10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

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

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 000-54819

BIOSOLAR, INC.

(Name of registrant in its charter)

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

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

(Address of principal executive offices) (Zip Code)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

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

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

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

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

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

The number of shares of registrant’s common stock issued and outstanding as of August 2, 2019 was 99,412,885.

BIOSOLAR, INC.

INDEX

		Page
PART I: FINANCIAL INFORMATION		1
ITEM 1	FINANCIAL STATEMENTS (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statement of Shareholders’ Deficit	3
	Condensed Statements of Cash Flows	4
	Notes to the Condensed Financial Statements	5
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4	CONTROLS AND PROCEDURES	15
PART II: OTHER INFORMATION		16
ITEM 1	LEGAL PROCEEDINGS	16
ITEM 1A	RISK FACTORS	16
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4	MINE SAFETY DISCLOSURES	16
ITEM 5	OTHER INFORMATION	16
ITEM 6	EXHIBITS	17
SIGNATURES		18

i

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOSOLAR, INC.

CONDENSED BALANCE SHEETS

	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	73,167		$	82,697
Prepaid expenses		30,327			23,107
TOTAL CURRENT ASSETS		103,494			105,804
PROPERTY AND EQUIPMENT
Machinery and equipment		37,225			37,225
Less accumulated depreciation		(28,348	)		(26,814	)
NET PROPERTY AND EQUIPMENT		8,877			10,411
OTHER ASSETS
Patents, net of amortization of $10,579 and $9,067, respectively		34,757			36,269
Deposit		770			770
TOTAL OTHER ASSETS		35,527			37,039
TOTAL ASSETS	$	147,898		$	153,254
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	6,174		$	896
Accrued expenses		735,764			641,366
Derivative liability		10,609,017			14,032,942
Convertible promissory notes net of debt discount of $241,739 and $265,873, respectively		667,287			493,287
TOTAL CURRENT LIABILITIES		12,018,242			15,168,491
LONG TERM LIABILITIES
Convertible promissory notes net of debt discount of $32,466 and $27, respectively		1,897,534			1,984,973
TOTAL LONG TERM LIABILITIES		1,897,534			1,984,973
TOTAL LIABILITIES		13,915,776			17,153,464
SHAREHOLDERS' DEFICIT
Preferred stock, $0.0001 par value; 10,000,000 authorized shares, none issued and outstanding		-			-
Common stock, $0.0001 par value; 500,000,000 authorized shares 88,033,767 and 60,639,308 shares issued and outstanding, respectively		8,803			6,064
Additional paid in capital		12,335,844			11,646,932
Accumulated deficit		(26,112,525	)		(28,653,206	)
TOTAL SHAREHOLDERS' DECIFIT		(13,767,878	)		(17,000,210	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	147,898		$	153,254

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

1

BIOSOLAR, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
REVENUE	$	-		$	-		$	-		$	-
OPERATING EXPENSES
General and administrative expenses		117,887			107,677			224,020			203,608
Research and development		45,133			40,041			120,134			93,441
Depreciation and amortization		1,317			1,809			3,045			3,343
TOTAL OPERATING EXPENSES		164,337			149,527			347,199			300,392
LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES)		(164,337	)		(149,527	)		(347,199	)		(300,392	)
OTHER INCOME/(EXPENSES)
Interest income		10			7			17			13
Loss on conversion of debt		(200,207	)		(71,258	)		(404,741	)		(234,733	)
Gain (Loss) on change in derivative liability		(330,425	)		(29,268,085	)		3,770,118			(29,464,894	)
Interest expense		(244,974	)		(68,424	)		(477,514	)		(129,601	)
TOTAL OTHER INCOME (EXPENSES)		(775,596	)		(29,407,760	)		2,887,880			(29,829,215	)
NET INCOME (LOSS)	$	(939,933	)	$	(29,557,287	)	$	2,540,681		$	(30,129,607	)
BASIC AND DILUTED INCOME (LOSS) PER SHARE	$	(0.01	)	$	(0.56	)	$	0.03		$	(0.62	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED		81,189,871			52,917,851			73,766,143			48,885,588

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

2

BIOSOLAR, INC.

CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

	SIX MONTHS ENDED JUNE 30, 2018
									Additional
	Preferred Stock				Common Stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2017		-	$	-		41,485,051	$	4,149	$	11,127,693	$	(18,786,377	)	$	(7,654,535	)
Issuance of common shares for converted promissory notes and accrued interest		-		-		8,704,271		870		241,474		-			242,344
Net Loss		-		-		-		-		-		(572,318	)		(572,318	)
Balance at March 31, 2018 (unaudited)		-		-		50,189,322		5,019		11,369,167		(19,358,695	)		(7,984,509	)
Issuance of common shares for converted promissory notes and accrued interest		-		-		6,741,070		674		107,495		-			108,169
Net Loss		-		-		-		-		-		(29,557,289	)		(29,557,289	)
Balance at June 30, 2018 (unaudited)		-	$	-		56,930,392	$	5,693	$	11,476,662	$	(48,915,984	)	$	(37,433,629	)

	SIX MONTHS ENDED JUNE 30, 2019
									Additional
	Preferred Stock				Common Stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2018		-	$	-		60,639,308	$	6,064	$	11,646,932	$	(28,653,206	)	$	(17,000,210	)
Issuance of common shares for converted promissory notes and accrued interest		-		-		12,263,930		1,226		349,130		-			350,356
Net Income		-		-		-		-		-		3,480,614			3,480,614
Balance at March 31, 2019 (unaudited)		-	$	-		72,903,238	$	7,290	$	11,996,062	$	(25,172,592	)	$	(13,169,240	)
Issuance of common shares for converted promissory notes and accrued interest		-		-		15,130,529		1,513		339,782		-			341,295
Net Loss		-		-		-		-		-		(939,933	)		(939,933	)
Balance at June 30, 2019 (unaudited)		-	$	-		88,033,767	$	8,803	$	12,335,844	$	(26,112,525	)	$	(13,767,878	)

