7.0. EDSR 11-13-2001 •
• Item# 7
City of
Elk -�--
River
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Developmen
DATE: November 13, 2001
SUBJECT: Incubator Application: Bixby Energy Systems, Inc.
Issue
Bixby Energy Systems, Inc. has submitted an application for consideration of admittance to
the Elk River Business Incubator Program. Bixby Energy Systems, Inc. has developed a
high technology, state-of-the-art biomass heat and electrical energy producing system that is
ready for production and sales. Bob Walker, President and CEO,will be in attendance to
provide a short presentation on the company and its plans.
Attachments
• Application—Bixby Energy Systems, Inc.
• Incubator Advisory Board November 7, 2001 minutes
• Elk River Business Incubator Member Company Selection Guidelines
Background
Bixby Energy Systems, Inc. has developed a biomass based heat and electrical energy
producing system that is scaleable for both the consumer and commercial market. The
company is prepared to begin production of its biomass heating systems and bring it to
market. Bixby is currently evaluating lease space in Elk River for its production and
assembly. Since the Incubator building cannot meet this type of use, Bixby would like to
lease space in the Incubator for its corporate office, sales and administration until the
company is ready to expand to combine its operations in a single new building. The
requested 2000 SF of incubator office space will allow the company to further establish itself
and conduct business with vendors and investors,while keeping its initial manufacturing
operation nearby in Elk River.
Bixby has recently presented and was well received by the Anoka/Sherburne County Capital
Fund for an investment of approximately$25,000. The company is continuing to seek other
investments to meet its $1,000,000 goal. The company has secured over $400,000 in
investments to date.
Incubator Application:Bixby Energy Systems,Inc.
November 13,2001
Page 2 of 2
. In addition, Bixby Energy Systems, Inc. presented to the Energy City Demonstration
Committee for consideration as a designated Energy City Demonstration Project.
The Incubator Advisory Board reviewed Bixby Energy Systems, Inc. application on
November 7, 2001 with a fording that the applicant met the program guidelines and is
recommending that the company be admitted to the program. Staff has proposed a lease of
$7.50 per square foot with a 50:50 cash/stock ratio.
Action Requested
Staff requests that the EDA consider the application of Bixby Energy Systems, Inc. for
admittance to the Business Incubator Program.
11111
1110
•
1►
ELK RIVER BUSINESS INCUBATOR
APPLICATION FORM
Name of Business:
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Name of Principal: ' ) ? 3 ret - (-4)ch-i' `ate- /ete-8io`"er/CLCD
Address: 000 {Sar' (mac rt,J r01.4 SS3=3
Phone: 7(42--b - Z�(:{ — /817 Fax: 1(0 3 -Z-`f/— /Cr 7-3
Ownership structure: Sole Proprietorship ❑
Partnership V4 ""
Corporation '
Business is primarily involved in: Research and Development _
Product Manufacturing/Assembly
Other n
Principal product(s): c c t
•
Activities to be undertaken in the incubator facility: C42'eQQ-t4`£'—
ctkj C Oodui-P,3.0 cs4 zj- t cJ
Projected number of employees (including principal) at incubator
operation:
Full Time Part Time
Initially 3
After 6 months !,o
At the end of 1 Year to
At the end of 3 Years 3 WA
The Business has the following character�'stics:
Advances Technology T •
Projects Fast to Moderate Growth er
Medical Related Product/Technology ❑
Energy Related Product/Technology EV-
If
✓If Business is a sole proprietorship, indicate principals net worth:
$0 - $24,999 n
$25,000 - $74,999 ❑
$75,000 - $99,999 ❑
$100,000 - $200,000 ❑
Greater than $200,000 n
List the amount of equity you have received to date in the form of stock
ownership and/or direct investment:
$0 - $24,999 ❑ $300,000 - $400,000 ✓
$25,000 - $74,999 ❑ $400,000 - $500,000 ❑
$75,000 - $99,999 ❑ $500,000 - $1,000,000 n
$100,000 - $200,000 ❑ $1,000,000 - $1,500,000 11
$200,000 - $300,000 ❑ $1,500,000 + up ❑
List the amount of equity you will require from outside sources over the
period of:
one year in the Business.Incubator $ oo45
two years in the Business Incubator $ •
The Business is currently in operatio, i Yes ffr No ❑
Current Location of Business A:4,14-5E-49 / MA)
Number of Years In Operation Sofg.oN rnr S
Current Number of Employees
Most Recent Annual Sales $'.v(-CR 72 B a c.J ( 6i4''£"''-� -
The Business will require approximately econo square feet of space in
the Business Incubator, with the following special needs/requirements:
/rp Setc,.r a C- I k v4 02"...02.400-4
•
• Please attach the following information:
• Business Plan, including financial projections, current sales figures (if
any), Profit and Loss Statement, and Balance Sheet.
