GACW is offering common stock at a $27.4 million pre-money valuation for the current raise. This valuation seems too high for GACW’s early stage. GACW scores very low amongst other early-stage companies in our database, as the company is technically still pre-product and has yet to generate any revenue. As such, GACW scores very low in the price metric.

The 2021 global off-the-road (OTR) tires market is valued around $30.7 billion, which is sizable.  And if GACW expands its focus beyond mining companies, it will have the opportunity to sell its airless tires in a number of industries. But the market is projected to grow only 5.2% per year, which is below average in comparison to the growth rates of other companies in our database. The combination of a decently sized market and slower market growth resulted in an average market score.

GACW founder Zoltan Kemeny is also the company’s CEO, president, treasurer, and director. Kemeny’s passion for wheels is clearly shown in his attempts to popularize airless tires like “Shweel” for more than 15 years. Kemeny also has a number of experiences at various self-owned enterprises, and he was an associate professor and research worker at the Hungarian Academy of Sciences. Kemeny graduated from the Budapest University of Technology and Economics with an MS and PhD in structural and surveying engineering. While passionate, his years of in-depth experience without many notable accomplishments seems concerning. Fortunately, Kemeny is backed by team members skilled in business development, sales, and engineering. The combination of a well-rounded team and a rather unaccomplished founder led to an average team score for GACW.

Despite being pre-product, GACW’s Air Suspension Wheel (ASW) has been through several field tests with global mining companies. According to the company, these tests have produced encouraging results. The company’s tires allegedly save at least 8% fuel, enable up to 40% higher payload capacity, are durable and heat resistant and reduce cost per mile by up to 60%. If the company’s claims are accurate, GACW’s tires seem to be meaningfully differentiated in their quality. GACW’s tires are more expensive on a per-tire basis — anywhere from $100,000 to $110,000 versus about $75,000 for standard off-the-road (OTR) tires. But the company’s tires will supposedly last for up to 20 years. Since standard mining tires need to be replaced every six months, GACW’s ASW could provide immense cost savings for mining companies. The high product quality and strong price point result in a strong product differentiation score.

The OTR tires space has some large competitors as well as new entrants that are looking to disrupt the tire market. Current competitors include household names like Bridgestone, Michelin, and Goodyear, all of which are developing some form of airless tires. Additionally, crowdfunded companies like The SMART Tire Company are among those that can develop an airless, heavy-duty tire that doesn’t require as much maintenance. But GACW’s strong differentiators outweigh the fact that it faces large, well-known competitors. Overall, GACW receives a strong differentiation score.

GACW has yet to generate any revenue and is still developing its product. It’s also burning through a significant amount of capital in the meantime. GACW holds nearly $1.4 million in long-term debt and more than $300,000 in short-term debt. The short-term debt figure, while not massive, is still significant enough to worry investors. 

But despite not having a finished product, GACW has made some encouraging progress. The company has been field testing for several years with mining companies and has a global manufacturing partner in OTR Wheel Engineering. GACW has also raised around $3 million in funding. Additionally, the company’s Air Suspension Wheel is at Technology Readiness Level (TRL) 8, a NASA-developed measure of technology maturity. TRL 9 indicates a commercially ready product, so GACW is very close to finishing its product. GACW has completed numerous steps to ensure its success when it does commercialize its product. All of these factors ultimately led to a slightly above-average performance score.

GACW is a risky investment. Despite being active for more than four years, GACW has yet to commercialize its product. The company supposedly expects to see purchases of its Air Suspension Wheel (ASW) by the end of 2021, but that seems optimistic given the company’s current pace. Additionally, the ability to scale up production will take a long time, given the technical nature of manufacturing these tires. The ability to scale sales will also take a while because the AWS is still an unproven product, and many mines will likely want to avoid unnecessary risks. 

The company’s financial situation, while not terrible, should also concern investors. GACW has noteworthy long-term and short-term debt, and its products aren’t on the market yet to help manage these numbers. Lastly, the industry has high capital requirements and high capital intensity. The amount of cash GACW currently has on hand, which amounts to a little more than $37,000, is not nearly enough to offset that. 

GACW’s production risk, sales and distribution risk, and weak financial situation leads to an overall high risk score for the company.

Investors should carefully consider any of GACW’s forward-looking projections and promises. If GACW isn’t able to sell any of its Air Suspension Wheels by the end of 2021, that will make its current pre-money valuation of $27.4 million less justifiable. Additionally, GACW has a large amount of debt and barely any cash on hand, which may sink the company before it can reach its goals. Lastly, the number of competitors in the space is not encouraging, and the founder’s failed attempt to commercialize the “Shweel” sets an unremarkable precedent.

GACW’s focus on the mining industry and environmental sustainability provides a good use case for its tires. GACW also has a clear pathway to the end of testing, given it has an established partner to test its tires. The company might reach success if just one mine adopts its tires. If that happens, then GACW can start to expand to other industries that require heavy-duty tires. If GACW’s claims to achieve commercialization within two years are to be believed, then the company could prove to be a rewarding investment.

GACW is a pre-product company manufacturing and selling airless off-the-road (OTR) tires to the mining industry. The company’s patented Air Suspension Wheel is an airless mechanical wheel that claims to provide several benefits, including increased fuel efficiency, durability, and cost savings. The OTR tires market is sizable, which is a positive signal for GACW. GACW has raised more than $3 million in funding, has partnerships in place, and has tested its tires with several mining companies. 

But GACW is pre-revenue, which makes its current valuation too high. Additionally, the market is growing at a slow rate and has a number of established competitors and new entrants that have manufactured airless wheels. GACW also has a number of risks, like scaling manufacturing, sales and distribution, and some financial risks. Overall, GACW’s StartEngine raise is rated a Neutral Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Francis Vu.