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

3

BIOSOLAR, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Unaudited)

	Six Months Ended
	June 30, 2019			June 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	2,540,681		$	(30,129,607	)
Adjustment to reconcile net income(loss) to net cash used in operating activities
Depreciation and amortization expense		3,045			3,343
(Gain) Loss on net change in derivative liability		(3,770,118	)		29,464,894
Loss on conversion of debt		404,741			234,733
Amortization of debt discount recognized as interest expense		337,889			13,016
(Increase) Decrease in Changes in Assets
Prepaid expenses		(7,219	)		(11,430	)
Increase (Decrease) in Changes in Liabilities
Accounts payable		5,278			(18,512	)
Accrued expenses		122,173			114,828
NET CASH (USED) IN OPERATING ACTIVITIES		(363,530	)		(328,735	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		-			(5,770	)
NET CASH (USED IN) INVESTING ACTIVITIES		-			(5,770	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible promissory notes		354,000			328,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		354,000			328,000
NET DECREASE IN CASH		(9,530	)		(6,505	)
CASH, BEGINNING OF PERIOD		82,697			119,446
CASH, END OF PERIOD	$	73,167		$	112,941
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	534		$	1,759
Taxes paid	$	-		$	-
SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS
Common stock issued for convertible notes and accrued interest	$	691,651		$	350,513

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

4

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

1. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2018.

Going Concern 

The accompanying unaudited condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying unaudited condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has historically obtained funds through private placements offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Revenue Recognition

The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has not had significant revenues and is in the development stage.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives

Stock-Based Compensation

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

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility.  The Company used Black Scholes to value its stock option awards which incorporated the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. The stock options terminate seven (7) years from the date of grant or upon termination of employment. As of June 30, 2019, 15,950,000 stock options are outstanding.

5

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Net Earnings (Loss) per Share Calculations 

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

  

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

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

Fair Value of Financial Instruments

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

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

● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	10,609,017	$	-	$	-	$	10,609,017
Total Liabilities measured at fair value	$	10,609,017	$	-	$	-	$	10,609,017

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

Balance as of December 31, 2018	$	14,032,942
Fair value of derivative liabilities issued		346,193
(Gain) on change in derivative liability		(3,770,118	)
Balance as of June 30, 2019	$	10,609,017

Recently Issued Accounting Pronouncements

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company has evaluated the impact of the adoption of ASU 2018-07, which has no impact on the Company’s financial statements.

6

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Pronouncements (Continued)

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

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

3. CAPITAL STOCK

During the six months ended June 30, 2019, the Company issued 27,394,459 shares of common stock upon conversion of convertible promissory notes in the amount of $259,134, plus accrued interest of $27,776, with an aggregate fair value loss of $404,741 at prices ranging from $0.0192 - $0.0341.

4. STOCK OPTIONS

Stock Options

The Company did not grant any stock options during the six months ended June 30, 2019 and 2018, respectively.

	6/30/2019				6/30/2018
	Number of Options		Weighted average exercise price		Number of Options			Weighted average exercise price
Outstanding as of the beginning of the periods		15,950,000	$	0.23		15,975,000		$	0.23
Granted		-		-		-			-
Exercised		-		-		-			-
Expired		-		-		(25,000	)		0.40
Outstanding as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23
Exercisable as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23

The weighted average remaining contractual life of options outstanding as of June 30, 2019 and 2018 was as follows:

6/30/2019								6/30/2018
Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)		Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.09		2,450,000		2,450,000		2.73	$	0.09		2,450,000		2,450,000		3.73
$	0.26		13,500,000		13,500,000		3.18	$	0.26		13,500,000		13,500,000		4.18
			15,950,000		15,950,000						15,950,000		15,950,000

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

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

7

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

5. CONVERTIBLE PROMISSORY NOTES

As of June 30, 2019, the outstanding convertible promissory notes net of debt discount are summarized as follows:

Convertible Promissory Notes, net of debt discount	$	2,564,821
Less current portion		667,287
Total long-term liabilities	$	1,897,534

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

June 30,	Amount
2020		667,287
2021		748,000
2022		510,000
2023		533,855
2024		105,679
	$	2,564,821

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

The Company issued an unsecured convertible promissory note (the May 2014 Note”), in the amount of $500,000 on May 2, 2014. The May Note matures September 18, 2019. The May 2014 Note bears interest at 10% per annum. The May 2014 Note is convertible into shares of the Company’s common stock at a conversion price of a) the lesser of $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance with the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the May 2014 Note has been determined by using the Binomial lattice formula from the effective date of each tranche. During the six months ended the Company issued 10,057,907 shares of common stock upon conversion of principal in the amount of $37,134, plus accrued interest of $16,676, with a fair value loss on conversion of debt in the amount of $213,121. As of June 30, 2019, the remaining balance of the May 2014 Note was $170,026.

The Company issued various unsecured convertible promissory notes (the 2015-2018 Notes”) in the aggregate amount of $2,500,000 on various dates of January 30, 2015 through February 26, 2018. On January 17, 2019, the Company received an additional tranche in the amount of $25,000, associated with the February 26, 2018 Note for a total aggregate of $2,340,000. The 2015-2018 Notes matures on dates from January 30, 2020 thru January 17, 2024. The 2015-2018 Notes bears interest at 10% per annum. The 2015-2018 Notes are convertible into shares of the Company’s common stock at conversion prices ranging from the a) the lesser of $0.03 to $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the lowest trade price recorded since the original effective date, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance within the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the 2015-2018 Notes have been determined by using the Binomial lattice formula from the effective date of each tranche. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $89,089 during the six months ended June 30, 2019. As of June 30, 2019, the aggregate balances of the 2015-2018 Notes were $2,340,000.

