UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________  FORM 10-Q  (Mark One)  XQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended May 31, 2010  ___        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from ___________to___________  Commission file number 333-127953   NEW ENERGY TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter)  Nevada
     59-3509694(State or other jurisdiction of
     (I.R.S. Employerincorporation or organization)
     Identification No.)3905 National Drive, Suite 110Burtonsville, Maryland
     20866(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.  YesTNoo. 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). YesoNooNot ApplicableT. 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 (Do not check if a smaller reporting company)
     
     
     Smaller reporting company
     x
  Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.)  YesoNoT. Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 58,600,600 shares of common stock, par value $0.001, were outstanding on July 9, 2010.


---



NEW ENERGY TECHNOLOGIES, INC. (Formerly Octillion Corp.) FORM 10-Q  For the Quarterly Period Ended May 31, 2010  Table of Contents   PART I FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets (Unaudited)
     3Consolidated Statements of Operations (Unaudited)
     4Consolidated Statements of Stockholders Equity (Deficit) (Unaudited)
     5Consolidated Statements of Cash Flows (Unaudited)
     6Notes to Consolidated Financial Statements (Unaudited)
     7Item 2.
     Management's Discussion and Analysis of Financial Condition andResults of Operations.
     18Item 4T. Controls and Procedures.
     29PART II OTHER INFORMATIONItem 1.
     Legal Proceedings.
     30Item 2.
     Unregistered Sales of Equity Securities and Use of Proceeds.
     30Item 3.
     Defaults Upon Senior Securities.
     30Item 4.
     Submission of Matters to a Vote of Security Holders.
     30Item 5.
     Other Information.
     30Item 6.
     Exhibits.
     30SignaturesCertifications


---



PART IFINANCIAL INFORMATION  Item 1. Consolidated Financial Statements (Unaudited)  NEW ENERGY TECHNOLOGIES, INC.(Formerly "Octillion Corp.")(A Development Stage Company)CONSOLIDATED BALANCE SHEETSMAY 31, 2010 AND AUGUST 31, 2009(Expressed in U.S. Dollars)(Unaudited)May 31,
     
     August 31,2010
     
     2009ASSETSCurrent assetsCash and cash equivalents
     $
     1,048,347
     $
     2,736,221Deferred research and development costs
     
     43,130
     
     39,559Prepaid expenses and other current assets
     
     25,537
     
     7,586Total current assets
     
     1,117,014
     
     2,783,366Total assets
     $
     1,117,014
     $
     2,783,366LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable
     $
     94,743
     $
     98,467Accrued liabilities
     
     244,259
     
     156,109Warrant liability
     
     406,673
     
     -Total current liabilities
     
     745,675
     
     254,576Total liabilities
     
     745,675
     
     254,576Commitments and contingenciesStockholders' equityPreferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding at May 31, 2010 and August 31, 2009
     
     -
     
     -Common stock: $0.001 par value; 100,000,000 shares authorized, 58,600,600 shares issued and outstanding at May 31, 2010 and August 31, 2009
     
     58,601
     
     58,601Additional paid-in capital
     
     7,358,812
     
     8,622,458Deficit accumulated during the development stage
     
     (7,046,074)
     
     (6,152,269)Total stockholders' equity
     
     371,339
     
     2,528,790Total liabilities and stockholders' equity
     $
     1,117,014
     $
     2,783,366(The accompanying notes are an integral part of these consolidated financial statements)
  
 3


---



NEW ENERGY TECHNOLOGIES, INC.(Formerly "Octillion Corp.)(A Development Stage Company)CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED MAY 31, 2010 AND 2009 AND FOR THEPERIOD FROM INCEPTION (MAY 5, 1998) TO MAY 31, 2010(Expressed in U.S. Dollars)(Unaudited)CumulativeThree Months Ended
     
     Nine Months Ended
     
     May 5, 1998May 31,
     
     May 31,
     
     (Inception) to2010
     
     2009
     
     2010
     
     2009
     
     May 31, 2010Revenue
     $
     -
     $
     -
     $
     -
     $
     -
     $
     -Operating (income) expenseInvestor relations
     
     30,245
     
     12,312
     
     98,342
     
     28,812
     
     2,289,160Marketing
     
     222,677
     
     11,015
     
     436,713
     
     11,465
     
     808,933Wages and benefits
     
     132,463
     
     40,369
     
     605,250
     
     (3,337,562)
     
     1,409,246Management fees - related party
     
     -
     
     -
     
     -
     
     4,472
     
     207,546Professional fees
     
     136,847
     
     47,903
     
     364,207
     
     210,935
     
     1,089,312Research and development
     
     72,025
     
     98,868
     
     514,152
     
     179,838
     
     1,274,927Travel and entertainment
     
     22,380
     
     1,592
     
     53,022
     
     35,962
     
     352,320Other operating expenses
     
     54,410
     
     19,423
     
     199,662
     
     54,404
     
     518,512Total operating (income) expense
     
     671,047
     
     231,482
     
     2,271,348
     
     (2,811,674)
     
     7,949,956Income (loss) from operations
     
     (671,047)
     
     (231,482)
     
     (2,271,348)
     
     2,811,674
     
     (7,949,956)Other income (expense)Interest income
     
     -
     
     -
     
     -
     
     7,743
     
     98,582Interest expense
     
     -
     
     -
     
     -
     
     (267)
     
     (11,002)Loss on disposal of fixed assets
     
     -
     
     -
     
     -
     
     -
     
     (5,307)Gain on dissolution of foreign subsidiary
     
     -
     
     -
     
     -
     
     59,704
     
     59,704Foreign exchange loss
     
     (638)
     
     -
     
     (1,344)
     
     (52,918)
     
     (84,885)Change in fair value of warrant liability
     
     165,660
     
     -
     
     1,721,658
     
     -
     
     1,721,658Payable forgiven
     
     -
     
     -
     
     -
     
     -
     
     30,000Total other income (expense)
     
     165,022
     
     -
     
     1,720,314
     
     14,262
     
     1,808,750Income (loss) from continuing operations
     
     (506,025)
     
     (231,482)
     
     (551,034)
     
     2,825,936
     
     (6,141,206)Loss from discontinued operations
     
     -
     
     -
     
     -
     
     -
     
     (162,097)Net income (loss)
     $
     (506,025)
     $
     (231,482)
     $
     (551,034)
     $
     2,825,936
     $
     (6,303,303)Net income (loss) per common share - basic and diluted
     $
     (0.01)
     $
     (0.00)
     $
     (0.01)
     $
     0.05Weighted average number of common shares outstanding - basic and diluted
     
     58,600,600
     
     57,754,600
     
     58,600,600
     
     57,754,600(The accompanying notes are an integral part of these consolidated financial statements)
  
 4


---



NEW ENERGY TECHNOLOGIES, INC.(formerly "Octillion Corp.")(A Development Stage Company)CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)FROM MAY 5, 1998 (INCEPTION) TO MAY 31, 2010(Expressed in U.S. Dollars)(Unaudited)Accumulated
     
     DeficitOther
     
     Accumulated
     
     
     
     TotalPreferred Stock
     
     Common Stock
     
     Additional
     
     Comprehensive
     
     During the
     
     Comprehensive
     
     Stockholders'Shares
     
     Amount
     
     Shares
     
     Amount
     
     Paid-in Capital
     
     Income (Loss)
     
     Development Stage
     
     Income (Loss)
     
     Equity (Deficit)Restricted common stockissued to related parties formanagement servicesat $0.003 per share
     -
     
     $  -
     
     9,000,000
     
     $    9,000
     
     $ (6,000)
     
