BEACON EQUITY RESEARCH

Analyst: Victor Sula, Ph.D.

Initial Report
May 28th

GNAU daily 5/27/2008

1.5
1.4
1.3
1.2
1.1
1.0
0.9
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General Automotive Company 0.5
5422 Carrier Dr., Suite 309 volume
Orlando, FL 32819 30

Thousands
Phone: 407-363-5633 20

IR phone: 212-838-3777
10
Fax: 407-363-4574
E-mail: info@generalautomotive.com 0
Website: www.generalautomotive.com March April May

Market Data Company Introduction

Symbol GNAU General Automotive Company (GNAU) provides state-of-the-art original
Exchange OTC BB equipment, aftermarket automotive parts, mobile electronics, and related
Current Price $0.61 products at multiple levels of distribution across the United States and inter-
Price Target $1.63 nationally. Through its two wholly-owned operating divisions - Global Parts
Rating Speculative Buy Direct (GPD) and OE Source (OES) - the Company has established strong
Outstanding Shares 14.06 Million relationships with auto manufacturers, vehicle processing centers and major
Market Cap. $8.57 Million distributors located in Japan, China, Taiwan, Thailand and Malaysia. GPD is
Average 3M Volume 1,675 also a Tier 1 supplier to the Mopar Division of Chrysler and was recognized in
Source: Yahoo Finance, Analyst estimates 2005 as one of Mopar’s top-performing suppliers, an award given out to only
5 percent of its vendors.

The Company’s product lines consist of automotive body parts, auto electron-
ics and accessories, including high-end accessories such as Lynx two-way car
alarms, backup view and sensor systems, an all-in-one flip down overhead
DVD mobile entertainment system, Hands Free telematics and navigation
systems, oxygen sensors and engine control units.

By leveraging its experience, innovative technologies and geographic strength,

the Company intends to build leadership positions in niche segments of the
automotive parts, electronics and accessories industry. In addition, GNAU
seeks to extend its international presence through acquisitions, and by pro-
viding cost-effective supply chain solutions for North American-based au-
tomakers. The Company’s business model is already producing noteworthy
results, with revenues up three-fold in 2007 to more than $15 million.
 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Investment Highlights

Huge target market

The U.S. automotive aftermarket is estimated at $265 billion, encompassing parts for replacement, collision re-
pair, appearance and performance. The aftermarket industry provides parts for virtually every make and mod-
el of vehicle, and employs 4.54 million people nationwide at manufacturers, distributors, retailers and repair
shops. According to the Aftermarket Automotive Industry Association, engine management products, such as
those produced by GNAU, have emerged one of the fastest growing aftermarket parts segments.

Business model capitalizing on demand for aftermarket parts

GNAU sells automotive systems, modules, components and auto electronics to vehicle manufacturers and the
automotive aftermarket. The Company’s growth strategy involves a combination of increasing sales to existing
customers and markets, introducing new products, and expanding into new markets through acquisitions and
start-ups. The Company’s goal is to build leadership positions in its key product groups, which should in turn,
bolster margins, profits and cash flows.

Established relationships with automotive manufacturers and distributors

The Company’s GPD subsidiary provides auto sound and video systems, and mobile electronics to auto manu-
facturers, vehicle processing centers and major distributors. Its OE Source subsidiary sells engine management
products and traditional auto parts through the largest U.S. distributors. Both subsidiaries have established re-
lationships with leading automotive manufacturers in Japan, China, Taiwan, Thailand and Malaysia, as well as
with the largest North American distribution networks. In addition, GPD is a Tier 1 supplier to Chrysler/Mopar,
Kia and Mitsubishi for mobile electronics.

3-fold revenue growth fuelled by OE Source acquisition

During 2007, GNAU’s revenues tripled to $15.3 million from $4.9 million in 2006. The increase reflects the rev-
enue contribution from recently acquired OE Source. Going forward, both of the Company’s subsidiaries have
active cost-control programs in place, which entail increasing profit margins by sourcing more parts from Asia
during 2008 and 2009. As a result, GNAU expects to turn profitable by year-end 2009.

