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Analyst: Victor Sula, Ph.D.

Initial Report
November 6th, 2008

RNNM daily 11/05/08


1.75

1.50

1.25

1.00

0.75

0.50
Ronn Motor Company, Inc.
0.25
4305 FM 2147 W volume © BigCharts.com
Horseshoe Bay, Texas 800

78657 USA 600

Thousands
Phone: 888-460-0960 400

Fax: 830-693-2254 200

E-mail: info@ronnmotors.com 0
Sep Oct Nov
Website: www.ronnmotors.com

MARKET DATA
Company Overview
Ronn Motor Company, Inc. (RNNM) designs and builds high-qual-
Symbol RNNM ity, high-performance sports cars that are also eco-friendly and
Exchanges OTC PK
feature alternative power systems able to deliver high gas mile-
Current Price $0.45
Price Target $5.12 age and reduced emissions. The Company plans to offer hydrogen-
Rating Speculative Buy fueled, fuel cell-powered and plug-in-electric vehicles. RNNM has
Outstanding Shares 200 Million developed and patented a proprietary hydrogen-generating system
Market Cap. $90 Million that produces and injects hydrogen gas into a conventional internal
Average 3-m Volume 34,265 combustion engine, enhancing the combustion process and allow-
ing fuel to burn more efficiently with significant emissions reduc-
tions.
Source: Yahoo Finance, Analyst Estimates

The Company’s initial sports car project, the ScorpionTM, is a mid-


engine, hydrogen fuel-injected hybrid, eco-friendly high-perfor-
mance sports car. The Scorpion will be equipped with an Acura®
aluminum and magnesium V-Tech, Type S V-6 motor that develops
nearly 300 horsepower stock and with RNNM’s twin turbo option,
over 450 horsepower. At minimal boost settings on the turbo char-
gers, the Scorpion is able to achieve speeds in excess of 180 mph.
The vehicle’s body has been designed and fabricated by Gaffoglio
Family Metalcrafters, Inc., a world-renowned automotive engineer-
ing company. At higher turbo boost settings, the Scorpion should be
able to break the 200 mph speed barrier. The Scorpion will debut at
the 2008 SEMA Show in Las Vegas in November. The SEMA Show
showcases the very best in groundbreaking automotive products
and new technology and attracts more than 120,000 attendees from
over 100 countries. RNNM plans to build 190 production units dur-
ing its first year of production. The Scorpion will retail for $150,000.
A Limited Edition Scorpion HX model will sell for $250,000.

Ronn Motor Company, Inc. (OTCPK: RNNM) 1


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

The Company has equipped the Scorpion with a hydrogen-on-demand system (H2GO™) that increases the fuel
efficiency of its internal combustion engine by as much as 25%, boosts power and reduces CO2 green house gas
emissions by approximately 90%. With the hydrogen generator installed, the car will get about 40 miles to the
gallon. RNNM is the first car company to install hydrogen-on-demand technology as a standard feature in its
vehicles. In addition, the Company will soon begin manufacturing the H2GO™ system on a commercial scale as
a retrofit device for any existing car or truck.

In late July, the Company was awarded the Publishers Choice Award by the duPont REGISTRY™. The award
committee noted that “The ‘Scorpion provides environmentally-conscious consumers with a car that has the
standout design and performance of an exotic car, but keeps carbon footprints at a minimum.” The duPont
REGISTRY™ is a buyers’ gallery of fine automobiles and a premiere luxury marketplace for cars, homes and
boats. The Scorpion will be displayed at the duPont REGISTRY™ booth at the SEMA show, where publisher Tom
duPont will personally unveil the supercar. RNNM will be partnering with the duPont REGISTRY™ for multiple
automotive events over the next 12 months.

Highlights

Market opportunity increasing for hybrid vehicles

Growing environmental concerns and demand for “green” technologies are encouraging automotive manu-
facturers to invest heavily in the development of environmentally friendly cars. Hybrid vehicles offer the ad-
vantages of low fuel consumption and low emissions while achieving speeds and performance comparable to
conventional cars.

At present, few hybrid vehicles are on the road but these technologies have the potential to become mainstream.
The principal limiting factor has been the high prices consumers must pay for hybrid vehicles; however, prices
should begin to decline as more hybrids are produced and manufacturers achieve economies of scale. High oil
prices and environmental awareness are causing more consumers to choose hybrid cars.

Ronn Motor Company, Inc. (OTCPK: RNNM) 2


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Real-Time Hydrogen Injection technology leadership

The Company is leveraging its in-house expertise in hydrogen-on-demand technology to develop and produce
emission reduction devices for transportation applications. RNNM’s innovative technology, marketed under the
H2GO™ brand, reduces fuel consumption while increasing vehicle engine power. The technology consists of a
system that generates hydrogen and oxygen from distilled water on-board a vehicle and delivers these gases to
the air intake of an internal combustion engine, resulting in reduced emissions, enhanced engine performance and
fuel consumption efficiency.

