NewHydrogen, Inc. - Annual Report: 2007 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
| x |
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE
FISCAL YEAR ENDED DECEMBER 31, 2007
| o |
TRANSITION
REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE
TRANSITION PERIOD FROM __________ TO __________
COMMISSION
FILE NUMBER: 333-138910
BIOSOLAR,
INC.
(Name
of
registrant in its charter)
|
NEVADA
(State
or other jurisdiction of incorporation or organization)
|
20-4754291
(I.R.S.
Employer Identification No.)
|
27936
Lost Canyon Road, Suite 202, Santa Clarita, California
91387
(Address
of principal executive offices) (Zip Code)
Issuer’s
telephone Number: (661)
251-0001
Securities
registered under Section 12(b) of the Exchange Act: None.
Securities
registered under Section 12(g) of the Exchange Act: Common Stock: None
Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
| Large accelerated filer o | Accelerated filer o |
| Non-accelerated filer o | Smaller reporting company x |
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x
The
aggregate market value of the common stock held by non-affiliates of the
registrant, based upon the last sale price of the common stock reported on
the
OTC-Bulletin Board on December 31, 2007 was $0.96.
The
number of shares of registrant’s common stock outstanding, as of March 12, 2008
was 131,706,777.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
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Overview
We
are
developing an innovative technology to produce bio-based materials from
renewable plant sources that will reduce the cost per watt of Photovoltaic
solar
cells. Most of the solar industry is focused on photovoltaic efficiency to
reduce cost, but we are introducing a new dimension of cost reduction by
replacing petroleum-based plastic solar cell components with durable bio-based
components. The process for producing electricity from sunlight is known as
Photovoltaics. Photovoltaic ("PV") is the science of capturing and
converting sun light into electricity.
We
are
focusing our research and product development efforts on producing bio-based
components that meet the thermal and durability requirements of current solar
cell manufacturing processes for conventional crystalline cell designs as well
as thin film PV devices in an effort to capitalize on what we perceive as cost
advantages to current petroleum based solar cell components.
We
are
focusing our research and product development efforts on bio-based backsheets,
substrates, superstrates, module and panel components.
Corporate
Information and History
We
were
incorporated in the State of Nevada on April 24, 2006, as BioSolar Labs, Inc.
Our name was changed to BioSolar, Inc. on June 8, 2006. Our principal executive
offices are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita,
California 91387, and our telephone number is (661) 251-0001. Our fiscal year
end is December 31.
Industry
Overview
The
solar
industry relies on two distinctly different solar energy technologies. Solar
energy can be converted directly into electricity using photovoltaic devices
or
into heat by solar thermal devices. Photovoltaic devices convert sunlight
directly into electricity through a photovoltaic (PV) cell, commonly called
a
solar cell, a non-mechanical device usually made from silicon alloys. Solar
thermal devices, on the other hand, are typically used for directly heating
swimming pools, heating water for domestic use, and space heating of
buildings.
Our
product development focus is based on photovoltaic technology, thus we are
currently a part of the photovoltaic segment of the industry. "Photovoltaics"
is
derived from the words photo, meaning light, and voltaic, meaning voltage
producing. Sunlight, not heat, fuels photovoltaic cells. The cells, made mostly
of the semiconductor silicon, convert sunlight directly into
electricity.
There
remains a variety of techniques for manufacturing the coatings needed to create
solar cells. Emerging thin film cell manufacturing holds much promise because
the coatings use less silicon than traditional films and can be manufactured
at
low cost and in large volume.
The
simplest cells power watches and calculators; more complex systems provide
power
to the electric grid, and provide electricity to pump water, power
communications equipment, light homes and run appliances.
In
photovoltaics, light particles called photons penetrate the cell and knock
electrons free from the silicon atoms, creating an electric current. As long
as
light flows into the cell, electrons flow out of the cell. The cell does not
use
up its electons and lose power, similar to a battery, as it is a converter
that
turns one kind of energy (sun light) into another (flowing
electrons).
Photovoltaic
cells are typically combined into modules that hold about 40 cells. Ten such
modules are mounted in photovoltaic arrays. Such arrays can be used to generate
electricity for a single building or, in large numbers, for a power
plant.
Stand-along
photovoltaic systems produce power independently of the utility grid. In some
off-the-grid locations, even one half kilometer from power lines, stand-alone
photovoltaic systems can be more cost effective than extending power lines.
They
are especially appropriate for remote, environmentally sensitive areas, such
as
national parks, cabins, and remote homes.
In
rural
areas, small stand-alone solar arrays often power farm lighting, fence chargers
for electric fences, and solar water pumps, which provide water for livestock.
Some hybrid systems combine solar power with other power sources such as wind
or
diesel. Photovoltaic technology can be combined with construction materials
and
be built into a building rather than added on top of a building. In such
building-integrated photovoltaics, photovoltaic systems are incorporated into
or
become elements of a building's structure.
Companies
are manufacturing solar panels that look like construction materials, such
as
roof shingles. It is also possible to produce windows that have solar cells
integrally constructed as part of the window surface or by placing thin films
on
the window.
Research
and Development
BioSolar
intends to produce robust bio-based components that meet the stringent thermal
and durability requirements of current solar cell manufacturing processes.
BioSolar materials are intended to be used directly in conventional
manufacturing systems, such as injection molding and thin-film roll-to-roll,
to
create superstrate layer, substrate layer, backsheet as well as module and
panel
components.
We
believe that one problem with the use of bio-based materials in solar cells
is
that these bio-based materials have much lower melting temperature and fragile
molecular structurer than those of conventional petroleum based plastic
materials. We have developed a proprietary manufacturing and materials process
to enhance the characteristics of traditional bio-based materials -- turning
them into robust and durable materials for solar applications
We
are
currently developing our bio-based backsheet, the company’s first product to be
commercialized in 2008. Our line of BioSolar Backsheets, based on the company’s
proprietary materials technology, is designed specifically for c-Si solar cell
manufacturers. These backsheets will be available in rolls of film for direct
use in lamination and roll-to-roll assembly systems. We believe that using
BioSolar Backsheets can reduce cost up to 50% over traditional backsheet
materials.
In
addition, the company commenced a test program to determine the physical
properties and characteristics that will be most suitable for commercially
available solar cell devices, and build prototype solar cells, as we attempt
to
validate the commercial viability of our product.
Marketing
Strategy
BioSolar,
Inc. is developing a technology to produce bio-based materials from renewable
plant sources that will reduce the cost per watt of solar cells. Most of
the solar industry is focused on photovoltaic efficiency to reduce cost.
BioSolar is the first company to introduce a new dimension of cost reduction
by
replacing petroleum-based plastic solar cell components with durable bio-based
materials. .
This
technology is in the research and development stage.
Once
we
complete our product development, we intend to market our bio-based solar cell
components directly to photovoltaic module manufacturers. In order to create
a
favorable environment for sales, we plan to undertake advertising and promotion
efforts. These efforts will be outsourced and will require the services of
advertising and public relations firms. We plan to interview various firms
and
select those most capable of assisting us with comprehensive advertising and
promotion plans. We have not yet finalized the potential costs of our marketing
strategy.
Our
marketing strategy is to market to potential manufacturing partners in our
target markets representing solar device manufactures.
Backlog
of Orders
There
are
currently no orders for sales at this time.
Government
Contracts
There
are
no government contracts at this time.
Compliance
with Environmental Laws and Regulations
Our
operations are subject to local, state and federal laws and regulations
governing environmental quality and pollution control. To date, our compliance
with these regulations by has had no material effect on our operations, capital,
earnings, or competitive position, and the cost of such compliance has not
been
material. We are unable to assess or predict at this time what effect additional
regulations or legislation could have on our activities.
Manufacturing
and Distribution
We
currently do not have any mechanism for the manufacture and distribution of
its
thin film solar cells produced on bio-based plastic substrates, nor do we have
adequate financing to undertake these efforts on our own. We intend to outsource
manufacturing and distribution efforts to existing manufacturing and
distributions firms.
Intellectual
Property
On
June
27, 2006, we filed a patent to protect the intellectual property rights for
“A
Method for Building Thin Film Flexible Solar Cells on Bio-Based Plastic
Substrates”, application number 11/476,518. The inventor listed on the patent
application is David Lee, our Chief Executive Officer. We are listed as the
assignee. As of the date of this prospectus, we are awaiting the US Patent
and
Trademark Office to complete their review of our application.
We
rely
upon confidentiality agreements signed by our employees, consultants and third
parties to protect our intellectual property.
Competition
While
there are a number of companies manufacturing backsheet and other plastic
components for PV devices, such as Madico, Inc, we do not know of any employing
the use of bio-based components.
Technology
Development Partners
To
assist
us in the development of our technology, we intend to seek out and enter into
technology development agreements with other entities with PV and bio-based
materials expertise.
EMPLOYEES
As
of
March 21, 2008 we had two (2) full time employees. We have not experienced
any
work stoppages and we consider relations with our employees to be good.
WE
HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN BASE AN INVESTMENT
DECISION.
Our
company was formed on April 24, 2006 and therefore, we have a limited operating
history upon which you can make an investment decision, or upon which we can
accurately forecast future sales. You should, therefore, consider us subject
to
the business risks associated with a new business. The likelihood of our success
must be considered in light of the expenses, difficulties and delays frequently
encountered in connection with the formation and initial operations of a new
business.
WE
HAVE A LIMITED HISTORY OF LOSSES AND HAVE NEVER REALIZED REVENUES TO DATE.
WE
EXPECT TO CONTINUE TO INCUR LOSSES AND NO ASSURANCE CAN BE GIVEN THAT WE WILL
REALIZE REVENUES. ACCORDINGLY, WE MAY NEVER ACHIEVE AND SUSTAIN
PROFITABILITY.
