o
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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59-3509694
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|
(State or other jurisdiction of
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(I.R.S. Employer
|
|
incorporation or organization)
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Identification No.)
|
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9192 Red Branch Road, Suite 110
|
||
Columbia, Maryland
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21045
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|
(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
|
o
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Non-accelerated filer (Do not check if a smaller reporting company)
|
o
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Smaller reporting company
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x
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PART I FINANCIAL INFORMATION
|
|||||
Item 1. |
Consolidated Financial Statements (Unaudited)
|
||||
Consolidated Balance Sheets
|
3 | ||||
Consolidated Statements of Operations
|
4 | ||||
Consolidated Statements of Stockholders’ Equity (Deficit)
|
5 | ||||
Consolidated Statements of Cash Flows
|
7 | ||||
Notes to Consolidated Financial Statements
|
8 | ||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
17 | |||
Item 4. |
Controls and Procedures
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22 | |||
PART II OTHER INFORMATION
|
|||||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
23 | |||
Item 6. |
Exhibits
|
23 | |||
Signatures
|
24 | ||||
Certifications
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NEW ENERGY TECHNOLOGIES, INC.
|
||||||||
(A Development Stage Company)
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
MAY 31, 2013 AND AUGUST 31, 2012
|
||||||||
May 31,
|
August 31,
|
|||||||
2013
|
2012
|
|||||||
ASSETS
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(Unaudited)
|
|||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 715,835 | $ | 1,046,918 | ||||
Deferred research and development costs
|
150,000 | 32,595 | ||||||
Prepaid expenses and other current assets
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22,757 | 28,233 | ||||||
Total current assets
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888,592 | 1,107,746 | ||||||
Equipment, net of accumulated depreciation of $10,489 and $5,882, respectively
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15,359 | 19,966 | ||||||
Total assets
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$ | 903,951 | $ | 1,127,712 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable
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$ | 35,643 | $ | 63,403 | ||||
Accrued liabilities
|
- | 26,231 | ||||||
Convertible promissory note, net of discount of $0 and $999,485, respectively
|
- | 515 | ||||||
Total current liabilities
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35,643 | 90,149 | ||||||
Commitments and contingencies
|
||||||||
Stockholders' equity
|
||||||||
Preferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding at May 31, 2013 and August 31, 2012
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- | - | ||||||
Common stock: $0.001 par value; 300,000,000 shares authorized, 24,194,713 and 20,638,360 shares issued and outstanding at
May 31, 2013 and August 31, 2012, respectively
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24,194 | 20,638 | ||||||
Additional paid-in capital
|
17,391,534 | 13,798,282 | ||||||
Deficit accumulated during the development stage
|
(16,547,420 | ) | (12,781,357 | ) | ||||
Total stockholders' equity
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868,308 | 1,037,563 | ||||||
Total liabilities and stockholders' equity
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$ | 903,951 | $ | 1,127,712 |
NEW ENERGY TECHNOLOGIES, INC.
|
||||||||||||||||||||
(A Development Stage Company)
|
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2013 AND 2012 AND FOR THE
|
||||||||||||||||||||
PERIOD FROM INCEPTION (MAY 5, 1998) TO MAY 31, 2013
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||||||||||||||||||||
Cumulative
|
||||||||||||||||||||
May 5, 1998
|
||||||||||||||||||||
Three Months Ended May 31,
|
Nine Months Ended May 31,
|
(Inception) to
|
||||||||||||||||||
2013
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2012
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2013
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2012
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May 31, 2013
|
||||||||||||||||
|
||||||||||||||||||||
Revenue
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Operating expense
|
||||||||||||||||||||
Selling, general and administrative
|
468,166 | 386,653 | 2,511,763 | 1,315,655 | 13,897,755 | |||||||||||||||
Research and development
|
115,813 | 241,652 | 224,490 | 557,400 | 2,814,628 | |||||||||||||||
Total operating expense
|
583,979 | 628,305 | 2,736,253 | 1,873,055 | 16,712,383 | |||||||||||||||
Loss from operations
|
(583,979 | ) | (628,305 | ) | (2,736,253 | ) | (1,873,055 | ) | (16,712,383 | ) | ||||||||||
Other income (expense)
|
||||||||||||||||||||
Interest income
|
- | - | - | - | 98,582 | |||||||||||||||
Interest expense - other
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- | (8,438 | ) | (30,325 | ) | (8,438 | ) | (68,949 | ) | |||||||||||
Interest expense - accretion of debt discount
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- | (15 | ) | (999,485 | ) | (15 | ) | (1,000,000 | ) | |||||||||||
Loss on disposal of fixed assets
|
- | - | - | - | (5,307 | ) | ||||||||||||||
Gain on dissolution of foreign subsidiary
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- | - | - | - | 59,704 | |||||||||||||||
Foreign exchange loss
|
- | - | - | (65 | ) | (86,428 | ) | |||||||||||||
Change in fair value of warrant liability
|
- | - | - | - | 2,128,331 | |||||||||||||||
Payable written off
|
- | - | - | 156,109 | 186,109 | |||||||||||||||
Total other income (expense)
|
- | (8,453 | ) | (1,029,810 | ) | 147,591 | 1,312,042 | |||||||||||||
Loss from continuing operations
|
(583,979 | ) | (636,758 | ) | (3,766,063 | ) | (1,725,464 | ) | (15,400,341 | ) | ||||||||||
Loss from discontinued operations
|
- | (3,000 | ) | - | (242,210 | ) | (404,307 | ) | ||||||||||||
Net loss
|
$ | (583,979 | ) | $ | (639,758 | ) | $ | (3,766,063 | ) | $ | (1,967,674 | ) | $ | (15,804,648 | ) | |||||
Basic and Diluted Loss per Common Share:
|
||||||||||||||||||||
Continuing operations
|
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.08 | ) | ||||||||
Discontinued operations
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$ | - | $ | - | $ | - | $ | (0.01 | ) | |||||||||||
Total
|
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.10 | ) | ||||||||
Weighted average number of common shares outstanding - basic and diluted
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24,174,652 | 20,638,360 | 22,174,541 | 20,638,360 |
NEW ENERGY TECHNOLOGIES, INC.
