nene_10q.htm

0001477932-14-003580.txt : 20140710 0001477932-14-003580.hdr.sgml : 20140710 20140710121222 ACCESSION NUMBER: 0001477932-14-003580 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20140531 FILED AS OF DATE: 20140710 DATE AS OF CHANGE: 20140710 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENERGY TECHNOLOGIES, INC. CENTRAL INDEX KEY: 0001071840 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 593509694 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-127953 FILM NUMBER: 14968844 BUSINESS ADDRESS: STREET 1: 9192 RED BRANCH RD STREET 2: SUITE 110 CITY: COLUMBIA STATE: MD ZIP: 21045 BUSINESS PHONE: 800-213-0689 MAIL ADDRESS: STREET 1: 9192 RED BRANCH RD STREET 2: SUITE 110 CITY: COLUMBIA STATE: MD ZIP: 21045 FORMER COMPANY: FORMER CONFORMED NAME: OCTILLION CORP DATE OF NAME CHANGE: 19981008 10-Q 1 nene_10q.htm FORM 10-Q nene_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For quarterly period ended May 31, 2014

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 333-127953

NEW ENERGY TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada		59-3509694
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

10632 Little Patuxent Parkway, Suite 406
Columbia, Maryland		21044
(Address of principal executive offices)		(Zip Code)

(800) 213-0689

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes T No o

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

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer (Do not check if a smaller reporting company)	o		Smaller reporting company	x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,306,612 shares of common stock, par value $0.001, were outstanding on July 8, 2014.

NEW ENERGY TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended May 31, 2014

Table of Contents

PART I FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)		3

	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	16

Item 4.	Controls and Procedures		21

PART II OTHER INFORMATION

Item 6.	Exhibits		22

Signatures			23

Certifications

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

NEW ENERGY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
MAY 31, 2014 AND AUGUST 31, 2013

	May 31,			August 31,
	2014			2013
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,364,454		$	347,493
Deferred research and development costs		150,000			150,000
Prepaid expenses and other current assets		13,405			22,379
Total current assets		1,527,859			519,872

Equipment, net of accumulated depreciation of $16,500 and $12,025, respectively		11,290			13,823
Total assets	$	1,539,149		$	533,695

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	127,885		$	122,356
Interest payable		137,788			-
Convertible promissory note, net of discount of $2,984,172 as of May 31, 2014		15,828			-
Total current liabilities		281,501			122,356

Commitments and contingencies

Stockholders' equity
Preferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock: $0.001 par value; 300,000,000 shares authorized, 24,306,612 and 24,194,713 shares issued and outstanding at May 31, 2014 and August 31, 2013, respectively		24,306			24,194
Additional paid-in capital		20,688,098			17,441,034
Deficit accumulated during the development stage		(19,454,756	)		(17,053,889	)
Total stockholders' equity		1,257,648			411,339
Total liabilities and stockholders' equity	$	1,539,149		$	533,695

(The accompanying notes are an integral part of these consolidated financial statements)

NEW ENERGY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2014 AND 2013 AND FOR THE
PERIOD FROM INCEPTION (MAY 5, 1998) TO MAY 31, 2014

													Cumulative
													May 5, 1998
	Three Months Ended May 31,						Nine Months Ended May 31,						(Inception) to
	2014			2013			2014			2013			May 31, 2014

Revenue	$	-		$	-		$	-		$	-		$	-

Operating expense
Selling, general and administrative		690,521			468,166			1,775,114			2,511,763			16,046,951
Research and development		171,875			115,813			472,137			224,490			3,419,153
Total operating expense		862,396			583,979			2,247,251			2,736,253			19,466,104

Loss from operations		(862,396	)		(583,979	)		(2,247,251	)		(2,736,253	)		(19,466,104	)

Other income (expense)
Interest income		-			-			-			-			98,582
Interest expense - other		(54,403	)		-			(137,788	)		(30,325	)		(206,737	)
Interest expense - accretion of debt discount		(15,464	)		-			(15,828	)		(999,485	)		(1,015,828	)
Loss on disposal of fixed assets		-			-			-			-			(5,307	)
Gain on dissolution of foreign subsidiary		-			-			-			-			59,704
Foreign exchange loss		-			-			-			-			(86,428	)
Change in fair value of warrant liability		-			-			-			-			2,128,331
Payable written off		-			-			-			-			186,109
Total other income (expense)		(69,867	)		-			(153,616	)		(1,029,810	)		1,158,426

Loss from continuing operations		(932,263	)		(583,979	)		(2,400,867	)		(3,766,063	)		(18,307,678	)

Loss from discontinued operations		-			-			-			-			(404,307	)

Net loss	$	(932,263	)	$	(583,979	)	$	(2,400,867	)	$	(3,766,063	)	$	(18,711,985	)

Basic and Diluted Loss per Common Share	$	(0.04	)	$	(0.02	)	$	(0.10	)	$	(0.17	)

Weighted average number of common shares outstanding - basic and diluted		24,306,612			24,174,652			24,270,086			22,174,541

(The accompanying notes are an integral part of these consolidated financial statements)

NEW ENERGY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited)
FROM MAY 5, 1998 (INCEPTION) TO MAY 31, 2014							Deficit
							Accumulated			Total
					Additional		During the			Stockholders'
	Common Stock				Paid-in		Development			Equity
	Shares		Amount		Capital		Stage			(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 $0.001 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		14,708.00		741,624.00		(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		17,954		3,790,378		(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

						Additional			Deficit Accumulated During the			Total Stockholders'
	Common Stock					Paid-in			Development			Equity
	Shares			Amount		Capital			Stage			(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 income for the year ended August 31, 2009		-			-		-			1,961,175			1,961,175
Balance, August 31, 2009		19,533,533			19,533		8,661,526.00			(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		-			-		334,305			-			334,305
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		6,476			-			6,484
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 year ended August 31, 2013		-			-		-			(4,272,532	)		(4,272,532	)
Balance, August 31, 2013		24,194,713			24,194		17,441,034			(17,053,889	)		411,339

Stock based compensation		30,000			30		604,119			-			604,149
Reversal of stock based compensation due to forfeiture of stock options		-			-		(356,973	)		-			(356,973	)
Exercise of stock options		81,899			82		(82	)		-			-
Discount on convertible promissory note due to detachable warrants		-			-		1,137,149			-			1,137,149
Discount on convertible promissory note due to beneficial conversion feature		-			-		1,862,851			-			1,862,851
Net loss for the nine months ended May 31, 2014		-			-					(2,400,867	)		(2,400,867	)
Balance, May 31, 2014		24,306,612		$	24,306	$	20,688,098		$	(19,454,756	)	$	1,257,648

(The accompanying notes are an integral part of these consolidated financial statements)

NEW ENERGY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE NINE MONTHS ENDED MAY 31, 2014 AND 2013 AND FOR THE
PERIOD FROM INCEPTION (MAY 5, 1998) TO MAY 31, 2014
							Cumulative
							May 5, 1998
	Nine Months Ended May 31,						(Inception) to
	2014			2013			May 31, 2014
Cash flows from operating activities
Loss from continuing operations	$	(2,400,867	)	$	(3,766,063	)	$	(18,265,073	)
Add: loss from discontinued operations		-			-			(404,307	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		4,475			4,607			20,982
Stock based compensation expense		604,149			284,806			8,475,786
Reversal of stock based compensation expense due to forfeiture of stock options		(356,973	)		(10,075	)		(5,773,611	)
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		-			-			(186,109	)
Common stock issued for services		-			-			3,000
Common stock issued for debt settlement		-			-			103,332
Accretion of debt discount		15,828			999,485			1,015,828
Changes in operating assets and liabilities:
Decrease (increase) in deferred research and development costs		-			(117,405	)		(150,000	)
Decrease (increase) in prepaid expenses and other current assets		8,974			5,476			(13,405	)
Increase (decrease) in accounts payable		5,529			(27,760	)		115,280
Increase (decrease) in accrued liabilities		137,788			30,325			350,453
Net cash used in operating activities		(1,981,097	)		(1,537,566	)		(15,771,830	)

Cash flows from investing activity
Purchase of equipment		(1,942	)		-			(37,579	)
Net cash used in investing activity		(1,942	)		-			(37,579	)

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		3,000,000			-			4,155,000
Dividend paid		-			-			(400,000	)
Net cash provided by financing activities		3,000,000			1,206,483			17,173,863

Increase (decrease) in cash and cash equivalents		1,016,961			(331,083	)		1,364,454

Cash and cash equivalents at beginning of period		347,493			1,046,918			-

Cash and cash equivalents at end of period	$	1,364,454		$	715,835		$	1,364,454

Supplemental disclosure of cash flow information:
Interest paid in cash	$	-		$	-		$	-
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	$	1,137,149		$	-		$	1,684,199
Debt discount recorded for beneficial conversion feature	$	1,862,851		$	-		$	2,315,801
Warrants issued for broker commissions	$	-		$	-		$	642,980
Common stock issued for conversion of note payable	$	-		$	1,056,556		$	1,056,556

(The accompanying notes are an integral part of these consolidated financial statements)

NEW ENERGY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Basis of Presentation, Recent Accounting Pronouncements, Organization and Going Concern

Basis of Presentation

The unaudited financial statements of New Energy Technologies, Inc. as of May 31, 2014, and for the three and nine months ended May 31, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and include the Company’s wholly-owned subsidiaries, Sungen Energy, Inc. (“Sungen”), Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”). Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended August 31, 2013, as filed with the Securities and Exchange Commission as part of the Company's Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

Recent Accounting Pronouncements

On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Company’s consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. As of the date these consolidated financial statements were issued, the Company was in the process of evaluating the impact of implementing the amendments. Subsequent to the Company’s adoption of the amendments, the Company will no longer present inception-to-date information in the consolidated statements of operations, stockholders' equity, and cash flows. In addition, the consolidated financial statements will no longer be labeled as those of a development stage entity.

Organization

New Energy Technologies, Inc. (the “Company,”) was incorporated in the State of Nevada on May 5, 1998, under the name “Octillion Corp.” On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sungen, KEC, and New Energy Solar. The Company’s common stock, par value $0.001 per share, is quoted on The OTC Markets Group, Inc. QB tier under the ticker symbol “NENE.”

The Company is a renewable and alternative energy company, developing two novel technologies for generating sustainable electricity, one of which collects light energy from the sun and artificial sources (SolarWindow™), and the other harvests kinetic energy present in moving vehicles (MotionPower™). The Company’s proprietary, patent-pending technologies and products, which are the subjects of one hundred and one (101) patent-filings, have been invented, designed, engineered, and prototyped in preparation for further field testing, product development, and eventual commercial deployment.

The Company’s SolarWindow™ technology generates electrical energy when the electricity-generating coating is applied to glass and flexible plastic surfaces creating semi-transparent, see-through organic photovoltaic (OPV) solar cells. If successfully developed, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone (U.S. Census Bureau, 2007 American Housing Survey & U.S. Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey). The Company’s SolarWindow™ technology is the subject of forty-two (42) patent filings.

The Company’s MotionPower™ technology harvests, or captures, the “kinetic” or “motion” energy of cars, trucks, buses, and heavy commercial vehicles when they pass over the system or slow down. MotionPower™ captures kinetic energy and converts it into electricity. If successfully developed, MotionPower™ could potentially be used to harvest kinetic energy generated by any of the estimated 250 million vehicles registered in America (U.S. Department of Transportation Federal Highway Administration, 2008 Highway Statistics), which drive approximately six billion miles on our nation’s roadways every day (U.S. Environmental Protection Agency). The Company’s MotionPower™ technology is the subject of fifty-nine (59) patent filings.

The Company’s product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants.

The Company continues to assess the ongoing development and value propositions of its novel SolarWindow™ and MotionPower™ technologies. This assessment helps the Company strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages.

As of May 31, 2014, the Company had accumulated a total deficit of $19,454,756 from operations in pursuit of the Company’s development and commercialization objectives.