Since
inception, we have incurred losses and have negative cash flows from operations
and have never realized revenues. From inception through December 31, 2007,
we
incurred a net loss of $1,122,067. These factors, among others discussed in
Note
1 to the financial statements, raise substantial doubt about the ability to
continue as a going concern. We expect to continue to incur net losses until
we
are able to realize revenues to fund our continuing operations. We may fail
to
achieve any or significant revenues from sales or achieve or sustain
profitability. Accordingly, there can be no assurance of when, if ever, we
will
be profitable or be able to maintain profitability.
WE
ARE A DEVELOPMENT STAGE COMPANY AND MAY BE UNABLE TO MANAGE OUR GROWTH OR
IMPLEMENT OUR EXPANSION STRATEGY IF WE ARE ABLE TO LAUNCH OUR PRODUCT AND
SERVICE OFFERINGS.
We
are a
development stage company and may not be able to launch our product and
service offerings, our client base and markets, or implement the other features
of our business strategy at the rate or to the extent presently planned. If
we
are able to launch our product and service offerings, our projected growth
will
place a significant strain on our administrative, operational and financial
resources. If we are unable to successfully manage our future growth, establish
and upgrade our operating and financial control systems, recruit and hire
necessary personnel or effectively manage unexpected expansion difficulties,
our
financial condition and results of operations could be materially and adversely
affected.
WE
MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES
WHICH
WOULD RESULT IN CONTINUED LOSSES AND OUR FINANCIAL CONDITION AND RESULTS OF
OPERATION COULD BE MATERIALLY AND ADVERSELY AFFECTED.
While
we
have made progress in the development of our products, we have not generated
any
revenues and we are unable to project when we will achieve profitability, if
at
all. As is the case with any new technology, we are a development stage company
and expect the development process to continue. We may not be able to create
our
product offering, develop a customer base and markets, or implement the other
features of our business strategy at the rate or to the extent presently
planned. Growth beyond the product development stage will place a significant
strain on our administrative, operational and financial resources. In
addition, our operations will not be able to move out of the development
stage without additional funding. If we are unable to successfully finance
our
future growth, establish and continue to upgrade our operating and financial
control systems, recruit and hire necessary personnel or effectively manage
unexpected expansion difficulties, our financial condition and results of
operation could be materially and adversely affected.
OUR
REVENUES ARE DEPENDENT UPON ACCEPTANCE OF OUR PRODUCTS BY THE MARKET; THE
FAILURE OF WHICH WOULD CAUSE TO CURTAIL OR CEASE
OPERATIONS.
We
believe that virtually all of our revenues will come from the sale or license
of
our products. As a result, we will continue to incur substantial operating
losses until such time as we are able to generate revenues from the sale or
license of our products. There can be no assurance that businesses and customers
will adopt our technology and products, or that businesses and prospective
customers will agree to pay for or license our products. In the event that
we
are not able to significantly increase the number of customers that purchase
or
license our products, or if we are unable to charge the necessary prices or
license fees, our financial condition and results of operations will be
materially and adversely affected.
WE
DO NOT MAINTAIN THEFT OR CASUALTY INSURANCE, AND ONLY MAINTAIN MODEST LIABILITY
AND PROPERTY INSURANCE COVERAGE AND THEREFORE WE COULD INCUR LOSSES AS A RESULT
OF AN UNINSURED LOSS.
We
do not
maintain theft or casualty insurance and we have modest liability and property
insurance coverage. We cannot assure that we will not incur uninsured
liabilities and losses as a result of the conduct of our business. Any such
uninsured or insured loss or liability could have a material adverse affect
on
our results of operations.
IF
WE LOSE KEY EMPLOYEES AND CONSULTANTS OR ARE UNABLE TO ATTRACT OR RETAIN
QUALIFIED PERSONNEL, OUR BUSINESS COULD SUFFER.
Our
success is highly dependent on our ability to attract and retain qualified
scientific, engineering and management personnel. We are highly dependent on
our
management, including Mr. David Lee who has been critical to the development
of
our technologies and business. The loss of the services of Mr. Lee could have
a
material adverse effect on our operations. We do not have an employment
agreement with Mr. Lee and do not maintain key man insurance with respect to
Mr.
Lee. Accordingly, there can be no assurance that he will remain associated
with us. His efforts will be critical to us as we continue to develop our
technology and as we attempt to transition from a development state company
to a
company with commercialized products and services. If we were to lose Mr. Lee,
or any other key employees or consultants, we may experience difficulties in
competing effectively, developing our technology and implementing our business
strategies.
THE
LOSS OF STRATEGIC RELATIONSHIPS USED IN THE DEVELOPMENT OF OUR PRODUCTS AND
TECHNOLOGY COULD IMPEDE OUR ABILITY TO COMPLETE OUR PRODUCT AND RESULT IN A
MATERIAL ADVERSE EFFECT CAUSING THE BUSINESS TO SUFFER.
We
may
rely on strategic relationships with technology development partners to provide
personnel, and expertise in the research and development of the technology
and
manufacturing process underlying our thin film PV product. A loss of these
relationships for any reason could cause us to experience difficulties in
completing the development of our product and implementing our business
strategy. There can be no assurance that we could establish other relationships
of adequate expertise in a timely manner or at all.
OUR
PATENT APPLICATION FOR OUR TECHNOLOGY IS PENDING AND THERE IS NO ASSURANCE
THAT
THIS APPLICATION WILL BE GRANTED. FAILURE TO OBTAIN THE PATENT FOR OUR
APPLICATION COULD PREVENT US FROM SECURING ROYALTY PAYMENTS IN THE FUTURE,
IF
APPROPRIATE.
We
have
filed a patent to protect the intellectual property rights for “A Method for
Building Thin Film Flexible Solar Cells on Bio-Based Plastic Substrates”. To
date our patent application has not been granted. We cannot be certain that
this
patent will be granted nor can we be certain that other companies have not
filed
for patent protection for this technology before us. Even if we are granted
patent protection for our technology, there is no assurance that we will be
in a
position to enforce our patent rights. Failure to be granted patent protection
for our technology could result in greater competition or in limited royalty
payments. This could result in inadequate revenue and cause us to cease
operations.
OUR
CURRENT AND POTENTIAL COMPETITORS, SOME OF WHOM HAVE GREATER RESOURCES THAN
WE
DO, MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAY CAUSE DEMAND FOR, AND THE
PRICES OF, OUR PRODUCTS TO DECLINE.
While
there are a number of companies manufacturing components for PV devices, we
do
not know of any employing the use of bio-based materials. Furthermore, our
competitors may combine with each other, and other companies may enter our
markets by acquiring or entering into strategic relationships with our
competitors. Current and potential competitors have established, or may
establish, cooperative relationships among themselves or with third parties
to
increase the abilities of their PV components to address the needs of our
prospective customers.
Many
of
our current and potential competitors have longer operating histories,
significantly greater financial, technical, product development and marketing
resources, greater name recognition and larger customer bases than we do. Our
present or future competitors may be able to develop products comparable or
superior to those we offer, adapt more quickly than we do to new technologies,
evolving industry trends and standards or customer requirements, or devote
greater resources to the development, promotion and sale of their products
than
we do. Accordingly, we may not be able to compete effectively in our markets,
competition may intensify and future competition may harm our
business.
WE
ARE CONTROLLED BY CURRENT OFFICERS, DIRECTORS AND PRINCIPAL
STOCKHOLDERS.
Our
directors, executive officers and principal stockholders and their affiliates
beneficially own approximately 41% of the outstanding shares of our common
stock. Accordingly, our executive officers, directors, principal stockholders
and certain of their affiliates will have the ability to control the election
of
our Board of Directors and the outcome of matters submitted to a vote of our
stockholders.
RISKS
RELATING TO OUR COMMON STOCK
BECAUSE
THERE IS A LIMITED MARKET IN OUR COMMON STOCK, STOCKHOLDERS MAY HAVE DIFFICULTY
IN SELLING OUR COMMON STOCK AND OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT
PRICE SWINGS.
There
is
a very limited market for our common stock. Since trading commenced in February
2007, there has been little activity in our common stock and on some days there
is no trading in our common stock. Because of the limited market for our common
stock, the purchase or sale of a relatively small number of shares may have
an
exaggerated effect on the market price for our common stock. We cannot assure
stockholders that they will be able to sell common stock or, that if they are
able to sell their shares, that they will be able to sell the shares in any
significant quantity at the quoted price.
IF
WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS
TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES
IN
THE SECONDARY MARKET.
Companies
trading on the Over-The-Counter Bulletin Board, such as we are seeking to
become, must be reporting issuers under Section 12 of the Securities Exchange
Act of 1934, as amended, and must be current in their reports under Section
13,
in order to maintain price quotation privileges on the OTC Bulletin Board.
If we
fail to remain current on our reporting requirements, we could be removed from
the OTC Bulletin Board. As a result, the market liquidity for our securities
could be severely adversely affected by limiting the ability of broker-dealers
to sell our securities and the ability of stockholders to sell their securities
in the secondary market. In addition, we may be unable to get re-listed on
the
OTC Bulletin Board, which may have an adverse material effect on our
Company.
OUR
COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SEC AND THE TRADING
MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK
CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR
STOCK.
The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.
