10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For quarterly period ended November 30, 2014

¨ 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 incorporation or organization)	(I.R.S. Employer 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 x No ¨

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 x No ¨

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,910,518 shares of common stock, par value $0.001, were outstanding on January 12, 2015.

NEW ENERGY TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended November 30, 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		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		15
Item 4.	Controls and Procedures		19
PART II OTHER INFORMATION
Item 6.	Exhibits		20
Signatures			21
Certifications

2

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

NEW ENERGY TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

NOVEMBER 30, 2014 AND AUGUST 31, 2014

	November 30,			August 31,
	2014			2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	255,966		$	785,237
Deferred research and development costs		150,000			150,000
Prepaid expenses and other current assets		22,255			14,257
Total current assets		428,221			949,494
Equipment, net of accumulated depreciation of $19,959 and $18,128, respectively		36,974			24,597
Total assets	$	465,195		$	974,091
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	220,067		$	144,239
Interest payable		248,878			193,151
Convertible promissory note, net of discount of $2,855,770 and $2,313,680, respectively		144,230			686,320
Total current liabilities		613,175			1,023,710
Commitments and contingencies
Stockholders' equity (deficit)
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, 24,310,518 and 24,306,612 shares issued and outstanding at November 30, 2014 and August 31, 2014, respectively		24,310			24,306
Additional paid-in capital		24,033,229			20,872,345
Retained earnings (deficit)		(24,205,519	)		(20,946,270	)
Total stockholders' equity (deficit)		(147,980	)		(49,619	)
Total liabilities and stockholders' equity (deficit)	$	465,195		$	974,091

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

3

NEW ENERGY TECHNOLOGIES, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 AND 2013

	Three Months Ended November 30,
	2014			2013
Revenue	$	-		$	-
Operating expense
Selling, general and administrative		566,291			576,011
Research and development		179,321			162,483
Total operating expense		745,612			738,494
Loss from operations		(745,612	)		(738,494	)
Other income (expense)
Interest expense		(55,727	)		(31,068	)
Interest expense - accretion of debt discount		(2,457,910	)		(8	)
Total other income (expense)		(2,513,637	)		(31,076	)
Net loss	$	(3,259,249	)	$	(769,570	)
Basic and Diluted Loss per Common Share	$	(0.13	)	$	(0.03	)
Weighted average number of common shares outstanding - basic and diluted		24,308,495			24,210,799

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

4

NEW ENERGY TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 AND YEAR ENDED AUGUST 31, 2014

	Common Stock				Additional Paid-in			Retained Earnings			Total Stockholders' Equity
	Shares		Amount		Capital			(Deficit)			(Deficit)
Balance, August 31, 2013		24,194,713		24,194		17,441,034			(17,053,889	)		411,339
Stock based compensation related to restricted stock issuance		30,000		30		86,970			-			87,000
Stock based compensation due to common stock purchase options		-		-		701,396			-			701,396
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 year ended August 31, 2014		-		-		-			(3,892,381	)		(3,892,381	)
Balance, August 31, 2014		24,306,612		24,306		20,872,345			(20,946,270	)		(49,619	)
Stock based compensation due to common stock purchase options		-		-		157,646			-			157,646
Exercise of Series H warrants		3,906		4		3,238			-			3,242
Discount on convertible promissory note due to detachable warrants		-		-		3,000,000			-			3,000,000
Net loss for the three months ended November 30, 2014		-		-		-			(3,259,249	)		(3,259,249	)
Balance, November 30, 2014		24,310,518	$	24,310	$	24,033,229		$	(24,205,519	)	$	(147,980	)

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

5

NEW ENERGY TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2014 AND 2013

			Three Months Ended November 30,
			2014			2013
Cash flows from operating activities
	Net loss		$	(3,259,249	)	$	769,570
	Adjustments to reconcile net loss to net cash used in operating activities
		Depreciation		1,831			1,420
		Stock based compensation expense		157,646			40,016
		Reversal of stock based compensation expense due to forfeiture of stock options		-			(32,192	)
		Accretion of debt discount		2,457,910			8
	Changes in operating assets and liabilities:
		Decrease (increase) in prepaid expenses and other current assets		(7,998	)		8,129
		Increase (decrease) in accounts payable		75,828			191,742
		Increase (decrease) in accrued liabilities		55,727			31,068
	Net cash used in operating activities			(518,305	)		1,009,761
Cash flows from investing activity
	Purchase of equipment			(14,208	)		-
	Net cash used in investing activity			(14,208	)		-
Cash flows from financing activities
	Proceeds from the exercise of warrants			3,242			-
	Proceeds from promissory notes			-			3,000,000
	Net cash provided by financing activities			3,242			3,000,000
Increase (decrease) in cash and cash equivalents				(529,271	)		4,009,761
Cash and cash equivalents at beginning of period				785,237			347,493
Cash and cash equivalents at end of period			$	255,966		$	4,357,254
Supplemental disclosure of cash flow information:
	Interest paid in cash		$	-		$	-
	Income taxes paid in cash		$	-		$	-
Supplemental disclosure of non-cash transactions:
	Debt discount recorded for value of warrants issued		$	3,000,000		$	1,137,149
	Debt discount recorded for beneficial conversion feature		$	-		$	1,862,851

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

6

NEW ENERGY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Basis of Presentation

The unaudited financial statements of New Energy Technologies, Inc. as of November 30, 2014, and for the three months ended November 30, 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, 2014, 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.

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, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”).

KEC was incorporated on June 19, 2008, in the State of Nevada and holds the patents related to the Company’s MotionPower™ technology. The Company’s business activities related to the MotionPower™ technology are conducted through KEC.

New Energy Solar was incorporated on February 9, 2009, in the State of Florida and has entered into agreements with USF to sponsor research related to the Company’s SolarWindow™ technology.

On March 16, 2011, pursuant to a consent signed by the Company’s shareholders owning a majority of the Company’s then issued and outstanding shares of common stock, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing its authorized shares of common stock, $0.001 par value, from 100,000,000 to 300,000,000.

The Company is a renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. The Company’s proprietary, patent-pending technologies and products are the subjects of one hundred and one (101) patent-filings, and have been invented, designed, engineered, and prototyped in preparation for further field testing, product development and eventual commercial deployment.

The Company’s 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 solar cells. The Company’s SolarWindow™ technology is the subject of forty-two (42) patent filings. Initially being developed for application on glass surfaces, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone.

The Company’s MotionPower™ technology, harvests “kinetic” or “motion” energy from vehicles when they slow down before coming to a stop and converts this captured energy into electricity. The Company’s MotionPower™ technology is the subject of fifty-nine (59) patent filings.

7

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 assists with strategically focusing on specific technology development which best delivers significant long-term commercial competitive advantages.

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its financial statements except as described below.

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 beginning as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. The Company has adopted the amendments and no longer presents 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.

Going Concern

The Company does not have any commercialized products and has not generated any revenue since inception. The Company has an accumulated deficit of $24,205,519 as of November 30, 2014, and does not have positive cash flow from operating activities. Included in the deficit are non-cash expenses totaling $8,353,668 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discounts. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.

In its report with respect to the Company’s financial statements for the year ended August 31, 2014, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue operations as a going concern. Because the Company has not generated revenues from its operations and does not expect to do so in the near future, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Currently, the Company is seeking additional financing but has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

As of November 30, 2014, the Company had cash of $255,966. On December 3, 2014, subsequent to its quarter end, the Company received $498,000 as a result of the exercise of 600,000 Series H Warrants. Based upon its current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable it to continue operations through February 2015.

If adequate funds are not available on reasonable terms, or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to delay, reduce the scope of or terminate one or more of its research programs, sell rights to its SolarWindow™ technology and/or MotionPower^TM technology or other technologies or products based upon such technologies, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available.