Significant cost savings with H2GOTM implementation

In an era of high gasoline prices, the Company’s technology could provide consumers with immediate, substantial
fuel cost savings. Based on the device’s $999 retail price and the H2GO™ system’s 30% mid-range mileage savings,
users recoup their investment in fewer than 50 tank fill-ups. Someone driving 35,000 miles per year in a vehicle
equipped with a H2GO™ system will recover his investment in the device in about eight months at the mid-range
30% mileage savings. This estimate assumes 70 fill-ups per year (35,000 miles per year /500 miles per tank).

Technology advantages may lead to rapid adoption

The H2GO™ system is similar in size to a standard car battery and holds approximately one gallon of water,
which can produce hydrogen as needed for approximately 5,000 miles (equivalent to approximately 10 tanks
of fuel for most vehicles) before requiring a water refill. H2GO™ is adaptable to any internal combustion piston
engine, including more than 250 million registered vehicles on American roads today. H2GO™ uses a patented
ProCooler™ which (i) reduces A/C refrigerant usage by 20% to 25%; (ii) generates less drag on the engine, and (iii)
increases horse power by 5% to 7%. The technology improves combustion by as much as 25%, reduces emissions
by approximately 75-90% and boosts fuel savings by as much as 15-35%.

Introduction of exotic Scorpion car

RNNM is introducing the ScorpionTM, which is the world’s first hydrogen-enhanced, eco-friendly exotic sports car.
The Scorpion will produce nearly 300 horsepower in its stock form and 450 horsepower with the twin turbo op-
tion, while maintaining Acura/Honda reliability. The Scorpion will accelerate from 0 to 60 mph in 3.5 seconds, will
get 40 mile to the gallon on highways and will produce nearly zero CO2 emissions. RNNM also plans to develop
a hydrogen/electric plug-in hybrid to be introduced in 2010.

The Company has already accepted delivery of its first ScorpionTM, which it plans to unveil to the world media at
the November 2008 SEMA show in Las Vegas, Nevada.

Plan to sell 300,000 H2GOTM systems and 190 ScorpionTM sports cars in 2009

RNNM plans to build a car showroom in its manufacturing facility and an executive sales room for pre-qualified
Scorpion buyers where potential customers can view a multimedia presentation highlighting the car’s exclusive
design features, including the hydrogen-on-demand fuel system.
The Company plans to gain national attention for the Scorpion by participating in national and international auto
shows in Detroit, New York, Geneva, Abu Dhabi and other major cities. The Company will also advertise in maga-
zines that reach a wealthy audience such as the Robb Report and the DuPont REGISTRY.

Ronn Motor Company, Inc. (OTCPK: RNNM) 3


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Business Model
RNNM has designed and begun manufacturing a finely detailed and hand crafted, exotic high-performance
sports car whicht incorporates the Company’s innovative hydrogen-on-demand technology. The technology
consists of a system that generates hydrogen and oxygen from distilled water on-board a vehicle and delivers
these gases to the air intake of an internal combustion engine. The hydrogen-on-demand system reduces engine
emissions, enhances engine performance and improves fuel consumption efficiency. With the H2GO™ system,
combustion improves by approximately 20% - 25%, emissions are reduced by roughly 75- 90% and fuel savings
of as much as 15%-35% are achieved. The system increases engine power while reducing wear.

RNNM’s exotic Scorpion supercar features a technically advanced Acura 3.5 liter Vtec Type S engines, widely
known for its superior engineering, high horsepower, light weight and reliability. This stock engine produces
nearly 300 horsepower and the RNNM twin turbo equipped model produces 450 horsepower. Because of the
hydrogen fuel enhancement system, the Scorpion gets approximately 40 miles to the gallon. The Scorpion will be
a limited production vehicle. Annual production will be limited to between 100 and 500 automobiles. The Com-
pany intends to use this automobile as an entry point into the automotive marketplace, providing a platform for
its other emerging technologies which include hydrogen fuel cells and electric plug-in hybrid cars.

The Company also plans to develop and commercialize hydrogen-generating, Real-Time Hydrogen (RTH) and
hydrogen fuel injection devices which can be installed in existing cars, trucks, RVs, aircrafts and boats. As soon
as testing is completed, RNNM plans to begin manufacturing and marketing its proprietary H2GO™ system to
automotive dealerships, trucking fleets, government fleets and individual automobile owners nationwide as an
economical aftermarket solution for increasing gas mileage and reducing noxious emissions. RNNM is currently
involved in negotiations with and expects to soon finalize an agreement with a major manufacturer/distributor
which will manufacture, warehouse and ship H2GO™ systems.