For
any transaction involving a penny stock, unless exempt, the rules
require:
|
·
|
that
a broker or dealer approve a person's account for transactions in
penny
stocks; and
|
|
·
|
the
broker or dealer receive from the investor a written agreement to
the
transaction, setting forth the identity and quantity of the penny
stock to
be purchased.
|
In
order
to approve a person's account for transactions in penny stocks, the broker
or
dealer must:
|
·
|
obtain
financial information and investment experience objectives of the
person;
and
|
|
·
|
make
a reasonable determination that the transactions in penny stocks
are
suitable for that person and the person has sufficient knowledge
and
experience in financial matters to be capable of evaluating the risks
of
transactions in penny stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock,
a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
|
·
|
sets
forth the basis on which the broker or dealer made the suitability
determination; and
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|
·
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that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
|
Generally,
brokers may be less willing to execute transactions in securities subject to
the
"penny stock" rules. This may make it more difficult for investors to dispose
of
our common stock and cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both
the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks.
WE
DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE; ANY RETURN ON INVESTMENT MAY
BE
LIMITED TO THE VALUE OF OUR COMMON STOCK.
We
do not
currently anticipate paying cash dividends in the foreseeable future. The
payment of dividends on our Common Stock will depend on earnings, financial
condition and other business and economic factors affecting it at such time
as
the board of directors may consider relevant. Our current intention is to apply
net earnings, if any, in the foreseeable future to increasing our capital base
and development and marketing efforts. There can be no assurance that the
Company will ever have sufficient earnings to declare and pay dividends to
the
holders of our Common Stock, and in any event, a decision to declare and pay
dividends is at the sole discretion of the our Board of Directors. If we do
not
pay dividends, our Common Stock may be less valuable because a return on your
investment will only occur if its stock price appreciates.
Our
headquarters are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita,
California 91387. We lease our facility under a lease that expires on May 14,
2008. The size of our office is 144 square feet. Rent expense, net of sublease
income, amounted to $9,950 and from inception (April 24, 2006) through December
31, 2007.
We
are
not currently a party to, nor is any of our property currently the subject
of,
any pending legal proceeding that will have a material adverse effect on our
business. None of our directors, officers or affiliates is involved in a
proceeding adverse to our business or has a material interest adverse to our
business.
No
matter
was submitted to a vote of security holders during the fourth quarter of the
fiscal year covered by this report.
On
February 22, 2007, our common stock became eligible for quotation on the NASD's
OTC Bulletin Board under the symbol "BSRC."
For
the
periods indicated, the following table sets forth the high and low bid prices
per share of common stock. These high and low bid prices represent prices quoted
by broker-dealers on the OTC Bulletin Board. These prices represent inter-dealer
quotations without retail markup, markdown, or commission and may not
necessarily represent actual transactions.
|
Fiscal
2008
|
Fiscal
2007
|
||||||||||||
|
Quarter
Ended
|
High
|
|
Low
|
|
High
*
|
|
Low*
|
||||||
|
March
31
|
$
|
1.58
|
** |
$
|
0.38
|
** |
$
|
0.22
|
$
|
0.10
|
|||
|
June
30
|
N/A
|
N/A
|
$
|
0.24
|
$
|
0.23
|
|||||||
|
September
31
|
N/A
|
N/A
|
$
|
0.57
|
$
|
0.20
|
|||||||
|
December
31
|
N/A
|
N/A
|
$
|
0.96
|
$
|
0.36
|
|||||||
*Our
common stock became eligible for quotation on the NASD's OTC Bulletin Board
on
February 22, 2007.
**
Through March 21, 2008
Common
Stock
Our
Amended Articles of Incorporation authorize the issuance of 500,000,000 shares
of common stock, $.0001 par value per share. Holders of shares of common stock
are entitled to one vote for each share on all matters to be voted on by the
stockholders. Holders of common stock have cumulative voting rights. Holders
of
shares of common stock are entitled to share ratably in dividends, if any,
as
may be declared, from time to time by the Board of Directors in its discretion,
from funds legally available therefor. In the event of a liquidation,
dissolution, or winding up of our company, the holders of shares of common
stock are entitled to share pro rata all assets remaining after payment in
full
of all liabilities. Holders of common stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to such shares.
As
of
March 21, 2008, our common stock was held by 139 stockholders of record and
we
had 131,706,777 shares of common stock issued and outstanding. We believe that
the number of beneficial owners is substantially greater than the number of
record holders because a significant portion of our outstanding common stock
is
held of record in broker street names for the benefit of individual investors.
The transfer agent of our common stock is Computershare Trust company N.A.,
P.O.
Box 43070, Providence, RI 02940-3070.
Dividend
Policy
We
have
never declared or paid any cash dividends on our common stock. We do not
anticipate paying any cash dividends to stockholders in the foreseeable future.
In addition, any future determination to pay cash dividends will be at the
discretion of the board of directors and will be dependent upon our financial
condition, results of operations, capital requirements, and such other factors
as the Board of Directors deem relevant. There are no restrictions in our
articles of incorporation or bylaws that restrict us from declaring
dividends.
Equity
Compensation Plan Information
The
following table shows information with respect to each equity compensation
plan
under which our common stock is authorized for issuance as from inception (April
24, 2006) through December 31, 2006.
EQUITY
COMPENSATION PLAN INFORMATION
|
Number
of securities to
be issued upon exercise
of outstanding
options, warrants
and rights
|
|
Weighted
average exercise
price of outstanding
options, warrans
and rights
|
|
Number
of securities remaining
available for future issuance under equity compensation plans (excluding
securities reflected in column (a)
|
|
|||||
|
Plan
category
|
|
(a)
|
|
(b)
|
|
(c)
|
||||
|
Equity
compensation plans approved by security holders
|
-0-
|
-0-
|
-0-
|
|||||||
|
|
||||||||||
|
Equity
compensation plans not approved by security holders
|
-0-
|
-0-
|
-0-
|
|||||||
|
|
||||||||||
|
Total
|
-0-
|
-0-
|
-0-
|
|||||||
Unregistered
Sales of Equity Securities
During
the year ended December 31, 2007, the Company issued 3,149,000 shares of common
stock, of which 2,655,000 shares were issued at a price of $0.10 per share
through a private placement , and 494,000 shares of common stock were issued
to
contractors for services.
*
All of
the above offerings and sales were deemed or determined by Biosolar, Inc. to
be
exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act
of
1933, as amended. No advertising or general solicitation was employed in
offering the securities. The offerings and sales were made to a limited number
of persons, all of whom were accredited investors, business associates of
Biosolar, Inc. or executive officers of Biosolar, Inc., and transfer was
restricted by Biosolar, Inc. in accordance with the requirements of the
Securities Act of 1933. In addition to representations by the above-referenced
persons, we have made independent determinations that all of the
above-referenced persons were accredited or sophisticated investors, and that
they were capable of analyzing the merits and risks of their investment, and
that they understood the speculative nature of their investment.
N/A
Special
Note on Forward-Looking Statements.
Certain
statements in “Management’s Discussion and Analysis or Plan of Operation” below,
and elsewhere in this annual report, are not related to historical results,
and
are forward-looking statements. Forward-looking statements present our
expectations or forecasts of future events. You can identify these statements
by
the fact that they do not relate strictly to historical or current facts. These
statements involve known and unknown risks, uncertainties and other factors
that
may cause our actual results, levels of activity, performance or achievements
to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking statements.
Forward-looking statements frequently are accompanied by such words such as
“may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative
of such terms or other words and terms of similar meaning. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance,
achievements, or timeliness of such results. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of such
forward-looking statements. We are under no duty to update any of the
forward-looking statements after the date of this annual report. Subsequent
written and oral forward looking statements attributable to us or to persons
acting in our behalf are expressly qualified in their entirety by the cautionary
statements and risk factors set forth below and elsewhere in this annual report,
and in other reports filed by us with the SEC.
You
should read the following description of our financial condition and results
of
operations in conjunction with the financial statements and accompanying notes
included in this report beginning on page F-1.
Overview
We
are
developing an innovative technology to produce bio-based materials from
renewable plant sources that will reduce the cost per watt of Photovoltaic
solar
cells. Most of the solar industry is focused on photovoltaic efficiency to
reduce cost, but we are introducing a new dimension of cost reduction by
replacing petroleum-based plastic solar cell components with durable bio-based
components. The process for producing electricity from sunlight is known as
Photovoltaics. Photovoltaic ("PV") is the science of capturing and
converting sun light into electricity.
We
are
focusing our research and product development efforts on producing bio-based
components that meet the thermal and durability requirements of current solar
cell manufacturing processes for conventional crystalline cell designs as well
as thin film PV devices in an effort to capitalize on what we perceive as cost
advantages to current petroleum based solar cell components.
We
are
focusing our research and product development efforts on bio-based backsheets,
substrates, superstrates, module, and panel components.
We
were
incorporated in the State of Nevada on April 24, 2006, as BioSolar Labs, Inc.
Our name was changed to BioSolar, Inc. on June 8, 2006. Our principal executive
offices are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita,
California 91387, and our telephone number is (661) 251-0001. Our fiscal
year end is December 31.
RESULTS
OF OPERATIONS - YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR ENDED DECEMBER
31, 2006
SELLING
AND MARKETING EXPENSES
Selling
& Marketing Expenses ("S&M") expenses increased by $289,946 or 1774.13%
to $306,289 for the year ended December 31, 2007, compared to the prior year.
This increase in G&A expenses was the result of a increase in marketing and
consulting fees.
GENERAL
AND ADMINISTRATIVE EXPENSES
General
and administrative ("G&A") expenses increased by $127,940 or 40.09% to
$396,276 for the year ended December 31, 2007, compared to the prior year.
This
increase in G&A expenses was the result of a increase in professional fees,
and salary expenses.
