UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
 
(Mark One)

x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
 
o
TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM __________ TO __________
 
COMMISSION FILE NUMBER: 333-138910

BIOSOLAR, INC.
(Name of registrant in its charter)

NEVADA
(State or other jurisdiction of incorporation or organization)
 
20-4754291
(I.R.S. Employer Identification No.)
 
27936 Lost Canyon Road, Suite 202, Santa Clarita, California 91387
(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (661) 251-0001

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act: Common Stock: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o  No  x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  o   No  x

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  o   Accelerated filer  o
   
Non-accelerated filer  o   Smaller reporting company  x
     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o   No  x
 
The aggregate market value of the common stock held by non-affiliates of the registrant, based upon the last sale price of the common stock reported on the OTC-Bulletin Board on December 31, 2007 was $0.96.
 
The number of shares of registrant’s common stock outstanding, as of March 12, 2008 was 131,706,777.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
None.
 
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TABLE OF CONTENTS

   
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3

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 cells. Most of the solar industry is focused on photovoltaic efficiency to reduce cost, but we are introducing a new dimension of cost reduction by replacing petroleum-based plastic solar cell components with durable bio-based components. The process for producing electricity from sunlight is known as Photovoltaics. Photovoltaic ("PV") is the science of capturing and converting sun light into electricity.

We are focusing our research and product development efforts on producing bio-based components that meet the thermal and durability requirements of current solar cell manufacturing processes for conventional crystalline cell designs as well as thin film PV devices in an effort to capitalize on what we perceive as cost advantages to current petroleum based solar cell components.

We are focusing our research and product development efforts on bio-based backsheets, substrates, superstrates, module and panel components.

Corporate Information and History

We were incorporated in the State of Nevada on April 24, 2006, as BioSolar Labs, Inc. Our name was changed to BioSolar, Inc. on June 8, 2006. Our principal executive offices are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita, California 91387, and our telephone number is (661) 251-0001. Our fiscal year end is December 31.  

Industry Overview  

The solar industry relies on two distinctly different solar energy technologies. Solar energy can be converted directly into electricity using photovoltaic devices or into heat by solar thermal devices. Photovoltaic devices convert sunlight directly into electricity through a photovoltaic (PV) cell, commonly called a solar cell, a non-mechanical device usually made from silicon alloys. Solar thermal devices, on the other hand, are typically used for directly heating swimming pools, heating water for domestic use, and space heating of buildings.
 
Our product development focus is based on photovoltaic technology, thus we are currently a part of the photovoltaic segment of the industry. "Photovoltaics" is derived from the words photo, meaning light, and voltaic, meaning voltage producing. Sunlight, not heat, fuels photovoltaic cells. The cells, made mostly of the semiconductor silicon, convert sunlight directly into electricity.

There remains a variety of techniques for manufacturing the coatings needed to create solar cells. Emerging thin film cell manufacturing holds much promise because the coatings use less silicon than traditional films and can be manufactured at low cost and in large volume.

The simplest cells power watches and calculators; more complex systems provide power to the electric grid, and provide electricity to pump water, power communications equipment, light homes and run appliances.

In photovoltaics, light particles called photons penetrate the cell and knock electrons free from the silicon atoms, creating an electric current. As long as light flows into the cell, electrons flow out of the cell. The cell does not use up its electons and lose power, similar to a battery, as it is a converter that turns one kind of energy (sun light) into another (flowing electrons).
 
 
Photovoltaic cells are typically combined into modules that hold about 40 cells. Ten such modules are mounted in photovoltaic arrays. Such arrays can be used to generate electricity for a single building or, in large numbers, for a power plant.

Stand-along photovoltaic systems produce power independently of the utility grid. In some off-the-grid locations, even one half kilometer from power lines, stand-alone photovoltaic systems can be more cost effective than extending power lines. They are especially appropriate for remote, environmentally sensitive areas, such as national parks, cabins, and remote homes.

In rural areas, small stand-alone solar arrays often power farm lighting, fence chargers for electric fences, and solar water pumps, which provide water for livestock. Some hybrid systems combine solar power with other power sources such as wind or diesel. Photovoltaic technology can be combined with construction materials and be built into a building rather than added on top of a building. In such building-integrated photovoltaics, photovoltaic systems are incorporated into or become elements of a building's structure.

Companies are manufacturing solar panels that look like construction materials, such as roof shingles. It is also possible to produce windows that have solar cells integrally constructed as part of the window surface or by placing thin films on the window.

Research and Development

BioSolar intends to produce robust bio-based components that meet the stringent thermal and durability requirements of current solar cell manufacturing processes. BioSolar materials are intended to be used directly in conventional manufacturing systems, such as injection molding and thin-film roll-to-roll, to create superstrate layer, substrate layer, backsheet as well as module and panel components.

We believe that one problem with the use of bio-based materials in solar cells is that these bio-based materials have much lower melting temperature and fragile molecular structurer than those of conventional petroleum based plastic materials. We have developed a proprietary manufacturing and materials process to enhance the characteristics of traditional bio-based materials -- turning them into robust and durable materials for solar applications

We are currently developing our bio-based backsheet, the company’s first product to be commercialized in 2008. Our line of BioSolar Backsheets, based on the company’s proprietary materials technology, is designed specifically for c-Si solar cell manufacturers. These backsheets will be available in rolls of film for direct use in lamination and roll-to-roll assembly systems. We believe that using BioSolar Backsheets can reduce cost up to 50% over traditional backsheet materials.
  
In addition, the company commenced a test program to determine the physical properties and characteristics that will be most suitable for commercially available solar cell devices, and build prototype solar cells, as we attempt to validate the commercial viability of our product.

Marketing Strategy

BioSolar, Inc. is developing a technology to produce bio-based materials from renewable plant sources that will reduce the cost per watt of solar cells.  Most of the solar industry is focused on photovoltaic efficiency to reduce cost.  BioSolar is the first company to introduce a new dimension of cost reduction by replacing petroleum-based plastic solar cell components with durable bio-based materials.   . This technology is in the research and development stage.

Once we complete our product development, we intend to market our bio-based solar cell components directly to photovoltaic module manufacturers. In order to create a favorable environment for sales, we plan to undertake advertising and promotion efforts. These efforts will be outsourced and will require the services of advertising and public relations firms. We plan to interview various firms and select those most capable of assisting us with comprehensive advertising and promotion plans. We have not yet finalized the potential costs of our marketing strategy.
 

Our marketing strategy is to market to potential manufacturing partners in our target markets representing solar device manufactures.
 
Backlog of Orders

There are currently no orders for sales at this time.

Government Contracts

There are no government contracts at this time.

Compliance with Environmental Laws and Regulations

Our operations are subject to local, state and federal laws and regulations governing environmental quality and pollution control. To date, our compliance with these regulations by has had no material effect on our operations, capital, earnings, or competitive position, and the cost of such compliance has not been material. We are unable to assess or predict at this time what effect additional regulations or legislation could have on our activities.

