NewHydrogen, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 16 In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. As of December 31, 2020, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management’s Report of Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a - 15(f). Our internal control system was designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework - Guidance for Smaller Public Companies (the COSO criteria). Based on our assessment we believe that, as of December 31, 2020, our internal controls over financial reporting are effective based on those criteria. This annual report does not include an attestation report by M&K CPAS, PLLC, our independent registered public accounting firm, regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permits the Company to only provide management’s report in this Form 10-K. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fourth quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. 17 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The following table sets forth information about our executive officers, key employees and directors. Name Age Position David Lee 61 Chief Executive Officer, Acting Chief Financial Officer and Director Spencer Hall 44 Chief Operating Officer and Director The principal occupations for the past five years (and, in some instances, for prior years) of each of our executive officers and directors, are as follows: David Lee - Chief Executive Officer and Acting Chief Financial Officer and Director of the Company since inception (April 24, 2006). Dr. Lee has over 30 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. The Board of Directors has concluded that Dr. Lee is qualified to serve as a director of the Company because of his diverse experience in technology, marketing, and executive management. Spencer Hall – Chief Operating Officer and Director of the Company since February 8, 29021, Mr. Hall has held senior management positions over the course of his career including director of communications for PacifiCorp, a Berkshire Hathaway Energy-owned electric utility serving nearly two million customers across Oregon, California, Washington, Utah, Idaho and Wyoming. Prior to his role at PacifiCorp, he served as vice president of digital platforms for the Utah Jazz (Larry H. Miller Sports & Entertainment) and as news director of KSL.com, the largest news outlet in the Intermountain West. Hall holds a Master of Science in Instructional Design and Technology from Utah State University and a Bachelor of Arts in Visual Art from Brigham Young University. The Board of Directors has concluded that Mr. Hall is qualified to serve as a director of the Company because of his diverse experience in technology, marketing, and executive management. 18 COMMITTEES OF THE BOARD We currently do not maintain any committees of the Board of Directors. Given our size and the development of our business to date, we believe that the board through its meetings can perform all of the duties and responsibilities which might be performed by a committee. We do not currently have an audit committee financial expert. INDEBTEDNESS OF EXECUTIVE OFFICERS AND DIRECTORS No executive officer, director or any member of these individuals’ immediate families or any corporation or organization with whom any of these individuals is an affiliate is or has been indebted to us since the beginning of our last fiscal year. FAMILY RELATIONSHIPS There are no family relationships among our executive officers and directors. CODE OF ETHICS We have adopted a Code of Ethics that applies to all of our directors, officers and employees. The text of the Code of Ethics is filed as an exhibit to this annual report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on March 25, 2008. The Company will provide to any person without charge, upon request to the Company at its office, a copy of the Code of Ethics. Any waiver of the provisions of the Code of Ethics for executive officers and directors may be made only by the Audit Committee and, in the case of a waiver for members of the Audit Committee, by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders. LEGAL PROCEEDINGS During the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been: ● the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; ● convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; ● found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law. ● the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 19 Board Leadership Structure and Role in Risk Oversight Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is in the best interests of the Company and its shareholders to combine these roles. Due to the small size and early stage of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions combined. In addition, having one person serve as both Chairman and Chief Executive Officer eliminates potential for confusion and provides clear leadership for the Company, with a single person setting the tone and managing our operations. The Board oversees specific risks, including, but not limited to: ● appointing, retaining and overseeing the work of the independent auditors, including resolving disagreements between the management and the independent auditors relating to financial reporting; ● approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing annually the independence and quality control procedures of the independent auditors; ● reviewing, approving, and overseeing risks arising from proposed related party transactions; ● discussing the annual audited financial statements with the management; ● meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internal controls, the auditor’s engagement letter and independence letter and other material written communications between the independent auditors and the management; and ● monitoring the risks associated with management resources, structure, succession planning, development and selection processes, including evaluating the effect the compensation structure may have on risk decisions. Board of Directors Meetings and Attendance We have no formal policy regarding director attendance at the annual meeting of stockholders. The Board of Directors held eighteen (18) meetings in 2020 including three (3) meetings prior to filing our quarterly reports and one (1) meeting prior to filing this Annual Report. All Board members were present at all of the meetings. During 2020, the Board of Directors acted by unanimous written consent eighteen (18) times. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who own more than 10% of the Company’s stock (collectively, “Reporting Persons”) to file with the SEC initial reports of ownership and changes in ownership of the Company’s common stock. Reporting Persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file. To the Company’s knowledge, based solely on its review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, the Company believes that during its fiscal year ended December 31, 2020 all Reporting Persons timely complied with all applicable filing requirements. ITEM 11. EXECUTIVE COMPENSATION. The following table summarizes all compensation recorded by us in each of the last two completed fiscal years for the named executive officers. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation All Other Compensation ($) Total ($) David Lee 2020 $ 144,000 - - - - - - $ 144,000 - CEO and Acting CFO 2019 $ 144,000 - - - - - - $ 144,000 Stanley Levy 2020 $ - $ - - CTO 2020 $ - - - - - - - $ - * Stanley Levy passed away on January 5, 2021. 