|
||||||||||||||||||||
(A Development Stage Company)
|
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(Unaudited)
|
||||||||||||||||||||
FROM MAY 5, 1998 (INCEPTION) TO MAY 31, 2013
|
||||||||||||||||||||
Deficit Accumulated
|
||||||||||||||||||||
Common Stock
|
Additional
|
During the
Development
|
Total Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Paid-in Capital
|
Stage
|
Equity (Deficit)
|
||||||||||||||||
Restricted common stock issued to related parties for management services at $0.001 per share
|
3,000,000 | $ | 3,000 | $ | - | $ | - | $ | 3,000 | |||||||||||
Unrestricted common stock sales to third parties at $0.40 per share
|
375,000 | 375 | 149,625 | - | 150,000 | |||||||||||||||
Net loss for the year ended August 31, 1998
|
(12,326 | ) | (12,326 | ) | ||||||||||||||||
Balance, August 31, 1998
|
3,375,000 | 3,375 | 149,625 | (12,326 | ) | 140,674 | ||||||||||||||
Net loss for the year ended August 31, 1999
|
(77,946 | ) | (77,946 | ) | ||||||||||||||||
Balance, August 31, 1999
|
3,375,000 | 3,375 | 149,625 | (90,272 | ) | 62,728 | ||||||||||||||
Net loss for the year ended August 31, 2000
|
(12,446 | ) | (12,446 | ) | ||||||||||||||||
Balance, August 31, 2000
|
3,375,000 | 3,375 | 149,625 | (102,718 | ) | 50,282 | ||||||||||||||
Net loss for year ended August 31, 2001
|
(12,904 | ) | (12,904 | ) | ||||||||||||||||
Balance, August 31, 2001
|
3,375,000 | 3,375 | 149,625 | (115,622 | ) | 37,378 | ||||||||||||||
Net loss for the year ended August 31, 2002
|
(54,935 | ) | (54,935 | ) | ||||||||||||||||
Balance, August 31, 2002
|
3,375,000 | 3,375 | 149,625 | (170,557 | ) | (17,557 | ) | |||||||||||||
Restricted common stock issued at $.001 per share to two related
parties to satisfy outstanding management fees.
|
10,333,200 | 10,333 | 92,999 | - | 103,332 | |||||||||||||||
Net loss for the year ended August 31, 2003
|
(97,662 | ) | (97,662 | ) | ||||||||||||||||
Balance, August 31, 2003
|
13,708,200 | 13,708 | 242,624 | (268,219 | ) | (11,887 | ) | |||||||||||||
Net loss for the year ended August 31, 2004
|
(19,787 | ) | (19,787 | ) | ||||||||||||||||
Balance, August 31, 2004
|
13,708,200 | 13,708 | 242,624 | (288,006 | ) | (31,674 | ) | |||||||||||||
Net loss for the year ended August 31, 2005
|
(103,142 | ) | (103,142 | ) | ||||||||||||||||
Balance, August 31, 2005
|
13,708,200 | 13,708 | 242,624 | (391,148 | ) | (134,816 | ) | |||||||||||||
Issuance of common stock and warrants at $0.50 per share
|
1,000,000 | 1,000 | 499,000 | - | 500,000 | |||||||||||||||
Net loss for the year ended August 31, 2006
|
(157,982 | ) | (157,982 | ) | ||||||||||||||||
Balance, August 31, 2006
|
14,708,200 | 14,708 | 741,624 | (549,130 | ) | 207,202 | ||||||||||||||
Exercise of Class A Warrants at $0.50 per share
|
1,000,000 | 1,000 | 499,000 | - | 500,000 | |||||||||||||||
Exercise of Class B Warrants at $0.55 per share
|
1,000,000 | 1,000 | 549,000 | - | 550,000 | |||||||||||||||
Exercise of Class C Warrants at $1.50 per share
|
326,667 | 327 | 489,673 | - | 490,000 | |||||||||||||||
Exercise of Class D Warrants at $1.65 per share
|
293,333 | 293 | 483,707 | - | 484,000 | |||||||||||||||
Exercise of Class E Warrants at $1.80 per share
|
293,333 | 293 | 527,707 | - | 528,000 | |||||||||||||||
Issuance of common stock and warrants at $1.50 per share
|
333,333 | 333 | 499,667 | - | 500,000 | |||||||||||||||
Dividend paid - spin off of MircoChannel Technologies Corporation
|
- | - | - | (400,000 | ) | (400,000 | ) | |||||||||||||
Net loss for the year ended August 31, 2007
|
(1,442,769 | ) | (1,442,769 | ) | ||||||||||||||||
Balance, August 31, 2007
|
17,954,866 | 17,955 | 3,790,377 | (2,391,899 | ) | 1,416,433 | ||||||||||||||
Common stock and warrants issued for cash and services at $3.00 per Unit
|
1,225,000 | 1,225 | 3,394,730 | - | 3,395,955 | |||||||||||||||
Exercise of Class C Warrants at $1.50 per share
|
6,667 | 7 | 9,993 | - | 10,000 | |||||||||||||||
Exercise of Class D Warrants at $1.65 per share
|
6,667 | 7 | 10,993 | - | 11,000 | |||||||||||||||
Exercise of Class F Warrants at $3.75 per share
|
58,333 | 58 | 218,692 | - | 218,750 | |||||||||||||||
Stock based compensation
|
- | - | 3,600,303 | - | 3,600,303 | |||||||||||||||
Net loss for the year ended August 31, 2008
|
(5,721,545 | ) | (5,721,545 | ) | ||||||||||||||||
Balance, August 31, 2008
|
19,251,533 | 19,251 | 11,025,089 | (8,113,444 | ) | 2,930,896 |
NEW ENERGY TECHNOLOGIES, INC.