     $   -
     
     $  -
     
     $   -
     
     $ 3,000Unrestricted common stock salesto third parties at $0.13 per share
     -
     
     -
     
     1,125,000
     
     1,125
     
     148,875
     
     -
     
     -
     
     -
     
     150,000Comprehensive income (loss)Net loss for the period
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (12,326)
     
     (12,326)
     
     (12,326)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (12,326)Balance, August 31, 1998
     -
     
     -
     
     10,125,000
     
     10,125
     
     142,875
     
     -
     
     (12,326)
     
     -
     
     140,674Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (77,946)
     
     (77,946)
     
     (77,946)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (77,946)Balance, August 31, 1999
     -
     
     -
     
     10,125,000
     
     10,125
     
     142,875
     
     -
     
     (90,272)
     
     -
     
     62,728Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (12,446)
     
     (12,446)
     
     (12,446)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (12,446)Balance, August 31, 2000
     -
     
     -
     
     10,125,000
     
     10,125
     
     142,875
     
     -
     
     (102,718)
     
     -
     
     50,282Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (12,904)
     
     (12,904)
     
     (12,904)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (12,904)Balance, August 31, 2001
     -
     
     -
     
     10,125,000
     
     10,125
     
     142,875
     
     -
     
     (115,622)
     
     -
     
     37,378Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (54,935)
     
     (54,935)
     
     (54,935)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (54,935)Balance, August 31, 2002
     -
     
     -
     
     10,125,000
     
     10,125
     
     142,875
     
     -
     
     (170,557)
     
     -
     
     (17,557)Restricted common stock issued toa related party to satisfy outstandingmanagement fees at $0.003 per shareon December 19, 2002
     -
     
     -
     
     24,000,000
     
     24,000
     
     56,000
     
     -
     
     -
     
     -
     
     80,000Restricted common stock issued to arelated party to satisfy outstandingmanagement fees at $0.003 per shareon March 18, 2003
     -
     
     -
     
     6,999,600
     
     7,000
     
     16,332
     
     -
     
     -
     
     -
     
     23,332Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (97,662)
     
     (97,662)
     
     (97,662)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (97,662)Balance, August 31, 2003
     -
     
     -
     
     41,124,600
     
     41,125
     
     215,207
     
     -
     
     (268,219)
     
     -
     
     (11,887)Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (19,787)
     
     (19,787)
     
     (19,787)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (19,787)Balance, August 31, 2004
     -
     
     -
     
     41,124,600
     
     41,125
     
     215,207
     
     -
     
     (288,006)
     
     -
     
     (31,674)Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (103,142)
     
     (103,142)
     
     (103,142)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (103,142)Balance, August 31, 2005
     -
     
     -
     
     41,124,600
     
     41,125
     
     215,207
     
     -
     
     (391,148)
     
     -
     
     (134,816)Issuance of common stock and warrantsat $0.17 per share on May 16, 2006
     -
     
     -
     
     3,000,000
     
     3,000
     
     497,000
     
     -
     
     -
     
     -
     
     500,000Comprehensive income (loss)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (157,982)
     
     (157,982)
     
     (157,982)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (157,982)Balance, August 31, 2006
     -
     
     -
     
     44,124,600
     
     44,125
     
     712,207
     
     -
     
     (549,130)
     
     -
     
     207,202Exercise of Class A Warrants  at $0.167per share during November - December 2006
     -
     
     -
     
     3,000,000
     
     3,000
     
     497,000
     
     -
     
     -
     
     -
     
     500,000Exercise of Class B Warrants  at $0.183per share November - May 2007
     -
     
     -
     
     3,000,000
     
     3,000
     
     547,000
     
     -
     
     -
     
     -
     
     550,000Exercise of Class C Warrants  at $0.50per share during August 2007
     -
     
     -
     
     980,000
     
     980
     
     489,020
     
     -
     
     -
     
     -
     
     490,000Exercise of Class D Warrants  at $0.55per share during August 2007
     -
     
     -
     
     880,000
     
     880
     
     483,120
     
     -
     
     -
     
     -
     
     484,000Exercise of Class E Warrants  at $0.60per share during August 2007
     -
     
     -
     
     880,000
     
     880
     
     527,120
     
     -
     
     -
     
     -
     
     528,000Issuance of common stock and warrantsat $0.50 per share on April 23, 2007
     -
     
     -
     
     1,000,000
     
     1,000
     
     499,000
     
     -
     
     -
     
     -
     
     500,000Dividend paid - spin off of MircoChannelTechnologies Corporation
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (400,000)
     
     -
     
     (400,000)Comprehensive income (loss)Foreign currency translation adjustments
     -
     
     -
     
     -
     
     -
     
     -
     
     (1,811)
     
     -
     
     (1,811)
     
     (1,811)Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (1,442,769)
     
     (1,442,769)
     
     (1,442,769)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (1,444,580)Balance, August 31, 2007
     -
     
     -
     
     53,864,600
     
     53,865
     
     3,754,467
     
     (1,811)
     
     (2,391,899)
     
     
     
     1,414,622Common stock and warrants issued for cash
     -
     
     -
     
     3,675,000
     
     3,675
     
     3,392,280
     
     -
     
     -
     
     -
     
     3,395,955and services at $1.00 per Unit in February 2008Exercise of Class C Warrants  at $0.50
     -
     
     -per share during March 2008
     
     
     
     
     20,000
     
     20
     
     9,980
     
     -
     
     -
     
     -
     
     10,000Exercise of Class D Warrants  at $0.55
     -
     
     -per share during May 2008
     
     
     
     
     20,000
     
     20
     
     10,980
     
     -
     
     -
     
     -
     
     11,000Exercise of Class F Warrants  at $1.25per share during April - May 2008
     -
     
     -
     
     175,000
     
     175
     
     218,575
     
     -
     
     -
     
     -
     
     218,750Stock based compensation
     -
     
     -
     
     -
     
     -
     
     3,600,303
     
     -
     
     -
     
     -
     
     3,600,303Comprehensive income (loss)Foreign currency translation adjustments
     -
     
     -
     
     -
     
     -
     
     -
     
     12,504
     
     -
     
     12,504
     
     12,504Net loss for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (5,721,545)
     
     (5,721,545)
     
     (5,721,545)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     (5,709,041)Balance, August 31, 2008
     -
     
     -
     
     57,754,600
     
     57,755
     
     10,986,585
     
     10,693
     
     (8,113,444)
     
     
     
     2,941,589Reversal of stock based compensation due to forfeitureof stock options
     -
     
     -
     
     -
     
     -
     
     (3,591,093)
     
     -
     
     -
     
     -
     
     (3,591,093)Exercise of Class E Warrants  at $0.60per share during July 2009
     -
     
     -
     
     20,000
     
     20
     
     11,980
     
     -
     
     -
     
     -
     
     12,000Exercise of Class F Warrants  at $1.25per share during July - August 2009
     -
     
     -
     
     826,000
     
     826
     
     1,031,674
     
     -
     
     -
     
     -
     
     1,032,500Stock based compensation
     -
     
     -
     
     -
     
     -
     
     183,312
     
     -
     
     -
     
     -
     
     183,312Comprehensive incomeForeign currency translation adjustments
     -
     
     -
     
     -
     
     -
     
     -
     
     (10,693)
     
     -
     
     (10,693)
     
     (10,693)Net income for the year
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     1,961,175
     
     1,961,175
     
     1,961,175Total comprehensive income
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     1,950,482Balance, August 31, 2009
     -
     
     -
     
     58,600,600
     
     58,601
     
     8,622,458
     
     -
     
     (6,152,269)
     
     
     
     2,528,790Stock based compensation
     -
     
     -
     
     -
     
     -
     
     521,914
     
     -
     
     -
     
     -
     
     521,914Cumulative adjustment upon adoption of ASC 815-40
     -
     
     -
     
     -
     
     -
     
     (1,785,560)
     