RESEARCH
AND DEVELOPMENT
Research
and Development ("R&D") costs increased by $174,461 or 1045.30%, to $191,151
for the year ended December 31, 2007 compared to the prior year. This increase
in R&D costs was the result of an increase in testing of product
alternatives, and construction of prototypes,
NET
LOSS
Net
Loss
increased by $573,345, or 208.97%, to $847,706 for the year ended December
31,
2007, compared to the prior year. This increase in Net Loss was the result
of an
increase in G&A expenses and R&D. Currently the Company is in its
development stage and had no revenues.
LIQUIDITY
AND CAPITAL RESOURCES
As
of
December 31, 2007, we had $1,064,077 of working capital as compared to
$1,177,314 from inception (April 24, 2006) through the fiscal year ended
December 31, 2006. This decrease of $113,237 was due primarily to use of funds
for operating expenses.
During
the year ended December 31, 2007, the Company used $753,324 of cash for
operating activities, as compared to $235,407 from inception (April 24, 2006)
during the fiscal year ended December 31, 2006. The increase in the use of
cash
for operating activities was a result of an increase in legal consulting fees,
general and administrative expenses, and research &
development.
Cash
provided by investing activities was $362,037 for the year ended December 31,
2007 as compared to cash used of $1,017,882 from inception (April 24, 2006)
through the fiscal year ended December 31, 2006. The decrease of cash used
in
investing activities was primarily due to a decrease in investing in
certificates of deposits.
Cash
provided from financing activities during the year ended December 31, 2007
was
$531,000 as compared to $1,454,028 from inception (April 24, 2006) through
fiscal year ended December 31, 2006. Our capital needs have primarily been
met
from the proceeds of private placements, as we are currently in the development
stage and had no revenues.
Our
financial statements as of December 31, 2007 have been prepared under the
assumption that we will continue as a going concern from inception (April 24,
2006) through December 31, 2007. Our independent registered public accounting
firm has issued their report dated March 11, 2007 that included an explanatory
paragraph expressing substantial doubt in our ability to continue as a going
concern without additional capital becoming available. Our ability to continue
as a going concern ultimately is dependent on our ability to generate a profit
which is dependent upon our ability to obtain additional equity or debt
financing, attain further operating efficiencies and, ultimately, to achieve
profitable operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
PLAN
OF OPERATION AND FINANCING NEEDS
We
are
engaged in the development of an innovative technology to produce bio-based
materials from renewable plant sources that will reduce the cost per watt of
Photovoltaic solar cells. We plan to develop our products and thereafter focus
our efforts on establishing markets in other related sectors by
2010.
Our
plan
of operation within the next twelve months is to utilize our cash balances
to
commercialize our bio-based backsheet component to replace the petroleum based
backsheet in crystalline photovoltaic modules. In addition, during the next
twelve months we intend to commence a test program to determine the physical
properties and characteristics that will be most suitable for the further
development of biobased solar cell components, and build solar cells, as we
attempt to validate the commercial viability of our product. We believe that
our
current cash and investment balances will be sufficient to support development
activity and general and administrative expenses for the next twelve months.
Management estimates that it will require additional cash resources during
2008,
based upon its current operating plan and condition. We will be investigating
additional financing alternatives, including equity and/or debt financing.
There
is no assurance that capital in any form would be available to us, and if
available, on terms and conditions that are acceptable. If we are unable to
obtain sufficient funds during the next fifteen months, we may be forced to
reduce the size of our organization, which could have a material adverse impact
on, or cause us to curtail and/or cease, the development of our
products.
All
financial information required by this Item is attached hereto at the end of
this report beginning on page F-1 and is hereby incorporated by reference.
None
(a)
Evaluation
of Disclosure Controls and Procedures.
Based on
an evaluation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934, as amended) required by paragraph (b) of Rule 13a-15 or
Rule 15d-15, as of December 31, 2007, our Chief Executive Officer and
Acting Chief Financial Officer has concluded that our disclosure controls and
procedures were effective in ensuring that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Commission’s rules and forms. Our Chief Executive Officer and Acting Chief
Financial Officer also concluded that, as of December 31, 2006, our disclosure
controls and procedures were effective in ensuring that information required
to
be disclosed by us in the reports that we file or submit under the Exchange
Act
is accumulated and communicated to our management, including our Chief Executive
Officer and Acting Chief Financial Officer, to allow timely decisions regarding
required disclosure.
(b)
Changes
in Internal Controls.
During
the year ended December 31, 2007, there were no changes in our internal control
over financial reporting identified in connection with the evaluation required
by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected,
or
is reasonably likely to materially affect, our internal control over financial
reporting.
Management’s
Report of Internal Control over Financial Reporting.
This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the
Company’s registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly public
companies.
None.
The
following table sets forth information about our executive officers, key
employees and directors as of December 31, 2007.
|
Name
|
Age
|
Position
|
||
|
David
Lee
|
48
|
Chief
Executive Officer and Acting Chief Financial Officer
|
||
|
Stanley
Levy
|
68
|
Vice
President and Chief Technology Officer
|
||
|
Steven
C. Bartling
|
45
|
Director
|
||
|
Dennis
LePon
|
60
|
Director
|
Directors
serve until the next annual meeting and until their successors are elected
and
qualified. The Directors of our company are elected by the vote of a
majority in interest of the holders of the voting stock of our company and
hold
office until the expiration of the term for which he or she was elected and
until a successor has been elected and qualified.
A
majority of the authorized number of directors constitutes a quorum of the
Board
for the transaction of business. The directors must be present at the meeting
to
constitute a quorum. However, any action required or permitted to be taken
by
the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.
Directors
receive compensation for their services and reimbursement for their expenses
as
shall be determined from time to time by resolution of the Board. Our
directors currently do not receive monetary compensation for their service
on
the Board of Directors.
Officers
are appointed to serve for one year until the meeting of the board of directors
following the annual meeting of stockholders and until their successors have
been elected and qualified.
The
principal occupations for the past five years (and, in some instances, for
prior
years) of each of our executive officers and directors, followed by our key
employees, are as follows:
David
Lee
- Chief
Executive Officer and Acting Chief Financial Officer: Dr. Lee has over 20 years
of engineering, marketing, sales, and corporate management experience in the
areas of military and consumer communication systems, automotive electronics,
software development and consulting. From 2004 to 2006, he was with
Ramsey-Shilling Co. in the business of Commercial Real Estate Investment and
Brokerage. From 2000 to 2004, he served as Chief Operating Officer for
Applied Reasoning, Inc., a Delaware company engaged in the business of Internet
Software Development. From 1994 to 2000, he served as Vice Present and General
Manager for RF-Link Technology, Inc., a California company engaged in the
business of Wireless Technology Development and Manufacturing. Dr. Lee received
a Ph.D. in Electrical Engineering from Purdue University in 1989, a Master
of
Science in Electrical Engineering from University of Michigan in 1986 and a
Bachelor of Science in Electrical Engineering from the University of Texas
at
Austin in 1984.
Stanley
Levy
- Vice
President and Chief Technology Officer: Dr. Levy has over 40 years of
engineering and technical experience in the areas of plastics and film
development. Dr. Levy spent 27 years at DuPont working on many of their premiere
films, including Teflon, Mylar and Kapton. He holds 12 patents, his work has
been published in numerous technical publications and he has received several
awards for technical excellence. Prior to joining BioSolar, Dr. Levy was a
consultant on module packaging for photovoltaic manufacturing companies
including Global Solar, MiaSole, and Solar Integrated Technologies. In addition,
he is a member of the National Renewable Energy Laboratory's Thin Film PV Module
Reliability Team. Dr. Levy holds a Ph.D in Mechanical Engineering from the
University of Connecticut, a Master of Science in Mechanical Engineering from
the University of Connecticut and a Bachelor of Science in Mechanical
Engineering from the University of Rhode Island.
Steven
C. Bartling -
Director: Steven C. Bartling has over 20 years of engineering and corporate
management experience in the areas of ultra high performance digital CMOS
(Complementary Metal Oxide Semiconductor) circuit design, high performance
microprocessor architecture/design, systems on a chip, packaging, and testing.
From 2002 to the present, Mr. Bartling has been employed in ASIC (Application
Specific Integrated Circuit) research and development for Texas Instruments,
Inc. From 2001 to 2002, he served as Director of Custom Design for Celerence,
an
Oragon company engaged in the business of Optical Communication Networking.
Mr.
Bartling received a Master of Science in Electrical Engineering from Georgia
Institute of Technology in 1987 and a Bachelor of Science in Electrical
Engineering from the University of Texas at Austin in 1985.
Dennis
LePon -
Director: Dennis LePon has over 35 years of financial, managerial, and business
experience working for a bank, real estate finance companies, as well as a
start
up high tech company. From 1992 to the present, Mr. LePon has served as Chief
Financial officer of Catalyst Resource Group, Inc., a real estate finance and
consulting firm offering specialized financing for healthcare, C-Store, gasoline
station and other varied commercial properties nationwide. From 2002 to
2004, he served as Chief Financial Officer for FoodMarket Place.com, a
California company engaged in the business of Web Based marketing for food
and
restaurant industry partnered with Hewlett Packard. Mr. LePon received a
Bachelor of Arts from California State University at Northridge in 1969 and
a
Master of Business Administration from the University of Southern California
in
1977.
COMMITTEES
OF THE BOARD
We
currently have no audit committee, compensation committee, nominations and
governance committee of our board of directors.
INDEBTEDNESS
OF EXECUTIVE OFFICERS AND DIRECTORS
No
executive officer, director or any member of these individuals' immediate
families or any corporation or organization with whom any of these individuals
is an affiliate is or has been indebted to us since the beginning of our last
fiscal year.
FAMILY
RELATIONSHIPS
There
are
no family relationships among our executive officers and directors.
CODE
OF ETHICS
We
have
adopted a Code of Ethics that applies to all of our directors, officers and
employees. The text of the Code of Ethics is filed
as
an exhibit to this annual report on Form 10-K.