|
||||||||||||||||||||
(A Development Stage Company)
|
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(Unaudited)
|
||||||||||||||||||||
FROM MAY 5, 1998 (INCEPTION) TO MAY 31, 2013
|
||||||||||||||||||||
Common Stock
|
Additional
|
Deficit Accumulated
During the
Development
|
Total Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Paid-in Capital
|
Stage
|
Equity (Deficit)
|
||||||||||||||||
Exercise of Class E Warrants at $1.80 per share
|
6,667 | 7 | 11,993 | - | 12,000 | |||||||||||||||
Exercise of Class F Warrants at $3.75 per share
|
275,333 | 275 | 1,032,225 | - | 1,032,500 | |||||||||||||||
Stock based compensation
|
- | - | 183,312 | - | 183,312 | |||||||||||||||
Reversal of stock based compensation due to forfeiture of stock options
|
- | - | (3,591,093 | ) | - | (3,591,093 | ) | |||||||||||||
Net loss for the year ended August 31, 2009
|
1,961,175 | 1,961,175 | ||||||||||||||||||
Balance, August 31, 2009
|
19,533,533 | 19,533 | 8,661,526 | (6,152,269 | ) | 2,528,790 | ||||||||||||||
Stock based compensation
|
- | - | 661,040 | - | 661,040 | |||||||||||||||
Reversal of stock based compensation due to forfeiture of stock options
|
- | - | (478,971 | ) | - | (478,971 | ) | |||||||||||||
Cumulative adjustment upon adoption of ASC 815-40
|
- | - | (1,785,560 | ) | (342,771 | ) | (2,128,331 | ) | ||||||||||||
Net loss for the year ended August 31, 2010
|
(233,136 | ) | (233,136 | ) | ||||||||||||||||
Balance, August 31, 2010
|
19,533,533 | 19,533 | 7,058,035 | (6,728,176 | ) | 349,392 | ||||||||||||||
Rounding due to reverse one for three stock split effective March 16, 2011
|
(3 | ) | - | - | - | - | ||||||||||||||
Exercise of Class F Warrants at $3.75 per share
|
1,054,512 | 1,055 | 3,953,320 | - | 3,954,375 | |||||||||||||||
Exercise of stock options
|
50,318 | 50 | 30,750 | - | 30,800 | |||||||||||||||
Stock based compensation
|
- | - | 2,855,630 | - | 2,855,630 | |||||||||||||||
Reversal of stock based compensation due to forfeiture of stock options
|
- | - | (1,304,551 | ) | - | (1,304,551 | ) | |||||||||||||
Net loss for the year ended August 31, 2011
|
(3,619,750 | ) | (3,619,750 | ) | ||||||||||||||||
Balance, August 31, 2011
|
20,638,360 | 20,638 | 12,593,184 | (10,347,926 | ) | 2,265,896 | ||||||||||||||
Stock based compensation
|
- | - | 237,046 | - | 237,046 | |||||||||||||||
Reversal of stock based compensation due to forfeiture of stock options
|
- | - | (31,948 | ) | - | (31,948 | ) | |||||||||||||
Discount on convertible promissory note due to detachable warrants
|
- | - | 547,050 | - | 547,050 | |||||||||||||||
Discount on convertible promissory note due to beneficial conversion feature
|
- | - | 452,950 | - | 452,950 | |||||||||||||||
Net loss for the year ended August 31, 2012
|
(2,433,431 | ) | (2,433,431 | ) | ||||||||||||||||
Balance, August 31, 2012
|
20,638,360 | 20,638 | 13,798,282 | (12,781,357 | ) | 1,037,563 | ||||||||||||||
Stock based compensation
|
- | - | 284,806 | - | 284,806 | |||||||||||||||
Reversal of stock based compensation due to forfeiture of stock options
|
- | - | (10,075 | ) | - | (10,075 | ) | |||||||||||||
Issuance of common stock and warrants at $0.64 per unit
|
1,875,000 | 1,875 | 1,198,125 | - | 1,200,000 | |||||||||||||||
Issuance of common stock upon the conversion of note at $0.64 per share
|
1,650,869 | 1,651 | 1,054,905 | - | 1,056,556 | |||||||||||||||
Exercise of stock options
|
22,672 | 22 | (22 | ) | - | - | ||||||||||||||
Issuance of common stock upon the exercise of Series H Warrants
|
7,812 | 8 | 6,475 | - | 6,483 | |||||||||||||||
Expense related to issuance of Series H Warrants as inducement to convert the 2012 Promissory Note
|
- | - | 1,059,038 | - | 1,059,038 | |||||||||||||||
Net loss for the nine months ended May 31, 2013
|
(3,766,063 | ) | (3,766,063 | ) | ||||||||||||||||
Balance, May 31, 2013
|
24,194,713 | $ | 24,194 | $ | 17,391,534 | $ | (16,547,420 | ) | $ | 868,308 |
NEW ENERGY TECHNOLOGIES, INC.
|
||||||||||||
(A Development Stage Company)
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
||||||||||||
FOR THE NINE MONTHS ENDED MAY 31, 2013 AND 2012 AND FOR THE
|
||||||||||||
PERIOD FROM INCEPTION (MAY 5, 1998) TO MAY 31, 2013
|
||||||||||||
Cumulative
|
||||||||||||
Nine Months Ended
|
May 5, 1998
|
|||||||||||
May 31,
|
(Inception) to
|
|||||||||||
2013
|
2012
|
May 31, 2013
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Loss from continuing operations
|
$ | (3,766,063 | ) | $ | (1,725,464 | ) | $ | (15,400,342 | ) | |||
Add: loss from discontinued operations
|
- | (242,210 | ) | (404,307 | ) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||||||
Depreciation
|
4,607 | 3,883 | 14,971 | |||||||||
Stock based compensation expense
|
284,806 | 193,185 | 7,822,137 | |||||||||
Reversal of stock based compensation expense due to forfeiture of stock options
|
(10,075 | ) | (8,243 | ) | (5,416,638 | ) | ||||||
Warrants issued to note holder
|
1,059,038 | - | 1,059,038 | |||||||||
Change in fair value of warrant liability
|
- | - | (2,128,331 | ) | ||||||||
Loss on disposal of fixed assets
|
- | - | 5,307 | |||||||||
Payable written off
|
- | (156,109 | ) | (186,109 | ) | |||||||
Common stock issued for services
|
- | - | 3,000 | |||||||||
Common stock issued for debt settlement
|
- | - | 103,332 | |||||||||
Accretion of debt discount
|
999,485 | 15 | 1,000,000 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Decrease (increase) in deferred research and development costs
|
(117,405 | ) | 70,017 | (150,000 | ) | |||||||
Decrease (increase) in prepaid expenses and other current assets
|
5,476 | 53,882 | (22,757 | ) | ||||||||
Increase (decrease) in accounts payable
|
(27,760 | ) | 28,608 | 65,643 | ||||||||
Increase (decrease) in accrued liabilities
|
30,325 | 3,538 | 212,665 | |||||||||
Net cash used in operating activities
|
(1,537,566 | ) | (1,778,898 | ) | (13,422,391 | ) | ||||||