8

In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

NOTE 2 – Convertible Promissory Note

On October 7, 2013 (the “Closing Date”), the Company entered into a Bridge Loan Agreement (the “2013 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 2013 Loan Agreement, the Company received proceeds of $3,000,000 and issued a 7% unsecured Convertible Promissory Note (the “2013 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 2013 Loan Agreement, the Investor may have elected, in its sole discretion, to convert all or any portion of the outstanding principal amount of the 2013 Note, and any or all accrued and unpaid interest thereon into 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 Warrant”); and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock (the “Series K Warrant”).

On November 10, 2014, the Company entered into an Amended Bridge Loan Agreement (the “2015 Loan Agreement”) with Investor pursuant to which the Company and Investor amended the 2013 Loan Agreement by amending the 2013 Note to extend the maturity date to December 31, 2015 (the “Amended Note”). According to the terms of the 2015 Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Amended Note, and any or all accrued and unpaid interest thereon into units of the Company’s equity securities (collectively, the “Units”), with each Unit consisting of (a) one share of common stock; and (b) one Series L Stock Purchase Warrant for the purchase of one share of common stock (the “Series L Warrant”). The conversion price for each Unit is the lesser of (i) $1.37; 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 L Warrant included in the Units issued upon conversion being equal to sixty percent (60%) of the 20 day average closing price of the Company’s common stock prior to conversion. The Series L Warrant will be exercisable for a period of five years from the date of issuance and will be exercisable on a cashless basis.

In order to induce Investor to enter into the 2015 Loan Agreement and extend the maturity date of the 2013 Note, the Company issued a Series J Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.12 and a Series K Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.20. Each of the Series J Warrant and Series K Warrant is exercisable through November 9, 2019 and contains a provision allowing the Investor to exercise the warrant on a cashless basis as further set forth therein. The number of shares issuable upon the exercise of the Series J Warrant and Series K Warrant is equal to the number of shares underlying the warrants issuable pursuant to the terms of the 2013 Loan Agreement whereby the conversion price for each unit (a unit consists of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock; and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock) is equal to $1.04, 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 being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant being equal to 114.6% of the unit exercise price.

For accounting purposes, the modification to the 2013 Loan Agreement did not result in a gain or loss, as an extinguishment under accounting principles generally accepted in the United States, due to the related party nature of the transaction. As described above, the Amended Bridge Loan Agreement resulted in the issuance of a Series J Warrant and a Series K Warrant. Prior to the Amended Bridge Loan Agreement, the Series J and Series K Warrants were to be issued to the Investor only upon the Investor’s election to convert the 2013 Note (according to the original terms of the 2013 note). Also as a result of the Amended Bridge Loan Agreement, the principal amount of the Amended Note and accrued interest thereon is convertible into Units. As such, the fair value of the Series L Warrant, representing the value exchanged for the modification of the conversion option associated with the 2013 Loan Agreement, was recognized as a discount to the Amended Note with a corresponding increase in additional paid-in capital. The fair value of the Series L Warrant was $1.16. The fair value of the Series L Warrant was calculated using the Black-Scholes option pricing model and the following assumptions: market price of common stock - $1.28 per share; estimated volatility - 138%; risk free interest rate - 1.57%; expected dividend rate - 0% and expected life - 5 years. Based on the terms of the Amended Note, 3,142,359 Series L warrants were issuable on November 10, 2014 with a fair value of $3,645,137 (3,142,359 Series L warrants x $1.16 per share). As a result of the debt discount exceeding the principal amount of the Amended Note, on November 10, 2014, the Company recorded a debt discount of $3,000,000 which is being accreted over the term of the Amended Note using the effective interest method.

9

Together with the 2013 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 2013 Loan Agreement or otherwise, for a period of one (1) year from the Closing Date (as defined in the 2013 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 2013 Note and the shares of common stock issuable upon exercise of the Series I, Series J and Series K Warrants. The Lock-Up Agreement expired on October 6, 2014.

During the three months ended November 30, 2014 and 2013, the Company recognized $55,727 and $31,068, respectively, of interest expense related to the 2013 Note and related amendment. During the three months ended November 30, 2014, the Company recognized $2,457,910 of interest expense related to debt discount accretion, which includes $2,313,680 of accretion related to the debt discount originally recorded on the 2013 Note and $144,230 related to the Series L Warrants issuable pursuant to the 2015 Loan Agreement. The remaining debt discount related to the Series L Warrants and totaling $2,855,770 will be amortized through December 31, 2015 with $649,038 amortized during the quarter ended February 28, 2015, $663,462 amortized during the quarter ended May 31, 2015, $663,462 amortized during the quarter ended August 31, 2015, $656,250 amortized during the quarter ended November 30, 2015 and $223,558 amortized during the quarter ended February 29, 2016.

NOTE 3 – Common Stock and Warrants

Common Stock

At November 30, 2014, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001 per share, with 24,310,518 shares of common stock outstanding and 3,359,163 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) as adopted and approved by the Company’s Board of Directors (the “Board”) on October 10, 2006 that provides for the grant of stock options to employees, directors, officers and consultants (See “NOTE 4 - Stock Options”).

During the three months ended November 30, 2014, the Company issued 3,906 shares of common stock as a result of the exercise of a Series H Warrant for which the Company received $3,242.

During the year ended August 31, 2014, the Company had the following common stock related transactions:

· On November 11, 2013 and November 13, 2013, the Company issued pursuant to the Plan a total of 81,899 shares of unrestricted common stock as a result of the cashless exercise of a stock option resulting in the issuance of 190,000 shares of common stock.

· On January 28, 2014, the Company issued 10,000 shares of common stock to each of the Company’s three directors pursuant to the 2006 Plan (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 (See “NOTE 6 - Related Party Transactions” below for additional information).

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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 November 30, 2014 and August 31, 2014 is as follows:

	Shares of Common Stock Issuable from Warrants Outstanding as of
Description	November 30, 2014		August 31, 2014		Exercise Price		Expiration
Series G		625,000		625,000	$	0.64	April 17, 2015
Series H		1,751,220		1,755,126	$	0.83	February 1, 2016
Series I		921,875		921,875	$	1.37	October 7, 2018
Series J		3,110,378		-	$	1.12	November 9, 2019
Series K		3,110,378		-	$	1.20	November 9, 2019
Total		9,518,851		3,302,001

The Series G Warrant was issued on April 17, 2012, as a condition to the Investor entering into the 2012 Loan Agreement. A Series H Warrant to purchase 825,435 shares was issued in connection with the 2012 Loan conversion. Series H Warrants to purchase 925,785 shares were issued on February 1, 2013, in connection with the self-directed registered offering of 1,875,000 units. The Series I Warrant was issued on October 7, 2013, in connection with the 2013 Loan Agreement. The Series J Warrant and Series K Warrant were issued on November 10, 2014 as a condition to the Investor entering into the 2015 Loan Agreement. In addition, there are a total of 3,248,878 shares issuable upon issuance of a Series L Warrant issuable as described above. Additional disclosure related to the warrants is more fully described above under “NOTE 2 - Convertible Promissory Notes.”

During the three months ended November 30, 2014, the Company received $3,242 upon the exercise of a Series H Warrant for 3,906 shares. No warrant exercises occurred during the three months ended November 30, 2013.

