UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20172019

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 000-54819

BIOSOLAR, INC.

(Name of registrant in its charter)

27936 Lost Canyon Road, Suite 202, , Santa Clarita, CA 91387

(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

The number of shares of registrant’s common stock issued and outstanding as of November 8, 2017August 2, 2019 was 39,053,356.99,412,885.

BIOSOLAR, INC.

INDEX

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOSOLAR, INC.

CONDENSED BALANCE SHEETS

The accompanying notes are an integral part of these unaudited condensed financial statementsstatements.

BIOSOLAR, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 20162018

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statementsstatements.

BIOSOLAR, INC.

CONDENSED STATEMENTSTATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ DEFICIT

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 2017

(Unaudited)2019 AND 2018

The accompanying notes are an integral part of these unaudited condensed financial statements statements.

BIOSOLAR, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 20162018

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statementsstatements.

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 20162018

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the ninesix months ended SeptemberJune 30, 20172019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2019. For further information refer to the financial statements and footnotes thereto included in the Company'sCompany’s Form 10-K for the year ended December 31, 2016.2018.

Going Concern

The accompanying unaudited condensed 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 unaudited condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated 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 historically obtained funds through private placements offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to 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. There is noNo assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company will beis able to continue raisingobtain additional financing, it may contain undue restrictions on our operations, in the required capitalcase of debt financing or cause substantial dilution for its operations.our stock holders, in case of equity financing. 

This summary of significant accounting policies of the Company areis 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 unaudited condensed financial statements.

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 not had significant 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.

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 unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets consist of patents that are initially measured at the lower of cost or fair value.  The patents are deemedhave finite useful lives continue to have an indefinite life and are not amortized. The patents are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified.amortized over their useful lives

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for an equity award based on the grant-date fair value of the award. All grants under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee, consultant, or director are required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to employees and non-employees is determined in accordance with the standard as the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Compensation expense for awards granted is re-measured each period.

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility.  The Company usesused Black Scholes to value its stock option awards which incorporateincorporated the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. On March 24, 2015, the Company granted 2,475,000The stock options with an exercise price of $0.09 per share, and on September 2, 2015 the Company granted an additional 13,500,000 stock options with an exercise price of $0.26 per share. The options will vest 1/25 on monthly basis, starting April 24, 2015 and October 1, 2015, respectively, and terminate seven (7) years from the date of grant or upon termination of employment. As of SeptemberJune 30, 2017, 15,975,0002019, 15,950,000 stock options are outstanding.

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 20162018

Net Earnings (Loss) per Share Calculations 

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock based awards (Note 4), plus the assumed conversion of convertible debt (Note 5).   

For the ninesix months ended SeptemberJune 30, 2017,2019, the Company’s diluted loss per share is the same as the basic loss per share, and the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. The Company has excluded 15,975,00015,950,000 stock options and warrants of 150,000, and the shares issuable from convertible debt of $2,094,150,$2,839,026, because their impact was anti-dilutive.

For the ninesix months ended SeptemberJune 30, 2016,2018, the Company’s diluted loss per share is the same as the basic loss per share, and the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. The Company has excluded 15,975,00015,950,000 stock options, and warrants of 245,000, and the shares issuable from convertible debt of $1,852,700,$2,436,220, because their impact was anti-dilutive.

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether recognized in the balance sheet, where it is practicable to estimate that value. As of SeptemberJune 30, 2017,2019, the amounts reported for cash, inventory, prepaid expenses, accounts payable, and accrued expenses, approximate the fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at SeptemberJune 30, 2017:2019:

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Recently Issued Accounting Pronouncements

In May 2017,June 2018, FASB issued accounting standards update ASU-2017-09, “Compensation-Stock Compensation”ASU 2018-07, (Topic 718) –Modification Accounting”505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to provide claritynonemployees for goods and reduce both (1) diversity in practice and (2) cost and complexity when applyingservices. Under the ASU, most of the guidance in Topic 718, Compensation-Stock Compensation,on such payments to a changenonemployees will be aligned with the requirements for share-based payments granted to employees. Under the terms or conditionsASU 2018-07, the measurement of aequity-classified nonemployee share-based payment award. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period for public entities for reporting periods for which financial statements have not yet been issued, and all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is currently evaluating the impact of the adoption of ASU 2017-09payments will be fixed on the Company’s financial statements.