Cash flows from investing activity
|
||||||||||||
Purchase of equipment
|
- | (24,458 | ) | (35,637 | ) | |||||||
Net cash used in investing activity
|
- | (24,458 | ) | (35,637 | ) | |||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from the issuance of common stock, exercise of warrants and stock options, net
|
1,206,483 | - | 13,573,863 | |||||||||
Repayment of promissory note
|
- | - | (155,000 | ) | ||||||||
Proceeds from promissory notes
|
- | 1,000,000 | 1,155,000 | |||||||||
Dividend paid
|
- | - | (400,000 | ) | ||||||||
Net cash provided by financing activities
|
1,206,483 | 1,000,000 | 14,173,863 | |||||||||
Increase (decrease) in cash and cash equivalents
|
(331,083 | ) | (803,356 | ) | 715,835 | |||||||
Cash and cash equivalents at beginning of period
|
1,046,918 | 2,320,185 | - | |||||||||
Cash and cash equivalents at end of period
|
$ | 715,835 | $ | 1,516,829 | $ | 715,835 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Interest paid in cash
|
$ | - | $ | - | $ | 12,393 | ||||||
Income taxes paid in cash
|
$ | - | $ | - | $ | - | ||||||
Supplemental disclosure of non-cash transactions:
|
||||||||||||
Accrued management fees converted to equity
|
$ | - | $ | - | $ | 103,332 | ||||||
Debt discount recorded for value of warrants issued
|
$ | - | $ | 547,050 | $ | 547,050 | ||||||
Debt discount recorded for beneficial conversion feature
|
$ | - | $ | 452,950 | $ | 452,950 | ||||||
Warrants issued for broker commissions
|
$ | - | $ | - | $ | 642,980 | ||||||
Common stock issued for conversion of note payable
|
$ | 1,056,556 | $ | - | $ | 1,056,556 |
Shares of Common Stock Issuable from Warrants Outstanding as of | |||||||||||||
Description
|
May 31, 2013
|
August 31, 2012
|
Exercise Price
|
Expiration
|
|||||||||
Series G
|
625,000 | 625,000 | $ | 0.64 |
April 17, 2015
|
||||||||
Series H
|
1,755,126 | - | $ | 0.83 |
February 1, 2016
|
||||||||
2,380,126 | 625,000 |
Number of Options
|
Weighted Average Exercise Price ($)
|
Weighted Average Remaining Contractual Term
|
Aggregate Intrinsic Value ($)
|
||||||||||
Outstanding at August 31, 2010
|
900,003 | 1.71 | |||||||||||
Grants
|
610,002 | 5.97 | |||||||||||
Exercises
|
(73,334 | ) | 1.61 | ||||||||||
Forfeitures
|
(476,666 | ) | 5.59 | ||||||||||
Outstanding at August 31, 2011
|
960,005 | 2.49 | |||||||||||
Forfeitures
|
(98,334 | ) | 5.93 | ||||||||||
Outstanding at August 31, 2012
|
861,671 | 2.10 | |||||||||||
Grants
|
177,500 | 1.59 | |||||||||||
Exercises
|
(63,333 | ) | 1.65 | ||||||||||
Forfeitures
|
(5,000 | ) | 3.27 | ||||||||||
Outstanding at May 31, 2013
|
970,838 | 2.03 |
7.09 years
|
$ | 410,284 | ||||||||
Exercisable at May 31, 2013
|
446,004 | 2.48 |
6.47 years
|
$ | 164,326 | ||||||||
Available for grant at May 31, 2013
|
3,892,495 |
Three Months Ended
|
Nine Months Ended
|
May 5, 1998
|
||||||||||||||||||
May 31,
|
May 31,
|
(Inception) to
|
||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
May 31, 2013
|
||||||||||||||||
Stock Compensation Expense net of reversals:
|
||||||||||||||||||||
Selling general and administrative expense
|
$ | 51,165 | $ | 48,272 | $ | 274,731 | $ | 184,942 | $ | 2,405,499 |
Stock Options Outstanding
|
Stock Options Exercisable
|
|||||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted Average
|
Weighted
|
|||||||||||||||||||||||
Range of
|
Number of
|
Average
|
Average
|
Number
|
Remaining
|
Average
|
||||||||||||||||||||
Exercise
|
Options
|
Contractural
|
Exercise
|
of Options
|
Contractual
|
Exercise
|
||||||||||||||||||||
Prices
|
Outstanding
|
Life (years)
|
Price
|
Exercisable
|
Life (Years)
|
Price
|
||||||||||||||||||||
$ | 0.80 | 15,000 | 9.56 | $ | 0.80 | 7,500 | 9.56 | $ | 0.80 | |||||||||||||||||
1.32 | 50,001 | 1.54 | 1.32 | 50,001 | 1.54 | 1.32 | ||||||||||||||||||||
1.65 | 763,334 | 7.07 | 1.65 | 250,000 | 8.61 | 1.65 | ||||||||||||||||||||
2.30 | 2,500 | 8.91 | 2.30 | 2,500 | 8.91 | 2.30 | ||||||||||||||||||||
2.50 | 10,000 | 7.85 | 2.50 | 6,000 | 7.85 | 2.50 | ||||||||||||||||||||
2.55 | 33,334 | 5.28 | 2.55 | 33,334 | 5.28 | 2.55 | ||||||||||||||||||||
3.27 | 18,334 | 1.16 | 3.27 | 18,334 | 1.16 | 3.27 | ||||||||||||||||||||
4.98 | 16,667 | 4.78 | 4.98 | 16,667 | 4.78 | 4.98 | ||||||||||||||||||||
5.94 | 50,001 | 7.57 | 5.94 | 50,001 | 7.57 | 5.94 | ||||||||||||||||||||
6.51 | 11,667 | 1.33 | 6.51 | 11,667 | 1.33 | 6.51 | ||||||||||||||||||||
Total
|
970,838 | 7.09 | $ | 2.03 | 446,004 | 6.47 | $ | 2.48 |
Three Months Ended May 31,
|
Nine Months Ended May 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Basic and Diluted EPS Computation
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Loss available to common stockholders'
|
$ | (583,979 | ) | $ | (639,758 | ) | $ | (3,766,063 | ) | $ | (1,967,674 | ) | ||||
Denominator:
|
||||||||||||||||
Weighted average number of common shares outstanding
|
24,174,652 | 20,638,360 | 22,174,541 | 20,638,360 | ||||||||||||
Basic and diluted EPS
|
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.10 | ) | ||||
The shares listed below were not included in the computation of diluted loss
|
||||||||||||||||
per share because to do so would have been antidilutive for the periods presented:
|
||||||||||||||||
Warrants
|
2,380,126 | 625,000 | 2,380,126 | 625,000 | ||||||||||||
Stock options
|
970,838 | 950,005 | 970,838 | 950,005 |
·
|
Further improve SolarWindow™ efficiency and transparency;
|
·
|
Optimize electrical power (current and voltage) output;
|
·
|
Optimize the application of the active layer coatings which make it possible for SolarWindow™ to generate electricity on glass surfaces;
|
·
|
Develop improved electricity-generating coatings by enhancing performance, processing, reliability, and durability;
|
·
|
Optimize SolarWindow™ performance on flexible substrates; and
|
·
|
Develop high speed and large area roll-to-roll (R2R) and sheet-to-sheet (S2S) coating methods required for commercial-scale BIPV and windows.