     -
     
     (342,771)
     
     -
     
     (2,128,331)Net loss for the nine months ended May 31, 2010
     -
     
     -
     
     -
     
     -
     
     -
     
     -
     
     (551,034)
     
     (551,034)
     
     (551,034)Total comprehensive loss
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     $  (551,034)Balance, May 31, 2010
     -
     
     $  -
     
     58,600,600
     
     $  58,601
     
     $   7,358,812
     
     $   -
     
     $   (7,046,074)
     
     
     
     $  371,339(The accompanying notes are an integral part of these consolidated financial statements)
  
 5


---



NEW ENERGY
      TECHNOLOGIES, INC.(Formerly
      "Octillion Corp.")(A Development
      Stage Company)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS
      ENDED MAY 31, 2010 AND 2009 AND FOR THEPERIOD FROM INCEPTION
      (MAY 5, 1998) TO MAY 31, 2010(Expressed in
      U.S. Dollars)(Unaudited)CumulativeNine Months
      Ended
    
    May 5,
      1998May
    31,
    
    (Inception)
      to2010
    
    2009
    
    May 31,
      2010Cash flows from operating
      activitiesIncome (loss) from continuing
      operations
    $
    (551,034)
    $
    2,825,936
    $
    (6,141,206)Add: loss from
      discontinued operations
    
    -
    
    -
    
    (162,097)Adjustments to reconcile net income (loss) to
      net cash used in operating activitiesDepreciation
    
    -
    
    -
    
    4,482Reversal of
      stock based compensation expense due to forfeiture of stock
      options
    
    -
    
    (3,591,093)
    
    (3,591,093)Stock based
      compensation expense
    
    521,914
    
    48,755
    
    4,305,529Change in fair
      value of warrant liability
    
    (1,721,658)
    
    -
    
    (1,721,658)Loss of
      disposal of fixed assets
    
    -
    
    -
    
    5,307Payable
      written off
    
    -
    
    -
    
    (30,000)Common stock
      issued for services
    
    -
    
    -
    
    3,000Common stock
      issued for debt settlement
    
    -
    
    -
    
    103,332Changes in operating assets and
      liabilities:Decrease
      (increase) in deferred research and development costs
    
    (3,571)
    
    107,904
    
    (43,130)Increase in
      prepaid expenses and other current assets
    
    (17,951)
    
    (577)
    
    (25,537)Increase
      (decrease) in accounts payable
    
    (3,724)
    
    33,486
    
    94,743Increase in
      accrued liabilities
    
    88,150
    
    -
    
    244,259Increase in
      accounts payable - related party
    
    -
    
    -
    
    30,000Net cash used in operating activities
    
    (1,687,874)
    
    (575,589)
    
    (6,924,069)Cash flows from investing
      activityPurchase of fixed assets
    
    -
    
    -
    
    (9,789)Net cash used in investing
      activity
    
    -
    
    -
    
    (9,789)Cash flows from financing
      activitiesProceeds from the issuance of common
      stock and exercise of warrants, net
    
    -
    
    -
    
    8,382,205Repayment of promissory
    note
    
    -
    
    -
    
    (155,000)Proceeds from promissory
      notes
    
    -
    
    -
    
    155,000Dividend paid
    
    -
    
    -
    
    (400,000)Net cash provided by financing
      activities
    
    -
    
    -
    
    7,982,205Increase (decrease) in cash and cash
      equivalents
    
    (1,687,874)
    
    (575,589)
    
    1,048,347Effect of foreign currency
      translation
    
    -
    
    (10,693)
    
    -Cash and cash equivalents at beginning of
      period
    
    2,736,221
    
    2,992,010
    
    -Cash and cash equivalents at end of
      period
    $
    1,048,347
    $
    2,405,728
    $
    1,048,347Supplemental disclosure of cash flow
      information:Interest paid in cash
    $
    -
    $
    267
    $
    11,002Income taxes paid in
cash
    $
    -
    $
    -
    $
    -Supplemental disclosure of non-cash
      transactions:Accrued management fees converted to
      equity
    $
    -
    $
    -
    $
    103,332Warrants issued for broker
      commissions
    $
    -
    $
    -
    $
    642,980(The
      accompanying notes are an integral part of these consolidated financial
      statements)
   
 6


---



NEW ENERGY
TECHNOLOGIES, INC. (Formerly
Octillion Corp.) (A Development Stage Company)  NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  May 31, 2010 (Expressed in U.S. Dollars) (Unaudited)   Note 1:  Organization and Nature of Operations  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), Octillion Technologies Limited (Octillion Technologies)
and New Energy Solar Corporation (New Energy Solar).  Sungen was incorporated on July 11, 2006 in the
State of Nevada and has no assets and no liabilities.  KEC was incorporated on June 19, 2008 in the State
of Nevada and has no assets and no liabilities.  Octillion Technologies was incorporated on April
11, 2007 in the Province of British Columbia, Canada for providing
administrative services to the Companys Canadian office. The Company ceased to
conduct business in Canada on August 31, 2008 and closed this office. As a
result,the Company dissolved Octillion Technologies and
eliminated all intercompany balances, effective December 1, 2008.  New Energy Solar was incorporated on February 9,
2009 in the State of Florida and has no assets and no liabilities.  On August 22, 2007, the Company spun off its
wholly-owned biotechnology subsidiary, MicroChannel Technologies Corporation
(MicroChannel) with the shareholders of the Company. The net assets and
results of operations of MicroChannel of the prior period have been reclassified
as discontinued operations.  Since inception,
the Company has been atechnology incubator focused on the
identification, acquisition, development and eventual commercialization of
emerging technologies initially in the biotech and subsequently in the
alternative energy sectors.However, commencing in August 2007 with the
spinoff of the Companys then wholly-owned subsidiary, MicroChannel Technologies
Corporation, the Company elected to focus all of its resources on alternative
energy technologies.  Accordingly, effective December 2, 2008 the Company
changed its name to New Energy Technologies, Inc. so as to more accurately
reflect its focus on alternative energy technologies.  The Companys
strategy is to develop new technologies and, where warranted, acquire rights to
obtain licenses to technologies and products that are being developed by third
parties, primarily universities and government agencies, through sponsored
research and development agreements.  The Company
conducts its current operations through its two wholly-owned subsidiaries:  ·KEC; and ·New
Energy Solar  The Company is
currently focusing its development efforts on two technologies, namely:
  
 7


---



·MotionPowerTM Technology for capturing the kinetic
energy of moving vehicles in order to use this captured energy to generate
electricity; and  ·SolarWindowTM Technology which enables transparent
glass windows to generate electricity by coating their glass surfaces with the
worlds smallest known solar cells.  Note 2.  Going Concern
Uncertainties  The Company is a development stage company, has not
generated any revenues, has an accumulated deficit of $7,046,074 as of May 31,
2010, 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 Companys ability to establish itself as a profitable
business.  Due to the start-up nature of the Companys
business, the Company expects to incur additional losses as it continues to
develop its technologies. To date, the Companys cash flow requirements have
primarily been met by a private placement of common stock and warrants for net
proceeds of $3,395,955 on February 12, 2008 and proceeds received from the
exercise of warrants.Management recognizes that in order to meet the
Companys capital requirements, and continue to operate, additional financing
will be necessary.The Company expects to raise
additional funds through private or public equity investments in order to
support existing operations and expand the range and scope of its business
operations. The Company will seek access to private or public equity but there
is no assurance that such additional funds will be available for the Company to
finance its operations on acceptable terms, if at all.  Furthermore, there
is no assurance that the net proceeds received from any successful financing
arrangement will be sufficient to cover cash requirements during the initial
stages of the Companys operations.If the Company is unable to raise additional
capital or generate positive cash flow, it is unlikely that the Company will be
able to continue as a going concern.  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 3.  Presentation of Interim Information  The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with Form 10-Q
instructions and in the opinion of management of New Energy Technologies, Inc.,
include all adjustments (of a normal recurring nature) considered necessary to
present fairly the financial position of the Company as of May 31, 2010 and
August 31, 2009 and the related results of operations, stockholders equity
(deficit), and cash flows for the three and nine months ended May 31, 2010 and
2009 and for the cumulative period from May 5, 1998 (inception) to May 31, 2010.
These results have been determined on the basis of generally accepted accounting
principles and practices in the United States and applied consistently with
those used in the preparation of the Companys 2009 Annual Report on Form
10-K.  Certain information and footnote disclosures
normally included in the quarterly financial statements presented in accordance
with generally accepted accounting principles in the United States have been
condensed or omitted. It is suggested that the accompanying unaudited interim
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto incorporated by reference in the
Companys 2009 Annual Report on Form 10-K.
  