The Company intends to finance its operations primarily through existing cash and possible future financing transactions. As of May 31, 2014, the Company had cash and cash equivalents of $1,364,454. Based upon the Company’s current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable the Company to continue operations into the Company’s fiscal year ending August 31, 2015.

The Company is subject to a number of risks, including its ability to successfully develop SolarWindow™ and MotionPower™ technologies into commercially viable products, the Company’s ability to obtain financing as and when the Company needs it, competition from existing and new products, fluctuation of quarterly financial results, loss of key personnel, uncertain protection for the Company’s intellectual property, litigation or other proceedings, dependence on corporate partners and collaborators and future changes in its target markets that may adversely affect the Company.

NOTE 2 - Convertible Promissory Note

On October 7, 2013 (the “Closing Date”), the Company entered into a Bridge Loan Agreement (the “Loan Agreement”) with Kalen Capital Corporation (the “Investor”), a private corporation owning in excess of 10% of the Company’s issued and outstanding shares of common stock. Pursuant to the Loan Agreement, the Company received proceeds of $3,000,000 and issued a 7% unsecured Convertible Promissory Note (the “Note”) due on October 6, 2014, with interest compounded quarterly and issued a Series I Stock Purchase Warrant (the “Series I Warrant”) allowing the holder to purchase up to 921,875 shares of the Company’s common stock at an initial exercise price of $1.37 for a period on five (5) years. The Series I Warrant is exercisable on a “cashless basis.” According to the original terms of the Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Note, and any or all accrued and unpaid interest thereon into units (collectively, the “Units”), with each Unit consisting of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock (the “Series J Warrants”); and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock (the “Series K Warrants”). The conversion price for each Unit is the lesser of (i) $1.37, with the exercise price of each Series J Warrant set at $1.47 and the exercise price of each Series K Warrant set at $1.57; or (ii) 70% of the 20 day average closing price of the Company’s common stock prior to conversion, subject to a floor of $1.00 with the exercise price of each Series J Warrant included in the Units issued upon conversion being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant included in the Units issued upon conversion being equal to 114.6% of the unit exercise price.

Together with the Loan Agreement, the Company entered into (a) a Lock-Up Agreement whereby the Investor agreed not to sell any shares of common stock owned by the Investor, including any shares issued upon conversion of the Note or upon exercise of any warrants held by Investor, whether issued pursuant to this Loan Agreement or otherwise, for a period of one (1) year from the Closing Date (as defined in the Loan Agreement) and (b) a Registration Rights Agreement that requires the Company to prepare and file a registration statement on Form S-1 no later than the 90th day prior to the expiration of the Lock-Up Agreement covering the resale of all shares of common stock issuable upon conversion of any portion of the Note and the shares of common stock issuable upon exercise of the Series I, Series J and Series K Warrants.

The Company calculated the debt discount related to the Note and Series I Warrants by first allocating the respective fair value of the Loan and the Series I Warrants based upon their relative fair values to the total Note proceeds. The fair value of the Series I Warrants issued with the Note was calculated using the Black-Scholes option pricing model and the following assumptions: market price of common stock - $2.12 per share; estimated volatility - 165.67%; risk free interest rate - 1.41%; expected dividend rate - 0% and expected life - 5.0 years. The resulting fair value of $1,137,149 was allocated to the Series I Warrants.

The intrinsic value of the beneficial conversion feature amounted to $1,862,851. The resulting $3,000,000 discount to the Note is being accreted over the one year term of the Note using the effective interest method.

During the three and nine months ended May 31, 2014, the Company recognized $54,403 and $137,788 of interest expense related to this Note and $15,464 and $15,828 of accretion related to the debt discount. The remaining debt discount of $2,984,172 will be amortized through October 6, 2014 with $670,492 recorded during the quarter ended August 31, 2014 and $2,313,680 recorded during the quarter ended November 30, 2014.

NOTE 3 – Common Stock and Warrants

Common Stock

During the nine months ended May 31, 2014, the Company issued 1) 81,899 shares of unrestricted common stock as a result of the cashless exercise of 190,000 stock options; and 2) 10,000 shares of restricted common stock to each of the Company’s three directors (30,000 shares total) valued at $2.90 per share, the closing price of the Company's common stock on the day the stock was issued.

Warrants

Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. A summary of the Company’s warrants outstanding and exercisable as of May 31, 2014 and August 31, 2013 is as follows:

Shares of Common Stock Issuable from Warrants Outstanding as of
Description	May 31, 2014		August 31, 2013		Exercise Price		Expiration
Series G		625,000		625,000	$	0.64	April 17, 2015
Series H		1,755,126		1,755,126	$	0.83	February 1, 2016
Series I		921,875		-	$	1.37	October 7, 2018
Total		3,302,001		2,380,126

The Series I Warrant was issued on October 7, 2013, in connection with the Loan Agreement more fully described above under “Note 2 - Convertible Promissory Note.” In addition, there are a total of 4,793,155 Series J warrants and Series K warrants issuable as described under “NOTE 2 - Convertible Promissory Note.”

NOTE 4 - Stock Options

On October 10, 2006, the Company’s Board of Directors (the “Board”) adopted and approved the 2006 Incentive Stock Option Plan (the “2006 Plan”) that provides for the grant of stock options to employees, directors, officers and consultants. Stock option grants vest either immediately or over one 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 3,347,496 remain available for grant and 326,667 options have been exercised as of May 31, 2014. 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 only for 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 Company’s stock option activity for the nine months ended May 31, 2014 and the year ended August 31, 2013 and related information follows:

	Number of Options			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($)
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 August 31, 2013		970,838			2.03
Grants		805,000			2.90
Exercises		(190,000	)		1.65
Forfeitures		(260,001	)		1.69
Outstanding at May 31, 2014		1,325,837			2.68	8.21 years	$	148,601
Exercisable at May 31, 2014		571,337			2.39	6.31 years	$	148,601
Available for grant at May 31, 2014		3,347,496

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 Company’s 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 vested options on May 31, 2014. The intrinsic value of the option changes based upon the fair market value of the Company’s common stock. Since the closing stock price was $1.96 on May 31, 2014 and 385,001 outstanding options have an exercise price below $1.96 per share, as of May 31, 2014, there is intrinsic value to the Company’s 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 Company’s Consolidated Statements of Operations for the three and nine months ended May 31, 2014 and 2013, and from May 5, 1998 (inception) to May 31, 2014 (excludes $87,000 of stock based compensation for restricted stock grants during the nine months ended May 31, 2014 described in "Note 3 - Common Stock and Warrants"):

											Cumulative
	Three Months Ended				Nine Months Ended						May 5, 1998
	May 31,				May 31,						(Inception) to
	2014		2013		2014			2013			May 31, 2014
Stock Compensation Expense:
SG&A - expense	$	237,577	$	51,165	$	517,149		$	284,806		$	8,388,786
SG&A - income due to forfeitures		-		-		(356,973	)		(10,075	)		(5,773,611	)
Net stock compensation cost	$	237,577	$	51,165	$	160,176		$	274,731		$	2,615,175

As of May 31, 2014, the Company had $844,009 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 4.25 years.

Stock Option Activity During the Nine Months Ended May 31, 2014

On January 27, 2014, pursuant to his employment agreement executed on January 1, 2014, John Conklin, CEO received a grant of 700,000 stock options. The 700,000 stock options granted on January 27, 2014 are exercisable at $2.90 per share, expire ten years from the date of grant, on January 27, 2024 and vest at the rate of 50,000 shares every six months beginning on June 30, 2014 through December 31, 2017 (4 years) for 400,000 options with the remaining 300,000 options vesting at such time as the Company shall have generated cumulative revenues of no less than $1,000,000 from the sale of a commercial product ("Performance Stock Options"). The stock option is further subject to the terms and conditions of a stock option agreement between the Company and Mr. Conklin. 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 employee ceases to be one of the Company’s employees. Upon termination of such service, the employee will have 120 days to exercise vested stock options, if any. The grant date fair value of the stock option granted was $1,862,000, or $2.66 per share, with $1,064,000 related to the ratable vesting over 4 years of 400,000 stock options and $798,000 related to the 300,000 Performance Stock Options. The grant date fair value of the stock option was estimated using a Black-Scholes model containing the following assumptions: Exercise price of $2.90, Spot price of $2.75, dividend yield of 0%, volatility of 154.0%, risk-free rate of 2.21%, and term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $200,271 and $267,028 of expense related to this issuance. During the nine months ended May 31, 2014, the Company reversed compensation expense amounting to $324,781 associated with 233,334 unvested performance based stock options originally granted to Mr. Conklin on August 9, 2010. The reversal was recorded when the Company determined it was no longer probable that the performance condition associated with the options would be achieved. The 233,334 performance based stock options were subsequently cancelled.

On January 9, 2014, the Board approved, and the Company granted, a stock option to each of the Company’s three directors to purchase 30,000 shares of its common stock at an exercise price of $2.90 per share, the fair market value of the Company’s common stock on the date of grant. Each stock option expires ten years from the date of grant, on January 9, 2024, and vests as follows: (a) 15,000 shares immediately on the date of grant, and (b) 15,000 shares on December 31, 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 Company’s directors. Upon termination of such service, the director will have two years to exercise vested stock options, if any. The grant date fair value of each of the stock options granted to each of the Company’s directors was $84,300, or $2.81 per share, estimated using a Black-Scholes model containing the following assumptions: Exercise price / spot price of $2.90 per share, dividend yield of 0%, volatility of 154.5%, risk-free rate of 2.41%, and a term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $31,613 and $179,138 of expense related to this issuance.

On January 9, 2014, the Company granted two stock options to purchase up to 15,000 (a 10,000 and 5,000 option grant, respectively) shares of the Company’s common stock at an exercise price of $2.90 per share, the fair market value of the Company’s 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 January 9, 2024 and vest as follows: (a) 7,500 shares vest immediately on the date of grant, and (b) 7,500 shares on December 31, 2014. 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 that employee ceases to be one of the Company’s employees. Upon termination of such service, the employee will have two years to exercise vested stock options, if any. The grant date fair value of the stock option granted was $42,150, or $2.81 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price/spot price of $2.90 per share, dividend yield of 0%, volatility of 154.5%, risk-free rate of 2.41%, and a term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $5,269 and $29,856 of expense related to these two issuances.

On each of November 11, 2013 and November 13, 2013, 95,000 stock options (190,000 in the aggregate) were exercised on a cashless basis resulting in the issuance of an aggregate of 81,999 shares of unrestricted common stock. Said shares were registered under Form S-8 filed with the Securities and Exchange Commission on February 28, 2013.

On October 31, 2013, Jatinder Bhogal resigned from the Board. As a result of his resignation, Mr. Bhogal forfeited 20,000 unvested stock options originally granted on January 23, 2013, and had vested 20,000 stock options with an exercise price of $1.65 per share. The Company recorded costs relating to stock based compensation totaling $64,386 related to the amortization of the fair value of this stock option grant, including the recognition of $8,049 and $56,337 of expense for the nine months ended May 31, 2014 and the year ended August 31, 2013, respectively. Since the stock option was forfeited prior to 20,000 options vesting, $32,192 previously recognized for stock based compensation was reversed on October 31, 2013, resulting in total stock based compensation expense related to Mr. Bhogal’s January 23, 2013, stock option grant of $32,194. In total, Mr. Bhogal has 70,001 of vested stock options which will be forfeited if not exercised prior to October 31, 2015.

During the three and nine months ended May 31, 2014, the Company recognized $424 and $33,078 of expense related to options granted during prior periods and not described above.

