BEACON EQUITY RESEARCH

Analyst: Victor Sula, PhD

Initial Report
September 12th, 2007

BSRC daily 9/17/07

0.40

0.35

0.30

0.25

BioSolar, Inc.
0.20
27936 Lost Canyon Road, Suite 202 volume
Santa Clarita, CA 91387 100
Tel : (661) 251-0001

Thousands
Fax : (661) 251-0003
50
Email : info@biosolar.com
Investor Relations : (877) 904-3733
0
Jul Aug Sep
www.biosolar.com

Market Data Company Introduction

Symbol / Exchange OTCBB: BSRC BioSolar, Inc. (BSRC) is developing innovative bioplastic solar cell com-
Coverage Initiated Sep 7th, 2007 ponents made from renewable plant sources. The Company’s technology
Current Price $0.30 can help reduce the manufacturing cost per watt of solar cells; manage-
Rating Speculative Buy ment anticipates substantial cost savings through the use of its bio-based
Price Target $0.84 plastics in solar cell production.
Outstanding Shares 128.56 Mn
Market Cap $38.56 Mn
Average 3M Volume 10,957 High volume manufacturing of solar cells using bio-based plastic compo-
nents rather than petroleum-based plastic components could produce both
cost and environmental benefits. The Company is targeting the market for
solar cell back sheets, substrates and superstrates and intends to exploit
the cost and application diversity advantages associated with its renewable
bioplastic components.

BSRC was incorporated on April 24, 2006 in Nevada as BioSolar Labs, Inc.
and changed its name to BioSolar, Inc. on June 8, 2006. It became a public
company in February 2007.
 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Investment Highlights
A business model capitalizing on the technology’s cost and environmental benefits
BSRC is developing a comprehensive line of renewable bioplastic films and resins that meet the stringent thermal
and durability requirements of current solar cell manufacturing processes. The Company is aiming to capitalize
on its innovative technology, which offers both cost and environmental advantages, and addresses the industry’s
fast growing demand for solar cells.

Technology leadership allows reduction in solar cell costs

The Company has developed a technology for producing bioplastic materials from renewable plant sources that
is as durable as conventional petroleum-based plastics. Currently, petroleum-based plastics are used in the pro-
duction of virtually all solar cells and modules. However, rising oil prices are pushing plastics’ costs higher and
impeding the industry’s effort to make solar energy competitive with conventional fossil fuel.
BSRC’s technology can help reduce the cost per watt of solar cells through the use of its bio-based plastics. Man-
agement anticipates substantial material cost reductions by using the bioplastic materials in solar cells backsheet,
superstrate and substrate applications.

Entering the market in 2007/08 with a strong product portfolio

BSRC is developing a comprehensive line of bioplastic films and resins for solar cell manufacturers.
- BioSolar Backsheets are designed specifically for traditional crystalline silicon (c-Si) solar cell manufactur-
ers and are expected to cost up to 50% less than traditional backsheet materials. The Company anticipates
introducing this product in late 2007.
- BioSolar Thin Film Substrate is intended to replace the currently available stainless steel or petroleum-
based plastics that are generally very expensive. BSRC anticipates making this product commercially avail-
able during 2008.
- BioSolar Superstrate is a transparent bioplastic material that can be used as solar cells superstrate to replace
the currently utilized polymers and further reduce the cost of solar cells. BSRC anticipates introducing this
product in 2008.
- BioSolar Plastic is a line of bioplastic resins for injection molding applications in creating various housing
and packaging components for solar panels and arrays. BSRC anticipates offering this product line in 2008.

Transitioning from development to commercialization phase

To date, the Company has not reported revenues since its products are still in the development stage. However,
the development of the BioSolar Backsheets has already been completed and the Company is preparing for the
commercial launch of this product line. BSRC plans to invest in an advertising campaign to lay the groundwork
for future sales and is establishing relationships with important players in the solar cells market to mutually
promote their technologies.

By year ending 2007, BSRC plans to make the first shipments of BioSolar Backsheets available to its strategic
partners. The commercialization of its other biomaterials solutions will follow in 2008.

