL liabilities                           9,086,294         11,204,243      17,116,034       17,950,144      18,942,454

Stockholders' equity (deficit):
Common stock, $.001 par value,
                                               13,887             15,967          16,467           16,467          16,467
50,000,000 shares authorized
Additional paid-in capital                    466,113          1,010,527       1,510,027        1,510,027       1,510,027
Retained earning (Accumulated deficit)       -989,937           -395,768       1,328,779        3,120,542       5,481,133

Total stockholders' equity (deficit)         -509,937           630,726        2,855,273       4,647,036       7,007,627

TOTAL Liabilities and Equity                 8,576,357        11,834,969      19,971,307       22,597,180     25,950,081

                                              FY02            FY03               FY04E          FY05E           FY06E
Consolidated Statement of Cash Flows        31-Dec-02       31-Dec-03           31-Dec-04      31-Dec-05       31-Dec-06

  Cash flows from operating activities:
Net income (loss)                               236,245            594,169         1,724,547      1,791,763      2,360,592
Depreciation and amortization                    97,029            167,830
Loss on disposition of assets                         0               5,191         317,464         745,797        745,797
Stock issued for services                             0            222,200                0               0              0
   Decrease (increase) in:                                                                0               0              0
Accounts receivable                          (3,160,919)         (1,777,634)
Inventories                                      (6,430)          (329,847)      (3,041,301)    (2,606,066)     (1,602,505)
Prepaid expenses                                (29,518)               4,624       (182,627)       (117,304)       (90,303)
Related party receivable                        287,864               15,435      (732,806)       (138,295)         (37,751)
Other current assets                             (11,153)            (12,311)         30,275               0              0
Other assets                                    (12,075)               1,097          14,883               0              0
  Increase (decrease) in:                                                              2,502           8,476              0
Auction proceeds payable                      6,848,022           2,293,726
Accounts payable                                143,838             142,694       3,954,743        626,637         781,196
Accrued liabilities                             421,069              18,700         733,816        243,559         382,961
                                                                                    151,728        178,422          28,152
  Net cash provided by operating
                                               4,813,972          1,345,874
                                                                                  2,973,226        732,990        2,568,139
Cash flows from investing activities:
Purchase of property and equipment            (328,585)           (281,940)
Increase in note receivable                   (100,000)          (350,000)       (4,914,457)     (200,000)     (2,000,000)
Increase in related party note receivable             0          (250,000)           191,592       158,408               0
Purchase of marketable securities                     0           (172,000)       (100,000)      (200,000)         550,000
Payments received on notes receivable            77,043             155,482           15,000             0               0
Net cash received in acquisition                      0               2,798                0             0               0
                                                                                           0             0               0
  Net cash used in investing activities        (351,542)          (895,660)
                                                                                 (4,807,865)      (241,592)     (1,450,000)
Cash flows from financing activities:
Proceeds from short-term notes payable           317,056            206,859
Payments on short-term notes                    (83,551)          (303,509)               0               0              0
Proceeds from related party notes payable         40,049                   0      (294,226)               0              0
Payments on related party notes                (372,535)           (116,775)              0               0              0
Payments of long-term debt                        (6,144)           (33,789)              0               0              0
Proceeds from issuance of common stock                  0           223,830         965,729       (214,508)      (200,000)
                                                                                   500,000                0              0
 Net cash used in financing activities         (105,125)           (23,384)
                                                                                   1,571,503      (214,508)      (200,000)
 Net increase in cash and cash
                                              4,357,305            426,830
                                                                                   (263,136)       276,889          918,139
 Cash and cash equivalents at
                                                221,907           4,579,212
beginning of year
 Cash and cash equivalents at end of
                                               4,579,212         5,006,042        5,006,042      4,742,906        5,019,796

