NewHydrogen, Inc. - Annual Report: 2009 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
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x
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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FOR THE
FISCAL YEAR ENDED DECEMBER 31,
2009
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¨
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TRANSITION
REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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FOR THE
TRANSITION PERIOD FROM __________ TO
__________
COMMISSION
FILE NUMBER:
333-138910
BIOSOLAR,
INC.
(Name of
registrant in its charter)
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NEVADA
(State or other jurisdiction of incorporation or
organization)
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20-4754291
(I.R.S. Employer Identification No.)
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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 if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act. Yes ¨ 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 ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such
files). Yes ¨ No ¨
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. ¨
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.
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Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ¨(Do not check if smaller
reporting company)
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Smaller
reporting company x
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ¨ 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 June 30, 2009 was $18,800,956.
The
number of shares of registrant’s common stock outstanding, as of March 19, 2010
was 147,766,777.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE
OF CONTENTS
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Page
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PART I
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Item
1.
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Description
of Business
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3
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Item
1A.
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Risk
Factors
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6
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Item
2.
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Properties
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10
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Item
3.
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Legal
Proceedings
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10
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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10
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PART II
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Item
5.
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Market
for Common Equity and Related Stockholder Matters
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10
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Item
6.
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Selected
Financial Data
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12
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Item
7.
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Management’s
Discussion and Analysis or Plan of Operation
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12
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Item
8.
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Financial
Statements and Supplementary Data
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14
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Item
9.
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Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosure
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14
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Item
9A.
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Controls
and Procedures
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15
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Item
9B.
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Other
Information
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15
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PART III
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Item
10.
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Directors,
Executive Officers, Promoters and Control Persons;
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Compliance
With Section 16(a) of the Exchange Act
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16
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Item
11.
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Executive
Compensation
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18
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management
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and
Related Stockholder Matters
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19
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Item
13.
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Certain
Relationship and Related Transactions
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20
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Item
14.
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Principal
Accountant Fees and Services
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20
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Item
15.
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Exhibits
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21
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SIGNATURES
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22
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2
PART
I
ITEM
1. DESCRIPTION OF
BUSINESS.
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
modules. 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 module 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
module 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.
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).
3
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 structure 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 multiple versions of our bio-based backsheet, and the
company’s first product went into limited production state in late
2009. Our line of BioSolar Backsheets (BioBacksheetTM), based
on the company’s proprietary materials technology, is designed for C-Si solar
cell module manufacturers as well as for thin film solar module 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
significantly reduce cost over traditional backsheet
materials. The company’s first BioBacksheetTM is
currently in a limited production stage.
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 this product in various forms.
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. BioBacksheetTM, the
company’s first commercially available product is in a limited production stage
and two additional versions of BioBacksheetTM which
enhanced capabilities are scheduled to start production during
2010. Other related products are in the research and development
stage.
We intend
to market our bio-based solar module 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.
4
Our
marketing strategy is to market to potential manufacturing partners in our
target markets representing photovoltaic module 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 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
BioBacksheet within the company, nor do we have adequate financing to undertake
these efforts on our own. We will be outsourcing manufacturing and distribution
efforts to contract manufacturing and distributions firms.
Intellectual
Property
On
October 22, 2008, we filed a patent to protect the intellectual property rights
for “Phovoltaic Laminated Module Backsheet, Films and Coatings for Use in Module
Backsheet, and Processes for Making the Same”, application number
12/256,176. The inventors listed on the patent application are
Stanley Levy, the company’s Chief Technology officer, and Josh
Cottrell. The company is listed as the assignee. As of the
date of this 10K, we are awaiting the US Patent and Trademark Office to complete
their review of our application. This patent protection also has been
sought through the World Intellectual Property Organization with the Patent
Cooperation Treaty (PCT) to ensure full protection outside of the U.S. on the
BioBacksheet technology. The PCT has been ratified by most of the
industrialized countries in the world, including the United States, most of
Europe, Russia and the former Soviet Republics, Japan, China, Korea and
India.
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.
5
EMPLOYEES
As of
March 11, 2010 we had two (2) full time employees. We have not experienced any
work stoppages and we consider relations with our employees to be
good.
ITEM
1A. RISK FACTORS
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, 2009, we
incurred a net loss of $2,714,314. 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.
6
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.
7
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 38.2% 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.
WORLDWIDE
ECONOMIC CONDITIONS MAY IMPACT OUR FINANCIAL CONDITION AND OPERATING
RESULTS.