Manufacturing and Distribution
 
We currently do not have any mechanism for the manufacture and distribution of its thin film solar cells produced on bio-based plastic substrates, nor do we have adequate financing to undertake these efforts on our own. We intend to outsource manufacturing and distribution efforts to existing manufacturing and distributions firms.
 
Intellectual Property

On June 27, 2006, we filed a patent to protect the intellectual property rights for “A Method for Building Thin Film Flexible Solar Cells on Bio-Based Plastic Substrates”, application number 11/476,518. The inventor listed on the patent application is David Lee, our Chief Executive Officer. We are listed as the assignee. As of the date of this prospectus, we are awaiting the US Patent and Trademark Office to complete their review of our application.

We rely upon confidentiality agreements signed by our employees, consultants and third parties to protect our intellectual property.

Competition

While there are a number of companies manufacturing backsheet and other plastic components for PV devices, such as Madico, Inc, we do not know of any employing the use of bio-based components.

Technology Development Partners

To assist us in the development of our technology, we intend to seek out and enter into technology development agreements with other entities with PV and bio-based materials expertise.
 
EMPLOYEES

As of March 21, 2008 we had two (2) full time employees. We have not experienced any work stoppages and we consider relations with our employees to be good.

 
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, 2007, we incurred a net loss of $1,122,067. These factors, among others discussed in Note 1 to the financial statements, raise substantial doubt about the ability to continue as a going concern. We expect to continue to incur net losses until we are able to realize revenues to fund our continuing operations. We may fail to achieve any or significant revenues from sales or achieve or sustain profitability. Accordingly, there can be no assurance of when, if ever, we will be profitable or be able to maintain profitability.

WE ARE A DEVELOPMENT STAGE COMPANY AND MAY BE UNABLE TO MANAGE OUR GROWTH OR IMPLEMENT OUR EXPANSION STRATEGY IF WE ARE ABLE TO LAUNCH OUR PRODUCT AND SERVICE OFFERINGS.  

We are a development stage company and may not be able to launch our product and service offerings, our client base and markets, or implement the other features of our business strategy at the rate or to the extent presently planned. If we are able to launch our product and service offerings, our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our future growth, establish and upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely affected.

WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES WHICH WOULD RESULT IN CONTINUED LOSSES AND OUR FINANCIAL CONDITION AND RESULTS OF OPERATION COULD BE MATERIALLY AND ADVERSELY AFFECTED.

While we have made progress in the development of our products, we have not generated any revenues and we are unable to project when we will achieve profitability, if at all. As is the case with any new technology, we are a development stage company and expect the development process to continue. We may not be able to create our product offering, develop a customer base and markets, or implement the other features of our business strategy at the rate or to the extent presently planned. Growth beyond the product development stage will place a significant strain on our administrative, operational and financial resources. In addition, our operations will not be able to move out of the development stage without additional funding. If we are unable to successfully finance our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operation could be materially and adversely affected.
 
OUR REVENUES ARE DEPENDENT UPON ACCEPTANCE OF OUR PRODUCTS BY THE MARKET; THE FAILURE OF WHICH WOULD CAUSE TO CURTAIL OR CEASE OPERATIONS.
 
We believe that virtually all of our revenues will come from the sale or license of our products. As a result, we will continue to incur substantial operating losses until such time as we are able to generate revenues from the sale or license of our products. There can be no assurance that businesses and customers will adopt our technology and products, or that businesses and prospective customers will agree to pay for or license our products. In the event that we are not able to significantly increase the number of customers that purchase or license our products, or if we are unable to charge the necessary prices or license fees, our financial condition and results of operations will be materially and adversely affected.
 
 
WE DO NOT MAINTAIN THEFT OR CASUALTY INSURANCE, AND ONLY MAINTAIN MODEST LIABILITY AND PROPERTY INSURANCE COVERAGE AND THEREFORE WE COULD INCUR LOSSES AS A RESULT OF AN UNINSURED LOSS.

We do not maintain theft or casualty insurance and we have modest liability and property insurance coverage. We cannot assure that we will not incur uninsured liabilities and losses as a result of the conduct of our business. Any such uninsured or insured loss or liability could have a material adverse affect on our results of operations.

IF WE LOSE KEY EMPLOYEES AND CONSULTANTS OR ARE UNABLE TO ATTRACT OR RETAIN QUALIFIED PERSONNEL, OUR BUSINESS COULD SUFFER.

Our success is highly dependent on our ability to attract and retain qualified scientific, engineering and management personnel. We are highly dependent on our management, including Mr. David Lee who has been critical to the development of our technologies and business. The loss of the services of Mr. Lee could have a material adverse effect on our operations. We do not have an employment agreement with Mr. Lee and do not maintain key man insurance with respect to Mr. Lee. Accordingly, there can be no assurance that he will remain associated with us. His efforts will be critical to us as we continue to develop our technology and as we attempt to transition from a development state company to a company with commercialized products and services. If we were to lose Mr. Lee, or any other key employees or consultants, we may experience difficulties in competing effectively, developing our technology and implementing our business strategies.

THE LOSS OF STRATEGIC RELATIONSHIPS USED IN THE DEVELOPMENT OF OUR PRODUCTS AND TECHNOLOGY COULD IMPEDE OUR ABILITY TO COMPLETE OUR PRODUCT AND RESULT IN A MATERIAL ADVERSE EFFECT CAUSING THE BUSINESS TO SUFFER.

We may rely on strategic relationships with technology development partners to provide personnel, and expertise in the research and development of the technology and manufacturing process underlying our thin film PV product. A loss of these relationships for any reason could cause us to experience difficulties in completing the development of our product and implementing our business strategy. There can be no assurance that we could establish other relationships of adequate expertise in a timely manner or at all.

OUR PATENT APPLICATION FOR OUR TECHNOLOGY IS PENDING AND THERE IS NO ASSURANCE THAT THIS APPLICATION WILL BE GRANTED. FAILURE TO OBTAIN THE PATENT FOR OUR APPLICATION COULD PREVENT US FROM SECURING ROYALTY PAYMENTS IN THE FUTURE, IF APPROPRIATE.

We have filed a patent to protect the intellectual property rights for “A Method for Building Thin Film Flexible Solar Cells on Bio-Based Plastic Substrates”. To date our patent application has not been granted. We cannot be certain that this patent will be granted nor can we be certain that other companies have not filed for patent protection for this technology before us. Even if we are granted patent protection for our technology, there is no assurance that we will be in a position to enforce our patent rights. Failure to be granted patent protection for our technology could result in greater competition or in limited royalty payments. This could result in inadequate revenue and cause us to cease operations.
 
 
OUR CURRENT AND POTENTIAL COMPETITORS, SOME OF WHOM HAVE GREATER RESOURCES THAN WE DO, MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAY CAUSE DEMAND FOR, AND THE PRICES OF, OUR PRODUCTS TO DECLINE.
 
While there are a number of companies manufacturing components for PV devices, we do not know of any employing the use of bio-based materials. Furthermore, our competitors may combine with each other, and other companies may enter our markets by acquiring or entering into strategic relationships with our competitors. Current and potential competitors have established, or may establish, cooperative relationships among themselves or with third parties to increase the abilities of their PV components to address the needs of our prospective customers.
  
Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, product development and marketing resources, greater name recognition and larger customer bases than we do. Our present or future competitors may be able to develop products comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets, competition may intensify and future competition may harm our business.

WE ARE CONTROLLED BY CURRENT OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS.

Our directors, executive officers and principal stockholders and their affiliates beneficially own approximately 41% of the outstanding shares of our common stock. Accordingly, our executive officers, directors, principal stockholders and certain of their affiliates will have the ability to control the election of our Board of Directors and the outcome of matters submitted to a vote of our stockholders.
 
RISKS RELATING TO OUR COMMON STOCK
 
BECAUSE THERE IS A LIMITED MARKET IN OUR COMMON STOCK, STOCKHOLDERS MAY HAVE DIFFICULTY IN SELLING OUR COMMON STOCK AND OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT PRICE SWINGS.

There is a very limited market for our common stock. Since trading commenced in February 2007, there has been little activity in our common stock and on some days there is no trading in our common stock. Because of the limited market for our common stock, the purchase or sale of a relatively small number of shares may have an exaggerated effect on the market price for our common stock. We cannot assure stockholders that they will be able to sell common stock or, that if they are able to sell their shares, that they will be able to sell the shares in any significant quantity at the quoted price.
 
IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.
 
Companies trading on the Over-The-Counter Bulletin Board, such as we are seeking to become, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on our Company.
 
 
OUR COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
 
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
 
 
·
that a broker or dealer approve a person's account for transactions in penny stocks; and
 
 
·
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
   
 
·
obtain financial information and investment experience objectives of the person; and
 
 
·
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
 
 
·
sets forth the basis on which the broker or dealer made the suitability determination; and
 
 
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
 
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE; ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.

We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of our Common Stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the our Board of Directors. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

 
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, 2008. The size of our office is 144 square feet. Rent expense, net of sublease income, amounted to $9,950 and from inception (April 24, 2006) through December 31, 2007.

ITEM 3. LEGAL PROCEEDINGS.

We are not currently a party to, nor is any of our property currently the subject of, any pending legal proceeding that will have a material adverse effect on our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

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 2008
 
Fiscal 2007
 
Quarter Ended
 
High
 
Low
 
High *
 
Low*
 
March 31
 
$
1.58
**
$
0.38
**
$
0.22
 
$
0.10
 
June 30
   
N/A
   
N/A
 
$
0.24
 
$
0.23
 
September 31
   
N/A
   
N/A
 
$
0.57
 
$
0.20
 
December 31
   
N/A
   
N/A
 
$
0.96
 
$
0.36
 

*Our common stock became eligible for quotation on the NASD's OTC Bulletin Board on February 22, 2007.
 
** Through March 21, 2008

Common Stock

Our Amended Articles of Incorporation authorize the issuance of 500,000,000 shares of common stock, $.0001 par value per share. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock have cumulative voting rights. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time by the Board of Directors in its discretion, from funds legally available therefor. In the event of a liquidation, dissolution, or winding up of our company, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect to such shares.
 
 
As of March 21, 2008, our common stock was held by 139 stockholders of record and we had 131,706,777 shares of common stock issued and outstanding. We believe that the number of beneficial owners is substantially greater than the number of record holders because a significant portion of our outstanding common stock is held of record in broker street names for the benefit of individual investors. The transfer agent of our common stock is Computershare Trust company N.A., P.O. Box 43070, Providence, RI 02940-3070.

Dividend Policy
 
We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

Equity Compensation Plan Information
 
The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance as from inception (April 24, 2006) through December 31, 2006.
 
 
EQUITY COMPENSATION PLAN INFORMATION

 
Number of securities   to be issued upon   exercise of   outstanding options,   warrants and rights
 
Weighted average   exercise price of   outstanding options,   warrans and rights
 
Number of securities   remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
 
Plan category
 
(a)    
 
(b)    
 
(c)    
 
Equity compensation plans approved by security holders    
   
-0-
   
-0-
   
-0-
 
     
             
Equity compensation plans not approved by security holders    
   
-0-
   
-0-
   
-0-
 
     
             
Total    
   
-0-
   
-0-
   
-0-
 
 
Unregistered Sales of Equity Securities

During the year ended December 31, 2007, the Company issued 3,149,000 shares of common stock, of which 2,655,000 shares were issued at a price of $0.10 per share through a private placement , and 494,000 shares of common stock were issued to contractors for services.

* All of the above offerings and sales were deemed or determined by Biosolar, Inc. to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of Biosolar, Inc. or executive officers of Biosolar, Inc., and transfer was restricted by Biosolar, Inc. in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment.
 
 
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.
 
RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR ENDED DECEMBER 31, 2006

SELLING AND MARKETING EXPENSES

Selling & Marketing Expenses ("S&M") expenses increased by $289,946 or 1774.13% to $306,289 for the year ended December 31, 2007, compared to the prior year. This increase in G&A expenses was the result of a increase in marketing and consulting fees.
 
 
GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative ("G&A") expenses increased by $127,940 or 40.09% to $396,276 for the year ended December 31, 2007, compared to the prior year. This increase in G&A expenses was the result of a increase in professional fees, and salary expenses.

RESEARCH AND DEVELOPMENT

Research and Development ("R&D") costs increased by $174,461 or 1045.30%, to $191,151 for the year ended December 31, 2007 compared to the prior year. This increase in R&D costs was the result of an increase in testing of product alternatives, and construction of prototypes,

NET LOSS

Net Loss increased by $573,345, or 208.97%, to $847,706 for the year ended December 31, 2007, compared to the prior year. This increase in Net Loss was the result of an increase in G&A expenses and R&D. Currently the Company is in its development stage and had no revenues.

LIQUIDITY AND CAPITAL RESOURCES

  As of December 31, 2007, we had $1,064,077 of working capital as compared to $1,177,314 from inception (April 24, 2006) through the fiscal year ended December 31, 2006. This decrease of $113,237 was due primarily to use of funds for operating expenses.

  During the year ended December 31, 2007, the Company used $753,324 of cash for operating activities, as compared to $235,407 from inception (April 24, 2006) during the fiscal year ended December 31, 2006. The increase in the use of cash for operating activities was a result of an increase in legal consulting fees, general and administrative expenses, and research & development.

Cash provided by investing activities was $362,037 for the year ended December 31, 2007 as compared to cash used of $1,017,882 from inception (April 24, 2006) through the fiscal year ended December 31, 2006. The decrease of cash used in investing activities was primarily due to a decrease in investing in certificates of deposits.

Cash provided from financing activities during the year ended December 31, 2007 was $531,000 as compared to $1,454,028 from inception (April 24, 2006) through fiscal year ended December 31, 2006. Our capital needs have primarily been met from the proceeds of private placements, as we are currently in the development stage and had no revenues.

Our financial statements as of December 31, 2007 have been prepared under the assumption that we will continue as a going concern from inception (April 24, 2006) through December 31, 2007. Our independent registered public accounting firm has issued their report dated March 11, 2007 that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
PLAN OF OPERATION AND FINANCING NEEDS
 
We are engaged in the development of an innovative technology to produce bio-based materials from renewable plant sources that will reduce the cost per watt of Photovoltaic solar cells. We plan to develop our products and thereafter focus our efforts on establishing markets in other related sectors by 2010.