Any
waiver of the provisions of the Code of Ethics for executive officers and
directors may be made only by the Audit Committee and, in the case of a waiver
for members of the Audit Committee, by the Board of Directors. Any such waivers
will be promptly disclosed to our shareholders.
The
following table sets forth the compensation paid or accrued by us to our Chief
Executive Officer and President and Chief Operating Officer and each of our
other officers whose compensation exceeded $100,000 for each of the Company’s
last two completed fiscal years.
|
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings
($)
|
All
Other Compensation ($)
|
Total
($)
|
|||||||||||||||||||
|
David
Lee-CEO and Acting CFO
|
2007
2006
|
$
$
|
144,000
84,000
|
-
-
|
-
-
|
-
-
|
-
-
|
-
-
|
-
-
|
$
|
144,000_
84,000
|
|||||||||||||||||
|
Stanley
Levy - CTO
|
2007
|
$
|
46,750
|
$
|
46,750
|
|||||||||||||||||||||||
Outstanding
Equity Awards at Fiscal Year-End Table.
The
following table sets forth information with respect to grants of options to
purchase our common stock to the named executive officers at December 31,
2007.
|
Option
Awards
|
|
Stock
Awards
|
|
|||||||||||||||||||||||||
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of Shares or Units of Stock That Have Not
Vested
(#)
|
|
Market Value of Shares or Units of Stock That Have Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards: Number of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
Equity Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
($)
|
|
|||||||||
|
David
Lee-CEO and Acting CFO
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
Director
Compensation
The
following table sets forth with respect to the named directors, compensation
information inclusive of equity awards and payments made for the fiscal year
ended December 31, 2007.
|
Name
(a)
|
|
Fees
Earned or Paid in Cash ($) (b)
|
|
Stock
Awards ($) (c)
|
|
Option
Awards ($) (d)
|
|
Non-Equity
Incentive Plan Compensation ($) (e)
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
(f)
|
|
All
Other Compensation ($) (g)
|
|
Total
($) (h)
|
|
|||||||
|
David
Lee-CEO and Acting CFO
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
EMPLOYMENT
AGREEMENTS
We currently
have no employment agreements with our executive officers.
The
following table sets forth, as of March 21, 2008, the number of and percent
of
our common stock beneficially owned by:
|
·
|
all
directors and nominees, naming
them,
|
|
·
|
our
executive officers,
|
|
·
|
our
directors and executive officers as a group, without naming them,
and
|
|
·
|
persons
or groups known by us to own beneficially 5% or more of our common
stock:
|
We
believe that all persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially owned by
them.
A
person
is deemed to be the beneficial owner of securities that can be acquired by
him
within 60 days from March 21, 2008 upon the exercise of options, warrants or
convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that options, warrants or convertible securities that
are
held by him, but not those held by any other person, and which are exercisable
within 60 days of March 21, 2008 have been exercised and
converted.
|
Title
of Class
|
Name
of
Beneficial
Owner
|
Number
of Shares Beneficially
Owned
|
Percent
of Total (1)
|
|||||||
|
Common
Stock
|
David
Lee
|
49,500,000
|
37.6
|
%
|
||||||
|
Common
Stock
|
Stanley
Levy
|
5,000,000
|
3.8
|
%
|
||||||
|
Common
Stock
|
Steven
C. Bartling
|
1,000,000
|
*
|
|||||||
|
Common
Stock
|
Dennis
LePon
|
1,000,000
|
*
|
|||||||
|
Common
Stock
|
All
Executive Officers and Directors as a Group (4 persons)
|
56,500,000
|
41.4
|
%
|
||||||
*Less
than one percent.
(i)
Based
upon 131,706,777 shares issued and outstanding as of March 21, 2008.
There
were no material related party transactions which we entered into from
inception (April 24, 2006) to December 31, 2007.
Audit
Fees
The
aggregate fees billable to us by HJ Associates & Consultants, LLP during
2007 and 2006 for the audits of our annual financial statements for the fiscal
year totaled approximately $23,500 and 21,095, respectively.
Audit-Related
Fees
We
incurred assurance and audit-related fees during 2007 and 2006 of $0 and $0
respectively, to HJ Associates & Consultants, LLP in connection with the
audit of the financial statements of Biosolar, Inc. from April 24, 2006
(Inception) through December 31, 2007 for the reviews of registration statements
and issuance of related consents and assistance with SEC comment
letters.
Tax
Fees
We
incurred fees of $0 and $ 0 billed to us by HJ Associates & Consultants, LLP
for services rendered to us for tax compliance, tax advice, or tax planning
for
the fiscal year ended December 31, 2006 and December 31, 2007,
respectively.
All
Other Fees
There
were no fees billed to us by HJ Associates & Consultants, LLP for services
rendered to us during the last two fiscal years, other than the services
described above under “Audit Fees” and “Audit-Related Fees.”
As
of the
date of this filing, our current policy is to not engage HJ Associates &
Consultants, LLP to provide, among other things, bookkeeping services, appraisal
or valuation services, or international audit services. The policy provides
that
we engage HJ Associates & Consultants, LLP to provide audit, tax, and other
assurance services, such as review of SEC reports or filings.
|
Exhibit
No.
|
|
Description
|
|
3.1
|
|
Articles
of Incorporation of Biosolar Labs, Inc. filed with the Nevada
Secretary of State on April 24, 2006. ( Incorporated by reference
to the
Company’s Registration Statement on Form SB-2 filed with the SEC on
November 22, 2006)
|
|
|
|
|
|
3.2
|
|
Articles
of Amendment of Articles of Incorporation of Biosolar Labs, Inc.
filed
with the Nevada Secretary of State on May 25, 2006.( Incorporated
by
reference to the Company’s Registration Statement on Form SB-2 filed with
the SEC on November 22, 2006)
|
|
|
|
|
|
3.3
|
|
Articles
of Amendment of Articles of Incorporation of Biosolar Labs, Inc.
filed
with the Nevada Secretary of State on June 8, 2006. ( Incorporated
by
reference to the Company’s Registration Statement on Form SB-2 filed with
the SEC on November 22, 2006)
|
|
|
|
|
|
3.4
|
|
Bylaws
of Biosolar, Inc.( Incorporated by reference to the Company’s Registration
Statement on Form SB-2 filed with the SEC on November 22,
2006)
|
MATERIAL
CONTRACTS
|
10.1
|
|
Form
of Subscription Agreement dated as of May 26, 2006. ( Incorporated
by
reference to the Company’s Registration Statement on Form SB-2 filed with
the SEC on November 22, 2006)
|
|
|
|
|
|
10.2
|
|
Form
of Subscription Agreement dated as of July 17, 2006. ( Incorporated
by
reference to the Company’s Registration Statement on Form SB-2 filed with
the SEC on November 22, 2006)
|
|
|
|
|
|
10.3
|
|
Form
of Subscription Agreement dated as of October 11, 2006. ( Incorporated
by
reference to the Company’s Registration Statement on Form SB-2 filed with
the SEC on November 22, 2006)
|
|
14.1
|
Code
of Ethics (filed herewith)
|
|
|
|
|
|
|
|
Certification
by Chief Executive Officer and Acting Chief Financial Officer
pursuant to
Sarbanes-Oxley Section 302 (filed herewith).
|
|
|
|
|
|
|
|
Certification
by Chief Executive Officer and Acting Chief Financial Officer
pursuant to
18 U.S.C. Section 1350 (filed
herewith).
|
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on March 25,
2008.
|
|
|
|
Biosolar,
Inc.
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
By:
|
/s/
David Lee
|
|
||
|
|
|
CHIEF
EXECUTIVE OFFICER
(PRINCIPAL
EXECUTIVE
OFFICER) AND
ACTING
CHIEF FINANCIAL
OFFICER
(PRINCIPAL
ACCOUNTING AND
FINANCIAL OFFICER)
|
|||
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the date
indicated:
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/S/
DAVID LEE
DAVID
LEE
|
|
CHIEF
EXECUTIVE OFFICER
(PRINCIPAL
EXECUTIVE OFFICER),
ACTING
CHIEF FINANCIAL OFFICER
|
|
MARCH
25, 2008
|
|
|
|
(PRINCIPAL
ACCOUNTING AND
|
|
|
|
|
|
FINANCIAL
OFFICER) AND
|
|
|
|
|
|
CHAIRMAN
OF THE BOARD
|
|
MARCH
25, 2008
|
|
|
|
|
|
|
|
/S/
DENNIS LEPON
DENNIS
LEPON
|
|
DIRECTOR
|
|
MARCH 25, 2008 |
22
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of
Directors and Shareholders of
BioSolar,
Inc.
(A
Development Stage Company)
Santa
Clarita, CA
We
have
audited the balance sheet of BioSolar, Inc. (a development stage
company) as of
December 31, 2007, and the related statements of operations, stockholders
equity
and cash flows for the years ended December 31, 2007 and 2006 and
from inception
on April 24, 2006 through December 31, 2007. These financial statements
are the
responsibility of the Company's management. Our responsibility is
to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public
Company
Accounting Oversight Board (United States). Those standards require
that we plan
and perform the audit to obtain reasonable assurance about whether
the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the
financial
statements. An audit also includes assessing the accounting principles
used and
significant estimates made by management, as well as evaluating the
overall
financial statement presentation. We believe that our audits provide
a
reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly,
in all
material respects, the financial position of BioSolar, Inc. as of
December 31,
2007, and the results of its operations and its cash flows for the
years ended
December 31, 2007 and 2006 and from inception of the development
stage on April
24, 2006 through December 31, 2007, in conformity with U.S. generally
accepted
accounting principles.
