BioSolar's Silicon Anode

Last month BioSolar, Inc. (BSRC:  OTC/QB) announced that its technology partner had started a second round of production of BioSolar’s prototype lithium ion battery  -  labeled the 21700 for the time being.  Additional manufacturing and development partners will get the sample batteries for qualification testing.  What is special about BioSolar’s battery is its anode.  BioSolar has laced the anode of its battery with silicon to enhance performance.

The electron-releasing component of a battery, the anode is really the business end of a battery as it sends energy into an external circuit so our cell phones ring and electric cars zip along the road.  The best batteries are those that offer high energy density because they deliver the most energy for the least size and weight.  It is the anode component that can deliver high energy.  Battery design engineers look for materials that have good conductivity and are stable under the battery’s continuous cycle of charge and recharge.  Additionally, battery companies are sensitive to the difficulty or ease in fabrication and cost of materials.

As attractive as lithium has been for anode material, it still has its shortcomings.  During battery charging lithium metals have a bad habit of forming dendrites, which are crystals in a tree-like structure.  No one wants anything like a tree growing in their cell phone battery!  Furthermore, as a very fine metal lithium can seep into the separator around the electrolyte and cause a short.   This can lead to heat generation and fire.

BioSolar has turned to silicon to pack more power into its batteries while sidestepping some of the problems associated with lithium.  The company’s engineering team points to the fact that silicon has a theoretical storage capacity of nearly 4200 m/AH/g (milliamperes per gram).  This is more than ten times the energy density of conventional lithium ion batteries relying on graphite electrodes. 

BioSolar Batteries Manufactured with Partner FerroGlobal

Silicon has its own behavioral issues.  Found in nature in sand, quartz and rock crystals, silicon can experience large volume expansion and contraction during charge and discharge.  So to get the higher efficiency that silicon offers, BioSolar’s team has had to find a means to preserve the silicon anode structure during the battery cycle.  The company claims progress with a silicon micro-particle using a proprietary technology, but has been a bit opaque on how their ‘additive technology’ works. This second test of BioSolar’s 21700 prototype battery should at least provide more assurance that its technology actually holds up under typical charge and discharge cycles.

BioSolar is aiming its battery at a particular segment of the electronics market  -  power tools.  The power tools market was valued at $23.5 billion in 2018.  MarketWatch reports the market segment is projected to grow at a healthy pace of 6.4% annually through 2025.  There are several big names that dominate the market, including Stanley Black & Decker, Bosch and TTI.  However, there are plenty of other power tool manufacturers that claim piece of the power tools pie, such as Snap-on, Apex Tool Group, Hitachi Koki, DEVON owned by Chevron Group, and Zhejiang Crown, among others.  Diversity in the power tool market gives BioSolar a number of potential customer-partners to bring its batteries to market.

News of another round of production and testing could not come at a better time for BioSolar shares.  The stock trades in the sub-pennies.  Investor pessimism can be understood with just a glance at the company’s balance sheet.  At the end of September 2019, the most recently reported financial results, BioSolar held $73,577 in cash in the bank and had another $29,411 in pre-paid expenses on which it could rely.  Unfortunately, the company also had some bills to pay, totaling $782,698.  These are of course, no large numbers as might be expected of a developmental stage company. 

Without a commercial product and no revenue coming in the door, BioSolar is still dependent upon the capital markets to power its operations.  The company is burning about $60,000 in cash per month.  Convertible promissory notes have been a favorite vehicle, most of which have been converted to common stock.  The most recently issued notes in April and June 2019, remained outstanding at the end of September.  The conversion feature of these notes requires the company to report a derivative liability on its balance sheet, which totaled $10.8 million at the end of September 2019.  Connected to the stock’s market value, fluctuations in the derivative liability inject some noise into BioSolar’s reported loss per share. 

Shareholders cannot expect this worrisome balance sheet feature to go away any time soon.  Throughout September, October and November 2019, the company continued to issue new convertible notes.

BioSolar shares come with considerable risk, but at a price that provides a cheap option on silicon anode technology.

         

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.