Our plan of operation within the next twelve months is to utilize our cash balances to commercialize our bio-based backsheet component to replace the petroleum based backsheet in crystalline photovoltaic modules. In addition, during the next twelve months we intend to commence a test program to determine the physical properties and characteristics that will be most suitable for the further development of biobased solar cell components, and build solar cells, as we attempt to validate the commercial viability of our product. We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next twelve months. Management estimates that it will require additional cash resources during 2008, based upon its current operating plan and condition. We will be investigating additional financing alternatives, including equity and/or debt financing. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If we are unable to obtain sufficient funds during the next fifteen months, we may be forced to reduce the size of our organization, which could have a material adverse impact on, or cause us to curtail and/or cease, the development of our products.
 
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

ITEM 9A.   CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures. Based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of December 31, 2007, our Chief Executive Officer and Acting Chief Financial Officer has concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Our Chief Executive Officer and Acting Chief Financial Officer also concluded that, as of December 31, 2006, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls. During the year ended December 31, 2007, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report of Internal Control over Financial Reporting.

This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.


ITEM 9B.   OTHER INFORMATION.

None.

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 as of December 31, 2007.

Name
 
Age
 
Position
David Lee
 
48
 
Chief Executive Officer and Acting Chief Financial Officer
Stanley Levy
 
68
 
Vice President and Chief Technology Officer
Steven C. Bartling
 
45
 
Director
Dennis LePon
 
60
 
Director

Directors serve until the next annual meeting and until their successors are elected and qualified. The Directors of our company are elected by the vote of a majority in interest of the holders of the voting stock of our company and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.  

A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board individually or collectively consent in writing to the action.

Directors receive compensation for their services and reimbursement for their expenses as shall be determined from time to time by resolution of the Board. Our directors currently do not receive monetary compensation for their service on the Board of Directors.
 
Officers are appointed to serve for one year until the meeting of the board of directors following the annual meeting of stockholders and until their successors have been elected and qualified.
 
The principal occupations for the past five years (and, in some instances, for prior years) of each of our executive officers and directors, followed by our key employees, are as follows:
 
David Lee - Chief Executive Officer and Acting Chief Financial Officer: Dr. Lee has over 20 years of engineering, marketing, sales, and corporate management experience in the areas of military and consumer communication systems, automotive electronics, software development and consulting.  From 2004 to 2006, he was with Ramsey-Shilling Co. in the business of Commercial Real Estate Investment and Brokerage.  From 2000 to 2004, he served as Chief Operating Officer for Applied Reasoning, Inc., a Delaware company engaged in the business of Internet Software Development. From 1994 to 2000, he served as Vice Present and General Manager for RF-Link Technology, Inc., a California company engaged in the business of Wireless Technology Development and Manufacturing. Dr. Lee received a Ph.D. in Electrical Engineering from Purdue University in 1989, a Master of Science in Electrical Engineering from University of Michigan in 1986 and a Bachelor of Science in Electrical Engineering from the University of Texas at Austin in 1984. 

Stanley Levy - Vice President and Chief Technology Officer: Dr. Levy has over 40 years of engineering and technical experience in the areas of plastics and film development. Dr. Levy spent 27 years at DuPont working on many of their premiere films, including Teflon, Mylar and Kapton. He holds 12 patents, his work has been published in numerous technical publications and he has received several awards for technical excellence. Prior to joining BioSolar, Dr. Levy was a consultant on module packaging for photovoltaic manufacturing companies including Global Solar, MiaSole, and Solar Integrated Technologies. In addition, he is a member of the National Renewable Energy Laboratory's Thin Film PV Module Reliability Team. Dr. Levy holds a Ph.D in Mechanical Engineering from the University of Connecticut, a Master of Science in Mechanical Engineering from the University of Connecticut and a Bachelor of Science in Mechanical Engineering from the University of Rhode Island.
 

Steven C. Bartling - Director: Steven C. Bartling has over 20 years of engineering and corporate management experience in the areas of ultra high performance digital CMOS (Complementary Metal Oxide Semiconductor) circuit design, high performance microprocessor architecture/design, systems on a chip, packaging, and testing. From 2002 to the present, Mr. Bartling has been employed in ASIC (Application Specific Integrated Circuit) research and development for Texas Instruments, Inc. From 2001 to 2002, he served as Director of Custom Design for Celerence, an Oragon company engaged in the business of Optical Communication Networking. Mr. Bartling received a Master of Science in Electrical Engineering from Georgia Institute of Technology in 1987 and a Bachelor of Science in Electrical Engineering from the University of Texas at Austin in 1985.
 
Dennis LePon - Director: Dennis LePon has over 35 years of financial, managerial, and business experience working for a bank, real estate finance companies, as well as a start up high tech company. From 1992 to the present, Mr. LePon has served as Chief Financial officer of Catalyst Resource Group, Inc., a real estate finance and consulting firm offering specialized financing for healthcare, C-Store, gasoline station and other varied commercial properties nationwide.  From 2002 to 2004, he served as Chief Financial Officer for FoodMarket Place.com, a California company engaged in the business of Web Based marketing for food and restaurant industry partnered with Hewlett Packard. Mr. LePon received a Bachelor of Arts from California State University at Northridge in 1969 and a Master of Business Administration from the University of Southern California in 1977.
 
COMMITTEES OF THE BOARD
 
We currently have no audit committee, compensation committee, nominations and governance committee of our board of directors.
 
INDEBTEDNESS OF EXECUTIVE OFFICERS AND DIRECTORS
 
No executive officer, director or any member of these individuals' immediate families or any corporation or organization with whom any of these individuals is an affiliate is or has been indebted to us since the beginning of our last fiscal year.

FAMILY RELATIONSHIPS
 
There are no family relationships among our executive officers and directors.
 
CODE OF ETHICS
 
We have adopted a Code of Ethics that applies to all of our directors, officers and employees. The text of the Code of Ethics is filed as an exhibit to this annual report on Form 10-K . Any waiver of the provisions of the Code of Ethics for executive officers and directors may be made only by the Audit Committee and, in the case of a waiver for members of the Audit Committee, by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders.


ITEM 11.   EXECUTIVE COMPENSATION.

The following table sets forth the compensation paid or accrued by us to our Chief Executive Officer and President and Chief Operating Officer and each of our other officers whose compensation exceeded $100,000 for each of the Company’s last two completed fiscal years.


 
 
 
Name and Principal Position
 
 
 
Year
 
 
 
 
 
Salary ($)
 
 
 
 
 
Bonus ($)
 
 
 
Stock Awards ($)
 
 
Option Awards ($)
 
 
Non-Equity Incentive Plan Compensation ($)
 
Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)
 
All Other Compensation ($)
 
 
 
 
Total ($)
 
David Lee-CEO and Acting CFO
   
2007
2006
 
$
$
144,000
84,000
   
-
-
   
-
-
   
-
-
   
-
-
   
-
-
   
-
-
 
$
144,000_
84,000
 
Stanley Levy - CTO 
   
2007
 
$
46,750
                         
$
46,750
 
 
Outstanding Equity Awards at Fiscal Year-End Table.