BioSolar, Inc. (OTCBB: BSRC) 2

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Environmental benefits draw government support

BSRC’s business model focuses on proactively providing renewable bio-solutions that remove petroleum from
solar cells and make solar power a truly “green” energy source. Government agencies worldwide are stepping
up efforts to restrict products that pollute the environment and damage eco-systems and actively encouraging
the further development of renewable clean energy technologies. Government support in more than 40 markets
worldwide is helping solar cell demand grow rapidly, creating an immediate business opportunity for innova-
tive material companies such as BSRC.

Solar cell market opportunity

World solar photovoltaic (PV) market installations reached a record high of 1,744 megawatts (MW) in 2006, rep-
resenting 19% growth over the previous year. An EPIA/Greenpeace report forecasts 35% annual market growth
through 2009 and 26% annual growth between 2010 and 2015. Worldwide sales of photovoltaics were approxi-
mately $16 billion in 2006, are projected to reach $36 billion in 2010 and may exceed $50 billion by 2020 1 .

Rising oil prices, environmental concerns related to global warming, and the rapid industrialization of China,
India, Eastern Europe and the CIS countries, have helped drive the global solar industry into hyper-growth
mode. In a very short period of time, solar power has become a viable source of energy in many countries and
a competitive source of electrical power generation. With the cost benefits made possible by its innovative bio-
plastics materials, BSRC is uniquely positioned to provide the solar industry, including next generation thin-film
manufacturers, with competitive advantages that can spur additional growth.

Experienced management team

BSRC’s management team combines more than 100 years of engineering and technical experience in the areas
of plastics and film development, as well as in marketing, sales and corporate management. The Company’s
management and advisory team have held senior management and technical positions with numerous technol-
ogy companies, including Applied Reasoning, Inc., RF-Link Technology, Inc., TRW Transportation Electronics,
DuPont, Texas Instruments and GRT Inc.
BSRC’s Chief Technology Officer, Stanley B. Levy, PhD, holds 12 patents, has received several awards for techni-
cal excellence and has been published in numerous technical journals. Prior to joining BSRC, Dr. Levy was a con-
sultant for several photovoltaic manufacturing companies, including Global Solar, MiaSole, and Solar Integrated
Technologies. In addition, he is a member of the National Renewable Energy Laboratory’s Thin Film PV Module
Reliability Team.

1 http://www.bine.info/pdf/infoplus/SunScreenII.pdf

BioSolar, Inc. (OTCBB: BSRC) 3

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Company Overview

Business Model

BSRC is developing a comprehensive line of renewable bioplastic films and resins for solar cell manufacturers
utilizing roll-to-roll injection molding and extrusion systems. The Company is poised to capitalize on its inno-
vative technology, which offers cost and environmental advantages compared to petroleum-based plastics and
benefit from the industry’s rapidly growing demand for solar cells.

Whether solar cells are produced using crystalline silicon, amorphous silicon or other solar technologies, BSRC
can help reduce the cost per watt through the use of its bio-based plastics. Management targets substantial ma-
terial cost reductions by manufacturers who use its bioplastic materials for solar cell superstrate and substrate
applications.

In addition, by removing petroleum from solar cells, the Company makes solar energy a truly green energy
source.

Technology

The Company has developed a technology to produce bioplastic materials from renewable plant sources that
reduces cost per watt of solar cells. Through the advanced manipulation of bio-based polymers, BSRC is produc-
ing robust bio-plastics that meet the stringent thermal and durability requirements of current solar cell manufac-
turing processes. BSRC materials can be used directly in conventional manufacturing systems (such as injection
molding and thin-film roll-to-roll) to create superstrate layer, substrate layer, backsheet as well as module and
panel components.

At present, petroleum-based plastics are used in the production of virtually all solar cells and modules. Howev-
er, rising oil prices are pushing costs higher and impeding the industry’s efforts to make solar energy competitive
with conventional fossil fuel. In addition, petroleum-based plastics pose environmental hazards.