In August 2017, FASB issued accounting standards update ASU-2017-12, “D” (Topic 815) – “Targeted Improvements to Accounting for Hedging Activities”, to require an entity to presentgrant date, as defined in ASC 718, and will use the earnings effect of the hedging instrument in the same statement line item in which the earnings effect of the hedged item is reported.term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, andincluding interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods with thewithin fiscal years beginning after December 15, 2020. Early adoption is permitted in any interim period after issuanceif financial statements have not yet been issued. The Company has evaluated the impact of the update.adoption of ASU 2018-07, which has no impact on the Company’s financial statements.

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

Recently Issued Accounting Pronouncements (Continued)

In August 2018, the FASB issued to accounting standards update ASU 2018-13, (Topic 820) - "Fair Value Measurement”, which changes the unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance. The Company is currently evaluating the impact of the adoption of ASU 2017-122018-13 on the Company’s financial statements.

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.

During the ninesix months ended SeptemberJune 30, 2017,2019, the Company issued 9,533,95127,394,459 shares of common stock upon conversion of convertible promissory notes in the amount of $62,850,$259,134, plus accrued interest of $17,871,$27,776, with an aggregate fair value loss of $338,652$404,741 at prices ranging from $0.0371$0.0192 - $0.0549.$0.0341.

4. STOCK OPTIONS AND WARRANTS

Stock Options

The Company did not grant any stock options during the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, respectively.

The weighted average remaining contractual life of options outstanding as of SeptemberJune 30, 20172019 and 2018 was as follows:

The stock-based compensation expense recognized in the statement of operations during the six months ended June 30, 2019 and 2018, related to the granting of these options was $0 and $0, respectively.

As of June 30, 2019 and 2018, respectively, there was no intrinsic value with regards to the outstanding options.

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 20162018

The weighted average remaining contractual life of options outstanding as of September 30, 2017 was as follows:

The stock-based compensation expense recognized in the statement of operations during the nine months ended September 30, 2017 and 2016, related to the granting of these options was $1,141,684 and $1,178,827, respectively.

As of September 30, 2017, and 2016, respectively, there was no intrinsic value with regards to the outstanding options.

Warrants

The warrants outstanding as of September 30, 2017 and 2016, were 150,000 and 245,000, respectively. The remaining warrants have a five (5) year term with an expiration date of October 2017.

On May 2, 2014,As of June 30, 2019, the Company entered into a securities purchase agreement, providingoutstanding convertible promissory notes net of debt discount are summarized as follows:

Maturities of long-term debt, net of debt discount for the sale bynext five years are as follows:

At June 30, 2019, the $2,839,026 in convertible promissory notes had a remaining debt discount of $274,205, leaving a net balance of $2,564,821.

The Company of a 10%issued an unsecured convertible promissory note (the “MayMay 2014 Note”) in the aggregate principal amount of up to $500,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received a tranche, in the amount of $50,000. On various dates, the Company received additional tranches in the aggregate sum of $450,000, for a total aggregate sum of $500,000. As of December 31, 2016, the remaining principal balance was $385,000. During the nine months ended$500,000 on May 2, 2014. The May Note matures September 30, 2017, the Company issued 9,533,951 shares of common stock upon conversion of $62,850 in principal, plus accrued interest of $17,871, leaving a principal balance of $287,000 as of September 30, 2017. Each tranche matures eighteen (18) months from the effective date of each tranche, which was extended on January 12, 2016 to sixty (60) months, with maturity dates ranging from June 12, 2019 to December 21,18, 2019. The May 2014 Note bears interest at 10% per annum. The May 2014 Note is convertible into shares of the Company’s common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance with the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the May 2014 Note has been determined by using the Binomial lattice formula with an expected life of sixty (60) months from the effective date of each tranche. During the six months ended the Company issued 10,057,907 shares of common stock upon conversion of principal in the amount of $37,134, plus accrued interest of $16,676, with a fair value loss on conversion of debt in the amount of $213,121. As of June 30, 2019, the remaining balance of the May 2014 Note was $170,026.