In recent
months, worldwide economic conditions have deteriorated significantly in the
United States and other countries, and may remain depressed for the foreseeable
future. These conditions make it difficult for us to accurately forecast and
plan future business activities, and could cause us to slow or reduce spending
on our research and development activities. Furthermore, during challenging
economic times, we may face issues gaining timely access to financings or
capital infusion, which could result in an impairment of our ability to continue
our business activities. We cannot predict the timing, strength or duration of
any economic slowdown or subsequent economic recovery, worldwide, in the United
States, or in our industry. These and other economic factors could have a
material adverse effect on our financial condition and operating
results.
Risks
Related 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.
8
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.
Securities
traded on the Over-The-Counter Bulletin Board must be registered with the
Securities and Exchange Commission and the issuer must be current
with its filings pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1933, as amended 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:
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that
a broker or dealer approve a person's account for transactions in penny
stocks; and
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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.
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In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:
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obtain
financial information and investment experience objectives of the person;
and
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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.
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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:
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sets forth the basis on which the broker or dealer made the suitability determination; and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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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.
9
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.
ITEM
2. PROPERTIES.
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,
2010. Our monthly lease payment is $534. The size of our office is 144 square
feet.
ITEM
3. LEGAL PROCEEDINGS.
ITEM
4. RESERVED
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
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 2010
|
Fiscal 2009
|
Fiscal 2008
|
||||||||||||||||||||||
|
Quarter Ended
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
||||||||||||||||||
|
March
31
|
$ | 0.16 | $ | 0.10 | ** | $ | 0.22 | $ | 0.111 | $ | 1.58 | $ | 0.38 | |||||||||||
|
June
30
|
$ | 0.27 | $ | 0.105 | $ | 0.62 | $ | 0.38 | ||||||||||||||||
|
September
30
|
$ | 0.22 | $ | 0.15 | $ | 0.47 | $ | 0.32 | ||||||||||||||||
|
December
31
|
$ | 0.18 | $ | 0.12 | $ | 0.34 | $ | 0.12 | ||||||||||||||||
*Our
common stock became eligible for quotation on the NASD's OTC Bulletin Board on
February 22, 2007.
** Through March 19,
2010
10
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 therefore. 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 19, 2010, our common stock was held by 111 stockholders of record and we
had 147,766,777 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.
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.
Securities
Authorized for Issuance Under Equity Compensation Plan
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, 2009.
EQUITY
COMPENSATION PLAN INFORMATION
|
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
Weighted average
exercise price of
outstanding
options,
warrants and
rights
|
Number of
securities
remaining available
for future issuance
under equity
compensation plans
(excluding
securities reflected
in column (a)
|
||||||
|
(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, 2009, the Company issued 14,400,000 shares of common
stock, at a price of $0.05 per share through a private
placement.
The above
offerings and sales were deemed or determined by the Company 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 offering and sales were made to a limited number of persons, all
of whom were accredited investors, business associates of the Company or
executive officers of the Company and transfer was restricted by the Company 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.
11
ITEM
6. SELECTED FINANCIAL DATA
N/A
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION.
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.
12
RESULTS
OF OPERATIONS - YEAR ENDED DECEMBER 31, 2009 COMPARED TO THE YEAR ENDED DECEMBER
31, 2008
SELLING
AND MARKETING EXPENSES
Selling
and Marketing Expenses ("S&M") expenses decreased by $179,044 or 61.42% to
$112,443 for the year ended December 31, 2009, compared to $291,487 for the
prior year. The decrease in S&M expenses was a result of a decrease in
consulting fees of $98,900 due to the Company utilizing less advisory services
for assessing markets for energy technologies, and a decrease in marketing
expenses of $82,074 was due to less media exposure in the current
year.
GENERAL
AND ADMINISTRATIVE EXPENSES
General
and administrative ("G&A") expenses decreased by $14,822 or 3.08% to
$466,777 for the year ended December 31, 2009, compared to $481,599 for the
prior year. This decrease in G&A expenses was the result of a decrease in
professional fees of $7,383 due to lower cost for registering shares, and a
decrease of $7,950 in travel and professional development.
RESEARCH
AND DEVELOPMENT
Research
and Development ("R&D") costs decreased by $127,775 or 67.08%, to $62,706
for the year ended December 31, 2009 compared to $190,481 for the prior year.
This decrease in R&D costs was the result of a decrease in consulting fees
and materials. The Company is in the testing phase of its new technology, which
required less labor and materials.