|
Three Months Ended May 31,
|
||||||||||||||||
2013
|
2012
|
Increase / (Decrease)
|
Percentage
Change
|
|||||||||||||
Operating expense
|
||||||||||||||||
Selling, general and administrative
|
$ | 417,001 | $ | 338,381 | $ | 78,620 | 23 | % | ||||||||
Research and development
|
115,813 | 241,652 | (125,839 | ) | -52 | % | ||||||||||
Stock compensation
|
51,165 | 48,272 | 2,893 | 6 | % | |||||||||||
Total operating expense
|
$ | 583,979 | $ | 628,305 | $ | (44,326 | ) | -7 | % |
Nine Months Ended May 31,
|
||||||||||||||||
2013
|
2012
|
Increase / (Decrease)
|
Percentage
Change
|
|||||||||||||
Operating expense
|
||||||||||||||||
Selling, general and administrative
|
$ | 1,177,994 | $ | 1,130,713 | $ | 47,281 | 4 | % | ||||||||
Research and development
|
224,490 | 557,400 | (332,910 | ) | -60 | % | ||||||||||
Stock compensation
|
1,333,769 | 184,942 | 1,148,827 | 621 | % | |||||||||||
Total operating expense
|
$ | 2,736,253 | $ | 1,873,055 | $ | 863,198 | 46 | % |
Three Months Ended May 31,
|
Three Month
|
Nine Months Ended May 31
|
Nine Month
|
|||||||||||||||||||||
2013
|
2012
|
Change |
2013
|
2012
|
Change | |||||||||||||||||||
Other income (expense)
|
||||||||||||||||||||||||
Interest expense - other
|
$ | - | $ | (8,438 | ) | $ | 8,438 | $ | (30,325 | ) | $ | (8,438 | ) | $ | (21,887 | ) | ||||||||
Interest expense - accretion of debt discount
|
- | (15 | ) | 15 | (999,485 | ) | (15 | ) | (999,470 | ) | ||||||||||||||
Foreign exchange loss
|
- | - | - | - | (65 | ) | 65 | |||||||||||||||||
Payable written off
|
- | - | - | - | 156,109 | (156,109 | ) | |||||||||||||||||
Total other income (expense)
|
$ | - | $ | (8,453 | ) | $ | 8,453 | $ | (1,029,810 | ) | $ | 147,591 | $ | (1,177,401 | ) |
Exhibit No.
|
Description of Exhibit
|
|
10.1
|
Redacted Modification to the Cooperative Research and Development Agreement entered into between the National Renewable Energy Laboratory and New Energy Technologies, Inc., dated January 16, 2013(1)
|
|
10.2
|
Loan Conversion Agreement dated February 1, 2013, by and between New Energy Technologies, Inc. and 1420524 Alberta Ltd.(2)
|
|
10.3
|
Redacted Letter of Commitment between New Energy Solar Corporation and University of South Florida(3)
|
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
|
101.INS
|
XBRL Instance Document** | |
101.SCH
|
XBRL Taxonomy Extension Schema Document**
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document**
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document**
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document**
|
New Energy Technologies, Inc.
(Registrant)
|
|||
Date: July 15, 2013
|
By:
|
/s/ John A. Conklin | |
John A. Conklin | |||
President and Chief Executive Officer, Chief Financial Officer and Director(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) | |||
1.
|
I have reviewed this quarterly report on Form 10-Q of New Energy Technologies, Inc. (the “Registrant”);
|
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.
|
As the registrant’s certifying officer I am 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my 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.
|
As the registrant’s certifying officer I have disclosed, based on my 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: July 15, 2013
|
By:
|
/s/ John A. Conklin | |
John A. Conklin | |||
President and Chief Executive Officer,
Chief Financial Officer and Director
|
|||
1.
|
Such Quarterly Report on Form 10-Q for the fiscal quarter ending May 31, 2013, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in such Quarterly Report on Form 10-Q for the fiscal quarter ending May 31, 2013, fairly presents, in all material respects, the financial condition and results of operations of New Energy Technologies, Inc.