RNNM is also developing a hydrogen/electric plug-in hybrid it plans to introduce in 2010. In the plug-in hybrid,
pumped hydrogen gas will be fed into the fuel cell where it will be electrochemically converted into electricity
with no combustion, no moving parts, and no emissions other than water vapor. Electricity will be used to power
the vehicle. The Scorpion chassis was designed so it could be easily converted to various power plants and drive
systems so RNNM’s R&D and redesign costs will be minimized. The Company expects to produce between 500-
1,500 premium plug-in-hybrid vehicles annually.

Ronn Motor Company, Inc. (OTCPK: RNNM) 4


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Strategy

The Company’s goal is to become a leading manufacturer of hydrogen-on-demand systems for mobile transporta-
tion and to be recognized for its exotic supercars equipped with alternative power systems.
The Company plans to accomplish these goals by:

• Developing commercial mobile applications for its hydrogen-on-demand and fuel injection technologies;
• Establishing strategic relationships with automobiles dealers and distributors globally;
• Pursuing selective acquisitions of similar or complementary businesses;
• Expanding its product markets through joint-venture, mergers or acquisition;
• Leveraging the full capabilities of its technology to drive new product development;
• Insuring effective test bed support for new market technologies, designs and performance measuring;
• Providing a high end, high performance, and economically friendly sports car experience for the customer;
• Increasing awareness of RNNM’s brand and the cost/environmental benefits of its technology.

The Company plans to build a new campus, which will feature a 10,000 square foot showroom and executive of-
fices, as well as an assembly plant, which will occupy 40,000 square foot of clear space and be outfitted with state-
of-the-art equipment.

Sales and Marketing

The Company will use targeted marketing programs to reach potential customers. RNNM intends to gain nation-
al attention by exhibiting its Scorpion car at national and international auto shows in Detroit, New York, Geneva,
Abu Dhabi and other major cities. The Company will also advertise in premium magazines such as the Robb
Report and DuPont REGISTRY.

RNNM is also exploring opportunities for strategic partnerships with lease companies and exotic car dealers. The
Company will accept advance orders for its Scorpion and Limited Edition Scorpion HX if the customer provides
a deposit, which will be placed in an escrow account with a third party.

Ronn Motor Company, Inc. (OTCPK: RNNM) 5


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Technology and Products


Real-Time Hydrogen Injection System - H2GO™

The value of using hydrogen to enhance combustion in internal combustion engines has been researched and
proven in hundreds of practical applications using on-road vehicles.

The Company’s technology is based on a proprietary system in which hydrogen and oxygen are generated
on-demand via electrolysis and then introduced into the combustion process. H2GO™ system draws electri-
cal power to split distilled water into hydrogen and oxygen. Both of these gases are then injected directly into
the air intake of the engine and blended with gasoline at a ratio of 30% hydrogen. Introducing hydrogen into
the process alters the combustion pattern of the fossil fuels so that chemical energy is released at a more auspi-
cious point in the power cycle, resulting in greater adiabatic efficiency and lower emissions. By converting more
chemical energy into mechanical energy, fuel consumption is reduced and exhaust emissions (CO, PM, HC,
NOx) are lowered dramatically.

The H2GO™ system also utilizes an advanced, proprietary piggy-back electronic control module (ECM) that
monitors the actual mixtures of fossil fuels, oxygen and the gaseous hydrogen produced by the RTHI system.
The onboard, computer-controlled “on demand” system will produce revolutionary hydrogen assistance in real
time, capturing the emissions-reducing benefits of hydrogen fuel without the safety hazards, expense, and filling
station requirements of hydrogen storage tank systems.

The H2GO™ system holds approximately one gallon of water, which produces enough hydrogen for approxi-
mately 5, 000 miles before requiring a refill. H2GO™ is adaptable to any internal combustion piston engine
vehicle and uses a patented ProCooler™ that (i) reduces A/C refrigerant usage by 20% to 25%; (ii) generates less
drag on the engine, and (iii) increases available horse power by 5% to 7%.

Ronn Motor Company, Inc. (OTCPK: RNNM) 6


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Potential savings

RNNM’s technology enhances combustion by injecting hydrogen into the engine. In this era of $3.00+ per gallon
gasoline, this new technology may provide substantial fuel cost savings.

Basic assumptions used for the table below:


Gas tank size = 20 gallons (average mid-size sedan);
Cost per gallon = $3.60 (projected regular grade gasoline prices for 2008 and 2009 [1])
Miles per gallon = 25 (average: mixed city, highway)
Miles per tank = 500 (20 gals. x 25 mpg)
Cost per fill-up = $72 (20 gals. x $3.60)
Miles per year = 35,000 (average per year)

Calculation of saving from H2GO™ system

H2GO™ Extra Miles Savings Per


% MPG Savings Per Tank Tank Fill-Up

+20% 100 $14.40


+25% 125 $18.00
+30% 150 $21.60
+35% 175 $25.20
+40% 200 $28.80

Source: Analyst estimates.