20 Employment Agreements The Company currently has no employment agreements with its executive officers. Employee Benefit Plans The Company currently has no benefit plans in place for its employees. Stock Option Plan The Company has no stock option plan. Director Compensation Directors receive compensation for their services and reimbursement for their expenses as shall be determined from time to time by resolution of the Board. Currently, our directors do not receive monetary compensation for their service on the Board of Directors. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth, as of February 11, 2021, 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 February 12, 2021 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 February 12, 2021 have been exercised and converted. Unless otherwise indicated, the address of each of the following beneficial owner is c/o Biosolar, Inc., 27936 Lost Canyon Road, Suite 202, Santa Clarita, CA 91387 Name of Beneficial Owner Number of Share Of Common Stock Beneficially Owned Percentage Of Shares Percentage of Voting Power David Lee (1)(2) 16,769,290 3.1 % 51 %(3) Spencer Hall - * All Executive Officers and Directors as a Group (2 individuals) 16,769,290 3.1 % 51 %(3) * Less than one percent. (1) Based upon 528,062,717 shares of common stock outstanding as of February 12, 2021. (2) Includes 12,000,000 shares underlying options to purchase shares of the Company’s common stock are fully vested. (3) Includes 1,000 shares of Series B Preferred Stock which entitles Mr. Lee to 51% of the total vote representing a super majority voting power on all shareholder matters of the Company. The ownership of these shares is conditioned as described below. 21 On January 15, 2021, as approved by the Board, the Company filed the Certificate of Designation (the “Certificate of Designation”) for its newly-created Series B Preferred Stock with the Secretary of State of Nevada designating 1,000 shares of its authorized preferred stock as Series B Preferred Stock. The shares of Series B Preferred Stock have a par value of $0.0001 per share. The Series B Preferred Stock does not have a dividend rate or liquidation preference and are not convertible into shares of our common stock. The 1,000 shares of Series Be Preferred have been issued to David Lee, our Chief Executive Officer. For so long as any shares of the Series B Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have voting power equal to 51% of the total vote (representing a super majority voting power) on all shareholder matters of the Company. Such vote shall be determined by the holder(s) of a majority of the then issued and outstanding shares of Series B Preferred Stock. The shares of the Series B Preferred Stock shall be automatically redeemed by us at their par value on the first to occur of the following triggering events: (i) a date forty five (45) days after the effective date of the Certificate of Designation, (ii) on the date that Mr. Lee ceases, for any reason, to serve as officer, director or consultant of the Company, or (ii) on the date that the Company’s shares of common stock first trade on any national securities exchange and such listing is conditioned upon the elimination of the preferential voting rights of the Series B Preferred Stock set forth in the Certificate of Designation. Additionally, we are prohibited from adopting any amendments to our Bylaws, Articles of Incorporation, as amended, as set forth in the Certificate of Designation, without the affirmative vote of at least 66-2/3% of the outstanding shares of Series B Preferred Stock. However, we may, by any means authorized by law and without any vote of the holders of shares of Series B Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designation that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series B Preferred Stock The issuance of the Series B Preferred Stock may prevent or frustrate attempts by stockholders to change the board of directors or current management and could make a third-party acquisition of the Company difficult which could limit the price that investors might be willing to pay in the future for shares of the Company’s common stock. 22 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. There were no material related party transactions which we entered into during the last two fiscal years. Director Independence No members of the board of directors is independent as the term “independent” is defined under the NASDAQ Marketplace Rules. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Audit Fees The following table shows that fees that were billed to the Company by our independent registered public accounting firm for professional services rendered in 2020 and 2019. The audit fees represent fees for professional services performed by M&K CPAS, PLLC (“M&K”) or Liggett & Webb, P.A. (“Liggett & Webb”), as applicable, for the audit of our financial statements and the review of our quarterly financial statements, as well as services that are normally provided in connection with statutory and regulatory filings or engagements. Year Audit Fees Audit-Related Fees Tax Fees All Other Fees 2020 – M&K CPAS, PLLC $ 22,000 $ $ $ 2020 – Liggett & Webb, P.A. (1) $ $ $ $ 4,000 2019 – M&K CPAS, PLLC $ 11,000 $ $ $ 2019 – Liggett & Webb, P.A. (2) $ 12,000 $ $ $ (1) February 25, 2020 (2) Through December 2, 2019 Audit-Related Fees We did not incur assurance and audit-related fees during 2020 and 2019, to M&K or Liggett & Webb, as applicable, nor in connection with the audit of our financial statements for the reviews of registration statements and issuance of related consents and assistance with SEC comment letters. Tax Fees We did not incur fees for tax compliance, tax advice, or tax planning for the years ended December 31, 2020 and 2019, respectively. All Other Fees There were no other fees billed to us by M&K or Liggett& Webb, as applicable, for services rendered to us during the years ended December 31, 2020 and 2019, respectively, 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 our independent registered public accounting firm to provide, among other things, bookkeeping services, appraisal or valuation services, or international audit services. The policy provides that we engage our independent registered public accounting firm to provide audit and other assurance services, such as review of SEC reports or filings, as set forth above. 23 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 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 Certificate of Amendment to 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 Certificate of Amendment to 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 Certificate of Amendment to Articles of Incorporation of BioSolar Labs, Inc. filed with the Nevada Secretary of State on July 18, 2011 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 19, 2011) 3.5 Certificate of Amendment to Articles of Incorporation of BioSolar, Inc. filed with the Nevada Secretary of State on July 10, 2013 (Incorporated by reference to the Company’s Quarterly Report of Form 10-Q filed with the SEC on October 25, 2013) 3.6 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) 3.7 Certificate of Designations of Preferences Rights and Limitations of Series A Preferred Stock filed with the Nevada Secretary of State on October 29, 2019 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 1, 2019) 3.8 Certificate of Amendment to Articles of Incorporation of BioSolar, Inc. filed with the Nevada Secretary of State on December 10, 2019 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 12, 2019) 3.9 Certificate of Designations of Series B Preferred Stock (Incorporated by reference to the Company’s Current Report on Form 8-K January 20, 2021) 10.1 Form of Note dated as of