Bio-based plastics can be produced inexpensively. Since they are derived from renewable plant sources, their
costs are not tied to high oil prices. In the past, conventional bio-based plastics have been unsuccessful in solar
cell applications due to their low melting temperature and fragile molecular structure. Conventional bioplastics
could not withstand most existing solar cell manufacturing processes.

Leveraging more than 40 years of experience in material science and processing technology, BSRC’s scientific
team has developed a breakthrough low-cost bioplastic that meets the manufacturing and operating require-
ments of solar cell systems. BSRC’s bioplastic is the result of several innovative enhancements to widely available
bio-based polymers. Its tough new bioplastic has durability characteristics similar to conventional petroleum-
based plastics, including the electromagnetic properties, mechanical strength, dimensional stability and resis-
tance to wind, sun and rain damage required for solar cell applications.

BSRC low-cost bioplastics can be used in backsheet, substrate and superstrate applications.

BioSolar, Inc. (OTCBB: BSRC) 4

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Bioplastic applications for solar cells

Superstrate
Superstrate

n-type n-type
p-type
Cell p-type
Substrate
Substrate

Module Backsheet (Replaces Cell Substrate (Replaces Cell Substrate (Replaces

Petrol-Plastic) Petrol-Plastic) Glass Layer)

Source: http://www.biosolar.com/

Products

There are two principal types of solar cells in the market: traditional crystalline silicon (c-Si) and thin film solar
cells. While thin film technology promises lower cost and more efficient manufacturing, it still represents a very
small part of the solar cell market.

BSRC is developing a comprehensive line of bioplastic films and resins for solar cell manufacturers, based on its
innovative technology.

BioSolar Backsheet - BioSolar Backsheets are designed specifically for c-Si solar cell manufacturers. These back-
sheets will be available in rolls of film for direct use in lamination and roll-to-roll assembly systems. The Com-
pany estimates that using BioSolar Backsheets can reduce material costs by 50% compared to conventional back-
sheet materials. The Company plans to make this product available to its strategic partners in late 2007.

Superstrate

Anti-reflective Coating

Front Contact

c-Si Wafer

Back Contact

Backsheet

c-Si Solar Cell layers

BioSolar, Inc. (OTCBB: BSRC) 5

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

BioSolar Thin Film Substrate - The Company is developing uses for its bioplastic in thin film substrates ap-
plications. In thin film processing, layers of a solar cell are deposited on top of a substrate and built up instead
of laminating the completed cell. As a result, the thermal and mechanical requirements for thin film are different
than those for c-Si. BSRC anticipates making its thin film substrate product available to customers in 2008.
The thin film substrates that are currently available are made primarily from stainless steel or petroleum-based
plastics - generally very expensive materials.

Superstrate

Transparent Conducting Oxide Layer

Thin Film Photovoltaic Layer
Back Contact
Substrate

Thin Film Solar Cell Layers

BioSolar Superstrate - The top layer of a solar cell is traditionally made from glass or other specialty non bio-
based polymers. The solar industry consumes as much top layer as backsheets and substrates. The Company
is developing a transparent bioplastic material that can be used as solar cell superstrate to replace the currently
utilized non bio-based polymers, further reducing the cost of solar cells.
BSRC anticipates making this product available to customers during 2008.

BioSolar Plastic - In addition, the Company has commenced development of a line of bioplastic resins for injec-
tion molding applications in creating various housing and packaging components for solar panels and arrays.
BSRC anticipates introducing this product line in 2008.

Marketing Strategy

The Company has committed to a two-phase plan for rolling out its breakthrough bioplastic materials.
- First phase (films) – Robust bioplastic-based superstrate, substrate and backsheet films;
- Second phase (resins) – Proprietary cellulose-based biopolymer resins for non roll-to-roll applications.

Once the product development phase is completed, the Company plans to commence an aggressive advertising
campaign that will create visibility for BioSolar and lay the groundwork for future sales. These marketing activi-
ties will be outsourced to advertising and public relations firms.