The Company issued various unsecured convertible promissory notes (the “Jul-Jun 2019 Notes”) in the aggregate principal amount of $444,000 on various dates of July 23, 2018 through June 3, 2019, with $222,000 of the notes issued in 2019. The Jul-Jun 2019 Notes matures on dates from July 23, 2019 thru June 3, 2020. The Jul-Jun 2019 Notes bears interest at 10% per annum. The Jul-Jun 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) trading prices during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Jul-Jun 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jul-Jun 2019 Notes. The fair value of the Jul-Jun 2019 Notes has been determined by using the Binomial lattice formula from the effective date of each note. During the period ended June 30, 2019, the Company issued 17,336,552 upon conversion of principal in the amount of $222,000, plus accrued interest of $11,100, with a fair value loss on conversion of debt in the amount of $191,619, The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $111,444 during the six months ended June 30, 2019. As of June 30, 2019, the remaining aggregate balances of the Jul-Jun 2019 Notes were $222,000.

8

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

5. CONVERTIBLE PROMISSORY NOTES (Continued)

The Company issued various unsecured convertible promissory notes (the “Feb-Apr 2019 Notes”) in the aggregate principal amount of $107,000. The Company paid an original issue discount of $4,000 and received funds in the amount of $103,000. The Feb-Apr 2019 Notes mature on dates from February 25, 2020 and April 5, 2020. The Feb-Apr 2019 Notes bears interest at 10% per annum. The Feb-Apr 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Feb-Apr 2019 Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb-Apr 2019 Notes. The fair value of the Feb-Apr 2019 Notes has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $31,333 during the six months ended June 30, 2019. As of June 30, 2019, the balance of the Feb-Apr 2019 Notes was $107,000.

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

6. DERIVATIVE LIABILITIES

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

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

During the six months ended June 30, 2019, as a result of the convertible notes (“Notes”) issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $346,193, based upon a Binomial-Model calculation. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes.

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

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

	6/30/2019
Risk free interest rate		1.71% - 2.44%
Stock volatility factor		91.0% -174.0%
Weighted average expected option life		6 months - 5 years
Expected dividend yield		None

9

BIOSOLAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – UNAUDITED

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

7. SUBSEQUENT EVENT

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

On July 1, 2019, the Company issued 2,540,878 shares of common stock upon conversion of principal in the amount of $9,250, plus accrued interest of $4,344.

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

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

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

10

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

Special Note on Forward-Looking Statements.

Certain statements in “Management’s Discussion and Analysis or Plan of Operation” below, and elsewhere in this quarterly report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth in our annual report on Form 10-K filed with the SEC on March 21, 2019, and in other reports filed by us with the SEC.

You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this report.

Overview

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

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

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

Recent Transactions

None.

Application of Critical Accounting Policies

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

11

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Fair Value of Financial Instruments

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

Recently Issued Accounting Pronouncements

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

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

OPERATING EXPENSES 

General and Administrative Expenses

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

Research and Development

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

Other Income/(Expenses)

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

12

Net Income (Loss)

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

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

OPERATING EXPENSES 

General and Administrative Expenses

General and administrative (“G&A”) expenses increased by $20,412 to $224,020 for the six months ended June 30, 2019, compared to $203,608 for the prior period ended June 30, 2018. This increase in G&A expenses was the result of an increase in professional fees of $21,591, and an overall decrease of $1,179 in other G&A expenses.

Research and Development

Research and Development (“R&D”) expenses increased by $26,693 to $120,134 for the six months ended June 30, 2019, compared to $93,441 for the prior period ended June 30, 2018. This overall increase in R&D expenses was the result of an increase in contracting of outside services.

Other Income/(Expenses)

Other income and (expenses) decreased by $(32,717,095) to $2,887,880 for the six months ended June 30, 2019, compared to $(29,829,215) for the prior period ended June 30, 2018. The decrease in other income and (expenses) was the result of an increase in non-cash gain on change in fair value of the derivative instruments of $33,235,012, an increase in interest expense of $347,913, which includes non-cash expense of amortization of debt discount in the amount of $324,873, and an increase in interest income of $4, with an increase in fair value loss on conversion of debt of $170,008. The decrease in other income and (expenses) was primarily due to the net change in the fair value of the derivative instruments and amortization of debt discount.

Net Income (Loss)

Our net income for the six months ended June 30, 2019 was $2,540,681, compared to a net loss of $(30,129,607) for the prior period ended June 30, 2018. The increase in net income was due to an increase in non-cash other income (expenses) associated with the net change in derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.  

13

LIQUIDITY AND CAPITAL RESOURCES

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

The condensed unaudited financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed unaudited financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the six months ended June 30, 2019, we did not generate any revenues, incurred net income of $2,540,681, and used cash of $(363,530) in operations. As of June 30, 2019, we had a working capital deficiency of $11,914,748 and a shareholders’ deficit of $13,767,878. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

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

As of June 30, 2019, we had a working capital deficit of $11,914,748 compared to a working capital deficit of $15,062,687 for the year ended December 31, 2018. This decrease in capital deficit of $3,147,939 was due primarily to a decrease in cash, and derivative liability associated with our outstanding promissory notes, with an increase in prepaid expenses, accounts payable, accrued expenses, and an increase in the issuance of convertible promissory notes.

During the six months ended June 30, 2019, we used $(363,530) of cash for operating activities, as compared to $(328,735) for the prior period ended June 30, 2018. The increase in the use of cash for operating activities for the current period was a result of an increase in research and development cost, and insurance expense, compared to the prior six months ended June 30, 2018.

Cash used in investing activities for the six months ended June 30, 2019 and 2018, were $0 and $(5,770), respectively. The overall net change in investing activities was primarily due to an increase in the purchase of equipment in the prior period.