April 5, 2016 (Incorporated by reference to the Company’ to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2016) 10.2 Sponsored Research Agreement with North Carolina Agricultural and Technical State University dated August 16, 2016 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 8, 2016) (Subject to Order granting Confidential Treatment dated December 22, 2016 File No. 000-54819- CF#34438) 10.3 Form of Note dated as of March 20, 2017 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 21, 2017) 10.4 Sponsored Research Agreement with North Carolina Agricultural and Technical State University dated September 11, 2017 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 13, 2017) 24 10.5 Exclusive License Agreement with North Carolina Agricultural and Technical State University dated September 25, 2017 (Incorporated by reference to the Company’s Current Report on Form 8-K/A filed with the SEC on November 17, 2017) (Subject to Order granting Confidential Treatment dated December 22, 2016 File No. 0-54819 - CF#35738) 10.6 Form of Note dated as of February 26, 2018 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 27, 2018) 10.7 Joint Development Agreement with Silico Ferrosolar SLU dated as of June 14, 2018 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 19, 2018 10.8 Convertible Promissory Note dated April 23, 2020 (Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on April 28, 2020) 10.9 Securities Purchase Agreement dated April 23, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 28, 2020) 10.10 Convertible Promissory Note dated August 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 21, 2020) 10.11 Securities Purchase Agreement dated August 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 21, 2020) 10.12 Convertible Promissory Note dated September 14, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 17, 2020) 10.13 Securities Purchase Agreement dated September 14, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 17, 2020) 10.14 Convertible Promissory Note dated November 2, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 3, 2020) 10.15 Securities Purchase Agreement dated November 2, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 3, 2020) 10.16 Convertible Promissory Note dated December 2, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 7, 2020) 10.17 Securities Purchase Agreement dated December 2, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 7, 2020) 10.18 Sponsored Research Agreement (Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2020) 10.19 Convertible Promissory Note dated December 29, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021) 10.20 Securities Purchase Agreement dated December 29, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021) 25 10.21 Convertible Promissory Note dated January 14, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 20, 2021) 10.22 Securities Purchase Agreement dated January 14, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 20, 2021) 10.23 Engagement Agreement between the Company and H.C. Wainwright & Co. LLC (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 10.24 Form of Securities Purchase Agreement (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 10.25 Form of Warrant (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 10.26 Form of Registration Rights Agreement (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 10.27 Form of Placement Agent Warrant (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 10.28 Form of Pre-Funded Warrant (Incorporated by reference to the Company’s current report on Form 8-K filed with the SEC on January 25, 2021) 16.1 Letter from Leggett & Webb, P.A. (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2019) 21.1 Subsidiaries (Incorporated by reference to exhibit 21.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on January 29, 2021) 31.1 Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 (filed herewith). 32.1 Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed herewith). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Labels Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 26 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 February 16, 2021. BIOSOLAR, INC. By: /s/ David Lee CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER) AND ACTING CHIEF FINANCIAL OFFICER (ACTING PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated: SIGNATURE TITLE DATE /s/ DAVID LEE CHIEF EXECUTIVE OFFICER February 16, 2021 DAVID LEE (PRINCIPAL EXECUTIVE OFFICER), ACTING CHIEF FINANCIAL OFFICER (PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER) AND CHAIRMAN OF THE BOARD /s/ SPENCER HALL CHIEF OPERATING OFFICER SPENCER HALL DIRECTOR February 16, 2021 27 INDEX TO FINANCIAL STATEMENTS BIOSOLAR, INC. FINANCIAL STATEMENTS CONTENTS Page Report of Independent Registered Public Accounting Firm - M&K CPAS, PLLC F-1 Balance Sheets as of December 31, 2019 and December 31, 2018 F-2 Statements of Operations for the years ended December 31, 2019 and 2018 F-3 Statement of Shareholders’ Deficit for the years ended December 31, 2019 and 2018 F-4 Statements of Cash Flows for the years ended December 31, 2019 and 2018 F-5 Notes to Financial Statements F-6 - F-16 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of BioSolar, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of BioSolar, Inc. (the Company) as of December 31, 2020 and 2019, and the related statements of operations, shareholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U . S . federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud . The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe our audits provide a reasonable basis for our opinion. Going Concern 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 net losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ M&K CPAS, PLLC M&K CPAS, PLLC We have served as the Company’s auditor since 2019 Houston, TX February 16, 2021 F- 1 BIOSOLAR, INC. BALANCE SHEETS December 31, 2020 December 31, 2019 ASSETS CURRENT ASSETS Cash $ 63,496 $ 61,794 Prepaid expenses 55,435 29,956 TOTAL CURRENT ASSETS 118,931 91,750 PROPERTY AND EQUIPMENT Machinery and equipment 37,225 37,225 Less accumulated depreciation (32,023 ) (30,681 ) NET PROPERTY AND EQUIPMENT 5,202 6,544 OTHER ASSETS Patents, net of amortization of $15,112 and $12,090, respectively 30,224 33,246 Deposit 770 770 TOTAL OTHER ASSETS 30,994 34,016 TOTAL ASSETS $ 155,127 $ 132,310 LIABILITIES AND SHAREHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable $ - $ 58 Accrued expenses 991,716 830,425 Derivative liability 148,590,100 8,919,202 Convertible promissory notes net of debt discount of $219,850 and $254,896, respectively 1,069,974 390,987 TOTAL CURRENT LIABILITIES 150,651,790 10,140,672 LONG TERM LIABILITIES Convertible promissory notes net of debt discount of $56,135 and $801, respectively 1,418,225 2,207,349 TOTAL LONG TERM LIABILITIES 1,418,225 2,207,349 TOTAL LIABILITIES 152,070,015 12,348,021 SHAREHOLDERS’ DEFICIT Preferred stock, $0.0001 par value; 10,000,000 authorized shares, none issued and outstanding - - Common stock, $0.0001 par value; 3,000,000,000 authorized shares 456,198,529 and 133,912,520 shares issued and outstanding, respectively 45,620 13,391 Preferred treasury stock, 1000 and 0 shares outstanding, respectively - - Additional paid in capital 13,114,993 12,301,739 Accumulated deficit (165,075,501 ) (24,530,841 ) TOTAL SHAREHOLDERS’ DECIFIT (151,914,888 ) (12,215,711 ) TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $ 155,127 $ 132,310 The accompanying notes are an integral part of these audited financial statements F- 2 BIOSOLAR, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 