*Table
          of Contents*





**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-K**




(Mark
      One)





**x**
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




FOR
      THE
      FISCAL YEAR ENDED DECEMBER 31, 2007




o
            TRANSITION
                REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




FOR
      THE
      TRANSITION PERIOD FROM __________ TO __________




COMMISSION
      FILE NUMBER: 333-138910





**BIOSOLAR,
      INC.**


(Name
      of
      registrant in its charter)





**NEVADA**
              (State
                or other jurisdiction of incorporation or organization)
            
            **20-4754291**
              (I.R.S.
                Employer Identification No.)




**27936
      Lost Canyon Road, Suite 202, Santa Clarita, California
      91387**


(Address
      of principal executive offices) (Zip Code)





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





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





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





Indicate
      by check mark whether the registrant is a well-known seasoned issuer, as defined
      in Rule 405 of the Securities Act. Yes **o** No **x**




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange
      Act. Yes **o** No **x**





Indicate
      by check mark whether the registrant (1) has filed all reports required by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days. Yes **x** No **o**




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the
      best of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K. **o**




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




Large accelerated filer  **o**
            Accelerated filer  **o**Non-accelerated filer  **o**
            Smaller reporting company  **x**





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




The
      aggregate market value of the common stock held by non-affiliates of the
      registrant, based upon the last sale price of the common stock reported on
      the
      OTC-Bulletin Board on December 31, 2007 was $0.96.




The
      number of shares of registrant’s common stock outstanding, as of March 12, 2008
      was 131,706,777.





*Table
        of Contents*




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None.




2
 *Table
          of Contents*




**TABLE
      OF CONTENTS**





**Page****PART
                I**Item
                1.     Description of Business
            
            4Item
                1A.  Risk
                Factors
            
            7Item
                2.    Properties
            
            11Item
                3.     Legal
                Proceedings
            
            11Item
                4.     Submission of Matters to a Vote of Security
                Holders
            
            11**PART
                II**Item
                5.     Market
                for Common Equity and Related Stockholder Matters
            
            11Item
                6.     Selected Financial Data
            
            13Item
                7.     Management’s Discussion and Analysis or Plan of
                Operation
            
            13Item
                8.     Financial Statements and Supplementary
                Data
            
            15Item
                9.     Changes
                In and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            15Item
                9A. Controls and
                Procedures
            
            15Item
                9B.  Other
                Information
            
            16**PART
                III**Item
                10.   Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of hte Exchange Act
            
            16Item
                11.   Executive
                Compensation
            
            18Item
                    12.   Security
                    Ownership of Certain Beneficial Owners and Management and Related
                    Stockholder Matters
            
            19Item
                13.   Certain
                Relationship and Related Transactions
            
            20Item
                14.   Principal
                Accountant Fees and Services
            
            20Item
                15.   Exhibits
            
            21**SIGNATURES**
            
            22





3
 *Table
          of Contents*





**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS.**




**Overview**




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





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





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





**Corporate
      Information and History**





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





**Industry
      Overview**





The
      solar
      industry relies on two distinctly different solar energy technologies. Solar
      energy can be converted directly into electricity using photovoltaic devices
      or
      into heat by solar thermal devices. Photovoltaic devices convert sunlight
      directly into electricity through a photovoltaic (PV) cell, commonly called
      a
      solar cell, a non-mechanical device usually made from silicon alloys. Solar
      thermal devices, on the other hand, are typically used for directly heating
      swimming pools, heating water for domestic use, and space heating of
      buildings.




Our
      product development focus is based on photovoltaic technology, thus we are
      currently a part of the photovoltaic segment of the industry. "Photovoltaics"
      is
      derived from the words photo, meaning light, and voltaic, meaning voltage
      producing. Sunlight, not heat, fuels photovoltaic cells. The cells, made mostly
      of the semiconductor silicon, convert sunlight directly into
      electricity.





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





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





In
      photovoltaics, light particles called photons penetrate the cell and knock
      electrons free from the silicon atoms, creating an electric current. As long
      as
      light flows into the cell, electrons flow out of the cell. The cell does not
      use
      up its electons and lose power, similar to a battery, as it is a converter
      that
      turns one kind of energy (sun light) into another (flowing
      electrons).




4
 *Table
          of Contents*




Photovoltaic
      cells are typically combined into modules that hold about 40 cells. Ten such
      modules are mounted in photovoltaic arrays. Such arrays can be used to generate
      electricity for a single building or, in large numbers, for a power
      plant.





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





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





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





**Research
      and Development**





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





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





We
      are
      currently developing our bio-based backsheet, the company’s first product to be
      commercialized in 2008. Our line of BioSolar Backsheets, based on the company’s
      proprietary materials technology, is designed specifically for c-Si solar cell
      manufacturers. These backsheets will be available in rolls of film for direct
      use in lamination and roll-to-roll assembly systems. We believe that using
      BioSolar Backsheets can reduce cost up to 50% over traditional backsheet
      materials.





In
      addition, the company commenced a test program to determine the physical
      properties and characteristics that will be most suitable for commercially
      available solar cell devices, and build prototype solar cells, as we attempt
      to
      validate the commercial viability of our product.





**Marketing
      Strategy**





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





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




5
 *Table
          of Contents*





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




**Backlog
      of Orders**





There
      are
      currently no orders for sales at this time.





**Government
      Contracts**





There
      are
      no government contracts at this time.





**Compliance
      with Environmental Laws and Regulations**





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





**Manufacturing
      and Distribution**




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




**Intellectual
      Property**





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





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





**Competition**





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





**Technology
      Development Partners**





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




**EMPLOYEES**





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





6
 *Table
          of Contents*




**ITEM
      1A. RISK FACTORS**





**WE
      HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN BASE AN INVESTMENT
      DECISION.**





Our
      company was formed on April 24, 2006 and therefore, we have a limited operating
      history upon which you can make an investment decision, or upon which we can
      accurately forecast future sales. You should, therefore, consider us subject
      to
      the business risks associated with a new business. The likelihood of our success
      must be considered in light of the expenses, difficulties and delays frequently
      encountered in connection with the formation and initial operations of a new
      business.




**WE
      HAVE A LIMITED HISTORY OF LOSSES AND HAVE NEVER REALIZED REVENUES TO DATE.
      WE
      EXPECT TO CONTINUE TO INCUR LOSSES AND NO ASSURANCE CAN BE GIVEN THAT WE WILL
      REALIZE REVENUES.  ACCORDINGLY, WE MAY NEVER ACHIEVE AND SUSTAIN
      PROFITABILITY.**




Since
      inception, we have incurred losses and have negative cash flows from operations
      and have never realized revenues. From inception through December 31, 2007,
      we
      incurred a net loss of $1,122,067. These factors, among others discussed in
      Note
      1 to the financial statements, raise substantial doubt about the ability to
      continue as a going concern. We expect to continue to incur net losses until
      we
      are able to realize revenues to fund our continuing operations. We may fail
      to
      achieve any or significant revenues from sales or achieve or sustain
      profitability. Accordingly, there can be no assurance of when, if ever, we
      will
      be profitable or be able to maintain profitability.





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





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





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





While
      we
      have made progress in the development of our products, we have not generated
      any
      revenues and we are unable to project when we will achieve profitability, if
      at
      all. As is the case with any new technology, we are a development stage company
      and expect the development process to continue. We may not be able to create
      our
      product offering, develop a customer base and markets, or implement the other
      features of our business strategy at the rate or to the extent presently
      planned. Growth beyond the product development stage will place a significant
      strain on our administrative, operational and financial resources. In
      addition, our operations will not be able to move out of the development
      stage without additional funding. If we are unable to successfully finance
      our
      future growth, establish and continue to upgrade our operating and financial
      control systems, recruit and hire necessary personnel or effectively manage
      unexpected expansion difficulties, our financial condition and results of
      operation could be materially and adversely affected.




**OUR
      REVENUES ARE DEPENDENT UPON ACCEPTANCE OF OUR PRODUCTS BY THE MARKET; THE
      FAILURE OF WHICH WOULD CAUSE TO CURTAIL OR CEASE
      OPERATIONS.**




We
      believe that virtually all of our revenues will come from the sale or license
      of
      our products. As a result, we will continue to incur substantial operating
      losses until such time as we are able to generate revenues from the sale or
      license of our products. There can be no assurance that businesses and customers
      will adopt our technology and products, or that businesses and prospective
      customers will agree to pay for or license our products. In the event that
      we
      are not able to significantly increase the number of customers that purchase
      or
      license our products, or if we are unable to charge the necessary prices or
      license fees, our financial condition and results of operations will be
      materially and adversely affected.