 8


---



Note 4.  Summary of Significant Accounting
Policies Estimates The preparation
of the Companys 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 managements application of accounting policies.  
Critical accounting policies for the Company include accounting for research and
development costs and accounting for stock-based compensation. On an on-going
basis, the Company evaluates its estimates.  Actual results and outcomes
may differ materially from these estimates and assumptions. Research and Development  Research and
development costs represent costs incurredto develop the Companys
technology, includingsalaries 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.  During the three
months ended May 31, 2010 and 2009, the Company incurred $72,025 and $98,868 on
research and development activities.  During the nine months ended May 31,
2010 and 2009, the Company incurred $514,152 and $179,838 on research and
development activities.  Stock-based Compensation  The
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 pricing model to
determine the fair value of stock-based compensation awards on the date of
grant.  The Black-Scholes pricing model requires management to make
assumptionsregarding the warrant and option lives, expected
volatility, and risk free interest rates. See Note 9. Warrants and Note 10.
Stock Options for additional information on the Companys stock-based
compensation plans.  Recently Adopted Accounting Pronouncements In
January 2010, the FASB issuedASUNo. 2010-06, Fair Value Measurements and Disclosures, which amends the
disclosure requirements related to recurring and nonrecurring fair value
measurements.  The guidance requires disclosure of transfers of assets and
liabilities between Level 1 and Level 2 of the fair value measurement hierarchy,
including the reasons and the timing of the transfers and information on
purchases, sales, issuance, and settlements on a gross basis in the
reconciliation of the assets and liabilities measured under Level 3 of the fair
value measurement hierarchy. The guidance is effective for annual and interim
reporting periods beginning after December 15, 2009, except for Level 3
reconciliation disclosures which are effective for annual and interim periods
beginning after December 15, 2010. The Company adopted this guidance at the
beginning of its third quarter of fiscal 2010, except for the Level 3
reconciliation disclosures on the rollforward activities, which it will adopt at
the beginning of its third quarter of fiscal 2011. Other than requiring
additional disclosures, the adoption of this standard did not and will not have
a material impact on the Companys consolidated financial position and results
of operations.  Note 5.  Net Income (Loss) Per Share  Basic net income
(loss) per share is computed by dividing the net income (loss) by the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of common and dilutive common equivalent shares
outstanding during the period.  During the three
and nine months ended May 31, 2010 and the three months ended May 31, 2009, the
Company recorded a net loss.  Therefore, the issuance of shares of common
stock from the exercise of stock options or
  
 9


---



warrants would
be anti-dilutive.  Excluded from the computation of diluted net loss per
share for the three and nine months ended May 31, 2010, because their effect
would be anti-dilutive, are stock options and warrants to acquire 6,138,500
shares of common stock with a weighted-average exercise price of $0.91 per
share.  Excluded from the computation of diluted net loss per share for the
three months ended May 31, 2009, because their effect would be anti-dilutive,
are stock options and warrants to acquire 4,284,500 shares of common stock with
a weighted-average exercise price of $1.23 per share.  During the nine
months ended May 31, 2009, stock options and warrants to purchase 4,284,500
shares of common stock with a weighted-average exercise price of $1.23 per share
were not included in the diluted earnings per share computation as the effects
would have been anti-dilutive.  For purposes of
earnings per share computations, shares of common stock that are issuable at the
end of a reporting period are included as outstanding.  Following is the computation of basic and diluted
net income per share for the three and nine months ended May 31, 2010 and
2009:  Three Months
      Ended
    
    Nine Months
      EndedMay 31,
    
    May
  31,2010
    
    2009
    
    2010
    
    2009Basic and Diluted EPS
      ComputationNumerator: net income (loss)
    
    $ 
      (506,025)
    
    $    
    (231,482)
    
    $ 
      (551,034)
    
    $   
      2,825,936Denominator:Weighted average number of common shares
      outstanding - basic and diluted
    58,600,600
    
    57,754,600
    
    58,600,600
    
    57,754,600Basic and diluted net income (loss) per common
      share
    
    $      
      (0.01)
    
    $         
      (0.00)
    
    $      
      (0.01)
    
    $           
      0.05
  Note
6.SolarWindowTM Technology  Current Research Agreements  USF
Sponsored Research Agreement and Option Agreement  On May 20, 2009,
the Company, through its wholly-owned subsidiary,  New Energy Solar
Corporation(New Energy Solar), entered into a
research agreement (the USF Sponsored Research Agreement) with University of
South Florida Board of Trustees (USF), for support to the project entitled
Semitransparent Flexible Power Foil (SFPF) relating to the development of
a  prototype flexible semi-transparentorganic power foil (1ft by 1ft dimension) for use
as an energy-generating window glass in building-integrated photovoltaic
products (the USF Technology).  Pursuant to Rule 24b-2, the Company
submitted a request to the SEC for confidential treatment of certain portions of
the USF Sponsored Research Agreement, relating to the payment terms, scope of
work under the USF Sponsored Research Agreement. The Companys request was
granted by the SEC on June 11, 2009. Accordingly, the terms of the USF Sponsored
Research Agreement have not been disclosed.  On June 21, 2010, the Company, through its
wholly-owned subsidiary, New Energy Solar, also entered into a License Agree
Agreement (the USF License Agreement) with the University of South Florida
Research Foundation, Inc., a corporation not for profit under Chapter 617
Florida Statutes, and a direct support organization of USF, pursuant to which
New Energy Solar has obtained exclusive worldwide commercial license under
certain patents relating to the USF Technology. Pursuant to Rule 24b-2, on June
28, 2010 the Company submitted a request to the SEC for confidential treatment
of certain portions of the USF License Agreement (the USF CTR), relating to
the payment terms, scope of work under the USF Option Agreement. The USF CTR is
pending.
  