On January 30, 2015, theThe Company entered into a securities purchase agreement, providing for the sale by the Company of a 10%issued various unsecured convertible notepromissory notes (the “January Note”2015-2018 Notes”) in the aggregate principal amount of up to $500,000, to be advanced in amounts at the lender’s discretion. Upon execution$2,500,000 on various dates of the securities purchase agreement,January 30, 2015 through February 26, 2018. On January 17, 2019, the Company received aan additional tranche in the amount of $50,000. On various$25,000, associated with the February 26, 2018 Note for a total aggregate of $2,340,000. The 2015-2018 Notes matures on dates the Company received additional tranches in the aggregate sum of $450,000. The principal balance at September 30, 2017 was $500,000. Each tranche matured eighteen (18) months from the effective date of each tranche, which was extended on January 12, 2016 to sixty (60) months from the effective date of each tranche, with maturity dates ranging from January 29,30, 2020 to August 25, 2020.thru January 17, 2024. The January Note is2015-2018 Notes bears interest at 10% per annum. The 2015-2018 Notes are convertible into shares of the Company’s common stock ofat conversion prices ranging from the Company at a price equal to a variable conversion price of a) the lesser of $0.15$0.03 to $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the lowest trade price recorded since the original effective date, of the January Note, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance within the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the January Note has2015-2018 Notes have been determined by using the Binomial lattice formula with an expected life of sixty (60) months from the effective date of each tranche. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $25,966$89,089 during the ninesix months ended SeptemberJune 30, 2017.

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE NINE MONTHS ENDED SEPTEMBER2019. As of June 30, 2017 AND 20162019, the aggregate balances of the 2015-2018 Notes were $2,340,000.

On October 1, 2015, theThe Company entered into a securities purchase agreement, providing for the sale by the Company of a 10%issued various unsecured convertible notepromissory notes (the “October Note”“Jul-Jun 2019 Notes”) in the aggregate principal amount of up to $500,000, to be advanced in amounts at the lender’s discretion. Upon execution$444,000 on various dates of July 23, 2018 through June 3, 2019, with $222,000 of the securities purchase agreement, the Company received a tranchenotes issued in the amount of $90,000. On various2019. The Jul-Jun 2019 Notes matures on dates the Company received additional tranches in the aggregate sum of $395,000.from July 23, 2019 thru June 3, 2020. The principal balanceJul-Jun 2019 Notes bears interest at September 30, 2017 was $485,000. Each tranche matures twelve (12) months from the effective date of each tranche, which was extended on October 13, 2016 to sixty (60) months from the effective date of each tranche, with maturity dates ranging from October 1, 2020 to March 9, 2021.The October Note is convertible10% per annum. The Jul-Jun 2019 Notes may be converted into shares of the Company’s common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.25 per share of common stock, b) fiftysixty-one (61%) percent (50%) of the lowest trade price recorded sinceaverage two (2) trading prices during the original effective datefifteen (15) trading day prior to the conversion date. The conversion feature of the OctoberJul-Jun 2019 Note or c)was considered a derivative in accordance with current accounting guidelines because of the lowest effective price per share granted to any person or entity afterreset conversion features of the effective date to acquire common stock.Jul-Jun 2019 Notes. The fair value of the October NoteJul-Jun 2019 Notes has been determined by using the Binomial lattice formula from the effective date of each note. During the period ended June 30, 2019, the Company issued 17,336,552 upon conversion of principal in the amount of $222,000, plus accrued interest of $11,100, with an expected lifea fair value loss on conversion of twelve (12) months.debt in the amount of $191,619, The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $9,912$111,444 during the ninesix months ended SeptemberJune 30, 2017.2019. As of June 30, 2019, the remaining aggregate balances of the Jul-Jun 2019 Notes were $222,000.