NET
LOSS
Net
Loss decreased by $(303,045), or 31.98%, to $(644,601) for the year ended
December 31, 2009, compared to $(947,646) for the prior year. This
decrease in net loss was the result of a decrease in overall operating expenses.
Currently the Company is in its development stage and has no
revenues.
LIQUIDITY
AND CAPITAL RESOURCES
As
of December 31, 2009, we had $462,726 of working capital as compared to $418,211
for the prior year. This increase of $44,515 was due primarily to equity
financing and less liabilities.
During
the year ended December 31, 2009, the Company used $652,111 of cash for
operating activities, as compared to $862,011 for the prior year. The decrease
of $209,900 in the use of cash for operating activities was a result of a
decrease in net loss of $303,045 due to a reduction of overall operating
expenses. There were no shares issued for services in the current year compared
to $25,000 issued in the prior year to outside consultants. The decrease in
inventory of $7,694 was due to utilizing the inventory on hand of $24,770 from
the prior year for research and development of the technology. The prepaid
expenses increased by $(3,678) due to legal fees for the current year compared
to a decrease of $71,594 for consulting fees in the prior year. Accounts payable
decreased by $(18,267) due to a reduction in cost to consultants for research
and development compared to an increase of $20,800 for the prior
year.
Cash
provided by investing activities was $187,949 for the year ended December 31,
2009 as compared to cash provided of $164,918 for the prior year. The increase
of cash provided by investing activities for the amount of $23,031 was primarily
due to a decrease of $79,962 in the purchase of fixed and intangible assets, and
proceeds of $(56,931) transferred from certificate of deposits.
13
Cash
provided from financing activities during the year ended December 31, 2009 was
$720,000 as compared to $390,000 for the prior year. Our capital needs have
primarily been met from the proceeds of private placements, as we are currently
in the development stage and have no revenues.
Our financial statements as of December
31, 2009 have been prepared under the assumption that we will continue as a
going concern from inception (April 24, 2006) through December 31, 2009. Our
independent registered public accounting firm has issued their report dated
March 24, 2010 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 related sectors by
2011.
Our plan
of operation within the next twelve months is to utilize our cash balances to
fully commercialize our bio-based backsheet component (BioBacksheetTM) to
replace the petroleum based backsheet in crystalline photovoltaic modules. In
addition, we intend to further enhance test programs to determine the physical
properties and characteristics that will be most suitable for the further
development of biobased solar module 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 four months.
Management estimates that it will require additional cash resources during 2010,
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.
ITEM
8. FINANCIAL STATEMENTS.
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.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
14
ITEM
9A
(T). CONTROLS
AND PROCEDURES.
Evaluation of Disclosure
Controls and Procedures.
We maintain "disclosure controls and
procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures,
management recognized that disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable assurance that the
objectives of the disclosure controls and procedures are met. Additionally, in
designing disclosure controls and procedures, our management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures. The design of any disclosure
controls and procedures also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions.
Management’s
Report of Internal Control over Financial Reporting.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as such term is defined in Exchange Act Rule
13a - 15(f). Our internal control system was designed to provide reasonable
assurance to our management and the Board of Directors regarding the preparation
and fair presentation of published financial statements. All internal control
systems, no matter how well designed have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation. Our management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, our management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") in Internal Control - Integrated Framework - Guidance for
Smaller Public Companies (the COSO criteria). Based on our assessment we believe
that, as of December 31, 2009, our internal control over financial reporting is
effective based on those criteria.
This
annual report does not include an attestation report by HJ Associates &
Consultants, LLP, our independent registered public accounting firm, regarding
internal control over financial reporting. Management’s report was
not subject to attestation by the Company’s independent registered public
accounting firm pursuant to temporary rules of the SEC that permits the Company
to only provide management’s report in this Form 10-K.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting that occurred
during the year ended December 31, 2009 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM
9B. OTHER
INFORMATION.
None.
15
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.
The
following table sets forth information about our executive officers, key
employees and directors.
|
Name
|
Age
|
Position
|
|
David
Lee
|
50
|
Chief
Executive Officer, Acting Chief Financial Officer and
Dirctor
|
|
Stanley
Levy
|
71
|
Vice
President and Chief Technology Officer
|
|
Steven
C. Bartling
|
47
|
Director
|
|
Dennis
LePon
|
62
|
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. Currently, our directors 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 and Director of the Company since
inception (April 24, 2006). 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 of the Company since August 2007. 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.