Years Ended December 31, 2020 December 31, 2019 REVENUE $ - $ - OPERATING EXPENSES General and administrative expenses 447,665 428,668 Research and development 177,722 264,687 Depreciation and amortization 4,365 6,890 TOTAL OPERATING EXPENSES 629,752 700,245 LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) (629,752 ) (700,245 ) OTHER INCOME/(EXPENSES) Interest income 75 36 Gain (Loss) on change in derivative liability (139,038,754 ) 5,777,348 Interest expense (876,229 ) (954,774 ) TOTAL OTHER INCOME (EXPENSES) (139,914,908 ) 4,822,610 NET INCOME (LOSS) $ (140,544,660 ) $ 4,122,365 BASIC EARNINGS (LOSS) PER SHARE $ (0.50 ) $ 0.04 DILUTED EARNING (LOSS) PER SHARE $ (0.50 ) $ 0.01 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC 280,952,034 92,022,751 DILUTED 280,952,034 679,815,020 The accompanying notes are an integral part of these audited financial statements F- 3 BIOSOLAR, INC. STATEMENTS OF SHAREHOLDERS’ DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 YEAR ENDED DECEMBER 31, 2019 Additional Additional Preferred Stock Paid-in Common Stock Paid-in Accumulated Shares Amount Capital Shares Amount Capital Deficit Total Balance at December 31, 2018 - - - 60,639,308 6,064 11,646,932 (28,653,206 ) (17,000,210 ) Issuance of common shares for converted promissory notes and accrued interest - - - 73,273,212 7,327 654,807 - 662,134 Issuance of preferred shares for services 1,000 - 20,000 - - - - 20,000 Redemption of preferred shares (1,000 ) - (20,000 ) - - - - (20,000 ) Net Income - - - - - - 4,122,365 4,122,365 Balance at December 31, 2019 - $ - $ - 133,912,520 $ 13,391 $ 12,301,739 $ (24,530,841 ) $ (12,215,711 ) YEAR ENDED DECEMBER 31, 2020 Additional Additional Preferred Stock Paid-in Common Stock Paid-in Accumulated Shares Amount Capital Shares Amount Capital Deficit Total Balance at December 31, 2019 - - - 133,912,520 13,391 12,301,739 (24,530,841 ) (12,215,711 ) Issuance of common shares for converted promissory notes and accrued interest - - - 322,286,009 32,229 813,254 - 845,483 Net Income - - - - - - (140,544,660 ) (140,544,660 ) Balance at December 31, 2020 - $ - $ - 456,198,529 $ 45,620 $ 13,114,993 $ (165,075,501 ) $ (151,914,888 ) The accompanying notes are an integral part of these audited financial statements F- 4 BIOSOLAR, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 Years Ended December 31, 2020 December 31, 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ (140,544,660 ) $ 4,122,365 Adjustment to reconcile net income(loss) to net cash (used in) provided by operating activities Depreciation and amortization expense 4,365 6,890 (Gain) Loss on net change in derivative liability 139,038,754 (5,777,348 ) Amortization of debt discount recognized as interest expense 611,856 673,812 (Increase) Decrease in Changes in Assets Prepaid expenses (25,479 ) (6,849 ) Increase (Decrease) in Changes in Liabilities Accounts payable (58 ) (838 ) Accrued expenses 267,924 263,565 NET CASH USED IN OPERATING ACTIVITIES (647,298 ) (718,403 ) CASH FLOWS FROM INVESTING ACTIVITIES: - - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible promissory notes 649,000 697,500 NET CASH PROVIDED BY FINANCING ACTIVITIES 649,000 697,500 NET INCREASE (DECREASE) IN CASH 1,702 (20,903 ) CASH, BEGINNING OF PERIOD 61,794 82,697 CASH, END OF PERIOD $ 63,496 $ 61,794 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ 925 $ 979 Taxes paid $ - $ - SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS Common stock issued for convertible notes and accrued interest $ 845,483 $ 662,134 Initial debt discount due to derivative $ 632,144 $ 663,608 The accompanying notes are an integral part of these audited financial statements F- 5 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 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 Photovoltaic solar technology products.    Line of Business We are a developer of clean energy technologies. Our current focus is on developing an electrolyzer technology to lower the cost of Green Hydrogen production. We are developing technologies to significantly reduce or replace rare earth materials with inexpensive earth abundant materials in electrolyzers to help usher in a Green Hydrogen economy. We are also developing innovative technologies to increase the storage capacity, lower the cost and extend the life of lithium-ion batteries for electric vehicles or EV. We previously developed BioBacksheet R , a high performance green back sheet for Photovoltaic solar modules., 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. During the year ended December 31, 2020, the Company did not generate any revenue, incurred net loss of $140,544,660, which includes a non-cash net gain in change in derivative of $139,038,754 and used cash in operations of $647,298. As of December 31, 2020, the Company had a working capital deficiency of $150,532,859 and a shareholders’ deficit of $151,914,888. These factors, among others raise substantial doubt about the Company’s ability to continue as a going concern. Our independent auditors, in their report on our audited financial statements for the year ended December 31, 2020 expressed substantial doubt about our ability to continue as a going concern.   The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.   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, achieving a level of profitable operations and receiving additional cash infusions. During the year ended December 31, 2020, the Company obtained funds from the issuance of convertible note agreements. Management believes this funding will continue from its’ current investors and 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 business operations. No 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 is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity financing. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company 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. 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. The Company adopted Accounting Standards Codification (“ASC”) 606, whereby revenue will be recognized as performance obligations are satisfied and customers obtain control of goods or services. However, in the event of a loss on a sale is foreseen, the Company will recognize the loss as it is determined. 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 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, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates. F- 6 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment are stated at cost, and are depreciated using straight line over its estimated useful lives: Computer equipment 5 Years Machinery and equipment 10 Years Depreciation expense for the years ended December 31, 2020 and 2019 was $2,854 and $4,623, respectively. 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 that have finite useful lives continue to be amortized over their useful lives. Useful Lives 2020 2019 Patents $ 45,336 $ 45,336 Less accumulated amortization 15 years (15,112 ) (12,090 ) $ 30,224 $ 33,246 Amortization expense for the years ended December 31, 2020 and 2019 was $1,511 and $2,267, respectively. 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. The Company granted 12,000,000 stock options to its’ employee and 3,950,000 stock options to and board of directors for services. As of December 31, 2020, there were 15,950,000 stock options outstanding. As of December 31, 2020, the Company did not issue any warrants and had no warrants outstanding. 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 used Black Scholes to value its stock option awards which incorporated the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. The stock options terminate seven (7) years from the date of grant or upon termination of employment. As of December 31, 2020, 15,950,000 stock options are outstanding. 