BioSolar Inc (OTCMKTS:BSRC) Charges its Batteries
What’s wrong with today’s Lithium-Ion batteries? Plenty of things, actually. They go flat which means that you have to charge them up every now and then, and that’s not exactly a five-minute job. Although they are now much more powerful than they used to be, the fact that you’re forced to top up your smartphone with electricity at least once a day proves that they are still not potent enough to satisfy our unquenchable thirst for energy. This, coupled with the fact that the technology is not exactly cheap, in turn, means that electric cars are struggling to gain traction as well. Apparently, however, BioSolar Inc (OTCMKTS:BSRC), a small OTC company based in California, has the answers to all of these problems.
They announced on Tuesday that they are in the process of developing a new type of super Lithium-Ion battery. It will be powerful enough to double the range of your rich neighbor’s Tesla and it will cost four times less which means that, like the said rich neighbor, you too might be able to afford Elon Musk’s creation in the near future. In addition to this, thanks to some clever use of polymers, charging time will be reduced significantly. Sounds like a plan, doesn’t it? The market certainly thinks so.
The stock was a bit slow off the line and although it gained quite a lot of ground on Tuesday and Wednesday, the volumes it registered were not that impressive. Yesterday, however, it really took off. At one point, BSRC smashed through the $0.20 per share barrier for the first time in over six months and although it later settled down, it still finished the day at $0.195 which is 14% up from Wednesday’s close. The dollar volume of more than $230 thousand and the buzz around the discussion boards and social networks show that investors are quite excited about the stock.
And why wouldn’t they be? BSRC basically said: “we have the technology”. Sadly, they didn’t say: “we have the money”, and that’s something of a problem.
The latest 10-Q covers the first three months of 2015 and it sports the following figures:
- cash: $173 thousand
- current assets: $239 thousand
- current liabilities: $3.7 million
- NO revenue since inception
- quarterly operating loss: $155 thousand
The balance sheet doesn’t really suggest that BSRC is on the brink of transforming the world as we know it, and if you check out the previous financial statements, you’ll see that the situation has been pretty much the same for a while. This, in turn, has led to another problem.
BSRC‘s business plan has always been centered around “clean” energy and saving the environment, but the constant financial struggles it has experienced means that its balance sheet is now polluted with a significant amount of toxic debt. Convertible notes started appearing in 2013 and in typical penny stock fashion, they can now be turned into shares at either a fixed price, or at a discount. In BSRC‘s case, the note holders have the right to acquire stock at 50% of the market price. Some of them already did.
During Q1, the company issued a total of 325,525 shares in order to satisfy $11,939 worth of debt and interest which brings the conversion rate down to just $0.0367 per share. For the record, BSRC never dropped below the $0.07 mark during the first three months of 2015. In April, a further $11,566 worth of principal amount and interest was converted into 595,441 shares which pushes the conversion rate down to less than $0.02 per share.
Sure, the dilution is not quite as devastating as the one we’ve seen from other OTC companies, but you mustn’t forget that there was a lot more convertible debt left at the end of Q1 which means that the printing press might soon be forced into overdrive.
On a (probably) unrelated note, BSRC isn’t the only penny stock trying to turn the battery industry on its head. Tanaris Power Hldgs Inc (OTCMKTS:TPHX) also announced that they are working on a clever new Lithium-Ion cell at the end of April. Since then, the stock has lost more than 89% of its value.