The following table summarizes information about stock options outstanding and exercisable at May 31, 2014:

Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Prices		Number of Options Outstanding		Weighted Average Contractual Life (years)		Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$	0.80		15,000		8.56	$	0.80		15,000		8.56	$	0.80
	1.32		50,001		0.54		1.32		50,001		0.54		1.32
	1.65		320,000		5.84		1.65		320,000		8.16		1.65
	2.30		2,500		7.91		2.30		2,500		7.91		2.30
	2.50		10,000		6.85		2.50		8,000		6.85		2.50
	2.55		33,334		4.28		2.55		33,334		4.28		2.55
	2.90		805,000		9.66		2.90		52,500		9.62		2.90
	3.27		11,667		0.53		3.27		11,667		0.53		3.27
	4.98		16,667		3.78		4.98		16,667		3.78		4.98
	5.94		50,001		6.57		5.94		50,001		6.57		5.94
	6.51		11,667		0.33		6.51		11,667		0.33		6.51
Total			1,325,837		8.21	$	2.68		571,337		6.31	$	2.39

NOTE 5 - Net Loss Per Share

During the three and nine months ended May 31, 2014 and 2013, 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 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, 2014 and 2013:

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2014			2013			2014			2013
Basic and Diluted EPS Computation
Numerator:
Loss available to common stockholders'	$	(932,263	)	$	(583,979	)	$	(2,400,867	)	$	(3,766,063	)
Denominator:
Weighted average number of common shares outstanding		24,306,612			24,174,652			24,270,086			22,174,541
Basic and diluted EPS	$	(0.04	)	$	(0.02	)	$	(0.10	)	$	(0.17	)

The shares listed below were not included in the computation of diluted losses
per share because to do so would have been antidilutive for the periods presented:

Convertible debt		2,396,577			-			2,396,577			-
Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)		4,793,155			-			4,793,155			-
Warrants		3,302,001			2,380,126			3,302,001			2,380,126
Stock options		1,325,837			970,838			1,325,837			970,838

NOTE 6 - Related Party Transactions

A related party with respect to the Company is generally defined as any person (i) (and, if a natural person, inclusive of his or her immediate family) that holds 10% or more of the Company’s securities, (ii) that is part of the Company’s management, (iii) that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

For services rendered in the capacity of a Board member, non-employee Board members received $3,750 per quarter through the quarter ended February 28, 2013. The amount was increased to $4,250 per quarter beginning with the Company’s third quarter ending on May 31, 2013. New Board member compensation is pro rated in their first quarter. During the three months ended May 31, 2014 and 2013, the Company incurred $8,500 and $12,750, respectively in cash based Board compensation. During the nine months ended May 31, 2014 and 2013, the Company incurred $29,750 and $40,500, respectively in cash based Board compensation.

The Company grants stock options and restricted common stock for services rendered by certain individuals, including the Company’s non-employee directors and sole officer, Mr. Conklin. During the nine months ended May 31, 2014, the Company's three directors each received a grant of 30,000 stock options with Mr. Conklin receiving a grant of 700,000 stock options (see “NOTE 4 - Stock Options” above). Additionally, each director was issued 10,000 shares of restricted common stock valued at $2.90 per share, the fair market value of the Company’s common stock on the date of issuance, which the Company expensed on the date of issue on January 9, 2014. In total, during the three months ended May 31, 2014 and 2013 the Company recognized net compensation expense related to stock options and restricted stock issued to the Company’s non-employee directors and executive of $231,883 and $48,820, respectively. During the nine months ended May 31, 2014 and 2013 the Company recognized net compensation expense related to stock options and restricted stock issued to the Company’s non-employee directors and executive of $214,059 and $256,898, respectively. These amounts include the reversal of compensation expense due to pre-vesting forfeitures.

The law firm of Sierchio & Company, LLP, of which Joseph Sierchio, one of the Company’s directors, is a principal, has provided counsel to the Company since its inception. In July 2008, the Company asked Mr. Sierchio to join the Company’s Board. During the three months ended May 31, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $18,275 and $18,550, respectively, of legal services. During the nine months ended May 31, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $92,997 and $84,866, respectively, of legal services. At May 31, 2014, the Company owed Sierchio & Company, LLP $6,000 which is included in accounts payable.

On October 7, 2013, the Company entered into the Loan Agreement with Kalen Capital Corporation, a private corporation owning in excess of 10% of the Company’s issued and outstanding shares of common stock. In connection with the Loan Agreement, the Company issued a $3,000,000 Note and Series I Warrants (see “NOTE 2 - Convertible Promissory Note” above).

All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Report on Form 10-Q contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations, and are generally identifiable by use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project,” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows, (b) our growth strategies, (c) expectations from our ongoing research and development activities, (d) anticipated trends in the technology industry, (e) our future financing plans, and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.

Except where the context otherwise requires and for purposes of this Form 10-Q only, “we,” “us,” “our,” “Company,” “our Company,” and “New Energy” refer to New Energy Technologies, Inc., a Nevada corporation, and its consolidated subsidiaries.

Overview

We are a development stage renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. Our proprietary, patent-pending technologies are collectively the subject of one hundred and one (101) patent filings. Our SolarWindow™ technology provides the ability to harvest light energy from the sun and artificial sources and generate electricity from a see-through, semi-transparent, coating of organic photovoltaic (“OPV”) solar cells applied to glass and flexible plastic surfaces. Our SolarWindow™ technology is the subject of forty-two (42) patent filings. Our MotionPower™ technology harvests “kinetic” or “motion” energy from vehicles when they slow down and converts kinetic energy into electricity. Our MotionPower™ technology is the subject of fifty-nine (59) patent filings.

We do not currently have any commercial products and there is no assurance that we will successfully be able to design, develop, manufacture, or sell any commercial products in the future.

Our product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by our contract engineers, scientists, and consultants.

Ultimately, we plan to market any SolarWindow™ technology and/or MotionPower™ technology products through co-marketing, co-promotion, licensing and distribution arrangements with third party collaborators. We believe that this approach could provide immediate access to distribution channels developed by the collaborators, therefore potentially increasing market penetration and commercial acceptance of our products and enabling us to avoid expending significant funds for development of a large sales and marketing organization.

We cannot accurately predict the amount of funding or the time required to successfully commercialize either the SolarWindow™ technology or the MotionPower™ technology. The actual cost and time required to commercialize these technologies may vary significantly depending on, among other things, the results of our research and development efforts, the cost of developing, acquiring, or licensing various enabling technologies, changes in the focus and direction of our research and development programs, competitive and technological advances, the cost of filing, prosecuting, defending and enforcing claims with respect to patents, the regulatory approval process and manufacturing, marketing and other costs associated with commercialization of these technologies. Because of this uncertainty, even if financing is available to us, we may secure insufficient funding to effectuate our business plan.

As of May 31, 2014, we had an accumulated deficit of $19,454,756 and working capital of $1,246,358. We intend to finance our operations primarily through our existing cash and possible future financing transactions. As of May 31, 2014, we had cash and cash equivalents of $1,364,454. Based upon our current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable us to continue operations into our fiscal year ending August 31, 2015.

Research and Related Agreement

We are a party to certain agreements related to the development of our SolarWindow™ technology and our MotionPower™ technology.

SolarWindow™ Technology

Stevenson-Wydler Cooperative Research and Development Agreement with the Alliance for Sustainable Energy

In efforts to advance the commercial development of the SolarWindow™ technology, on March 18, 2011, we entered into a Cooperative Research and Development Agreement (the “CRADA”) with Alliance for Sustainable Energy, LLC (“Alliance”), the operator of the National Renewable Energy Laboratory (“NREL”) under its U.S. Department of Energy contract. Under terms of the CRADA, NREL researchers will make use of our exclusive intellectual property (“IP”), newly developed IP, and possibly NREL’s background IP in order to work towards specific product development goals. Under the terms of the CRADA, we agreed to reimburse Alliance for filing fees associated with all documented, out-of-pocket costs directly related to patent application preparation and filings, and maintenance of the patent applications.

On January 16, 2013, we entered into a modification to the CRADA for the purpose of extending the date pursuant to which NREL’s researchers will make use of our exclusive IP and NREL’s background IP. As part of the extension, we advanced $150,000 to Alliance as a retainer, which will be used once the development goals are met. Until such time, however, Alliance bills us monthly for R&D related costs as they are incurred.

On March 6, 2013, we entered into Phase II of our CRADA with Alliance, during which researchers will additionally work towards:

·	Further improving SolarWindow™ efficiency and transparency;

·	Optimizing electrical power (current and voltage) output;

·	Optimizing the application of the active layer coatings which make it possible for SolarWindow™ to generate electricity on glass surfaces;

·	Developing improved electricity-generating coatings by enhancing performance, processing, reliability, and durability;

·	Optimizing SolarWindow™ performance on flexible substrates; and

·	Developing high speed and large area roll-to-roll (R2R) and sheet-to-sheet (S2S) coating methods required for commercial-scale building integrated photovoltaic (BIPV) and building applied photovoltaic (BAPV) applications, and windows.

Results of Operations

Three and Nine Months Ended May 31, 2014 Compared with the Three and Nine Months Ended May 31, 2013

Operating Expenses

A summary of our operating expense for the three and nine months ended May 31, 2014 and 2013 follows:

	Three Months Ended
	May 31,				Increase /		Percentage
	2014		2013		(Decrease)		Change
Operating expense
Selling, general and administrative	$	452,944	$	417,001	$	35,943		9	%
Research and development		171,875		115,813		56,062		48	%
Subtotal		624,819		532,814		92,005		17	%
Stock compensation		237,577		51,165		186,412		364	%
Total operating expense	$	862,396	$	583,979	$	278,417		48	%

	Nine Months Ended
	May 31,				Increase /			Percentage
	2014		2013		(Decrease)			Change
Operating expense
Selling, general and administrative	$	1,527,938	$	1,177,994	$	349,944			30	%
Research and development		472,137		224,490		247,647			110	%
Subtotal		2,000,075		1,402,484		597,591			43	%
Stock compensation		247,176		1,333,769		(1,086,593	)		-81	%
Total operating expense	$	2,247,251	$	2,736,253	$	(489,002	)		-18	%

Selling, General and Administrative

Selling, general and administrative costs include all expenditures incurred other than research and development related costs, including costs related to personnel, professional fees, travel and entertainment, public company costs, insurance and other office related costs. The nine month increase is due to an increase in professional fees and public company costs primarily related to fees paid to publicize our SolarWindow™ and MotionPower™ technologies within the industry and investor community offset by decreased expenses related to personnel and travel.

Research and Development

Research and development (“R&D”) costs represent costs incurred to develop our SolarWindow™ and MotionPower™ technologies and are incurred pursuant to our research agreements and agreements with other third party providers and certain internal R&D cost allocations. Payments under these agreements include salaries and benefits for R&D personnel, allocated overhead, contract services and other costs. R&D costs are expensed when incurred, except for non-refundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed. R&D costs increased during the three and nine months as a result of increasing SolarWindow™ research and development activities.

Stock Compensation

Expense associated with equity based transactions is calculated and expensed in our financial statements as required pursuant to various accounting rules and is non-cash in nature. Stock compensation represents the expense associated with the amortization of our stock options, issuance of restricted common stock and issuance of warrants to purchase our common stock. Stock compensation expense increased in the three month period ended May 31, 2014 compared to May 31, 2013 primarily due to the January 1, 2014 grant of stock options to Mr. Conklin, our President & CEO. The nine month stock compensation expense decrease is primarily due to the current year reversal of $324,781 of expense associated with the forfeiture of Mr. Conklin’s stock options that were issued to him on August 9, 2010 pursuant to his previous employment agreement and the prior year inclusion of $1,059,038 recognized upon the issuance of Series H Warrants granted as an inducement to convert a $1,000,000 bridge loan into shares of common stock.