On April 5, 2016, theBIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

The Company entered into a securities purchase agreement, providing for the sale by the Company of a 10%issued various unsecured convertible notepromissory notes (the “April Note”“Feb-Apr 2019 Notes”) in the aggregate principal amount of up to $500,000, to be advanced in amounts at the lender’s discretion. Upon execution$107,000. The Company paid an original issue discount of the securities purchase agreement, the Company$4,000 and received a tranchefunds in the amount of $48,000. On various$103,000. The Feb-Apr 2019 Notes mature on dates the Company received additional tranches in the aggregate sum of $452,000.from February 25, 2020 and April 5, 2020. The principal balanceFeb-Apr 2019 Notes bears interest at September 30, 2017 was $500,000. Each tranche matures twelve (12) months from the effective date of each tranche through November 15, 2017.10% per annum. The April Note is convertibleFeb-Apr 2019 Notes may be converted into shares of the Company’s common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.13 per share of common stock, b) fiftysixty-one (61%) percent (50%) of the lowest tradeone (1) day trading price recorded sinceduring the original effective datefifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the April Note, or c)common stock issuable upon conversion of these Notes are not delivered by the lowest effective pricedeadline, the Borrower shall pay to the Holder $2,000 per share grantedday in cash, for each day beyond the deadline that the Borrower fails to any person or entity afterdeliver such common stock. The conversion feature of the effective date to acquire common stock.Feb-Apr 2019 Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb-Apr 2019 Notes. The fair value of the April NoteFeb-Apr 2019 Notes has been determined by using the Binomial lattice formula with an expected lifefrom the effective date of twelve (12) months.the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $102,405$31,333 during the ninesix months ended SeptemberJune 30, 2017.

On March 20, 2017,2019. As of June 30, 2019, the Company entered into a securities purchase agreement, providing for the sale by the Company of a 10% unsecured convertible note (the “March Note”) in the aggregate principal amount of up to $500,000, to be advanced in amounts at the lender’s discretion. Upon executionbalance of the securities purchase agreement, the Company received a tranche in the amount of $25,000. On various dates during the nine months ended September 30, 2017, the Company received additional tranches in the aggregate sum of $262,000. The principal balance as of September 30, 2017Feb-Apr 2019 Notes was $287,000. Each tranche matures twelve (12) months from the effective date of each tranche, with an extension of sixty (60) months from each tranche. The March Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.13 per share of common stock, b) fifty percent (50%) of the lowest trade price recorded since the original effective date of the March Note, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. The fair value of the March Note has been determined by using the Binomial lattice formula with an expected life of twelve (12) months. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $3,290 during the nine months ended September 30, 2017.$107,000.

We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically per the stock price fluctuations.

We hadevaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a new material commitment for capital expendituresseparation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically per the stock price fluctuations.

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the formstatement of a sponsored research agreement with North Carolina Agricultural and Technical State University duringoperations.

During the twelvesix months ended SeptemberJune 30, 2017. The contract period was from September 12, 2016 through September 11, 2017 and the total cost was not to exceed the sum of $123,993. The cost2019, as a result of the commitment was financed byconvertible notes (“Notes”) issued that were accounted for as derivative liabilities, we determined that the issuance of equity or debt securitiesfair value of the Company. The costconversion feature of the commitment has been paidconvertible notes at issuance was $346,193, based upon a Binomial-Model calculation. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of Septemberthe Notes.

During the six months ended June 30, 2017.2019, the Company converted $259,134 in principal of convertible notes, plus accrued interest of $27,776. As a result of the conversion of these notes the Company recorded a fair value loss on the conversion of debt in the amount of $404,741 in the statement of operations for the six months ended June 30, 2019. At June 30, 2019, the fair value of the derivative liability was $10,609,017.

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice valuation model. The significant assumptions used in the Binomial lattice valuation model for the derivative are as follows:

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has determined that there are the following subsequent events:

On October 20, 2017, the Company received an additional tranche of $58,000 on the March Note.