The
accompanying financial statements have been prepared assuming that
the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered losses from operations since
inception.
This raises substantial doubt about the Company's ability to continue
as a going
concern. Management's plans in regard to this matter are also described
in Note
1. The financial statements do not include any adjustments that might
result
from the outcome of this uncertainty.
HJ
Associates & Consultants, LLP.
Salt
Lake
City, Utah
March
13,
2008
BIOSOLAR,
INC.
(A
Development Stage Company)
BALANCE
SHEET
DECEMBER
31, 2007
|
ASSETS
|
||||
|
CURRENT
ASSETS
|
||||
|
Cash
& Cash Equivalents
|
$
|
340,484
|
||
|
Certificates
of Deposits
|
653,867
|
|||
|
Prepaid
Expenses
|
80,332
|
|||
|
Total
Current Assets
|
1,074,683
|
|||
|
|
||||
|
PROPERTY
& EQUIPMENT
|
||||
|
Computer
|
1,978
|
|||
|
Less:
Accumulated Depreciation
|
(1,029
|
)
|
||
|
Net
Property and Equipment
|
949
|
|||
|
OTHER
ASSETS
|
||||
|
Deposit
|
770
|
|||
|
Patents
|
7,265
|
|||
|
Total
Other Assets
|
8,035
|
|||
|
TOTAL
ASSETS
|
$
|
1,083,667
|
||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||
|
CURRENT
LIABILITIES
|
||||
|
Accrued
Expenses
|
$
|
9,611
|
||
|
Credit
Card Payable
|
995
|
|||
|
TOTAL
CURRENT LIABILITIES
|
10,606
|
|||
|
SHAREHOLDERS'
EQUITY EQUITY
|
||||
|
Common
Stock, $0.0001 par value;
|
||||
|
500,000,000
authorized common shares
|
||||
|
131,706,777
shares issued and outstanding
|
13,170
|
|||
|
Additional
Paid in Capital
|
2,181,958
|
|||
|
Deficit
Accumulated during the Development Stage
|
(1,122,067
|
)
|
||
|
TOTAL
SHAREHOLDERS' EQUITY
|
1,073,061
|
|||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
1,083,667
|
||
The
accompanying notes are an integral part of these financial
statements
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
|
From
Inception
|
From
Inception
|
|||||||||
|
April
24, 2006
|
April
24, 2006
|
|||||||||
|
Year
Ended
|
through
|
through
|
||||||||
|
December
31, 2007
|
December
31, 2006
|
December
31, 2007
|
||||||||
|
REVENUE
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
OPERATING
EXPENSES
|
||||||||||
|
Selling
and marketing expenses
|
306,289
|
16,343
|
322,632
|
|||||||
|
General
and administrative expenses
|
390,276
|
262,336
|
652,613
|
|||||||
|
Research
and development
|
191,151
|
16,690
|
207,841
|
|||||||
|
Depreciation
and amortization
|
673
|
396
|
1,069
|
|||||||
|
TOTAL
OPERATING EXPENSES
|
888,389
|
295,765
|
1,184,155
|
|||||||
|
LOSS
FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
|
(888,389
|
)
|
(295,765
|
)
|
(1,184,155
|
)
|
||||
|
TOTAL
OTHER INCOME/(EXPENSE)
|
||||||||||
|
Interest
income
|
40,683
|
21,404
|
62,088
|
|||||||
|
NET
LOSS
|
$
|
(847,706
|
)
|
$
|
(274,361
|
)
|
$
|
(1,122,067
|
)
|
|
|
BASIC
AND DILUTED LOSS PER SHARE
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
||||
|
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING
|
||||||||||
|
BASIC
AND DILUTED
|
129,113,689
|
110,953,304
|
||||||||
The
accompanying notes are an integral part of these financial
statements
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS
OF SHAREHOLDERS' EQUITY
|
Common
stock
|
Additional
Paid-in
|
Deficit
Accumulated during the Development
|
||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stage
|
Total
|
||||||||||||
|
Inception
April 24, 2006
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
|
Issuance
of common stock in April 2006 for services
(1,000
common shares issued at $0.001 per share )
|
1,000
|
1
|
-
|
-
|
1
|
|||||||||||
|
|
||||||||||||||||
|
Issuance
of founders shares in May 2006 for cash
(29,999,000
common shares issued at $0.00025 per share )
|
29,999,000
|
2,999
|
4,500
|
-
|
7,499
|
|||||||||||
|
Issuance
of founders shares in May 2006 for cash
(20,000,000
common shares issued at $0.00025 per share )
|
20,000,000
|
2,000
|
3,000
|
-
|
5,000
|
|||||||||||
|
Issuance
of founders shares in May 2006 for cash
(9,000,000
common shares issued at $0.00025 per share )
|
9,000,000
|
900
|
1,350
|
-
|
2,000
|
|||||||||||
|
Issuance
of common stock in May 2006 for cash
(25,000,000
common shares issued at $0.015 per share )
|
25,000,000
|
2,500
|
372,500
|
-
|
375,000
|
|||||||||||
|
Issuance
of founders shares in June 2006 for cash
(34,000,000
common shares issued at $0.00025 per share )
|
34,000,000
|
3,400
|
5,100
|
-
|
8,500
|
|||||||||||
|
Issuance
of common shares in June 2006 for cash
(90,000
common shares issued at $0.10 per share )
|
90,000
|
9
|
8,991
|
-
|
9,000
|
|||||||||||
|
|
||||||||||||||||
|
Stocks
subscribed
|
-
|
-
|
-
|
-
|
250
|
|||||||||||
|
Issuance
of common shares in July 2006 for cash
(5,760,000
common shares issued at $0.10 per share )
|
5,760,000
|
576
|
575,424
|
-
|
576,000
|
|||||||||||
|
Issuance
of common shares in August 2006 for cash
(2,807,777
common shares issued at $0.10 per share )
|
2,807,777
|
281
|
280,497
|
-
|
280,778
|
|||||||||||
|
|
||||||||||||||||
|
Issuance
of common shares in September 2006 for cash
(1,450,000
common shares issued at $0.10 per share )
|
1,450,000
|
145
|
144,855
|
-
|
145,000
|
|||||||||||
|
|
||||||||||||||||
|
Issuance
of common shares in October 2006 for cash
(450,000
common shares issued at $0.10 per share )
|
450,000
|
45
|
44,955
|
-
|
45,000
|
|||||||||||
|
|
||||||||||||||||
|
Net
Loss from Inception through December 31, 2006
|
-
|
-
|
-
|
(274,361
|
)
|
(274,361
|
)
|
|||||||||
|
Balance
at December 31, 2006
|
128,557,777
|
$
|
12,856
|
$
|
1,441,172
|
$
|
(274,361
|
)
|
$
|
1,179,667
|
||||||
|
Issuance
of common shares in September 2007 for cash
(250,000
common shares issued at $0.20 per share)
|
250,000
|
25
|
49,975
|
-
|
50,000
|
|||||||||||
|
Issuance
of common shares in September 2007 for cash
(50,000
common shares issued at $0.20 per share )
|
50,000
|
5
|
9,995
|
-
|
10,000
|
|||||||||||
|
Issuance
of common shares in September 2007 for services
(100,000
common shares issued at $0.35 per share )
|
100,000
|
10
|
34,990
|
-
|
35,000
|
|||||||||||
|
Issuance
of common shares in September 2007 for services
(100,000
common shares issued at $0.26 per share )
|
100,000
|
10
|
25,990
|
-
|
26,000
|
|||||||||||
|
Issuance
of common shares in September 2007 for services
(40,000
common shares issued at $0.54 per share )
|
40,000
|
4
|
21,596
|
-
|
21,600
|
|||||||||||
|
Issuance
of common shares in October 2007 for services
(4,000
common shares issued at $0.54 per share )
|
4,000
|
0
|
2,160
|
-
|
2,160
|
|||||||||||
|
Issuance
of common shares in October 2007 for cash
(1,175,000
common shares issued at $0.20 per share )
|
1,175,000
|
117
|
234,883
|
-
|
235,000
|
|||||||||||
|
Issuance
of common shares in October 2007 for services
(250,000
common shares issued at $0.51 per share )
|
250,000
|
25
|
127,475
|
-
|
127,500
|
|||||||||||
|
Issuance
of common shares in November 2007 for cash
(1,180,000
common shares issued at $0.20 per share )
|
1,180,000
|
118
|
235,882
|
-
|
236,000
|
|||||||||||
|
Stock
issuance cost
|
-
|
-
|
(2,160
|
)
|
-
|
(2,160
|
)
|
|||||||||
|
Net
Loss for the year ended December 31, 2007
|
-
|
-
|
-
|
(847,706
|
)
|
(847,706
|
)
|
|||||||||
|
Balance
at December 31, 2007
|
131,706,777
|
$
|
13,170
|
$
|
2,181,958
|
$
|
(1,122,067
|
)
|
$
|
1,073,061
|
||||||
The
accompanying notes are an integral part of these financial
statements
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
|
From
Inception
|
From
Inception
|
|||||||||
|
April
24, 2006
|
April
24, 2006
|
|||||||||
|
Year
Ended
|
through
|
through
|
||||||||
|
December
31, 2007
|
December
31, 2006
|
December
31, 2007
|
||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
|
Net
loss
|
$
|
(847,706
|
)
|
$
|
(274,361
|
)
|
$
|
(1,122,067
|
)
|
|
|
Adjustment
to reconcile net loss to net cash
|
||||||||||
|
used
in operating activities
|
||||||||||
|
Depreciation
& amortization expense
|
673
|
396
|
1,069
|
|||||||
|
Issuance
of stock for services
|
212,260
|
-
|
212,260
|
|||||||
|
(Increase)
Decrease in:
|
||||||||||
|
Prepaid
expenses
|
(79,564
|
)
|
(768
|
)
|
(80,332
|
)
|
||||
|
Deposits
|
-
|
(770
|
)
|
(770
|
)
|
|||||
|
Patents
|
(7,305
|
)
|
-
|
(7,305
|
)
|
|||||
|
Increase
(Decrease) in:
|
||||||||||
|
Accounts
Payable
|
(37,179
|
)
|
37,179
|
-
|
||||||
|
Accrued
Expenses
|
7,419
|
-
|
7,419
|
|||||||
|
Credit
Card Payable
|
(1,922
|
)
|
2,917
|
995
|
||||||
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(753,324
|
)
|
(235,407
|
)
|
(988,731
|
)
|
||||
|
NET
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||
|
Purchase
of Equipment
|
-
|
(1,978
|
)
|
(1,978
|
)
|
|||||
|
Investment
in Certificate of Deposits
|
362,037
|
(1,015,904
|
)
|
(653,867
|
)
|
|||||
|
NET
CASH (USED)/PROVIDED BY INVESTING ACTIVITIES
|
362,037
|
(1,017,882
|
)
|
(655,845
|
)
|
|||||
|
NET
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
|
Proceeds
from issuance of common stock
|
531,000
|
1,454,028
|
1,985,028
|
|||||||
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
531,000
|
1,454,028
|
1,985,028
|
|||||||
|
NET
INCREASE (DECREASE) IN CASH
|
139,713
|
200,739
|
340,452
|
|||||||
|
CASH,
BEGINNING OF PERIOD
|
200,739
|
-
|
-
|
|||||||
|
CASH,
END OF PERIOD
|
340,452
|
200,739
|
340,452
|
|||||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||
|
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
Taxes
paid
|
$
|
800
|
$
|
800
|
$
|
1,600
|
||||
|
SUPPLEMENTAL
SCHEDULE OF NON-CASH TRANSACTIONS
|
||||||||||
|
During
the year ended December 31, 2007, the Company issued
|
||||||||||
|
494,000
shares of common stock for services at a fair value of
|
||||||||||
|
$212,260.