NOTE 4 – Stock Options

Stock option grants pursuant to the 2006 Plan 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 3,359,163 remain available for grant and 326,667 issued pursuant to the exercise of vested options as of November 30, 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 employs the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:

	Year Ended August 31, 2014
Expected dividend yield		–
Expected stock price volatility		154.0% – 154.5%
Risk-free interest rate		2.21% – 2.41%
Expected term (in years)		7.67
Exercise price	$	2.90
Weighted-average grant date fair-value	$	2.68

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A summary of the Company’s stock option activity for the three months ended November 30, 2014 and the year ended August 31, 2014 and related information follows:

	Number of Shares Subject to Option Grants			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($)
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 August 31, 2014		1,325,837			2.68
Forfeitures		(11,667	)		6.51
Outstanding at November 30, 2014		1,314,170			2.64	7.72 years	$	15,600
Exercisable at November 30, 2014		609,670			2.35	6.06 years	$	15,600
Available for grant at November 30, 2014		3,359,163

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 November 30, 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 $1.44 on November 30, 2014 and 65,001 outstanding options have an exercise price below $1.44 per share, as of November 30, 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 months ended November 30, 2014 and 2013:

			Three Months Ended
			November 30,
			2014		2013
Stock Compensation Expense:
	SG&A - expense		$	157,646	$	7,824
		Net stock compensation cost	$	157,646	$	7,824

As of November 30, 2014, the Company had $542,117 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 3.25 years.

The following table summarizes information about stock options outstanding and exercisable at November 30, 2014:

	Stock Options Outstanding				Stock Options Exercisable
Range of Exercise Prices	Number of Shares Subject to Outstanding Options	Weighted Average Contractual Life (years)		Weighted Average Exercise Price	Number of Shares Subject To Options Exercise	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.80	15,000	8.06	$	0.80	15,000	8.06	$	0.80
1.32	50,001	0.04		1.32	50,001	0.04		1.32
1.65	320,000	5.41		1.65	320,000	7.59		1.65
2.30	2,500	7.41		2.30	2,500	7.41		2.30
2.50	10,000	6.35		2.50	8,000	6.35		2.50
2.55	33,334	3.78		2.55	33,334	3.78		2.55
2.90	805,000	9.16		2.90	102,500	9.14		2.90
3.27	11,667	0.03		3.27	11,667	0.03		3.27
4.98	16,667	3.28		4.98	16,667	3.28		4.98
5.94	50,001	6.07		5.94	50,001	6.07		5.94
Total	1,314,170	7.72	$	2.64	609,670	6.06	$	2.35

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NOTE 5 – Net Loss Per Share

During the three months ended November 30, 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 months ended November 30, 2014 and 2013:

		Three Months Ended
		November 30,
		2014			2013
Basic and Diluted EPS Computation
Numerator:
	Loss available to common stockholders'	$	(3,259,249	)	$	(769,570	)
Denominator:
	Weighted average number of common shares outstanding		24,308,495			24,210,799
Basic and diluted EPS		$	(0.13	)	$	(0.03	)
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		3,248,878			2,624,651
	Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)		3,248,878			5,249,303
	Warrants		9,518,851			3,302,001
	Stock options		1,314,170			1,325,837
	Total shares not included in the computation of diluted losses per share		17,330,777			12,501,792

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 $4,250 per quarter. New Board member compensation is pro rated in their first quarter. During the three months ended November 30, 2014 and 2013, the Company incurred $8,500 and $12,750, respectively in cash based Board compensation.

The Company grants stock options and common stock for services rendered by certain individuals, including the Company’s non-employee directors and sole officer, Mr. Conklin. No stock based compensation was granted to these individuals during the three months ended November 30, 2014.

13

During the three months ended November 30, 2014 and 2013 the Company recognized net compensation expense related to stock options and stock issued to the Company’s non-employee directors and executive of $5,675 and $152,083, respectively. These amounts include the reversal of compensation expense due to pre-vesting forfeitures, if any.

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 November 30, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $48,910 and $37,640, respectively, of legal services. At November 30, 2014, the Company owed Sierchio & Company, LLP $29,215 which is included in accounts payable.

On October 7, 2013, the Company entered into the 2013 Loan Agreement with Investor and on November 10, 2014, the Company and Investor entered into the 2015 Loan Agreement resulting in the extension of the 2013 Note’s maturity date to December 31, 2015 and the issuance of a Series J Warrant to purchase 3,110,378 shares of our common stock and a Series K Warrant to purchase 3,110,378 shares of our common stock (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.

NOTE 7 – Subsequent Events

On December 3, 2014, 1420524 Alberta Ltd. exercised a Series H Warrant to purchase 600,000 shares of our common stock at an exercise price of $0.83 per share resulting in $498,000 of proceeds to the Company.

On December 15, 2014, the Board of Directors issued 20,000 shares (the “Shares”) of common stock to each of the Company’s three directors (60,000 shares total) valued at $1.40 per share, the closing price of the Company’s common stock on the day the stock was issued. Together with the issuance, the Company and each director entered into a Lock-Up Agreement whereby each director agreed not to sell more than 25% of their Shares, for a period of one (1) year.

On December 15, 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 $1.40 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 December 15, 2024 and vest as follows: (a) 7,500 shares vest immediately on the date of grant, and (b) 7,500 shares on December 15, 2015. 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 $19,890, or $1.326 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price / spot price of $1.40 per share, dividend yield of 0%, volatility of 137.5%, risk-free rate of 1.90%, and a term of 7.67 years.

14

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 pre-revenue 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 OPV solar cells applied to glass and plastics. 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 before coming to a stop and converts this captured 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.

15

Our product development programs involve ongoing research and development (“R&D”) 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™ 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 pre-existing distribution channels, 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™ 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 R&D efforts, the cost of developing, acquiring, or licensing various enabling technologies, changes in the focus and direction of our R&D 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 November 30, 2014, we had negative working capital of $184,954 and cash of $255,966. On December 3, 2014, subsequent to our quarter end, the Company received $498,000 as a result of the exercise of 600,000 Series H Warrants. Based upon our current level of operations and expenditures, we believe that cash on hand should be sufficient to enable us to continue operations through February 2015. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of its business operations. We will seek access to private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital 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.

Research and Related Agreements

We are a party to certain agreements related to the development of our SolarWindow™ and 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 CRADA with Alliance for Sustainable Energy, LLC (“Alliance”), the operator of 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 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.

16

On March 6, 2013, we entered into Phase II of our CRADA with Alliance. Under the terms of the agreement, researchers will additionally work towards:

· Further improving SolarWindow™’s 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 BIPV and windows.

University of South Florida Research Foundation, Inc. License Agreement, Option Agreement, Sponsored Research Agreement

Through New Energy Solar, we are a party to a License Agreement, an Addendum to the License Agreement, an Option Agreement and a Sponsored Research Agreement with USF. These agreements provide for our support of a project relating to the development of the SolarWindow™ technology and grant us an exclusive worldwide commercial license under certain patents relating to the SolarWindow™ technology developed at USF.

On July 5, 2011, we entered into a letter agreement pursuant to which we agreed to reimburse USF for filing fees associated with USF’s patent applications (the “Applications”) for certain identified technologies (the “Letter Agreement”). Pursuant to the terms of the Letter Agreement, we committed to reimburse USF for all documented, out-of-pocket costs directly related to the filing and maintenance of the Applications. In return, USF granted us the exclusive right to negotiate a definitive option or license agreement with USF for the technologies underlying the Applications for a period of time after USF files a patent for an identified technology (the “Negotiation Period”). Should the Negotiation Period expire without us entering into an agreement with USF, the Company may extend the Negotiation Period for an additional period of time by paying USF a one-time payment of a specified sum. If after this additional time we fail to enter into an agreement with USF, USF is free to enter into negotiations and license the underlying technologies to a third-party. The USF Research Foundation, Inc. granted the lead USF research scientist authorization to enter into discussions with us to extend the date of the Sponsored Research Agreement. We mutually agreed with USF to terminate the sponsored research on February 23, 2013, as the scope of work of the sponsored research was substantially completed. We are in the process of negotiating terms to a new world-wide licensing agreement for completed research and related patent filings.