Cash provided from financing activities was $354,000 for the six months ended June 30, 2019, as compared to $328,000 for the prior period ended June 30, 2018. The increase in financing was due to an increase in convertible promissory notes. The convertible notes are convertible into shares of common stock, which have limitations on conversion. The lender is limited to no more than a 4.99% beneficial ownership of the outstanding shares of common stock. Beneficial ownership is determined in accordance with Section 13D-G. Our ability to continue as a going concern is dependent upon raising capital through financing transactions and future revenue. Our capital needs have primarily been met from the proceeds of private placement of our securities, as we currently have not generated any revenues.

Our independent auditors, in their report on our audited financial statements for the year ended December 31, 2018, expressed substantial doubt about our ability to continue as a going concern. Our financial statements as of June 30, 2019 have been prepared under the assumption that we will continue as a going concern. Our ability to continue as a going concern ultimately is dependent upon our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

14

PLAN OF OPERATION AND FINANCING NEEDS

We are engaged in the development of innovative technologies that increase the capacity and reduce the cost of storing electrical energy. We are currently focusing on developing a high capacity silicon alloy anode material technology to increase the storage capacity and reduce cost of the current and future generation of lithium-ion batteries by 2020.

Our plan of operation within the next six months is to utilize our cash balances to develop our silicon-based anode technology for high capacity, high density, and low cost Lithium-ion batteries.  We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next three months. Management estimates that it will require additional cash resources during 2019, based upon its current operating plan and condition. We expect increased expenses during the third quarter of 2019 as we ramp up prototyping efforts for Lithium-ion batteries incorporating our electrode material.  We will be investigating additional financing alternatives, including equity and/or debt financing. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If we are unable to obtain sufficient funds during the next fifteen months, we may be forced to reduce the size of our organization, which could have a material adverse impact on, or cause us to curtail and/or cease the development of our products

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

15

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K filed on March 21, 2019.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

16

ITEM 6. EXHIBITS

Exhibit No.	Description
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).
EX-101.INS	XBRL Instance Document
EX-101.SCH	XBRL Taxonomy Extension Schema Document
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB	XBRL Taxonomy Extension Labels Linkbase
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase

17

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 August 9, 2019.

	BIOSOLAR, INC.
Date: August 8, 2019	By:	/s/ David Lee
		Chief Executive Officer (Principal Executive Officer) and Acting Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

18

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR RULE 15d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, David Lee, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of BioSolar, Inc. for the quarter ended June 30, 2019;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2019

/s/ David Lee

David Lee

Chief Executive Officer and

Acting Chief Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioSolar, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David Lee, Chief Executive Officer and Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: August 8, 2019

/s/ David Lee

David Lee

Chief Executive Officer and

Acting Chief Financial Officer
(Principal Executive Officer and
Acting Principal Financial and 
Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 02, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	BioSolar Inc
Entity Central Index Key	0001371128
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Ex Transition Period	false
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		99,412,885
Entity File Number	000-54819
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	NV

XML

Condensed Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 73,167	$ 82,697
Prepaid expenses	30,327	23,107
TOTAL CURRENT ASSETS	103,494	105,804
PROPERTY AND EQUIPMENT
Machinery and equipment	37,225	37,225
Less accumulated depreciation	(28,348)	(26,814)
NET PROPERTY AND EQUIPMENT	8,877	10,411
OTHER ASSETS
Patents, net of amortization of $10,579 and $9,067, respectively	34,757	36,269
Deposit	770	770
TOTAL OTHER ASSETS	35,527	37,039
TOTAL ASSETS	147,898	153,254
CURRENT LIABILITIES
Accounts payable	6,174	896
Accrued expenses	735,764	641,366
Derivative liability	10,609,017	14,032,942
Convertible promissory notes net of debt discount of $241,739 and $265,873, respectively	667,287	493,287
TOTAL CURRENT LIABILITIES	12,018,242	15,168,491
LONG TERM LIABILITIES
Convertible promissory notes net of debt discount of $32,466 and $27, respectively	1,897,534	1,984,973
TOTAL LONG TERM LIABILITIES	1,897,534	1,984,973
TOTAL LIABILITIES	13,915,776	17,153,464
SHAREHOLDERS' DEFICIT
Preferred stock, $0.0001 par value; 10,000,000 authorized shares, none issued and outstanding
Common stock, $0.0001 par value; 500,000,000 authorized shares 88,033,767 and 60,639,308 shares issued and outstanding, respectively	8,803	6,064
Additional paid in capital	12,335,844	11,646,932
Accumulated deficit	(26,112,525)	(28,653,206)
TOTAL SHAREHOLDERS' DECIFIT	(13,767,878)	(17,000,210)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 147,898	$ 153,254

XML

Condensed Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Patents, net of amortization	$ 10,579	$ 9,067
Convertible promissory notes net of debt discount, current	241,739	265,873
Convertible promissory notes net of debt discount, non current	$ 32,466	$ 27
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	88,033,767	60,639,308
Common stock, shares outstanding	88,033,767	60,639,308

XML

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
REVENUE
OPERATING EXPENSES
General and administrative expenses	117,887	107,677	224,020	203,608
Research and development	45,133	40,041	120,134	93,441
Depreciation and amortization	1,317	1,809	3,045	3,343
TOTAL OPERATING EXPENSES	164,337	149,527	347,199	300,392
LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES)	(164,337)	(149,527)	(347,199)	(300,392)
OTHER INCOME/(EXPENSES)
Interest income	10	7	17	13
Loss on conversion of debt	(200,207)	(71,258)	(404,741)	(234,733)
Gain (Loss) on change in derivative liability	(330,425)	(29,268,085)	3,770,118	(29,464,894)
Interest expense	(244,974)	(68,424)	(477,514)	(129,601)
TOTAL OTHER INCOME (EXPENSES)	(775,596)	(29,407,760)	2,887,880	(29,829,215)
NET INCOME (LOSS)	$ (939,933)	$ (29,557,287)	$ 2,540,681	$ (30,129,607)
BASIC AND DILUTED INCOME (LOSS) PER SHARE	$ (0.01)	$ (0.56)	$ 0.03	$ (0.62)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED	81,189,871	52,917,851	73,766,143	48,885,588