Other Income (Expense)

A summary of our other income (expense) for the three and nine months ended May 31, 2014 and 2013 follows:

	Three Months Ended May 31,					Three Month			Nine Months Ended May 31,						Nine Month
	2014			2013		Change			2014			2013			Change
Other income (expense)
Interest expense - other		(54,403	)		-	$	(54,403	)	$	(137,788	)	$	(30,325	)	$	(107,463	)
Interest expense - accretion of debt discount		(15,464	)		-		(15,464	)		(15,828	)		(999,485	)		983,657
Total other income (expense)	$	(69,867	)	$	-	$	(69,867	)	$	(153,616	)	$	(1,029,810	)	$	876,194

Interest Expense

“Interest expense – other” relates to the stated interest of our convertible promissory notes. “Interest expense - accretion of debt discount” represents the accretion of the discount applied to our notes as a result of the issuance of detachable warrants and the beneficial conversion feature contained our notes calculated according to the effective interest method. The amounts under the 2014 column relate to the $3 million Note and the amounts under the 2013 column relate to the 2012, $1 million bridge loan.

Liquidity and Capital Resources

We have an accumulated deficit of $19,454,756 through May 31, 2014. Included in the deficit are non-cash expenses totaling $4,883,373 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discount. Due to the “start-up” nature of our business, we expect to incur losses as we continue development of our OPV and energy harvesting technologies and expand. Although we believe that we have sufficient capital to fund our operations into our fiscal year ended August 31, 2015, management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing may be necessary. In the event additional financing is needed, we expect to raise additional funds through private or public equity investment in order to maintain and/or expand the range and scope of our business operations. However, there is no assurance that such additional funds will be available for us on acceptable terms, if at all. If we are unable to raise additional capital when needed or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our principal source of liquidity is cash in the bank. At May 31, 2014, we had a cash and cash equivalent balance of $1,364,454. We have financed our operations primarily from the sale of equity securities as follows:

·	$3,395,955 received in 2008 pursuant to a securities purchase agreement ("SPA") in which we issued 3,675,000 shares of common stock and a like number of Class F Warrants;

·	$1,044,500 received in 2009 from the exercise of 20,000 Class E Warrants and 826,000 Class F Warrants;

·	$3,954,375 received in 2011 from the exercise of 1,054,512 Class F Warrants;

·	$1,000,000 received in 2012 pursuant to the 2012 Bridge Loan;

·	$1,200,000 received in 2013 from the consummation of a self-directed registered offering of common stock and Series H Warrants on February 1, 2013; and

·	$3,000,000 received on October 7, 2013 from the issuance of the Note.

Net cash used in operating activities was $1,981,097 for the nine months ended May 31, 2014, compared to net cash used in operating activities of $1,537,566 for the nine months ended May 31, 2013. The increase in cash used in operating activities of $443,531 substantially reflects increases in amounts paid for research and development and public company marketing expenses.

Net cash provided by financing activities was $3,000,000 for the nine months ended May 31, 2014, compared to $1,206,483 for the nine months ended May 31, 2013. Cash provided by financing activities in 2014 was from the Note and in 2013 from the February 1, 2013 self-directed registered offering of common stock and exercise of warrants.

Other Contractual Obligations

In addition to our contractual obligations under the research agreements, as of May 31, 2014, we have lease payments of $1,100 each month under our month-to-month corporate office operating lease. In addition, we have future payments totaling $13,000 pursuant to agreements with third party providers that we utilize for investor and public relations and marketing and business development.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

See Note 1 to our Consolidated Financial Statements for more information regarding recent accounting pronouncements and their impact to our consolidated results of operations and financial position.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2014, that our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 6. Exhibits

Exhibit No.		Description of Exhibit

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**

____________________

*Filed herewith

** Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	New Energy Technologies, Inc. (Registrant)

July 10, 2014	By:	/s/ John A. Conklin
		John A. Conklin
		President, Chief Executive Officer, Chief Financial Officer
		(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

EX-31.1 2 nene_ex311.htm CERTIFICATION nene_ex311.htm

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Conklin, certify that:

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;

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 10, 2014	By:	/s/ John A. Conklin
		John A. Conklin
		President, Chief Executive Officer, Chief Financial Officer
		(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

EX-32.1 3 nene_ex321.htm CERTIFICATION nene_ex321.htm

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of New Energy Technologies, Inc. for the fiscal quarter ending May 31, 2014, I, John Conklin, Chief Executive Officer and Chief Financial Officer of New Energy Technologies, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1. Such Quarterly Report on Form 10-Q for the fiscal quarter ending May 31, 2014, 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, 2014, fairly presents, in all material respects, the financial condition and results of operations of New Energy Technologies, Inc.

Date: July 10, 2014	By:	/s/ John A. Conklin
		John A. Conklin
		President, Chief Executive Officer, Chief Financial Officer
		(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

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Basis of Presentation   The unaudited financial statements of New Energy Technologies, Inc. as of May 31, 2014, and for the three and nine months ended May 31, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and include the Companys wholly-owned subsidiaries, Sungen Energy, Inc. (Sungen), Kinetic Energy Corporation (KEC), and New Energy Solar Corporation (New Energy Solar). Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended August 31, 2013, as filed with the Securities and Exchange Commission as part of the Company's Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.   Recent Accounting Pronouncements   On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Companys consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. As of the date these consolidated financial statements were issued, the Company was in the process of evaluating the impact of implementing the amendments. Subsequent to the Companys adoption of the amendments, the Company will no longer present inception-to-date information in the consolidated statements of operations, stockholders' equity, and cash flows. In addition, the consolidated financial statements will no longer be labeled as those of a development stage entity.   Organization   New Energy Technologies, Inc. (the Company,) was incorporated in the State of Nevada on May 5, 1998, under the name Octillion Corp. On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sungen, KEC, and New Energy Solar. The Companys common stock, par value $0.001 per share, is quoted on The OTC Markets Group, Inc. QB tier under the ticker symbol NENE.   The Company is a renewable and alternative energy company, developing two novel technologies for generating sustainable electricity, one of which collects light energy from the sun and artificial sources (SolarWindow), and the other harvests kinetic energy present in moving vehicles (MotionPower). The Companys proprietary, patent-pending technologies and products, which are the subjects of one hundred and one (101) patent-filings, have been invented, designed, engineered, and prototyped in preparation for further field testing, product development, and eventual commercial deployment.   The Companys SolarWindow technology generates electrical energy when the electricity-generating coating is applied to glass and flexible plastic surfaces creating semi-transparent, see-through organic photovoltaic (OPV) solar cells. If successfully developed, SolarWindow could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone (U.S. Census Bureau, 2007 American Housing Survey & U.S. Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey). The Companys SolarWindow technology is the subject of forty-two (42) patent filings.   The Companys MotionPower technology harvests, or captures, the kinetic or motion energy of cars, trucks, buses, and heavy commercial vehicles when they pass over the system or slow down. MotionPower captures kinetic energy and converts it into electricity. If successfully developed, MotionPower could potentially be used to harvest kinetic energy generated by any of the estimated 250 million vehicles registered in America (U.S. Department of Transportation Federal Highway Administration, 2008 Highway Statistics), which drive approximately six billion miles on our nations roadways every day (U.S. Environmental Protection Agency). The Companys MotionPower technology is the subject of fifty-nine (59) patent filings.   The Companys product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants.   The Company continues to assess the ongoing development and value propositions of its novel SolarWindow and MotionPower technologies. This assessment helps the Company strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages.   As of May 31, 2014, the Company had accumulated a total deficit of $19,454,756 from operations in pursuit of the Companys development and commercialization objectives.   The Company intends to finance its operations primarily through existing cash and possible future financing transactions. As of May 31, 2014, the Company had cash and cash equivalents of $1,364,454. Based upon the Companys current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable the Company to continue operations into the Companys fiscal year ending August 31, 2015.   The Company is subject to a number of risks, including its ability to successfully develop SolarWindow and MotionPower technologies into commercially viable products, the Companys ability to obtain financing as and when the Company needs it, competition from existing and new products, fluctuation of quarterly financial results, loss of key personnel, uncertain protection for the Companys intellectual property, litigation or other proceedings, dependence on corporate partners and collaborators and future changes in its target markets that may adversely affect the Company.

On October 7, 2013 (the Closing Date), the Company entered into a Bridge Loan Agreement (the Loan Agreement) with Kalen Capital Corporation (the Investor), a private corporation owning in excess of 10% of the Companys issued and outstanding shares of common stock. Pursuant to the Loan Agreement, the Company received proceeds of $3,000,000 and issued a 7% unsecured Convertible Promissory Note (the Note) due on October 6, 2014, with interest compounded quarterly and issued a Series I Stock Purchase Warrant (the Series I Warrant) allowing the holder to purchase up to 921,875 shares of the Companys common stock at an initial exercise price of $1.37 for a period on five (5) years. The Series I Warrant is exercisable on a cashless basis. According to the original terms of the Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Note, and any or all accrued and unpaid interest thereon into units (collectively, the Units), with each Unit consisting of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock (the Series J Warrants); and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock (the Series K Warrants). The conversion price for each Unit is the lesser of (i) $1.37, with the exercise price of each Series J Warrant set at $1.47 and the exercise price of each Series K Warrant set at $1.57; or (ii) 70% of the 20 day average closing price of the Companys common stock prior to conversion, subject to a floor of $1.00 with the exercise price of each Series J Warrant included in the Units issued upon conversion being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant included in the Units issued upon conversion being equal to 114.6% of the unit exercise price.   Together with the Loan Agreement, the Company entered into (a) a Lock-Up Agreement whereby the Investor agreed not to sell any shares of common stock owned by the Investor, including any shares issued upon conversion of the Note or upon exercise of any warrants held by Investor, whether issued pursuant to this Loan Agreement or otherwise, for a period of one (1) year from the Closing Date (as defined in the Loan Agreement) and (b) a Registration Rights Agreement that requires the Company to prepare and file a registration statement on Form S-1 no later than the 90th day prior to the expiration of the Lock-Up Agreement covering the resale of all shares of common stock issuable upon conversion of any portion of the Note and the shares of common stock issuable upon exercise of the Series I, Series J and Series K Warrants.   The Company calculated the debt discount related to the Note and Series I Warrants by first allocating the respective fair value of the Loan and the Series I Warrants based upon their relative fair values to the total Note proceeds. The fair value of the Series I Warrants issued with the Note was calculated using the Black-Scholes option pricing model and the following assumptions: market price of common stock - $2.12 per share; estimated volatility - 165.67%; risk free interest rate - 1.41%; expected dividend rate - 0% and expected life - 5.0 years. The resulting fair value of $1,137,149 was allocated to the Series I Warrants.   The intrinsic value of the beneficial conversion feature amounted to $1,862,851. The resulting $3,000,000 discount to the Note is being accreted over the one year term of the Note using the effective interest method.   During the three and nine months ended May 31, 2014, the Company recognized $54,403 and $137,788 of interest expense related to this Note and $15,464 and $15,828 of accretion related to the debt discount. The remaining debt discount of $2,984,172 will be amortized through October 6, 2014 with $670,492 recorded during the quarter ended August 31, 2014 and $2,313,680 recorded during the quarter ended November 30, 2014.

Common Stock   During the nine months ended May 31, 2014, the Company issued 1) 81,899 shares of unrestricted common stock as a result of the cashless exercise of 190,000 stock options; and 2) 10,000 shares of restricted common stock to each of the Companys three directors (30,000 shares total) valued at $2.90 per share, the closing price of the Company's common stock on the day the stock was issued.   Warrants   Each of the Companys warrants outstanding entitles the holder to purchase one share of the Companys common stock for each warrant share held. A summary of the Companys warrants outstanding and exercisable as of May 31, 2014 and August 31, 2013 is as follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">  Shares of Common Stock Issuable from Warrants Outstanding as of</td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: left">Description</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">May 31, 2014</td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">August 31, 2013</td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Exercise Price</td> <td nowrap="nowrap"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Expiration</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Series G</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 8%; text-align: right">625,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 8%; text-align: right">625,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.64</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 31%; text-align: center">April 17, 2015</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Series H</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1,755,126</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1,755,126</td> <td nowrap="nowrap"> </td> <td> </td> <td>$</td> <td style="text-align: right">0.83</td> <td nowrap="nowrap"> </td> <td style="text-align: center">February 1, 2016</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Series I</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">921,875</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td>$</td> <td style="text-align: right">1.37</td> <td nowrap="nowrap"> </td> <td style="text-align: center">October 7, 2018</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,380,126</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td></tr> </table>   The Series I Warrant was issued on October 7, 2013, in connection with the Loan Agreement more fully described above under Note 2 - Convertible Promissory Note. In addition, there are a total of 4,793,155 Series J warrants and Series K warrants issuable as described under NOTE 2 - Convertible Promissory Note.