Acquisitions may add $80 to revenues by 2010

The Company continues to search out well managed, niche-focused automotive parts companies with strong
national or international distribution and supply chains as potential acquisition candidates. According to man-
agement, GNAU has already identified several acquisition targets with annual sales in the $20 million to $50
million range. If some or all of these acquisitions close, the Company could reach its 2010 revenue goal of sales
exceeding $100 million.

General Automotive Company (GNAU) 2

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Business Model

The Company sources, distributes and sells automotive systems, modules, components and auto electronics to
vehicle manufacturers and the automotive aftermarket through its GPD and OE Source subsidiaries. GNAU has
established relationships with a broad range of manufacturers worldwide, including leading manufacturers in
Japan, China, Taiwan, Thailand and Malaysia.

The Company’s growth strategy focuses on increasing sales to existing customers, enhancing penetration of cur-
rently served markets, introducing new products, and expanding into new markets through acquisitions and
start-ups. By building leadership positions in its key product groups, GNAU expects to improve margins, long-
term profitability and cash flows.

Geographic expansion is an integral component of GNAU’s growth strategy, enabling the Company to enter
new markets and to better address the global sourcing needs of its customers. The Company is exploring new
sourcing relationships, while solidifying relationships with existing vendors and customers in the Asia Pacific
region.

Another key element of GNAU’s business plan is growth through acquisitions. In identifying attractive acquisi-
tion candidates, the Company looks for well managed, niche-focused automotive parts manufacturers that may
be seeking a partner who can provide investment capital, operating leverage, increased capacity and/or technical
support.

The Company’s acquisition criteria are described below:

- Manufacturers of high-value-added automotive components;
- Niche-oriented, market-leading companies with either a No. 1 or strong No. 2 market share;
- Candidates with extensive national or international distribution and supply chains; and
- Companies with outstanding financial performances and solid prospects for future growth.

Synergies among its stand-alone companies are not a requirement.

GNAU’s acquisitions fall into two broad categories, consisting of either:

- Stand-alone companies, which are independent operating companies; or
- Add-on businesses, which become part of an existing stand-alone company.

A rigorous due diligence process is conducted, which covers financial performance, growth potential, manage-
ment capabilities and operations.

Acquisitions in 2008 will likely focus on the following niche automotive segments:
- Mobile electronics;
- Web-based automotive parts and accessories sales platforms; and
- Aftermarket parts & accessories manufacturers.

Global Parts Direct Inc.

Global Parts Direct (GDP) provides auto sound and video systems, and

General Automotive Company (GNAU) 3

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

mobile electronics to auto manufacturers and dealerships. GDP has manufacturing and sourcing capabilities that
extend around the globe, and the Company has secured distribution relationships with large international distribu-
tors. GPD sources its products from manufacturers in Korea and finishes the products by packaging them with
brackets and installation kits at its facility in Arizona.

In March 2004, DaimlerChrysler Corp. recognized GPD as a Tier 1 supplier for mobile electronics. Though
Chrysler considers GPD a co-manufacturer of original equipment automotive electronics, the Company intends
to expand its relationships with Chrysler, other North American manufacturers and original equipment manufac-
turers overseas. GPD sells products that address the most up-to-date trends in automotive customization, special-
izing in value-added, high-margin, dealer-installed options such as DVD players and rear view camera systems.
GPD was founded in 1995 and acquired by GNAU in October 2005.

GPD offers a wide range of automotive accessories, some of which are described below.

All-in-one overhead DVD player with 7” flip down LCD monitor

• Widescreen TFT LCD monitor (16:9 aspect ratio)

• Slot-in DVD deck mechanism
• DVD video, VCD, MP3 decoding (CD-R/RW)
• Last play memory
• IR transmitter for wireless headphones
• Dome lights
• Auxiliary inputs for game systems
• Remote controls all DVD & monitor functions
• 24 bits/96 kHz Digital/Audio converter
• 2-channel down mix
• Digital out for PCM & Dolby Digital

All-in-one Double Headrest Monitor/DVD System

• Built-in top loading DVD player

• Built-in wireless FM modulator
• Built-in wireless IR headphone transmitter
• Wireless Headphones
• Wireless Remote
• 7” Widescreen TFT LCD Screen
• Resolution: 1440 x 234
• Brightness: 400-500 Nits

General Automotive Company (GNAU) 4

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Back view system BV1350

The color cameras are weatherproof, and feature a high resolution 1/3” CCD
imager with 0.5 lux sensitivity for extreme low light conditions. The package
includes 3.5” TFT monitor, but the camera can be adapted for use with any
pre-installed monitor already in the car LCD monitor.