|
||||||||||
The
accompanying notes are an integral part of these financial
statements
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
| 1. |
ORGANIZATION
AND LINE OF BUSINESS
|
Organization
BioSolar,
Inc. (the "Company") was incorporated in the state of Nevada on April
24, 2006.
The Company, based in Santa Clarita, California, began operations on
April 25,
2006 to develop and market a solar cell technology .
Line
of Business
The
Company is currently in the stage of developing
an innovative technology to produce bio-based materials from renewable
plant
sources that will reduce the cost per watt of Photovoltaic solar cells.
Once we
complete our product development, we intend to market our bio-based solar
cell
components directly to photovoltaic module manufacturers.
Going
Concern
The
accompanying financial statements have been prepared on a going concern
basis of
accounting, which contemplates continuity of operations, realization
of assets
and liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that
might
result if the Company is unable to continue as a going concern. The Company
does
not generate significant revenue, and has negative cash flows from operations,
which raise substantial doubt about the Company’s ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other
things, additional cash infusion. The Company has obtained funds from
its
shareholders since its’ inception through the year ended December 31, 2007.
Management believes this funding will continue, and has also obtained
funding
from new investors. Management believes the existing shareholders and
the
prospective new investors will provide the additional cash needed to
meet the
Company’s obligations as they become due, and will allow the development of its
core of business.
| 2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
This
summary of significant accounting policies of BioSolar, Inc. is presented
to
assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of
America and have been consistently applied in the preparation of the
financial
statements.
Development
Stage Activities and Operations
The
Company has been in its initial stages of formation and for the year
ended
December 31, 2007, had insignificant revenues. FASB #7 defines a development
stage activity as one in which all efforts are devoted substantially
to
establishing a new business and even if planned principal operations
have
commenced, revenues are insignificant.
Revenue
Recognition
The
Company will recognize revenue when services are performed, and at the
time of
shipment of products, provided that evidence of an arrangement exists,
title and
risk of loss have passed to the customer, fees are fixed or determinable,
and
collection of the related receivable is reasonably assured. To date,
the Company
has had no revenues and is in the development stage.
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an original maturity
of
three months or less to be cash equivalents.
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Investments
Certificate
of Deposits with banking institutions are short-term investments with
initial
maturities of more than 90 days. The carrying amount of these investments
is a
reasonable estimate of fair value due to their short-term nature.
Use
of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the amounts reported in the accompanying financial statements.
Significant estimates made in preparing these financial statements include
the
estimate of useful lives of property and equipment, the deferred tax
valuation
allowance, and the fair value of stock options. Actual results could
differ from
those estimates.
Property
and Equipment
Property
and equipment are stated at cost, and are depreciated using the modified
accelerated cost recovery system (macrs) method over its estimated useful
lives:
|
Computer
equipment
|
5 Years | |||
Fair
Value of Financial Instruments
SFAS
No.
107, “Disclosures About Fair Value of Financial Instruments”, requires
disclosure of the fair value information, whether or not recognized in
the
balance sheet, where it is practicable to estimate that value. As of
December
31, 2007, the amounts reported for cash, accounts receivable, accounts
payable,
accrued interest and other expenses, and notes payable approximate the
fair
value because of their short maturities.
Loss
per Share Calculations
The
Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic
earnings per share and diluted earnings per share. Basic earnings per
share is
computed by dividing income available to common shareholders by the
weighted-average number of common shares available. Diluted earnings
per share
is computed similar to basic earnings per share except that the denominator
is
increased to include the number of additional common shares that would
have been
outstanding if the potential common shares had been issued and if the
additional
common shares were dilutive. No shares for employee options or warrants
were
used in the calculation of the loss per share as they were all anti-dilutive.
The Company’s diluted loss per share is the same as the basic loss per share for
the year ended December 31, 2007, as the inclusion of any potential shares
would
have had an anti-dilutive effect due to the Company generating a
loss.
Reclassification
of Expenses
Certain
amounts from the prior year have been reclassified to conform with the
current
year presentation.
Income
Taxes
Deferred
income taxes are provided using the liability method whereby deferred
tax assets
are recognized for deductible temporary differences and operating loss
and tax
credit carryforwards and deferred tax liabilities are recognized for
taxable
temporary differences. Temporary differences are the differences between
the
reported amounts of assets and liabilities and their tax bases. Deferred
tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax
assets
will not be realized. Deferred tax assets and liabilities are adjusted
for the
effects of the changes in tax laws and rates of the date of
enactment.
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
| 2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
When
tax
returns are filed, it is highly certain that some positions taken would
be
sustained upon examination by the taxing authorities, while others are
subject
to uncertainty about the merits of the position taken or the amount of
the
position that would be ultimately sustained. The benefit of a tax position
is
recognized in the financial statements in the period during which, based
on all
available evidence, management believes it is more likely than not that
the
position will be sustained upon examination, including the resolution
of appeals
or
Research
and Development
Research
and development costs are expensed as incurred. Total research and development
costs were $191,151 and $16,690 for the years ended December 31, 2007
and 2006,
respectively.
Advertising
Costs
The
Company expenses the cost of advertising and promotional materials when
incurred. Total advertising costs were $35,445 and $500 for the years
ended
December 31, 2007 and 2006, respectively.
Recently
Issued Accounting Pronouncements
In
November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment
of
ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that
abnormal amounts of idle facility expense, freight, handling costs, and
wasted
materials (spoilage) should be recognized as current-period charges and
require
the allocation of fixed production overheads to inventory based on the
normal
capacity of the production facilities. The guidance is effective for
inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after November 23, 2004. The Company has evaluated the impact
of the
adoption of SFAS 151, and does not believe the impact will be significant
to the
Company's overall results of operations or financial position.
In
December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary
Assets, an
amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."The
amendments made by Statement 153 are based on the principle that exchanges
of
nonmonetary assets should be measured based on the fair value of the
assets
exchanged. Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it with
a broader
exception for exchanges of nonmonetary assets that do not have commercial
substance. Previously, Opinion 29 required that the accounting for an
exchange
of a productive asset for a similar productive asset or an equivalent
interest
in the same or similar productive asset should be based on the recorded
amount
of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive
assets.
The Board believes that exception required that some nonmonetary exchanges,
although commercially substantive, be recorded on a carryover basis.
By focusing
the exception on exchanges that lack commercial substance, the Board
believes
this Statement produces financial reporting that more faithfully represents
the
economics of the transactions. The Statement is effective for nonmonetary
asset
exchanges occurring in fiscal periods beginning after June 15, 2005.
Earlier
application is permitted for nonmonetary asset exchanges occurring in
fiscal
periods beginning after the date of issuance. The provisions of this
Statement
shall be applied prospectively. The Company has evaluated the impact
of the
adoption of SFAS 153, and does not believe the impact will be significant
to the
Company's overall results of operations or financial position.
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Recently
Issued Accounting Pronouncements (continued)
|
In
December 2004, the Financial Accounting Standards Board issued
two FASB
Staff Positions - FSP FAS 109-1, Application of FASB Statement
109
"Accounting for Income Taxes" to the Tax Deduction on Qualified
Production
Activities Provided by the American Jobs Creation Act of 2004,
and FSP FAS
109-2 Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act
of 2004.
Neither of these affected the Company as it does not participate
in the
related activities.
|
In
December 2004, the FASB issued Statement of Financial Accounting Standards
No.
123R, Share-based Payment. SFAS 123R revises SFAS 123 and supersedes
APB 25.
SFAS 123R will be effective for the period ending December 31, 2006,
and applies
to transactions in which an entity exchanges its equity instruments for
goods or
services and also applies to liabilities an entity may incur for goods
or
services that are to follow a fair value of those equity instruments.