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 carry-forwards 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 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. 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 litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. On December 22, 2017, the Tax Cut and Jobs Act (the “Tax Act”) was signed into law by the President of the United States. The TCJA is a tax reform act that among other things, reduced corporate income tax rate to 21%, effective January 1, 2018. Accordingly, the Company adjusted its deferred tax assets and liabilities on January 1, 2018, using the new corporate rate of 21%. See Note 7. Research and Development Research and development costs are expensed as incurred. Total research and development costs were $177,722 and $264,687 for the years ended December 31, 2020 and 2019, respectively. F- 7 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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).   The Company has excluded shares issuable from convertible debt of $2,764,184 and 15,950,000 stock options for the year ended December 31, 2020, because their impact on the income per share is antidilutive. The Company has included shares issuable from convertible debt of $2,854,033 and 15,950,000 stock options for the year ended December 31, 2019, because their impact on the income per share is dilutive. For the Years Ended December 31, 2020 2019 Income (Loss) to common shareholders (Numerator) $ (140,544,660 ) $ (4,122,365 ) Basic weighted average number of common shares outstanding (Denominator) 280,952,034 92,022,751 Diluted weighted average number of common shares outstanding (Denominator) 280,952,034 679,815,020 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 December 31, 2020, 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: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. 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 on December 31, 2020 and 2019: Total (Level 1) (Level 2) (Level 3) Assets: $ - $ - $ - $ - Liabilities: Derivative Liability at fair value as of December 31, 2020 $ 148,590,100 $ - $ - $ 148,590,100 Derivative Liability at fair value as of December 31, 2019 $ 8,919,202 $ - $ - $ 8,919,202 Fair Value of Financial Instruments The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: Balance as of December 31, 2018 $ 14,032,942 Fair value of derivative liabilities issued 663,608 Loss on change in derivative liability (5.777.348 ) Balance as of December 31, 2019 $ 8,919,202 Fair value of derivative liabilities issued 632,144 Loss on change in derivative liability 139,038,754 Balance as of December 31, 2020 $ 148,590,100 F- 8 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting for Derivatives The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-2, which creates ASC Topic 842, “Leases.” This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company has evaluated the impact of the adoption of ASC 2016-2, which had no effect on the Company’s financial statements. In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including 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 within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company has evaluated the impact of the adoption of ASU 2018-07, which has no effect on the Company’s financial statements. 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 has evaluated the impact of the adoption of ASU 2018-13, which has no effect 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 condensed financial statements. 3. CAPITAL STOCK Preferred Stock On October 28, 2019, the Board of Directors granted 10,000,000 shares of preferred stock, par value $0.0001 per share, and authorized Series A Preferred stock consisting of one thousand (1,000) shares, which shall not be entitled to receive dividends paid on common stock, no liquidation preference, and no conversion rights. The Series A Preferred Stock will have voting rights for as long as the Series A Preferred Stock remains issued and outstanding, shall have the fifty-one percent (51%) majority voting power of the Company’s shareholders. The Series A Preferred Stock shall be automatically redeemed at par value without any required action by the Company or the holder, and shall be triggered by the following events: (i) A date forty-five (45) days after the effective date of the certificate of designation. (ii) On the date that Mr. Lee ceases for any reason, to serve as officer, director or consultant of the Company. (iii) On the date that the Company’s shares of common stock first trade on any national securities exchange. The Series A Preferred Stock automatically reverted back to the Company at par value on December 12, 2019. As of December 31, 2019, there were no Series A Preferred Stock outstanding. Common Stock On October 28, 2019, the Board of Directors deem it advisable and in the best interest of the Corporation to increase the authorized number of shares of common stock of the Corporation from 500,000,000 shares of common stock, par value $0.0001 per share to 3,000,000,000 shares of common stock, par value $0.0001 per share. During the year ended December 31, 2020, the Company issued 322,286,009 shares of common stock upon conversion of convertible promissory notes in the amount of $738,850, plus accrued interest of $101,884, and other fees of $4,750 at prices ranging from $0.0014 - $0.0074. During the year ended December 31, 2019, the Company issued 73,273,212 shares of common stock upon conversion of convertible promissory notes in the amount of $587,628, plus accrued interest of $74,006, and other fees of $500 at prices ranging from $0.00495 - $0.0172. F- 9 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 4. STOCK OPTIONS Stock Options The Company did not grant any stock options during the years ended December 31, 2020 and 2019, respectively. 12/31/2020 12/31/2019 Number of Options Weighted average exercise price Number of Options Weighted average exercise price Outstanding as of the beginning of the periods 15,950,000 $ 0.23 15,950,000 $ 0.23 Granted - - - - Exercised - - - - Expired - - Outstanding as of the end of the periods 15,950,000 $ 0.23 15,950,000 $ 0.23 Exercisable as of the end of the periods 15,950,000 $ 0.23 15,950,000 $ 0.23 The weighted average remaining contractual life of options outstanding as of December 31, 2020 and 2019 was as follows: 12/31/2020 12/31/2019 Exercisable Price Stock Options Outstanding Stock Options Exercisable Weighted Average Remaining Contractual Life (years) Exercisable Price Stock Options Outstanding Stock Options Exercisable Weighted Average Remaining Contractual Life (years) $ 0.09 2,450,000 2,450,000 1.23 $ 0.09 2,450,000 2,450,000 2.23 $ 0.26 13,500,000 13,500,000 1.37 $ 0.26 13,500,000 13,500,000 2.37 15,950,000 15,950,000 15,950,000 15,950,000 The stock-based compensation expense recognized in the statement of operations during the years ended December 31, 2020 and 2019, related to the granting of these options was $0 and $0, respectively. As of December 31, 2020 and 2019, respectively, there was no intrinsic value with regards to the outstanding options. 