• 12V operation
• Wide angle lens (120° cone of vision)
• Up to 165’ (50 meters) visibility
• 25’ feet of total cables for longer applications (camera: 16’/monitor: 9’)
• Electronic iris for low light conditions
• Backlight compensation circuit for TFT
• Auto-on circuit when reverse gear is engaged

Navigation systems

The navigation system boots from Flash memory into 32MB of RAM. The
display is a quarter-VGA (320x240) TFT LCD touch screen. The Go includes
an integrated 12-channel GPS receiver with built-in antenna, and “all-in-view”
tracking.

• SD memory slot for cards containing regional maps

• Mini-USB device port
• Integral loudspeaker
• Power charging jack

Bluetooth GPS receiver

The Bluetooth GPS receiver picks up positioning data from satellites and de-
livers the data to mobile computing devices wirelessly via Bluetooth. It pro-
vides pinpoint accuracy and thoroughly reliable tracking capabilities.

• The voice instruction indicates distance and turns

• Speed detection
• Alternative local-only routes
• Programming buttons on PDAs for convenience
• 3-D display option
• Trip time estimation

General Automotive Company (GNAU) 5

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

OE Source

OE Source (OES) imports and sells hard-to-find auto parts from proprietary
sources domestically and abroad. OE Source’s direct relationships
with Asian manufacturers facilitate cost savings while maintaining a high standard of product and service quality.
The Company’s customers include large, multi-national distributors. These distributors resell OE Source products
to dealerships, automakers, automotive repair shops and retail outlets. OE Source’s product line includes engine
management products such as O2 sensors, speed sensors, throttle position sensors, engine control units (ECU),
filters, high performance carbon parts, transmission and brake system components. OE Source was incorporated
in 2004 and acquired by GNAU in January 2007.

OE Source markets a wide variety of engine management tools, some of which are described below.

Oxygen Sensors

Commonly located in the exhaust manifold or further downstream in the exhaust path, the
oxygen sensor measures the amount of oxygen in the exhaust through changing voltages
and sends this information to the onboard computer. The computer uses this information
to monitor fuel delivery, making changes in the fuel/air mixture as necessary.

Throttle Position Sensors (TPS)

A TPS measures throttle position through changing voltage, and sends this information
to the onboard computer. The computer uses this and other input to calculate the correct
amount of fuel to deliver.

Engine Control Units (ECU)

An ECU is an electronic control unit which controls various aspects of an internal com-
bustion engine’s operation. ECUs found on most modern cars also control the ignition
timing, variable valve timing (VVT), the level of boost maintained by the turbocharger
(in turbocharged cars), and control other peripherals.

Oil Pump Ignition Coil Brake Disc Rotor Speed Sensor Transmission Water Pump
Solenoid Valves

General Automotive Company (GNAU) 6

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Industry Outlook
The North American automotive industry is in a serious state of flux as rising commodity prices and foreign
currency exposure drive supplier rationalization, creating continued pressure to cut costs. As a result, consumer
demand for vehicles produced by the Big Three (Ford, General Motors and Chrysler) is declining while share
for Asian manufacturers grows as they continue to introduce new models and platforms in North America at an
accelerating pace.

In 1980, the Big Three Detroit automakers represented nearly 73 percent of all light vehicle sales while foreign
producers with U.S. operations were less than 2 percent of sales; imports accounted for just over a quarter of the
market. During the 1980s, the number of foreign-nameplated vehicles produced in the United States began to
rise as foreign-owned factories, referred to as transplants, began to multiply.

Through the early to mid-1990s, the growing popularity of sports utility vehicles (SUV) helped the Detroit Three
maintain market share. By 1996, the Detroit Three’s market share stood at 72.5 percent, virtually the same as 16
years earlier. In the years that followed, challenged presented by the growing number of foreign SUVs, rising
energy prices, flattening demand caused the Detroit Three to gradually lose market share.

