Bimergen Energy Corporation ($BESS)

Hello. This is Paul Kuntz with RedChip Companies. I want to thank everyone for joining today's event with Bimergen Energy, which trades on the NYSE American under the ticker BESS. With us today, we have Bimergen Co-CEOs, Robert Brilon; and Cole Johnson. We will begin with a brief presentation in a moment, and then we'll answer -- we'll open up the event for your questions. [Operator Instructions] Before we begin, I'll run through the safe harbor statement real quick. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking. And of course, forward-looking statements involve risks and uncertainties. With that, I will now turn the webinar over to Bob. Please go ahead.

All right. Thank you very much. Appreciate it. Thank you, everybody, for joining us today. This is Bimergen Energy, BESS on the New York Stock Exchange American. We're going to go through the full deck today. There's some of you out there probably already know who we are and what we do, but we want to give everybody an opportunity to understand that we are a utility-scale battery energy storage system builder, operator, owner, developer. And what we're doing is we're building battery farms. So our revenue cycle is actually energy arbitrage. So that's kind of -- we build these battery farms, we buy low, sell high on a daily basis, hourly at some times. And we're doing this in areas where there is plenty of energy during certain times of the day and just not enough during the other times of the day. We've got 23 development projects that we purchased April '24. And we did that with our co-CEO, who now owns 25% of the company from doing that merger and that acquisition of these 23 projects. As you can see here, it's 2 gigawatts worth of capacity. And that's important because that 2 gigawatts worth of capacity is actually worth about $150 million in the marketplace for the fair market value of a development project. We have $250 million committed in equity -- excuse me, not equity, I'll call it project equity, mezzanine debt. And that's important because it unleashes over $1 billion worth of bank debt for us. And I'll show you why that's important here in a second. The other reason that this really figures to be a very profitable operation is because you have an ITC tax credit that helps you right upfront. As soon as you get operational, that's basically within a year of construction, you're plugging into the grid. At that point, you get up to 50% of that money back. So when we talk about a project, we're talking about $125 million project. So you're getting $60 million of that back and you're reducing your mezzanine and you're basically paying off your mezzanine and then you're reducing your permanent debt. So you only have $65 million against that $125 million asset. This is the important piece. Everybody asks, why can't anybody do this? Because you're not really using any of your own money. And they're exactly right because we aren't using our own money. We actually have equity we raised. We did about $2.5 million last year in corporate overhead. This year, we have 400 -- or excuse me, $4 million in corporate overhead that we're budgeting. And that's gone up because we're expecting to spend about $0.5 million this year on -- like this, doing investor relations, getting out there, letting people know about us because it is such a good model and a good business model for really, the public markets. We're excited about getting out there and talking about it. These are the pieces of the puzzle. And I put them here just to be very simple. We'll go into the details, but you need development projects. What these are is your deal flow. And the 23 projects we have will be about 4 to 5 years before we get them all on the ground. When you're talking about a battery farm, we're talking about batteries the size of tractor trailers. And so you're putting these on 10 to 30 acres. And at that time, you have mezzanine debt and permanent debt you need to do $125 million and to build that 100-megawatt project. The ITC monetization I talked about, you have to have a partner to go out and monetize that for you as soon as you're ready. That's right after -- right when you're plugging in, really, COD, they call it. We have to have engineering, procurement and construction relationships. So there's groups out there that are just -- that's what they focus on is EPC. And we have relationships with several of those groups. And then one of the more important of all of these is an offtake hedge guarantee agreement. And what that means is groups such as a Goldman Sachs or others that have a commodity desk, you'll work a deal with them. You'll say, okay, I need a guarantee because my $100 million bank guy wants a guarantee that he's going to have enough to pay off his debt and do his debt service. So you get that guarantee from these groups, and let me show you here on the next slide. So we talked about the $125 million over here to the left. That's other people's money. So we raised the $13.6 million, and that's -- everybody says, how can you build $2 billion in assets, $400 million in revenues over the next 4 or 5 years and only have $13.6 million? It's because we're using other people's money. This is a debt facility. The other piece is the very bottom there in the red, each project is financed on its own assets and operations, nonrecourse to Bimergen. So that's important. So each of these projects, each of these joint ventures that has a project in it is siloed. So that's important because it does have each one of it -- each one of them has its own bank, has its own mezzanine debt partner and just moves forward into operations. The second piece here, again, I talked about the operational investment tax credit refinance. So that happens at the 1-year point. As soon as construction is done and it's ready to operate, you take it from $125 million of financing down to $65 million by getting that $50 million in. And then the last piece over here is now we're into operations. So annual operations on a project like this averages about $20 million of revenue on energy arbitrage. So that's buying low, selling high every day. These aren't just numbers that we make up. The $20 