5. CONVERTIBLE PROMISSORY NOTES As of December 31, 2020 and 2019, the outstanding convertible promissory notes net of debt discount are summarized as follows: 2020 2019 Convertible Promissory Notes, net of debt discount $ 2,764,184 $ 2,598,336 Less current portion 275,985 390,987 Total long-term liabilities $ 2,488,199 $ 2,207,349 Maturities of long-term debt, net of debt discount for the next five years are as follows: December 31, Amount 2021 $ 1,289,824 2022 473,560 2023 900,800 2024 25,000 2025 75,000 $ 2,764,184 On December 31, 2020, the Company had $2,764,184 in convertible promissory notes had a remaining debt discount of $275,985, leaving a net balance of $2,488,199. F- 10 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 5. CONVERTIBLE PROMISSORY NOTES (Continued) The Company issued an unsecured convertible promissory note (the May 2014 Note”), in the amount of $500,000 on May 2, 2014. The May Note matured on September 18, 2019 and was extended to May 2, 2022 on December 26, 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 at a 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 from the effective date of each tranche. During the year ended December 31, 2020, the Company issued 100,105,926 shares of common stock upon conversion of principal in the amount of $96,590, plus accrued interest of $54,460. As of December 31, 2020, the remaining balance of the May 2014 Note was $1,560. The Company issued various unsecured convertible promissory notes (the 2015-2018 Notes”) in the aggregate amount of $2,145,000 on various dates of January 30, 2015 through February 9, 2018. The 2015-2018 Notes mature on January 30, 2023. The 2015-2018 Notes bears interest at 10% per annum. The 2015-2018 Notes are convertible into shares of the Company’s common stock at conversion prices ranging from the a) the lesser of $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, 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 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 2015-2018 Notes have been determined by using the Binomial lattice formula from the effective date of each tranche. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $801 during the year ended December 31, 2020. During the year ended December 31, 2020, the Company issued 30,836,986 shares of common stock upon conversion of $27,200, plus accrued interest of $15,972. As of December 31, 2020, the aggregate balances of the 2015-2018 Notes were $1,957,800. The Company issued various unsecured convertible promissory notes (the Feb 18 Note”) in the aggregate amount of $355,000 on various dates from February 26, 2018 through January 17, 2019. On October 12, 2020 and December 22, 2020, the Company received additional tranches in the amount of $75,000, associated with the Feb 2018 Note for a total aggregate of $430,000. The maturity date of the Feb 18 Note was extended, and as a result matures on dates from February 18, 2018 through December 22, 2025. The Feb 18 Note bears interest at 10% per annum. The Feb 18 Note is convertible into shares of the Company’s common stock at conversion prices ranging from the a) the lesser of $0.03 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, 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 with-in 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 Feb 18 Note was determined by using the Binomial lattice formula from the effective date of each tranche. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $2,810 during the year ended December 31, 2020. As of December 31, 2020, the balance of the Feb 18 Note was $430,000. The Company issued various unsecured convertible promissory notes (the “Feb-Apr 2019 Notes”) in the aggregate principal amount of $107,000. The Company paid an original issue discount of $4,000 and received funds in the amount of $103,000. The Feb-Apr 2019 Notes matures on dates from February 25, 2020 and April 5, 2020. The Feb-Apr 2019 Notes bears interest at 10% per annum. The Feb-Apr 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price or lowest bid price during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the 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 Feb-Apr 2019 Notes has been determined by using the Binomial lattice formula from the effective date of the notes. The Company issued 34,267,881 upon conversion of principal of $72,384, plus accrued interest of $6,351 and other fees of $1,750. The Feb-Apr 2019 Note was converted based on the terms of the agreement, and the Company did not recognize a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $21,801 during the year ended December 31, 2020. As of December 31, 2020, the note was fully converted. F- 11 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 5. CONVERTIBLE PROMISSORY NOTES (Continued) The Company issued an unsecured convertible promissory note on July 16, 2019 (the “July 2019 Note”), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The July 2019 Note matured on July 16, 2020. The July 2019 Note bears interest at 10% per annum. The July 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the July 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the July 2019 Note. The fair value of the July 2019 Notes has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 8,248,918 shares of common stock upon conversion of principal in the amount of $53,000, plus interest of $2,650. The July 2019 Note was converted based on the terms of the agreement, and the Company did not recognize a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $28,672 during the year ended December 31, 2020. The July 2019 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on August 8, 2019 (the “August 2019 Note”), in the aggregate principal amount of $53,500. The Company paid an original issue discount of $2,000 and received funds in the amount of $51,500. The August 2019 Note shall mature on February 14, 2021. The August 2019 Note bears interest at 10% per annum. The August 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price or lowest bid price during the fifteen (15) trading days prior to the conversion date. The parties agree that if shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the August 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the August 2019 Note. The fair value of the August 2019 Notes has been determined by using the Binomial lattice formula from the effective date of the notes. The Company issued 21,000,000 shares of common stock upon conversion of principal in the amount of $40,676, plus other fees of $3,000. The August 2019 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $32,305 during the year ended December 31, 2020. The August 2019 Note as of December 31, 2020 had a remaining balance of $12,824. The Company issued an unsecured convertible promissory note on August 29, 2019 (the “August 29, 2019 Note”), in the aggregate principal amount of $63,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $60,000. The August 29, 2019 Note matures on August 29, 2020. The August 29, 2019 Note bears an interest at 10% per annum. The August 29, 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the August 29, 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the August 29, 2019 Note. The fair value of the August 29, 2019 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 13,624,762 shares of common stock upon conversion in principal of $63,000, plus accrued interest of $3,150. The August 2019 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $24,408 during the year ended December 31, 2020. The August 2019 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on October 1, 2019 (the “Oct 2019 Note”), in the aggregate principal amount of $63,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $60,000. The October 1, 2019 Note matures on October 1, 2020. The Oct 2019 Note bears interest at 10% per annum. The Oct 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Oct 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Oct 2019 Note. The fair value of the Oct 2019 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 