7
 *Table
          of Contents*




**WE
      DO NOT MAINTAIN THEFT OR CASUALTY INSURANCE, AND ONLY MAINTAIN MODEST LIABILITY
      AND PROPERTY INSURANCE COVERAGE AND THEREFORE WE COULD INCUR LOSSES AS A RESULT
      OF AN UNINSURED LOSS.**





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





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





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





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





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





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





We
      have
      filed a patent to protect the intellectual property rights for “A Method for
      Building Thin Film Flexible Solar Cells on Bio-Based Plastic Substrates”. To
      date our patent application has not been granted. We cannot be certain that
      this
      patent will be granted nor can we be certain that other companies have not
      filed
      for patent protection for this technology before us. Even if we are granted
      patent protection for our technology, there is no assurance that we will be
      in a
      position to enforce our patent rights. Failure to be granted patent protection
      for our technology could result in greater competition or in limited royalty
      payments. This could result in inadequate revenue and cause us to cease
      operations.




8
 *Table
          of Contents*




**OUR
      CURRENT AND POTENTIAL COMPETITORS, SOME OF WHOM HAVE GREATER RESOURCES THAN
      WE
      DO, MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAY CAUSE DEMAND FOR, AND THE
      PRICES OF, OUR PRODUCTS TO DECLINE.**




While
      there are a number of companies manufacturing components for PV devices, we
      do
      not know of any employing the use of bio-based materials. Furthermore, our
      competitors may combine with each other, and other companies may enter our
      markets by acquiring or entering into strategic relationships with our
      competitors. Current and potential competitors have established, or may
      establish, cooperative relationships among themselves or with third parties
      to
      increase the abilities of their PV components to address the needs of our
      prospective customers.





Many
      of
      our current and potential competitors have longer operating histories,
      significantly greater financial, technical, product development and marketing
      resources, greater name recognition and larger customer bases than we do. Our
      present or future competitors may be able to develop products comparable or
      superior to those we offer, adapt more quickly than we do to new technologies,
      evolving industry trends and standards or customer requirements, or devote
      greater resources to the development, promotion and sale of their products
      than
      we do. Accordingly, we may not be able to compete effectively in our markets,
      competition may intensify and future competition may harm our
      business.





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





Our
      directors, executive officers and principal stockholders and their affiliates
      beneficially own approximately 41% of the outstanding shares of our common
      stock. Accordingly, our executive officers, directors, principal stockholders
      and certain of their affiliates will have the ability to control the election
      of
      our Board of Directors and the outcome of matters submitted to a vote of our
      stockholders.




**RISKS
      RELATING TO OUR COMMON STOCK**




**BECAUSE
      THERE IS A LIMITED MARKET IN OUR COMMON STOCK, STOCKHOLDERS MAY HAVE DIFFICULTY
      IN SELLING OUR COMMON STOCK AND OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT
      PRICE SWINGS.**





There
      is
      a very limited market for our common stock. Since trading commenced in February
      2007, there has been little activity in our common stock and on some days there
      is no trading in our common stock. Because of the limited market for our common
      stock, the purchase or sale of a relatively small number of shares may have
      an
      exaggerated effect on the market price for our common stock. We cannot assure
      stockholders that they will be able to sell common stock or, that if they are
      able to sell their shares, that they will be able to sell the shares in any
      significant quantity at the quoted price.




**IF
      WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
      FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS
      TO
      SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES
      IN
      THE SECONDARY MARKET.**




Companies
      trading on the Over-The-Counter Bulletin Board, such as we are seeking to
      become, must be reporting issuers under Section 12 of the Securities Exchange
      Act of 1934, as amended, and must be current in their reports under Section
      13,
      in order to maintain price quotation privileges on the OTC Bulletin Board.
      If we
      fail to remain current on our reporting requirements, we could be removed from
      the OTC Bulletin Board. As a result, the market liquidity for our securities
      could be severely adversely affected by limiting the ability of broker-dealers
      to sell our securities and the ability of stockholders to sell their securities
      in the secondary market. In addition, we may be unable to get re-listed on
      the
      OTC Bulletin Board, which may have an adverse material effect on our
      Company.




9
 *Table
          of Contents*




**OUR
      COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SEC AND THE TRADING
      MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK
      CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR
      STOCK.**




The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a "penny stock," for the purposes relevant to us, as any equity
      security that has a market price of less than $5.00 per share or with an
      exercise price of less than $5.00 per share, subject to certain exceptions.
      For
      any transaction involving a penny stock, unless exempt, the rules
      require:




·
            that
                a broker or dealer approve a person's account for transactions in
                penny
                stocks; and




·
            the
                broker or dealer receive from the investor a written agreement to
                the
                transaction, setting forth the identity and quantity of the penny
                stock to
                be purchased.




In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must:





·
            obtain
                financial information and investment experience objectives of the
                person;
                and




·
            make
                a reasonable determination that the transactions in penny stocks
                are
                suitable for that person and the person has sufficient knowledge
                and
                experience in financial matters to be capable of evaluating the risks
                of
                transactions in penny stocks.




The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form:




·
            sets
                forth the basis on which the broker or dealer made the suitability
                determination; and




·
            that
                the broker or dealer received a signed, written agreement from the
                investor prior to the transaction.




Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
      "penny stock" rules. This may make it more difficult for investors to dispose
      of
      our common stock and cause a decline in the market value of our
      stock.




Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.




**WE
      DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE; ANY RETURN ON INVESTMENT MAY
      BE
      LIMITED TO THE VALUE OF OUR COMMON STOCK.**





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





10
 *Table
          of Contents*




**ITEM
      2. PROPERTIES.**





Our
      headquarters are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita,
      California 91387. We lease our facility under a lease that expires on May 14,
      2008. The size of our office is 144 square feet. Rent expense, net of sublease
      income, amounted to $9,950 and from inception (April 24, 2006) through December
      31, 2007.





**ITEM
      3. LEGAL PROCEEDINGS.**





We
      are
      not currently a party to, nor is any of our property currently the subject
      of,
      any pending legal proceeding that will have a material adverse effect on our
      business. None of our directors, officers or affiliates is involved in a
      proceeding adverse to our business or has a material interest adverse to our
      business.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





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





**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.**





On
      February 22, 2007, our common stock became eligible for quotation on the NASD's
      OTC Bulletin Board under the symbol "BSRC."





For
      the
      periods indicated, the following table sets forth the high and low bid prices
      per share of common stock. These high and low bid prices represent prices quoted
      by broker-dealers on the OTC Bulletin Board. These prices represent inter-dealer
      quotations without retail markup, markdown, or commission and may not
      necessarily represent actual transactions.





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





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




**
      Through March 21, 2008





**Common
      Stock**





Our
      Amended Articles of Incorporation authorize the issuance of 500,000,000 shares
      of common stock, $.0001 par value per share. Holders of shares of common stock
      are entitled to one vote for each share on all matters to be voted on by the
      stockholders. Holders of common stock have cumulative voting rights. Holders
      of
      shares of common stock are entitled to share ratably in dividends, if any,
      as
      may be declared, from time to time by the Board of Directors in its discretion,
      from funds legally available therefor. In the event of a liquidation,
      dissolution, or winding up of our company, the holders of shares of common
      stock are entitled to share pro rata all assets remaining after payment in
      full
      of all liabilities. Holders of common stock have no preemptive or other
      subscription rights, and there are no conversion rights or redemption or sinking
      fund provisions with respect to such shares.




11
 *Table
          of Contents*




As
      of
      March 21, 2008, our common stock was held by 139 stockholders of record and
      we
      had 131,706,777 shares of common stock issued and outstanding. We believe that
      the number of beneficial owners is substantially greater than the number of
      record holders because a significant portion of our outstanding common stock
      is
      held of record in broker street names for the benefit of individual investors.
      The transfer agent of our common stock is Computershare Trust company N.A.,
      P.O.
      Box 43070, Providence, RI 02940-3070.