On October 10, 2006, the Companys Board of Directors (the Board) adopted and approved the 2006 Incentive Stock Option Plan (the 2006 Plan) that provides for the grant of stock options to employees, directors, officers and consultants. Stock option grants vest either immediately or over one 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 3,347,496 remain available for grant and 326,667 options have been exercised as of May 31, 2014. 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 only for 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, 2014 and the year ended August 31, 2013 and related information follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Options</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Exercise Price ($)</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid"> Weighted Average Remaining Contractual Term</td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Aggregate Intrinsic Value ($)</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Outstanding at August 31, 2012</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">861,671</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.10</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Grants</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">177,500</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.59</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercises</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(63,333</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.65</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Forfeitures</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(5,000</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.27</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Outstanding at August 31, 2013</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">970,838</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.03</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Grants</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">805,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.90</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercises</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(190,000</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.65</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Forfeitures</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(260,001</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.69</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 42%; line-height: 115%">Outstanding at May 31, 2014</td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="width: 9%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,325,837</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; text-align: right; line-height: 115%">2.68</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 22%; text-align: center; line-height: 115%">8.21 years</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">148,601</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Exercisable at May 31, 2014</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">571,337</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.39</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">6.31 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">148,601</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Available for grant at May 31, 2014</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3,347,496</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> </table>   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 vested options on May 31, 2014. The intrinsic value of the option changes based upon the fair market value of the Companys common stock. Since the closing stock price was $1.96 on May 31, 2014 and 385,001 outstanding options have an exercise price below $1.96 per share, as of May 31, 2014, there is intrinsic value to the Companys 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, 2014 and 2013, and from May 5, 1998 (inception) to May 31, 2014 (excludes $87,000 of stock based compensation for restricted stock grants during the nine months ended May 31, 2014 described in "Note 3 - Common Stock and Warrants"):   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid">   Three Months Ended May 31,</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid"> Nine Months Ended May 31,</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Cumulative May 5, 1998 (Inception) to May 31,</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2014</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2013</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2014</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2013</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2014</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%">Stock Compensation Expense:</td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 40%; line-height: 115%">SG&A - expense</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">237,577</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">51,165</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">517,149</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">284,806</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">8,388,786</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">SG&A - income due to forfeitures</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">-</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">-</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(356,973</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(10,075</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(5,773,611</td> <td nowrap="nowrap" style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Net stock compensation cost</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">237,577</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">51,165</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">160,176</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">274,731</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,615,175</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> </table>   As of May 31, 2014, the Company had $844,009 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 4.25 years.   Stock Option Activity During the Nine Months Ended May 31, 2014   On January 27, 2014, pursuant to his employment agreement executed on January 1, 2014, John Conklin, CEO received a grant of 700,000 stock options. The 700,000 stock options granted on January 27, 2014 are exercisable at $2.90 per share, expire ten years from the date of grant, on January 27, 2024 and vest at the rate of 50,000 shares every six months beginning on June 30, 2014 through December 31, 2017 (4 years) for 400,000 options with the remaining 300,000 options vesting at such time as the Company shall have generated cumulative revenues of no less than $1,000,000 from the sale of a commercial product ("Performance Stock Options"). The stock option is further subject to the terms and conditions of a stock option agreement between the Company and Mr. Conklin. 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 employee ceases to be one of the Companys employees. Upon termination of such service, the employee will have 120 days to exercise vested stock options, if any. The grant date fair value of the stock option granted was $1,862,000, or $2.66 per share, with $1,064,000 related to the ratable vesting over 4 years of 400,000 stock options and $798,000 related to the 300,000 Performance Stock Options. The grant date fair value of the stock option was estimated using a Black-Scholes model containing the following assumptions: Exercise price of $2.90, Spot price of $2.75, dividend yield of 0%, volatility of 154.0%, risk-free rate of 2.21%, and term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $200,271 and $267,028 of expense related to this issuance. During the nine months ended May 31, 2014, the Company reversed compensation expense amounting to $324,781 associated with 233,334 unvested performance based stock options originally granted to Mr. Conklin on August 9, 2010. The reversal was recorded when the Company determined it was no longer probable that the performance condition associated with the options would be achieved. The 233,334 performance based stock options were subsequently cancelled.   On January 9, 2014, the Board approved, and the Company granted, a stock option to each of the Companys three directors to purchase 30,000 shares of its common stock at an exercise price of $2.90 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 of grant, on January 9, 2024, and vests as follows: (a) 15,000 shares immediately on the date of grant, and (b) 15,000 shares on December 31, 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 two years 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 $84,300, or $2.81 per share, estimated using a Black-Scholes model containing the following assumptions: Exercise price / spot price of $2.90 per share, dividend yield of 0%, volatility of 154.5%, risk-free rate of 2.41%, and a term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $31,613 and $179,138 of expense related to this issuance.   On January 9, 2014, 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 $2.90 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 January 9, 2024 and vest as follows: (a) 7,500 shares vest immediately on the date of grant, and (b) 7,500 shares on December 31, 2014. 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 that employee ceases to be one of the Companys employees. Upon termination of such service, the employee will have two years to exercise vested stock options, if any. The grant date fair value of the stock option granted was $42,150, or $2.81 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price/spot price of $2.90 per share, dividend yield of 0%, volatility of 154.5%, risk-free rate of 2.41%, and a term of 7.67 years. During the three and nine months ended May 31, 2014, the Company recognized $5,269 and $29,856 of expense related to these two issuances.   On each of November 11, 2013 and November 13, 2013, 95,000 stock options (190,000 in the aggregate) were exercised on a cashless basis resulting in the issuance of an aggregate of 81,999 shares of unrestricted common stock. Said shares were registered under Form S-8 filed with the Securities and Exchange Commission on February 28, 2013.   On October 31, 2013, Jatinder Bhogal resigned from the Board. As a result of his resignation, Mr. Bhogal forfeited 20,000 unvested stock options originally granted on January 23, 2013, and had vested 20,000 stock options with an exercise price of $1.65 per share. The Company recorded costs relating to stock based compensation totaling $64,386 related to the amortization of the fair value of this stock option grant, including the recognition of $8,049 and $56,337 of expense for the nine months ended May 31, 2014 and the year ended August 31, 2013, respectively. Since the stock option was forfeited prior to 20,000 options vesting, $32,192 previously recognized for stock based compensation was reversed on October 31, 2013, resulting in total stock based compensation expense related to Mr. Bhogals January 23, 2013, stock option grant of $32,194. In total, Mr. Bhogal has 70,001 of vested stock options which will be forfeited if not exercised prior to October 31, 2015.   During the three and nine months ended May 31, 2014, the Company recognized $424 and $33,078 of expense related to options granted during prior periods and not described above.   The following table summarizes information about stock options outstanding and exercisable at May 31, 2014:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Stock Options Outstanding</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Stock Options Exercisable</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="border-bottom: black 1.5pt solid"> Range of Exercise Prices</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Options Outstanding</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Contractual Life (years)</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Exercise Price</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Options Exercisable</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Remaining Contractual Life (Years)</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Exercise Price</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 20%; text-align: right; line-height: 115%">0.80</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">15,000</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: center; line-height: 115%">8.56</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 10%; text-align: right; line-height: 115%">0.80</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">15,000</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: center; line-height: 115%">8.56</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 10%; text-align: right; line-height: 115%">0.80</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.32</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">50,001</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">0.54</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.32</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">50,001</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">0.54</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.32</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.65</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">320,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">5.84</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.65</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">320,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">8.16</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.65</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.30</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,500</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">7.91</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.30</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,500</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">7.91</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.30</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.50</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">10,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">6.85</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.50</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">8,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">6.85</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.50</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.55</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">33,334</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">4.28</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.55</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">33,334</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">4.28</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.55</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.90</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">805,000</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">9.66</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.90</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">52,500</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">9.62</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.90</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.27</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">11,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">0.53</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.27</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">11,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">0.53</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.27</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.98</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">16,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">3.78</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.98</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">16,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">3.78</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.98</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.94</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">50,001</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">6.57</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.94</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">50,001</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: center; line-height: 115%">6.57</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.94</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.51</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">11,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">0.33</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">6.51</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">11,667</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">0.33</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">6.51</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="2" style="text-align: center; line-height: 115%">Total</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,325,837</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%">8.21</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2.68</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">571,337</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%">6.31</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2.39</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> </table>

During the three and nine months ended May 31, 2014 and 2013, 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 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, 2014 and 2013:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="6" style="text-align: center; vertical-align: bottom">Three Months Ended</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="text-align: center; vertical-align: bottom">Nine Months Ended</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Basic and Diluted EPS Computation</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Numerator:</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%">Loss available to common stockholders'</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(932,263</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(583,979</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(2,400,867</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(3,766,063</td> <td nowrap="nowrap" style="width: 1%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Denominator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Weighted average number of common shares outstanding</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,306,612</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,174,652</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,270,086</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">22,174,541</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Basic and diluted EPS</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.04</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.02</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.10</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.17</td> <td nowrap="nowrap">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="4">The shares listed below were not included in the computation of diluted losses</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td colspan="5">per share because to do so would have been antidilutive for the periods presented:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Convertible debt</td> <td> </td> <td> </td> <td style="text-align: right">2,396,577</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,396,577</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)</td> <td> </td> <td> </td> <td style="text-align: right">4,793,155</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">4,793,155</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Warrants</td> <td> </td> <td> </td> <td style="text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,380,126</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,380,126</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Stock options</td> <td> </td> <td> </td> <td style="text-align: right">1,325,837</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">970,838</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">1,325,837</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">970,838</td> <td nowrap="nowrap"> </td></tr> </table>

A related party with respect to the Company is generally defined as any person (i) (and, if a natural person, inclusive of his or her immediate family) that holds 10% or more of the Companys securities, (ii) that is part of the Companys management, (iii) that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.   For services rendered in the capacity of a Board member, non-employee Board members received $3,750 per quarter through the quarter ended February 28, 2013. The amount was increased to $4,250 per quarter beginning with the Companys third quarter ending on May 31, 2013. New Board member compensation is pro rated in their first quarter. During the three months ended May 31, 2014 and 2013, the Company incurred $8,500 and $12,750, respectively in cash based Board compensation. During the nine months ended May 31, 2014 and 2013, the Company incurred $29,750 and $40,500, respectively in cash based Board compensation.   The Company grants stock options and restricted common stock for services rendered by certain individuals, including the Companys non-employee directors and sole officer, Mr. Conklin. During the nine months ended May 31, 2014, the Company's three directors each received a grant of 30,000 stock options with Mr. Conklin receiving a grant of 700,000 stock options (see NOTE 4 - Stock Options above). Additionally, each director was issued 10,000 shares of restricted common stock valued at $2.90 per share, the fair market value of the Companys common stock on the date of issuance, which the Company expensed on the date of issue on January 9, 2014. In total, during the three months ended May 31, 2014 and 2013 the Company recognized net compensation expense related to stock options and restricted stock issued to the Companys non-employee directors and executive of $231,883 and $48,820, respectively. During the nine months ended May 31, 2014 and 2013 the Company recognized net compensation expense related to stock options and restricted stock issued to the Companys non-employee directors and executive of $214,059 and $256,898, respectively. These amounts include the reversal of compensation expense due to pre-vesting forfeitures.   The law firm of Sierchio & Company, LLP, of which Joseph Sierchio, one of the Companys directors, is a principal, has provided counsel to the Company since its inception. In July 2008, the Company asked Mr. Sierchio to join the Companys Board. During the three months ended May 31, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $18,275 and $18,550, respectively, of legal services. During the nine months ended May 31, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $92,997 and $84,866, respectively, of legal services. At May 31, 2014, the Company owed Sierchio & Company, LLP $6,000 which is included in accounts payable.   On October 7, 2013, the Company entered into the Loan Agreement with Kalen Capital Corporation, a private corporation owning in excess of 10% of the Companys issued and outstanding shares of common stock. In connection with the Loan Agreement, the Company issued a $3,000,000 Note and Series I Warrants (see NOTE 2 - Convertible Promissory Note above).   All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.