In addition, the Company intends to establish partnerships with important players in the solar cell market, in-
cluding solar device manufactures, glass and building materials manufacturers.

BioSolar, Inc. (OTCBB: BSRC) 6

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Industry Outlook
World solar photovoltaic (PV) market installations reached a record high of 1,744 megawatts (MW) in 2006, rep-
resenting 19% growth over the previous year.

An EPIA/Greenpeace report forecasts 35% annual growth in the worldwide PV market through 2009 and 26%
annual growth between 2010 and 2015. Between 2016 and 2025, the market is expected to slowly consolidate at
a higher level, with annual growth rates slowing to 19% until 2020 and 11% between 2021 and 2025. Although
initial growth is expected to be fastest in the grid-connected sector, the off-grid sector will play an increasing role
by 2010.

With government support in more than 40 markets, end-customer demand for solar power significantly exceeds
production capacity. CLSA Asia-Pacific Markets estimates volume growth of at least 30% annually through 2010.
This sector is poised to grow four-fold from 1.5 Gigawatts in 2005 to at least 6 Gigawatts in 2010. The same con-
clusion was reached by the European Photovoltaic Industry Association in their outlook for the global PV (solar
photovoltaic) market.

Global annual PV installation capacity

8000
7000
5.6 GW
6000
5000
4000
3000
1.5 GW
2000
1000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Pessimistic scenario Policy driven scenario

Source: www.epia.org

According to the US Energy Information Administration, every year roughly 100 Gigawatts (GW) of incremental
power generating capacity are added globally. Most of this capacity is powered by coal, natural gas, nuclear or
hydro as the energy source. In 2006, solar power accounted for only about 1.5% or 1.8 GW of total peak capacity
installations. It is expected that solar’s share will increase to 5% by 2010 and to 15-20% by 2015.

Rising oil prices, environmental concerns related to global warming, and rapid industrialization of China, India,
Eastern Europe and the CIS countries are spurring rapid growth for the global solar industry. Solar power has
become a viable energy source and more price-competitive for electrical power generation.
Worldwide sales of photovoltaics were approximately $16 billion in 2006 and have grown 40% annually since
1997. Sales are projected to reach $36 billion in 2010 and exceed $50 billion in 2020 2. Just as silicon providers sup-
ply silicon wafers to solar cell manufacturers, BioSolar will supply bioplastic materials to these manufacturers.

2 http://www.bine.info/pdf/infoplus/SunScreenII.pdf

BioSolar, Inc. (OTCBB: BSRC) 7

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Germany, Japan and the US are the clear PV market leaders. Together, these three countries represent 1.3 GW of
a total 1.8 GW capacity globally. Germany’s grid-connected PV market grew 16% in 2006 to 960 Megawatts and
now accounts for 55% of the world market. While Japan’s market size barely advanced last year, Spain and the
United States were strong performers. The Spanish market was up over 200% in 2006 while the US market grew
33%.
PV Installations by market, 2006

9%
17 %
8%
Japan
11 % Germany
ROE
USA
ROW

55 %

Source: Marketbuzz, 2007.

World solar cell production grew to 2,204 MW in 2006, up from 1,656 MW a year earlier. Japanese producers have
lost ground over the past 12 months, with their share dropping from 46% to 37% while Chinese cell manufactur-
ers have gained share. In absolute production figures, almost all regions showed growth.

Cell production by region, 2006 (shipments) Top 10 Cell producers shares, 2006

8.2% 6.8% USA 23.5% Sharp

17.1%
15.1% China Q-Cell
20.0% India Kyocera
Japan 10% Suntech
1.4% Sanyo
Taiwan
Mitshubishi
0.3% Rest of Asia 3.4% Electric
1.3% Australia 3.5%
3.7% 7.1% Motech
Middle East 3.8% Schott Solar
6.7% 4.0%
Germany 6.3% Solar World
4.4% 6.1%
36.4% Rest of Europe BP Solar

Source: Photon International, European Photovoltaic Industry Association.