Results of Operations

Three Months Ended November 30, 2014 Compared with the Three Months Ended November 30, 2013

Operating Expenses

A summary of our operating expense for the three months ended November 30, 2014 and 2013 follows:

	Three Months ended November 30,				Increase/			Percentage
	2014		2013		(Decrease)			Change
Operating expense
Selling, general and administrative	$	408,645	$	568,187	$	(159,542	)		-28
Research and development		179,321		162,483		16,838			10
Stock compensation		157,646		7,824		149,822			1,915
Total operating expense	$	745,612	$	738,494	$	7,118			1

Selling, General and Administrative

Selling, general and administrative costs include all expenditures incurred other than R&D related costs, including costs related to personnel, professional fees, travel and entertainment, public company costs, insurance and other office related costs. The decrease is primarily due to a decrease in costs related to fees paid to publicize our SolarWindow™ and MotionPower™ technologies within the industry and investor community offset by increases in patent related fees.

17

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 R&D activities which are capitalized and recognized as expense as the related services are performed. R&D costs increased during the three months ended November 30, 2014 compared to the three months ended November 30, 2013, as a result of increasing SolarWindow™ R&D 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 common stock and issuance of warrants to purchase our common stock. Stock compensation expense increased during the three months ended November 30, 2014 compared to the three months ended November 30, 2013 primarily due to the grant of 805,000 stock options in mid fiscal year 2014 compared to 177,500 stock option grants in mid fiscal year 2013 resulting in less amortization during the three months ended November 30, 2013 compared to the three months ended November 30, 2014.

Other Income (Expense)

A summary of our other income (expense) for the three months ended November 30, 2014 and 2013 follows:

		November 30, 2014			November 30, 2013			Change
Other income (expense)
	Interest expense	$	(55,727	)	$	(31,068	)	$	24,659
	Interest expense - accretion of debt discount		(2,457,910	)		(8	)		2,457,902
Total other income (expense)		$	(2,513,637	)	$	(31,076	)	$	2,482,561

Interest Expense

“Interest expense” 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 in our notes calculated according to the effective interest method. The amounts under each column relate to the 2013 Note. See “NOTE 2 – Convertible Promissory Note” to our Consolidated Financial Statements contained in this Form 10-Q.

Liquidity and Capital Resources

We have an accumulated deficit of $24,205,519 through November 30, 2014. Included in the deficit are non-cash expenses totaling $8,353,668 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.

These conditions raise substantial doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. 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.

18

Our principal source of liquidity is cash in the bank. At November 30, 2014, we had a cash and cash equivalent balance of $255,966. On December 3, 2014, subsequent to our quarter end, we received $498,000 as a result of the exercise of a Series H Warrant for 600,000 shares of common stock. We have financed our operations primarily from the sale of equity securities as follows:

· $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 an unsecured, convertible promissory note bearing an annual interest rate of 7% (the “2013 Note”) in that amount.

Net cash used in operating activities was $518,305 for the three months ended November 30, 2014, compared to net cash used in operating activities of $529,379 for the three months ended November 30, 2013.

Net cash used in investing activities was $14,208 for the three months ended November 30, 2014, compared to net cash used in investing activities of $0 for the three months ended November 30, 2013. The increase in cash used in investing activities reflects increases in amounts paid for R&D equipment.

Net cash provided by financing activities was $3,242 for the three months ended November 30, 2014, compared to $3,000,000 for the three months ended November 30, 2013. Cash provided by financing activities in 2014 was from the exercise of 3,906 Series H Warrants compared to the 2013 proceeds from the 2013 Note.

Other Contractual Obligations

In addition to our contractual obligations under the research agreements, as of November 30, 2014, we have lease payments of $1,150 each month under our month-to-month corporate and other office operating leases. In addition, we have future payments totaling $6,500 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 November 30, 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.

19

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.

20

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)
Date: January 14, 2015	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)

22

EX-31.1

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;
4.	As the registrant’s certifying officer I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

5. As the registrant's certifying officer I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 14, 2015	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

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 November 30, 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 November 30, 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 November 30, 2014, fairly presents, in all material respects, the financial condition and results of operations of New Energy Technologies, Inc.

Date: January 14, 2015	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)

XML

Stock Options (Details 3) (USD $)	3 Months Ended
	Nov. 30, 2014
Number of options outstanding	1,314,170
Weighted average contractural life (years)	7 years 8 months 19 days
Weighted-average exercise price	$ 2.64
Number of options exercisable	609,670
Weighted average contractural life (years) of options exercisable	6 years 22 days
Weighted-average exercise price of options exercisable	$ 2.35
$ 0.80 Per Share [Member]
Number of options outstanding	15,000
Weighted average contractural life (years)	8 years 22 days
Weighted-average exercise price	$ 0.80
Number of options exercisable	15,000
Weighted average contractural life (years) of options exercisable	8 years 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)	15 days
Weighted-average exercise price	$ 1.32
Number of options exercisable	50,001
Weighted average contractural life (years) of options exercisable	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 4 months 28 days
Weighted-average exercise price	$ 1.65
Number of options exercisable	320,000
Weighted average contractural life (years) of options exercisable	7 years 7 months 2 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 4 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 4 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 4 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 4 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)	3 years 9 months 11 days
Weighted-average exercise price	$ 2.55
Number of options exercisable	33,334
Weighted average contractural life (years) of options exercisable	3 years 9 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 1 month 28 days
Weighted-average exercise price	$ 2.90
Number of options exercisable	102,500
Weighted average contractural life (years) of options exercisable	9 years 1 month 21 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)	11 days
Weighted-average exercise price	$ 3.27
Number of options exercisable	11,667
Weighted average contractural life (years) of options exercisable	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 3 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 3 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 26 days
Weighted-average exercise price	$ 5.94
Number of options exercisable	50,001
Weighted average contractural life (years) of options exercisable	6 years 26 days
Weighted-average exercise price of options exercisable	$ 5.94

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Common Stock and Warrants

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Note 3. Common Stock and Warrants

Common Stock

At November 30, 2014, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001 per share, with 24,310,518 shares of common stock outstanding and 3,359,163 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) as adopted and approved by the Company’s Board of Directors (the “Board”) on October 10, 2006 that provides for the grant of stock options to employees, directors, officers and consultants (See “NOTE 4 - Stock Options”).

During the three months ended November 30, 2014, the Company issued 3,906 shares of common stock as a result of the exercise of a Series H Warrant for which the Company received $3,242.

During the year ended August 31, 2014, the Company had the following common stock related transactions:

· On November 11, 2013 and November 13, 2013, the Company issued pursuant to the Plan a total of 81,899 shares of unrestricted common stock as a result of the cashless exercise of a stock option resulting in the issuance of 190,000 shares of common stock.

· On January 28, 2014, the Company issued 10,000 shares of common stock to each of the Company’s three directors pursuant to the 2006 Plan (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 (See “NOTE 6 - Related Party Transactions” below for additional information).