The unaudited financial statements of New Energy Technologies, Inc. as of May 31, 2014, and for the three and nine months ended May 31, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and include the Companys wholly-owned subsidiaries, Sungen Energy, Inc. (Sungen), Kinetic Energy Corporation (KEC), and New Energy Solar Corporation (New Energy Solar). Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended August 31, 2013, as filed with the Securities and Exchange Commission as part of the Company's Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Companys consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. As of the date these consolidated financial statements were issued, the Company was in the process of evaluating the impact of implementing the amendments. Subsequent to the Companys adoption of the amendments, the Company will no longer present inception-to-date information in the consolidated statements of operations, stockholders' equity, and cash flows. In addition, the consolidated financial statements will no longer be labeled as those of a development stage entity.

New Energy Technologies, Inc. (the Company,) was incorporated in the State of Nevada on May 5, 1998, under the name Octillion Corp. On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sungen, KEC, and New Energy Solar. The Companys common stock, par value $0.001 per share, is quoted on The OTC Markets Group, Inc. QB tier under the ticker symbol NENE.   The Company is a renewable and alternative energy company, developing two novel technologies for generating sustainable electricity, one of which collects light energy from the sun and artificial sources (SolarWindow), and the other harvests kinetic energy present in moving vehicles (MotionPower). The Companys proprietary, patent-pending technologies and products, which are the subjects of one hundred and one (101) patent-filings, have been invented, designed, engineered, and prototyped in preparation for further field testing, product development, and eventual commercial deployment.   The Companys SolarWindow technology generates electrical energy when the electricity-generating coating is applied to glass and flexible plastic surfaces creating semi-transparent, see-through organic photovoltaic (OPV) solar cells. If successfully developed, SolarWindow could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone (U.S. Census Bureau, 2007 American Housing Survey & U.S. Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey). The Companys SolarWindow technology is the subject of forty-two (42) patent filings.   The Companys MotionPower technology harvests, or captures, the kinetic or motion energy of cars, trucks, buses, and heavy commercial vehicles when they pass over the system or slow down. MotionPower captures kinetic energy and converts it into electricity. If successfully developed, MotionPower could potentially be used to harvest kinetic energy generated by any of the estimated 250 million vehicles registered in America (U.S. Department of Transportation Federal Highway Administration, 2008 Highway Statistics), which drive approximately six billion miles on our nations roadways every day (U.S. Environmental Protection Agency). The Companys MotionPower technology is the subject of fifty-nine (59) patent filings.   The Companys product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants.   The Company continues to assess the ongoing development and value propositions of its novel SolarWindow and MotionPower technologies. This assessment helps the Company strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages.   As of May 31, 2014, the Company had accumulated a total deficit of $19,454,756 from operations in pursuit of the Companys development and commercialization objectives.   The Company intends to finance its operations primarily through existing cash and possible future financing transactions. As of May 31, 2014, the Company had cash and cash equivalents of $1,364,454. Based upon the Companys current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable the Company to continue operations into the Companys fiscal year ending August 31, 2015.   The Company is subject to a number of risks, including its ability to successfully develop SolarWindow and MotionPower technologies into commercially viable products, the Companys ability to obtain financing as and when the Company needs it, competition from existing and new products, fluctuation of quarterly financial results, loss of key personnel, uncertain protection for the Companys intellectual property, litigation or other proceedings, dependence on corporate partners and collaborators and future changes in its target markets that may adversely affect the Company.

A summary of the Companys warrants outstanding and exercisable as of May 31, 2014 and August 31, 2013 is as follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">  Shares of Common Stock Issuable from Warrants Outstanding as of</td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: left">Description</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">May 31, 2014</td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">August 31, 2013</td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Exercise Price</td> <td nowrap="nowrap"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Expiration</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Series G</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 8%; text-align: right">625,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 8%; text-align: right">625,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.64</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 31%; text-align: center">April 17, 2015</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Series H</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1,755,126</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1,755,126</td> <td nowrap="nowrap"> </td> <td> </td> <td>$</td> <td style="text-align: right">0.83</td> <td nowrap="nowrap"> </td> <td style="text-align: center">February 1, 2016</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Series I</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">921,875</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td>$</td> <td style="text-align: right">1.37</td> <td nowrap="nowrap"> </td> <td style="text-align: center">October 7, 2018</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,380,126</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td></tr> </table>

A summary of the Companys stock option activity for the nine months ended May 31, 2014 and the year ended August 31, 2013 and related information follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Number of Options</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Exercise Price ($)</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Remaining Contractual Term</td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Aggregate Intrinsic Value ($)</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Outstanding at August 31, 2012</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">861,671</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.10</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Grants</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">177,500</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.59</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Exercises</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">(63,333</td> <td nowrap="nowrap">)</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.65</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Forfeitures</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(5,000</td> <td nowrap="nowrap">)</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">3.27</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Outstanding at August 31, 2013</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">970,838</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.03</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Grants</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">805,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.90</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Exercises</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">(190,000</td> <td nowrap="nowrap">)</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.65</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Forfeitures</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(260,001</td> <td nowrap="nowrap">)</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.69</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 42%">Outstanding at May 31, 2014</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%; border-bottom: black 2.25pt double"> </td> <td style="width: 9%; border-bottom: black 2.25pt double; text-align: right">1,325,837</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">2.68</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 22%; text-align: center">8.21 years</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">148,601</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercisable at May 31, 2014</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">571,337</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.39</td> <td nowrap="nowrap"> </td> <td style="text-align: center">6.31 years</td> <td> </td> <td>$</td> <td style="text-align: right">148,601</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Available for grant at May 31, 2014</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">3,347,496</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr></table>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt">    </td> <td style="padding-bottom: 1.5pt">     </td> <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"> Three Months Ended May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom; padding-bottom: 1.5pt">     </td> <td style="text-align: center; vertical-align: bottom; padding-bottom: 1.5pt">     </td> <td colspan="6" style="text-align: center; vertical-align: bottom; border-bottom: Black 1.5pt solid"> Nine Months Ended May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom; padding-bottom: 1.5pt">     </td> <td style="text-align: center; vertical-align: bottom; padding-bottom: 1.5pt">     </td> <td colspan="2" style="text-align: center; vertical-align: bottom; border-bottom: Black 1.5pt solid">Cumulative May 5, 1998 (Inception) to May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom; padding-bottom: 1.5pt">     </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Stock Compensation Expense:</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 40%">SG&A - expense</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">237,577</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">51,165</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">517,149</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">284,806</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">8,388,786</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>SG&A - income due to forfeitures</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(356,973</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(10,075</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(5,773,611</td> <td nowrap="nowrap">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Net stock compensation cost</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">237,577</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">51,165</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">160,176</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">274,731</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,615,175</td> <td nowrap="nowrap"> </td></tr></table>

The following table summarizes information about stock options outstanding and exercisable at May 31, 2014:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Stock Options Outstanding</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"></td> <td style="text-align: center; vertical-align: bottom"></td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Stock Options Exercisable</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"></td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Range of Exercise Prices</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Number of Options Outstanding</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Contractual Life (years)</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Exercise Price</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Number of Options Exercisable</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Remaining Contractual Life (Years)</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">Weighted Average Exercise Price</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%">$</td> <td style="width: 20%; text-align: right">0.80</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">15,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: center">8.56</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">0.80</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">15,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: center">8.56</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">0.80</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">1.32</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">0.54</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.32</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">0.54</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.32</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">1.65</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">320,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">5.84</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.65</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">320,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">8.16</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">1.65</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">2.30</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2,500</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">7.91</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.30</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2,500</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">7.91</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.30</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">2.50</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">10,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">6.85</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.50</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">8,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">6.85</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.50</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">2.55</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">33,334</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">4.28</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.55</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">33,334</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">4.28</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.55</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">2.90</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">805,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">9.66</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.90</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">52,500</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">9.62</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">2.90</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">3.27</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">11,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">0.53</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">3.27</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">11,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">0.53</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">3.27</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">4.98</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">16,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">3.78</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4.98</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">16,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">3.78</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4.98</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">5.94</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">6.57</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5.94</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,001</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: center">6.57</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5.94</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">6.51</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">0.33</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">6.51</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,667</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">0.33</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">6.51</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="2" style="text-align: center">Total</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,325,837</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: center">8.21</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2.68</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">571,337</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: center">6.31</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2.39</td> <td nowrap="nowrap"> </td></tr></table>

970838

1325837

861671

-260001

-5000

-190000

-63333

805000

177500

3347496

2.03

2.68

2.1

1.69

3.27

1.65

2.9

1.59

148601

2128331

Following is the computation of basic and diluted net loss per share for the three and nine months ended May 31, 2014 and 2013:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="6" style="text-align: center; vertical-align: bottom">Three Months Ended</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="text-align: center; vertical-align: bottom">Nine Months Ended</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">May 31,</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2014</td> <td nowrap="nowrap" style="text-align: center; vertical-align: bottom"> </td> <td style="text-align: center; vertical-align: bottom"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; vertical-align: bottom">2013</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Basic and Diluted EPS Computation</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Numerator:</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%">Loss available to common stockholders'</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(932,263</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(583,979</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(2,400,867</td> <td nowrap="nowrap" style="width: 1%">)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">(3,766,063</td> <td nowrap="nowrap" style="width: 1%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Denominator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Weighted average number of common shares outstanding</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,306,612</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,174,652</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">24,270,086</td> <td nowrap="nowrap"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">22,174,541</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Basic and diluted EPS</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.04</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.02</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.10</td> <td nowrap="nowrap">)</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.17</td> <td nowrap="nowrap">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="4">The shares listed below were not included in the computation of diluted losses</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td colspan="5">per share because to do so would have been antidilutive for the periods presented:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Convertible debt</td> <td> </td> <td> </td> <td style="text-align: right">2,396,577</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,396,577</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)</td> <td> </td> <td> </td> <td style="text-align: right">4,793,155</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">4,793,155</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Warrants</td> <td> </td> <td> </td> <td style="text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,380,126</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">3,302,001</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">2,380,126</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Stock options</td> <td> </td> <td> </td> <td style="text-align: right">1,325,837</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">970,838</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">1,325,837</td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right">970,838</td> <td nowrap="nowrap"> </td></tr> </table>

2015-04-17 2016-02-01 2018-10-07 P4Y3M

Net Loss Per Share (Details) (USD $)	3 Months Ended	9 Months Ended
May 31, 2014	May 31, 2013	May 31, 2014	May 31, 2013
Numerator:
Loss available to common stockholders	$ (932,263)	$ (583,979)	$ (2,400,867)	$ (3,766,063)
Denominator:
Weighted average number of common shares outstanding	24,306,612	24,174,652	24,270,086	22,174,541
Basic and diluted EPS	$ (0.04)	$ (0.02)	$ (0.10)	$ (0.17)
Earnings Per Share, Diluted, Other Disclosures
Convertible debt	2,396,577		2,396,577
Warrants issuable upon conversion of debt	$ 4,793,155		$ 4,793,155
Warrant [Member]
Earnings Per Share, Diluted, Other Disclosures
Potentially dilutive common shares	3,302,001	2,380,126	3,302,001	2,380,126
Stock Option [Member]
Earnings Per Share, Diluted, Other Disclosures
Potentially dilutive common shares	1,325,837	970,838	1,325,837	970,838

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Common Stock and Warrants (Details Narrative) (USD $)
9 Months Ended