|
Date: July 15, 2013
|
By:
|
/s/ John A. Conklin | |
John A. Conklin | |||
President and Chief Executive Officer,
Chief Financial Officer and Director
|
|||
Organization and Going Concern (Details Narrative) (USD $)
|
9 Months Ended |
---|---|
May 31, 2013
|
|
Organization And Going Concern Details Narrative | |
Accumulated deficit | $ 16,547,420 |
Cash and cash equivalents | 715,835 |
Non cash expenses | $ 4,570,869 |
Consolidated Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 9 Months Ended | 181 Months Ended | ||
---|---|---|---|---|---|
May 31, 2013
|
May 31, 2012
|
May 31, 2013
|
May 31, 2012
|
May 31, 2013
|
|
Consolidated Statements Of Operations | |||||
Revenue | |||||
Operating expense | |||||
Selling, general and administrative | 468,166 | 386,653 | 2,511,763 | 1,315,655 | 13,897,755 |
Research and development | 115,813 | 241,652 | 224,490 | 557,400 | 2,814,628 |
Total operating expense | 583,979 | 628,305 | 2,736,253 | 1,873,055 | 16,712,383 |
Loss from operations | (583,979) | (628,305) | (2,736,253) | (1,873,055) | (16,712,383) |
Other income (expense) | |||||
Interest income | 98,582 | ||||
Interest expense - other | (8,438) | (30,325) | (8,438) | (68,949) | |
Interest expense - accretion of debt discount | (15) | (999,485) | (15) | (1,000,000) | |
Loss on disposal of fixed assets | (5,307) | ||||
Gain on dissolution of foreign subsidiary | 59,704 | ||||
Foreign exchange loss | (65) | (86,428) | |||
Change in fair value of warrant liability | 2,128,331 | ||||
Payable written off | 156,109 | 186,109 | |||
Total other income (expense) | (8,453) | (1,029,810) | 147,591 | 1,312,042 | |
Loss from continuing operations | (583,979) | (636,758) | (3,766,063) | (1,725,464) | (15,400,341) |
Loss from discontinued operations | (3,000) | (242,210) | (404,307) | ||
Net loss | $ (583,979) | $ (639,758) | $ (3,766,063) | $ (1,967,674) | $ (15,804,648) |
Basic and Diluted Loss per Common Share: | |||||
Continuing operations | $ (0.02) | $ (0.03) | $ (0.17) | $ (0.08) | |
Discontinued operations | $ (0.01) | ||||
Total | $ (0.02) | $ (0.03) | $ (0.17) | $ (0.10) | |
Weighted average number of common shares outstanding - basic and diluted | 24,174,652 | 20,638,360 | 22,174,541 | 20,638,360 |
Stock Options
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 4. Stock Options | On October 10, 2006, the Companys Board of Directors (the Board) adopted and approved the 2006 Incentive Stock Option Plan (the 2006 Stock Plan) that provides for the grant of stock options to employees, directors, officers and consultants. Stock option grants vest over two to five years and expire ten years after the date of grant. Stockholders previously approved 5,000,000 shares for grant under the 2006 Plan, of which 3,892,495 remain available for grant and 136,667 options have been exercised as of May 31, 2013. All shares approved for grant and subsequently forfeited are available for future grant. The Company does not repurchase shares to fulfill the requirements of options that are exercised. The Company issues new shares when options are exercised.
The Company measures all stock-based compensation based on the fair value on the grant date using the Black-Scholes-Merton formula and recognizes expense over the requisite service period. The Black-Scholes model requires management to make assumptions regarding option time to expiration, expected volatility, and risk-free interest rates, all of which have a significant impact on the fair value of the option.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a bond with a similar term. The Company does not anticipate declaring dividends in the foreseeable future. Volatility is calculated based on the historical closing stock prices. The Company uses the simplified method for determining the expected term of its plain vanilla stock options. The Company recognizes compensation expense for only the portion of stock options that are expected to vest. Therefore, the Company applies an estimated forfeiture rate that is derived from historical employee termination data and adjusted for expected future employee turnover rates. If the actual number of forfeitures differs from those estimated by the Company, additional adjustments to compensation expense may be required in future periods.
A summary of the Companys stock option activity for the nine months ended May 31, 2013 and the years ended August 31, 2012 and 2011, and related information follows:
The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all in-the-money options (i.e. the difference between the Companys closing stock price on the last trading day of the period covered by this report and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all in-the-money option holders exercised their options on May 31, 2013. The intrinsic value of the option changes based upon the fair market value of the Companys common stock. Since the closing stock price was $2.11 on May 31, 2013 and 828,335 outstanding options have an exercise price below $2.11 per share, as of May 31, 2013, there is intrinsic value to our outstanding in-the-money stock options.
The following table sets forth the share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in the Companys Consolidated Statements of Operations for the three and nine months ended May 31, 2013 and 2012, and from May 5, 1998 (inception) to May 31, 2013:
As of May 31, 2013, the Company had $116,828 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 2.25 years.
Stock Option Activity During the Nine Months Ended May 31, 2013
On December 20, 2012, the Company granted two stock options to purchase up to 15,000 (a 10,000 and 5,000 option grant, respectively) shares of the Companys common stock at an exercise price of $0.80 per share, the fair market value of the Companys common stock on the date of grant, to two employees as partial compensation for services. The stock options expire ten years from the date of grant, on December 20, 2022 and vest as follows: (a) 7,500 shares vest immediately on the date of grant and (b) 7,500 shares on the one-year anniversary on December 20, 2013. The stock options are further subject to the terms and conditions of a stock option agreement between the Company and the employees. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date that employees cease to be one of the Companys employees. Upon termination of such service, the employee will have a specified period of time to exercise vested stock options, if any. The grant date fair value of the stock option granted was $11,700, or $0.78 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price / spot price of $0.80 per share, dividend yield of 0%, volatility of 160.1%, risk-free rate of 1.14%, and a term of 7.67 years. During the three and nine months ended May 31, 2013, the Company recognized $1,463 and $8,775, respectively of expense related to these two issuances.
On April 27, 2012, pursuant to his employment agreement, the Companys Vice President of Business and Technology Development, Mr. John Patrick Thompson received a grant of 100,000 stock options. The options have an exercise price of $2.30, the fair market value of the Companys common stock on the date of grant. The stock options expire ten years from the date of grant, on April 27, 2022 and vest in various amounts upon the meeting of certain milestones and which vesting is subject to Board approval. The stock option is further subject to the terms and conditions of a stock option agreement between the Company and the employee. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date the employee ceases to be one of the Companys employees. Upon termination of such service, the employee will have a specified period of time to exercise vested stock options, if any. The grant date fair value of the stock option granted was $225,000, or $2.25 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price / spot price of $2.30 per share, dividend yield of 0%, volatility of 167.1%, risk-free rate of 1.34%, and term of 7.67 years. The Company recognizes compensation cost associated with this stock option grant with performance conditions when the Company determines that it is probable that certain milestones will be achieved. On December 20, 2012, the Companys Board determined that milestones related to 2,500 options were substantially met and during the three and nine months ended May 31, 2013, the Company recognized $5,625 of expense related to this award.
On January 23, 2013, the Board approved, and the Company granted, a stock option to each of the Companys four directors, including John Conklin, CEO, to purchase 40,000 shares of its common stock at an exercise price of $1.65 per share, the fair market value of the Companys common stock on the date of grant. Each stock option expires ten years from the date the applicable stock option agreement was executed, on January 23, 2023, and vests as follows: (a) 20,000 shares vest immediately on the date of grant and (b) 20,000 shares on the one-year anniversary on January 23, 2014. The stock options are further subject to the terms and conditions of a stock option agreement between the Company and each director. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date that the director ceases to be one of the Companys directors. Upon termination of such service, the director will have a specified period of time to exercise vested stock options, if any. The grant date fair value of each of the stock options granted to each of the Companys directors was $64,386 estimated using a Black-Scholes model containing the following assumptions: Exercise price / spot price of $1.65 per share, dividend yield of 0%, volatility of 161.1%, risk-free rate of 1.24%, and a term of 7.67 years. During the three and nine months ended May 31, 2013, the Company recognized $32,193 and $193,157 of expense related to this issuance.