28,413,462 shares of common stock upon conversion of principal of $63,000, plus accrued interest of $3,150. The Oct 2019 Note was converted based on the terms of the agreement and the Company did not recognized a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $47,336 during the year ended December 31, 2020. The Oct 2019 Note was fully converted as of December 31, 2020. F- 12 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 5. CONVERTIBLE PROMISSORY NOTES (Continued) The Company issued an unsecured convertible promissory note on November 4, 2019 (the “Nov 2019 Note”), in the aggregate principal amount of $58,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $55,000. The November 4, 2019 Note matures on November 4, 2020. The Nov 2019 Note bears interest at 10% per annum. The Nov 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Nov 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Nov 2019 Note. The fair value of the Nov 2019 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 24,588,385 shares of common stock upon conversion of $58,000 in principal, plus accrued interest of $2,900. The Nov 2019 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $48,967 during the year ended December 31, 2020. The Nov 2019 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on December 20, 2019 (the “Dec 2019 Note”), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The December 20, 2019 Note matures on December 20, 2020. The Dec 2019 Note bears an interest at 10% per annum. The Dec 2019 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Dec 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Dec 2019 Note. The fair value of the Dec 2019 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 21,118,946 shares of common stock upon the conversion of principal of $53,000, plus accrued interest of $2,650. The Dec 2019 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on the conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $51,407 during the year ended December 31, 2020. The Dec 2019 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on January 23, 2020 (the “Jan 2020 Note”), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The January 23, 2020 Note matures on January 23, 2021. The Jan 2020 Note bears interest at 10% per annum. The Jan 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Jan 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jan 2020 Note. The fair value of the Jan 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 12,320,494 of common stock upon conversion of $53,000 in principal, plus accrued interest of $2,650. The Jan 2020 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on the conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $53,000 during the year ended December 31, 2020. The Jan 2020 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on February 13, 2020 (the “Feb 2020 Note”), in the aggregate principal amount of $53,500. The Company paid an original issue discount of $2,000 and received funds in the amount of $51,500. The Feb 2020 Note matures on August 14, 2021. The Feb 2020 Note bears interest at 10% per annum. The Feb 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price or lowest bid price during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Feb 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb 2020 Note. The fair value of the Feb 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $33,474 during the year ended December 31, 2020. The Feb 2020 Note as of December 31, 2020 had a remaining balance of $53,500. F- 13 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 5. CONVERTIBLE PROMISSORY NOTES (Continued) The Company issued an unsecured convertible promissory note on March 2, 2020 (the “Mar 2020 Note”), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The March 2, 2020 Note matures on March 2, 2021. The Mar 2020 Note bears interest at 10% per annum. The Mar 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Mar 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Mar 2020 Note. The fair value of the Mar 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 7,520,270 shares of common stock upon conversion in principal of $53,000, plus accrued interest of $2,650. The Mar 2020 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on the conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $53,000 during the year ended December 31, 2020. The Mar 2020 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on April 28, 2020 (the “Apr 2020 Note”), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The April 28, 2020 Note matures on April 28, 2021. The Apr 2020 Note bears interest at 10% per annum. The Apr 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if the shares of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Apr 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Apr 2020 Note. The fair value of the Apr 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 12,616,691 shares of common stock upon conversion in principal of $53,000, plus accrued interest of $2,650. The Apr 2020 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on the conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $53,000 during the year ended December 31, 2020. The Apr 2020 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on June 22, 2020 (the Jun 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The June 22, 2020 Note matures on June 22, 2021. The Jun 2020 Note bears interest at 10% per annum. The Jun 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Jun 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jun 2020 Note. The fair value of the Jun 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. During the year ended December 31, 2020, the Company issued 7,623,288 shares of common stock upon conversion in principal of $53,000, plus accrued interest of $2,650. The Jun 2020 Note was converted based on the terms of the agreement and the Company did not recognize a gain or loss on the conversion in the financials. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $53,000 during the year ended December 31, 2020. The Jun 2020 Note was fully converted as of December 31, 2020. The Company issued an unsecured convertible promissory note on July 6, 2020 (the Jul 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The Jul 2020 Note matures on July 6, 2021. The Jul 2020 Note bears interest at 10% per annum. The Jul 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Jul 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jul 2020 Note. The fair value of the Jul 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $25,847 during the year ended December 31, 2020. The Jul 2020 Note as of December 31, 2020 had a remaining balance of $53,000. F- 14 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 5. CONVERTIBLE PROMISSORY NOTES (Continued) The Company issued an unsecured convertible promissory note on August 4, 2020 (the Aug 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The August 4, 2020 Note matures on August 4, 2021. The Aug 2020 Note bears interest at 10% per annum. The Aug 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Aug 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Aug 2020 Note. The fair value of the Aug 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $21,781 during the year ended December 31, 2020. The Aug 2020 Note as of December 31, 2020 had a remaining balance of $53,000. The Company issued an unsecured convertible promissory note on September 14, 2020 (the Sep 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The September 14, 2020 Note matures on September 14, 2021. The Sep 2020 Note bears interest at 10% per annum. The Sep 