XML

Condensed Statements of Shareholders' Deficit (Unaudited) - USD ($)	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2017		$ 4,149	$ 11,127,693	$ (18,786,377)	$ (7,654,535)
Beginning balance, shares at Dec. 31, 2017		41,485,051
Issuance of common shares for converted promissory notes and accrued interest		$ 870	241,474		242,344
Issuance of common shares for converted promissory notes and accrued interest, shares		8,704,271
Net Income				(572,318)	(572,318)
Ending balance at Mar. 31, 2018		$ 5,019	11,369,167	(19,358,695)	(7,984,509)
Ending balance, shares at Mar. 31, 2018		50,189,322
Beginning balance at Dec. 31, 2017		$ 4,149	11,127,693	(18,786,377)	(7,654,535)
Beginning balance, shares at Dec. 31, 2017		41,485,051
Net Income					(30,129,607)
Ending balance at Jun. 30, 2018		$ 5,693	11,476,662	(48,915,984)	(37,433,629)
Ending balance, shares at Jun. 30, 2018		56,930,392
Beginning balance at Mar. 31, 2018		$ 5,019	11,369,167	(19,358,695)	(7,984,509)
Beginning balance, shares at Mar. 31, 2018		50,189,322
Issuance of common shares for converted promissory notes and accrued interest		$ 674	107,495		108,169
Issuance of common shares for converted promissory notes and accrued interest, shares		6,741,070
Net Income				(29,557,289)	(29,557,287)
Ending balance at Jun. 30, 2018		$ 5,693	11,476,662	(48,915,984)	(37,433,629)
Ending balance, shares at Jun. 30, 2018		56,930,392
Beginning balance at Dec. 31, 2018		$ 6,064	11,646,932	(28,653,206)	(17,000,210)
Beginning balance, shares at Dec. 31, 2018		60,639,308
Issuance of common shares for converted promissory notes and accrued interest		$ 1,226	349,130		350,356
Issuance of common shares for converted promissory notes and accrued interest, shares		12,263,930
Net Income				3,480,614	3,480,614
Ending balance at Mar. 31, 2019		$ 7,290	11,996,062	(25,172,592)	(13,169,240)
Ending balance, shares at Mar. 31, 2019		72,903,238
Beginning balance at Dec. 31, 2018		$ 6,064	11,646,932	(28,653,206)	(17,000,210)
Beginning balance, shares at Dec. 31, 2018		60,639,308
Net Income					2,540,681
Ending balance at Jun. 30, 2019		$ 8,803	12,335,844	(26,112,525)	(13,767,878)
Ending balance, shares at Jun. 30, 2019		88,033,767
Beginning balance at Mar. 31, 2019		$ 7,290	11,996,062	(25,172,592)	(13,169,240)
Beginning balance, shares at Mar. 31, 2019		72,903,238
Issuance of common shares for converted promissory notes and accrued interest		$ 1,513	339,782		341,295
Issuance of common shares for converted promissory notes and accrued interest, shares		15,130,529
Net Income				(939,933)	(939,933)
Ending balance at Jun. 30, 2019		$ 8,803	$ 12,335,844	$ (26,112,525)	$ (13,767,878)
Ending balance, shares at Jun. 30, 2019		88,033,767

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$ 2,540,681	$ (30,129,607)
Adjustment to reconcile net income(loss) to net cash used in operating activities
Depreciation and amortization expense	3,045	3,343
(Gain) Loss on net change in derivative liability	(3,770,118)	29,464,894
Loss on conversion of debt	404,741	234,733
Amortization of debt discount recognized as interest expense	337,889	13,016
(Increase) Decrease in Changes in Assets
Prepaid expenses	(7,219)	(11,430)
Increase (Decrease) in Changes in Liabilities
Accounts payable	5,278	(18,512)
Accrued expenses	122,173	114,828
NET CASH (USED) IN OPERATING ACTIVITIES	(363,530)	(328,735)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(5,770)
NET CASH (USED IN) INVESTING ACTIVITIES		(5,770)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible promissory notes	354,000	328,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	354,000	328,000
NET DECREASE IN CASH	(9,530)	(6,505)
CASH, BEGINNING OF PERIOD	82,697	119,446
CASH, END OF PERIOD	73,167	112,941
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	534	1,759
Taxes paid
SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS
Common stock issued for convertible notes and accrued interest	$ 691,651	$ 350,513

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2018.

Going Concern 

The accompanying unaudited condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying unaudited condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has historically obtained funds through private placements offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing. 

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Revenue Recognition

The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has not had significant revenues and is in the development stage.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives

Stock-Based Compensation

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

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility.  The Company used Black Scholes to value its stock option awards which incorporated the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. The stock options terminate seven (7) years from the date of grant or upon termination of employment. As of June 30, 2019, 15,950,000 stock options are outstanding.

Net Earnings (Loss) per Share Calculations 

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

  

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

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

Fair Value of Financial Instruments

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

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

● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	10,609,017	$	-	$	-	$	10,609,017
Total Liabilities measured at fair value	$	10,609,017	$	-	$	-	$	10,609,017

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

Balance as of December 31, 2018	$	14,032,942
Fair value of derivative liabilities issued		346,193
(Gain) on change in derivative liability		(3,770,118	)
Balance as of June 30, 2019	$	10,609,017

Recently Issued Accounting Pronouncements

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company has evaluated the impact of the adoption of ASU 2018-07, which has no impact on the Company’s financial statements.

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

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

XML

Capital Stock

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

CAPITAL STOCK

3. CAPITAL STOCK

During the six months ended June 30, 2019, the Company issued 27,394,459 shares of common stock upon conversion of convertible promissory notes in the amount of $259,134, plus accrued interest of $27,776, with an aggregate fair value loss of $404,741 at prices ranging from $0.0192 - $0.0341.

XML

Stock Options

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

STOCK OPTIONS

4. STOCK OPTIONS

Stock Options

The Company did not grant any stock options during the six months ended June 30, 2019 and 2018, respectively.