• Personal financial statements
Signature.
Printed name: a B 94.1.7" 11. -‹
111 Company name: LAO'? E/O '+S:")-91c � 4'''�G .
Date: tOcr-c esez_ /f_ / aopl
eda\bincapp.doc
410
Bixby Energy Systems, Inc.
Bob Walker/ (763) 241-1817
• Mission
The mission of Bixby Energy is directed at 3 goals: 1)To be the leading developer, manufacturer and
marketer of heating and electrical energy systems based on biomass technology,2)To develop the
information and as a result become the national technology expert and provider of energy yield information
of all biomass materials, and 3) to become the national processor and distributor of biomass"superpellets"
based on the knowledge that we are developing.
Market Demand
$500,000 Billion Industry
Last Year: 100,000+ Orders Went Unfilled
This Year: Competitors Sold Out thru May 2002
Bixby's Products
High Tech Biomass Heating System w/MaiMYield Technology
6 Years of Operating History
Self Starting
Controlled Burn/Low Ash Content
Easily Adjustable To Any Temperature Level
Minimum Venting Requirements
Scaleable Technology
High Tech Biomass Omni Energy System
Heat Your Home, Heat Your Hot Water, Generate Your Electricity
• Sell It Back To The Grid
Bixby Certified Fuel
Certified Fuel Distribution Program
Biomass Energy Research Data Base
Biomass Super Pellet Program
Initial Biomass Fuel/Dry Shelled Corn
4 Million/40 Years/4 Months
Grown everywhere except Antarctica
We grow more than 9.5 billion bushels every year,2 billion surplus
Corn is cheap
Easy to transport
No smell when burned
Goals: First 12 Months
500 Units by December 31st,2001
1000 more by June 30th,2002
Total Relative Costs to Produce 1,000,000 BTU's of Heat/July 2001
Dry Shelled Corn $3.32
Fuel Oil $6.40
• Wood $6.99
Natural Gas $8.61
Wood Pellets $10.26
Liquid Propane Gas $12.88
Electricity $21.39
Elk River Business Incubator Advisory Board
November 7, 2001
4:00 PM
Elk River Business Incubator
BIXBY ENERGY SYSTEMS, INC.
Present Absent
JeffgAdvisory
Gongoll— Board Larry Hickman—Advisory Board
Louise Kuester—AdvisoStephanien —Advisory
Board Klinzing Board
Jim Barthel—Advisory Board Jack Mowry—Advisory Board
Bob Walker—Bixby Energy Systems, Inc. Harlan Jacobs—Consultant
Catherine Mehelich—Staff
Following a presentation resentatiby Bob Walker,President& CEO of Bixby Energy Systems, Inc.,
the advisoryboard asked a series of questions around the followingissues:
Technology
for the
Bob Walker indicated that the technology is scaleable for both the consumer and the
commercial market. The system can also burn biomass products other than corn. Walker
will start with building and selling the space heater units. Additional opportunities exist for a
central heating system, heating units for large commercial buildings, drying units for corn
dryers, operating units for commercial ethanol plants and electrical generation systems all
• powered by biomass products.
Competition/Unique Technology
Walker stated that the Bixby system is unique from other "corn burners" on the market in
that it is a self-starting system,provides a controlled burn with a low ash content, adjustable
temperature levels, and minimum venting requirements. A patent is pending on the burn
efficiency device within the unit.
Management Experience
Bob Walker has more than 20 years experience with startups and is the founder of Select
Comfort Corporation. Walker's management team includes Marion Mast, Chief Technical
Officer who has over 18 years in biomass research and systems development. Harlan Jacobs
has joined the company's Board of Directors, along with John Carlson, chairman of
BioEnergy, Inc, and Excorp Medical, Inc.,with experience as chairman and CEO of Cray
Research, Inc., a supercomputer manufacturer.