16
Steven C. Bartling – Director
since May 11, 2006: Steven C. Bartling has over 25 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. We
concluded that Mr. Bartling’s wealth of technical and business experience he
gained through his successful technical and corporate management career made him
qualified to serve on the Board of Directors. Mr. Bartling does not
currently hold any other directorship.
Dennis LePon – Director since
May 11, 2006: 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. We concluded that Mr. LePon’s strong financial
and business experience he gained throughout his successful financial and
corporate management career made him qualified to serve on the Board of
Directors. Mr. LePon does not currently hold any other
directorship.
COMMITTEES
OF THE BOARD
We
currently have no audit committee, compensation committee, nominations and
governance committee of our board of directors. We do not have an audit committee financial
expert.
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 for the year ended December 31, 2008 filed with the
Securities and Exchange Commission on March 25, 2008. The Company
will provide to any person without charge, upon request to the Company at its
office, a copy of the Code of Ethics. 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.
LEGAL
PROCEEDINGS
To our
knowledge, during the past ten years, none of our directors, executive officers,
promoters, control persons, or nominees has been:
|
|
·
|
the
subject of any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that
time;
|
17
|
|
·
|
convicted in a criminal
proceeding or is subject to a pending criminal proceeding (excluding
traffic violations and other minor
offenses);
|
|
|
·
|
subject to any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction or any Federal or State authority, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking
activities;
|
|
|
·
|
found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law.
|
|
|
·
|
the subject of, or a party to,
any Federal or State judicial or administrative order, judgment, decree,
or finding, not subsequently reversed, suspended or vacated, relating to
an alleged violation of (a) any Federal or State securities or commodities
law or regulation; (b) any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a
temporary or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or (c) any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity;
or
|
the
subject of, or a party to, any sanction or order, not subsequently reversed,
suspended or vacated, of any self-regulatory organization (as defined in Section
3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))),
or any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
ITEM
11. EXECUTIVE
COMPENSATION.
The
following table summarizes all compensation recorded by us in each of the last
two completed fiscal years for our principal executive officer, our two most
highly compensated executive officers other than the Company’s principal
executive officer, and up to two additional individuals for whom disclosure
would have been made in this table but for the fact that the individual was not
serving as an executive officer of our company at December 31, 2009.
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
Non-
Qualified
Deferred
Compensation
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||||
|
David
Lee - CEO and
|
2009
|
$ | 144,000 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 144,000 | |||||||||||||||||||||||
|
Acting
CFO
|
2008
|
$ | 144,000 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 144,000 | |||||||||||||||||||||||
|
Stanley
Levy – CTO
|
2009
|
$ | 132,000 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 132,000 | |||||||||||||||||||||||
|
2008
|
$ | 132,000 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 132,000 | ||||||||||||||||||||||||
Employment
Agreements
The
Company currently has no employment agreements with its executive
officers.
Employee
Benefit Plans
The
Company currently has no health plan for its employees.
18
Stock
Option Plan
The
Company has no stock option plan.
Election
and Compensation of Directors
The
Directors of the Company are elected by the vote of a majority in interest of
the holders of the voting stock of the 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.
The Company’s directors currently do
not receive monetary compensation for their service on the Board of
Directors. Directors may receive compensation for their services in
the future and reimbursement for their expenses as shall be determined from time
to time by resolution of the Board.
The
following table sets forth, as of March 19, 2010, 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 19, 2010 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 19, 2010 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 | 33.5 | % | ||||||
|
Common
Stock
|
Stanley
Levy
|
5,000,000 | 3.4 | % | ||||||
|
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 | 38.2 | % | ||||||
19
*Less
than one percent.
(i) Based
upon 147,766,777 shares issued and outstanding as of March 19,
2010.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
There
were no material related party transactions which we entered into from inception (April 24, 2006) to December 31, 2009.
Director
Independence
Director
is independent as that term is defined under the NASDAQ Marketplace
Rules.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit
Fees
Audit-Related
Fees
We did
not incur assurance and audit-related fees during 2009 and 2008, to HJ
Associates & Consultants, LLP in connection with the audit of our financial
statements from April 24, 2006 (Inception) through December 31, 2009 for the
reviews of registration statements and issuance of related consents and
assistance with SEC comment letters.
Tax
Fees
We did
not incur fees for tax compliance, tax advice, or tax planning for the fiscal
year ended December 31, 2009 and December 31, 2008, 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.