On November 7, 2017,July 1, 2019, the Company issued 1,274,5632,540,878 shares of common stock upon conversion of principal in the amount of $8,150,$9,250, plus accrued interest of $2,641 associated$4,344.

On July 16, 2019, the Company entered into a convertible promissory note with an investor providing for the May Note.sale by the Company of a 10% unsecured convertible note (the “Jul Note”) in the principal amount of $53,000. The Jul Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of 61% of the average of the two lowest (1) day trading prices for common stock during the fifteen (15) trading day period prior to the conversion date.

During the month of July 2019, the Company issued 4,797,413 shares of common stock upon conversion of principal in the amount of $53,000, plus accrued interest of $2,650.

On August 2, 2019, the Company issued 4,040,827 shares of common stock upon conversion of principal in the amount of $14,645, plus accrued interest of $7,006.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note on Forward-Looking Statements.

Certain statements in “Management’s Discussion and Analysis or Plan of Operation” below, and elsewhere in this quarterly 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 quarterly 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 in our annual report on Form 10-K filed with the SEC on March 17, 2017,21, 2019, 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.

Overview

We are developing innovative technologies to increase the capacity and reduce the cost of storing electrical energy. We have previously developed an innovative material technology to reduce the cost per watt of electricity produced by Photovoltaic, or PV, solar modules.

We are currently working on a high capacity silicon alloy anode additive material technology intended to drastically increase the storage capacity of current and future generation of lithium-ion batteries while lowering the cost of storing electrical energy. LowerThe lower cost of electrical energy storage will resultsresult in reduced cost per watt of electricity produced by PV solar modules as well.

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.

Recent Transactions

None.

Application of Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using a Binomial lattice valuation model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Use of Estimates

In accordance

The preparation of financial statements in conformity with generally accepted accounting principles generally accepted in the United States,requires management utilizesto make estimates and assumptions that affect the amounts reported amountsin the accompanying unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of assetsuseful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the disclosurefair value of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period.stock options. Actual results could differ from those estimates. These estimates and assumptions relate to recording net revenue, collectability of accounts receivable, useful lives and impairment of tangible and intangible assets, accruals, income taxes, inventory realization, stock-based compensation expense and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Fair Value of Financial Instruments

Our cash, cash equivalents, investments, inventory, prepaid expenses, and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments.

Recently Issued Accounting Pronouncements

Management reviewed currently issued pronouncements during the threesix months ended SeptemberJune 30, 2017,2019, and does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.

Results of Operations – Three Months Ended SeptemberJune 30, 20172019 Compared to the Three Months Ended SeptemberJune 30, 20162018

OPERATING EXPENSES

General and Administrative Expenses

General and administrative (“G&A”) expenses increased by $10,210 to $117,887 for the three months ended June 30, 2019, compared to $107,677 for the prior period ended June 30, 2018. This increased in G&A expenses was the result of an increase in professional fees of $18,539, with an overall decrease of $8,329 in other G&A expenses.

Research and Development

Research and Development (“R&D”) expenses increased by $5,092 to $45,133 for the three months ended June 30, 2019, compared to $40,041 for the prior period ended June 30, 2018. This overall increase in R&D expenses was the result of an increase in contracting of outside services.

Other Income/(Expenses)

Other income and (expenses) decreased by $(28,632,164) to $(775,596) for the three months ended June 30, 2019, compared to $(29,407,760) for the prior period ended June 30, 2018. The decrease in other income and (expenses) was the result of a decrease in non-cash loss on change in fair value of the derivative instruments of $28,937,660, an increase in interest expense of $176,550, which includes non-cash expense of amortization of debt discount in the amount of $164,898, and an increase in interest income of $3, with an increase in fair value loss on conversion of debt of $128,949. The decrease in other income and (expenses) was primarily due to the net change in the fair value of the derivative instruments and amortization of debt discount.

Net Income (Loss)

Our net loss for the three months ended June 30, 2019 was $(939,933), compared to net loss of $(29,557,287) for the prior period ended June 30, 2018. The decrease in net loss was due to a decrease in non-cash other income (expenses) associated with the net change in derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.  