The following table sets forth information with respect to grants of options to purchase our common stock to the named executive officers at December 31, 2007.

Option Awards
 
Stock Awards
 
Name    
 
  Number of
Securities
Underlying
Unexercised
Options (#) Exercisable
 
  Number of
Securities
Underlying
Unexercised
Options (#) Unexercisable
 
  Equity
Incentive
Plan Awards:
Number of
Securities Underlying
Unexercised
Unearned
Options (#)
 
  Option
Exercise
Price ($)
 
  Option
Expiration
Date
 
  Number of Shares or Units of Stock That Have Not
Vested (#)
 
  Market Value of Shares or Units of Stock That Have Not
Vested ($)
 
  Equity
Incentive
Plan Awards: Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested (#)
 
  Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned
Shares, Units or
Other
Rights
That Have
Not
Vested ($)
 
David Lee-CEO and Acting CFO
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
 
Director Compensation

The following table sets forth with respect to the named directors, compensation information inclusive of equity awards and payments made for the fiscal year ended December 31, 2007.
 
Name   (a)
 
Fees Earned or Paid in Cash   ($)   (b)
 
Stock Awards   ($)   (c)
 
Option   Awards ($)   (d)
 
Non-Equity Incentive Plan Compensation ($)   (e)
 
Change in Pension Value and Nonqualified Deferred Compensation Earnings   (f)
 
All Other Compensation   ($)   (g)
 
Total   ($)   (h)
 
David Lee-CEO and Acting CFO
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
-0-
 
 
EMPLOYMENT AGREEMENTS
 
We currently have no employment agreements with our executive officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 21, 2008, the number of and percent of our common stock beneficially owned by:
 
 
·
all directors and nominees, naming them,
 
 
·
our executive officers,
 
 
·
our directors and executive officers as a group, without naming them, and
 
 
·
persons or groups known by us to own beneficially 5% or more of our common stock:
 
We believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
 
A person is deemed to be the beneficial owner of securities that can be acquired by him within 60 days from March 21, 2008 upon the exercise of options, warrants or convertible securities. Each beneficial owner's percentage ownership is determined by assuming that options, warrants or convertible securities that are held by him, but not those held by any other person, and which are exercisable within 60 days of March 21, 2008 have been exercised and converted.

Title of Class
 
Name of
Beneficial Owner
 
Number of Shares   Beneficially Owned    
 
Percent of Total (1)
 
Common Stock
   
David Lee
   
49,500,000
   
37.6
%
Common Stock
   
Stanley Levy
   
5,000,000
   
3.8
%
Common Stock
   
Steven C. Bartling
   
1,000,000
   
*
 
Common Stock
   
Dennis LePon
   
1,000,000
   
*
 
Common Stock
   
All Executive Officers and Directors as a Group (4 persons )
 
56,500,000
   
41.4
%
 
*Less than one percent.    
 
(i) Based upon 131,706,777 shares issued and outstanding as of March 21, 2008.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
There were no material related party transactions which we entered into from inception (April 24, 2006) to December 31, 2007.  

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees
 
The aggregate fees billable to us by HJ Associates & Consultants, LLP during 2007 and 2006 for the audits of our annual financial statements for the fiscal year totaled approximately $23,500 and 21,095, respectively.

Audit-Related Fees

We incurred assurance and audit-related fees during 2007 and 2006 of $0 and $0 respectively, to HJ Associates & Consultants, LLP in connection with the audit of the financial statements of Biosolar, Inc. from April 24, 2006 (Inception) through December 31, 2007 for the reviews of registration statements and issuance of related consents and assistance with SEC comment letters.
 
Tax Fees
 
We incurred fees of $0 and $ 0 billed to us by HJ Associates & Consultants, LLP for services rendered to us for tax compliance, tax advice, or tax planning for the fiscal year ended December 31, 2006 and December 31, 2007, respectively.
 
All Other Fees
 
There were no fees billed to us by HJ Associates & Consultants, LLP for services rendered to us during the last two fiscal years, other than the services described above under “Audit Fees” and “Audit-Related Fees.”
 
As of the date of this filing, our current policy is to not engage HJ Associates & Consultants, LLP to provide, among other things, bookkeeping services, appraisal or valuation services, or international audit services. The policy provides that we engage HJ Associates & Consultants, LLP to provide audit, tax, and other assurance services, such as review of SEC reports or filings.
 
 

Exhibit No.
 
Description
3.1
 
Articles of Incorporation of Biosolar Labs, Inc. filed with the Nevada Secretary of State on April 24, 2006. ( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
 
 
 
3.2
 
Articles of Amendment of Articles of Incorporation of Biosolar Labs, Inc. filed with the Nevada Secretary of State on May 25, 2006.( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
 
 
 
3.3
 
Articles of Amendment of Articles of Incorporation of Biosolar Labs, Inc. filed with the Nevada Secretary of State on June 8, 2006. ( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
 
 
 
3.4
 
Bylaws of Biosolar, Inc.( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
      
MATERIAL CONTRACTS
 
10.1
 
Form of Subscription Agreement dated as of May 26, 2006. ( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
 
 
 
10.2
 
Form of Subscription Agreement dated as of July 17, 2006. ( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
 
 
 
10.3
 
Form of Subscription Agreement dated as of October 11, 2006. ( Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the SEC on November 22, 2006)
     
14.1
 
Code of Ethics (filed herewith)
 
 
 
 
Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 (filed herewith).
 
 
 
 
Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed herewith).

 
 
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 25, 2008. 

 
 
 
Biosolar, Inc.
 
 
 
 
 
 
 
 
   
 
By:
/s/ David Lee
 
 
 
 
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER) AND
ACTING CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER)
 
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated:
 
SIGNATURE
 
TITLE
 
DATE
 
 
 
 
 
         
/S/ DAVID LEE
DAVID LEE
 
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER),
ACTING CHIEF FINANCIAL OFFICER
 
MARCH 25, 2008
 
 
(PRINCIPAL ACCOUNTING AND
 
 
 
 
FINANCIAL OFFICER) AND
 
 
 
 
CHAIRMAN OF THE BOARD
 
  MARCH 25, 2008
 
 
 
 
 
 
         
/S/ DENNIS LEPON
DENNIS LEPON
 
DIRECTOR
 
MARCH 25, 2008
 
22
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Board of Directors and Shareholders of
BioSolar, Inc.
(A Development Stage Company)
Santa Clarita, CA

We have audited the balance sheet of BioSolar, Inc. (a development stage company) as of December 31, 2007, and the related statements of operations, stockholders equity and cash flows for the years ended December 31, 2007 and 2006 and from inception on April 24, 2006 through December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BioSolar, Inc. as of December 31, 2007, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006 and from inception of the development stage on April 24, 2006 through December 31, 2007, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from operations since inception. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 