20
ITEM
15. EXHIBITS.
|
Description
|
||
|
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 ( Incorporated by reference to the Company’s annual report on
Form 10-K filed with the SEC on March 25, 2008)
|
|
|
31.1
|
Certification
by Chief Executive Officer and Acting Chief Financial Officer pursuant to
Sarbanes-Oxley Section 302 (filed herewith).
|
|
|
32.1
|
Certification
by Chief Executive Officer and Acting Chief Financial Officer pursuant to
18 U.S.C. Section 1350 (filed
herewith).
|
21
SIGNATURES
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 24,
2009.
|
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
|
CHIEF
EXECUTIVE OFFICER
|
MARCH
24, 2010
|
|||
|
DAVID
LEE
|
(PRINCIPAL
EXECUTIVE OFFICER),
ACTING
CHIEF FINANCIAL OFFICER
|
||||
|
(PRINCIPAL
ACCOUNTING AND
|
|||||
|
FINANCIAL
OFFICER) AND
|
|||||
|
CHAIRMAN
OF THE BOARD
|
MARCH 24,
2010
|
||||
|
/s/
STEVEN C.
BARTLING
|
DIRECTOR
|
||||
|
STEVEN
C. BARTLING
|
MARCH 24,
2010
|
||||
|
/S/
DENNIS LEPON
|
DIRECTOR
|
||||
|
DENNIS
LEPON
|
MARCH 24,
2010
|
||||
22
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors
BioSolar,
Inc.
(A
Development Stage Company)
Santa
Clarita, California
We have
audited the accompanying balance sheets of BioSolar, Inc. (a development stage
company) as of December 31, 2009 and 2008, and the related statements of
operations, stockholders’ equity and cash flows for each of the two years in the
period ended December 31, 2009, and from inception of the development stage on
April 24, 2006 through December 31, 2009. 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 audits 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. (a development stage
company) as of December 31, 2009 and 2008, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2009,
and from inception of the development stage on April 24, 2006 through December
31, 2009, 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 does not generate revenue, and has
negative cash flows from operations. This raises substantial doubt about
the Company's
ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1 to the financial
statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
We were
not engaged to examine management's assessment of the effectiveness of BioSolar,
Inc’s (a development stage company) internal control over financial reporting as
of December 31, 2009 and, accordingly, we do not express an opinion
thereon.
HJ
Associates & Consultants, LLP
Salt Lake
City, UT
March 24,
2010
F-1
BIOSOLAR,
INC.
(A
Development Stage Company)
BALANCE SHEETS
|
December 31, 2009
|
December 31, 2008
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
& cash equivalents
|
$ | 289,229 | $ | 33,391 | ||||
|
Certificates
of deposits
|
147,288 | 372,112 | ||||||
|
Inventory,
raw materials
|
17,076 | 24,770 | ||||||
|
Prepaid
expenses
|
12,416 | 8,738 | ||||||
|
TOTAL
CURRENT ASSETS
|
466,009 | 439,011 | ||||||
|
PROPERTY
AND EQUIPMENT
|
||||||||
|
Machinery
and equipment
|
74,643 | 49,130 | ||||||
|
Computer
|
1,978 | 1,978 | ||||||
| 76,621 | 51,108 | |||||||
|
Less
accumulated depreciation
|
(10,638 | ) | (4,647 | ) | ||||
|
NET
PROPERTY AND EQUIPMENT
|
65,983 | 46,461 | ||||||
|
OTHER
ASSETS
|
||||||||
|
Patents,
net of amortization of $40
|
86,334 | 74,972 | ||||||
|
Deposit
|
770 | 770 | ||||||
|
TOTAL
OTHER ASSETS
|
87,104 | 75,742 | ||||||
|
TOTAL
ASSETS
|
$ | 619,096 | $ | 561,214 | ||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 2,533 | $ | 20,800 | ||||
|
Accrued
expense
|
750 | - | ||||||
|
TOTAL
CURRENT LIABILITIES
|
3,283 | 20,800 | ||||||
|
SHAREHOLDERS'
EQUITY
|
||||||||
|
Common
stock, $0.0001 par value;
|
||||||||
|
500,000,000
authorized common shares
|
||||||||
|
147,766,777
and 133,366,777 shares issued and outstanding,
respectively
|
14,776 | 13,336 | ||||||
|
Additional
paid in capital
|
3,315,351 | 2,596,791 | ||||||
|
Deficit
accumulated during the development stage
|
(2,714,314 | ) | (2,069,713 | ) | ||||
|
TOTAL
SHAREHOLDERS' EQUITY