Peer Group Profile
Ritchie Bros. Auctioneers Incorporated is an                         to match sellers and buyers through the auction process.
auctioneer of industrial equipment in over 90 locations,             The Company generally functions as an agent accepting
including 29 auction sites, in more than 20 countries                property on consignment from its selling clients. It sells
around the world. The Company sells, through                         property as an agent of the consignor, billing the buyer
unreserved public auctions, a range of equipment,                    for property purchased, receiving payment from the
including equipment used in the construction,                        buyer and remitting to the consignor the consignor's
transportation, mining, forestry, petroleum, marine and              portion of the buyer's payment after deducting its
agricultural industries. The Company's customers are                 commissions, expenses and applicable taxes. On February
primarily end users of equipment, such as contractors,               17, 2004, the Company consummated the sale of
and they also include equipment manufacturers, dealers,              Sotheby's International Realty, Inc. to Cendant
brokers and finance companies. The Company's core                    Corporation.
target market includes both mobile and stationary                    MSC Industrial Direct Co., Inc. is a direct marketer
equipment.                                                           of industrial products to industrial customers throughout, Inc. is a liquidator and auction                   the United States. The Company distributes industrial
technology company. The Company has developed its                    products intended to satisfy its customers' maintenance,
business and technology through the acquisition of                   repair and operations (MRO) supplies requirements.
auction houses in the United States, Canada and England.             MSC offers over 500,000 stock-keeping units (SKUs), conducts live auctions for clients and              representing a range of MRO (including metal working)
simultaneously broadcasts them over the Internet.                    product lines that include cutting tools; measuring
Through its liquidation stores, it acquires merchandise              instruments; tooling components; fasteners; flat stock,
through bankruptcies, insolvencies and defaults. As a                raw materials; abrasives; machinery hand and power
liquidator, it auctions merchandise and equipment from a             tools, safety, janitorial, plumbing, material handling,
variety of industries including antique, automotive,                 power transmission, electrical supplies, as well as other
bakery, broadcasting, chemical, construction, dairy,                 categories. Offering of specific products from multiple
electronics, energy, food processing, foundry, furniture,            manufacturers at different prices and levels permits the
high technology, machine tool, metal fabrication, office,            Company to offer a good-better-best product selection
paper, pharmaceutical, plastic, printing, restaurant,                alternative.
textile and others. The auctions are open to the public              Fastenal Company is engaged in the wholesale
and the Company's typical auction draws approximately                distribution of industrial and construction supplies. As of
300 to 500 bidders in person and offers on average                   December 31, 2003, it operated 1,314 store sites located
approximately 1,200 items or lots of merchandise and                 in 50 states, Puerto Rico, Canada, Mexico and Singapore.
equipment for auction.                                               In addition to the stores, Fastenal also operates in-plant
Greg Manning Auctions, Inc. is a multi-category                      sites. An in-plant site is a selling unit located in or near a
business-to-business        and      business-to-consumer            customer's facility that sells product solely to that
collectibles auctioneer and merchant. GMAI combines                  customer. The Company sells approximately 448,000
traditional and electronic (Internet, interactive telephone          different types of industrial and construction supplies in
and live with simulcast Internet) capabilities to sell coins,        10 product categories. These include threaded fasteners
stamps, sports trading cards and memorabilia and                     and miscellaneous supplies, different types of tools, metal
affordable fine art. The Company's businesses include                cutting tool blades, fluid transfer components and
wholesale and retail sales, and it possesses a branded               accessories for hydraulic and pneumatic power, material
presence in all major sales channels both in the                     handling and storage products, janitorial and paper
traditional and the electronic commerce worlds. On the               products, electrical supplies, welding supplies (excluding
Internet,       GMAI      offers      products      through          welding gases), safety supplies and raw materials and on branded pages on other                      (metals).
persons' Websites. In addition, GMAI and its subsidiaries            Rush Enterprises, Inc. is a full-service, integrated
own and use the following additional material domain                 retailer of transportation and construction equipment
names in their business:,,               and related services. Through its network of Rush Truck and The Company                   Centers and Rush Equipment Centers, the Company
generates income through the resale of goods purchased               provides one-stop service for the needs of its customers,
directly by GMAI and from sellers and buyers through                 including retail sales of new and used transportation and
auctions of consigned goods.                                         construction equipment, after-market parts sales, service
Sotheby Holdings, Inc. auctions a variety of property,               and repair facilities and financing, leasing/rental and
including fine art, antiques and decorative art, jewelry             insurance services. All of its business operations are
and collectibles. Its principal role as an auctioneer is to          conducted through four separate divisions: the Rush
identify, evaluate and appraise works of art through its             Truck Center division, the Rush Equipment Center
international staff of specialists; to stimulate purchaser           division, the Rush Leasing and Rental division and the
interest through professional marketing techniques, and              Rush Financial and Insurance division.

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