By 2006, their market share had plunged nearly 20 percentage points to 53 percent. New domestic sales from
transplant factories had risen to nearly a quarter of the market, and imports sales rose more than 22 percent.
Detroit’s market share loss created growth opportunities for foreign-branded but domestically produced ve-
hicles and imports.

Share of light vehicle sales

100
90 Imports
80 New domestics
70
60
50
40 Detroit Three
30
20
10
0
1890 ‘83 ‘86 ‘89 ‘92 ‘95 ‘98 2001 ‘04 ‘07

Source: Wards Automotive

Transplant vehicles are made with less domestic content than Detroit Three vehicles, which negatively impacts
sales for domestic auto parts suppliers. As of November 2005, seven of North America’s largest OEM (Original
Equipment Manufacturers) suppliers, representing nearly $28 billion in NAFTA sales, were operating under
Chapter 11 bankruptcy protection. In Canada as well, large manufacturers have begun shutting down plants.
Despite this, North America’s appetite for automobiles and aftermarket parts is not diminishing. This changing
environment is creating long-term opportunities for savvy industry players with global sourcing capabilities.

General Automotive Company (GNAU) 7

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Automobile demand worldwide remains buoyant and sales opportunities are especially favorable for manufac-
turers of smaller, more fuel-efficient cars. Global automobile output rose 4.5 percent in 2006 to 70.93 million.
The United States has lost 666,754 units of production and its No. 1 world ranking in terms of units produced to
Japan, which has emerged as the world’s leading carmaker.

North America light vehicle production and capacity utilization

18 production millions Capacity utilization, %

17

16

15

14

13

12
2007 2008 2009 2010 2011 2012 2013

Source: http://www.autofacts.com/datapage.asp

According to Stout Risius Ross, U.S. new car sales declined to 16.15 million in 2007 (the lowest level in nearly a
decade) and are likely to decline further in 2008. As the U.S. experiences economic headwinds and high gasoline
prices, new car sales are expected to trough mid-year 2008, with full year consensus estimates in the mid 15-mil-
lion-range. PriceWaterhouseCoopers forecasts the North America automotive industry will decline in 2008 but
begin to rebound in 2009.

Major automotive industry trends1:

Growing focus on global sourcing: GM, Ford and Chrysler now require parts manufacturers to source vehicle
components in low cost countries. In addition, suppliers are encouraged to improve service to customers outside
the United States by establishing facilities in these countries. Moreover, as vehicle design moves outside North
America, suppliers who are not already global must co-locate with OEM facilities to operate as a full-service
supplier.

Continued consolidation: Considerable supply-chain overcapacity in North America and the downturn in sales
volume are forcing a new round of supplier consolidation. OEMs are working toward “commonizing” com-
modity components across vehicle platforms, resulting in fewer programs, albeit at larger volumes, awarded to
a smaller number of suppliers. In addition, OEMs must add scale to support the infrastructure needed for the
value-added design and engineering services required to remain globally competitive.

1 http://www.worldservicesgroup.com/publications.asp?action=article&artid=2227

General Automotive Company (GNAU) 8

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

OEMs continue to garner market share: Market share gains for foreign OEMs come at the expense of domestic
automakers. Toyota, Honda and Nissan increased U.S. market share by 3.1 percent, 2.8 percent, and 4.8 percent
respectively, in 2007 while domestic OEMs share declined by approximately 7 percent. Continued restructuring
initiatives, product mix improvements and new, more flexible UAW labor contracts will benefit domestics in the
long-term, but fail to materially impact operating performance in the short-term.

Divesting commodity businesses to invest in technology and innovation: OEMs and Tier 1 suppliers are com-
monizing basic components, and shifting their focus to next generation technologies, resulting in a sell-off of
non-core operations. The recently passed Federal Energy Bill significantly increased 2020 CAFE standards and
thereby intensified automakers’ focus on fuel-saving initiatives such as engine-downsizing, turbo charging, di-
rect injection, advanced transmission, diesel, hybrid and other next generation propulsion systems. In addition,
with electronics content expected to grow 6 percent annually through 2012, telematics will be the highest growth
segment.