	6/30/2019				6/30/2018
	Number of Options		Weighted average exercise price		Number of Options			Weighted average exercise price
Outstanding as of the beginning of the periods		15,950,000	$	0.23		15,975,000		$	0.23
Granted		-		-		-			-
Exercised		-		-		-			-
Expired		-		-		(25,000	)		0.40
Outstanding as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23
Exercisable as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23

The weighted average remaining contractual life of options outstanding as of June 30, 2019 and 2018 was as follows:

6/30/2019								6/30/2018
Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)		Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.09		2,450,000		2,450,000		2.73	$	0.09		2,450,000		2,450,000		3.73
$	0.26		13,500,000		13,500,000		3.18	$	0.26		13,500,000		13,500,000		4.18
			15,950,000		15,950,000						15,950,000		15,950,000

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

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

XML

Convertible Promissory Notes

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

CONVERTIBLE PROMISSORY NOTES

5. CONVERTIBLE PROMISSORY NOTES

As of June 30, 2019, the outstanding convertible promissory notes net of debt discount are summarized as follows:

Convertible Promissory Notes, net of debt discount	$	2,564,821
Less current portion		667,287
Total long-term liabilities	$	1,897,534

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

June 30,	Amount
2020		667,287
2021		748,000
2022		510,000
2023		533,855
2024		105,679
	$	2,564,821

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

The Company issued an unsecured convertible promissory note (the May 2014 Note”), in the amount of $500,000 on May 2, 2014. The May Note matures September 18, 2019. The May 2014 Note bears interest at 10% per annum. The May 2014 Note is convertible into shares of the Company’s common stock at a conversion price of a) the lesser of $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance with the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the May 2014 Note has been determined by using the Binomial lattice formula from the effective date of each tranche. During the six months ended the Company issued 10,057,907 shares of common stock upon conversion of principal in the amount of $37,134, plus accrued interest of $16,676, with a fair value loss on conversion of debt in the amount of $213,121. As of June 30, 2019, the remaining balance of the May 2014 Note was $170,026.

The Company issued various unsecured convertible promissory notes (the 2015-2018 Notes”) in the aggregate amount of $2,500,000 on various dates of January 30, 2015 through February 26, 2018. On January 17, 2019, the Company received an additional tranche in the amount of $25,000, associated with the February 26, 2018 Note for a total aggregate of $2,340,000. The 2015-2018 Notes matures on dates from January 30, 2020 thru January 17, 2024. The 2015-2018 Notes bears interest at 10% per annum. The 2015-2018 Notes are convertible into shares of the Company’s common stock at conversion prices ranging from the a) the lesser of $0.03 to $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the lowest trade price recorded since the original effective date, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance within the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The fair value of the 2015-2018 Notes have been determined by using the Binomial lattice formula from the effective date of each tranche. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $89,089 during the six months ended June 30, 2019. As of June 30, 2019, the aggregate balances of the 2015-2018 Notes were $2,340,000.

The Company issued various unsecured convertible promissory notes (the “Jul-Jun 2019 Notes”) in the aggregate principal amount of $444,000 on various dates of July 23, 2018 through June 3, 2019, with $222,000 of the notes issued in 2019. The Jul-Jun 2019 Notes matures on dates from July 23, 2019 thru June 3, 2020. The Jul-Jun 2019 Notes bears interest at 10% per annum. The Jul-Jun 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) trading prices during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Jul-Jun 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jul-Jun 2019 Notes. The fair value of the Jul-Jun 2019 Notes has been determined by using the Binomial lattice formula from the effective date of each note. During the period ended June 30, 2019, the Company issued 17,336,552 upon conversion of principal in the amount of $222,000, plus accrued interest of $11,100, with a fair value loss on conversion of debt in the amount of $191,619, The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $111,444 during the six months ended June 30, 2019. As of June 30, 2019, the remaining aggregate balances of the Jul-Jun 2019 Notes were $222,000.

The Company issued various unsecured convertible promissory notes (the “Feb-Apr 2019 Notes”) in the aggregate principal amount of $107,000. The Company paid an original issue discount of $4,000 and received funds in the amount of $103,000. The Feb-Apr 2019 Notes mature on dates from February 25, 2020 and April 5, 2020. The Feb-Apr 2019 Notes bears interest at 10% per annum. The Feb-Apr 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Feb-Apr 2019 Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb-Apr 2019 Notes. The fair value of the Feb-Apr 2019 Notes has been determined by using the Binomial lattice formula from the effective date of the notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $31,333 during the six months ended June 30, 2019. As of June 30, 2019, the balance of the Feb-Apr 2019 Notes was $107,000.

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

XML

Derivative Liabilities

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITIES

6. DERIVATIVE LIABILITIES

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

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

During the six months ended June 30, 2019, as a result of the convertible notes (“Notes”) issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $346,193, based upon a Binomial-Model calculation. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes.

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

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

	6/30/2019
Risk free interest rate		1.71% - 2.44%
Stock volatility factor		91.0% -174.0%
Weighted average expected option life		6 months - 5 years
Expected dividend yield		None

XML

Subsequent Event

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENT

7. SUBSEQUENT EVENT

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

On July 1, 2019, the Company issued 2,540,878 shares of common stock upon conversion of principal in the amount of $9,250, plus accrued interest of $4,344.

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

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

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

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition

The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has not had significant revenues and is in the development stage.

Cash and Cash Equivalent

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements. Significant estimates made in preparing these unaudited condensed financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Intangible Assets

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives

Stock-Based Compensation

Stock-Based Compensation

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

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility.  The Company used Black Scholes to value its stock option awards which incorporated the Company's stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. The stock options terminate seven (7) years from the date of grant or upon termination of employment. As of June 30, 2019, 15,950,000 stock options are outstanding.