 10


---



Terminated Research Agreements  UIUC
Sponsored Research Agreement  On
August 25, 2006, through its wholly-owned subsidiary, Sungen Energy, Inc.
(Sungen), the Company entered into a Sponsored Research Agreement (UIUC
Sponsored Research Agreement) with the University of Illinois at
Urbana-Champaign (UIUC) for the development of a new patent-pending technology
to integrate films of silicon nanoparticle material on glass substrates, acting
as photovoltaic solar cells that have the potential to convert normal home and
office glass windows into ones capable of converting solar energy into
electricity, with limited loss of transparency and minimal changes in
manufacturing infrastructure (the UIUC Silicon Nanoparticle Energy
Technology). On July 23, 2007, the Company through its wholly owned subsidiary,
Sungen, amended its Sponsored Research Agreement with the UIUC.  Pursuant
to this amended Sponsored Research Agreement, the Company agreed to provide an
additional $203,617 to the previously awarded amount of $219,201 for a total of
$422,818, to the University of Illinois in order to accelerate the development
of films of silicon nanoparticle material composed of nanosilicon photovoltaic
solar cells that have the potential to convert solar radiation to electrical
energy.  The
UIUC Sponsored Research Agreement expired on August 22, 2008.  As of this
date, the Company had advanced a total of $266,709 to the University of Illinois
pursuant to the terms of the UIUC Sponsored Research Agreement.  Pursuant
to the terms of the UIUC Sponsored Research Agreement, the Company was to
advance an additional $156,109 to the University of Illinois, which is included
in other accrued liabilities at May 31, 2010 and August 31, 2009.  However,
the Company has not made the advance pending determination as to whether funds
previously paid to UIUC under the terms of the UIUC Sponsored Research Agreement
have been fully expended.  The Company is of the opinion that to the extent
these funds were not expended they are refundable to the Company.  During both the three and nine month periods ended
May 31, 2010 and 2009, the Company did not record any research and development
expense pursuant to the UIUC Sponsored Research Agreement. During the period
from inception (May 5, 1998) to May 31, 2010, the Company recorded $422,818 as
research and development expense pursuant to the UIUC Sponsored Research
Agreement.  Oakland Sponsored Research
Agreement  On
August 18, 2008, the Company entered into a two-year Sponsored Research
Agreement (Oakland Sponsored Research Agreement) with scientists at Oakland
University to further the development of the Companys photovoltaic technology
for generating electricity on transparent glass windows.  Pursuant to the
terms of the Oakland Sponsored Research Agreement the Company agreed to advance
a total of $348,066 to fund the research and development activities of which
$140,519 was payable on or before September 1, 2008, $127,547 was payable on or
before October 1, 2009 and $80,000 was payable on demand during the contract
period for reimbursement of materials provided by Oakland University.  In
August 2008, the Company advanced $140,519 to Oakland University pursuant to the
Oakland Sponsored Research Agreement.In February 2009, the
Company, in order to preserve its working capital, decided that it was in its
best interest not to proceed forward with the Oakland Sponsored Research
Agreement and exercised its termination right by providing written notice to
Oakland University of its election to terminate the Oakland Sponsored Research
Agreement. As of the termination date of the Oakland Sponsored Research
Agreement, $20,220 of the $140,519 initially advanced to Oakland University had
been expended, all during the quarter ended February 28, 2009, and is included
in research and development expense for the nine months ended May 31,
2009.  The remaining $120,299 was refunded to the Company in April
2009.
  
 11


---



Note
7. MotionPowerTM Technology  Veryst Agreement  On November 4,
2008, the Company, through its wholly-owned subsidiary, KEC, entered into
an agreement with Veryst Engineering LLC (the Veryst Agreement) relating to
the development of a car and truck energy harvester.  The Veryst Agreement
continues until terminated by either Veryst Engineering LLC or KEC. 
Pursuant to Rule 24b-2 the Company submitted a request for confidential
treatment of certain portions of the Veryst Agreement, relating to the payment
terms, scope of work and the milestone terms of the license agreement under the
Veryst Agreement. The Companys request was granted on November 25, 2008.  On September 9,
2009, the Company entered into an agreement with Veryst Engineering, LLC
(Veryst) whereby Veryst is performing ongoing testing of the Companys vehicle
energy harvester and advancing prototyping.  Additionally, on
September 9, 2009, the Company entered into an agreement with Veryst, whereby
Veryst is developing a commercial scale truck energy harvester.  During the three and nine months ended May 31,
2010, the Company recorded $46,969 and $280,259 as research and development
expense pursuant to the agreements with Veryst entered into on September 9,
2009.During the period from inception (May
5, 1998) to May 31, 2010, the Company recorded $284,435 as research and
development expense pursuant to these same agreements.  The Company continues to utilize Veryst, on a
consulting basis, to further test and calibrate theMotionPowerTM Technology.  Sigma Design Agreement  On
May 1, 2009, KEC entered into a consulting agreement (the Initial Sigma
Consulting Agreement) with Sigma Design Company (Sigma Design) whereby Sigma
Design provides ongoing engineering and product development services relating to
the development of the MotionPowerTM Technology.  On August 25, 2009, KEC
entered into an additional consulting agreement with Sigma Design whereby Sigma
Design continues to provide engineering services relating to the development of
the MotionPowerTM Technology (the Additional Sigma Consulting Agreement and,
together with the Initial Sigma Consulting Agreement, collectively the Sigma
Design Agreements). Each of the Sigma Design Agreements may be terminated by
either Sigma Design or KEC upon 30 days written notice to the other party. 
The Company has also engaged Sigma Design to assist the Company in conducting
durability field tests of its MotionPowerTM Technology.  During the three and nine months ended May 31,
2010, the Company recorded $0 and $121,025 as research and development expense
pursuant to the Sigma Design Agreements and services provided for the durability
field tests.  During both the three and nine month periods ended May 31,
2009, the Company recorded $18,847 as research and development expense pursuant
to the Sigma Design Agreements.  During the period from inception (May 5,
1998) to May 31, 2010, the Company recorded $202,694 as research and development
expense pursuant to the Sigma Design Agreements and services provided for the
durability field tests.  Note 8. Capital Stock  Preferred Stock  At May 31, 2010 there were 1,000,000 shares of
preferred stock (par value $0.10 per share) authorized, of which no shares were
issued and outstanding.  The Board of Directors has the authority to issue
such stock in one or more series, to fix the number of shares and to fix and
determine the relative rights and preferences of the shares of any such series
so established to the full extent permitted by the laws of the State of Nevada
and the Articles of Incorporation.
  
 12


---



Common Stock  On February 12, 2008, the Company consummated the
sale of an aggregate of 3,675,000 shares of its common stock and Class F
Callable Warrants to purchase up to an additional 3,675,000 shares of the
Companys common stock for aggregate gross proceeds of $3,675,000 pursuant to
the terms of a Securities Purchase Agreement dated February 8, 2008 (the 2008
Private Placement) with certain institutional and other accredited investors,
as defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the Investors).  The Class F Callable Warrants are
exercisable for a period of three years from the date of issuance at an initial
exercise price of $1.25 per share.  The number of shares issuable upon exercise of the
Class F Callable Warrants and the exercise price of the Class F Callable
Warrants are adjustable in the event of stock splits, combinations and
reclassifications, but not in the event of the issuance by the Company of
additional securities, unless such issuance is at a price per share which is
less than the then applicable exercise price of the Class F Callable Warrants
(Dilutive Issuance), in which event then the exercise price shall be reduced
and only reduced to equal the lower issuance price and the number of shares
issuable upon exercise thereof shall be increased such that the aggregate
exercise price payable thereunder, after taking into account the decrease in the
exercise price, shall be equal to the aggregate exercise price prior to such
adjustment.  The potential adjustment to the Class F Callable Warrants
exercise price and number of underlying shares of common stock results in a
settlement amount that does not equal the difference between the fair value of a
fixed number of the Companys common stock and a fixed exercise price. 
Accordingly, the Class F Callable Warrants are not considered indexed to the
Companys own stock and therefore need to be accounted for as a
derivative.  As of May 31, 2010 the Company has not sold any shares of
common stock or common stock equivalents that would result in an adjustment to
the exercise price or number of shares of common stock underlying the Class F
Callable Warrants. See Note 9. Warrants.  The Class F Callable Warrants are callable by the
Company, at a repurchase price of $0.001 per warrant, subject to certain
conditions, after the earlier to occur of (i) the expiration of the then
applicable hold periods for a cashless exercise under Rule 144 as promulgated
pursuant to the Securities Act of 1933, as amended or (ii) the date the
registration statement filed pursuant to the Registration Rights Agreement is
declared effective by the SEC, which was declared effective by the SEC on March
21, 2008, if New Energy Technologies, Inc.s common stock, the volume weighted
average price for each of 5 consecutive Trading Days exceeds $1.75.  Pursuant to the 2008 Private Placement and the
Registration Rights Agreement, the Company and the Investors have made other
covenants and representations and warranties regarding matters that are
customarily included in financings of this nature.  The Company engaged an agent (the Agent) to help
in the fund raising efforts of the 2008 Private Placement.  The Agent was
paid a total cash fee of 7% ($257,250) of the aggregate gross proceeds and Class
F Callable Warrants to purchase 514,500 shares of the Companys common stock
valued at $642,980 and representing 7% of the total number of shares purchased
by the Investors. In addition, the Agent was reimbursed $6,045 for expenses
incurred on behalf of the Company.  At the time of grant, the fair value of the
4,189,500 Class F Callable warrants was $5,236,875, using the Black-Scholes
Option Pricing Model with the following weighted average assumptions: dividend
yield of 0%, expected volatility of 159.33%, risk-free interest rates of 4.76%,
and expected lives of 3 years.  The proceeds received pursuant to the 2008
Private Placement allocated to the warrants were $2,337,885.  Note 9.  Warrants  Class E Warrants  On April 23, 2010, the Companys outstanding
100,000 Class E Warrants expired unexercised.  Therefore, as of May 31,
2010, there are no Class E Warrants outstanding.
  