May 31, 2014

Common Stock And Warrants Details Narrative

Unrestricted common stock issued 81,899

Stock options cash less excercised 190,000

Restricted common stock issued 30,000

Restricted common stock per share $ 2.90

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CONSOLIDATED BALANCE SHEETS (USD $)	May 31, 2014	Aug. 31, 2013
ASSETS
Cash and cash equivalents	$ 1,364,454	$ 347,493
Deferred research and development costs	150,000	150,000
Prepaid expenses and other current assets	13,405	22,379
Total current assets	1,527,859	519,872
Equipment, net of accumulated depreciation of $16,500 and $12,025, respectively	11,290	13,823
Total assets	1,539,149	533,695
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	127,885	122,356
Interest payable	137,788
Convertible promissory note, net of discount of $2,984,172 as of May 31, 2014	15,828
Total current liabilities	281,501	122,356
Commitments and contingencies
Stockholders' equity
Preferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding
Common stock: $0.001 par value; 300,000,000 shares authorized, 24,306,612 and 24,194,713 shares issued and outstanding at May 31, 2014 and August 31, 2013, respectively	24,306	24,194
Additional paid-in capital	20,688,098	17,441,034
Deficit accumulated during the development stage	(19,454,756)	(17,053,889)
Total stockholders' equity	1,257,648	411,339
Total liabilities and stockholders' equity	$ 1,539,149	$ 533,695

Stock Options (Details 1) (USD $)	3 Months Ended		9 Months Ended		193 Months Ended
Stock Options (Details 1) (USD $)	May 31, 2014	May 31, 2013	May 31, 2014	May 31, 2013	May 31, 2014
Stock Compensation Expense net of reversals:
SG&A - expense	$ 237,577	$ 51,165	$ 517,149	$ 284,806	$ 8,388,786
SG&A - income due to forfeitures			(356,973)	(10,075)	(5,773,611)
Net stock compensation cost	$ 237,577	$ 51,165	$ 160,176	$ 274,731	$ 2,615,175

Stock Options (Details Narrative) (USD $)	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended		12 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
Stock Options (Details Narrative) (USD $)	May 31, 2014	May 31, 2014	Feb. 28, 2014 Two Thousand Six Plan [Member]	May 31, 2014 Employee [Member]	May 31, 2014 Employee [Member]	May 31, 2014 Jatinder Bhogal [Member]	Aug. 31, 2013 Jatinder Bhogal [Member]	May 31, 2014 Director [Member]	May 31, 2014 Director [Member]	May 31, 2014 CEO [Member]	May 31, 2014 CEO [Member]
Expected period		4 years 3 months
Amortization of the fair value of stock option		$ 64,386				$ 8,049	$ 56,337
Closing stock option exercise price	$ 1.96	$ 1.96
Stock option outstanding	385,001	385,001
Stock option grant shares			3,347,496
Stock based compensation expense	424	33,078
Stock option exercise			326,667
Stock based compensation reversed	324,781
Stock based compensation recognized				$ 5,269	$ 29,856			$ 31,613	$ 179,138	$ 200,271	$ 267,028
Performance based stock options subsequently cancelled	233,334

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	May 31, 2014	Aug. 31, 2013
Current assets
Equipment, accumulated depreciation	$ 16,500	$ 12,025
Current liabilities
Convertible promissory note, discount	$ 2,984,172
Stockholders' equity
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	24,306,612	24,194,713
Common stock, shares outstanding	24,306,612	24,194,713

Organization and Going Concern (Details Narrative) (USD $)	May 31, 2014	Aug. 31, 2013	May 31, 2013	Aug. 31, 2012
Organization And Going Concern Details Narrative
Accumulated deficit	$ 19,454,756	$ 17,053,889
Cash and cash equivalents	$ 1,364,454	$ 347,493	$ 715,835	$ 1,046,918

Document and Entity Information	9 Months Ended
Document and Entity Information	May 31, 2014	Jul. 08, 2014
Document And Entity Information
Entity Registrant Name	NEW ENERGY TECHNOLOGIES, INC.
Entity Central Index Key	0001071840
Document Type	10-Q
Document Period End Date	May 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--08-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		24,306,612
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014

Convertible Promissory Note (Details Narrative) (USD $)	3 Months Ended	9 Months Ended
Convertible Promissory Note (Details Narrative) (USD $)	May 31, 2014	May 31, 2014
Convertible Promissory Note Details Narrative
Interest expense related to the Loan	$ 54,403	$ 137,788
Accretion related to the debt discount	$ 15,464	$ 15,828

Stock Options (Details 2) (USD $)	9 Months Ended
Stock Options (Details 2) (USD $)	May 31, 2014
Number of options outstanding	1,325,837
Weighted average contractural life (years)	8 years 2 months 16 days
Weighted-average exercise price	$ 2.68
Number of options exercisable	571,337
Weighted average contractural life (years) of options exercisable	6 years 3 months 22 days
Weighted-average exercise price of options exercisable	$ 2.39
$ 0.80 Per Share [Member]
Number of options outstanding	15,000
Weighted average contractural life (years)	8 years 6 months 22 days
Weighted-average exercise price	$ 0.80
Number of options exercisable	15,000
Weighted average contractural life (years) of options exercisable	8 years 6 months 22 days
Weighted-average exercise price of options exercisable	$ 0.80
$ 1.32 Per Share [Member]
Number of options outstanding	50,001
Weighted average contractural life (years)	6 months 15 days
Weighted-average exercise price	$ 1.32
Number of options exercisable	50,001
Weighted average contractural life (years) of options exercisable	6 months 15 days
Weighted-average exercise price of options exercisable	$ 1.32
$ 1.65 Per Share [Member]
Number of options outstanding	320,000
Weighted average contractural life (years)	5 years 10 months 2 days
Weighted-average exercise price	$ 1.65
Number of options exercisable	320,000
Weighted average contractural life (years) of options exercisable	8 years 1 month 28 days
Weighted-average exercise price of options exercisable	$ 1.65
$ 2.30 Per Share [Member]
Number of options outstanding	2,500
Weighted average contractural life (years)	7 years 10 months 28 days
Weighted-average exercise price	$ 2.30
Number of options exercisable	2,500
Weighted average contractural life (years) of options exercisable	7 years 10 months 28 days
Weighted-average exercise price of options exercisable	$ 2.30
$ 2.50 Per Share [Member]
Number of options outstanding	10,000
Weighted average contractural life (years)	6 years 10 months 6 days
Weighted-average exercise price	$ 2.50
Number of options exercisable	8,000
Weighted average contractural life (years) of options exercisable	6 years 10 months 6 days
Weighted-average exercise price of options exercisable	$ 2.50
$ 2.55 Per Share [Member]
Number of options outstanding	33,334
Weighted average contractural life (years)	4 years 3 months 11 days
Weighted-average exercise price	$ 2.55
Number of options exercisable	33,334
Weighted average contractural life (years) of options exercisable	4 years 3 months 11 days
Weighted-average exercise price of options exercisable	$ 2.55
$ 2.90 Per Share [Member]
Number of options outstanding	805,000
Weighted average contractural life (years)	9 years 7 months 28 days
Weighted-average exercise price	$ 2.90
Number of options exercisable	52,500
Weighted average contractural life (years) of options exercisable	9 years 7 months 13 days
Weighted-average exercise price of options exercisable	$ 2.90
$ 3.27 Per Share [Member]
Number of options outstanding	11,667
Weighted average contractural life (years)	6 months 11 days
Weighted-average exercise price	$ 3.27
Number of options exercisable	11,667
Weighted average contractural life (years) of options exercisable	6 months 11 days
Weighted-average exercise price of options exercisable	$ 3.27
$ 4.98 Per Share [Member]
Number of options outstanding	16,667
Weighted average contractural life (years)	3 years 9 months 11 days
Weighted-average exercise price	$ 4.98
Number of options exercisable	16,667
Weighted average contractural life (years) of options exercisable	3 years 9 months 11 days
Weighted-average exercise price of options exercisable	$ 4.98
$ 5.94 Per Share [Member]
Number of options outstanding	50,001
Weighted average contractural life (years)	6 years 6 months 26 days
Weighted-average exercise price	$ 5.94
Number of options exercisable	50,001
Weighted average contractural life (years) of options exercisable	6 years 6 months 26 days
Weighted-average exercise price of options exercisable	$ 5.94
$ 6.51 Per Share [Member]
Number of options outstanding	11,667
Weighted average contractural life (years)	3 months 29 days
Weighted-average exercise price	$ 6.51
Number of options exercisable	11,667
Weighted average contractural life (years) of options exercisable	3 months 29 days
Weighted-average exercise price of options exercisable	$ 6.51

Common Stock and Warrants (Details) (USD $)	9 Months Ended
Common Stock and Warrants (Details) (USD $)	May 31, 2014	Aug. 31, 2013
Shares of Common Stock Issuable from Warrants	3,302,001	2,380,126
Series G [Member]
Shares of Common Stock Issuable from Warrants	625,000	625,000
Exercise Price	$ 0.64
Expiration	2015-04-17
Series H [Member]
Shares of Common Stock Issuable from Warrants	1,755,126	1,755,126
Exercise Price	$ 0.83
Expiration	2016-02-01
Series I [Member]
Shares of Common Stock Issuable from Warrants	921,875
Exercise Price	$ 1.37
Expiration	2018-10-07

Organization and Going Concern (Policies)	9 Months Ended
Organization and Going Concern (Policies)	May 31, 2014
Organization And Going Concern Policies
Basis of Presentation	The unaudited financial statements of New Energy Technologies, Inc. as of May 31, 2014, and for the three and nine months ended May 31, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and include the Company’s wholly-owned subsidiaries, Sungen Energy, Inc. (“Sungen”), Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”). Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended August 31, 2013, as filed with the Securities and Exchange Commission as part of the Company's Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.
Recent Accounting Pronouncements	On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Company’s consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. As of the date these consolidated financial statements were issued, the Company was in the process of evaluating the impact of implementing the amendments. Subsequent to the Company’s adoption of the amendments, the Company will no longer present inception-to-date information in the consolidated statements of operations, stockholders' equity, and cash flows. In addition, the consolidated financial statements will no longer be labeled as those of a development stage entity.
Organization	New Energy Technologies, Inc. (the “Company,”) was incorporated in the State of Nevada on May 5, 1998, under the name “Octillion Corp.” On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sungen, KEC, and New Energy Solar. The Company’s common stock, par value $0.001 per share, is quoted on The OTC Markets Group, Inc. QB tier under the ticker symbol “NENE.” The Company is a renewable and alternative energy company, developing two novel technologies for generating sustainable electricity, one of which collects light energy from the sun and artificial sources (SolarWindow™), and the other harvests kinetic energy present in moving vehicles (MotionPower™). The Company’s proprietary, patent-pending technologies and products, which are the subjects of one hundred and one (101) patent-filings, have been invented, designed, engineered, and prototyped in preparation for further field testing, product development, and eventual commercial deployment. The Company’s SolarWindow™ technology generates electrical energy when the electricity-generating coating is applied to glass and flexible plastic surfaces creating semi-transparent, see-through organic photovoltaic (OPV) solar cells. If successfully developed, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone (U.S. Census Bureau, 2007 American Housing Survey & U.S. Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey). The Company’s SolarWindow™ technology is the subject of forty-two (42) patent filings. The Company’s MotionPower™ technology harvests, or captures, the “kinetic” or “motion” energy of cars, trucks, buses, and heavy commercial vehicles when they pass over the system or slow down. MotionPower™ captures kinetic energy and converts it into electricity. If successfully developed, MotionPower™ could potentially be used to harvest kinetic energy generated by any of the estimated 250 million vehicles registered in America (U.S. Department of Transportation Federal Highway Administration, 2008 Highway Statistics), which drive approximately six billion miles on our nation’s roadways every day (U.S. Environmental Protection Agency). The Company’s MotionPower™ technology is the subject of fifty-nine (59) patent filings. The Company’s product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants. The Company continues to assess the ongoing development and value propositions of its novel SolarWindow™ and MotionPower™ technologies. This assessment helps the Company strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages. As of May 31, 2014, the Company had accumulated a total deficit of $19,454,756 from operations in pursuit of the Company’s development and commercialization objectives. The Company intends to finance its operations primarily through existing cash and possible future financing transactions. As of May 31, 2014, the Company had cash and cash equivalents of $1,364,454. Based upon the Company’s current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable the Company to continue operations into the Company’s fiscal year ending August 31, 2015. The Company is subject to a number of risks, including its ability to successfully develop SolarWindow™ and MotionPower™ technologies into commercially viable products, the Company’s ability to obtain financing as and when the Company needs it, competition from existing and new products, fluctuation of quarterly financial results, loss of key personnel, uncertain protection for the Company’s intellectual property, litigation or other proceedings, dependence on corporate partners and collaborators and future changes in its target markets that may adversely affect the Company.