**Dividend
      Policy**




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





**Equity
      Compensation Plan Information**




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






**EQUITY
      COMPENSATION PLAN INFORMATION**


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




**Unregistered
      Sales of Equity Securities**





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





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




12
 *Table
          of Contents*




**ITEM
      6. SELECTED FINANCIAL DATA**




**N/A**





**ITEM
      7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





**Special
      Note on Forward-Looking Statements.** Certain
      statements in “Management’s Discussion and Analysis or Plan of Operation” below,
      and elsewhere in this annual report, are not related to historical results,
      and
      are forward-looking statements. Forward-looking statements present our
      expectations or forecasts of future events. You can identify these statements
      by
      the fact that they do not relate strictly to historical or current facts. These
      statements involve known and unknown risks, uncertainties and other factors
      that
      may cause our actual results, levels of activity, performance or achievements
      to
      be materially different from any future results, levels of activity, performance
      or achievements expressed or implied by such forward-looking statements.
      Forward-looking statements frequently are accompanied by such words such as
      “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative
      of such terms or other words and terms of similar meaning. Although we believe
      that the expectations reflected in the forward-looking statements are
      reasonable, we cannot guarantee future results, levels of activity, performance,
      achievements, or timeliness of such results. Moreover, neither we nor any other
      person assumes responsibility for the accuracy and completeness of such
      forward-looking statements. We are under no duty to update any of the
      forward-looking statements after the date of this annual report. Subsequent
      written and oral forward looking statements attributable to us or to persons
      acting in our behalf are expressly qualified in their entirety by the cautionary
      statements and risk factors set forth below and elsewhere in this annual report,
      and in other reports filed by us with the SEC.





You
      should read the following description of our financial condition and results
      of
      operations in conjunction with the financial statements and accompanying notes
      included in this report beginning on page F-1.




**Overview**




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





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





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




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




**RESULTS
      OF OPERATIONS - YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR ENDED DECEMBER
      31, 2006**





*SELLING
      AND MARKETING EXPENSES*





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




13
 *Table
          of Contents*




*GENERAL
      AND ADMINISTRATIVE EXPENSES*





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





*RESEARCH
      AND DEVELOPMENT*





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





*NET
      LOSS*





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





*LIQUIDITY
      AND CAPITAL RESOURCES*





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





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





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





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





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





14
 *Table
          of Contents*




**PLAN
      OF OPERATION AND FINANCING NEEDS**




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





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




**ITEM
      8. FINANCIAL STATEMENTS.**





All
      financial information required by this Item is attached hereto at the end of
      this report beginning on page F-1 and is hereby incorporated by reference.




**ITEM
      9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE.**





None





**ITEM
      9A.****CONTROLS
      AND PROCEDURES.**





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





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





**Management’s
      Report of Internal Control over Financial Reporting.**





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





15
 *Table
          of Contents*





**ITEM
      9B.****OTHER
      INFORMATION.**





None.





**PART
      III**





**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT.**





The
      following table sets forth information about our executive officers, key
      employees and directors as of December 31, 2007.





**Name**
            
            **Age**
            
            **Position**David
                Lee
            
            48
            
            Chief
                Executive Officer and Acting Chief Financial OfficerStanley
                Levy
            
            68
            
            Vice
                President and Chief Technology OfficerSteven
                C. Bartling
            
            45
            
            DirectorDennis
                LePon
            
            60
            
            Director





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





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





Directors
      receive compensation for their services and reimbursement for their expenses
      as
      shall be determined from time to time by resolution of the Board. Our
      directors currently do not receive monetary compensation for their service
      on
      the Board of Directors.




Officers
      are appointed to serve for one year until the meeting of the board of directors
      following the annual meeting of stockholders and until their successors have
      been elected and qualified.




The
      principal occupations for the past five years (and, in some instances, for
      prior
      years) of each of our executive officers and directors, followed by our key
      employees, are as follows:




**David
      Lee** - Chief
      Executive Officer and Acting Chief Financial Officer: Dr. Lee has over 20 years
      of engineering, marketing, sales, and corporate management experience in the
      areas of military and consumer communication systems, automotive electronics,
      software development and consulting.  From 2004 to 2006, he was with
      Ramsey-Shilling Co. in the business of Commercial Real Estate Investment and
      Brokerage.  From 2000 to 2004, he served as Chief Operating Officer for
      Applied Reasoning, Inc., a Delaware company engaged in the business of Internet
      Software Development. From 1994 to 2000, he served as Vice Present and General
      Manager for RF-Link Technology, Inc., a California company engaged in the
      business of Wireless Technology Development and Manufacturing. Dr. Lee received
      a Ph.D. in Electrical Engineering from Purdue University in 1989, a Master
      of
      Science in Electrical Engineering from University of Michigan in 1986 and a
      Bachelor of Science in Electrical Engineering from the University of Texas
      at
      Austin in 1984.





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




16
 *Table
          of Contents*





**Steven
      C. Bartling -** Director: Steven C. Bartling has over 20 years of engineering and corporate
      management experience in the areas of ultra high performance digital CMOS
      (Complementary Metal Oxide Semiconductor) circuit design, high performance
      microprocessor architecture/design, systems on a chip, packaging, and testing.
      From 2002 to the present, Mr. Bartling has been employed in ASIC (Application
      Specific Integrated Circuit) research and development for Texas Instruments,
      Inc. From 2001 to 2002, he served as Director of Custom Design for Celerence,
      an
      Oragon company engaged in the business of Optical Communication Networking.
      Mr.
      Bartling received a Master of Science in Electrical Engineering from Georgia
      Institute of Technology in 1987 and a Bachelor of Science in Electrical
      Engineering from the University of Texas at Austin in 1985.




**Dennis
      LePon -** Director: Dennis LePon has over 35 years of financial, managerial, and business
      experience working for a bank, real estate finance companies, as well as a
      start
      up high tech company. From 1992 to the present, Mr. LePon has served as Chief
      Financial officer of Catalyst Resource Group, Inc., a real estate finance and
      consulting firm offering specialized financing for healthcare, C-Store, gasoline
      station and other varied commercial properties nationwide.  From 2002 to
      2004, he served as Chief Financial Officer for FoodMarket Place.com, a
      California company engaged in the business of Web Based marketing for food
      and
      restaurant industry partnered with Hewlett Packard. Mr. LePon received a
      Bachelor of Arts from California State University at Northridge in 1969 and
      a
      Master of Business Administration from the University of Southern California
      in
      1977.




**COMMITTEES
      OF THE BOARD**




We
      currently have no audit committee, compensation committee, nominations and
      governance committee of our board of directors.




**INDEBTEDNESS
      OF EXECUTIVE OFFICERS AND DIRECTORS**




No
      executive officer, director or any member of these individuals' immediate
      families or any corporation or organization with whom any of these individuals
      is an affiliate is or has been indebted to us since the beginning of our last
      fiscal year.





**FAMILY
      RELATIONSHIPS**




There
      are
      no family relationships among our executive officers and directors.




**CODE
      OF ETHICS**




We
      have
      adopted a Code of Ethics that applies to all of our directors, officers and
      employees. The text of the Code of Ethics is filed
      as
      an exhibit to this annual report on Form 10-K .
      Any
      waiver of the provisions of the Code of Ethics for executive officers and
      directors may be made only by the Audit Committee and, in the case of a waiver
      for members of the Audit Committee, by the Board of Directors. Any such waivers
      will be promptly disclosed to our shareholders.





17
 *Table
          of Contents*





**ITEM
      11.****EXECUTIVE
      COMPENSATION.**





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








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




**Outstanding
      Equity Awards at Fiscal Year-End Table.**





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


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




18
 *Table
          of Contents*




**Director
      Compensation**





The
      following table sets forth with respect to the named directors, compensation
      information inclusive of equity awards and payments made for the fiscal year
      ended December 31, 2007.




Name
                  (a)
            
            Fees
                Earned or Paid in Cash   ($)   (b)
            
            Stock
                Awards   ($)   (c)
            
            Option
                  Awards ($)   (d)
            
            Non-Equity
                Incentive Plan Compensation ($)   (e)
            
            Change
                in Pension Value and Nonqualified Deferred Compensation Earnings
 
                (f)
            
            All
                Other Compensation   ($)   (g)
            
            Total
                  ($)   (h)David
                Lee-CEO and Acting CFO
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-




**EMPLOYMENT
      AGREEMENTS**




We currently
      have no employment agreements with our executive officers.





**ITEM
      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**





The
      following table sets forth, as of March 21, 2008, the number of and percent
      of
      our common stock beneficially owned by:




·
            all
                directors and nominees, naming
                them,




·
            our
                executive officers,




·
            our
                directors and executive officers as a group, without naming them,
                and




·
            persons
                or groups known by us to own beneficially 5% or more of our common
                stock:




We
      believe that all persons named in the table have sole voting and investment
      power with respect to all shares of common stock beneficially owned by
      them.




A
      person
      is deemed to be the beneficial owner of securities that can be acquired by
      him
      within 60 days from March 21, 2008 upon the exercise of options, warrants or
      convertible securities. Each beneficial owner's percentage ownership is
      determined by assuming that options, warrants or convertible securities that
      are
      held by him, but not those held by any other person, and which are exercisable
      within 60 days of March 21, 2008 have been exercised and
      converted.