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 November 30, 2014 and August 31, 2014 is as follows:

	Shares of Common Stock Issuable from Warrants Outstanding as of
Description	November 30, 2014		August 31, 2014		Exercise Price		Expiration
Series G		625,000		625,000	$	0.64	April 17, 2015
Series H		1,751,220		1,755,126	$	0.83	February 1, 2016
Series I		921,875		921,875	$	1.37	October 7, 2018
Series J		3,110,378		-	$	1.12	November 9, 2019
Series K		3,110,378		-	$	1.20	November 9, 2019
Total		9,518,851		3,302,001

The Series G Warrant was issued on April 17, 2012, as a condition to the Investor entering into the 2012 Loan Agreement. A Series H Warrant to purchase 825,435 shares was issued in connection with the 2012 Loan conversion. Series H Warrants to purchase 925,785 shares were issued on February 1, 2013, in connection with the self-directed registered offering of 1,875,000 units. The Series I Warrant was issued on October 7, 2013, in connection with the 2013 Loan Agreement. The Series J Warrant and Series K Warrant were issued on November 10, 2014 as a condition to the Investor entering into the 2015 Loan Agreement. In addition, there are a total of 3,248,878 shares issuable upon issuance of a Series L Warrant issuable as described above. Additional disclosure related to the warrants is more fully described above under “NOTE 2 - Convertible Promissory Notes.”

During the three months ended November 30, 2014, the Company received $3,242 upon the exercise of a Series H Warrant for 3,906 shares. No warrant exercises occurred during the three months ended November 30, 2013.

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Related Party Transactions (Details Narrative) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Cash based Board compensation	$ 8,500	$ 12,750
Non-employee directors and executive [Member]
Net compensation expense	5,675	152,083
Sierchio Company LLP [Member]
Legal services	48,910	37,640
Accounts payable	$ 29,215

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Convertible Promissory Note

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Note 2. Convertible Promissory Note

On October 7, 2013 (the “Closing Date”), the Company entered into a Bridge Loan Agreement (the “2013 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 2013 Loan Agreement, the Company received proceeds of $3,000,000 and issued a 7% unsecured Convertible Promissory Note (the “2013 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 2013 Loan Agreement, the Investor may have elected, in its sole discretion, to convert all or any portion of the outstanding principal amount of the 2013 Note, and any or all accrued and unpaid interest thereon into 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 Warrant”); and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock (the “Series K Warrant”).

On November 10, 2014, the Company entered into an Amended Bridge Loan Agreement (the “2015 Loan Agreement”) with Investor pursuant to which the Company and Investor amended the 2013 Loan Agreement by amending the 2013 Note to extend the maturity date to December 31, 2015 (the “Amended Note”). According to the terms of the 2015 Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Amended Note, and any or all accrued and unpaid interest thereon into units of the Company’s equity securities (collectively, the “Units”), with each Unit consisting of (a) one share of common stock; and (b) one Series L Stock Purchase Warrant for the purchase of one share of common stock (the “Series L Warrant”). The conversion price for each Unit is the lesser of (i) $1.37; 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 L Warrant included in the Units issued upon conversion being equal to sixty percent (60%) of the 20 day average closing price of the Company’s common stock prior to conversion. The Series L Warrant will be exercisable for a period of five years from the date of issuance and will be exercisable on a cashless basis.

In order to induce Investor to enter into the 2015 Loan Agreement and extend the maturity date of the 2013 Note, the Company issued a Series J Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.12 and a Series K Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.20. Each of the Series J Warrant and Series K Warrant is exercisable through November 9, 2019 and contains a provision allowing the Investor to exercise the warrant on a cashless basis as further set forth therein. The number of shares issuable upon the exercise of the Series J Warrant and Series K Warrant is equal to the number of shares underlying the warrants issuable pursuant to the terms of the 2013 Loan Agreement whereby the conversion price for each unit (a unit consists of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock; and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock) is equal to $1.04, 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 being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant being equal to 114.6% of the unit exercise price.

For accounting purposes, the modification to the 2013 Loan Agreement did not result in a gain or loss, as an extinguishment under accounting principles generally accepted in the United States, due to the related party nature of the transaction. As described above, the Amended Bridge Loan Agreement resulted in the issuance of a Series J Warrant and a Series K Warrant. Prior to the Amended Bridge Loan Agreement, the Series J and Series K Warrants were to be issued to the Investor only upon the Investor’s election to convert the 2013 Note (according to the original terms of the 2013 note). Also as a result of the Amended Bridge Loan Agreement, the principal amount of the Amended Note and accrued interest thereon is convertible into Units. As such, the fair value of the Series L Warrant, representing the value exchanged for the modification of the conversion option associated with the 2013 Loan Agreement, was recognized as a discount to the Amended Note with a corresponding increase in additional paid-in capital. The fair value of the Series L Warrant was $1.16. The fair value of the Series L Warrant was calculated using the Black-Scholes option pricing model and the following assumptions: market price of common stock - $1.28 per share; estimated volatility - 138%; risk free interest rate - 1.57%; expected dividend rate - 0% and expected life - 5 years. Based on the terms of the Amended Note, 3,142,359 Series L warrants were issuable on November 10, 2014 with a fair value of $3,645,137 (3,142,359 Series L warrants x $1.16 per share). As a result of the debt discount exceeding the principal amount of the Amended Note, on November 10, 2014, the Company recorded a debt discount of $3,000,000 which is being accreted over the term of the Amended Note using the effective interest method.

Together with the 2013 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 2013 Loan Agreement or otherwise, for a period of one (1) year from the Closing Date (as defined in the 2013 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 2013 Note and the shares of common stock issuable upon exercise of the Series I, Series J and Series K Warrants. The Lock-Up Agreement expired on October 6, 2014.

During the three months ended November 30, 2014 and 2013, the Company recognized $55,727 and $31,068, respectively, of interest expense related to the 2013 Note and related amendment. During the three months ended November 30, 2014, the Company recognized $2,457,910 of interest expense related to debt discount accretion, which includes $2,313,680 of accretion related to the debt discount originally recorded on the 2013 Note and $144,230 related to the Series L Warrants issuable pursuant to the 2015 Loan Agreement. The remaining debt discount related to the Series L Warrants and totaling $2,855,770 will be amortized through December 31, 2015 with $649,038 amortized during the quarter ended February 28, 2015, $663,462 amortized during the quarter ended May 31, 2015, $663,462 amortized during the quarter ended August 31, 2015, $656,250 amortized during the quarter ended November 30, 2015 and $223,558 amortized during the quarter ended February 29, 2016.

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CONSOLIDATED BALANCE SHEETS (USD $)	Nov. 30, 2014	Aug. 31, 2014
Current assets
Cash and cash equivalents	$ 255,966	$ 785,237
Deferred research and development costs	150,000	150,000
Prepaid expenses and other current assets	22,255	14,257
Total current assets	428,221	949,494
Equipment, net of accumulated depreciation of $19,959 and $18,128, respectively	36,974	24,597
Total assets	465,195	974,091
Current liabilities
Accounts payable	220,067	144,239
Interest payable	248,878	193,151
Convertible promissory note, net of discount of $2,855,770 and $2,313,680, respectively	144,230	686,320
Total current liabilities	613,175	1,023,710
Stockholders' equity (deficit)
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, 24,310,518 and 24,306,612 shares issued and outstanding at November 30, 2014 and August 31, 2014, respectively	24,310	24,306
Additional paid-in capital	24,033,229	20,872,345
Retained earnings (deficit)	(24,205,519)	(20,946,270)
Total stockholders' equity (deficit)	(147,980)	(49,619)
Total liabilities and stockholders' equity (deficit)	$ 465,195	$ 974,091