On December 10, 2012, Mr. Peter Fusaro resigned from the Board. As a result of his resignation, Mr. Fusaro forfeited 5,000 unvested stock options and had vested 11,667 stock options. Total stock based compensation expense related to Mr. Fusaros options was $48,850 of which $44,270 was expensed through August 31, 2012. On November 30, 2012, the Company reversed $10,075 of expense related to forfeited options on which expense was previously recorded resulting in total recognized expense related to Mr. Fusaros options of $34,195. Mr. Fusaro has until December 10, 2014, to exercise his 11,667 vested stock options.
Stock Option Activity During the Year Ended August 31, 2012
On December 8, 2011, Mr. Todd Pitcher resigned from the Board. Mr. Pitcher had vested 6,667 stock options and forfeited 10,000 unvested stock options with an exercise price of $3.27 per share. During the year ended August 31, 2011, the Company recorded stock based compensation of $27,784 for the amortization of the fair value of his stock option. Since the stock option was forfeited prior to 10,000 options vesting, $8,243 previously recognized for stock based compensation was reversed on November 30, 2011, resulting in total stock based compensation expense related to Mr. Pitchers stock option grant of $19,541. Mr. Pitcher has until December 8, 2013, to exercise his 6,667 vested stock options.
On August 12, 2012, 83,334 vested options with an exercise price of $6.21 per share held by Mr. Andrew Farago, the Companys former Chief Operating Officer expired unexercised.
On September 30, 2012, Mr. Javier Jimenez resigned from the Board. As a result of his resignation, Mr. Jimenez forfeited 5,000 unvested stock options and had vested 11,667 stock options with an exercise price of $3.27 per share. The Company recorded stock based compensation totaling $91,780 related to the amortization of the fair value of this stock option grant, including the recognition of $66,252 and $25,528 of expense for the years ended August 31, 2012 and 2011, respectively. Since the stock option was forfeited prior to 5,000 options vesting, $23,705 previously recognized for stock based compensation was reversed on August 31, 2012, resulting in total stock based compensation expense related to Mr. Jimenezs stock option grant of $68,075. Mr. Jimenez has until September 30, 2014, to exercise his 11,667 vested stock options.
The following table summarizes information about stock options outstanding and exercisable at May 31, 2013:
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Stock Options (Details Narrative) (USD $)
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3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
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May 31, 2013
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May 31, 2013
On December 20, 2012 [Member]
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May 31, 2013
On December 20, 2012 [Member]
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May 31, 2013
On January 23, 2013 [Member]
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May 31, 2013
On January 23, 2013 [Member]
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May 31, 2013
On April 27, 2012 [Member]
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May 31, 2013
On April 27, 2012 [Member]
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Aug. 31, 2012
Javier Jimenez [Member]
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Aug. 31, 2011
Javier Jimenez [Member]
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Aug. 31, 2011
Todd Pitcher [Member]
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Nov. 30, 2011
Todd Pitcher
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Unrecognized compensation cost | $ 116,828 | ||||||||||
Expected period | 2 years 3 months | ||||||||||
Expense related to issuance | 1,463 | 8,775 | 32,193 | 193,157 | 5,625 | 5,625 | |||||
Amortization of the fair value of stock option | 66,252 | 25,528 | 27,784 | ||||||||
Stock based compensation reversed | $ 23,705 | $ 8,243 |
Convertible Promissory Note (Details Narrative) (USD $)
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3 Months Ended | 9 Months Ended | ||
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May 31, 2013
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May 31, 2012
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May 31, 2013
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May 31, 2012
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Convertible Promissory Note Details Narrative | ||||
Interest expense related to the 2012 Promissory Note | $ 0 | $ 8,438 | $ 30,325 | $ 8,438 |
Accretion related to the debt discount | $ 0 | $ 999,485 |
Related Party Transactions (Details Narrative) (USD $)
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3 Months Ended | 9 Months Ended | ||
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May 31, 2013
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May 31, 2012
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May 31, 2013
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May 31, 2012
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Related Party Transactions Details Narrative | ||||
Cash based Board compensation | $ 12,750 | $ 18,750 | $ 40,500 | $ 70,350 |
Stock based compensation expense related to stock options granted non employee | 24,983 | 19,782 | 151,785 | 96,138 |
Legal services | 18,550 | 44,099 | 84,873 | 141,528 |
Accounts payable | $ 6,225 | $ 6,225 |
Net Loss Per Share (Details 1)
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3 Months Ended | 9 Months Ended | ||
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May 31, 2013
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May 31, 2012
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May 31, 2013
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May 31, 2012
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StockOptions [Member]
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Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 970,838 | 950,005 | 970,838 | 950,005 |
Warrant [Member]
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Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 2,380,126 | 625,000 | 2,380,126 | 625,000 |
Net Loss Per Share (Details) (USD $)
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3 Months Ended | 9 Months Ended | ||
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May 31, 2013
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May 31, 2012
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May 31, 2013
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May 31, 2012
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Numerator: | ||||
Loss available to common stockholders | $ (583,979) | $ (639,758) | $ (3,766,063) | $ (1,967,674) |
Denominator: | ||||
Weighted average number of common shares outstanding | 24,174,652 | 20,638,360 | 22,174,541 | 20,638,360 |
Basic and diluted EPS | $ (0.02) | $ (0.03) | $ (0.17) | $ (0.10) |
Convertible Promissory Note
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9 Months Ended |
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May 31, 2013
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Convertible Promissory Note | |
Note 2. Convertible Promissory Note | On April 17, 2012, the Company entered into a Bridge Loan Agreement (the Loan Agreement) with 1420524 Alberta Ltd. (the Creditor), pursuant to which the Company borrowed $1,000,000 at an annual interest rate of 7% (the Loan), compounded quarterly; following the occurrence of an event of default, as further specified in the Loan Agreement, the annual interest rate would increase to 15%. The Loan was evidenced by a convertible promissory note with a maturity date of the earlier of: (a) the closing of any equity financing by the Company in excess of $1,000,000, or (b) April 16, 2013 (the 2012 Promissory Note). As a condition to the Creditors entry into the Loan Agreement, the Company issued the Creditor 625,000 Series G Stock Purchase Warrants (the Series G Warrants), which are exercisable through April 17, 2015, with an initial exercise price of 84% of the average of the closing price for our common stock as reported on the OTC Markets Group Inc. QB tier (the OTCQB) for the five trading days immediately preceding the closing of the Loan, or $1.92 per share, subject to adjustment as provided therein. Additionally, the Series G Warrants contain a cashless exercise provision and require us to file a registration statement with the SEC for the shares issuable upon exercise of the Series G Warrants within 60 days receipt of a written request by the Creditor. According to the original terms of the Loan Agreement, the Creditor could elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at an initial fixed conversion price equal to seventy (70%) percent of the average of the closing price for the Companys common stock as reported on the OTCQB for the five trading days immediately preceding the closing of the Loan, or $1.60 per share subject to adjustment as provided therein. The debt discount attributable to the relative fair value of the warrants and the beneficial conversion feature amounted to $547,050 and $452,950, respectively, and was to be accreted over the term of the Loan using the effective interest method.