**Title
                  of Class**
              
              **Name
                  of**
                **Beneficial
                  Owner**
              
              **Number
                  of Shares****Beneficially
                  Owned**
              
              **Percent
                  of Total (1)**Common
                  Stock
              
              
              David
                  Lee
              
              
              49,500,000
              
              
              37.6
              %Common
                  Stock
              
              
              Stanley
                  Levy
              
              
              5,000,000
              
              
              3.8
              %Common
                  Stock
              
              
              Steven
                  C. Bartling
              
              
              1,000,000
              
              
              *Common
                  Stock
              
              
              Dennis
                  LePon
              
              
              1,000,000
              
              
              *Common
                  Stock
              
              
              All
                  Executive Officers and Directors as a Group (4 persons)
              
              
              56,500,000
              
              
              41.4
              %




*Less
      than one percent.




(i)
      Based
      upon 131,706,777 shares issued and outstanding as of March 21, 2008.





19
 *Table
          of Contents*





**ITEM
      13.****CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS.**




There
      were no material related party transactions which we entered into from
      inception (April 24, 2006) to December 31, 2007.





**ITEM
      14.****PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.**





**Audit
      Fees**




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





**Audit-Related
      Fees**





We
      incurred assurance and audit-related fees during 2007 and 2006 of $0 and $0
      respectively, to HJ Associates & Consultants, LLP in connection with the
      audit of the financial statements of Biosolar, Inc. from April 24, 2006
      (Inception) through December 31, 2007 for the reviews of registration statements
      and issuance of related consents and assistance with SEC comment
      letters.




**Tax
      Fees**




We
      incurred fees of $0 and $ 0 billed to us by HJ Associates & Consultants, LLP
      for services rendered to us for tax compliance, tax advice, or tax planning
      for
      the fiscal year ended December 31, 2006 and December 31, 2007,
      respectively.




**All
      Other Fees**




There
      were no fees billed to us by HJ Associates & Consultants, LLP for services
      rendered to us during the last two fiscal years, other than the services
      described above under “Audit Fees” and “Audit-Related Fees.”




As
      of the
      date of this filing, our current policy is to not engage HJ Associates &
Consultants, LLP to provide, among other things, bookkeeping services, appraisal
      or valuation services, or international audit services. The policy provides
      that
      we engage HJ Associates & Consultants, LLP to provide audit, tax, and other
      assurance services, such as review of SEC reports or filings.




20
 *Table
          of Contents*


**ITEM
          15.****EXHIBITS.**
 
 Exhibit
                    No.
                
                Description3.1
                
                Articles
                    of Incorporation of Biosolar Labs, Inc. filed with the Nevada
                    Secretary of State on April 24, 2006. ( Incorporated by reference
                    to the
                    Company’s Registration Statement on Form SB-2 filed with the SEC on
                    November 22, 2006)3.2
                
                Articles
                    of Amendment of Articles of Incorporation of Biosolar Labs, Inc.
                    filed
                    with the Nevada Secretary of State on May 25, 2006.( Incorporated
                    by
                    reference to the Company’s Registration Statement on Form SB-2 filed with
                    the SEC on November 22, 2006)3.3
                
                Articles
                    of Amendment of Articles of Incorporation of Biosolar Labs, Inc.
                    filed
                    with the Nevada Secretary of State on June 8, 2006. ( Incorporated
                    by
                    reference to the Company’s Registration Statement on Form SB-2 filed with
                    the SEC on November 22, 2006)3.4
                
                Bylaws
                    of Biosolar, Inc.( Incorporated by reference to the Company’s Registration
                    Statement on Form SB-2 filed with the SEC on November 22,
                    2006)
 
 **MATERIAL
          CONTRACTS**
  10.1
                
                Form
                    of Subscription Agreement dated as of May 26, 2006. ( Incorporated
                    by
                    reference to the Company’s Registration Statement on Form SB-2 filed with
                    the SEC on November 22, 2006)10.2
                
                Form
                    of Subscription Agreement dated as of July 17, 2006. ( Incorporated
                    by
                    reference to the Company’s Registration Statement on Form SB-2 filed with
                    the SEC on November 22, 2006)10.3
                
                Form
                    of Subscription Agreement dated as of October 11, 2006. ( Incorporated
                    by
                    reference to the Company’s Registration Statement on Form SB-2 filed with
                    the SEC on November 22, 2006)14.1
                
                Code
                    of Ethics (filed herewith)31.1
                
                Certification
                    by Chief Executive Officer and Acting Chief Financial Officer
                    pursuant to
                    Sarbanes-Oxley Section 302 (filed herewith).32.1
                
                Certification
                    by Chief Executive Officer and Acting Chief Financial Officer
                    pursuant to
                    18 U.S.C. Section 1350 (filed
                    herewith).
 
 21
 *Table
              of Contents*
  **SIGNATURES**
 
 In
          accordance with Section 13 or 15(d) of the Exchange Act, the registrant
          caused
          this report to be signed on its behalf by the undersigned, thereunto duly
          authorized, in the City of Los Angeles, State of California, on March 25,
          2008.
 
 **Biosolar,
                    Inc.**By:
                /s/
                    David LeeCHIEF
                    EXECUTIVE OFFICER
                  (PRINCIPALEXECUTIVE
                    OFFICER) AND
                  ACTING
                    CHIEFFINANCIAL
                    OFFICER
                  (PRINCIPAL
                    ACCOUNTINGAND
                    FINANCIAL OFFICER)
  Pursuant
          to the requirements of the Securities Act of 1933, this registration statement
          has been signed by the following persons in the capacities and on the date
          indicated:
  SIGNATURE
                
                TITLE
                
                DATE/S/
                    DAVID LEE
                  DAVID
                    LEE
                
                CHIEF
                    EXECUTIVE OFFICER
                    (PRINCIPAL
                      EXECUTIVE OFFICER),
                    ACTING
                      CHIEF FINANCIAL OFFICER
                
                MARCH
                    25, 2008(PRINCIPAL
                    ACCOUNTING ANDFINANCIAL
                    OFFICER) ANDCHAIRMAN
                    OF THE BOARD
                
                MARCH
                    25, 2008
  /S/
                    DENNIS LEPON
                  DENNIS
                    LEPON
                
                DIRECTOR
                
                MARCH
                  25, 2008
 22
  REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Board
                of
                Directors and Shareholders of
 BioSolar,
                Inc.
 (A
                Development Stage Company)
 Santa
                Clarita, CA
 
 We
                have
                audited the balance sheet of BioSolar, Inc. (a development stage
                company) as of
                December 31, 2007, and the related statements of operations, stockholders
                equity
                and cash flows for the years ended December 31, 2007 and 2006 and
                from inception
                on April 24, 2006 through December 31, 2007. These financial statements
                are the
                responsibility of the Company's management. Our responsibility is
                to express an
                opinion on these financial statements based on our audits.
 
 We
                conducted our audits in accordance with the standards of the Public
                Company
                Accounting Oversight Board (United States). Those standards require
                that we plan
                and perform the audit to obtain reasonable assurance about whether
                the financial
                statements are free of material misstatement. An audit includes examining,
                on a
                test basis, evidence supporting the amounts and disclosures in the
                financial
                statements. An audit also includes assessing the accounting principles
                used and
                significant estimates made by management, as well as evaluating the
                overall
                financial statement presentation. We believe that our audits provide
                a
                reasonable basis for our opinion.
 
 In
                our
                opinion, the financial statements referred to above present fairly,
                in all
                material respects, the financial position of BioSolar, Inc. as of
                December 31,
                2007, and the results of its operations and its cash flows for the
                years ended
                December 31, 2007 and 2006 and from inception of the development
                stage on April
                24, 2006 through December 31, 2007, in conformity with U.S. generally
                accepted
                accounting principles.
 