Silicon is the basic material needed today for the production of solar cells based on crystalline technology. Solar
cells based on crystalline technology cover more than 90% of the world market. Silicon usage increased from
14,000 tons in 2004 to 19,000 tons in 2006. Solar-grade silicon prices have risen as well: from US$24/kg in 2003 to

BioSolar, Inc. (OTCBB: BSRC) 8

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

US$50/kg in 2006. However, demand continues to significantly exceed silicon supply. Output of non-silicon tech-
nologies is rising as a result of tight supply and high silicon prices. Production of non-silicon based solar power
products increased from 70 MW in 2004 to 140 MW in 2005 and 240 MW in 2006.

Europe is expected to experience considerable growth in the Photovoltaic sector over the next few years. By 2010,
fueled by a favorable regulatory environment, the European Union could be generating 3 GW of solar power,
more than triple its 2006 output. Even under the most pessimistic scenario, the European Photovoltaic market
is expected to at least double its size by 2010.

In 2006, the US solar energy industry experienced record growth due to increased cus¬tomer and utility demand
– a result of rising energy prices as well as the expan¬sion of federal and state support for solar deployment.
US PV installations are forecast to grow over 20% this year to 120 MW, one of the world market’s fastest growth
rates. Many US manufacturers have raised sub¬stantial equity capital to expand their operations in the US and
abroad. The US con¬tinues to lead the world in both next-generation thin film technologies and the polysilicon
feedstock used for most PV applications.

US utilities are planning to meet the growing demand for expensive daytime power by building over 2,000 MW
of new concentrating solar capacity over the next decade in the sunny southwestern US. Dozens of US compa-
nies are entering this growing market.

Although the US possesses the best solar resources in the world, Germany installs 8 times as much PV as the US.
This is because the German government provides generous incentives that stimulate demand for solar energy.
In 2006, the US saw major new solar programs emerge as well.

US vs. Germany: solar resources

Source: Solar Energy Industries Association (www.seia.org).

BioSolar, Inc. (OTCBB: BSRC) 9

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

In 2006 California enacted the largest solar program out¬side of Germany through the passage of the California
Solar Initiative on January 12th and the Million Solar Roofs Bill signed into law on August 21st. These programs
target the installation of 3,000 MW of solar power electricity capacity over the next ten years. Funding of $3.35
billion has been provided for these programs. Eight additional US states have created programs this year that
expand incentives or require the use of solar.

US energy consumption by energy source, 2002-2006, (Quadrillion Btu)

Energy Source 2002 2003 2004 2005 2006

Total 97.93 98.28 100.41 100.76 99.96

Fossil Fuels 83.99 84.39 86.19 86.45 85.31
Coal 21.90 22.32 22.47 22.79 22.51
Coal Coke Net Imports 0.06 0.05 0.14 0.04 0.06
Natural Gas 23.63 22.97 22.99 22.89 22.52
Petroleum 38.40 39.05 40.59 40.74 40.22
Electricity Net Imports 0.07 0.02 0.04 0.08 0.06
Nuclear Electric Power 8.14 7.96 8.22 8.16 8.21
Renewable Energy 5.89 6.15 6.26 6.40 6.84
Biomass 2.71 2.82 3.02 3.11 3.28
Biofuels 0.31 0.41 0.51 0.59 0.76
Waste 0.40 0.40 0.39 0.40 0.40
Wood Derived Fuels 2.00 2.00 2.12 2.12 2.11
Geothermal Energy 0.33 0.33 0.34 0.34 0.35
Hydroelectric Conventional 2.69 2.83 2.69 2.70 2.89
Solar/ PV Energy 0.06 0.06 0.06 0.07 0.07
Wind Energy 0.11 0.12 0.14 0.18 0.26

Source: www.eia.doe.gov

BioSolar, Inc. (OTCBB: BSRC) 10

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Financial Analysis

Revenue

To date, the Company has not reported revenues since its products are still in development stage and not yet
ready for commercialization.
The Company’s expenses consist mainly of administrative, professional and research and development fees re-
lating to bringing to market its next-generation bioplastic materials for use in solar cell manufacturing.