Under SFAS
123R, we will be required to follow a fair value approach using an
option-pricing model, such as the Black Scholes option valuation model,
at the
date of a stock option grant. The deferred compensation calculated under
the
fair value method would then be amortized over the respective vesting
period of
the stock option. The adoption of SFAS 123R is expected to have a material
impact on our results of operations.
In
March
2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment”
(“SAB 107”), which provides interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations. It also provides
the
SEC staff’s views regarding valuation of share-based payment arrangements. In
April 2005, the SEC amended the compliance dates for SFAS 123(R), to
allow
companies to implement the standard at the beginning of their next fiscal
year,
instead of the next reporting period beginning after June 15, 2005. Management
is currently evaluating the impact SAB 107 will have on our consdensed
financial
statements.
In
March
2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
the identification of and financial reporting for legal obligations to
perform
an asset retirement activity. The Interpretation requires recognition
of a
liability for the fair value of a conditional asset retirement obligation
when
incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
defines when an entity would have sufficient information to reasonably
estimate
the fair value of an asset retirement obligation. The provision is effective
no
later than the end of fiscal years ending after December 15, 2005. The
Company
will adopt FIN 47 beginning the first quarter of fiscal year 2006 and
does not
believe the adoption will have a material impact on its financial position
or
results of operations or cash flows.
In
May
2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements,” and represents another step in the FASB’s goal to
converge its standards with those issued by the IASB. Among other changes,
Statement 154 requires that a voluntary change in accounting principle
be
applied retrospectively with all prior period financial statements presented
on
the new accounting principle, unless it is impracticable to do so. Statement
154
also provides that (1) a change in method of depreciating or amortizing
a
long-lived non-financial asset be accounted for as a change in estimate
(prospectively) that was effected by a change in accounting principle,
and (2)
correction of errors in previously issued financial statements should
be termed
a “restatement.” The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15,
2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005
. The
Company has evaluated the impact of the adoption of Statement 154 and
does not
believe the impact will be significant to the Company's overall results
of
operations or financial position.
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
| 2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Recently
Issued Accounting Pronouncements (continued
In
February of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments”, which is intended to simplify the accounting and improve
the financial reporting of certain hybrid financial instruments (i.e.,
derivatives embedded in other financial instruments). The statement amends
SFAS
No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and
SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities—a replacement of FASB Statement No. 125.” SFAS
No. 155 is effective for all financial instruments issued or acquired
after the
beginning of an entity's first fiscal year that begins after September
15,
2006.. The Company is currently evaluating the impact SFAS No. 155 will
have on
its financial statements, if any.
In
July
2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting
for Uncertainty in Income Taxes ,
which
clarifies the accounting for uncertainty in income taxes recognized in
the
financial statements in accordance with FASB Statement No. 109, Accounting
for Income Taxes .
FIN 48
provides guidance on the financial statement recognition and measurement
of a
tax position taken or expected to be taken in a tax return. FIN 48 also
provides
guidance on derecognition, classification, interest and penalties, accounting
in
interim periods, disclosures, and transition. FIN 48 is effective for
fiscal
years beginning after December 15, 2006. The Company is currently evaluating
the
impact of this standard on the financial statements.
Stock-Based
Compensation
|
As
of December 31, 2007, the Company adopted Financial Accounting
Standards
No. 123 (revised 2004), “Share-Based Payment” (FAS) No. 123R, that
addresses the accounting for share-based payment transactions
in which an
enterprise receives employee services in exchange for either
equity
instruments of the enterprise or liabilities that are based
on the fair
value of the enterprise’s equity instruments or that may be settled by the
issuance of such equity instruments. The statement eliminates
the ability
to account for share-based compensation transactions, as we
formerly did,
using the intrinsic value method as prescribed by Accounting
Principles
Board, or APB, Opinion No. 25, “Accounting for Stock Issued to Employees,”
and generally requires that such transactions be accounted
for using a
fair-value-based method and recognized as expenses in our statement
of
income. The
adoption of (FAS) No. 123R by the Company had no material impact
on the
statement of income.
|
|
3.
|
CAPITAL
STOCK
|
During
the year ended December 31, 2007, the Company’s issued 2,655,000 shares of
common stock at a price of $0.20 per share for cash in the amount of
$531,000;
Also, the Company issued 494,000 shares of common stock at a price between
$0.26
and $0.54 per share for services at a fair value of $212,260. During
the period
ended December 31, 2006, the Company issued 450,000 shares of common
stock at a
purchase price of $0.10 per share pursuant to a private placement made
pursuant
to Rule 506 of Regulation D promulgated under section 4(2) of the Securities
Act
of 1933, as amended.
|
4.
|
RENTAL
LEASE
|
|
The
Company renewed its lease for a six month term expiring on
May 1, 2008.
The rent paid for the years ended December 31, 2007 and 2006
were $6,158
and $3,960.
|
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
|
5.
|
INTANGIBLE
ASSETS
|
|
Intangible
assets that have finite useful lives continue to be amortized
over their
useful lives, and are reviewed for impairment when warranted
by economic
condition.
|
|
|
Useful
Lives
|
|
2007
|
|
2,006
|
|||||
|
Patents-gross
|
$
|
7,306
|
$
|
-
|
||||||
|
Less
accumulated amortization
|
20
years
|
41
|
-
|
|||||||
|
$
|
7,265
|
$
|
-
|
|||||||
|
6.
|
INCOME
TAXES
|
|
The
Company files income tax returns in the U.S. Federal jurisdiction,
and the
state of California.
|
|
The
Company adopted the provisions of FASB Interpretation No. 48,
Accounting
for Uncertainty in Income Taxes, on January 1, 2007. As a result
of the
implementation of interpretation 48, there has been no effect
on the
Company’s retained deficit. A reconciliation of the beginning and ending
amount of unrecognized tax benefits is as
follows:
|
|
Balance
at June 1, 2007
|
$
|
-
|
||
|
Additions
based on tax positions related to the current year
|
-
|
|||
|
Balance
at December 31, 2007
|
$
|
-
|
|
Included
in the balance at December 31, 2007, are no tax positions for
which the
ultimate deductibility is highly certain but for which there
is
uncertainty about the timing of such deductibility. Because
of the impact
of deferred tax accounting, other than interest and penalties,
the
disallowance of the shorter deductibility period would not
affect the
annual effective tax rate but would accelerate the payment
of cash to the
taxing authority to an earlier
period.
|
|
The
Company's policy is to recognize interest accrued related to
unrecognized
tax benefits in interest expense and penalties in operating
expenses.
During the period ended December 31, 2007, the Company did
not recognize
interest and penalties.
|
|
7.
|
DEFERRED
TAX BENEFIT
|
|
At
December 31, 2007, the Company had net operating loss carry-forwards
of
approximately $847,674, which expire at dates that have not
been
determined. No tax benefit has been reported in the December
31, 2007
financial statements since the potential tax benefit is offset
by a
valuation allowance of the same
amount..
|
|
A
reconciliation of income tax expense that would result from
applying the
U.S. Federal and State rate of 40% to pretax income from continuing
operations for the year ended December 31, 2007, with federal
income tax
expense presented in the financial statements is as
follows:
|
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
DECEMBER
31, 2007
| 7. |
DEFERRED
TAX BENEFIT (continued)
|
|
2007
|
||||
|
Income
tax benefit computed at U.S. Federal
|
||||
|
statutory
rate of 34%
|
$
|
(288,209
|
)
|
|
|
State
Income taxes, net of benefit of federal taxes
|
(50,860
|
)
|
||
|
R&D
|
3,650
|
|||
|
Non
deductible stock compensation
|
84,904
|
|||
|
Other
|
442
|
|||
|
Valuation
Allowance
|
250,073
|
|||
|
Income
tax expense
|
$
|
-
|
||
|
Deferred
taxes are provided on a liability method whereby deferred tax
assets are
recognized for deductible differences and operating loss and
tax credit
carry-forwards and deferred tax liabilities are recognized
for taxable
temporary differences. Temporary differences are the difference
between
the reported amounts of assets and liabilities and their tax
bases.
Deferred tax assets are reduced by a valuation allowance when,
in the
opinion of management, it is more likely than not that some
portion or all
of the deferred tax assets will not be realized. Deferred tax
assets and
liabilities are adjusted for the effects of changes in tax
laws and rates
on the date of enactment.
|
|
Deferred
taxes are provided on a liability method whereby deferred tax
assets are
recognized for deductible differences and operating loss and
tax credit
carry-forwards and deferred tax liabilities are recognized
for taxable
temporary differences. Temporary differences are the difference
between
the reported amounts of assets and liabilities and their tax
bases.
|
|
Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of
management, it is more likely than not that some portion or
all of the
deferred tax assets will not be realized. Deferred tax assets
and
liabilities are adjusted for the effects of changes in tax
laws and rates
on the date of enactment.
|
Net
deferred tax liabilities consist of the following components as of December
31,
2007:
|
2007
|
||||
|
Deferred
tax assets:
|
||||
|
NOL
carryover
|
$
|
847,674
|
||
|
R
& D credit
|
3,650
|
|||
|
Deferred
tax liabilites:
|
||||
|
Depreciation
|
(79
|
)
|
||
|
Less
Valuation Allowance
|
(851,245
|
)
|
||
|
Net
deferred tax asset
|
$
|
-
|
||
|
Due
to the change in ownership provisions of the Tax Reform Act
of 1986, net
operating loss carry-forwards for Federal income tax reporting
purposes
are subject to annual limitations. Should a change in ownership
occur, net
operating loss carryforwards may be limited as to use in future
years.
|
F-12