million is done through modeling, and it's through historical and predictive modeling. We come up with those numbers, we then have them verified by independent engineers. And as you can imagine, a group like a Goldman Sachs would have their own independent engineers verify those. And the guy writing the $100 million check is also going to have his independent engineers verify that. So that's the $20 million top line. The $6.5 million there is what it costs us for a group like Goldman Sachs to be involved. So for them to give us their guarantee, what their agreement is, okay, we're going to guarantee you around $7 million on an annual basis for 7 years, but we're going to take 50% of the upside. So if you do $20 million, there's $13 million of upside, they're going to take half of that as their fee. So in that case, they're taking $6.5 million. The gross profit is $13.5 million. We have about $2.5 million in operating expenses every year. Big line items on that are such as insurance wraps. So when you have assets out there and you have the guarantees of producing power, you have to have insurance wraps to cover yourself in case something goes wrong. In this case, we end up with EBITDA of about $11 million a year. And as you can see, once you get to that year 7 and you no longer need to have an offtake guarantee, then your EBITDA really jumps up. It jumps up to $17.5 million. So with this being a 20-year asset, you got 7 years where you're paying back the debt, and then you've got those 13 years where you're really running at very high gross margins and EBITDA. So we talked about 23 projects. The 23 projects are throughout the United States, 11 of those are in Texas. These 23 projects were bought, again, by Cole -- from Cole Johnson and his group back in April 2024. The 11 are in Texas because they have issues in Texas that were taken care of, meaning there are places on the grid where there's plenty of power at certain times of day, not enough power at other times of the day. When we look at putting projects in locations, it is a location, location, location type of project because we are looking for an area that is going to generate that $20 million of annual arbitrage. There's going to be another area you can go into, and it's going to generate $10 million of annual arbitrage for you, but it just doesn't pencil out as well. So you really spend the time and do the analysis to know where to put your projects. So the development process, again, we bought this. They had gone through this process, all the feasibility studies, getting the legal formation, doing some site control, engineering, negotiating the leases, having them ready to sign, and then you go into financing. And we talked about these 23 projects. And I think I talked about -- this is on our books for $22 million is what we paid for these in stock. But if you look at what they're worth today, they're worth $150 million. And that's because -- when I should have gone back here on the first slide and talked about other people's money, when we're getting that $125 million from other people, they're actually paying us $7 million to $8 million to put our project into that joint venture. So people ask me, well, when are you going to have profit -- or revenues and profits? Well, if you look at this, we're going to start having revenues probably about a year out in the end of 2026. And during 2027, we'll have initial operations just starting. But before that, we'll have projects that are being put into place into joint ventures. That means we'll have money coming in from those development fees. And what we've said out in the analyst reports, et cetera, you'll see that we have between $15 million and $20 million, we believe are going to come in this year. And when I said earlier, we only have $4 million in operating expenses, you can see that we're already going to be profitable in 2026. With that, rising power demand and intermittent renewable supply, that makes us a sustainable model. So again, we know that power is going to be -- all the studies say in the next 4 years, it's going to double. The intermittent part of this, because they're trying to keep up with renewable supplies, meaning wind and solar, those only power during certain times of the day. So there's other times of the day when you really need to harness that energy and put it back onto the grid. And it's going to be at a much higher price when you buy it low, sell it high. The deepening duct curve, again, this just shows over the last 15 years they've tracked it, how the -- there's been a problem of supply and demand getting worse and worse every year, again, proving out our sustainable model for this project. This is important because I'd like to show here, we are energy-agnostic, meaning we don't care where the energy comes from. The energy can come from wind, solar, hydroelectric, oil and gas. It's on the grid, and we take it off the grid when there's plenty of it, when we can get it for a low price and we put it back when it's needed or there's a spike. So all day long, we've got traders that are out there. And when I say traders, these are a group such as Tenaska that we hire to watch this. They own about 60% of the energy market. And so they're using their own algorithms, knowing what's history, what's the predictive modeling saying, when it will be best to buy this. It's just like a day trader trying to guess when to buy high, when to buy low, sell high. In this case, we're doing the same thing. But they've seen this history, they watch weather patterns, and they know what they're doing to get us the best return for our asset. The other piece I talked about in here is the tolling agreement that's there. So we're sitting there taking this energy off the grid and putting it back on the grid. So that means we're buying it from the same person that we're selling it to. So there's no accounts receivable. There's nothing to worry about here for a vendor. You're sitting there buying and selling to that same utility company. The strategic partnerships we talk about, RelyEZ is a group that we started with first. They came up with $50 million that they committed in mezzanine debt. So we've moved forward with them. You'll see