Based on the device’s $999 retail price and the H2GO™ system’s 30% mileage savings, users recoup their invest-
ment in fewer than 50 tank fill-ups ($999/$21.60 savings per tank=46.3 fill-ups). Motorists driving 35,000 miles per
year with a H2GO™ system-equipped vehicle can recover their investment in the device in about eight months.
This estimate assumes 70 fill-ups per year (35,000 miles per year /500 miles per tank).

Estimated H2GO™ system savings

Year +20% +30% +40%


1 $1,008 $1,512 $2,016
2 $1,008 $1,512 $2,016
3 $1,008 $1,512 $2,016
4 $1,008 $1,512 $2,016
5 $1,008 $1,512 $2,016

Total $5,040 $7,560 $10,080

Source: Analyst estimates.

_________________________
1. www.eia.doe.gov/emeu/steo/pub/contents.html#US_Petroleum_Markets

Ronn Motor Company, Inc. (OTCPK: RNNM) 7


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

THE SCORPION

The Scorpion is designed with a light-weight, hand-built carbon fiber body, over a race car- designed chrome
molly chassis, powered by the latest high tech Acura® V-Tech Type S, V-6 engine coupled with a six speed syn-
chronous manual transmission. The power plant will produce nearly 300 horsepower in its stock form and 450
horsepower in the twin turbo option. The Scorpion can accelerate from 0 to 60 mph in 3.5 seconds. Equipped
with a hydrogen fuel injection system, the Scorpion will get a 40 mile per gallon highway fuel rating with nearly
zero CO2 emissions.

The Scorpion will consist of a basic model with several upgrades available. The basics include:

INTERIOR EXTERIOR
• Recarro custom leather seats, with heated and • HID Xenon Headlights
electric modules • LED side markers, Signal and Brake Lamps
• Custom carbon fiber center console • NEON lighting in key areas including interior
• Removable Steering Wheel and engine bay
• Six Speed Steering Wheel Paddle Shifter for • Carbon Fiber Body
automatic transmissions • Carbon Fiber Side Mirrors
• Custom LED gauges
• 3 point shoulder harness
• Bose 8 speaker sound system
• GPS guidance system, with satellite tracking SUSPENSION
• Air Bags • Custom Race Designed Chrome Moly Chassis
• RNNM eco-saving proprietary Procooler equipped • Indy car style hybrid fully independent front and
air conditioning system rear suspension
• Fully adjustable coil over shocks
DIMENSIONS • Billet custom machined components
• Wheel Base 105 inches
• Width Front 75 inches
• Width Rear 80 inches

Ronn Motor Company, Inc. (OTCPK: RNNM) 8


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

BODY ENGINE/DRIVE TRAIN


• Concept and design by founder Ronn Maxwell • 2008 Acura® Dual Overhead Cam, Aluminum
• 3D modeling, design interpretation, cad draw- block, 3.5 liter, V-Tech, V-6, Type S Engine
ing by Jonathan Gryphon, of Gryphon Automobile • 289 horsepower in stock form, 450 horsepower
Design with twin turbos
• Lamborghini style doors • 6 speed manual transmission, 6 speed automatic
• Enclosed smooth under carriage like Ferrari and transmission
Formula 1 • Light weight clutch and flywheel
• Front and Rear air diffusers • RNNM proprietary refrigerated intercoolers
• Rear air spoiler • Limited Slip Differential
• 6 standard paint colors available, with any choice • 4 wheel disc brakes, 12 inch cross drilled rotors,
of custom colors polished Wilwood calipers
• Sikkens paint system from Akso Nobel • Polished stainless front spindles
• Carbon Fiber hand laminated body

Industry Outlook
Automotive industry

In 2007, a total of 73 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-
Pacific, 19.4 million in North America, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million
in Africa [2]. The markets in North America and Japan were stagnant, while those in South America and Asia grew
strongly. Of the major markets, Russia, Brazil and China saw the most rapid growth.

In 2008, automotive manufacturers have experienced pricing pressures, changes in consumer buying habits and
rising raw material costs. The industry also faces increasing external competition from the public transport sector
as consumers reevaluate their private vehicle usage.

Auto manufacturing is the nation’s largest single manufacturing industry in terms of total value of products,
value added by manufacturers, and number of wage earners employed. One of every six American businesses[3]
is dependent on the manufacturing, distribution, servicing, or use of motor vehicles. Sales and receipts of automo-
tive firms represent more than one-fifth of the country’s wholesale business and more than one-fourth of its retail
trade. In a typical year, it accounts for 5% of GDP, 16% of all durable goods shipments, and 6% of all manufactur-
ing employment in the United States.