HJ Associates & Consultants, LLP.
Salt Lake City, Utah
March 13, 2008
 
 
BIOSOLAR, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 2007
 
ASSETS
     
CURRENT ASSETS
     
Cash & Cash Equivalents
 
$
340,484
 
Certificates of Deposits
   
653,867
 
Prepaid Expenses
   
80,332
 
         
Total Current Assets
   
1,074,683
 
 
       
PROPERTY & EQUIPMENT
       
Computer
   
1,978
 
Less: Accumulated Depreciation
   
(1,029
)
         
Net Property and Equipment
   
949
 
         
OTHER ASSETS
       
Deposit
   
770
 
Patents
   
7,265
 
         
Total Other Assets
   
8,035
 
         
TOTAL ASSETS
 
$
1,083,667
 
         
LIABILITIES AND SHAREHOLDERS' EQUITY
       
         
CURRENT LIABILITIES
       
Accrued Expenses
 
$
9,611
 
Credit Card Payable
   
995
 
         
TOTAL CURRENT LIABILITIES
   
10,606
 
         
SHAREHOLDERS' EQUITY EQUITY
       
Common Stock, $0.0001 par value;
       
500,000,000 authorized common shares
       
131,706,777 shares issued and outstanding
   
13,170
 
Additional Paid in Capital
   
2,181,958
 
Deficit Accumulated during the Development Stage
   
(1,122,067
)
         
TOTAL SHAREHOLDERS' EQUITY
   
1,073,061
 
         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
1,083,667
 
 
The accompanying notes are an integral part of these financial statements
 
 
BIOSOLAR, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
 
       
From Inception
 
From Inception
 
       
April 24, 2006
 
April 24, 2006
 
   
Year Ended
 
through
 
through
 
   
December 31, 2007
 
December 31, 2006
 
December 31, 2007
 
               
REVENUE
 
$
-
 
$
-
 
$
-
 
                     
OPERATING EXPENSES
                   
Selling and marketing expenses
   
306,289
   
16,343
   
322,632
 
General and administrative expenses
   
390,276
   
262,336
   
652,613
 
Research and development
   
191,151
   
16,690
   
207,841
 
Depreciation and amortization
   
673
   
396
   
1,069
 
                     
TOTAL OPERATING EXPENSES
   
888,389
   
295,765
   
1,184,155
 
                     
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
   
(888,389
)
 
(295,765
)
 
(1,184,155
)
                     
TOTAL OTHER INCOME/(EXPENSE)
                   
Interest income
   
40,683
   
21,404
   
62,088
 
                     
NET LOSS
 
$
(847,706
)
$
(274,361
)
$
(1,122,067
)
                     
BASIC AND DILUTED LOSS PER SHARE
 
$
(0.01
)
$
(0.00
)
     
                     
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
                   
BASIC AND DILUTED
   
129,113,689
   
110,953,304
       
 
The accompanying notes are an integral part of these financial statements
 
BIOSOLAR, INC.
(A Development Stage Company)
STATEMENTS OF SHAREHOLDERS' EQUITY
   
Common stock
 
  Additional Paid-in
 
Deficit Accumulated during the Development
     
   
Shares
 
Amount
 
  Capital
 
Stage
 
Total
 
Inception April 24, 2006
   
-
 
$
-
 
$
-
 
$
-
 
$
-
 
                       
Issuance of common stock in April 2006 for services
(1,000 common shares issued at $0.001 per share )
   
1,000
   
1
   
-
   
-
   
1
 
 
                     
Issuance of founders shares in May 2006 for cash
(29,999,000 common shares issued at $0.00025 per share )
   
29,999,000
   
2,999
   
4,500
   
-
   
7,499
 
                       
Issuance of founders shares in May 2006 for cash
(20,000,000 common shares issued at $0.00025 per share )
   
20,000,000
   
2,000
   
3,000
   
-
   
5,000
 
                       
Issuance of founders shares in May 2006 for cash
(9,000,000 common shares issued at $0.00025 per share )
   
9,000,000
   
900
   
1,350
   
-
   
2,000
 
                       
Issuance of common stock in May 2006 for cash
(25,000,000 common shares issued at $0.015 per share )
   
25,000,000
   
2,500
   
372,500
   
-
   
375,000
 
                       
Issuance of founders shares in June 2006 for cash
(34,000,000 common shares issued at $0.00025 per share )
   
34,000,000
   
3,400
   
5,100
   
-
   
8,500
 
                       
Issuance of common shares in June 2006 for cash
(90,000 common shares issued at $0.10 per share )
   
90,000
   
9
   
8,991
   
-
   
9,000
 
 
                     
Stocks subscribed
   
-
   
-
   
-
   
-
   
250
 
                       
Issuance of common shares in July 2006 for cash
(5,760,000 common shares issued at $0.10 per share )
   
5,760,000
   
576
   
575,424
   
-
   
576,000
 
                       
Issuance of common shares in August 2006 for cash
(2,807,777 common shares issued at $0.10 per share )
   
2,807,777
   
281
   
280,497
   
-
   
280,778
 
 
                     
Issuance of common shares in September 2006 for cash
(1,450,000 common shares issued at $0.10 per share )
   
1,450,000
   
145
   
144,855
   
-
   
145,000
 
 
                     
Issuance of common shares in October 2006 for cash
(450,000 common shares issued at $0.10 per share )
   
450,000
   
45
   
44,955
   
-
   
45,000
 
 
                     
Net Loss from Inception through December 31, 2006
   
-
   
-
   
-
   
(274,361
)
 
(274,361
)
                                 
Balance at December 31, 2006
   
128,557,777
 
$
12,856
 
$
1,441,172
 
$
(274,361
)
$
1,179,667
 
                                 
Issuance of common shares in September 2007 for cash
(250,000 common shares issued at $0.20 per share)
   
250,000
   
25
   
49,975
   
-
   
50,000
 
                                 
Issuance of common shares in September 2007 for cash
(50,000 common shares issued at $0.20 per share )
   
50,000
   
5
   
9,995
   
-
   
10,000
 
                                 
Issuance of common shares in September 2007 for services
(100,000 common shares issued at $0.35 per share )
   
100,000
   
10
   
34,990
   
-
   
35,000
 
                                 
Issuance of common shares in September 2007 for services
(100,000 common shares issued at $0.26 per share )
   
100,000
   
10
   
25,990
   
-
   
26,000
 
                                 
Issuance of common shares in September 2007 for services
(40,000 common shares issued at $0.54 per share )
   
40,000
   
4
   
21,596
   
-
   
21,600
 
                                 
Issuance of common shares in October 2007 for services
(4,000 common shares issued at $0.54 per share )
   
4,000
   
0
   
2,160
   
-
   
2,160
 
                                 
Issuance of common shares in October 2007 for cash
(1,175,000 common shares issued at $0.20 per share )
   
1,175,000
   
117
   
234,883
   
-
   
235,000
 
                                 
Issuance of common shares in October 2007 for services
(250,000 common shares issued at $0.51 per share )
   
250,000
   
25
   
127,475
   
-
   
127,500
 
                                 
Issuance of common shares in November 2007 for cash
(1,180,000 common shares issued at $0.20 per share )
   