some announcements out there. We're doing projects with them right now. They put $10 million into a joint venture last year to get that rolling. So we're now moving forward with projects. And we'll -- of course, when we're having -- using RelyEZ financing, we'll be using RelyEZ batteries. So this is a very strategic relationship for them. Even though they'll make 12% on their money for that mezzanine debt, they also get an $80 million check for 125 -- excuse me, a 100-megawatt project. And so that goes to them for their batteries, and that will come out of the permanent construction debt financing. Then we also have Eos here. Eos is somebody we signed a joint development agreement with just late last year, have been moving forward with them. We did some announcements about how we're going to be using their actual technologies on some of our projects. So we have some great things happening with Eos, and we think they'll be a wonderful partner going forward for many of our projects. We have Cox over here. It's a letter of an agreement that we have in place that's a binding letter of agreement. We're going through -- getting a definitive agreement in place with them. And again, they are just part of that project equity, mezzanine debt-type group that we want to work with. That being said, we also have other, I'll call it, just mezzanine debt partners that we're talking to. And these aren't strategic. These are just groups that have looked at this and said, "Gee, so you're telling me, I put my $25 million in here and I get it back as soon as you get that ITC tax credit after a year. And all it has to do is hook into the grid, and that's when that comes back?" That's exactly right. So there's other groups that are looking at this as a nice just straight play for 12% on their money. The scheduling and long-term tolling agreements, again, we talked about Tenaska, who's doing our scheduling and the likes of Goldman Sachs that's going to do our commodity. The case study here is really just to show $85 million of the equipment being the inverters, the batteries, et cetera. Most of that is batteries, of course. That is what's coming out of $125 million price tag. That's important because when you've now written everything down to only $65 million of debt, then you really have a good leverage there where the banks are very happy when they see physical assets versus construction costs, et cetera. They're still sitting there. Company management, we've got Cole Johnson, who is the co-CEO. Again, has 25% of the company because he brought in these 23 projects. He's also brought in an incredible team with him. These guys and a few more that aren't listed here are really the cream of the crop. They've been there, done that. And they have what I call priceless relationships. These are guys that they've done relationships with before. They've worked with Goldman Sachs. They've worked with several of these banks that we'll be doing deals with. But they've also had these guys write them very large checks in the past. So that's important that when you've done something with these guys before, you have that trust, you understand the due diligence process, and it goes much smoother than it would if you were trying to do a cold call and get people involved. Ben Tran is our Executive Chairman. Ben has been since he's founded the company. And we did this through a reverse merger back in March of '22. We were going to grow it just project by project. We were fortunate enough to run into Cole, did that merger in April 2024. My background is public companies. So I've taken 6 companies public. I really am industry-agnostic, if you will. Cole comes with all the energy experience, but I'm here to do the capital markets. So I'll be the one that will go out, talk to investors. And again, we're going to go city to city to city. We're going to make sure we're on everybody's radar screen. The good thing is we're not out raising money. We don't need to raise any more money. We're going to be profitable with just a little bit we did raise. So we're excited about that. But I understand you got to get on the radar screen because not everybody is ready to buy right now. They're going to want to see, okay, when you get to a $5 stock, I'll buy in. When you have that first quarter of profitability, I'll buy in. Or you get on an index, that's when our fund can take hold or your volume liquidity gets to a certain level. So we want to be on the radar screen so that we have all the investors involved that like this type of a model. This is a nice, nice growth model. Balance sheet, $11 million you have there, and that includes the proceeds from the offering. Total assets, $35 million because it's got the $22 million in there from the projects that we purchased for stock. Accounts payable, $400,000. Debt, none. So we're sitting there with a little bit of deferred revenue, and that's for projects that are -- once they hit the milestones, that revenue will flow into our top line. Cap table is actually very clean. We have 7.1 million shares outstanding after this last deal, 300,000 of those are actually in prefunded warrants. We had a group come in. They did about $4 million of the offering. And -- but they also really wanted to do more of the offering. But at this point, they hit their kind of their cap at the top. Not for them, but for having to report. So they're out there. Their name is Encompass. They did tremendous amount of due diligence on us. And I can say their name because they had to file. We have tradable warrants out there, $5 exercise price, $3.6 million of those. And again, those tradable warrants, last time we looked, were just north of $2. They've been trading more around the $0.75 to $1, but we've been doing a lot of outreach, getting to different conferences. We just came back from LD Micro Conference. We've been doing things in New York and in Minnesota. We'll be going to, gosh, Kansas City, Chicago, Dallas, Houston. We're going to go all over the place, just getting more and more awareness for our company. With that, that kind of gives you the highlights about us. Hopefully, I didn't miss much there, but I'm sure that will come up in the questions. Thank you very much.