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Sep 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Sep 2020 Note. The fair value of the Sep 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $15,682 during the year ended December 31, 2020. The Sep 2020 Note as of December 31, 2020 had a remaining balance of $53,000. The Company issued an unsecured convertible promissory note on November 2, 2020 (the Nov 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The November 2, 2020 Note matures on November 2, 2021. The Nov 2020 Note bears interest at 10% per annum. The Nov 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Nov 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Nov 2020 Note. The fair value of the Nov 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $8,567 during the year ended December 31, 2020. The Nov 2020 Note as of December 31, 2020 had a remaining balance of $53,000. The Company issued an unsecured convertible promissory note on December 2, 2020 (the Dec 2020 Note), in the aggregate principal amount of $53,000. The Company paid an original issue discount of $3,000 and received funds in the amount of $50,000. The December 2, 2020 Note matures on December 2, 2021. The Dec 2020 Note bears interest at 10% per annum. The Dec 2020 Note may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) day closing bid prices during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Dec 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Nov 2020 Note. The fair value of the Dec 2020 Note has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $3,416 during the year ended December 31, 2020. The Dec 2020 Note as of December 31, 2020 had a remaining balance of $43,000. F- 15 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 5. CONVERTIBLE PROMISSORY NOTES (Continued) 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. 6. DERIVATIVE LIABILITIES 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. 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 statement of operations. During the year ended December 31, 2020, as a result of the convertible notes (“Notes”) issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $632,143, 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 the Notes. During the year ended December 31, 2020, the Company converted $738,850 in principal of convertible notes, plus accrued interest of $101,884, and other fees of $4,750. The convertible notes were valued using the binomial lattice valuation model showing an increase in fair value of the derivatives issued by $632,144 and the loss on the change in derivative by $139,038,754. As of December 31, 2020, the fair value of the derivative liability was $148,590,100. 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: 12/31/2020 Risk free interest rate 0.08% - 0.17% Stock volatility factor 164.0% -247.0% Weighted average expected option life 6 months - 5 years Expected dividend yield None 7. INCOME TAXES On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018. The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2017. Included in the balance on December 31, 2020, 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. F- 16 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 7. INCOME TAXES (Continued) The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the year ended December 31, 2020, the Company did not recognize interest and penalties. As of December 31, 2020, the Company had net operating loss carry-forwards of approximately $9,890,000 that may be offset against future taxable income. No tax benefit has been reported in the December 31, 2020 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rate of 30% to pretax income from continuing operations for the years ended December 31, 2020 and 2019 due to the following: 2020 2019 Book Income (Loss) (29,514,380 ) 1,236,710 Non-deductible expenses 29,381,500 (1,013,080 ) Valuation Allowance 132,880 (223,630 ) 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 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 assets consist of the following components as of December 31, 2020 and 2019: 2020 2019 Deferred tax assets: NOL carryover (2,076,950 ) (1,947,750 ) R & D credit 166,875 142,385 Depreciation 10,735 10,735 Deferred tax liabilities: - Less Valuation Allowance 1,899,340 1794,630 Net deferred tax asset $ - $ - Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years. F- 17 BIOSOLAR, INC. NOTES TO FINANCIAL STATEMENTS – AUDITED FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 8. RELATED PARTY TRANSACTION On October 28, 2019, the Company issued 1,000 shares of Series A Preferred Stock at $20 par value to Mr. David Lee as a bonus for services. The Series A Preferred Stock had a fifty-one (51%) voting right only and was redeemed at par value on December 12, 2019. As of December 31, 2019, there were no Series A Preferred Stock outstanding. 9. COMMITMENTS AND CONTINGENCIES The Company rents office space on a yearly basis with a monthly rent payment in the amount of $550. In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results of operations. As of December 31, 2020, there were no legal proceedings against the Company. 10. SUBSEQUENT EVENT Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has determined that there are the following subsequent events: On January 4, 2021, the Company entered into a convertible promissory note with an investor providing for the sale by the Company of a 10% unsecured convertible note (the “Jan 2021 Note”) in the principal amount of $53,500. The Jan 2021 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 (2) day trading prices for common stock during the fifteen (15) trading day period prior to the conversion date. On January 7, 2021, the Company issued 4,062,044 shares of common stock upon conversion of principal in the amount of $53,000, plus accrued interest of $2,650. On January 15, 2021, the Company issued 14,025,851 shares of common stock upon conversion of principal in the amount of $12,300, plus accrued interest of $7,336. On January 13, 2021, the Company received additional consideration on the convertible note dated February 26, 2018 in the amount of $50,000. On January 14, 2021, the Company entered into a convertible promissory note with an investor providing for the sale by the Company of a 10% unsecured convertible note (the “Feb 2021 Note”) in the principal amount of $53,500. The Feb 2021 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 (2) day trading prices for common stock during the fifteen (15) trading day period prior to the conversion date. On January 27, 2021, the Company entered into a securities purchase agreement with an investor to sell through a private placement an aggregate of 52,000,000 shares of common stock and two separate pre-funded warrants to purchase up to an aggregate of 31,333,334 shares of common stock, and an aggregate of 83,333,334 shares of common stock for gross proceeds to the Company of approximately $5,000,000. The combined purchase price for on share of common stock and a warrant to purchase one share of common stock is $0.06 and the combined purchase price for one pre-funded warrant to purchase one share of common stock and a warrant to purchase one share of common stock is $0.0599. On February 4, 2021, the Company issued 868,175 shares of common stock upon conversion of principal in the amount of $53,000, plus accrued interest of $2,650. On February 5, 2021, the Company issued 908,118 shares of common stock upon conversion of principal in the amount of $12,824, plus accrued interest of $5,564 and other fees of $1,000. On February 5, 2021, the Company issued 1,000,000 shares of common stock for services. F- 18