1,180,000
   
118
   
235,882
   
-
   
236,000
 
                                 
Stock issuance cost
   
-
   
-
   
(2,160
)
 
-
   
(2,160
)
                                 
Net Loss for the year ended December 31, 2007
   
-
   
-
   
-
   
(847,706
)
 
(847,706
)
                                 
Balance at December 31, 2007
   
131,706,777
 
$
13,170
 
$
2,181,958
 
$
(1,122,067
)
$
1,073,061
 
 
The accompanying notes are an integral part of these financial statements
 
BIOSOLAR, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS

       
From Inception
 
From Inception
 
       
April 24, 2006
 
April 24, 2006
 
   
Year Ended
 
through
 
through
 
   
December 31, 2007
 
December 31, 2006
 
December 31, 2007
 
CASH FLOWS FROM OPERATING ACTIVITIES:
             
Net loss
 
$
(847,706
)
$
(274,361
)
$
(1,122,067
)
Adjustment to reconcile net loss to net cash
                   
used in operating activities
                   
Depreciation & amortization expense
   
673
   
396
   
1,069
 
Issuance of stock for services
   
212,260
   
-
   
212,260
 
(Increase) Decrease in:
                   
Prepaid expenses
   
(79,564
)
 
(768
)
 
(80,332
)
Deposits
   
-
   
(770
)
 
(770
)
Patents
   
(7,305
)
 
-
   
(7,305
)
Increase (Decrease) in:
                   
Accounts Payable
   
(37,179
)
 
37,179
   
-
 
Accrued Expenses
   
7,419
   
-
   
7,419
 
Credit Card Payable
   
(1,922
)
 
2,917
   
995
 
                     
NET CASH USED IN OPERATING ACTIVITIES
   
(753,324
)
 
(235,407
)
 
(988,731
)
                     
NET CASH FLOWS USED IN INVESTING ACTIVITIES:
                   
Purchase of Equipment
   
-
   
(1,978
)
 
(1,978
)
Investment in Certificate of Deposits
   
362,037
   
(1,015,904
)
 
(653,867
)
                     
NET CASH (USED)/PROVIDED BY INVESTING ACTIVITIES
   
362,037
   
(1,017,882
)
 
(655,845
)
                     
NET CASH FLOWS FROM FINANCING ACTIVITIES:
                   
Proceeds from issuance of common stock
   
531,000
   
1,454,028
   
1,985,028
 
                     
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
531,000
   
1,454,028
   
1,985,028
 
                     
NET INCREASE (DECREASE) IN CASH
   
139,713
   
200,739
   
340,452
 
                     
CASH, BEGINNING OF PERIOD
   
200,739
   
-
   
-
 
                     
CASH, END OF PERIOD
   
340,452
   
200,739
   
340,452
 
                     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                   
Interest paid
 
$
-
 
$
-
 
$
-
 
Taxes paid
 
$
800
 
$
800
 
$
1,600
 
                     
SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS
                   
During the year ended December 31, 2007, the Company issued
                   
494,000 shares of common stock for services at a fair value of
                   
$212,260.
                   
 
The accompanying notes are an integral part of these financial statements
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007

1.
ORGANIZATION AND LINE OF BUSINESS

Organization
 
BioSolar, Inc. (the "Company") was incorporated in the state of Nevada on April 24, 2006. The Company, based in Santa Clarita, California, began operations on April 25, 2006 to develop and market a solar cell technology .

Line of Business
 
The Company is currently in the stage of developing an innovative technology to produce bio-based materials from renewable plant sources that will reduce the cost per watt of Photovoltaic solar cells. Once we complete our product development, we intend to market our bio-based solar cell components directly to photovoltaic module manufacturers .

Going Concern
 
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has obtained funds from its shareholders since its’ inception through the year ended December 31, 2007. Management believes this funding will continue, and has also obtained funding from new investors. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business.
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of BioSolar, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Development Stage Activities and Operations
 
The Company has been in its initial stages of formation and for the year ended December 31, 2007, had insignificant revenues. FASB #7 defines a development stage activity as one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

Revenue Recognition
 
The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has had no revenues and is in the development stage.

Cash and Cash Equivalent
 
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.  
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments
 
Certificate of Deposits with banking institutions are short-term investments with initial maturities of more than 90 days. The carrying amount of these investments is a reasonable estimate of fair value due to their short-term nature.
 
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.

Property and Equipment
 
Property and equipment are stated at cost, and are depreciated using the modified accelerated cost recovery system (macrs) method over its estimated useful lives:
 
Computer equipment
5 Years
 
Fair Value of Financial Instruments
 
SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2007, the amounts reported for cash, accounts receivable, accounts payable, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.

Loss per Share Calculations
 
The Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the year ended December 31, 2007, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

Reclassification of Expenses
 
Certain amounts from the prior year have been reclassified to conform with the current year presentation.

Income Taxes
 
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or
 
Research and Development
 
Research and development costs are expensed as incurred. Total research and development costs were $191,151 and $16,690 for the years ended December 31, 2007 and 2006, respectively.

Advertising Costs
 
The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $35,445 and $500 for the years ended December 31, 2007 and 2006, respectively.

Recently Issued Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment of ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 23, 2004. The Company has evaluated the impact of the adoption of SFAS 151, and does not believe the impact will be significant to the Company's overall results of operations or financial position.

In December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."The amendments made by Statement 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. Opinion 29 provided an exception to its basic measurement principle (fair value) for exchanges of similar productive assets. The Board believes that exception required that some nonmonetary exchanges, although commercially substantive, be recorded on a carryover basis. By focusing the exception on exchanges that lack commercial substance, the Board believes this Statement produces financial reporting that more faithfully represents the economics of the transactions. The Statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of this Statement shall be applied prospectively. The Company has evaluated the impact of the adoption of SFAS 153, and does not believe the impact will be significant to the Company's overall results of operations or financial position.
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Pronouncements (continued)

 
In December 2004, the Financial Accounting Standards Board issued two FASB Staff Positions - FSP FAS 109-1, Application of FASB Statement 109 "Accounting for Income Taxes" to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. Neither of these affected the Company as it does not participate in the related activities.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R, Share-based Payment. SFAS 123R revises SFAS 123 and supersedes APB 25. SFAS 123R will be effective for the period ending December 31, 2006, and applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. Under SFAS 123R, we will be required to follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. The adoption of SFAS 123R is expected to have a material impact on our results of operations.

In March 2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”), which provides interpretive guidance related to the interaction between SFAS 123(R) and certain SEC rules and regulations. It also provides the SEC staff’s views regarding valuation of share-based payment arrangements. In April 2005, the SEC amended the compliance dates for SFAS 123(R), to allow companies to implement the standard at the beginning of their next fiscal year, instead of the next reporting period beginning after June 15, 2005. Management is currently evaluating the impact SAB 107 will have on our consdensed financial statements.

In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to the identification of and financial reporting for legal obligations to perform an asset retirement activity. The Interpretation requires recognition of a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 also defines when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provision is effective no later than the end of fiscal years ending after December 15, 2005. The Company will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a material impact on its financial position or results of operations or cash flows.