Excellent. Thank you, Bob. Fantastic presentation. We do actually have quite a few questions that have already come in. [Operator Instructions] We'll just jump into these since we have a lot of them. Bob, first one, can you provide key milestones we should be expecting between now and year-end? For example, timing for a binding offtake with Goldman, timing for notice to proceed on Project Redbird? Or should we expect any additional announcements with local battery manufacturers?

All of the above. That's what you should expect from us. So those are all the type of pieces that we are working on, plus more. So the milestones will be those things that I did talk about there. It will be more mezzanine debt partners announcing projects going into construction. We just announced letting out the construction contract for some of our smaller projects doing there in Texas. You'll want to look for more of those. And again, what are we doing with Eos? You're going to want to look for that because, again, that's something that we've been talking about that's heading in the right direction. And again, we have other mezzanine debt partners that you should look for. And then also, we didn't talk about it too much during this. But even though we have 23 projects, we're actually being shown projects weekly that are ready to go. And that's important because it gives us more deal flow. What's nice is we -- they want us to acquire those projects. But guess what, we're not going to acquire any projects for cash. Obviously, we don't have the cash to do it. What we'll do it is we'll do it through financial engineering where we bring them into the fold, we'll have them part of that mezzanine debt payout over the first year. And then at that point in time, we'll own them at the end of that year and have the operations on our balance sheet. So it's another way to build our portfolio without actually using our own cash.

Excellent. Thank you, Bob.

Sure.