Net Earnings (Loss) per Share Calculations

Net Earnings (Loss) per Share Calculations

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

 

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

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

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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

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

● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	10,609,017	$	-	$	-	$	10,609,017
Total Liabilities measured at fair value	$	10,609,017	$	-	$	-	$	10,609,017

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

Balance as of December 31, 2018	$	14,032,942
Fair value of derivative liabilities issued		346,193
(Gain) on change in derivative liability		(3,770,118	)
Balance as of June 30, 2019	$	10,609,017

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company has evaluated the impact of the adoption of ASU 2018-07, which has no impact on the Company’s financial statements.

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

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

XML

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Schedule of assets and liabilities measured at fair value on recurring basis

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	10,609,017	$	-	$	-	$	10,609,017
Total Liabilities measured at fair value	$	10,609,017	$	-	$	-	$	10,609,017

Schedule of reconciliation of derivative liability

Balance as of December 31, 2018	$	14,032,942
Fair value of derivative liabilities issued		346,193
(Gain) on change in derivative liability		(3,770,118	)
Balance as of June 30, 2019	$	10,609,017

XML

Stock Options (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of stock options

	6/30/2019				6/30/2018
	Number of Options		Weighted average exercise price		Number of Options			Weighted average exercise price
Outstanding as of the beginning of the periods		15,950,000	$	0.23		15,975,000		$	0.23
Granted		-		-		-			-
Exercised		-		-		-			-
Expired		-		-		(25,000	)		0.40
Outstanding as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23
Exercisable as of the end of the periods		15,950,000	$	0.23		15,950,000		$	0.23

Schedule of weighted average remaining contractual life of options outstanding

6/30/2019								6/30/2018
Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)		Exercisable Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.09		2,450,000		2,450,000		2.73	$	0.09		2,450,000		2,450,000		3.73
$	0.26		13,500,000		13,500,000		3.18	$	0.26		13,500,000		13,500,000		4.18
			15,950,000		15,950,000						15,950,000		15,950,000

XML

Convertible Promissory Notes (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of outstanding convertible promissory notes

Convertible Promissory Notes, net of debt discount	$	2,564,821
Less current portion		667,287
Total long-term liabilities	$	1,897,534

Schedule of maturities of long-term debt, net of debt discount

June 30,	Amount
2020		667,287
2021		748,000
2022		510,000
2023		533,855
2024		105,679
	$	2,564,821

XML

Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of derivative liabilities valuation assumptions

	6/30/2019
Risk free interest rate		1.71% - 2.44%
Stock volatility factor		91.0% -174.0%
Weighted average expected option life		6 months - 5 years
Expected dividend yield		None

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Schedule of assets and liabilities measured at fair value on recurring basis
Derivative Liability	$ 10,609,017
Total Liabilities measured at fair value	10,609,017
Fair Value, Inputs, Level 1 [Member]
Schedule of assets and liabilities measured at fair value on recurring basis
Derivative Liability
Total Liabilities measured at fair value
Fair Value, Inputs, Level 2 [Member]
Schedule of assets and liabilities measured at fair value on recurring basis
Derivative Liability
Total Liabilities measured at fair value
Fair Value, Inputs, Level 3 [Member]
Schedule of assets and liabilities measured at fair value on recurring basis
Derivative Liability	10,609,017
Total Liabilities measured at fair value	$ 10,609,017

XML

Summary of Significant Accounting Policies (Details 1)	6 Months Ended
	Jun. 30, 2019 USD ($)
Schedule of reconciliation of derivative liability
Balance as of December 31, 2018	$ 14,032,942
Fair value of derivative liabilities issued	346,193
Gain (loss) on change in derivative liability	(3,770,118)
Balance as of June 30, 2019	$ 10,609,017

XML

Summary of Significant Accounting Policies (Details Textual) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Stock options [Member]
Summary of Significant Accounting Policies (Textual)
Expiration period	7 years
Antidilutive securities excluded from computation of earnings per share, amount	15,950,000
Outstanding stock options	15,950,000	15,950,000
Convertible debt [Member]
Summary of Significant Accounting Policies (Textual)
Antidilutive securities excluded from computation of earnings per share, amount	2,839,026	2,436,220

XML

Capital Stock (Details) - Convertible promissory notes [Member]	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Capital Stock (Textual)
Common stock issued | shares	27,394,459
Aggregate fair value loss	$ 404,741
Amount of debt conversion	259,134
Accrued interest	$ 27,776
Minimum [Member]
Capital Stock (Textual)
Common stock conversion price per share | $ / shares	$ 0.0192
Maximum [Member]
Capital Stock (Textual)
Common stock conversion price per share | $ / shares	$ 0.0341

XML

Stock Options (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Number of Options
Outstanding as of the beginning of the periods	15,950,000	15,975,000
Granted
Exercised
Expired		(25,000)
Outstanding as of the end of the periods	15,950,000	15,950,000
Exercisable as of the end of the periods	15,950,000	15,950,000
Weighted average exercise price
Outstanding as of the beginning of the periods	$ 0.23	$ 0.23
Granted
Exercised
Expired		0.40
Outstanding as of the end of the periods	0.23	0.23
Exercisable as of the end of the periods	$ 0.23	$ 0.23

XML

Stock Options (Details 1) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Schedule of weighted average remaining contractual life of options outstanding
Stock Options Outstanding	15,950,000	15,950,000
Stock Options Exercisable	15,950,000	15,950,000
Exercisable Price One [Member]
Schedule of weighted average remaining contractual life of options outstanding
Exercisable Price	$ 0.09	$ 0.09
Stock Options Outstanding	2,450,000	2,450,000
Stock Options Exercisable	2,450,000	2,450,000
Weighted Average Remaining Contractual Life (years)	2 years 8 months 23 days	3 years 8 months 23 days
Exercisable Price Two [Member]
Schedule of weighted average remaining contractual life of options outstanding
Exercisable Price	$ 0.26	$ 0.26
Stock Options Outstanding	13,500,000	13,500,000
Stock Options Exercisable	13,500,000	13,500,000
Weighted Average Remaining Contractual Life (years)	3 years 2 months 5 days	4 years 2 months 5 days