Stock Options (Details) (USD $)	9 Months Ended	12 Months Ended
Stock Options (Details) (USD $)	May 31, 2014	Aug. 31, 2013
Number of Options
Outstanding Beginning	970,838	861,671
Grants	805,000	177,500
Exercises	(190,000)	(63,333)
Forfeitures	(260,001)	(5,000)
Outstanding Ending	1,325,837	970,838
Exercisable at February 28, 2014	571,337
Available for grant at February 28, 2014	3,347,496
Weighted Average Exercise Price ($)
Weighted-average exercise price	$ 2.03	$ 2.1
Grants	$ 2.9	$ 1.59
Exercises	$ 1.65	$ 1.65
Forfeitures	$ 1.69	$ 3.27
Weighted-average exercise price	$ 2.68	$ 2.03
Exercisable at February 28, 2014	$ 2.39
Weighted Average Remaining Contractual Term
Outstanding at May 31, 2014	8 years 2 months 16 days
Exercisable at May 31, 2014	6 years 3 months 22 days
Aggregate Intrinsic Value ($)
Outstanding at May 31, 2014	$ 148,601
Exercisable at May 31, 2014	$ 148,601

Related Party Transactions (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
Related Party Transactions (Details Narrative) (USD $)	May 31, 2014	May 31, 2013	May 31, 2014	May 31, 2013
Cash based Board compensation	$ 8,500	$ 12,750	$ 29,750	$ 40,500
Stock based compensation expense related to stock options granted non employee	231,883	48,820	214,059	256,898
Sierchio Company LLP [Member]
Legal services	18,275	18,550	92,997	84,866
Accounts payable	$ 6,000		$ 6,000

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) (USD $)	Common Stock	Additional Paid-In Capital	Deficit Accumulated During the Development Stage	Total
Beginning Balance, Amount at May. 04, 1998
Beginning Balance, Shares at May. 04, 1998
Restricted common stock issued to related parties for management services at $0.001 per share, Amount	3,000			3,000
Restricted common stock issued to related parties for management services at $0.001 per share, Shares	3,000,000
Unrestricted common stock sales to third parties at $0.40 per share, Amount	375	149,625		150,000
Unrestricted common stock sales to third parties at $0.40 per share, Shares	375,000
Net loss			(12,326)	(12,326)
Ending Balance, Amount at Aug. 31, 1998	3,375	149,625	(12,326)	140,674
Ending Balance, Shares at Aug. 31, 1998	3,375,000
Net loss			(77,946)	(77,946)
Ending Balance, Amount at Aug. 31, 1999	3,375	149,625	(90,272)	62,728
Ending Balance, Shares at Aug. 31, 1999	3,375,000
Net loss			(12,446)	(12,446)
Ending Balance, Amount at Aug. 31, 2000	3,375	149,625	(102,718)	50,282
Ending Balance, Shares at Aug. 31, 2000	3,375,000
Net loss			(12,904)	(12,904)
Ending Balance, Amount at Aug. 31, 2001	3,375	149,625	(115,622)	37,378
Ending Balance, Shares at Aug. 31, 2001	3,375,000
Net loss			(54,935)	(54,935)
Ending Balance, Amount at Aug. 31, 2002	3,375	149,625	(170,557)	(17,557)
Beginning Balance, Shares at Aug. 31, 2002	3,375,000
Restricted common stock issued at $.001 per share to two related parties to satisfy outstanding management fees., Amount	10,333	92,999		103,332
Restricted common stock issued at $.001 per share to two related parties to satisfy outstanding management fees., Shares	10,333,200
Net loss			(97,662)	(97,662)
Ending Balance, Amount at Aug. 31, 2003	13,708	242,624	(268,219)	(11,887)
Ending Balance, Shares at Aug. 31, 2003	13,708,200
Net loss			(19,787)	(19,787)
Ending Balance, Amount at Aug. 31, 2004	13,708	242,624	(288,006)	(31,674)
Ending Balance, Shares at Aug. 31, 2004	13,708,200
Net loss			(103,142)	(103,142)
Ending Balance, Amount at Aug. 31, 2005	13,708	242,624	(391,148)	(134,816)
Beginning Balance, Shares at Aug. 31, 2005	13,708,200
Issuance of common stock and warrants at $0.50 per share, Amount	1,000	499,000		500,000
Issuance of common stock and warrants at $0.50 per share, Shares	1,000,000
Net loss			(157,982)	(157,982)
Ending Balance, Amount at Aug. 31, 2006	14,708	741,624	(549,130)	207,202
Ending Balance, Shares at Aug. 31, 2006	14,708,200
Exercise of Class A Warrants at $0.50 per share, Amount	1,000	499,000		500,000
Exercise of Class A Warrants at $0.50 per share, Shares	1,000,000
Exercise of Class B Warrants at $0.55 per share, Amount	1,000	549,000		550,000
Exercise of Class B Warrants at $0.55 per share, Shares	1,000,000
Exercise of Class C Warrants at $1.50 per share, Amount	327	489,673		490,000
Exercise of Class C Warrants at $1.50 per share, Shares	326,667
Exercise of Class D Warrants at $1.65 per share, Amount	293	483,707		484,000
Exercise of Class D Warrants at $1.65 per share, Shares	293,333
Exercise of Class E Warrants at $1.80 per share, Amount	293	527,707		528,000
Exercise of Class E Warrants at $1.80 per share, Shares	293,333
Issuance of common stock and warrants at $1.50 per share, Amount	333	499,667		500,000
Issuance of common stock and warrants at $1.50 per share, Shares	333,333
Dividend paid - spin off of MircoChannel Technologies Corporation			(400,000)	(400,000)
Net loss			(1,442,769)	(1,442,769)
Ending Balance, Amount at Aug. 31, 2007	17,954	3,790,378	(2,391,899)	1,416,433
Ending Balance, Shares at Aug. 31, 2007	17,954,866
Exercise of Class C Warrants at $1.50 per share, Amount	7	9,993		10,000
Exercise of Class C Warrants at $1.50 per share, Shares	6,667
Exercise of Class D Warrants at $1.65 per share, Amount	7	10,993		11,000
Exercise of Class D Warrants at $1.65 per share, Shares	6,667
Common stock and warrants issued for cash and services at $3.00 per Unit, Amount	1,225	3,394,730		3,395,955
Common stock and warrants issued for cash and services at $3.00 per Unit, Shares	1,225,000
Exercise of Class F Warrants at $3.75 per share, Amount	58	218,692		218,750
Exercise of Class F Warrants at $3.75 per share, Shares	58,333
Stock based compensation, Amount		3,600,303		3,600,303
Net loss			(5,721,545)	(5,721,545)
Ending Balance, Amount at Aug. 31, 2008	19,251	11,025,089	(8,113,444)	2,930,896
Ending Balance, Shares at Aug. 31, 2008	19,251,533
Exercise of Class E Warrants at $1.80 per share, Amount	7	11,993		12,000
Exercise of Class E Warrants at $1.80 per share, Shares	6,667
Exercise of Class F Warrants at $3.75 per share, Amount	275	1,032,225		1,032,500
Exercise of Class F Warrants at $3.75 per share, Shares	275,333
Stock based compensation, Amount		183,312		183,312
Reversal of stock based compensation due to forfeiture of stock options		(3,591,093)		(3,591,093)
Net loss			1,961,175	1,961,175
Ending Balance, Amount at Aug. 31, 2009	19,533	8,661,526	(6,152,269)	2,528,790
Ending Balance, Shares at Aug. 31, 2009	19,533,533
Stock based compensation, Amount		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			(233,136)	(233,136)
Ending Balance, Amount at Aug. 31, 2010	19,533	7,058,035	(6,728,176)	349,392
Beginning Balance, Shares at Aug. 31, 2010	19,533,533
Exercise of Class F Warrants at $3.75 per share, Amount	1,055	3,953,320		3,954,375
Exercise of Class F Warrants at $3.75 per share, Shares	1,054,512
Stock based compensation, Amount		2,855,630		2,855,630
Reversal of stock based compensation due to forfeiture of stock options		(1,304,551)		(1,304,551)
Rounding due to reverse one for three stock split effective March 16, 2011, Amount
Rounding due to reverse one for three stock split effective March 16, 2011, Shares	(3)
Exercise of stock options, Amount	50	30,750		30,800
Exercise of stock options, Shares	50,318
Net loss			(3,619,750)	(3,619,750)
Ending Balance, Amount at Aug. 31, 2011	20,638	12,593,184	(10,347,926)	2,265,896
Ending Balance, Shares at Aug. 31, 2011	20,638,360
Stock based compensation, Amount		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			(2,433,431)	(2,433,431)
Ending Balance, Amount at Aug. 31, 2012	20,638	13,798,282	(12,781,357)	1,037,563
Beginning Balance, Shares at Aug. 31, 2012	20,638,360
Stock based compensation, Amount		334,305		334,305
Reversal of stock based compensation due to forfeiture of stock options		(10,075)		(10,075)
Exercise of stock options, Amount	22	(22)
Exercise of stock options, Shares	22,672
Issuance of common stock and warrants at $0.64 per unit, Amount	1,875	1,198,125		1,200,000
Issuance of common stock and warrants at $0.64 per unit, Shares	1,875,000
Issuance of common stock upon the conversion of note at $0.64 per share, Amount	1,651	1,054,905		1,056,556
Issuance of common stock upon the conversion of note at $0.64 per share, Shares	1,650,869
Issuance of common stock upon the exercise of Series H Warrants, Amount	8	6,476		6,484
Issuance of common stock upon the exercise of Series H Warrants, Shares	7,812
Expense related to issuance of Series H Warrants as inducement to convert the 2012 Promissory Note		1,059,038		1,059,038
Net loss			(4,272,532)	(4,272,532)
Ending Balance, Amount at Aug. 31, 2013	24,194	17,441,034	(17,053,889)	411,339
Ending Balance, Shares at Aug. 31, 2013	24,194,713
Stock based compensation, Amount	30	604,119		604,149
Stock based compensation, Shares	30,000
Reversal of stock based compensation due to forfeiture of stock options		(356,973)		(356,973)
Exercise of stock options, Amount	82	(82)
Exercise of stock options, Shares	81,899
Discount on convertible promissory note due to detachable warrants		1,137,149		1,137,149
Discount on convertible promissory note due to beneficial conversion feature		1,862,851		1,862,851
Net loss			(2,400,867)	(2,400,867)
Ending Balance, Amount at May. 31, 2014	$ 24,306	$ 20,688,098	$ (19,454,756)	$ 1,257,648
Ending Balance, Shares at May. 31, 2014	24,306,612

Common Stock and Warrants (Details Narrative) (USD $)	9 Months Ended
Common Stock and Warrants (Details Narrative) (USD $)	May 31, 2014
Common Stock And Warrants Details Narrative
Unrestricted common stock issued	81,899
Stock options cash less excercised	190,000
Restricted common stock issued	30,000
Restricted common stock per share	$ 2.90