Shift in vehicle preferences: Crossovers and small cars continue to acquire market share at the expense of large
trucks and SUVs, a shift that has been prevalent since 2004. The small SUV segment has also gained market share
from large SUVs. Shifting consumer vehicle preferences are requiring suppliers to continually evaluate current
programs and re-adjust their operations to ensure they address the most attractive vehicle segments going for-
ward.

Declining fleet sales: Despite market share declines, Ford and GM slashed fleet sales in 2007, and Chrysler is ex-
pected to follow suit in 2008. Restructurings will gradually allow domestic OEMs to set production levels based
on profitability and demand, thereby reducing the overproduction that has been a primary driver of fleet sales.

M&A activity influenced by private equity: Depressed valuation levels, distressed auto suppliers, and under-
valued assets have attracted the interest of private equity investors, accelerating the realignment of the automo-
tive parts industry. Private buyers are acquiring auto parts companies and re-positioning these businesses to
improve footprints, bolster technology, rationalize capacity, and ultimately emerge as a preferred supplier with
a strong financial position.

Original Equipment Manufacturers (OEMs)

OEMs design, manufacture and supply parts that auto manufacturers incorporate into their finished vehicles.
Most automotive components are not manufactured by the carmaker. Instead, these parts are purchased from
OEMs, branded as the carmakers own, and installed during the assembly process. This strategy allows carmak-
ers to focus on their core competencies. Auto manufactures have clearly defined standards regarding quality,
price, and service and, based upon those standards, approve certain suppliers to provide particular parts. Com-
ponent suppliers may, in turn, either purchase the parts they supply or manufacture the parts themselves. Either
way, parts providers must consistently meet the automakers’ price and quality standards or risk losing their
status as an approved supplier.

Automotive accessories

The global automobile accessory market is highly fragmented. To differentiate their vehicles, dealers often add

General Automotive Company (GNAU) 9

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

options to their vehicles after the vehicle has been manufactured and delivered to a vehicle processing center
or dealer lot. These options packages are commonly referred to as “upfit” or “dealer installed” packages. Most
of GPD’s products are option packages or a subset of option packages installed at Chrysler’s vehicle processing
centers.

Vehicle processing centers are typically owned either by the automobile manufacturer or by an independent
third party. These centers supply accessorized automobiles to the retail dealership network. Vehicle processing
centers do not design and/or manufacture option packages. Instead, they install pre-assembled accessory kits.

Vehicle manufacturers and the vehicle processing centers rely on GNAU and other approved suppliers to de-
velop, design, manufacture and deliver the accessory packages desired by retail customers. Vehicle processing
centers operate under quality control programs similar or equal to the manufacturer’s on-line production facili-
ties. Therefore, process stability, quality control issues and other related procedures are a crucial component of
a successful relationship with the processing centers.

A growing percentage of new vehicles are sold with mobile electronics or entertainment packages such as DVD
players, back up camera systems, navigation systems and telematic systems. According to the Consumer Elec-
tronics Association (CEA), mobile electronics is a rapidly evolving segment encompassing audio, video, multi-
media and telematics. The U.S. market for mobile electronics is estimated at $6 billion.

Automotive aftermarket

Automotive aftermarket parts are a $265 billion market in the United States. This segment encompasses parts for
replacement, collision repair, appearance and performance. According to the Aftermarket Automotive Industry
Association, engine management products have become and will likely remain one of the fastest growing after-
market parts segments.

General Automotive Company (GNAU) 10

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Financial Analysis

Revenues

During 2007, GNAU tripled revenues to $15.3 million from $4.9 million in 2006. Most of the revenue increase
reflects the acquisition of OE Source.

The OE Source acquisition has allowed GNAU to leverage selling, general and administrative expenses and
reduce operating losses. Both of the Company’s subsidiaries have active programs in-place aimed at reducing
costs by sourcing more parts from Asia in 2008-2009.