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Cash flows from operating activities
Net loss	$ (3,259,249)	$ 769,570
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	1,831	1,420
Stock based compensation expense	157,646	40,016
Reversal of stock based compensation expense due to forfeiture of stock options		(32,192)
Accretion of debt discount	2,457,910	8
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses and other current assets	(7,998)	8,129
Increase (decrease) in accounts payable	75,828	191,742
Increase (decrease) in accrued liabilities	55,727	31,068
Net cash used in operating activities	(518,305)	1,009,761
Cash flows from investing activity
Purchase of equipment	(14,208)
Net cash used in investing activity	(14,208)
Cash flows from financing activities
Proceeds from the exercise of warrants	3,242
Proceeds from promissory notes		3,000,000
Net cash provided by financing activities	3,242	3,000,000
Increase (decrease) in cash and cash equivalents	(529,271)	4,009,761
Cash and cash equivalents at beginning of period	785,237	347,493
Cash and cash equivalents at end of period	255,966	4,357,254
Supplemental disclosure of cash flow information:
Interest paid in cash
Income taxes paid in cash
Supplemental disclosure of non-cash transactions:
Debt discount recorded for value of warrants issued	3,000,000	1,137,149
Debt discount recorded for beneficial conversion feature		$ 1,862,851

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Stock Options (Details) (USD $)	3 Months Ended	12 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Expected dividend yield
Expected term (in years)		7 years 8 months 1 day
Exercise price		$ 2.90
Weighted-average grant date fair-value		$ 2.68
Minimum [Member]
Expected stock price volatility		154.00%
Risk-free interest rate		2.21%
Maximum [Member]
Expected stock price volatility		154.50%
Risk-free interest rate		2.41%

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Stock Options (Details 2) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Stock Options Details 2
SG&A - expense	$ 157,646	$ 7,824
Net stock compensation cost	$ 157,646	$ 7,824

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Basis of Presentation, Organization, Recent Accounting Pronouncements and Going Concern

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

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

Basis of Presentation

The unaudited financial statements of New Energy Technologies, Inc. as of November 30, 2014, and for the three months ended November 30, 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, 2014, 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.

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, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”).

KEC was incorporated on June 19, 2008, in the State of Nevada and holds the patents related to the Company’s MotionPower™ technology. The Company’s business activities related to the MotionPower™ technology are conducted through KEC.

New Energy Solar was incorporated on February 9, 2009, in the State of Florida and has entered into agreements with USF to sponsor research related to the Company’s SolarWindow™ technology.

On March 16, 2011, pursuant to a consent signed by the Company’s shareholders owning a majority of the Company’s then issued and outstanding shares of common stock, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing its authorized shares of common stock, $0.001 par value, from 100,000,000 to 300,000,000.

The Company is a renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. The Company’s proprietary, patent-pending technologies and products are the subjects of one hundred and one (101) patent-filings, and have been invented, designed, engineered, and prototyped in preparation for further field testing, product development and eventual commercial deployment.

The Company’s 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 solar cells. The Company’s SolarWindow™ technology is the subject of forty-two (42) patent filings. Initially being developed for application on glass surfaces, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone.

The Company’s MotionPower™ technology, harvests “kinetic” or “motion” energy from vehicles when they slow down before coming to a stop and converts this captured energy into electricity. 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 assists with strategically focusing on specific technology development which best delivers significant long-term commercial competitive advantages.

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its financial statements except as described below.

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 beginning as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. The Company has adopted the amendments and no longer presents 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.

Going Concern

The Company does not have any commercialized products and has not generated any revenue since inception. The Company has an accumulated deficit of $24,205,519 as of November 30, 2014, and does not have positive cash flow from operating activities. Included in the deficit are non-cash expenses totaling $8,353,668 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discounts. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.

In its report with respect to the Company’s financial statements for the year ended August 31, 2014, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue operations as a going concern. Because the Company has not generated revenues from its operations and does not expect to do so in the near future, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Currently, the Company is seeking additional financing but has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

As of November 30, 2014, the Company had cash of $255,966. On December 3, 2014, subsequent to its quarter end, the Company received $498,000 as a result of the exercise of 600,000 Series H Warrants. Based upon its current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable it to continue operations through February 2015.

If adequate funds are not available on reasonable terms, or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to delay, reduce the scope of or terminate one or more of its research programs, sell rights to its SolarWindow™ technology and/or MotionPower^TM technology or other technologies or products based upon such technologies, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available.

In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Nov. 30, 2014	Aug. 31, 2014
Current assets
Equipment, net of accumulated depreciation	$ 19,959	$ 18,128
Current liabilities
Convertible promissory note, net of discount	$ 2,855,770	$ 2,313,680
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	24,310,518	24,306,612
Common stock, shares outstanding	24,310,518	24,306,612

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Net Loss Per Share (Tables)

3 Months Ended

Nov. 30, 2014

Net Loss Per Share Tables

Computation of basic and diluted net loss per share

Following is the computation of basic and diluted net loss per share for the three months ended November 30, 2014 and 2013:

		Three Months Ended
		November 30,
		2014			2013
Basic and Diluted EPS Computation
Numerator:
	Loss available to common stockholders'	$	(3,259,249	)	$	(769,570	)
Denominator:
	Weighted average number of common shares outstanding		24,308,495			24,210,799
Basic and diluted EPS		$	(0.13	)	$	(0.03	)
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		3,248,878			2,624,651
	Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)		3,248,878			5,249,303
	Warrants		9,518,851			3,302,001
	Stock options		1,314,170			1,325,837
	Total shares not included in the computation of diluted losses per share		17,330,777			12,501,792

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Document and Entity Information	3 Months Ended
	Nov. 30, 2014	Jan. 12, 2015
Document And Entity Information
Entity Registrant Name	NEW ENERGY TECHNOLOGIES, INC.
Entity Central Index Key	0001071840
Document Type	10-Q
Document Period End Date	Nov. 30, 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		24,910,518
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

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Basis of Presentation, Organization, Recent Accounting Pronouncements and Going Concern (Details Narrative) (USD $)	Nov. 30, 2014	Aug. 31, 2014	Nov. 30, 2013	Aug. 31, 2013
Organization And Going Concern Details Narrative
Accumulated deficit	$ 24,205,519	$ 20,946,270
Cash and cash equivalents	$ 255,966	$ 785,237	$ 4,357,254	$ 347,493

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Consolidated Statements Of Operations
Revenue
Operating expense
Selling, general and administrative	566,291	576,011
Research and development	179,321	162,483
Total operating expense	745,612	738,494
Loss from operations	(745,612)	(738,494)
Other income (expense)
Interest expense	(55,727)	(31,068)
Interest expense - accretion of debt discount	(2,457,910)	(8)
Total other income (expense)	(2,513,637)	(31,076)
Net loss	$ (3,259,249)	$ (769,570)
Basic and Diluted Loss per Common Share	$ (0.13)	$ (0.03)
Weighted average number of common shares outstanding - basic and diluted	24,308,495	24,210,799

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Related Party Transactions

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

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 $4,250 per quarter. New Board member compensation is pro rated in their first quarter. During the three months ended November 30, 2014 and 2013, the Company incurred $8,500 and $12,750, respectively in cash based Board compensation.

The Company grants stock options and common stock for services rendered by certain individuals, including the Company’s non-employee directors and sole officer, Mr. Conklin. No stock based compensation was granted to these individuals during the three months ended November 30, 2014.

During the three months ended November 30, 2014 and 2013 the Company recognized net compensation expense related to stock options and stock issued to the Company’s non-employee directors and executive of $5,675 and $152,083, respectively. These amounts include the reversal of compensation expense due to pre-vesting forfeitures, if any.

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 November 30, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $48,910 and $37,640, respectively, of legal services. At November 30, 2014, the Company owed Sierchio & Company, LLP $29,215 which is included in accounts payable.

On October 7, 2013, the Company entered into the 2013 Loan Agreement with Investor and on November 10, 2014, the Company and Investor entered into the 2015 Loan Agreement resulting in the extension of the 2013 Note’s maturity date to December 31, 2015 and the issuance of a Series J Warrant to purchase 3,110,378 shares of our common stock and a Series K Warrant to purchase 3,110,378 shares of our common stock (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.