Results of Operations – Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018

OPERATING EXPENSES

General and Administrative Expenses

General and administrative (“G&A”) expenses decreasedincreased by $95,444$20,412 to $439,082$224,020 for the threesix months ended SeptemberJune 30, 2017,2019, compared to $534,526$203,608 for the prior period ended SeptemberJune 30, 2016.2018. This decreaseincrease in G&A expenses was the result of a decreasean increase in professional fees of $12,727, a decrease in salaries of $8,800, a decrease in non-cash stock compensation expense of $22,285, with an decrease in investor relations of $52,492,$21,591, and an overall increasedecrease of $860$1,179 in other G&A expenses.

Research and Development

Research and Development (“R&D”) expenses increased by $29,860$26,693 to $85,506$120,134 for the threesix months ended SeptemberJune 30, 2017,2019, compared to $55,646$93,441 for the prior period ended SeptemberJune 30, 2016.2018. This overall increase in R&D expenses was the result of an increase in contracting of outside services.

Other Income/(Expenses)

Other income and (expenses) decreased by $106,850$(32,717,095) to $551,695$2,887,880 for the threesix months ended SeptemberJune 30, 2017,2019, compared to $658,545$(29,829,215) for the prior period ended SeptemberJune 30, 2016.2018. The decrease in other income and (expenses) was the result of a decreasean increase in non-cash lossgain on change in fair value of the derivative instruments of $111,058, a decrease$33,235,012, an increase in interest expense of $89,483,$347,913, which includes non-cash expense of amortization of debt discount in the amount of $96,528,$324,873, and a decreasean increase in interest income of $6,$4, with an increase in fair value loss on settlementconversion of debt of $93,685.$170,008. The decrease in other income and (expenses) was primarily due to the net change in the fair value of the derivative instruments and amortization of debt discount.

Net Income (Loss)

Our net lossincome for the threesix months ended SeptemberJune 30, 20172019 was $(1,104,315),$2,540,681, compared to a net loss of $(1,249,389)$(30,129,607) for the prior period ended SeptemberJune 30, 2016. The decrease in net loss was due to a decrease in non-cash other income (expenses) associated with the net change in derivative instruments, and an overall decrease in operating expenses. The Company has not generated any revenues.

Results of Operations – Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

OPERATING EXPENSES

General and Administrative Expenses

G&A expenses decreased by $154,454 to $1,442,254 for the nine months ended September 30, 2017, compared to $1,596,708 for the prior period ended September 30, 2016. This decrease in G&A expenses was the result of a decrease in insurance expense of $18,670, a decrease in professional fees of $29,565, a decrease in salaries of $35,200, a decrease in non-cash stock compensation of $37,143, a decrease in investor relations of $34,750, and an overall increase of $874 in other G&A expenses.

Research and Development

R&D expenses decreased by $81,474 to $117,065 for the nine months ended September 30, 2017, compared to $198,539 for the prior period ended September 30, 2016. This overall decrease in R&D expenses was the result of a decrease in contracting of outside services.

Other Income/(Expenses)

Other income and (expenses) increased by $905,411 to $(1,555,423) for the nine months ended September 30, 2017, compared to $(650,012) for the prior period ended September 30, 2016. The increase in other income and (expenses) was the result of an increase in non-cash loss on change in fair value of the derivative instruments of $747,311 an increase in fair value of loss on settlement of debt in the amount of $338,652, a decrease in interest expense of $180,566, which includes non-cash expense of amortization of debt discount in the amount of $206,876, and a decrease in interest income of $14. The decrease in other income and (expenses) was primarily due to the net change in the fair value of the derivative instruments and amortization of debt discount.