 The
                accompanying financial statements have been prepared assuming that
                the Company
                will continue as a going concern. As discussed in Note 1 to the financial
                statements, the Company has suffered losses from operations since
                inception.
                This raises substantial doubt about the Company's ability to continue
                as a going
                concern. Management's plans in regard to this matter are also described
                in Note
                1. The financial statements do not include any adjustments that might
                result
                from the outcome of this uncertainty.
  HJ
                  Associates & Consultants, LLP.
 Salt
                  Lake
                  City, Utah
 March
                  13,
                  2008
  F-1
 *Table
                    of Contents*
 BIOSOLAR,
                INC.
 (A
                  Development Stage Company)
 BALANCE
                    SHEET
 DECEMBER
                        31, 2007
 ASSETSCURRENT
                          ASSETSCash
                          & Cash Equivalents
                      
                      $
                      340,484Certificates
                          of Deposits
                      
                      
                      653,867Prepaid
                          Expenses
                      
                      
                      80,332Total
                          Current Assets
                      
                      
                      1,074,683PROPERTY
                          & EQUIPMENTComputer
                      
                      
                      1,978Less:
                          Accumulated Depreciation
                      
                      
                      (1,029
                      )Net
                          Property and Equipment
                      
                      
                      949OTHER
                          ASSETSDeposit
                      
                      
                      770Patents
                      
                      
                      7,265Total
                          Other Assets
                      
                      
                      8,035TOTAL
                          ASSETS
                      
                      $
                      1,083,667LIABILITIES
                          AND SHAREHOLDERS' EQUITYCURRENT
                          LIABILITIESAccrued
                          Expenses
                      
                      $
                      9,611Credit
                          Card Payable
                      
                      
                      995TOTAL
                          CURRENT LIABILITIES
                      
                      
                      10,606SHAREHOLDERS'
                          EQUITY EQUITYCommon
                          Stock, $0.0001 par value;500,000,000
                          authorized common shares131,706,777
                          shares issued and outstanding
                      
                      
                      13,170Additional
                          Paid in Capital
                      
                      
                      2,181,958Deficit
                          Accumulated during the Development Stage
                      
                      
                      (1,122,067
                      )TOTAL
                          SHAREHOLDERS' EQUITY
                      
                      
                      1,073,061TOTAL
                          LIABILITIES AND SHAREHOLDERS' EQUITY
                      
                      $
                      1,083,667
  The
          accompanying notes are an integral part of these financial
          statements
  F-2
 *Table
            of Contents*
  BIOSOLAR,
            INC.
 (A
              Development Stage Company)
 STATEMENTS
                OF OPERATIONS
  From
                            Inception
                        
                        From
                            InceptionApril
                            24, 2006
                        
                        April
                            24, 2006Year
                            Ended
                        
                        through
                        
                        throughDecember
                            31, 2007
                        
                        December
                            31, 2006
                        
                        December
                            31, 2007REVENUE
                        
                        $
                        -
                        
                        $
                        -
                        
                        $
                        -OPERATING
                            EXPENSESSelling
                            and marketing expenses
                        
                        
                        306,289
                        
                        
                        16,343
                        
                        
                        322,632General
                            and administrative expenses
                        
                        
                        390,276
                        
                        
                        262,336
                        
                        
                        652,613Research
                            and development
                        
                        
                        191,151
                        
                        
                        16,690
                        
                        
                        207,841Depreciation
                            and amortization
                        
                        
                        673
                        
                        
                        396
                        
                        
                        1,069TOTAL
                            OPERATING EXPENSES
                        
                        
                        888,389
                        
                        
                        295,765
                        
                        
                        1,184,155LOSS
                            FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
                        
                        
                        (888,389
                        )
                        
                        (295,765
                        )
                        
                        (1,184,155
                        )TOTAL
                            OTHER INCOME/(EXPENSE)Interest
                            income
                        
                        
                        40,683
                        
                        
                        21,404
                        
                        
                        62,088NET
                            LOSS
                        
                        $
                        (847,706
                        )
                        $
                        (274,361
                        )
                        $
                        (1,122,067
                        )BASIC
                            AND DILUTED LOSS PER SHARE
                        
                        $
                        (0.01
                        )
                        $
                        (0.00
                        )WEIGHTED-AVERAGE
                            COMMON SHARES OUTSTANDINGBASIC
                            AND DILUTED
                        
                        
                        129,113,689
                        
                        
                        110,953,304
  The
          accompanying notes are an integral part of these financial
          statements
  F-3
 *Table
              of Contents*
 BIOSOLAR,
          INC.
 (A
            Development Stage Company)
 STATEMENTS
            OF SHAREHOLDERS' EQUITY
 Common
                          stock
                      
                      Additional
                          Paid-in
                      
                      Deficit
                          Accumulated during the DevelopmentShares
                      
                      Amount
                      
                      Capital
                      
                      Stage
                      
                      TotalInception
                          April 24, 2006
                      
                      
                      -
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      -Issuance
                          of common stock in April 2006 for services
                        (1,000
                          common shares issued at $0.001 per share )
                      
                      
                      1,000
                      
                      
                      1
                      
                      
                      -
                      
                      
                      -
                      
                      
                      1Issuance
                          of founders shares in May 2006 for cash
                        (29,999,000
                          common shares issued at $0.00025 per share )
                      
                      
                      29,999,000
                      
                      
                      2,999
                      
                      
                      4,500
                      
                      
                      -
                      
                      
                      7,499Issuance
                          of founders shares in May 2006 for cash
                        (20,000,000
                          common shares issued at $0.00025 per share )
                      
                      
                      20,000,000
                      
                      
                      2,000
                      
                      
                      3,000
                      
                      
                      -
                      
                      
                      5,000Issuance
                          of founders shares in May 2006 for cash
                        (9,000,000
                          common shares issued at $0.00025 per share )
                      
                      
                      9,000,000
                      
                      
                      900
                      
                      
                      1,350
                      
                      
                      -
                      
                      
                      2,000Issuance
                          of common stock in May 2006 for cash
                        (25,000,000
                          common shares issued at $0.015 per share )
                      
                      
                      25,000,000
                      
                      
                      2,500
                      
                      
                      372,500
                      
                      
                      -
                      
                      
                      375,000Issuance
                          of founders shares in June 2006 for cash
                        (34,000,000
                          common shares issued at $0.00025 per share )
                      
                      
                      34,000,000
                      
                      
                      3,400
                      
                      
                      5,100
                      
                      
                      -
                      
                      
                      8,500Issuance
                          of common shares in June 2006 for cash
                        (90,000
                          common shares issued at $0.10 per share )
                      
                      
                      90,000
                      
                      
                      9
                      
                      
                      8,991
                      
                      
                      -
                      
                      
                      9,000Stocks
                          subscribed
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      250Issuance
                          of common shares in July 2006 for cash
                        (5,760,000
                          common shares issued at $0.10 per share )
                      
                      
                      5,760,000
                      
                      
                      576
                      
                      
                      575,424
                      
                      
                      -
                      
                      
                      576,000Issuance
                          of common shares in August 2006 for cash
                        (2,807,777
                          common shares issued at $0.10 per share )
                      
                      
                      2,807,777
                      
                      
                      281
                      
                      
                      280,497
                      
                      
                      -
                      
                      
                      280,778Issuance
                            of common shares in September 2006 for cash
                          (1,450,000
                            common shares issued at $0.10 per share )
                      
                      
                      1,450,000
                      
                      
                      145
                      
                      
                      144,855
                      
                      
                      -
                      
                      
                      145,000Issuance
                          of common shares in October 2006 for cash
                        (450,000
                          common shares issued at $0.10 per share )
                      
                      
                      450,000
                      
                      
                      45
                      
                      
                      44,955
                      
                      
                      -
                      
                      
                      45,000Net
                          Loss from Inception through December 31, 2006
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (274,361
                      )
                      
                      (274,361
                      )Balance
                          at December 31, 2006
                      
                      
                      128,557,777
                      
                      $
                      12,856
                      
                      $
                      1,441,172
                      
                      $
                      (274,361
                      )
                      $
                      1,179,667Issuance
                            of common shares in September 2007 for cash
                          (250,000
                            common shares issued at $0.20 per share)
                      
                      
                      250,000
                      
                      
                      25
                      
                      
                      49,975
                      
                      
                      -
                      
                      
                      50,000Issuance
                          of common shares in September 2007 for cash
                        (50,000
                          common shares issued at $0.20 per share )
                      
                      
                      50,000
                      
                      
                      5
                      
                      
                      9,995
                      
                      
                      -
                      
                      
                      10,000Issuance
                          of common shares in September 2007 for services
                        (100,000
                          common shares issued at $0.35 per share )
                      
                      
                      100,000
                      
                      
                      10
                      
                      
                      34,990
                      
                      
                      -
                      
                      
                      35,000Issuance
                          of common shares in September 2007 for services
                        (100,000
                          common shares issued at $0.26 per share )
                      
                      
                      100,000
                      
                      
                      10
                      
                      
                      25,990
                      
                      
                      -
                      
                      
                      26,000Issuance
                          of common shares in September 2007 for services
                        (40,000
                          common shares issued at $0.54 per share )
                      
                      
                      40,000
                      
                      
                      4
                      
                      
                      21,596
                      
                      
                      -
                      
                      
                      21,600Issuance
                          of common shares in October 2007 for services
                        (4,000
                          common shares issued at $0.54 per share )
                      
                      
                      4,000
                      
                      
                      0
                      
                      
                      2,160
                      
                      
                      -
                      
                      
                      2,160Issuance
                          of common shares in October 2007 for cash
                        (1,175,000
                          common shares issued at $0.20 per share )
                      