Income Statement

Six months
$ Thousands 2006
2007

REVENUE 0 0
COST & ADMINISTRATIVE EXPENSES 295.8 280.4
Salaries 84.0 72.0
Professional fees 143.3 64.4
Research & Development 16.7 100.0
Depreciation 0.4 0.6
Rent 4.0 3.1
Payroll taxes 6.7 5.9
Office expense 1.8 1.3
Advertising 0.5 2.9
Automobile expense 0.5 1.2
Insurance 0.4 9.7
Marketing expenses 15.8 0.0
Meals & Entertainment 0.2 0.8
Printing & Production expense 2.6 0.1
Professional Development 1.6 10.3
Taxes & Licenses 14.7 0.5
Telephone expense 0.8 0.8
Travel expense 1.6 6.9

Interest income 21.4 23.0

EARNINGS BEFORE TAXES -274.4 -257.5

Provision for income taxes 0.0 -0.8
NET EARNINGS -274.4 -258.3
Diluted EPS (0.00) (0.00)
Source: SEC filings

BioSolar, Inc. (OTCBB: BSRC) 11

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Research and development expenses, salaries and professional fees accounted for approximately 85% of total
operating expenses incurred during the first six months of 2007. We expect these expenses to increase since the
Company is accelerating its development activity in preparation for the commercial launch of its products in late
2007 and in 2008.

Liquidity and capital resources

The Company is relying primarily on external financing to fund its operations. At June 30, 2007, BSRC had $920
thousand of working capital, down from $1.2 million of working capital at year ending 2006. The decline reflects
the use of funds for operating expenses.

$ Thousands 31-Dec-06 31-Mar-07 30-Jun-07

Cash and equivalents 1,217 1,057 913

Net working capital 1,177 1,067 920

Liabilities 40 8 7
Equity 1,180 1,069 921
including accumulated deficit (274) (385) (533)

Source: SEC filings

BSRC plans to utilize its existing cash balances to fund its operations over the next 12 months. In addition, we
expect the Company to commence a test program and build prototype solar cells using its materials to validate
the commercial viability of its products.

According to management, BSRC’s current cash and equivalents will be sufficient to support development activi-
ties over the next twelve months. However, BSRC will likely be required to raise additional cash to support its
2008 business activities.

BioSolar, Inc. (OTCBB: BSRC) 12

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Valuation

Solar companies presently face two major issues: high costs and lack of silicon supply to expand production and
meet rising demand. These problems are interconnected since tight supplies push up the cost of materials and
products.

While market experts agree that the revenue potential of the solar industry is enormous, few can predict when
solar will become competitive with other sources of electricity. The high cost of supplies is a major hurdle to the
rapid adoption of solar cells.

More than 90% of solar cells are made with crystalline polysilicon. Producers do not have the facilities or the sup-
plies to meet growing demand, contributing to very high prices. Larger, more established companies are locking
in the majority of the silicon supply, forcing smaller competitors to place small orders at prices that can be several
times higher or search for alternative materials.

The industry’s search for alternative materials is positioning BSRC for strong product demand and rapid growth.
Important industry players such as First Solar are already using “thin film” technology instead of silicon. While
less efficient at converting solar energy into electricity, thin film modules can produce power more cheaply.

Companies developing technologies for replacing silicon in solar cell manufacturing are commanding premium
valuation multiples. First Solar’s shares price has more than quadrupled over the past year partly due to the fact
that its revenues are not tied to silicon supplies.

Our peer comparison analysis is based on a group of early stage solar companies, as well as on established play-
ers with significant interests in alternative-to-silicon technologies.

