ArmaTerra growth depends on sales, investment

Sergio Nevel, chief executive office of Reno-based ArmaTerra, says his company is faced with the classic “chicken-and-egg” problem when it comes to growing revenue at the fledgling geo-reinforcing firm.

On the one hand, Nevel says, ArmaTerra requires capital investment for independent validation that will help spur sales of its geo-reinforcing system that replaces wire mesh in structural retaining walls.

On the other hand, ArmaTerra needs a proven track record of sales before angel investors commit funds to the company.

“The financing world is a little tight, probably because of the economy and a lot of (investors) got burned during the 2008-09 fiasco,” Nevel says.

After several years of research and development and product refinement, ArmaTerra began selling its patented Geotire reinforcing system last fall. The solution is manufactured for stabilizing retaining walls that require reinforcing behind them — think of the many mechanically stabilized earth walls in between the big bridges along Interstate 580 between Mount Rose Highway and Washoe Valley.

Construction of those walls typically calls for precast segmented blocks or panels, which are held in place by vertical layers of wire mesh running horizontally from the wall face. The wire is compacted with soil as the wall is built, which greatly increases the wall’s tensile strength and stability. ArmaTerra’s Geotire products replace the wire mesh with sections of recycled tires cut lengthwise and bound together. The rubber-encased steel belting far outlasts wire mesh exposed to the earth, Nevel says.

The company’s products are built to suit at a recycling center in Stockton, Calif. The facility’s equipment recycles tires to fit ArmaTerra’s needs by taking the sidewalls out, cutting the tire treads and linking them lengthwise to form a strap that connects to the face of the wall.

ArmaTerra is scouting sales opportunities in northern California and northern Nevada, primarily because the company’s engineer is based in northern Nevada and can be deployed on a limited regional basis to oversee construction efforts.

ArmaTerra’s low-hanging fruit is commercial and residential work, of which there is very little going on, Nevel says. A more lucrative field is regional government infrastructure projects, such as roads, dams and levees — but getting approved for those types projects requires the company to complete more independent validation that its geo-reinforcing system works as well as current mechanically stabilized earth wall systems.

“In order for them to buy from us we need to have that independent validation, and we need money to do that,” Nevel says. “But investors want to see sales prior to investing. It is the matter of finding the right person that is interested in good solid return on something that is kind of nuts and bolts instead of software or high tech, someone who understands the market.”

Nevel says ArmaTerra executives are in early-stage negotiations with a strategic partner for a licensing deal that potentially could alleviate the company’s cash flow and independent validation problems.

“Getting some sales will convince investors, and we are working toward that goal,” he says.

ArmaTerra also is working with the University of Nevada, Reno to test its levee engineering system that replaces common slurry-wall construction with a less-expensive method of reinforcing levees walls.