Time Frames
Walker stated that the research and development for the technology is complete along with a
proto-type unit. Pre-production of up to 500 units will take place through December 1,
2001. Currently the company is evaluating leasible space in Elk River for the production and
assembly of the units. Walker is interested in a 1-year lease in the Elk River's Business
Incubator for the purposes of establishing Bixby Energy Systems, Inc. corporate offices,
• sales, marketing and administration. Walker is anticipating fast-growth with the company
, Business Incubator Advisory Board Meeting
November 7,2001
Page 2 of 2
• and would like to allow time to consider finished building space to meet the company's full
operational needs.
Recommendation
Advisory Board members Barthel and Kuester recommended that the EDA consider Bixby
Energy Systems, Inc. for admittance into the Business Incubator Program.
Other Business
Catherine Mehelich updated the advisory board on other prospects for the incubator
including MicroSurfaces, Inc. The company has developed a technology of surface coating
for the MEMS industry (machines on the microscale). As a result of limitations of the
incubator building (namely lack of city services), staff is working with MicroSurfaces to
locate in a"satellite" incubator in Elk River. Siting opportunities for the company with a
similar barter rent/stock with Tescom and Linda Norha's West Business Park building are
being explored. Staff cited a similar problem in being able to accommodate Cymbet's clean
room needs and now Bixby's assembly space needs.
The advisory board recommended that the EDA consider exploring other building space
options in order to provide greater flexibility for incubator prospects.
•
•
• ELK RIVER BUSINESS INCUBATOR
MEMBER COMPANY SELECTION GUIDELINES
The primary purpose of the Business Incubator is to provide inexpensive
space and support for higher technology, (start-up and existing) small
companies whose success would add significantly to the growth and
diversification of the City of Elk River's economic base.
The Elk River Economic Development Authority (EDA) will, as its primary
objective, select companies which appear to have the necessary fundamentals
established to assure their future growth and success.
I. Basic Entry Guidelines
The following basic entry guidelines will be used to determine the
eligibility of applicants to the Business Incubator:
1. Retail/service businesses will not be considered.
2. Businesses which compete exclusively in the local market with
• other similar local businesses will not be considered.
3. Manufacturing/assembly businesses will be screened to assure
the facility is able to accommodate their intended process and
byproducts.
4. Companies marketing new products/technology in the energy
field are encouraged to apply.
5. Companies must be involved in product
manufacturing/assembly or be high technology-service related.
6. The principals must have substantial technical and/or
managerial skills, or demonstrated experience and education in
the product field.
7. Companies must clearly demonstrate a need for incubator
services.
II. Specific Application Guidelines
Evidence of the following specific guidelines is to be provided at the
time of application to the Business Incubator:
1. Companies will be required to give hiring preference to persons
meeting certain eligibility requirements.
S 2. Companies will be required to allow opportunities for local
businesses to manufacture products for the company.
3. Existing companies will be considered for incubator occupancy if .
either (a) it is deemed that circumstances clearly indicate that a
move to the incubator will help retain and/or create jobs in Elk
River that would otherwise be lost, and if those circumstances
are considered to be the result of factors other than poor
management or inadequate technical skills, or (b) the aim is to
begin a research and/or production effort that is new and for
which there is inadequate space in the company's present
facility.
4. Companies must be able to demonstrate credible projections
which show significant job creation and growth.
5. Companies must have a prepared and legally acceptable stock
"offering statement" prior to entry into the business incubator.
6. Companies must agree to a stock "barter" transaction whereby
the EDA, building owner, and business incubator consultant
would be provided company stock in lieu of services rendered
7. Upon acceptance, member companies must agree to retain
operations of the company within the City of Elk River for a
specified period of time.
8. Companies are required to have a completed business plan and
a working product prototype prior to acceptance into the
incubator. •
Considerations which enhance a companies eligibility for admittance to the
Business Incubator:
1. Companies are considered to have the potential of creating
significant employment opportunities in Elk River in the near
future, provided that such business projections are deemed to be
realistic.
2. Companies are involved in higher technology or energy
technology related products.
•
eda\bincapp.doc