Peer comparison

Ticker Mrkt.Cap.
P/E P/S EPS, $ Revenue, $ Mn
Price per
5-Sep-07 Symbol $ Mn
Share, $
2007 2008 2007 2008 2007 2008 %chg 2007 2008 %chg

Ascent Solar Technologies n/m n/m 97.96 50.53 -0.73 -0.63 n/m 1.0 1.9 94%
ASTI 9.53 96

n/m n/m 162.50 65.00 n/a n/a n/m 0.4 1.0 150%
DayStar Technologies DSTI 4.29 65

n/m n/m 14.26 10.30 -0.26 -0.07 n/m 65 90 38%

Evergreen Solar ESLR 9.21 927

Suntech Power Holdings 35.67 22.60 4.36 2.96 1.02 1.61 58% 1,290 1,900 47%
STP 36.38 5,620

169.81 76.96 19.14 11.37 0.63 1.39 121% 408 687 68%
First Solar FSLR 106.98 7,810

47.48 29.27 13.28 6.27 1.19 1.93 62% 445 943 112%
LDK Solar LDK 56.50 5,910

Median 47.48 29.27 16.70 10.83 62% 81%

Source: SEC Filings, Analyst estimates

BioSolar, Inc. (OTCBB: BSRC 13

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

The solar cell technology sector is poised for robust long-term growth, with both revenue and earnings expected
to increase spectacularly. Moreover, these peer companies command strong valuation multiples, suggesting fa-
vorable long-term growth potential.

We believe BSRC’s products and business m0del are perfectly designed to capitalize on the industry’s strong
growth momentum. As a result, we believe the Company should trade at a premium to the peer group P/S mul-
tiple, given its innovative technology and commercial launch of products this year and next year.

BSRC is likely to report revenues by early 2008 from the sales of bioplastic backsheets and should finish 2008
with a solid orders backlog. Going forward, the introduction of other products should enable the Company to
outperform industry peers and record robust revenue growth over the next five years.

Revenue forecast

Annual Backsheets Backsheets Revenue estimate, $ Mn

Deployment area Price, $/sq ft Mrkt. Share
Scenarios GW Mn sq ft Industry BSRC, 5% 10% 15%

Pessimistic 2.5 250 1.0 0.5 6.3 12.5 18.8

Medium 5.0 500 1.0 0.5 12.5 25 37.5
Optimistic 7.5 750 1.0 0.5 18.8 37.5 56.3

Source: SEC Filings, Analyst estimates

Assuming the pessimistic scenario for both annual deployment of solar power capacity and market share gains,
we derive a 2008 revenue estimate for BSRC of $6.3 million. Applying a 60% premium to the peer average P/S
multiple and multiplying that number by our 2008 revenue estimate, we derive a target price for BSRC of $0.84/
share.

2008 E Revenue 2008 P/S multiple Premium to multiple Fair value

$6.3 Mn x 10.83 x 1.6 = $108 Mn or $0.84/share

BioSolar, Inc. (OTCBB: BSRC) 14

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Analyst summary
BSRC is developing renewable bioplastic films and resins for solar cell manufacturers. The Company’s products
offer a lower-cost, more environmentally friendly replacement for traditional petroleum based supplies. BSRC’s
products can help reduce solar cells costs, address supply issues that are constraining solar cell deployment and
reduce the price of solar powered electricity.
The Company has already developed the technology and is currently working on a range of technology applica-
tions that can best address the needs of the solar cell industry. BSRC expects to introduce its first products to the
market by year ending 2007 and launch three additional product lines in 2008.

Industry conditions, characterized by tight supply and high prices for silicon, should facilitate rapid market ac-
ceptance of BSRC’s bioplastic products and enable the Company to quickly build meaningful market share. As
a result, we are initiating coverage of BSRC with a Speculative Buy rating and a $0.84 price target, based on a 17
times P/S multiple of our 2008 revenue estimate.

Investment Risks

Development stage status

BSRC is a development-stage company with an unproven ability to finish the necessary research, launch its
products and establish a customer base. Moreover, the Company has a limited operating history, has not report-
ed revenues and has an accumulated deficit that raises doubt about its viability as a going concern.

Unproven market potential of BSRC products

BSRC’s success will depend on its ability to bring its products to market. Despite an optimistic industry outlook
and the advantages of the Company’s technology, no assurance can be given that BSRC will be able to drive prod-
uct sales and expand its business model on acceptable terms.