Net Income (Loss)

Our net loss for the nine months ended September 30, 2017 was $(3,144,435), compared to net loss of $(2,447,463) for the prior period ended September 30, 2016.2018. The increase in net lossincome was due to an increase in non-cash other income (expenses) associated with the net change in derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and an overall decrease in operating expenses.probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

The condensed unaudited 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 condensed unaudited financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the ninesix months ended SeptemberJune 30, 2017,2019, we did not generate any revenues, incurred a net lossincome of $3,144,435,$2,540,681, and used cash of $433,741$(363,530) in operations. As of SeptemberJune 30, 2017,2019, we had a working capital deficiency of $6,484,417$11,914,748 and a shareholders’ deficit of $8,227,578.$13,767,878. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

In the ninesix months ended SeptemberJune 30, 2017,2019, we obtained funding through the sale of our securities. Management believes that we will be able to continue to raise funds through the sale of our securities to existing and new investors. Management believes that funding from existing and prospective new investors and future revenue will provide the additional cash needed to meet our obligations as they become due, and will allow the development of our core business operations.

As of SeptemberJune 30, 2017,2019, we had a working capital deficit of $6,484,417$11,914,748 compared to a working capital deficit of $5,396,611$15,062,687 for the year ended December 31, 2016.2018. This increasedecrease in capital deficit of $1,087,806$3,147,939 was due primarily to a decrease in cash, and accounts payable, with an increase in derivative liability associated with theour outstanding promissory notes, with an increase in prepaid expenses, accounts payable, accrued expenses, and an increase in the issuance of convertible promissory notes.

During the ninesix months ended SeptemberJune 30, 2017,2019, we used $433,741$(363,530) of cash for operating activities, as compared to $558,850$(328,735) for the prior period ended SeptemberJune 30, 2016.2018. The decreaseincrease in the use of cash for operating activities for the current period was a result of a decrease in salaries, professional fees, insurance, and a decreasean increase in research and development expensescost, and insurance expense, compared to the prior ninesix months ended SeptemberJune 30, 2016.2018.

Cash used in investing activities for the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, were $699$0 and $1,984,$(5,770), respectively. The overall net change in investing activities was primarily due to a decrease in patent expenditure costan increase in the currentpurchase of equipment in the prior period.

Cash provided from financing activities was $357,000$354,000 for the ninesix months ended SeptemberJune 30, 2017,2019, as compared to $603,000$328,000 for the prior period ended SeptemberJune 30, 2016.2018. The increase in financing was due to an increase in convertible promissory notes. The convertible notes are convertible into shares of common stock, which have limitations on conversion. The lender is limited to no more than a 4.99% beneficial ownership of the outstanding shares of common stock. Beneficial ownership is determined in accordance with Section 13D-G. Our ability to continue as a going concern is dependent upon raising capital through financing transactions and future revenue. Our capital needs have primarily been met from the proceeds of private placements,placement of our securities, as we currently have not generated any revenues.

Our independent auditors, in their report on our audited financial statements for the year ended December 31, 2016,2018, expressed substantial doubt about our ability to continue as a going concern. Our financial statements as of SeptemberJune 30, 20172019 have been prepared under the assumption that we will continue as a going concern. Our ability to continue as a going concern ultimately is dependent upon our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. Our 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 innovative technologies that increase the capacity and reduce the cost of storing electrical energy. We are currently focusing on developing a high capacity silicon alloy anode material technology to increase the storage capacity and reduce cost of the current and future generation of lithium-ion batteries by 2018.  2020.

Our plan of operation within the next six months is to utilize our cash balances to develop our silicon-based anode technology for high capacity, high density, and low cost Lithium-ion batteries.  We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next fivethree months. Management estimates that it will require additional cash resources during 2017,2019, based upon its current operating plan and condition. We expect increased expenses during the lastthird quarter of 20172019 as we ramp up prototyping efforts for Lithium-ion batteries incorporating our electrode material.  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

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide information required by this Item. 

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission'sCommission’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change to our internal control over financial reporting that occurred during our second fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -– OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of 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 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K filed on March 17, 2017.21, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2017, the Company issued 3,104,956 shares of common stock at a price of $0.0085 per share upon conversion of $20,100 in convertible promissory notes, including $6,189 in accrued interest.None.

The Company relied on an exemption pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the foregoing issuance.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

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 NovemberAugust 9, 2017.2019.

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