|
615,813 | 540,414 | ||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 619,096 | $ | 561,214 | ||||
F-2
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS OF OPERATIONS
|
From Inception
|
||||||||||||
|
April 24, 2006
|
||||||||||||
|
Year Ended
|
through
|
|||||||||||
|
December 31, 2009
|
December 31, 2008
|
December 31, 2009
|
||||||||||
|
REVENUE
|
$ | - | $ | - | $ | - | ||||||
|
OPERATING
EXPENSES
|
||||||||||||
|
Selling
and marketing expenses
|
112,443 | 291,487 | 724,402 | |||||||||
|
General
and administrative expenses
|
466,777 | 481,599 | 1,600,006 | |||||||||
|
Research
and development
|
62,706 | 190,481 | 463,371 | |||||||||
|
Depreciation
and amortization
|
5,991 | 3,618 | 10,678 | |||||||||
|
TOTAL
OPERATING EXPENSES
|
647,917 | 967,185 | 2,798,457 | |||||||||
|
LOSS
FROM OPERATIONS BEFORE OTHER INCOME
|
(647,917 | ) | (967,185 | ) | (2,798,457 | ) | ||||||
|
TOTAL
OTHER INCOME
|
||||||||||||
|
Interest
income
|
4,116 | 20,339 | 86,543 | |||||||||
|
LOSS
BEFORE PROVISION FOR TAXES
|
(643,801 | ) | (946,846 | ) | (2,711,914 | ) | ||||||
|
Income
taxes
|
(800 | ) | (800 | ) | (2,400 | ) | ||||||
|
NET
LOSS
|
$ | (644,601 | ) | $ | (947,646 | ) | $ | (2,714,314 | ) | |||
|
BASIC
AND DILUTED LOSS PER SHARE
|
$ | (0.00 | ) | $ | (0.01 | ) | ||||||
|
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING BASIC AND DILUTED
|
138,258,832 | 132,402,777 | ||||||||||
F-3
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS OF STOCKHOLDER’S
EQUITY
|
Deficit
|
||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||
|
Additional
|
during the
|
|||||||||||||||||||||||
|
Common stock
|
Paid-in
|
Subscription
|
Development
|
|||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Payable
|
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 | ||||||||||||||||||
|
Issuance
of common shares in June 2008 for cash
|
||||||||||||||||||||||||
|
(520,000
common shares issued at $0.25 per share )
|
520,000 | 52 | 129,948 | - | 130,000 | |||||||||||||||||||
|
Issuance
of common shares in July 2008 for cash
|
||||||||||||||||||||||||
|
(440,000
common shares issued at $0.25 per share )
|
440,000 | 44 | 109,956 | - | 110,000 | |||||||||||||||||||
|
Issuance
of common shares in August 2008 for cash
|
||||||||||||||||||||||||
|
(80,000
common shares issued at $0.25 per share )
|
80,000 | 8 | 19,992 | - | 20,000 | |||||||||||||||||||
|
Issuance
of common shares in September 2008 for cash
|
||||||||||||||||||||||||
|
(520,000
common shares issued at $0.25 per share )
|
520,000 | 52 | 129,948 | - | 130,000 | |||||||||||||||||||
|
Issuance
of common shares in October 2008 for services
|
||||||||||||||||||||||||
|
(100,000
common shares issued at $0.25 per share )
|
100,000 | 10 | 24,990 | - | 25,000 | |||||||||||||||||||
|
Net
Loss for the year ended December 31, 2008
|
- | - | - | (947,646 | ) | (947,646 | ) | |||||||||||||||||
|
Balance
at December 31, 2008
|
133,366,777 | 13,336 | 2,596,791 | - | (2,069,713 | ) | 540,414 | |||||||||||||||||
|
Common
stock subscription payable
|
- | - | - | 203,000 | - | 203,000 | ||||||||||||||||||
|
Issuance
of common shares in September 2009 for cash
|
||||||||||||||||||||||||
|
(4,060,000
common shares issued at $0.05 per share )
|
4,060,000 | 406 | 202,594 | (203,000 | ) | - | - | |||||||||||||||||
|
Issuance
of common shares in September 2009 for cash
|
||||||||||||||||||||||||
|
(3,200,000
common shares issued at $0.05 per share )
|
3,200,000 | 320 | 159,680 | - | - | 160,000 | ||||||||||||||||||
|
Issuance
of common shares in September 2009 for cash
|
||||||||||||||||||||||||
|
(7,140,000
common shares issued at $0.05 per share )
|
7,140,000 | 714 | 356,286 | - | - | 357,000 | ||||||||||||||||||
|
Net
Loss for the year ended December 31, 2009
|
- | - | - | (644,601 | ) | (644,601 | ) | |||||||||||||||||
|
Balance
at December 31, 2009
|
147,766,777 | $ | 14,776 | $ | 3,315,351 | $ | - | $ | (2,714,314 | ) | $ | 615,813 | ||||||||||||
F-4
BIOSOLAR,
INC.