_________________________
2. http://oica.net/category/production-statistics/
3. www.britannica.com/eb/article-65779/automotive-industry

Ronn Motor Company, Inc. (OTCPK: RNNM) 9


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Annual U.S. Light Vehicle Sales (Mn. of units)

20.0
17.4 17.2 16.9
18.0 17.0 16.8 16.6 16.9 16.5
15.6
16.0 15.0 14.7 15.1 15.0
13.9 4.4 4.6 4.3 4.1 4.4 4.6
14.0 13.3 4.4
3.4 3.3 3.6 3.7 4.0
2.9
12.0 2.6 8.4
3.8 3.8 3.9 4.2 4.7
10.0 2.5 2.6 2.8 3.0 3.1 3.5 4.8 4.4
2.5
8.0
8.5 9.0 8.6 8.5 8.2 8.2 8.8 9.0 8.7 8.3 7.8
6.0 8.2 7.7 7.9 8.1
4.0
2.0
0.0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

Car MV/CSU/CUV Truck/Van Total

Source: www.cargroup.org/documents/MEMA-Final2-08-07_000.pdf

In current dollars, the automotive industry grew from just over $100 billion per year in the late 1970s to nearly
$500 billion in 1999, its all-time high. Gross output declined in 2000-01, rose to $436 billion in 2002, but then fell
again to $424 billion in 2004. Industry revenues were approximately $675 billion in 2006.

Fuel optimization technologies

The impacts of rising oil and gas prices may be manageable on a macroeconomic level, but there is plenty of
evidence that individual consumers are negatively affected. A 2006 survey of American drivers by Consumer
Reports magazine indicated that more than one-third were considering replacing their current vehicle with a
more fuel-efficient model.

Technologies that improve fuel efficiency include devices or designs that control valve timing, reduce engine
friction, improve transmission efficiency or reduce other losses. Existing fuel saving technologies include fuel
cells, battery-powered vehicles, hybrid vehicles, alternative fuels, and other emission reduction alternatives such
as diesel oxidation catalysts and diesel particulate filters.

Worldwide, there were approximately 800 million cars and light trucks on the road in 2006. By 2020, that num-
ber will reach one billion. There are approximately 240 million light vehicles in operation in the United States.

The global market for fuel optimization technologies was $35.3 billion in 2005, estimated at $38.6 billion in 2006
and is forecast to grow 11% annually to $66.1 billion by 2011. Applications for these technologies in the trans-
portation sector represent the largest market segment. Transportation applications represented a $27.8 billion
market in 2005 and a $31 billion in 2006. This market is expected to grow 13.4% annually to $52 billion by 2011.

Ronn Motor Company, Inc. (OTCPK: RNNM) 10


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Global Market for fuel optimization technologies, $ Billion

70 66.1

60
50
38.6
40 35.6
30
20
10
0
2005 2006 2007 2008 2009 2010 2011

Source: www.marketresearch.com/map/prod/1344599.html

The U.S. and other governments have a strong interest in promoting technologies that reduce their dependence
on imported petroleum and optimize oil and gas use. These governments are supporting the development and
commercialization of fuel optimization technologies through government-funded R&D, tax incentives, and other
policy initiatives.

The U.S. Department of Energy is involved in six fuel efficiency programs. The total cost of these projects is ap-
proximately $14 million. It is estimated that these technologies could reduce fuel consumption for all highway
vehicles by 10%, saving over one million barrels of oil per day by 2025. These projects are part of a DOE initiative
to improve engine efficiency by at least 30% to 45% for light-duty vehicles by 2010 and by 40% to 55% for heavy-
duty vehicles by 2013.

Hybrid-electric vehicles

Consumer hybrid vehicles have been getting a lot of media attention recently due to their fuel economy benefits.
Oil prices around $100 a barrel and a world dependent on foreign oil encourage new car buyers to “go electric”.
Another factor driving increased sales of Hybrid-Electric Vehicles (HEV) is reduced CO2 emissions.

There are only a few hybrid vehicles on the road today but the technology has the potential to become a main-
stream one. High costs for hybrid has been a limiting factor; hybrid vehicles are generally priced $2,000-4,000
higher than conventional light vehicles. However, cost disparities between HEVs and conventional light vehicles
should decline as production volumes increase.
On a global level, the U.S. dominates in hybrid vehicle sales, followed by Japan and Europe. Toyota and Honda
are the leading hybrid car makers. According to an IDTechEx[4] report, the HEV industry generated $31.1 billion
in sales globally in 2005 at ex factory prices, excluding electric toys. The report forecasts seven-fold growth in the
HEV market between 2005 and 2015.