 13


---



Class F Callable Warrants  On February 12, 2008, the Company completed the 2008 Private Placement (see Note 8. Capital Stock).  Pursuant to the 2008 Private Placement and payment of a commission to an Agent, the Company issued 4,189,500 Class F Callable Warrants, each to purchase a share of common stock at $1.25 per share, expiring on February 12, 2011.  Refer to Note 8. Capital Stock - Common Stock for additional disclosures regarding the terms and conditions related to the Class F Callable Warrants.  As of May 31, 2010, there were 3,188,500 Class F Callable Warrants outstanding and exercisable.  Class F Callable Warrant Liability  On September 1, 2009, the Company adopted guidance which is now part of ASC 815-40,Contracts in Entitys Own Equity.The Company determined that its Class F Callable Warrants contained a Dilutive Issuance provision.  As a result, the Company reclassified 3,188,500 of its Class F Callable Warrants to long-term warrant liability, resulting in a cumulative adjustment to accumulated deficit as of September 1, 2009 of $342,771.  The Companys Class F Callable Warrants are considered derivative financial liabilities and are therefore required to be adjusted to fair value each quarter.  Fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entitys own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).  The Company has valued its warrant liability at May 31, 2010 using a Black-Scholes model (Level 3 inputs) containing the following assumptions:  dividend yield of 0%, expected volatility of 104.62%, risk-free interest rate of 0.22%, and expected term of 0.7 years.  The Company recorded non-cash gains related to the Class F Callable Warrants of $165,660 and $1,721,658 during the three and nine months ended May 31, 2010.  The Company does not intend to sell any shares of common stock or common stock equivalents at a price that is below the exercise price of Class F Callable Warrants, prior to their expiration date of February 12, 2011, whichwould result in an adjustment to the exercise price or number of shares of common stock underlying theClass F Callable Warrants.Since the Company determined that the future probability of a Dilutive Issuance is deemed unlikely, it did not have a material impact on the fair value of the Class F Callable Warrants at May 31, 2010.  The following reconciles the warrant liability for the nine months ended May 31, 2010:  Beginning Balance, September 1, 2009
     $
     2,128,331Change in fair value of warrant liability
     
     (1,721,658)Ending Balance, May 31, 2010
     $
     406,673
   There were no Class E Warrants or Class F Callable Warrants granted or exercised during the three and nine months ended May 31, 2010. Note 10. Stock Options  On October 10, 2006, the Board of Directors (the Board) of the Company adopted and approved the 2006 Incentive Stock Option Plan (the 2006 Stock Plan) that provides for the grant of stock options to employees, directors, officers and consultants. The 2006 Plan provides for the granting of stock options to purchase a maximum of 15,000,000 shares of the Companys common stock.  Stock options granted to employees under the Companys
  
 14


---



2006 Plan generally vest over two to five years or as otherwise determined by the plan administrator. Stock options to purchase shares of the Companys common stock expire no later than ten years after the date of grant.  The per share exercise price for each stock option is determined by the Board and may not be below fair market value on the date of grant.  The fair market value of the Companys common stock is the closing price of the common stock as listed on the Over the Counter Bulletin Board  (the OTCBB) on the date of grant or, if the Companys common stock is not traded on the date of grant, the first day of active trading following the date of grant.  The Company measures all 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 grant date fair value of stock options is based on the price of a share of the Companys common stock on the date of grant.  In determining the grant date fair value of stock options, the Company uses the Black-Scholes option pricing model whichrequires management to make assumptionsregarding the option lives, expected volatility, and risk free interest rates, all of which impact the fair value of the option and, ultimately, the expense that will be recognized over the life of the option.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a bond with a similar term.  The Company does not anticipate declaring dividends in the foreseeable future.  Volatility is calculated based on the historical weekly closing stock prices for the same period as the expected life of the option.  The Company uses the simplified method for determining the expected term of its plain vanilla stock options.  The Company recognizes compensation expense for only the portion of stock options that are expected to vest.  Therefore, the Company applies an estimated forfeiture rate that is derived from historical employee termination data and adjusted for expected future employee turnover rates.  If the actual number of forfeitures differs from those estimated by the Company, additional adjustments to compensation expense may be required in future periods.  A summary of the Companys stock option activity for the nine months ended May 31, 2010 and related information follows:  Number of Options
     
     Weighted Average Exercise Price
     
     Weighted Average Remaining Contractual Term
     
     Aggregate Intrinsic ValueOutstanding at August 31, 2009
     
     2,150,000
     
     $      0.56Grants
     
     800,000
     
     0.50Outstanding at May 31, 2010
     
     2,950,000
     
     $      0.54
     
     7.8 years
     
     $  578,000Exercisable at May 31, 2010
     
     350,000
     
     $      0.53
     
     4.9 years
     
     $   86,800Available for grant at May 31, 2010
     
     12,050,000
  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 its third quarter of 2010 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on May 28, 2010 (May 31, 2010 was a Monday, Memorial Day, which is considered a national holiday). The intrinsic value changes based on the fair market value of the Companys common stock.  Stock Option Grants During the Quarter Ended May 31, 2010  On April 6, 2010, the Company entered into an Amendment to the Employment Agreement dated June 24, 2009 with Mr. Meetesh Patel (the Amended Employment Agreement), the Companys Chief Executive Officer,
  