Income statement, $

2006 2007 % Chg

Revenues 4,947,516 15,292,780 209%

Costs of goods sold 4,149,558 13,271,384 220%
Gross profit 797,958 2,021,396 153%

Operating expenses:
Selling, general and administrative 2,033,563 1,954,576 -4%
Stock-based compensation 1,374,107 1,247,250 -9%
Loss from operations -2,609,712 -1,180,430 n/m

Other expenses -268,625 -570,714 n/m

Net loss -2,878,337 -1,751,144 n/m

Gross margin 16.1% 13.2% -2.9%

Operating margin -52.7% -7.7% 45.0%

Source: SEC Filings

Liquidity and Capital Resources

As of December 31, 2007, GNAU had current assets of $3.8 million, consisting mainly of accounts receivable and
inventory, and current liabilities of $9.5 million, consisting mainly of accounts payable, a bank line of credit and
notes. The Company’s working capital deficit at year-end 2007 totaled $5.7 million.

The conversion of approximately $5.7 million of notes payable into common stock and the recent sale of 1.5
million GNAU’s common shares for $1.35 million provides the Company with funding for its restructuring pro-
grams and pursuing new sourcing relationships in Asia.

General Automotive Company (GNAU) 11

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Balance sheet, $

31-Dec-06 31-Dec-07

Total current assets, including 1,012,693 3,759,376

Cash and cash equivalents 170,556 600
Property, plant and equipment, net 19,182 19,451
Customer relationship, net 1,484,155 1,272,133
Other assets, net 77,778 114,183
TOTAL ASSETS 2,593,808 5,165,143

Current liabilities, including 1,975,979 9,471,367

Short term debt 226,802 6,244,589
Long term debt 3,700,000 2,653,867
Shareholder’s deficit -3,082,171 -6,960,091

Source: SEC Filings

The Company may also seek additional financing for acquisitions and other growth opportunities.

Outlook

The Company’s growth strategy centers on increasing sales to existing customers, enhancing penetration of
currently served markets, introducing new products and expanding into new markets through acquisitions and
start-ups. The Company’s goal is to establish leadership positions in its key product groups, which will in turn
position GNAU for improved margins, long-term profitability and cash flows.

Acquisitions are a key element of GNAU’s strategy. The Company seeks to identify well-managed, niche-ori-
ented companies with strong national or international distribution and supply chains that manufacture high-
value-added automotive components. According to management, GNAU has already identified several acqui-
sition targets with annual sales in a $20 million to $50 million range. We estimate one or two small acquisitions
per year, driving growth in sales to $50 million in 2009 and $70 million in 2010. However, if more acquisitions
close or larger entities are acquired, GNAU could achieve its goal of 2010 sales exceeding $100 million through
a combination of acquisitions and internal growth.

General Automotive Company (GNAU) 12

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Revenue forecast, $ Million

Projected Revenue $ in millions

100

80

60

40

20

0
2007 2008E 2009E 2010E 2011E

Source: Analyst estimates

Going forward, the revenue contribution from acquisitions, as well as cost control programs and improved Asian
outsourcing, should enable GNAU to improve gross and operating margins and become profitable in 2009.

Income forecast, $

2006 2007 2008E 2009E

Revenues 4,947,516 15,292,780 22,900,000 50,000,000

Costs of goods sold 4,149,558 13,271,384 19,465,000 42,500,000
Gross profit 797,958 2,021,396 3,435,000 7,500,000

Operating expenses:
Selling, general and administrative 2,033,563 1,954,576 2,400,000 5,200,000
Stock-based compensation 1,374,107 1,247,250 1,300,000 1,600,000
Loss from operations (2,609,712) (1,180,430) (265,000) 700,000

Other expenses (268,625) (570,714) (600,000) (650,000)

Net loss (2,878,337) (1,751,144) (865,000) 50,000

Source: Historical financials and Analyst estimates

General Automotive Company (GNAU) 13

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Valuation

We based our comparative valuation analysis on GNAU’s peer group of automotive parts manufacturers and
distributors. The peer group companies currently trade at forward Price/Sales multiples ranging around 0.42
times sales. We believe GNAU should trade at the higher end of the peer group range due to its rapid business
expansion and higher-end accessory and engine management products.

