General Automotive Co (OTCBB: GNAU)

General Automotive Company (GNAU) is a provider of original equipment (OE) and aftermarket automotive parts and related automotive products at multiple levels of distribution throughout the United States and internationally. The Company operates through its wholly-owned subsidiary, OE Source L.C. (OES). OES sells conventional auto parts that it imports directly from manufacturers, consolidators and distributors in the Far East to the customers in the United States. On February 22, 2008, the Company completed a reverse merger with Global Automotive Supply Inc. (GAS Nevada). On November 14, 2008, the Company divested its wholly owned subsidiary, Global Parts Direct Inc. (GPD).

General Automotive Company is based in Orlando, Florida.

Source: Reuters.com, SEC Filings.

Financial Summary

Gross margin improved 20.39% for the quarter ended September 30, 2009, to 10.74% compared to 8.92% for the same quarter in 2008. Sustained improvements in purchasing practices and product sourcing at its OE Source subsidiary have resulted in a year-over-year reduction in cost of goods sold and the realization of 12.50% gross profit margin for the nine months ended September 30, 2009. The Company achieved a reduction in its loss from operations of 47.62%, to $378,712 from $723,171 for the nine months ending September 30 in 2009 and 2008, respectively.

Earnings before interest and taxes continued to improve in the three months ended September 30, 2009, to a net loss of $171,161 from an operating loss of $215,068 for the quarter ended September 30, 2008. Through sustained operating initiatives GAC reported a reduced net loss of $706,052, or $0.04 per basic and diluted share for the nine months ended September 30, 2009, versus a net loss of $2,416,024, or $0.20 per basic and diluted share, in the nine months ended September 30, 2008. The year-over-year net loss included $1,551,263, or $0.13 per basic and diluted share, related to discontinued operations.

Source: Reuters.com, SEC Filings.

Analyst Consensus

No chart available.

Source: www.ft.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=GNAU.OB

Investment Highlights

GNAU last week announced it has an agreement to acquire privately held S.P.E.C. Inc. The transaction is expected to further position the Company as an organization that capitalizes on both organic growth as well as growth through strategic acquisition. S.P.E.C., based in Birmingham, AL, is a leading provider of high performance clutches and flywheels to the high performance automotive market. S.P.E.C., which reported unaudited revenue of approximately $5.6 million in 2009, will operate as a wholly owned subsidiary of General Automotive.

S.P.E.C. highlights:

– Leading provider of clutches, flywheels and pressure plates to the high

performance automotive market

– Extensive distribution network with over 100 domestic dealer

participants

– State-of-the-art warehouse and production facility

Under terms of the agreement, GNAU will issue 750,000 shares of restricted common stock to the current owners of S.P.E.C. in addition to $2 million cash. S.P.E.C. shareholders can earn shares over the next six years based on the achievement of certain revenue and profitability milestones. Closing of the S.P.E.C. transaction is subject to completion of due diligence and other conditions. In connection with the acquisition and with its overall growth plan, GNAU expects to raise additional capital in 2010.

GNAU announced in late December that it has launched an export sales division for the purpose of expanding its distribution abroad. General Automotive has historically focused its sales and distribution efforts in the United States, but now seeks to take advantage of opportunity for international distribution of its products. The Company has appointed industry veteran Scott Bruno as Director of Sales, and has brought on a full sales team for the purpose of building the export division.

Source: http://www.generalautomotive.com/

Technical Analysis

Source: http://stockcharts.com

GNAU is trading above its 50 day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

GNAU is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

The MACD for GNAU currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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