According to Freedonia Group, Inc., worldwide demand for hybrid-electric vehicles will advance to 3.9 million
units in 2015 and then nearly double by 2020 [5]. Demand for HEVs will rise in response to rising energy costs and
increasing emissions regulations worldwide. Although hybrid cars account for only about 3% of U.S. car sales,
_________________________
4. www.idtechex.com/products/en/view.asp?productcategoryid=41
5. www.marketwire.com/mw/release_html_b1?release_id=191172&tsource=3

Ronn Motor Company, Inc. (OTCPK: RNNM) 11


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

their share is growing rapidly. Hybrid cars sales in the U.S. market are likely to exceed the one million milestone
by 2012 [6].

The US Hybrid Electric Passenger Vehicle Sales & Market Share 2000-2012

1200 7.0%
6.0 %
1000
5.6 % 6.0%
4.7 % 5.0%
800 3.8%
4.0%
600
2.2% 2.4% 3.0%
400 1.5% 2.0%
1.2%
200 0.5%
0.1% 0.1% 0.2% 0.3% 1.0%
0 0.0%
9.4 20.3 36.0 47.5 83.2 209.7 246.6 324.3 382.0 614.0 772.0 938.0 1,007
2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

Source: Electric Drive Transportation Association. www.electricdrive.org/index.php?tg=articles&topics=7&new=0&newc=0

The 2005-2007 market expansion was due to high oil prices, coupled with automakers lowering price premiums
for most hybrid models. In addition, sales run-ups between 2006 and 2007 reflect increased production and sales
of the popular Toyota Prius. An estimated 255,000 hybrid vehicles were sold this year in the U.S. market through
October 2008.

Retail gasoline prices

Strong global demand and low surplus production capacity, backed by a weaker dollar contributed to record
crude oil prices this summer of $147.27 per barrel. The current economic slowdown is reducing oil demand and
prices. However, oil supplies are expected to remain relatively tight because of slow production growth. Absent
a major worldwide economic recession, WTI crude oil prices are projected to average around $112 per barrel in
both 2008 and 2009[7].

According to the Energy Information Administration, weekly prices of regular-grade gasoline, which peaked at
$4.11 per gallon on July 14, averaged $3.05 per gallon in October, a decline of $1.06. Diesel fuel prices fell from
$4.76 per gallon on July 14 to $3.57 in October, a drop of $1.19. Regular-grade gasoline prices are projected to aver-
age around $3.56 per gallon in both 2008 and 2009.

_________________________

6. www.reuters.com/article/pressRelease/idUS97613+31-Jul-2008+BW20080731
7. www.eia.doe.gov/emeu/steo/pub/contents.html#Natural_Gas_Markets

Ronn Motor Company, Inc. (OTCPK: RNNM) 12


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

NYMEX Crude Oil Futures Close (Front Month)

$160

$140

$120
$ / Barrel

$100

$80
$70.53
$60
11/01/2007 01/03/2008 03/05/08 05/05/08 07/03/08 09/03/08 10/31/2008
12/03/2007 02/04/2008 04/04/08 06/04/08 08/04/08 10/02/08
Nov. 1, 2007 / Nov. 4, 2008 WTRG Economics ©2008
www.wtrg.com
Close (479) 293-4081

Source: www.wtrg.com/daily/crudeoilprice.html

The U.S. Energy Information Administration projects three scenarios for gasoline prices. In the high demand/high
price scenario, crude oil prices rise to more than $119 per barrel in 2030 and gas prices increase from $3.06 per
gallon in 2016 to $3.52 per gallon in 2030. In the low price case, gasoline prices decline to $1.74 per gallon in 2016,
increase slowly through the early 2020s, and level off at about $1.84 per gallon through 2030 [8].

Average US delivered process for motor gasoline, 1990-2030 (2006 dollars per gallon)

History Projections
4
High Price

3
Refer-
2 Low

0
1990 2000 2006 2020 2030

Source: www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf

_________________________

8. www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf

Ronn Motor Company, Inc. (OTCPK: RNNM) 13


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Financial Outlook
The transition to a low-emissions global economy offers significant opportunities to technology companies such
as RNNM. The Company has developed a hydrogen-on-demand system it plans to distribute through automotive
dealerships, trucking and government fleets and individual automobile owners. This product offers an economi-
cal aftermarket solution for increasing gas mileage while reducing noxious emissions.

The Company’s hydrogen-on-demand system will be available through distributors in the first quarter of 2009 at a
projected retail price of $999 per unit. RNNM plans to sell at least 500,000 Real-Time Hydrogen Injection systems
in 2010, which represents less than 0.5% penetration of the U.S. car and truck market.

In addition to H2GOTM systems, RNNM plans to sell the Scorpion eco-exotic sports car. The ScorpionM is equipped
with RNNM’s proprietary H2GOTM real-time hydrogen system. The car is also planned as ethanol compliant
and engineered to burn 70% gasoline/ethanol and approximately 30% hydrogen, thereby lowering fuel costs and
greatly reducing emissions.

