New Energy Technologies,
Inc. (the Company) was incorporated in the State of Nevada on May 5, 1998, under the name Octillion Corp.
On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Sungen
Energy, Inc. (Sungen), Kinetic Energy Corporation (KEC), and New Energy Solar Corporation (New
Sungen was incorporated
on July 11, 2006, in the State of Nevada and is currently inactive.
KEC was incorporated
on June 19, 2008, in the State of Nevada and holds the patents related to the Companys MotionPower Technology. The
Companys 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 a License Agreement, an Addendum to the License
Agreement, an Option Agreement and a Sponsored Research Agreement with the University of South Florida Research Foundation, Inc.
On March 16, 2011,
pursuant to the Consents, 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.
On August 19, 2011,
the Company established Nakoda, a California corporation and wholly-owned subsidiary of the Company, which began operations in
September 2011. Nakoda is an energy savings and management corporation that provides a broad range of energy solutions and savings
projects with the goal of implementing energy conservation, load management, and reducing building energy consumption in target
markets. Due to the high costs associated with growing operations and difficult financing environment, management suspended all
Nakoda related operations as of November 30, 2011. On January 20, 2012, management completed the sale of Nakoda Energy, Inc. as
described pursuant to a Stock Purchase Agreement. The Company did not recognize any revenue from Nakoda related operations nor
were there any recorded assets or liabilities as of and during the years ended August 31, 2012 and 2011. During the year ended
August 31, 2012, The Company recognized a loss of $242,210 from discontinued operations, of which
$102,250 of this loss resulted from the disposition.
The Company is
a renewable and alternative energy company, actively developing two novel technologies for generating sustainable electricity,
one of which harvests solar energy of the sun and artificial light, and the other harvests kinetic energy present in moving vehicles.
The Companys proprietary, patent-pending technologies and products, which are the subjects of fifty-six (56) patent-filings,
have been invented, designed, engineered, and prototyped in preparation for further field testing, product development, and commercial
||The Companys SolarWindow Technology generates electricity when glass surfaces are sprayed with electricity-generating coatings, creating, semi-transparent, see-through solar cells. If successfully developed, SolarWindow could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone (U.S. Census Bureau, 2007 American Housing Survey & U.S. Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey).|
MotionPower Technology harvests the available "kinetic" or "motion" energy of cars, trucks, buses, and
heavy commercial vehicles when they slow down before coming to a stop. MotionPower converts this captured energy into electricity.
If successfully developed, MotionPower could potentially be used to harvest kinetic energy generated by any of the estimated
250 million vehicles registered in America (U.S. Department of Transportation Federal Highway Administration, 2008 Highway Statistics),
which drive approximately six billion miles on our nations roadways every day (U.S. Environmental Protection Agency).
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.
Company is a development stage company, does not have any commercialized products and has not generated any revenue since inception.
The Company has an accumulated deficit of $12,781,357 as of August 31, 2012, and does not have
positive cash flows from operating activities. 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 Companys ability to establish itself as a profitable business.
In its report with
respect to the Companys financial statements for the year ended August 31, 2012, the Companys independent auditors
expressed substantial doubt about the Companys ability to continue as a going concern. Because the Company has not yet 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 August 31,
2012, the Company had cash and cash equivalents of $1,046,918. The Company will remain engaged in research and product development
activities at least through February, 2013. Based upon its current and near term anticipated level of operations and expenditures,
the Company believes that, absent any modification or expansion of its existing research, development and testing activities, cash
on hand should be sufficient to enable it to continue operations for the next six months. However, any significant expansion in
scope or acceleration in timing of the Companys current research and development activities, or commencement of any marketing
and sales activities, will require additional funds.
If adequate funds
are not available on reasonable terms or at all, it would result in a material adverse effect on the Companys 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 MotionPowerTM 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.
Summary of Significant Accounting Policies
Principles of Consolidation
financial statements presented are those of the Company and its wholly-owned subsidiaries, Sungen, KEC, and New Energy Solar. All
significant intercompany balances and transactions have been eliminated.
preparation of the Companys consolidated financial statements requires management to make estimates and use assumptions
that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by
managements application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results
and outcomes may differ materially from these estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents
includes highly liquid investments with original maturities of three months or less. The Company has amounts deposited with financial
institutions in excess of federally insured limits.
Fair Value Measurement
The Company measures
fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction
between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used
in the valuation methodologies in measuring fair value:
Level 1. Valuations based on quoted prices in
active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities
valued with Level 1 inputs.
Level 2. Valuations based on quoted prices for
similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs
that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The
Company has no assets or liabilities valued with Level 2 inputs.
Level 3. Valuations based on inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities. The
Company has no assets or liabilities valued with Level 3 inputs.
Fair Value of Financial Instruments
The carrying value
of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair value because of the short-term nature
of these instruments and their liquidity. It is not practical to determine the fair value of our notes payable due to the complex
terms. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these
Research and Development
Research and development
costs represent costs incurred to develop the Companys technology, including salaries
and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase
and repair and other costs. Research and development costs are expensed when incurred, except
for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense
as the related services are performed.
Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such
expense in its consolidated financial statements over the requisite service period. The Company
uses the Black-Scholes-Merton formula to determine the fair value of stock-based compensation awards on the date of grant. The
Black-Scholes-Merton formula requires management to make assumptions regarding the option lives, expected volatility, and
risk free interest rates. See Note 6 - Capital Stock and Note 7 - Stock Options for additional information
on the Companys stock-based compensation plans.
The Company accounts
for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and
carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to
reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting
from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties
are recorded as a component of interest expense or other expense, respectively.
business is considered to be operating in one segment based upon the Companys organizational structure, the way in which
the operations are managed and evaluated, the availability of separate financial results and materiality considerations.
Net Income (Loss) Per Share
computation of basic earnings per share (EPS) is based on the weighted average number of shares that were outstanding
during the period, including shares of common stock that are issuable at the end of the reporting period.
The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares
that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method.
The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that
would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there
is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants
will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period
exceeds the exercise price of the options or warrants (they are in the money). See Note 8 - Net Loss Per Share
for further discussion.
All share and per
share amounts reflect the 1-for-3 reverse stock split declared effective on March 21, 2011, by FINRA.
Recently Adopted Accounting Pronouncements
The Company reviews
new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Companys
previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion.
The Company believes that none of the new standards will have a significant impact on its consolidated financial statements.