XML

Stock Options (Details Textual) - Stock Options [Member] - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018
Stock Options (Textual)
Stock-based compensation expense	$ 0	$ 0
Intrinsic value of options outstanding

XML

Convertible Promissory Notes (Details)	Jun. 30, 2019 USD ($)
Debt Disclosure [Abstract]
Convertible Promissory Notes, net of debt discount	$ 2,564,821
Less current portion	667,287
Total long-term liabilities	$ 1,897,534

XML

Convertible Promissory Notes (Details 1)	Jun. 30, 2019 USD ($)
Year Ending December 31,
2020	$ 667,287
2021	748,000
2022	510,000
2023	533,855
2024	105,679
Total long-term debt	$ 2,564,821

XML

Convertible Promissory Notes (Details Textual) - USD ($)			1 Months Ended		3 Months Ended		6 Months Ended
	Feb. 20, 2019	May 02, 2014	Jan. 17, 2019	Feb. 26, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Convertible Promissory Notes (Textual)
Convertible promissory notes					$ 2,839,026		$ 2,839,026
Debt discount					274,205		274,205
Net balance					667,287		667,287
Loss on conversion of debt					(200,207)	$ (71,258)	$ (404,741)	$ (234,733)
May 2014 Note [Member]
Convertible Promissory Notes (Textual)
Unsecured convertible promissory note		$ 500,000
Note maturity date		Sep. 18, 2019
Note bears interest rate		10.00%
Debt conversion, description		Note is convertible into shares of the Company’s common stock at a conversion price of a) the lesser of $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance with the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered.
Shares of common stock upon conversion							10,057,907
Shares of common stock upon conversion of principal amount							$ 37,134
Accrued interest							16,676
Loss on conversion of debt							213,121
Remaining balance of note					170,026		170,026
2015-2018 Notes [Member]
Convertible Promissory Notes (Textual)
Convertible promissory notes				$ 2,340,000
Debt discount					89,089		89,089
Unsecured convertible promissory note				$ 2,500,000
Note bears interest rate				10.00%
Debt conversion, description				The 2015-2018 Notes are convertible into shares of the Company’s common stock at conversion prices ranging from the a) the lesser of $0.03 to $0.25 per share of common stock (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or b) fifty percent (50%) of the lowest trade price recorded since the original effective date, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Borrower fails to deliver shares in accordance within the time frame of three (3) business days, the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower. In addition, for each conversion, in the event shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered.
Remaining balance of note					2,340,000		2,340,000
Note maturity date, description				The 2015-2018 Notes matures on dates from January 30, 2020 thru January 17, 2024. The 2015-2018 Notes bears interest at 10% per annum.
Received additional amount			$ 25,000
Jul-Jun 2019 Notes [Member]
Convertible Promissory Notes (Textual)
Debt discount					111,444		111,444
Unsecured convertible promissory note					$ 444,000		$ 444,000
Note bears interest rate					10.00%		10.00%
Debt conversion, description							The Jul-Jun 2019 Notes bears interest at 10% per annum. The Jul-Jun 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest average two (2) trading prices during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Jul-Jun 2019 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jul-Jun 2019 Notes.
Shares of common stock upon conversion							17,336,552
Shares of common stock upon conversion of principal amount							$ 222,000
Accrued interest							11,100
Loss on conversion of debt							191,619
Remaining balance of note					$ 222,000		222,000
Feb 2019 Note [Member]
Convertible Promissory Notes (Textual)
Debt discount	$ 4,000				31,333		31,333
Net balance	103,000
Unsecured convertible promissory note	$ 107,000
Debt conversion, description	. The Feb-Apr 2019 Note bears interest at 10% per annum. The Feb-Apr 2019 Notes may be converted into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest one (1) day trading price during the fifteen (15) trading days prior to the conversion date. The parties agree that if delivery of the common stock issuable upon conversion of these Notes are not delivered by the deadline, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the deadline that the Borrower fails to deliver such common stock. The conversion feature of the Feb-Apr 2019 Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb-Apr 2019 Notes.
Remaining balance of note					$ 107,000		$ 107,000
Note maturity date, description	The Feb-Apr 2019 Note matures on February 25, 2020.

XML

Derivative Liabilities (Details)	6 Months Ended
	Jun. 30, 2019
Expected dividend yield
Minimum [Member]
Risk free interest rate	1.71%
Stock volatility factor	91.00%
Weighted average expected option life	6 months
Maximum [Member]
Risk free interest rate	2.44%
Stock volatility factor	174.00%
Weighted average expected option life	5 years

XML

Derivative Liabilities (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Derivative Liabilities (Textual)
Fair value loss on the conversion of debt	$ (200,207)	$ (71,258)	$ (404,741)	$ (234,733)
Fair value of the derivative liability	$ 10,609,017		10,609,017		$ 14,032,942
Convertible Notes [Member]
Derivative Liabilities (Textual)
Fair value of the conversion feature			346,193
Amount of debt conversion			259,134
Fair value loss on the conversion of debt			404,741
Accrued interest			$ 27,776

XML

Subsequent Event (Details) - Subsequent Event [Member] - USD ($)			1 Months Ended
	Jul. 16, 2019	Jul. 01, 2019	Aug. 02, 2019	Jul. 31, 2019
Subsequent Event (Textual)
Principal amount	$ 53,000
Unsecured convertible note, percentage	10.00%
Conversion of common stock, description	The Jul Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of 61% of the average of the two lowest (1) day trading prices for common stock during the fifteen (15) trading day period prior to the conversion date.
Common stock upon conversion issued, shares		2,540,878	4,040,827	4,797,413
Common stock upon conversion issued, amount		$ 9,250	$ 14,645	$ 53,000
Accrued interest		$ 4,344	$ 7,006	$ 2,650