Peer comparison

Ticker Price/ Market Cap. P/E P/S

Company Name 5/19/2008
Symbol share($) $ million
2008 2009 2008 2009

Standard Motor Products Inc. SMP 8.24 151 7.70 6.75 0.18 0.18
Genuine Parts Co. GPC 45.16 7,400 14.43 13.36 0.66 0.64
Modine Manufacturing Co. MOD 17.10 551 -14.87 26.31 0.31 0.29
Lear Corp. LEA 30.88 2,390 7.90 7.33 0.16 0.15
Autoliv Inc. ALV 59.12 4,300 11.71 10.71 0.59 0.56
Tomkins plc TKS 15.05 3310 12.75 n/a 0.60 0.59

Median 9.80 10.71 0.45 0.42

Source: Yahoo Finance

Multiplying our $50 million 2009 revenue estimate by a 0.65 times forward Price/Sales multiple, we derive a
$32.5 million market capitalization target for GNAU. Dividing this amount by 20 million fully diluted shares
(assuming dilution from future equity sales), we obtain a $1.63 price target. As a result, we are initiating cover-
age of GNAU with a Speculative Buy rating and a $1.63 price target. However, we strongly advise investors to
consider the risk factors mentioned below since the Company faces many challenges in achieving its acquisition
and revenue growth goals.

General Automotive Company (GNAU) 14

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Risks
History of losses raises doubts about the Company as a going concern

GNAU has incurred operating losses and negative cash flows since its inception. Accumulated losses exceed $6.9
million. There can be no assurance that GNAU will be able to generate positive cash flows to fund operations
in the future or to pursue its strategic objectives. In addition, it is unlikely the Company will generate positive
operating cash flows over the next two years.

Intense competition

The automotive parts industry is highly fragmented and extremely competitive. There are a large number of
competitors in this market with significantly greater resources and experience than GNAU. Additionally, there
are few barriers to entry for new companies offering similar products or services. The market is large and very
few competitors hold significant market shares.

North American industry challenges

The North American automotive industry is in a serious state of flux. Consumer demand for vehicles produced
by the Big Three is declining, while Asian manufacturers continue to bring new models and platforms to North
America at a faster rate. Spiking commodity prices and foreign currency exposure are forcing supplier rational-
ization and resulting in continued pressure to cut costs.

Moreover, transplant vehicles are made with less domestic content, thus reducing sales opportunities for domes-
tic parts suppliers. Many major North American OEMs are operating under Chapter 11 bankruptcy protection.

Need for additional funding

The Company will likely need additional funding to pursue strategic acquisitions. GNAU may seek debt or
equity financing; however, there is no assurance that the Company will be able to raise the needed financing on
acceptable terms.

Management

Joseph L. DeFrancisci Mr. DeFrancisci has approximately 20 years experience leading companies from start-up
President, through growth, improving operations and building value. Prior to joining GNAU, Mr. De-
Chief Executive Officer Francisci was senior vice president of worldwide operations for Grindmaster Corp., a global
and Director leader in the beverage dispensing equipment industry with marketing operations in more than
90 countries. Prior to that, he served as senior partner with the Highwood Group LLP, a con-
sulting firm focused on competitive strategy and operational effectiveness. From 1996-2000,
Mr. DeFrancisi was president and COO of Pasta Montana LLC, a start-up food company her-
alded as one of the fastest-growing and best-managed food companies of its time.

General Automotive Company (GNAU) 15

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Management

Mr. DeFrancisci’s early career includes his 15-year tenure with Demaco/Howden Group, a lead-
ing manufacturer of highly engineered capital equipment. He earned rapid promotions to vice
president-level positions in sales, marketing and operations. He holds a Bachelor of Science in
industrial technology education from the State University of New York and is an alumnus of the
Advanced Executive Program of the Kellogg Graduate School of Management - Northwestern
University. In addition to belonging to various professional and alumni organizations, he serves
on the advisory board of Univedant Corp., a Chicago-based advanced engineering firm.