Next question. Congratulations on the recent progress. Given that Bimergen is operating in a very capital-intensive sector, can you walk us through your strategy for balancing project development while maintaining a healthy balance sheet, especially in this high interest rate environment?

Yes. And that's what's -- the interesting piece of that, of course, is on our balance sheet, that debt really won't be on our balance sheet. It's going to be within the joint ventures themselves. Of course, all that will consolidate up once we own the 100% piece of those. But really, they're not against us. There's not the recourse against Bimergen. So having those grow and having the interest rates fluctuate isn't going to affect us a lot because they'll be kind of locked into those agreements.

Excellent. Thank you. The next question, you mentioned partnering with global institutional counterparties. Can you explain why these large partners choose Bimergen as their operator rather than building their own capabilities in-house?

Well, when you talk about international, China really can't own a battery plant. It's just -- it's not something they can own and operate. They can be involved in the front end of the mezzanine debt part of it as we grow these, but that's why we end up taking out the mezzanine debt and being that 100% owner at that time. And again, that's -- I'm assuming that was the question because that's the international groups that we're talking about working with right now.

And our next question. The Redbird project appears to represent an important proof point for the platform. Can you discuss how that project informs your broader development and commercialization strategy moving forward?

Yes. We just used Redbird as kind of our token, our first one that we talk about because it was the farthest along when we were going through our S-1. But realistically, we have several other projects that are just like Redbird. And I say that because there's a lot of projects that are at that same capacity, that have that 100-megawatt capacity. So we like to use Redbird because it's a nice typical 100-megawatt capacity for us. And it is going to be a great project, especially because it's right there in Fort Bend outside of Houston. And so there's -- as we've said, there's a lot of pinch points there in Texas. And we think every one of the places we have is going to generate the same type arbitrage. And Redbird has gone through a load of analysis just proving that it's going to be able to do that significant amount of energy arbitrage where it's located.

And our next question. Could you talk about the maintenance and operating costs associated with these systems? What does the long-term operational budget look like to keep these assets running at peak efficiency?

Yes. We put in there $2.5 million a year. And really, that's higher than what it's probably going to cost. A lot of that is -- there's not -- these are solid-state batteries. So there's not a lot of maintenance to them. They usually have about a 12-year warranty on them, expected to go up to 20 years. We do expect years -- I think it was years 12 through 15 is when there's a lot of monitoring done on them, looking for any degradation in cells, meaning looking for anything that's not charging and discharging as you want it to at a high enough level. What's nice is even though these are in tractor trailers, these cells, if you will, are the size of kind of a container that you would haul to your own storage unit. So those can be plug and play as you need. What's going to be interesting, though, as we look forward is 12 years down the road, what is the new technology going to look like? How -- does it make sense to plug and play some new technology instead of your older technology? So it's going to be interesting once you get to that point. The other costs related to operating this are really just in our numbers. You'll see that working with Tenaska to do your scheduling and to take their piece of the action is one piece of the operation, and that's making sure that they're buying low, selling high at the best opportunity available.

Excellent. Thank you. Our next question, ERCOT continues to attract significant attention given load growth and reserve constraints. What differentiates Bimergen's positioning within that market today?

Really, what differentiates us is that we've been there for a long time. We've kind of been in the queue, so we've worked in that area. We're not new to the game. Cole and his group have worked with ERCOT for the last 5, 6 years. So we really don't see an issue. We've locked ourselves into several of these locations. And again, when you look at a grid, you look at a certain location, you aren't going to spend your money unless you know your 100 megawatts is acceptable for that location. So we're feeling good about it.

Thank you. And our next question. As more renewable generation comes online, do you expect the value proposition for storage assets to strengthen?

I do, because it is creating more of a need. Because when you have more and more power, you don't want to lose it. That's what's happening now. There's areas where they've got tons of power, they're having to curtail it. It's just like putting a wire into the ground and having it go into the ground instead of onto the lines where consumers can use it. We really like the fact that we are bringing down the price for consumers, we believe. Because if we weren't there, if we weren't helping balance this, then consumers would have to bear that cost of that really high price during times when there's not enough energy generation.