On February 1, 2013, the Company and the Creditor entered into a Loan Conversion Agreement (LCA) whereby the Creditor agreed to convert the entire balance outstanding, including $1,000,000 of principal and $56,556 of accrued interest payable into 1,650,869 shares of restricted common stock. In order to induce the Creditor to convert the Loan into shares of common stock, and eliminate the Companys obligation to repay the Loan in cash, the effective conversion price was reduced to $0.64 (the price at which the Company sold shares pursuant to its self-directed registered offering; see NOTE 3 Stockholders Equity (Deficit) below) from the initial conversion price of $1.60. In addition, as an inducement to convert, the Company issued to the Creditor 825,435 Series H Warrants and reduced the exercise price of the Series G Warrants to $0.64 (See NOTE 3 Stockholders Equity (Deficit) below for additional information). No incremental expense was recognized in these consolidated financial statements related to the reduction in the exercise price of the Series G Warrants, and the conversion of the Loan, because the transaction did not meet the requirements for an inducement under accounting principles generally accepted in the United States. As such, the Loan conversion was accounted for as a debt extinguishment with no gain or loss recognized due to the related party nature of the transaction. The Company recognized expense amounting to $1,059,038 for the issuance of the Series H warrants to the Creditor, representing additional financing costs associated with the Loan.
During the three and nine months ended May 31, 2013, the Company recognized $0 and $30,325, respectively, of interest expense related to the 2012 Promissory Note. During the three and nine months ended May 31, 2012, the Company recognized $8,438 of interest expense related to the 2012 Promissory Note.
During the three and nine months ended May 31, 2013, the Company recognized $0 and $999,485, respectively, of accretion related to the Loan discount. As a result of the Loan conversion, the debt discount was fully amortized by February 1, 2013, the date of the LCA. |
Net Loss Per Share
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May 31, 2013
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Net Loss Per Share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 5. Net Loss Per Share | During the three and nine months ended May 31, 2013 and 2012, the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has not included the effects of warrants, stock options and convertible debt on net loss per share for the past two fiscal years because to do so would be antidilutive.
Following is the computation of basic and diluted net loss per share for the three and nine months ended May 31, 2013 and 2012:
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Stockholders' Equity (Deficit)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2013
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Stockholders Equity Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 3. Stockholders' Equity (Deficit) | On February 1, 2013, in full satisfaction of the 2012 Promissory Note, the Company issued to the Creditor 1,650,869 shares of restricted common stock upon the conversion of the 2012 Promissory Note, as adjusted in accordance with the terms of the LCA. Additionally, pursuant to the terms of the LCA, the Company issued to the Creditor 825,435 Series H Warrants and reduced the exercise price of the Series G Warrants to $0.64 (See Note 2 - Convertible Promissory Note above for additional information).
On February 1, 2013, the Company completed a self-directed registered offering of 1,875,000 units at a price of $0.64 per unit for $1,200,000 in aggregate proceeds (the Registered Offering). Each unit consisted of one share of the Companys common stock and one-half Series H stock purchase warrant (Series H Warrant) to purchase one-half of a share of common stock at the initial exercise price of $0.83 per share for a period of three years from the date of issuance. The Company issued 937,503 Series H Warrants as part of the Registered Offering. The relative fair value of the common stock was estimated to be $638,717 and the relative fair value of the warrants was estimated to be $561,283 as determined based on the relative fair value allocation of the proceeds received. The Series H Warrants were valued using the Black-Scholes option pricing model using the following variables: $0.83 exercise price, $1.48 stock price, 161% volatility, 0.40% risk-free interest rate, 3 year term and no dividends.
On March 21, 2013, the Company issued 7,812 shares of common stock upon the exercise of an equal number of Series H Warrants and received proceeds of $6,484.
Warrants
Each of the Companys warrants outstanding entitle the holder to purchase one share of the Companys common stock for each warrant share held. A summary of the Companys warrants outstanding and exercisable as of May 31, 2013 and August 31, 2012 is as follows:
The Series G Warrants were issued on April 17, 2012 as a condition to the Creditor entering into the Loan Agreement more fully described above under Note 2 - Convertible Promissory Note. In order to induce the Creditor to convert the Loan into shares of the Companys common stock, the initial exercise price of $1.92 was reduced to $0.64. Additionally, the Series G Warrants contain a cashless exercise provision and registration rights requiring us to file a registration statement with the SEC for the shares issuable upon exercise of the Series G Warrants within 60 days receipt of a written request by the Creditor.
As inducement to convert the Loan, on February 1, 2013, the Company issued to the Creditor 825,435 Series H Warrants (See Note 2 - Convertible Promissory Note above for additional information). The warrants have an exercise price of $0.83 per share, expire on the third anniversary of the LCA, or on February 1, 2016 and may be exercised in whole or in part at any time from the date of issuance through expiration. Based on the following Black-Scholes Option Pricing Model assumptions: exercise price - $0.83; market price of common stock - $1.48 per share; estimated volatility - 161%; risk free interest rate - 0.40%; expected dividend rate - 0%; and expected life - 3.0 years, the Company calculated the fair value of these warrants to be $1,059,038.
On February 1, 2013, as part of the Registered Offering, the Company issued 937,503 Series H Warrants (See Note 3 Stockholders Equity (Deficit) above for additional information).
During the three and nine months ended May 31, 2013, the Company received $6,484 upon the exercise of 7,812 Series H warrants by two warrant holders. |