RNNM plans to develop a hydrogen/electric plug-in hybrid for sales in 2010. The Company expects to produce
between 500-1500 plug-in hybrid vehicles annually.

Sales Forecast

FY 2009 FY 2010 FY 2011

Unit Sales
Scorpion 190 250 350
Plug in Hybrid 0 500 1,000
Hydrogen Systems H2GO 345,000 500,000 500,000

Unit Prices, $
Scorpion 150,000 150,000 150,000
Plug in Hybrid - 100,000 150,000
Hydrogen Systems H2GO 450 450 450

Sales Revenue, $
Scorpion 28,500,000 37,500,000 52,500,000
Plug in Hybrid 0 50,000,000 150,000,000
Hydrogen Systems H2GO 155,250,000 225,000,000 225,000,000

Total Sales 183,750,000 312,500,000 427,500,000

Source: Management outlook

Based on management’s goals for hydrogen system and Scorpion sales, we expect the Company to generate rev-
enues of $183.8 million and net income of $63.4 million in 2009. Over the long term, we anticipate double-digit
revenue growth as hydrogen system sales increase and RNNM rolls out a plug-in hybrid vehicle in 2010.

Ronn Motor Company, Inc. (OTCPK: RNNM) 14


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Earnings forecast, $

FY 2009E FY 2010E FY 2011E

Sales 183,750,000 312,500,000 427,500,000


Costs of Goods Sold 89,025,000 147,500,000 193,500,000
Gross Margin 94,725,000 165,000,000 234,000,000
Gross Margin % 51.55% 52.80% 54.74%
Total Operating Expenses 4,170,600 8,064,950 8,950,150
Profit Before Interest and Taxes 90,554,400 156,935,050 225,049,850
Interest Expense 0 0 0
Taxes Incurred 27,166,320 47,080,515 67,514,955
Net Profit 63,388,080 109,854,535 157,534,895
Net Margin, % 34.50% 35.15% 36.85%

Source: Management outlook

RNHM intends to pre-sell most of its vehicles so the Company will not require significant external financing
to commence production. Sales trends for other manufacturers introducing high-end, eco-sports cars suggest
the market potential for the Scorpion. Fisker Automotive, for example, has predicted sales of 15,000 units for its
$100,000 eco premium automobile, which goes into production in late 2009. Fisker has raised over $100 million
from venture capital firms.

Tesla Motors has verbal commitments for $100 million in private capital. Tesla reported 1,200 back orders for its
$100,000 sports car, mostly from wealthy trendsetters.

Valuation

We based our valuation analysis on companies offering fuel cell technologies, hybrid electric vehicles and onboard
hydrogen generation technologies. Because of strong forecasted demand for these technologies, these companies
trade at comparatively high Price/Sales multiples.

We also considered the valuations of major auto manufacturers in our analysis.

Ronn Motor Company, Inc. (OTCPK: RNNM) 15


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Comparative analysis

Company name Ticker Price per Mrkt. Cap. P/S Sales estimates, $ Mn
5-Nov-08 Symbol Share, $ $ Mn 2008 2009 2008 2009 %Chg

Fuel optimisation technologies peers


Ballard Power Systems Inc. 252 3.82 2.96 66 85 29%
BLDP 3.07
Ener1 Inc. 786 355.66 13.10 2.21 60 2615%
HEV 7.53
FuelCell Energy Inc. 358 3.54 2.75 101 130 29%
FCEL 5.21
Plug Power Inc. 93.47 5.19 4.45 18 21 17%
PLUG 1.06
Median 4.51 3.71 29%
Auto manufacturers peers
General Motors Corporation 3400 0.02 0.02 159,000 157,000 -1.3%
GM 6.00
Ford Motor Co. 4970 0.04 0.04 132,630 131,820 -0.6%
F 2.20
Toyota Motor Corp. 130620 0.57 0.51 231,000 258,000 11.7%
TM 83.00
Honda Motor Co. Ltd. 99070 0.83 0.85 119,800 116,450 -2.8%
HMC 27.30
Median 0.30 0.27 -0.9%

Source: Reuters, Analyst estimates

Because of its early development stage, we value RNNM at a discount to the technology peer group and at a one
time forward P/S multiple. We multiply our 2009 revenue forecast by a one time P/S multiple, then divide that
amount by 220 million shares outstanding to obtain our $0.84 target price. We are initiating coverage of RNNM
with a Speculative Buy rating and a $0.84 price target.

We believe these shares offer good upside potential for investors but encourage readers to consider the risk factors
cited below before making an investment RNNM must overcome many hurdles to achieve sustainable profitabil-
ity.

