BioSolar Files Application to Protect Silicon Anode Technology

BioSolar, Inc. (BSRC:  OTC) disclosed this week that it has filed a patent application to protect its work toward using a silicon alloy for battery anodes.  The move signals progress by BioSolar in solving the problem of energy efficiency in batteries.  Everyone  -  from a youngster playing video on a cell phone to utilities generating solar or wind power  -  wants a better battery with greater capacity and longer lasting power.

Lithium ion batteries have become the technology of choice for high power batteries.  Lighter weight, greater power density, fast recharge times and lower cost contribute to the popularity of this battery type.  It is estimated that the lithium-ion battery market in the U.S. alone could reach $77 billion by 2024.

Still lithium ion batteries could be improved.  Anodes are the negative electrode of a battery cell during the discharge phase and the positive pole during the charge phase.   The conventional anode in most lithium ion batteries is made with graphite, a low cost and readily available material.  Unfortunately, graphite has very poor energy density, putting a limit on battery performance.

Silicon offers a dramatically higher capacity of 4,200 mAh/g (milliampere hours per gram) compared to 260 mAh/g for graphite.  The fifteen times step up capacity that silicon offers is alluring.  Unfortunately, silicon does not behave well during the charge and discharge process that lithium ion batteries are routinely subjected to.  Anodes made out of silicon appear to take on a life of their own, expanding in volume and then violently contracting as the battery charges and discharges. 

BioSolar appears to have been successful in getting silicon anodes to behave better.  The company’s engineers have designed a carbon matrix to surround and mechanically protect the silicon as it expands and contracts in the charge/discharge cycle.  Earlier in 2020, the company completed production of a second batch of commercial prototype batteries for power tools.  Management intends to target the hand-held tool market first before moving on to larger batteries for electric vehicles.  In a message to shareholders earlier this year, BioSolar’s chief executive officer emphasized lower cost as well as increased storage capacity as benefits of its silicon alloy anode.

Taking a position in BioSolar is not for the faint of heart.  Its stock is quoted by the Over the Counter service, leaving open the possibility of wide bid-ask spreads that are typical of OTC quoted stocks.  The sub-penny price might dissuade some, but trading volumes are frothy at 4.2 million shares exchanging hands daily.

BioSolar gets good marks for communications with shareholders and market transparency.  The company is fully reporting with the SEC and has a strong track record for complete and on-time filings.  Those reports though reveal a capital starved operation.  At the end of March 2020, BioSolar had $68,668 in its bank account.  Working capital was negative $1.5 million, excluding a current liability related to outstanding derivatives.  The company had $1.9 million in convertible promissory notes outstanding at the end of March 2020, a figure which has changed in recent weeks as some convertible notes have been converted to common stock and a new promissory note was issued. 

Fortunately, management seems to have been successful in keeping trim.  The company used $152,626 in cash to support operations in the first three months of 2020.  BioSolar’s cash needs were funded primarily by the issuance of convertible promissory notes, many of which have already been converted to equity.  BioSolar has 73.9 million shares outstanding at the end of March 2020, representing 20% dilution in just the first quarter of the year.

There is plenty of risk in BSRC shares.  If the technology in the company’s patent application takes on it the market, the more adventurous investors may get a major reward.

 

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.