                      
                      1,175,000
                      
                      
                      117
                      
                      
                      234,883
                      
                      
                      -
                      
                      
                      235,000Issuance
                          of common shares in October 2007 for services
                        (250,000
                          common shares issued at $0.51 per share )
                      
                      
                      250,000
                      
                      
                      25
                      
                      
                      127,475
                      
                      
                      -
                      
                      
                      127,500Issuance
                          of common shares in November 2007 for cash
                        (1,180,000
                          common shares issued at $0.20 per share )
                      
                      
                      1,180,000
                      
                      
                      118
                      
                      
                      235,882
                      
                      
                      -
                      
                      
                      236,000Stock
                          issuance cost
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (2,160
                      )
                      
                      -
                      
                      
                      (2,160
                      )Net
                          Loss for the year ended December 31, 2007
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (847,706
                      )
                      
                      (847,706
                      )Balance
                          at December 31, 2007
                      
                      
                      131,706,777
                      
                      $
                      13,170
                      
                      $
                      2,181,958
                      
                      $
                      (1,122,067
                      )
                      $
                      1,073,061
 The
            accompanying notes are an integral part of these financial
            statements
 F-4
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 STATEMENTS
              OF CASH FLOWS
 From
                        Inception
                    
                    From
                        InceptionApril
                        24, 2006
                    
                    April
                        24, 2006Year
                        Ended
                    
                    through
                    
                    throughDecember
                        31, 2007
                    
                    December
                        31, 2006
                    
                    December
                        31, 2007CASH
                        FLOWS FROM OPERATING ACTIVITIES:Net
                        loss
                    
                    $
                    (847,706
                    )
                    $
                    (274,361
                    )
                    $
                    (1,122,067
                    )Adjustment
                        to reconcile net loss to net cashused
                        in operating activitiesDepreciation
                        & amortization expense
                    
                    
                    673
                    
                    
                    396
                    
                    
                    1,069Issuance
                        of stock for services
                    
                    
                    212,260
                    
                    
                    -
                    
                    
                    212,260(Increase)
                        Decrease in:Prepaid
                        expenses
                    
                    
                    (79,564
                    )
                    
                    (768
                    )
                    
                    (80,332
                    )Deposits
                    
                    
                    -
                    
                    
                    (770
                    )
                    
                    (770
                    )Patents
                    
                    
                    (7,305
                    )
                    
                    -
                    
                    
                    (7,305
                    )Increase
                        (Decrease) in:Accounts
                        Payable
                    
                    
                    (37,179
                    )
                    
                    37,179
                    
                    
                    -Accrued
                        Expenses
                    
                    
                    7,419
                    
                    
                    -
                    
                    
                    7,419Credit
                        Card Payable
                    
                    
                    (1,922
                    )
                    
                    2,917
                    
                    
                    995NET
                        CASH USED IN OPERATING ACTIVITIES
                    
                    
                    (753,324
                    )
                    
                    (235,407
                    )
                    
                    (988,731
                    )NET
                        CASH FLOWS USED IN INVESTING ACTIVITIES:Purchase
                        of Equipment
                    
                    
                    -
                    
                    
                    (1,978
                    )
                    
                    (1,978
                    )Investment
                        in Certificate of Deposits
                    
                    
                    362,037
                    
                    
                    (1,015,904
                    )
                    
                    (653,867
                    )NET
                        CASH (USED)/PROVIDED BY INVESTING ACTIVITIES
                    
                    
                    362,037
                    
                    
                    (1,017,882
                    )
                    
                    (655,845
                    )NET
                        CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds
                        from issuance of common stock
                    
                    
                    531,000
                    
                    
                    1,454,028
                    
                    
                    1,985,028NET
                        CASH PROVIDED BY FINANCING ACTIVITIES
                    
                    
                    531,000
                    
                    
                    1,454,028
                    
                    
                    1,985,028NET
                        INCREASE (DECREASE) IN CASH
                    
                    
                    139,713
                    
                    
                    200,739
                    
                    
                    340,452CASH,
                        BEGINNING OF PERIOD
                    
                    
                    200,739
                    
                    
                    -
                    
                    
                    -CASH,
                        END OF PERIOD
                    
                    
                    340,452
                    
                    
                    200,739
                    
                    
                    340,452SUPPLEMENTAL
                        DISCLOSURES OF CASH FLOW INFORMATIONInterest
                        paid
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -Taxes
                        paid
                    
                    $
                    800
                    
                    $
                    800
                    
                    $
                    1,600SUPPLEMENTAL
                        SCHEDULE OF NON-CASH TRANSACTIONSDuring
                        the year ended December 31, 2007, the Company issued494,000
                        shares of common stock for services at a fair value of$212,260.
  The
          accompanying notes are an integral part of these financial
          statements
  F-5
 *Table
              of Contents*
  BIOSOLAR,
            INC.
 (A
            Development Stage Company)
 NOTES
            TO
            FINANCIAL STATEMENTS
 DECEMBER
            31, 2007
 
 1.
                  ORGANIZATION
                      AND LINE OF BUSINESS
 
 Organization
  BioSolar,
            Inc. (the "Company") was incorporated in the state of Nevada on April
            24, 2006.
            The Company, based in Santa Clarita, California, began operations on
            April 25,
            2006 to develop and market a solar cell technology .
 
 Line
            of Business
  The
            Company is currently in the stage of developing
            an innovative technology to produce bio-based materials from renewable
            plant
            sources that will reduce the cost per watt of Photovoltaic solar cells.
            Once we
            complete our product development, we intend to market our bio-based solar
            cell
            components directly to photovoltaic module manufacturers .
 
 Going
            Concern
  The
            accompanying financial statements have been prepared on a going concern
            basis of
            accounting, which contemplates continuity of operations, realization
            of assets
            and liabilities and commitments in the normal course of business. The
            accompanying financial statements do not reflect any adjustments that
            might
            result if the Company is unable to continue as a going concern. The Company
            does
            not generate significant revenue, and has negative cash flows from operations,
            which raise substantial doubt about the Company’s ability to continue as a going
            concern. The ability of the Company to continue as a going concern and
            appropriateness of using the going concern basis is dependent upon, among
            other
            things, additional cash infusion. The Company has obtained funds from
            its
            shareholders since its’ inception through the year ended December 31, 2007.
            Management believes this funding will continue, and has also obtained
            funding
            from new investors. Management believes the existing shareholders and
            the
            prospective new investors will provide the additional cash needed to
            meet the
            Company’s obligations as they become due, and will allow the development of its
            core of business.
  2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
 
 This
            summary of significant accounting policies of BioSolar, Inc. is presented
            to
            assist in understanding the Company’s financial statements. The financial
            statements and notes are representations of the Company’s management, which is
            responsible for their integrity and objectivity. These accounting policies
            conform to accounting principles generally accepted in the United States
            of
            America and have been consistently applied in the preparation of the
            financial
            statements.
 
 Development
            Stage Activities and Operations
  The
            Company has been in its initial stages of formation and for the year
            ended
            December 31, 2007, had insignificant revenues. FASB #7 defines a development
            stage activity as one in which all efforts are devoted substantially
            to
            establishing a new business and even if planned principal operations
            have
            commenced, revenues are insignificant.
 
 Revenue
            Recognition
  The
            Company will recognize revenue when services are performed, and at the
            time of
            shipment of products, provided that evidence of an arrangement exists,
            title and
            risk of loss have passed to the customer, fees are fixed or determinable,
            and
            collection of the related receivable is reasonably assured. To date,
            the Company
            has had no revenues and is in the development stage.
 
 Cash
            and Cash Equivalent
  The
            Company considers all highly liquid investments with an original maturity
            of
            three months or less to be cash equivalents.
  F-6
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
 2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
 
 Investments
  Certificate
            of Deposits with banking institutions are short-term investments with
            initial
            maturities of more than 90 days. The carrying amount of these investments
            is a
            reasonable estimate of fair value due to their short-term nature.
  Use
            of
            Estimates
  The
            preparation of financial statements in conformity with generally accepted
            accounting principles requires management to make estimates and assumptions
            that
            affect the amounts reported in the accompanying financial statements.
            Significant estimates made in preparing these financial statements include
            the
            estimate of useful lives of property and equipment, the deferred tax
            valuation
            allowance, and the fair value of stock options. Actual results could
            differ from
            those estimates.
 