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Net Loss Per Share

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Note 5. Net Loss Per Share

During the three months ended November 30, 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 months ended November 30, 2014 and 2013:

		Three Months Ended
		November 30,
		2014			2013
Basic and Diluted EPS Computation
Numerator:
	Loss available to common stockholders'	$	(3,259,249	)	$	(769,570	)
Denominator:
	Weighted average number of common shares outstanding		24,308,495			24,210,799
Basic and diluted EPS		$	(0.13	)	$	(0.03	)
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		3,248,878			2,624,651
	Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Note" above)		3,248,878			5,249,303
	Warrants		9,518,851			3,302,001
	Stock options		1,314,170			1,325,837
	Total shares not included in the computation of diluted losses per share		17,330,777			12,501,792

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Stock Options (Details 1) (USD $)	3 Months Ended	12 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Number of Options
Outstanding Beginning	1,325,837	970,838
Grants		805,000
Exercises		(190,000)
Forfeitures	(11,667)	(260,001)
Outstanding Ending	1,314,170	1,325,837
Exercisable Ending	609,670
Available for grant Ending	3,359,163
Weighted Average Exercise Price ($)
Weighted-average exercise price Beginning	$ 2.68	$ 2.03
Grants		$ 2.90
Exercises		$ 1.65
Forfeitures	$ 6.51	$ 1.69
Weighted-average exercise price Ending	$ 2.64	$ 2.68
Exercisable Ending	$ 2.35
Weighted Average Remaining Contractual Term
Outstanding at November 30, 2014	7 years 8 months 19 days
Exercisable at November 30, 2014	6 years 22 days
Aggregate Intrinsic Value ($)
Outstanding at November 30, 2014	$ 15,600
Exercisable at November 30, 2014	$ 15,600

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Convertible Promissory Note (Details Narrative) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
2013 Note [Member]
Interest expense related to the Loan	$ 55,727	$ 31,068
Accretion interest expense related to debt discount	2,457,910
Accretion related to the debt discount	2,313,680
2015 Loan Agreement [Member]
Accretion related L series warrants to the debt discount	$ 144,230

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Common Stock and Warrants (Tables)

3 Months Ended

Nov. 30, 2014

Common Stock And Warrants Tables

Warrants outstanding and exercisable

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 November 30, 2014 and August 31, 2014 is as follows:

	Shares of Common Stock Issuable from Warrants Outstanding as of
Description	November 30, 2014		August 31, 2014		Exercise Price		Expiration
Series G		625,000		625,000	$	0.64	April 17, 2015
Series H		1,751,220		1,755,126	$	0.83	February 1, 2016
Series I		921,875		921,875	$	1.37	October 7, 2018
Series J		3,110,378		-	$	1.12	November 9, 2019
Series K		3,110,378		-	$	1.20	November 9, 2019
Total		9,518,851		3,302,001

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Subsequent Events

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Note 7. Subsequent Events

On December 3, 2014, 1420524 Alberta Ltd. exercised a Series H Warrant to purchase 600,000 shares of our common stock at an exercise price of $0.83 per share resulting in $498,000 of proceeds to the Company.

On December 15, 2014, the Board of Directors issued 20,000 shares (the “Shares”) of common stock to each of the Company’s three directors (60,000 shares total) valued at $1.40 per share, the closing price of the Company’s common stock on the day the stock was issued. Together with the issuance, the Company and each director entered into a Lock-Up Agreement whereby each director agreed not to sell more than 25% of their Shares, for a period of one (1) year.

On December 15, 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 $1.40 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 December 15, 2024 and vest as follows: (a) 7,500 shares vest immediately on the date of grant, and (b) 7,500 shares on December 15, 2015. 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 $19,890, or $1.326 per option, estimated using the Black-Scholes model containing the following assumptions: Exercise price / spot price of $1.40 per share, dividend yield of 0%, volatility of 137.5%, risk-free rate of 1.90%, and a term of 7.67 years.

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Basis of Presentation, Organization, Recent Accounting Pronouncements and Going Concern (Policies)

3 Months Ended

Nov. 30, 2014

Organization And Going Concern Policies

Basis of Presentation

The unaudited financial statements of New Energy Technologies, Inc. as of November 30, 2014, and for the three months ended November 30, 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, 2014, 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.

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, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”).

KEC was incorporated on June 19, 2008, in the State of Nevada and holds the patents related to the Company’s MotionPower™ technology. The Company’s business activities related to the MotionPower™ technology are conducted through KEC.

New Energy Solar was incorporated on February 9, 2009, in the State of Florida and has entered into agreements with USF to sponsor research related to the Company’s SolarWindow™ technology.

On March 16, 2011, pursuant to a consent signed by the Company’s shareholders owning a majority of the Company’s then issued and outstanding shares of common stock, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing its authorized shares of common stock, $0.001 par value, from 100,000,000 to 300,000,000.

The Company is a renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. The Company’s proprietary, patent-pending technologies and products are the subjects of one hundred and one (101) patent-filings, and have been invented, designed, engineered, and prototyped in preparation for further field testing, product development and eventual commercial deployment.

The Company’s 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 solar cells. The Company’s SolarWindow™ technology is the subject of forty-two (42) patent filings. Initially being developed for application on glass surfaces, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone.

The Company’s MotionPower™ technology, harvests “kinetic” or “motion” energy from vehicles when they slow down before coming to a stop and converts this captured energy into electricity. 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 assists with strategically focusing on specific technology development which best delivers significant long-term commercial competitive advantages.

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its financial statements except as described below.

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 beginning as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. The Company has adopted the amendments and no longer presents 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.

Going Concern

The Company does not have any commercialized products and has not generated any revenue since inception. The Company has an accumulated deficit of $24,205,519 as of November 30, 2014, and does not have positive cash flow from operating activities. Included in the deficit are non-cash expenses totaling $8,353,668 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discounts. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.

In its report with respect to the Company’s financial statements for the year ended August 31, 2014, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue operations as a going concern. Because the Company has not generated revenues from its operations and does not expect to do so in the near future, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Currently, the Company is seeking additional financing but has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

As of November 30, 2014, the Company had cash of $255,966. On December 3, 2014, subsequent to its quarter end, the Company received $498,000 as a result of the exercise of 600,000 Series H Warrants. Based upon its current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable it to continue operations through February 2015.

If adequate funds are not available on reasonable terms, or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to delay, reduce the scope of or terminate one or more of its research programs, sell rights to its SolarWindow™ technology and/or MotionPower^TM technology or other technologies or products based upon such technologies, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available.

In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

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Stock Options (Tables)

3 Months Ended

Nov. 30, 2014

Stock Options Tables

Fair value of each option award

The Company employs the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:

	Year Ended August 31, 2014
Expected dividend yield		–
Expected stock price volatility		154.0% – 154.5%
Risk-free interest rate		2.21% – 2.41%
Expected term (in years)		7.67
Exercise price	$	2.90
Weighted-average grant date fair-value	$	2.68

Stock option activity

A summary of the Company’s stock option activity for the three months ended November 30, 2014 and the year ended August 31, 2014 and related information follows:

	Number of Shares Subject to Option Grants			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($)
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 August 31, 2014		1,325,837			2.68
Forfeitures		(11,667	)		6.51
Outstanding at November 30, 2014		1,314,170			2.64	7.72 years	$	15,600
Exercisable at November 30, 2014		609,670			2.35	6.06 years	$	15,600
Available for grant at November 30, 2014		3,359,163

Share-based compensation cost

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 months ended November 30, 2014 and 2013:

			Three Months Ended
			November 30,
			2014		2013
Stock Compensation Expense:
	SG&A - expense		$	157,646	$	7,824
		Net stock compensation cost	$	157,646	$	7,824