In May 2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error Corrections.” This new standard replaces APB Opinion No. 20, “Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements,” and represents another step in the FASB’s goal to converge its standards with those issued by the IASB. Among other changes, Statement 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. Statement 154 also provides that (1) a change in method of depreciating or amortizing a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be termed a “restatement.” The new standard is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. Early adoption of this standard is permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005 . The Company has evaluated the impact of the adoption of Statement 154 and does not believe the impact will be significant to the Company's overall results of operations or financial position.
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Recently Issued Accounting Pronouncements (continued
 
In February of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, which is intended to simplify the accounting and improve the financial reporting of certain hybrid financial instruments (i.e., derivatives embedded in other financial instruments). The statement amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a replacement of FASB Statement No. 125.” SFAS No. 155 is effective for all financial instruments issued or acquired after the beginning of an entity's first fiscal year that begins after September 15, 2006.. The Company is currently evaluating the impact SFAS No. 155 will have on its financial statements, if any.
 
In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes , which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes . FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of this standard on the financial statements.
 
Stock-Based Compensation  
 
 
As of December 31, 2007, the Company adopted Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (FAS) No. 123R, that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The statement eliminates the ability to account for share-based compensation transactions, as we formerly did, using the intrinsic value method as prescribed by Accounting Principles Board, or APB, Opinion No. 25, “Accounting for Stock Issued to Employees,” and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expenses in our statement of income.   The adoption of (FAS) No. 123R by the Company had no material impact on the statement of income.

3.
CAPITAL STOCK

During the year ended December 31, 2007, the Company’s issued 2,655,000 shares of common stock at a price of $0.20 per share for cash in the amount of $531,000; Also, the Company issued 494,000 shares of common stock at a price between $0.26 and $0.54 per share for services at a fair value of $212,260. During the period ended December 31, 2006, the Company issued 450,000 shares of common stock at a purchase price of $0.10 per share pursuant to a private placement made pursuant to Rule 506 of Regulation D promulgated under section 4(2) of the Securities Act of 1933, as amended.
 
4.
RENTAL LEASE

 
The Company renewed its lease for a six month term expiring on May 1, 2008. The rent paid for the years ended December 31, 2007 and 2006 were $6,158 and $3,960.
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
5.
INTANGIBLE ASSETS

 
Intangible assets that have finite useful lives continue to be amortized over their useful lives, and are reviewed for impairment when warranted by economic condition.
 
 
 
Useful Lives
 
2007
 
2,006
 
               
Patents-gross
       
$
7,306
 
$
-
 
Less accumulated amortization
   
20 years
   
41
   
-
 
         
$
7,265
 
$
-
 
 
6.
INCOME TAXES

 
The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California.

 
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of interpretation 48, there has been no effect on the Company’s retained deficit. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
Balance at June 1, 2007
 
$
-
 
         
Additions based on tax positions related to the current year
   
-
 
         
Balance at December 31, 2007
 
$
-
 
 
 
Included in the balance at December 31, 2007, are no tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

 
The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended December 31, 2007, the Company did not recognize interest and penalties.

7.
DEFERRED TAX BENEFIT
   
 
At December 31, 2007, the Company had net operating loss carry-forwards of approximately $847,674, which expire at dates that have not been determined. No tax benefit has been reported in the December 31, 2007 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount..

 
A reconciliation of income tax expense that would result from applying the U.S. Federal and State rate of 40% to pretax income from continuing operations for the year ended December 31, 2007, with federal income tax expense presented in the financial statements is as follows:
 
 
BIOSOLAR, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
 
7.
DEFERRED TAX BENEFIT (continued)
 
   
2007
 
Income tax benefit computed at U.S. Federal
     
statutory rate of 34%
 
$
(288,209
)
State Income taxes, net of benefit of federal taxes
   
(50,860
)
R&D
   
3,650
 
Non deductible stock compensation
   
84,904
 
Other
   
442
 
         
Valuation Allowance
   
250,073
 
         
Income tax expense
 
$
-
 
 
 
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax bases.

 
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax liabilities consist of the following components as of December 31, 2007:
 
   
2007
 
Deferred tax assets:
     
NOL carryover
 
$
847,674
 
R & D credit
   
3,650
 
         
Deferred tax liabilites:
       
Depreciation
   
(79
)
         
Less Valuation Allowance
   
(851,245
)
         
Net deferred tax asset
 
$
-
 
 
 
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
F-12
 
Biosolar, Inc. - Corporate Code of Conduct
 
 
Responsibilities of Directors, Officers and Employees
 
Biosolar, Inc. is a corporate entity that is responsible for the physical and financial well-being of its community, its customers, its employees and its shareholders.  Each individual person involved in the operation of this Company is called upon to maintain this obligation.
 
This Corporate Code of Ethics has been adopted by the Board of Directors to provide a guideline for conducting Company business in a manner to support our collective responsibility and to maintain our reputation for holding to the highest standards of honesty and integrity.
 
All individuals who represent this Company must:
 
A. Conduct themselves and Company business with honesty and integrity, avoiding both actual and apparent conflicts of personal or professional interests.
 
B. Promote ethical behavior in the work environment as a responsible partner among peers.
 
C. Comply with laws, rules and regulations of federal, state and local governments, and other appropriate private and public regulatory agencies that govern our business. While it is difficult to know the details of these laws, it is important to know enough to determine when to seek advice from work team leaders or other appropriate management personnel.
 
D. Promptly report dishonest, unethical or illegal activities by other employees to appropriate parties within the Human Resources, Legal or other management personnel.
 
E. Provide full, fair, accurate, timely and understandable reporting and disclosure in documents prepared for shareholders or filed with the SEC or in any other public communication.
 
F. Responsibly use and control all tangible and intangible assets and resources employed or entrusted from the Company. We are obliged to respect the confidentiality of information acquired in the course of our work.
 
G. Comply with this Code of Conduct knowing that failure to do so may result in disciplinary action up to and including termination of employment.
 
Reporting and Enforcement
 
Any person involved in the operation of this Company who suspects possible violations of this Code of Ethics or other corporate policies or laws, including those pertaining to government contracting, has the responsibility to disclose such violation to the Management or the Board of Directors.  Such reporting will be handled confidentially and there will be no form of reprisal for doing so.  The Company will investigate fully all matters related to alleged violations and take appropriate action.
 
EXHIBIT 31.1
 
CERTIFICATION

I, David Lee, the Chief Executive Officer and Acting Chief Financial Officer of Biosolar, Inc., certify that certify that:

1. I have reviewed this annual report on Form 10-K of Biosolar, Inc., Inc. for the fiscal year ended December 31, 2007;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(e) 15d-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting and the preparation of financial reports for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions);

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 25, 2008
       
       
/s/ David Lee      
David Lee
Chief Executive Officer and
Acting Chief Financial Officer
   
 
EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Biosolar, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David Lee, Chief Executive Officer and Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 
     
March 25, 2008   /s/ David Lee
 
David Lee
Chief Executive Officer and
Acting Chief Financial Officer