 Property
            and Equipment
  Property
            and equipment are stated at cost, and are depreciated using the modified
            accelerated cost recovery system (macrs) method over its estimated useful
            lives:
  Computer
                        equipment
                    5
                      Years
  Fair
            Value of Financial Instruments
  SFAS
            No.
            107, “Disclosures About Fair Value of Financial Instruments”, requires
            disclosure of the fair value information, whether or not recognized in
            the
            balance sheet, where it is practicable to estimate that value. As of
            December
            31, 2007, the amounts reported for cash, accounts receivable, accounts
            payable,
            accrued interest and other expenses, and notes payable approximate the
            fair
            value because of their short maturities.
 
 Loss
            per Share Calculations
  The
            Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
            calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic
            earnings per share and diluted earnings per share. Basic earnings per
            share is
            computed by dividing income available to common shareholders by the
            weighted-average number of common shares available. Diluted earnings
            per share
            is computed similar to basic earnings per share except that the denominator
            is
            increased to include the number of additional common shares that would
            have been
            outstanding if the potential common shares had been issued and if the
            additional
            common shares were dilutive. No shares for employee options or warrants
            were
            used in the calculation of the loss per share as they were all anti-dilutive.
            The Company’s diluted loss per share is the same as the basic loss per share for
            the year ended December 31, 2007, as the inclusion of any potential shares
            would
            have had an anti-dilutive effect due to the Company generating a
            loss.
 
 Reclassification
            of Expenses
  Certain
            amounts from the prior year have been reclassified to conform with the
            current
            year presentation.
 
 Income
            Taxes
  Deferred
            income taxes are provided using the liability method whereby deferred
            tax assets
            are recognized for deductible temporary differences and operating loss
            and tax
            credit carryforwards and deferred tax liabilities are recognized for
            taxable
            temporary differences. Temporary differences are the differences between
            the
            reported amounts of assets and liabilities and their tax bases. Deferred
            tax
            assets are reduced by a valuation allowance when, in the opinion of management,
            it is more likely than not that some portion or all of the deferred tax
            assets
            will not be realized. Deferred tax assets and liabilities are adjusted
            for the
            effects of the changes in tax laws and rates of the date of
            enactment.
  F-7
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
  2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
  When
            tax
            returns are filed, it is highly certain that some positions taken would
            be
            sustained upon examination by the taxing authorities, while others are
            subject
            to uncertainty about the merits of the position taken or the amount of
            the
            position that would be ultimately sustained. The benefit of a tax position
            is
            recognized in the financial statements in the period during which, based
            on all
            available evidence, management believes it is more likely than not that
            the
            position will be sustained upon examination, including the resolution
            of appeals
            or
  Research
            and Development
  Research
            and development costs are expensed as incurred. Total research and development
            costs were $191,151 and $16,690 for the years ended December 31, 2007
            and 2006,
            respectively.
 
 Advertising
            Costs
  The
            Company expenses the cost of advertising and promotional materials when
            incurred. Total advertising costs were $35,445 and $500 for the years
            ended
            December 31, 2007 and 2006, respectively.
 
 Recently
            Issued Accounting Pronouncements
 
 In
            November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment
            of
            ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that
            abnormal amounts of idle facility expense, freight, handling costs, and
            wasted
            materials (spoilage) should be recognized as current-period charges and
            require
            the allocation of fixed production overheads to inventory based on the
            normal
            capacity of the production facilities. The guidance is effective for
            inventory
            costs incurred during fiscal years beginning after June 15, 2005. Earlier
            application is permitted for inventory costs incurred during fiscal years
            beginning after November 23, 2004. The Company has evaluated the impact
            of the
            adoption of SFAS 151, and does not believe the impact will be significant
            to the
            Company's overall results of operations or financial position.
 
 In
            December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary
            Assets, an
            amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."The
            amendments made by Statement 153 are based on the principle that exchanges
            of
            nonmonetary assets should be measured based on the fair value of the
            assets
            exchanged. Further, the amendments eliminate the narrow exception for
            nonmonetary exchanges of similar productive assets and replace it with
            a broader
            exception for exchanges of nonmonetary assets that do not have commercial
            substance. Previously, Opinion 29 required that the accounting for an
            exchange
            of a productive asset for a similar productive asset or an equivalent
            interest
            in the same or similar productive asset should be based on the recorded
            amount
            of the asset relinquished. Opinion 29 provided an exception to its basic
            measurement principle (fair value) for exchanges of similar productive
            assets.
            The Board believes that exception required that some nonmonetary exchanges,
            although commercially substantive, be recorded on a carryover basis.
            By focusing
            the exception on exchanges that lack commercial substance, the Board
            believes
            this Statement produces financial reporting that more faithfully represents
            the
            economics of the transactions. The Statement is effective for nonmonetary
            asset
            exchanges occurring in fiscal periods beginning after June 15, 2005.
            Earlier
            application is permitted for nonmonetary asset exchanges occurring in
            fiscal
            periods beginning after the date of issuance. The provisions of this
            Statement
            shall be applied prospectively. The Company has evaluated the impact
            of the
            adoption of SFAS 153, and does not believe the impact will be significant
            to the
            Company's overall results of operations or financial position.
  F-8
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
 2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
 
 Recently
            Issued Accounting Pronouncements (continued)
 
 In
                      December 2004, the Financial Accounting Standards Board issued
                      two FASB
                      Staff Positions - FSP FAS 109-1, Application of FASB Statement
                      109
                      "Accounting for Income Taxes" to the Tax Deduction on Qualified
                      Production
                      Activities Provided by the American Jobs Creation Act of 2004,
                      and FSP FAS
                      109-2 Accounting and Disclosure Guidance for the Foreign Earnings
                      Repatriation Provision within the American Jobs Creation Act
                      of 2004.
                      Neither of these affected the Company as it does not participate
                      in the
                      related activities.
 
 In
            December 2004, the FASB issued Statement of Financial Accounting Standards
            No.
            123R, Share-based Payment. SFAS 123R revises SFAS 123 and supersedes
            APB 25.
            SFAS 123R will be effective for the period ending December 31, 2006,
            and applies
            to transactions in which an entity exchanges its equity instruments for
            goods or
            services and also applies to liabilities an entity may incur for goods
            or
            services that are to follow a fair value of those equity instruments.
            Under SFAS
            123R, we will be required to follow a fair value approach using an
            option-pricing model, such as the Black Scholes option valuation model,
            at the
            date of a stock option grant. The deferred compensation calculated under
            the
            fair value method would then be amortized over the respective vesting
            period of
            the stock option. The adoption of SFAS 123R is expected to have a material
            impact on our results of operations.
 
 In
            March
            2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment”
(“SAB 107”), which provides interpretive guidance related to the interaction
            between SFAS 123(R) and certain SEC rules and regulations. It also provides
            the
            SEC staff’s views regarding valuation of share-based payment arrangements. In
            April 2005, the SEC amended the compliance dates for SFAS 123(R), to
            allow
            companies to implement the standard at the beginning of their next fiscal
            year,
            instead of the next reporting period beginning after June 15, 2005. Management
            is currently evaluating the impact SAB 107 will have on our consdensed
            financial
            statements.
 
 In
            March
            2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
            Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
            the identification of and financial reporting for legal obligations to
            perform
            an asset retirement activity. The Interpretation requires recognition
            of a
            liability for the fair value of a conditional asset retirement obligation
            when
            incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
            defines when an entity would have sufficient information to reasonably
            estimate
            the fair value of an asset retirement obligation. The provision is effective
            no
            later than the end of fiscal years ending after December 15, 2005. The
            Company
            will adopt FIN 47 beginning the first quarter of fiscal year 2006 and
            does not
            believe the adoption will have a material impact on its financial position
            or
            results of operations or cash flows.
 