(A
Development Stage Company)
STATEMENTS OF CASH FLOWS
|
From
Inception
|
||||||||||||
|
April
24, 2006
|
||||||||||||
|
Year
Ended
|
through
|
|||||||||||
|
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
|
Net
loss
|
$ | (644,601 | ) | $ | (947,646 | ) | $ | (2,714,314 | ) | |||
|
Adjustment
to reconcile net loss to net cash used in operating
activities
|
||||||||||||
|
Depreciation
expense
|
5,991 | 3,618 | 8,755 | |||||||||
|
Issuance
of stock for services
|
- | 25,000 | 237,260 | |||||||||
|
Changes
in Assets and Liabilities
|
||||||||||||
|
(Increase)
Decrease in:
|
||||||||||||
|
Inventory
|
7,694 | (24,770 | ) | (20,338 | ) | |||||||
|
Prepaid
expenses
|
(3,678 | ) | 71,594 | (17,034 | ) | |||||||
|
Deposits
|
- | - | (770 | ) | ||||||||
|
Increase
(Decrease) in:
|
||||||||||||
|
Accounts
payable
|
(18,267 | ) | 20,800 | 2,785 | ||||||||
|
Accrued
expenses
|
750 | (9,612 | ) | - | ||||||||
|
Credit
card payable
|
- | (995 | ) | 703 | ||||||||
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(652,111 | ) | (862,011 | ) | (2,502,953 | ) | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
|
Purchase
of equipment
|
(25,513 | ) | (49,130 | ) | (76,621 | ) | ||||||
|
Patent
expenditures
|
(11,362 | ) | (67,707 | ) | (86,280 | ) | ||||||
|
Proceeds
from /(investments in) certificate of deposits
|
224,824 | 281,755 | (146,862 | ) | ||||||||
|
NET
CASH (USED)/PROVIDED IN INVESTING ACTIVITIES
|
187,949 | 164,918 | (309,763 | ) | ||||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Proceeds
from common stock subcription payable
|
203,000 | - | 203,000 | |||||||||
|
Proceeds
from issuance of common stock
|
517,000 | 390,000 | 2,889,867 | |||||||||
|
NET
CASH PROVIDED IN FINANCING ACTIVITIES
|
720,000 | 390,000 | 3,092,867 | |||||||||
|
NET
INCREASE/(DECREASE) IN CASH
|
255,838 | (307,093 | ) | 280,151 | ||||||||
|
CASH,
BEGINNING OF PERIOD
|
33,391 | 340,484 | - | |||||||||
|
CASH,
END OF PERIOD
|
289,229 | 33,391 | 280,151 | |||||||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||||
|
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
|
Taxes
paid
|
$ | 800 | $ | 800 | $ | 2,400 | ||||||
SUPPLEMENTAL
SCHEDULE OF NON-CASH TRANSACTIONS
During
the year ended December 31, 2008, the Company issued 100,000 shares of common
stock for services at a fair value of $25,000.
F-5
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
|
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 module component
technology .
Line of
Business
The
Company is currently in the stage of developing an innovative technology to
produce bio-based photovoltaic components from renewable plant sources that will
reduce the cost per watt of Photovoltaic solar cells. The bio-based photovoltaic
components will be directly marketed 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 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, 2009. 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, 2009, had no revenues. A development stage activity is 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.
F-6
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
|
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 straight line over
their estimated useful lives:
|
Computer
equipment
|
5 Years
|
|
Machinery &
equipment
|
10
Years
|
Fair Value of Financial
Instruments
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, 2009 and 2008, the
amounts reported for cash, inventory, prepaid expenses, accounts payable, and
accrued expenses, approximate the fair value because of their short
maturities.
Loss per Share
Calculations
Loss per
Share dictates the calculation of basic earnings per share and diluted earnings
per share. Basic earnings per share are 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 years ended December 31, 2009 and 2008, as
the inclusion of any potential shares would have had an anti-dilutive effect due
to the Company generating a loss.