Stock options outstanding and exercisable

The following table summarizes information about stock options outstanding and exercisable at November 30, 2014:

	Stock Options Outstanding				Stock Options Exercisable
Range of Exercise Prices	Number of Shares Subject to Outstanding Options	Weighted Average Contractual Life (years)		Weighted Average Exercise Price	Number of Shares Subject To Options Exercise	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.80	15,000	8.06	$	0.80	15,000	8.06	$	0.80
1.32	50,001	0.04		1.32	50,001	0.04		1.32
1.65	320,000	5.41		1.65	320,000	7.59		1.65
2.30	2,500	7.41		2.30	2,500	7.41		2.30
2.50	10,000	6.35		2.50	8,000	6.35		2.50
2.55	33,334	3.78		2.55	33,334	3.78		2.55
2.90	805,000	9.16		2.90	102,500	9.14		2.90
3.27	11,667	0.03		3.27	11,667	0.03		3.27
4.98	16,667	3.28		4.98	16,667	3.28		4.98
5.94	50,001	6.07		5.94	50,001	6.07		5.94
Total	1,314,170	7.72	$	2.64	609,670	6.06	$	2.35

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Common Stock and Warrants (Details Narrative) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2014
Common stock, shares authorized	300,000,000		300,000,000
Common stock, par value	$ 0.001		$ 0.001
Common stock, shares outstanding	24,310,518		24,306,612
Series H [Member]
Amount received upon the exercise of warrants	$ 3,242
Exercise of warrants	3,906	0
2006 Long-Term Incentive Plan [Member]
Common stock, shares authorized	300,000,000
Common stock, par value	$ 0.001
Common stock, shares outstanding	24,310,518
Stock reserved	3,359,163

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Stock Options (Details Narrative) (USD $)	3 Months Ended
	Nov. 30, 2014
Stock option available for grant shares	3,359,163
Closing stock option exercise price	$ 1.44
Stock options outstanding below exercise price	65,001
Stock based compensation unrecognized	$ 542,117
Expected period for recognition	3 years 3 months
2006 Incentive Stock Option Plan [Member]
Stock option approved	5,000,000
Stock option available for grant shares	3,359,163
Stock option exercise	326,667

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED) (USD $)	Common Stock	Additional Paid-In Capital	Retained Earnings (Deficit)	Total
Beginning Balance, Amount at Aug. 31, 2013	$ 24,194	$ 17,441,034	$ (17,053,889)	$ 411,339
Beginning Balance, Shares at Aug. 31, 2013	24,194,713
Stock based compensation related to restricted stock issuance, Shares	30,000
Stock based compensation related to restricted stock issuance, Amount	30	86,970		87,000
Stock based compensation due to common stock purchase options		701,396		701,396
Reversal of stock based compensation due to forfeiture of stock options		(356,973)		(356,973)
Exercise of stock options, Shares	81,899
Exercise of stock options, Amount	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			(3,892,381)	(3,892,381)
Ending Balance, Amount at Aug. 31, 2014	24,306	20,872,345	(20,946,270)	(49,619)
Ending Balance, Shares at Aug. 31, 2014	24,306,612
Stock based compensation due to common stock purchase options		157,646		157,646
Discount on convertible promissory note due to detachable warrants		3,000,000		3,000,000
Exercise of Series H warrants, Shares	3,906
Exercise of Series H warrants, Amount	4	3,238		3,242
Net loss			(3,259,249)	(3,259,249)
Ending Balance, Amount at Nov. 30, 2014	$ 24,310	$ 24,033,229	$ (24,205,519)	$ (147,980)
Ending Balance, Shares at Nov. 30, 2014	24,310,518

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Stock Options

3 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Note 4. Stock Options

Stock option grants pursuant to the 2006 Plan 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 3,359,163 remain available for grant and 326,667 issued pursuant to the exercise of vested options as of November 30, 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 employs the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:

	Year Ended August 31, 2014
Expected dividend yield		–
Expected stock price volatility		154.0% – 154.5%
Risk-free interest rate		2.21% – 2.41%
Expected term (in years)		7.67
Exercise price	$	2.90
Weighted-average grant date fair-value	$	2.68

A summary of the Company’s stock option activity for the three months ended November 30, 2014 and the year ended August 31, 2014 and related information follows:

	Number of Shares Subject to Option Grants			Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($)
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 August 31, 2014		1,325,837			2.68
Forfeitures		(11,667	)		6.51
Outstanding at November 30, 2014		1,314,170			2.64	7.72 years	$	15,600
Exercisable at November 30, 2014		609,670			2.35	6.06 years	$	15,600
Available for grant at November 30, 2014		3,359,163

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 November 30, 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 $1.44 on November 30, 2014 and 65,001 outstanding options have an exercise price below $1.44 per share, as of November 30, 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 months ended November 30, 2014 and 2013:

			Three Months Ended
			November 30,
			2014		2013
Stock Compensation Expense:
	SG&A - expense		$	157,646	$	7,824
		Net stock compensation cost	$	157,646	$	7,824

As of November 30, 2014, the Company had $542,117 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 3.25 years.

The following table summarizes information about stock options outstanding and exercisable at November 30, 2014:

	Stock Options Outstanding				Stock Options Exercisable
Range of Exercise Prices	Number of Shares Subject to Outstanding Options	Weighted Average Contractual Life (years)		Weighted Average Exercise Price	Number of Shares Subject To Options Exercise	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.80	15,000	8.06	$	0.80	15,000	8.06	$	0.80
1.32	50,001	0.04		1.32	50,001	0.04		1.32
1.65	320,000	5.41		1.65	320,000	7.59		1.65
2.30	2,500	7.41		2.30	2,500	7.41		2.30
2.50	10,000	6.35		2.50	8,000	6.35		2.50
2.55	33,334	3.78		2.55	33,334	3.78		2.55
2.90	805,000	9.16		2.90	102,500	9.14		2.90
3.27	11,667	0.03		3.27	11,667	0.03		3.27
4.98	16,667	3.28		4.98	16,667	3.28		4.98
5.94	50,001	6.07		5.94	50,001	6.07		5.94
Total	1,314,170	7.72	$	2.64	609,670	6.06	$	2.35

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Net Loss Per Share (Details) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Numerator:
Loss available to common stockholders'	$ (3,259,249)	$ (769,570)
Denominator:
Weighted average number of common shares outstanding	24,308,495	24,210,799
Basic and diluted EPS	$ (0.13)	$ (0.03)
Earnings Per Share, Diluted, Other Disclosures
Convertible debt	3,248,878	2,624,651
Warrants issuable upon conversion of debt	$ 3,248,878	$ 5,249,303
Total shares not included in the computation of diluted losses per share	17,330,777	12,501,792
Warrant [Member]
Earnings Per Share, Diluted, Other Disclosures
Potentially dilutive common shares	9,518,851	3,302,001
Stock Option [Member]
Earnings Per Share, Diluted, Other Disclosures
Potentially dilutive common shares	1,314,170	1,325,837

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Common Stock and Warrants (Details) (USD $)	3 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Shares of Common Stock Issuable from Warrants	9,518,851	3,302,001
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	1,751,220	1,755,126
Exercise Price	$ 0.83
Expiration	2016-02-01
Series I [Member]
Shares of Common Stock Issuable from Warrants	921,875	921,875
Exercise Price	$ 1.37
Expiration	2018-10-07
Series J [Member]
Shares of Common Stock Issuable from Warrants	3,110,378
Exercise Price	$ 1.12
Expiration	2019-11-09
Series K [Member]
Shares of Common Stock Issuable from Warrants	3,110,378
Exercise Price	$ 1.20
Expiration	2019-11-09