 In
            May
            2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
            Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
            Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
            Financial Statements,” and represents another step in the FASB’s goal to
            converge its standards with those issued by the IASB. Among other changes,
            Statement 154 requires that a voluntary change in accounting principle
            be
            applied retrospectively with all prior period financial statements presented
            on
            the new accounting principle, unless it is impracticable to do so. Statement
            154
            also provides that (1) a change in method of depreciating or amortizing
            a
            long-lived non-financial asset be accounted for as a change in estimate
            (prospectively) that was effected by a change in accounting principle,
            and (2)
            correction of errors in previously issued financial statements should
            be termed
            a “restatement.” The new standard is effective for accounting changes and
            correction of errors made in fiscal years beginning after December 15,
            2005.
            Early adoption of this standard is permitted for accounting changes and
            correction of errors made in fiscal years beginning after June 1, 2005
            . The
            Company has evaluated the impact of the adoption of Statement 154 and
            does not
            believe the impact will be significant to the Company's overall results
            of
            operations or financial position.
  F-9
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
 2.
                  SUMMARY
                      OF SIGNIFICANT ACCOUNTING POLICIES
                      (Continued)
  Recently
            Issued Accounting Pronouncements (continued
  In
            February of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
            Financial Instruments”, which is intended to simplify the accounting and improve
            the financial reporting of certain hybrid financial instruments (i.e.,
            derivatives embedded in other financial instruments). The statement amends
            SFAS
            No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and
            SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
            Extinguishments of Liabilities—a replacement of FASB Statement No. 125.” SFAS
            No. 155 is effective for all financial instruments issued or acquired
            after the
            beginning of an entity's first fiscal year that begins after September
            15,
            2006.. The Company is currently evaluating the impact SFAS No. 155 will
            have on
            its financial statements, if any.
  In
            July
            2006, the FASB issued Interpretation No. 48 (“FIN 48”), *Accounting
            for Uncertainty in Income Taxes* ,
            which
            clarifies the accounting for uncertainty in income taxes recognized in
            the
            financial statements in accordance with FASB Statement No. 109, *Accounting
            for Income Taxes* .
            FIN 48
            provides guidance on the financial statement recognition and measurement
            of a
            tax position taken or expected to be taken in a tax return. FIN 48 also
            provides
            guidance on derecognition, classification, interest and penalties, accounting
            in
            interim periods, disclosures, and transition. FIN 48 is effective for
            fiscal
            years beginning after December 15, 2006. The Company is currently evaluating
            the
            impact of this standard on the financial statements.
  Stock-Based
            Compensation ****
  As
                      of December 31, 2007, the Company adopted Financial Accounting
                      Standards
                      No. 123 (revised 2004), “Share-Based Payment” (FAS) No. 123R, that
                      addresses the accounting for share-based payment transactions
                      in which an
                      enterprise receives employee services in exchange for either
                      equity
                      instruments of the enterprise or liabilities that are based
                      on the fair
                      value of the enterprise’s equity instruments or that may be settled by the
                      issuance of such equity instruments. The statement eliminates
                      the ability
                      to account for share-based compensation transactions, as we
                      formerly did,
                      using the intrinsic value method as prescribed by Accounting
                      Principles
                      Board, or APB, Opinion No. 25, “Accounting for Stock Issued to Employees,”
                      and generally requires that such transactions be accounted
                      for using a
                      fair-value-based method and recognized as expenses in our statement
                      of
                      income.**The
                      adoption of (FAS) No. 123R by the Company had no material impact
                      on the
                      statement of income.
 
 3.
                  CAPITAL
                      STOCK
 
 During
            the year ended December 31, 2007, the Company’s issued 2,655,000 shares of
            common stock at a price of $0.20 per share for cash in the amount of
            $531,000;
            Also, the Company issued 494,000 shares of common stock at a price between
            $0.26
            and $0.54 per share for services at a fair value of $212,260. During
            the period
            ended December 31, 2006, the Company issued 450,000 shares of common
            stock at a
            purchase price of $0.10 per share pursuant to a private placement made
            pursuant
            to Rule 506 of Regulation D promulgated under section 4(2) of the Securities
            Act
            of 1933, as amended.
  4.
                  RENTAL
                      LEASE
 
 The
                      Company renewed its lease for a six month term expiring on
                      May 1, 2008.
                      The rent paid for the years ended December 31, 2007 and 2006
                      were $6,158
                      and $3,960.
  F-10
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
 5.
                  INTANGIBLE
                      ASSETS
 
 Intangible
                      assets that have finite useful lives continue to be amortized
                      over their
                      useful lives, and are reviewed for impairment when warranted
                      by economic
                      condition.
  Useful
                        Lives
                    
                    2007
                    
                    2,006Patents-gross
                    
                    
                    
                    
                    $
                    7,306
                    
                    $
                    -Less
                        accumulated amortization
                    
                    
                    20
                        years
                    
                    
                    41
                    
                    
                    -$
                    7,265
                    
                    $
                    -
 6.
                  INCOME
                      TAXES
 
 The
                      Company files income tax returns in the U.S. Federal jurisdiction,
                      and the
                      state of California.
 
 The
                      Company adopted the provisions of FASB Interpretation No. 48,
                      Accounting
                      for Uncertainty in Income Taxes, on January 1, 2007. As a result
                      of the
                      implementation of interpretation 48, there has been no effect
                      on the
                      Company’s retained deficit. A reconciliation of the beginning and ending
                      amount of unrecognized tax benefits is as
                      follows:
  Balance
                        at June 1, 2007
                    
                    $
                    -Additions
                        based on tax positions related to the current year
                    
                    
                    -Balance
                        at December 31, 2007
                    
                    $
                    -
  Included
                      in the balance at December 31, 2007, are no tax positions for
                      which the
                      ultimate deductibility is highly certain but for which there
                      is
                      uncertainty about the timing of such deductibility. Because
                      of the impact
                      of deferred tax accounting, other than interest and penalties,
                      the
                      disallowance of the shorter deductibility period would not
                      affect the
                      annual effective tax rate but would accelerate the payment
                      of cash to the
                      taxing authority to an earlier
                      period.
 
 The
                      Company's policy is to recognize interest accrued related to
                      unrecognized
                      tax benefits in interest expense and penalties in operating
                      expenses.
                      During the period ended December 31, 2007, the Company did
                      not recognize
                      interest and penalties.
 
 7.
                  DEFERRED
                      TAX BENEFIT
 At
                      December 31, 2007, the Company had net operating loss carry-forwards
                      of
                      approximately $847,674, which expire at dates that have not
                      been
                      determined. No tax benefit has been reported in the December
                      31, 2007
                      financial statements since the potential tax benefit is offset
                      by a
                      valuation allowance of the same
                      amount..
 
 A
                      reconciliation of income tax expense that would result from
                      applying the
                      U.S. Federal and State rate of 40% to pretax income from continuing
                      operations for the year ended December 31, 2007, with federal
                      income tax
                      expense presented in the financial statements is as
                      follows:
  F-11
 *Table
                of Contents*
  BIOSOLAR,
              INC.
 (A
              Development Stage Company)
 NOTES
              TO
              FINANCIAL STATEMENTS
 DECEMBER
              31, 2007
 7.
                  DEFERRED
                      TAX BENEFIT (continued)
  2007Income
                        tax benefit computed at U.S. Federalstatutory
                        rate of 34%
                    
                    $
                    (288,209
                    )State
                        Income taxes, net of benefit of federal taxes
                    
                    
                    (50,860
                    )R&D
                    
                    
                    3,650Non
                        deductible stock compensation
                    
                    
                    84,904Other
                    
                    
                    442Valuation
                        Allowance
                    
                    
                    250,073Income
                        tax expense
                    
                    $
                    -
  Deferred
                      taxes are provided on a liability method whereby deferred tax
                      assets are
                      recognized for deductible differences and operating loss and
                      tax credit
                      carry-forwards and deferred tax liabilities are recognized
                      for taxable
                      temporary differences. Temporary differences are the difference
                      between
                      the reported amounts of assets and liabilities and their tax
                      bases.
                      Deferred tax assets are reduced by a valuation allowance when,
                      in the
                      opinion of management, it is more likely than not that some
                      portion or all
                      of the deferred tax assets will not be realized. Deferred tax
                      assets and
                      liabilities are adjusted for the effects of changes in tax
                      laws and rates
                      on the date of enactment.
 
 Deferred
                      taxes are provided on a liability method whereby deferred tax
                      assets are
                      recognized for deductible differences and operating loss and
                      tax credit
                      carry-forwards and deferred tax liabilities are recognized
                      for taxable
                      temporary differences. Temporary differences are the difference
                      between
                      the reported amounts of assets and liabilities and their tax
                      bases.
 
 Deferred
                      tax assets are reduced by a valuation allowance when, in the
                      opinion of
                      management, it is more likely than not that some portion or
                      all of the
                      deferred tax assets will not be realized. Deferred tax assets
                      and
                      liabilities are adjusted for the effects of changes in tax
                      laws and rates
                      on the date of enactment.
 
 Net
            deferred tax liabilities consist of the following components as of December
            31,
            2007:
  2007Deferred
                        tax assets:NOL
                        carryover
                    
                    $
                    847,674R
                        & D credit
                    
                    
                    3,650Deferred
                        tax liabilites:Depreciation
                    
                    
                    (79
                    )Less
                        Valuation Allowance
                    
                    
                    (851,245
                    )Net
                        deferred tax asset
                    
                    $
                    -
  Due
                      to the change in ownership provisions of the Tax Reform Act
                      of 1986, net
                      operating loss carry-forwards for Federal income tax reporting
                      purposes
                      are subject to annual limitations. Should a change in ownership
                      occur, net
                      operating loss carryforwards may be limited as to use in future
                      years.
 F-12