 15


---



President, and
Chief Financial Officer.  Mr. Patel is also one of the Companys
directors.  Pursuant to the Amended Employment Agreement, Mr. Patel agreed
to continue to serve as the Companys President and Chief Executive Officer,
until March 31, 2011 (the Employee Employment Commitment).  In
consideration of the Employee Employment Commitment, Mr. Patel was granted a
stock option to purchase up to 150,000 shares of the Companys common stock at
an exercise price of $0.58 per share, the fair market value of the Companys
common stock on the date of grant as quoted on the OTCBB on April 6, 2010, the
date of grant.  The stock option expires five years from the date of grant
on April 6, 2015. Subject to the terms, restrictions and earlier termination
provisions as set forth in the option agreement dated April 6, 2010 between the
Company and Mr. Patel, the option vests as follows:  (a)as to 37,500 on
June 30, 2010; (b)as to 37,500 on
September 30, 2010; (c)as to 37,500 on
December 31, 2010; and (d)as to 37,500 on
March 31, 2011.  The grant date fair value of the 150,000 stock
options granted Mr. Patel was $72,403, estimated using the Black-Scholes option
pricing model with the following weighted average assumptions:expected volatility of 139.58%, risk-free interest
rate of 2.71%, expected life of 3.75 years, and a 0% dividend yield.  On April 1,
2010, the Company entered into a consulting agreement with Mr. John A. Conklin
whereby Mr. Conklin will provide technical advice, guidance, and management
oversight to help advance the commercial development of the Companys
technologies, including but not necessarily limited to its SolarWindowTM and
MotionPowerTM technologies.  In consideration of Mr. Conklins services, the
Company will pay Mr. Conklin $11,000 per calendar month for the first three
calendar months of the consulting agreement and $12,444 for each calendar month
of service thereafter.  In additional consideration of Mr. Conklins
services, the Company granted Mr. Conklin a stock option to purchase up to
250,000 shares of the Companys common stock at an exercise price of $0.54 per
share, the fair market value of the Companys common stock on the date of grant
as quoted on the OTCBB.  The stock option expires five years from the date
of grant on April 1, 2015. The stock option granted Mr. Conklin vests upon the
achievement of specific technical, product development, and/or business
milestones.  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 Mr. Conklin ceases to provide consulting
services to the Company.  Upon termination of such service, Mr. Conklin
will have a specified period of time to exercise vested stock options, if any.
The grant date fair value of the 250,000 stock options granted Mr. Conklin was
$119,975, estimated using the Black-Scholes option pricing model with the
following weighted average assumptions:expected volatility of
139.53%, risk-free interest rate of 2.59%, expected life of five years, and a 0%
dividend yield.  The following table sets forth the share-based
compensation cost resulting from stock option grants, including those previously
granted and vesting over time,  that was recorded in the Companys
consolidated statements of operations for the three and nine months ended May
31, 2010 and 2009:  Three Months
      Ended
    
    
    Nine Months
      EndedMay 31,
    
    
    May
  31,2010
    
    2009
    
    
    2010
    
    2009Wages and benefits
    $
    85,369
    $
    -
    
    $
    451,661
    $
    (3,573,778)Professional fees
    
    
    26,557
    
    13,078
    
    
    70,253
    
    31,440Total
    
    $
    111,926
    $
    13,078
    
    $
    521,914
    $
    (3,542,338)
  The share-based compensation expense table above
includes the reversal of stock compensation expense related to stock options
that were previously granted and forfeited.  During the three months ended February 28, 2009,
the Company recorded a reversal ofstock compensation expense previously recorded of
$4,053, which is included inmanagement fees  related party.  Upon the resignation of Mr. Frank Fabio as
Chief Financial Officer of the Company on January 9, 2009, 50,000 stock options
that were previously granted were forfeited.
  
 16


---



During the nine months ended May 31, 2009, the
Company recorded a reversal ofstock compensation expense previously recorded of
$3,591,093, of which $3,573,778 is included in wages and benefits and $17,315 is
included in professional fees.  Upon the resignation of Mr. Frank Fabio as
Chief Financial Officer of the Company on January 9, 2009, 50,000 stock options
that were previously granted him were forfeited. Mr. Nicholas Cucinelli, the
Companys former President and Chief Operating Officer forfeited 1,250,000 stock
options upon his resignation on October 15, 2008 and Mr. Gladwin forfeited
50,000 stock option upon his resignation as a Board member on September 9,
2008.  As of May 31, 2010, the Company had $720,883 of
total unrecognized compensation cost related to unvested stock options which is
expected to be recognized over a period of four years.  The following table summarizes information about
stock options outstanding and exercisable at May 31, 2010:  Stock
      Options Outstanding
    
    
    
    
    
    Stock
      Options ExercisableWeighted
    
    
    
    
    
    WeightedAverage
    
    Weighted
    
    
    
    Average
    
    WeightedNumber
      of
    
    Remaining
    
    Average
    
    Number
      of
    
    Remaining
    
    AverageOptions
    
    Contractual
    
    Exercise
    
    Options
    
    Contractual
    
    ExerciseExercise
      Prices
    
    Outstanding
    
    Life
      (Years)
    
    Price
    
    Exercisable
    
    Life
      (Years)
    
    Price$
    0.44
    
    400,000
    
    4.6
    $
    0.44
    
    310,000
    
    4.6
    $
    0.440.52
    
    2,000,000
    
    9.1
    
    0.52
    
    
    
    
    
    0.54
    
    250,000
    
    4.8
    
    0.54
    
    
    
    
    
    0.58
    
    150,000
    
    4.9
    
    0.58
    
    
    
    
    
    0.85
    
    100,000
    
    8.3
    
    0.85
    
    20,000
    
    8.3
    
    0.851.66
    
    50,000
    
    7.8
    
    1.66
    
    20,000
    
    7.8
    
    1.66$
    0.44  $ 1.66
    2,950,000
    
    7.8
    $
    0.54
    
    350,000
    
    4.9
    $
    0.53
   The Company does not repurchase shares to fulfill
the requirements of options that are exercised. Further, the Company issues new
shares when options are exercised.  Note 11.  Related Party Transactions  Non-employee
Board members receive $2,500 per quarter for services rendered in the capacity
of a Board member.  During the three months ended May 31, 2010, the
Company incurred $20,927, including stock compensation of $13,427, for services
rendered by non-employee directors of the Company, which is included in
professional fees.  During thenine months ended May 31, 2010, the Companyincurred $79,623, including stock compensation of
$57,123, for services rendered by non-employee directors of the Company, which
is included in professional fees.  During the three and nine months ended May 31,
2010, the law firm of Sierchio & Company, LLP (S&C LLP), the Companys
corporate and securities legal counsel, provided $121,892 and $203,232 of legal
services to the Company.  Joseph Sierchio, a non-employee director of the
Company, is a principal of S&C LLP.  At May 31, 2010, the Company owed
S&CG LLP $26,185 which is included in accounts payable.  The Companys
corporate office is located at 3905 National Drive, Suite 110, Burtonsville,
Maryland 20866. On December 1, 2009, the Company entered into a one year
sublease agreement with MVP Law Group, P.A., of which the Companys Chief
Executive Officer and President is a founder and managing attorney, with respect
to this office space.  Monthly rent is $900.  Additionally, the
Company paid a $900 security deposit.
  
 17


---



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.
  
 18


---



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 the words 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
sponsored 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 and 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.  The following
Managements Discussion and Analysis (MD&A) is intended to help the reader
understand our consolidated results of operations and financial condition. The
MD&A is provided as a supplement to, and should be read in conjunction with
our consolidated financial statements and the accompanying notes to the
consolidated financial statements included in this Form 10-Q.  Our discussion
and analysis of our financial condition and results of operations is based on
our consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities
and expenses and related disclosures. We review our estimates on an ongoing
basis.  Overview  We were incorporated in the State of Nevada on May
5, 1998, under the name Octillion Corp. On December 2, 2008, we amended our
Articles of Incorporation to effect a change of name to New Energy Technologies,
Inc.  The accompanying consolidated financial statements include the
accounts of New Energy Technologies, Inc. and its wholly-owned subsidiaries,
Sungen Energy, Inc. (Sungen), Kinetic Energy Corporation (KEC), Octillion
Technologies Limited (Octillion Technologies) and New Energy Solar Corporation
(New Energy Solar).
  