Additional capital required to continue operations

The Company will require external financing to complete the development of its proposed product portfolio
and commence sustainable production and commercialization. If the Company fails to obtain sufficient funds to
continue operations, implementation of its business plan could stall, affecting our valuation model.

BioSolar, Inc. (OTCBB: BSRC) 15

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Management
David D. Lee, PhD Dr. Lee, the President, CEO and founder of the Company, has over 20 years of engi-
President and Chief Executive Officer neering, marketing, sales and corporate management experience in the areas of mili-
tary and consumer communication systems, automotive electronics, software devel-
opment and consulting.
Prior to founding the Company, he has held senior management positions with other
technology companies. These positions included: Chief Operating Officer for Applied
Reasoning, Inc., an Internet software development company; Vice President and Gen-
eral Manager of RF-Link Technology, Inc., a wireless technology company; Program
Manager at TRW Transportation Electronics, and Systems Engineer at TRW Space
and Defense. Dr. Lee holds a PhD in Electrical Engineering from Purdue University,
a Master of Science in Electrical Engineering from the University of Michigan at Ann
Arbor, and a Bachelor of Science in Electrical Engineering from the University of Tex-
as at Austin.

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

Steven C. Bartling Mr. Bartling has over 20 years engineering and corporate management experience in
Director the areas of ultra high performance digital CMOS circuit design, high performance
microprocessor architecture/design, systems on a chip, packaging and testing. For the
last four years, he has been employed in ASIC R&D for Texas Instruments, Inc. Mr.
Bartling holds a Master of Science in Electrical Engineering from Georgia Institute of
Technology and a Bachelor of Science in Electrical Engineering from the University
of Texas at Austin.

Dennis LePon Mr. LePon has over 35 years of financial, managerial and business experience work-
Director ing in banking, real estate and for technology start-ups. He currently serves as Chief
Financial Officer of Catalyst Resource Group, Inc., a real estate finance and consult-
ing firm offering specialized financing for healthcare, convenience stores, gas stations
and other varied commercial properties nationwide. Mr. LePon holds a Bachelor of
Arts from California State University at Northridge and a Master of Business Admin-
istration from the University of Southern California.

Michael D. Wyrsta, PhD
Technical Consultant
Dr. Wyrsta has more than 10 years technical experience in the areas of chemistry and
novel materials. Dr. Wyrsta has been part of several start-up ventures. He recently
served as a senior researcher for GRT, Inc., where his duties included the continued
development of novel materials and catalysts for the conversion of natural gas to liq-
uids and other chemicals.
As senior chemist, Dr. Wyrsta directed GRT’s research and development efforts for a
number of large chemical and petroleum company customers. He previously served
as the Chief Technology Officer of SBA Materials, establishing strategic business con-
tracts, guiding intellectual property development and breaking new ground in solid-
state composite materials for the electronics, photonics and pharma industries. Dr.
Wyrsta holds a PhD in Materials from the University of California at Santa Barbara.

BioSolar, Inc. (OTCBB: BSRC) 16

 Analyst: Victor Sula, PhD
Initial Report
September 12th, 2007

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclu-
sions in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides
investors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all
investors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties,
as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expe-
ctations expressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate
due-diligence prior to making any investment. Beacon Equity Research and its affiliates have been directly compensated a total of fifteen
thousand dollars and one hundred thousand restricted rule 144 shs directly from the company for enrollment of BSRC in this research
program and other marketing services . Ratings and price targets in this report should not be construed as recommendations or stock pri-
ce predictors. Readers of this report are urged to use due-diligence in any purchase of security listed herein. Readers should consult the
Company’s SEC filings as well as our initial report on the firm to better understand the inherent risks associated with this security. There
may be many uncontrollable or unknown factors which may cause actual results to materially differ from the results, performance or
expectations expressed or implied by such forward-looking statements. Investors should exercise good judgment and perform adequate
due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, CFA, the author of this report, certify that the material and views presented herein represent my personal opinion regar-
ding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my com-
pensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will
own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004,
Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistan-
ce and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D.
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

BioSolar, Inc. (OTCBB: BSRC) 17