Ronn Motor Company, Inc. (OTCPK: RNNM) 16


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Risk factors
Development-stage business

RNNM has no appreciable revenues or signed agreements to commercialize its products. Despite an optimistic
management outlook, there is no assurance that the Company will be able to successfully enter the mass commer-
cialization phase and establish a viable business.

Unproven market potential of RNNM products

RNNM’s success will depend on its ability to develop and commercialize its offerings. Despite rising demand for
hybrid vehicles and the advantages of the Company’s technology, no assurance can be given that RNNM will be
able to drive product sales and expand its business model on acceptable terms.

Additional financing to continue as going concern

RNNM will likely need to raise additional funds to implement its business plan. If the Company fails to obtain
sufficient funds, implementation of its business plan could stall, affecting our valuation model.

Global recession may impact vehicle sales

The global recessions is impacting every segment of the economy, including car sales. Many of the major auto-
mobiles manufacturers have reported significant revenue declines. Reduced consumer spending and toughening
credit standards may negatively impact RNNM’s revenues and earnings outlook.

Ronn Motor Company, Inc. (OTCPK: RNNM) 17


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Management Team

The Company’s founder and CEO, Ronn Maxwell, has dedicated his professional career to building, de-
Ronn Maxwell signing, fabricating, racing, restoring and selling automobiles. Mr. Maxwell has owned several high-end
Chief Executive Officer automotive shops and proven that he has the operational and interpersonal skills required to bring a start-
up business to profitable operation.

In 2007, Mr. Maxwell was engaged by an American firm to explore and develop a joint venture with a Chi-
nese company, Zhonda International, China’s third largest bus manufacturer. As Director of Engineering
and Manufacturing, he developed building processes and quality control procedures that were integral to
the operation as Zhonda increased its global presence in preparation for export of its buses into the United
States.

In 2005, using his patented air conditioning technology that was launched into the automotive market in
1994, Mr. Maxwell designed and built a complete replacement air conditioning system for the Porsche 911
model. He formed a business, Rennaire LLC, to market these components and systems, which are now the
standard for Porsche A/C systems.

Ronn Maxwell also worked with Amos Minter in Dallas to produce classic Ford Thunderbirds. He has
founded and managed five companies so far in his career and been recognized in the automotive industry
for his talents and credibility. He has developed many strategic relationships in his career which RNNM
can leverage for increased visibility and sales.

Mr. Kuhn and his partner operate Diamondback Engines, a Mopar specific race engine shop. Their engines
Damon Kuhn have been shipped worldwide and power some of the fastest cars in their class. Crate engines as well as
Chief Operating Officer custom engines are built and sold directly, through the Internet and through magazine ads. Mr. Kuhn has
not only fabricated his own record-setting race cars, but also owns and operates a race car fabrication facil-
ity in Dallas, Texas.

His last manufacturing position was COO (2003-2005) at Phillips Industries in Dallas, Texas. Phillips is the
world’s largest manufacturer of OEM wiring harnesses for the commercial trucking industry. At Phillips,
Mr. Kuhn restructured their manufacturing processes, resulting in 12 months of record-setting sales.

Mr. Kuhn has served as COO at two other companies and has gained a reputation as a turnaround special-
ist in the manufacturing industry. Additionally, his knowledge of automotive engineering makes him an
expert in engine design, suspension and computer electronics.

Prior to joining RNNM, Mr. Rawlings was a prototype engineer with Renault Automobiles and Electrical
James Rawlings Engineer on a French electric automobile project.
Manager of Product
Development

Ronn Motor Company, Inc. (OTCPK: RNNM) 18


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

Mr. Pylypec joined Dell Computer when it was still a small concern in 1989 and remained there until 2001.
Adrian Pylypec During his tenure at Dell, he became known for his work with Microsoft (strategic partner) and most no-
VP of Sales and Marketing tably for developing Dell’s corporate relationship with Boeing Corporation. He managed the Northwest
Commercial Accounts division, which included 35 employees and $350 million in annual sales.

After a year hiatus, he returned to the high technology industry in 2002 to help launch an ex-Dell start-up
called Motion Computing. Mr. Pylypec successfully developed sales programs and revenue for the fledg-
ling company.

In 2004, Mr. Pylypec started his own automotive business called Monster Rides. He built a facility, hired a
staff and now has one of the best-known hot rod shops in Texas. Emphasizing quality and creativity, Mon-
ster Rides became a profitable business in its second year of operation. Because of his broad knowledge
and experience, Mr. Pylypec is filling multiple roles for RNNM. He will plan and build the Company’s new
facility, engage legal and accounting partners, develop the corporate website and create sales and market-
ing programs.

Ronn Motor Company, Inc. (OTCPK: RNNM) 19


Analyst: Victor Sula, Ph.D.
Initial Report
November 6th, 2008

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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 securities 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 posi-
tions 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.

Ronn Motor Company, Inc. (OTCPK: RNNM) 20