Great. And our next question. With 2 gigawatts of capacity in the pipeline, how are you handling supply chain constraints and lead times for critical components like inverters and battery cells?

Because we knew we were doing this for the last -- Cole knew he was doing this for the last 3 years before he even met us. So we've had 5 years of planning. So there's been a lot going on in the background, knowing when we were going to build these ultimately. So we're handling that. Of course, there's always -- it's construction, so you're always having to pivot and you may have to go find something that you thought you had and find it somewhere else, but we're going to get it done.

Excellent. And our next question. Many early-stage developers struggle moving from pipeline announcements to actual construction activity. What do you believe investors may be still underappreciating about Bimergen's current stage of development?

The only thing that's underappreciated is that having all the pieces to the puzzle is so important. It is one of those things that if you don't have it, you're not going to just cold call a Goldman Sachs or somebody of that nature to get your guarantee. It just -- there's a lot of work that goes into that. Same thing with banks that are going to be writing $100 million checks. Those guys have to feel very comfortable and have to have gone through a lot of due diligence with you. When you look at our company, we come with a full data room of thousands of documents proving our pipeline, proving what we have, proving all the work we've done over the last 5 years. So it's -- there's a lot of work that goes in. When you look at it and when I talk about it, it sounds simple, but there's a lot of work that went into getting it here. And then having these relationships, as I said, you don't just go out and meet these guys at conferences and have them come on board with you. You have relationships with these guys for the last 10 years, and then now you're using those relationships to everybody's benefit. I like that about this model is everybody is winning. So everybody has their place. Everybody is staying in their lane. Nobody is getting greedy. And so everybody is making money off the deal.

Excellent. Thank you. Another question came in. Do or would you ever consider selling a BESS system once developed rather than operating it?

We are here for our shareholders. So if there were a situation where it made sense, we sure could do that. I was actually running the net present value on one the other day. And it looked like you get this up and operating, it could be worth near $100 million just out of the chute as a value for it, so even before it's operating, just because of all the work you've done there. So -- and the cash flow is going to throw off. As we said, once you get through that payback period, you can be throwing off that $17 million a year in cash flows. So it has quite a value for that 7- and then 20-year period overall.

Excellent. Thank you. Thank you, Bob. And that actually looks like that was our last question that came in. Were there any final comments you would like to leave for our audience?

No. I appreciate everybody that's been supporting us. Obviously, the stock has been doing very well over the last 10 days. We're excited. We see the warrants themselves are trading very nicely, which -- that's great. I think it was above $2 today. So that tells us that people understand the story and they understand where we're headed with this. So when you have a $5 exercise price that's selling over $2, people are -- they're looking at this going north of $10 here pretty soon, which we're excited about.

Very exciting indeed. Thank you, Bob. And for our audience, for more information on Bimergen, please reach us here at RedChip at 1-800-RedChip or you can e-mail us at [email protected]. That's the ticker symbol, [email protected]. You can also, of course, visit the RedChip website and go to Bimergen to see more information about Bimergen Energy. You can actually directly get there by simply typing in bimergeninfo.com, that will take you right to the page. You can download their investor presentation as well as fact sheet and also sign up for news alerts on Bimergen.

Yes. One other thing, I'm sorry, reminded me there is we do have our 2 different analyst reports that are on our website. So if you want to get into those, again, there's a lot of reading there. It's about 40 pages on one of them, but they show you the good, the bad, the ugly, the risks and -- but the great possible upside. So they're good reports to look at.

Excellent. And thank you for our audience. That's bimergen.com, where you can access those reports. So please do that as well. And with that, I want to thank everyone. Bob, thank you again for presenting the story. We look forward to having you back to share updates, and thank you to our attendees for participating today.

Thank you. Appreciate it very much.