Dan Valladao One of the founders of General Automotive, Mr. Valladao has 25 years of automotive experi-
Chairman and Founder, ence, including experience in the retail, wholesale and OEM sales channels. He was instrumen-
Business Development tal in increasing the Company’s sales from just over $3 million in 2004 to $15 million in 2007.
Director Prior to co-founding General Automotive, Mr. Valladao served as vice president of sales and
marketing for APS International for five years. APS is a global manufacturer and distributor of
automotive products. He was previously responsible for sales to OEM companies such as Ford,
GM, Chrysler, Honda and Toyota for HSG Corp., a large manufacturer’s representatives firm.
In 1988, Mr. Valladao served as executive vice president for Mobile Living Corp., a retailer of
vehicle accessories, building the company into a multi-store chain with sales exceeding $20
million within five years.

Harry Christenson Mr. Christenson is an accomplished senior financial executive with more than 30 years ex-
Chief Financial Officer perience operating and managing complex international businesses. He recently served as a
director and CFO of LNG Holdings, SA, the parent company of LambdaNet Communications,
a pan-European supplier of network-related telecommunications services. Among his achieve-
ments was the successful turnaround of the company, concluding with a transfer of ownership
by its private equity holders to a U.S. public ISP network operator. Previous positions include
director and CFO of Precell Solutions Inc.; chairman of the board and CFO of Octagon Inc; and
director, COO, CFO and executive vice president of Penril DataComm Networks. Mr. Chris-
tenson received a bachelor’s degree in accounting from Fairfield University and a master’s
degree from the University of New Haven, Conn.

Sechoon Park Sechoon Park is a former executive of IBM and AT&T, with more than 15 years experience
President, in marketing and sales management, international project management and technical sales
Global Parts Direct and support. Mr. Park has served as president of Global Parts Direct (GPD), a wholly-owned
subsidiary of General Automotive, since 2005. His network of contacts has contributed sig-
nificantly to GPD’s success with Chrysler Mopar and manufacturers in Korea. Mr. Park was
previously vice president of OEM sales at Promise Mobile Electronics Inc., which was acquired
by GPD in 2005. In these positions, his duties included developing and implementing product
marketing and sales strategies for the automotive OEM accessories business. Mr. Park gradu-
ated with a Master of Business Administration from Yale University in 1987.

Tim Alford For more than 25 years, Mr. Alford has specialized in sales and marketing of electronic com-
President, OE Source ponents with both OEM and global distribution channels. He joined General Automotive as
president of OE Source, a wholly-owned subsidiary, in 2004. Earlier in his career, he served
as operations and marketing manager for multi-billion dollar global electronic distributors
such as Arrow Electronics (2000-2004), Future Electronics (1997-2000), and Milgray Electronics
(1991-1997). He also served as regional distributor sales manager for AVX Corp., a NYSE-listed
OEM manufacturer with 20 facilities in 12 countries, from 1979-1984 and from 1987-1991. Mr.
Alford’s primary responsibilities were to provide management direction relating to all aspects
of product procurement and inventory control. In addition, he provided sales and product
expertise to customers and the sales force.

General Automotive Company (GNAU) 16

 Analyst: Victor Sula, Ph.D.
Initial Report
May 28th

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization companies.
BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research analysts and
the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should be construed as an
endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely on publicly avail¬able
information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclusions in this report are deemed
reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides investors a “safe harbor” in regard
to forward-looking statements. To fully comply with the requirements of this law, BER cautions all investors that such forward-looking state-
ments in this report are not guarantees of future performance. Unknown risk, uncertainties, as well as other uncontrollable or unknown factors
may cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-look¬ing
statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment. Beacon Equity
Resources and its affiliates have been compensated thirty five thousand free trading shares from Windermere Capital Partners for enrollment
of GNAU in its research program and other services. Ratings and price targets in this report should not be construed as recommendations or
stock price predictors. Readers of this report are urged to use due-diligence in any purchase of security listed herein. Readers should consult the
Company’s SEC filings as well as our initial report on the firm to better understand the inherent risks associated with this security. There may
be many uncontrollable or unknown factors which may cause actual results to materially differ from the results, performance or expectations
expressed or implied by such forward-looking statements. Investors should exercise good judgment and perform adequate due-diligence prior
to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the
content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been
either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or se-
curities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula
held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS
sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is
also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s
degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

General Automotive Company (GNAU) 17