Income
Taxes
The
Company uses the liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry-forwards. The measurement of deferred tax
assets and liabilities is based on provisions of applicable tax
law. The measurement of deferred tax assets is reduced, if necessary,
by a valuation allowance based on the amount of tax benefits that, based on
available evidence, is not expected to be realized.
Research and
Development
Research
and development costs are expensed as incurred. Total research and
development costs were $62,706 and $190,481 for the years ended December 31,
2009 and 2008, respectively.
F-7
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Advertising
Costs
The
Company expenses the cost of advertising and promotional materials when
incurred. Total advertising costs were $18,430 and $16,500 for the
years ended December 31, 2009 and 2008, respectively.
Stock based
Compensation
Share
based payments 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. 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 share based compensation has no material
impact on our results of operations.
Recently Issued Accounting
Pronouncements
|
|
Management
reviewed accounting pronouncements issued during the three months ended
December 31, 2009, and no pronouncements were adopted during the
period.
|
|
3.
|
CAPITAL
STOCK
|
During
the year ended December 31, 2009, the Company issued 14,400,000 shares of common
stock at a purchase price of $0.05 per share for cash in the amount of
$720,000, through a private placement made pursuant to Rule 506 of
Regulation D promulgated under section 4(2) of the Securities Act of 1933, as
amended. During the period ended December 31, 2009. During the year ended
December 31, 2008, the Company issued 1,560,000 shares of common stock at a
price of $0.25 per share for cash in the amount of $390,000; 100,000 shares of
common stock issued for services at a fair value of $25,000.
|
4.
|
RENTAL
LEASE
|
|
|
The
Company renewed its lease for a one year term expiring on May 14, 2010,
with an option to renew for another 12 months. The rent paid for the years
ended December 31, 2009 and 2008 was $6,408, for each
year.
|
|
|
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
|
2009
|
2008
|
|||||||
|
Patents-gross
|
$ | 86,374 | $ | 75,012 | |||||
|
Less accumulated
amortization
|
20 years
|
40 | 40 | ||||||
| $ | 86,334 | $ | 74,972 | ||||||
|
|
As
of December 31, 2009 and 2008, no amortization has been expensed for the
patents, since approval of the patents are
pending.
|
F-8
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
|
6.
|
INCOME
TAXES
|
|
|
The
Company files income tax returns in the U.S. Federal jurisdiction, and the
state of California. With few exceptions, the Company is no longer subject
to U.S. federal, state and local, or non-U.S. income tax examinations by
tax authorities for years before
2007.
|
|
|
Deferred
income taxes have been provided by temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for tax purposes. To the extent allowed by
GAAP, we provide valuation allowances against the deferred tax assets for
amounts when the realization is uncertain.Included in the balances at
December 31, 2009 and 2008, 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 periods ended December 31, 2009 and 2008, the Company did not
recognize interest and penalties.
|
|
7.
|
DEFERRED
TAX BENEFIT
|
|
|
At
December 31, 2009, the Company had net operating loss carry-forwards of
approximately $2,700,000, which expire at dates that have not been
determined. No tax benefit has been reported in the December 31, 2009 and
2008 financial statements, since the potential tax benefit is offset by a
valuation allowance of the same
amount.
|
|
|
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pretax income from continuing
operations for the years ended December 31, 2009 and 2008 due to the
following:
|
|
2009
|
2008
|
|||||||
|
Book income
|
$ | (257,520 | ) | $ | (379,058 | ) | ||
|
State income
taxes
|
(320 | ) | (320 | ) | ||||
|
Depreciation
|
(1,760 | ) | (2,341 | ) | ||||
|
M & E
|
418 | 400 | ||||||
|
R&D
|
1,606 | 3,560 | ||||||
|
Valuation
Allowance
|
257,576 | 377,759 | ||||||
|
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.
|
F-9
BIOSOLAR,
INC.
(A
Development Stage Company)
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
|
|
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,
2009 and 2008:
|
2009
|
2008
|
|||||||
|
Deferred tax
assets:
|
||||||||
|
NOL
carryover
|
$ | 1,086,827 | $ | 817,800 | ||||
|
R & D
credit
|
24,502 | 8,900 | ||||||
|
Deferred tax
liabilites:
|
||||||||
|
Depreciation
|
(7,627 | ) | (2,283 | ) | ||||
|
Less Valuation
Allowance
|
(1,103,702 | ) | (824,417 | ) | ||||
|
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 carry-forwards may be limited as to use in future
years.
|
|
8.
|
SUBSEQUENT
EVENT
|
|
|
Management
has determined there are no subsequent events to be
reported.
|
F-10