 19


---



Sungen was incorporated on July 11, 2006 in the
State of Nevada and has no assets and no liabilities.  KEC was incorporated on June 19, 2008 in the State
of Nevada and has no assets and no liabilities.  Octillion Technologies was incorporated on April
11, 2007 in the Province of British Columbia, Canada for providing
administrative services to the Canadian office. We ceased to conduct business in
Canada on August 31, 2008 and closed this office. As a result, we dissolved
Octillion Technologies and eliminated all intercompany balances, effective
December 1, 2008.  New Energy Solar was incorporated on February 9,
2009 in the State of Florida and has no assets and no liabilities.  Our
research and development activities include the development of a technology to
adapt home and office glass windows, skylights, and building facades into
products capable of generating electricity from solar energy without losing
significant transparency or requiring major changes in manufacturing
infrastructure, and technologies to harness the kinetic energy of vehicles to
generate electricity.  Ultimately, we plan to market MotionPowerTM
Technology and/or SolarWindowTM Technology products, if any, subject to receiving
any requisite regulatory approvals, through co-marketing, co-promotion,
licensing and distribution arrangements with third party collaborators. The
decision as to which method or methods of commercialization we will pursue will
depend on various factors including, but not limited to, our financial resources
at the time, manufacturing costs, market acceptance of the product(s), and
competing technologies or products at the time.  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.
Currently no such products or arrangements exist, nor can we currently project
with any degree of accuracy when, if ever, such products or arrangements may
exist.  If we do not ultimately commercialize products derived from our
MotionPowerTM Technology and/or SolarWindowTM Technology we will not generate
revenues from our operations as currently conducted.  Our
success will be dependent upon our ability to develop products that are superior
to existing products and products introduced in the future, and which are cost
effective. In addition, we may be required to continually enhance any products
that are developed as well as introduce new products that keep pace with
technological change and address the increasingly sophisticated needs of the
marketplace. There can be no assurance that we will be able to keep pace with
the technological demands of the marketplace or successfully develop products
that will succeed in the marketplace.  We
cannot currently estimate with any accuracy the amount of either the additional
funds or time required to successfully commercialize either technology, because
the actual cost and time may vary significantly depending on results of current
basic research and development and product testing, cost of acquiring an
exclusive license, changes in the focus and direction of our research and
development programs, competitive and technological advances, the cost of
filing, prosecuting, defending and enforcing patent claims, the regulatory
approval process, manufacturing, marketing and other costs associated with
commercialization of products following receipt of regulatory approvals and
other factors.  Because we are a smaller reporting company, we are
not required to make certain disclosures otherwise required to be made on a Form
10-Q.
  
 20


---



SolarWindowTM Technology  Current Research Agreements  USF
Sponsored Research Agreement and Option Agreement  On
May 20, 2009, our wholly-owned subsidiary, New Energy Solar, entered into the
USF Sponsored Research Agreement with USF, for support to the project entitled
Semitransparent Flexible Power Foil (SFPF) relating to the development of a
prototype flexible semi-transparent organic power foil (1ft by 1ft dimension)
for use as an energy-generating window glass in building-integrated photovoltaic
products which we refer to in this Prospectus as the SolarWindowTM
Technology.  Pursuant to Rule 24b-2 we submitted a request to the SEC for
confidential treatment of certain portions of the USF Sponsored Research
Agreement, relating to the payment terms and scope of work under the USF
Sponsored Research Agreement; our request was granted by the SEC on June 11,
2009. Accordingly, the terms of the USF Sponsored Research Agreement have not
been disclosed.  On
May 20, 2009, our wholly-owned subsidiary, New Energy Solar, also entered into
an Option Agreement (the USF Option Agreement) with the University of South
Florida Research Foundation, Inc., a corporation not for profit under Chapter
617 Florida Statutes, and a direct support organization of USF, pursuant to
which New Energy Solar has the right to an exclusive option to obtain an
exclusive worldwide commercial license under certain patents relating to the
SolarWindowTM Technology. Pursuant to Rule 24b-2 we submitted a request to the
SEC for confidential treatment of certain portions of the USF Option Agreement,
relating to the payment terms and scope of work under the USF Option Agreement;
our request was granted by the SEC on June 11, 2009. Accordingly, these terms of
the USF Option Agreement have not been disclosed.  Terminated Research Agreements  UIUC
Sponsored Research Agreement  On
August 25, 2006, through our wholly owned subsidiary, Sungen, we entered into a
Sponsored Research Agreement (UIUC Sponsored Research Agreement) with the
University of Illinois at Urbana-Champaign (UIUC) for the development of a new
patent-pending technology to integrate films of silicon nanoparticle material on
glass substrates, acting as photovoltaic solar cells that have the potential to
convert normal home and office glass windows into ones capable of converting
solar energy into electricity, with limited loss of transparency and minimal
changes in manufacturing infrastructure (the UIUC Silicon Nanoparticle Energy
Technology). On July 23, 2007, Sungen, amended its Sponsored Research Agreement
with UIUC. Pursuant to this amended Sponsored Research Agreement, we agreed to
provide an additional $203,617 to the previously awarded amount of $219,201 for
a total of $422,818, to the University of Illinois in order to accelerate the
development of films of silicon nanoparticle material composed of nanosilicon
photovoltaic solar cells that have the potential to convert solar radiation to
electrical energy.  The
UIUC Sponsored Research Agreement expired on August 22, 2008. As of this date,
we had advanced a total of $266,709 to the University of Illinois pursuant to
the terms of the UIUC Sponsored Research Agreement. Pursuant to the terms of the
UIUC Sponsored Research Agreement, we were to advance an additional $156,109 to
the University of Illinois, which is included in other accrued liabilities at
May 31, 2010 and August 31, 2009. However, we have not made the advance pending
determination as to whether funds previously paid to UIUC under the terms of the
UIUC Sponsored Research Agreement have been fully expended. We are of the
opinion that to the extent these funds were not expended they are refundable to
us.  During both the three and nine month periods ended
May 31, 2010 and 2009, we did not record any research and development expense
pursuant to the UIUC Sponsored Research Agreement. During the period from
inception (May 5, 1998) to May 31, 2010, we recorded $422,818 as research and
development expense pursuant to the UIUC Sponsored Research
Agreement.
  
 21


---



Oakland Sponsored Research
Agreement  On
August 18, 2008, we entered into a two-year Sponsored Research Agreement
(Oakland Sponsored Research Agreement) with scientists at Oakland University
to further the development of our photovoltaic technology for generating
electricity on transparent glass windows.  Pursuant to the
terms of the Oakland Sponsored Research Agreement we agreed to advance a total
of $348,066 to fund the research and development activities of which $140,519
was payable on or before September 1, 2008, $127,547 was payable on or before
October 1, 2009 and $80,000 was payable on demand during the contract period for
reimbursement of materials provided by Oakland University.  In August 2008,
we advanced $140,519 to Oakland University pursuant to the Oakland Sponsored
Research Agreement.In February 2009, in order to preserve
our working capital, we decided that it was in our best interest not to proceed
forward with the Oakland Sponsored Research Agreement and exercised our
termination right by providing written notice to Oakland University of our
election to terminate the Oakland Sponsored Research Agreement. As of the
termination date of the Oakland Sponsored Research Agreement, $20,220 of the
$140,519 initially advanced to Oakland University had been expended, all during
the quarter ended February 28, 2009, and is included in research and development
expense for the nine months ended May 31, 2009.  The remaining $120,299 was
refunded to us in April 2009.  MotionPowerTM Technology  Veryst Agreement  On
November 4, 2008, our wholly-owned subsidiary, KEC, entered into an agreement
(the Veryst Agreement) with Veryst Engineering LLC (Veryst) relating to the
development of a car and truck energy harvester . The Veryst Agreement continues
until terminated by either Veryst Engineering LLC or KEC. Pursuant to Rule 24b-2
we submitted a request for confidential treatment of certain portions of the
Veryst Agreement, relating to the payment terms, scope of work and the milestone
terms of the license agreement under the Veryst Agreement.  Our request was
granted on November 25, 2008.  On
September 9, 2009, we entered into another agreement with Veryst whereby Veryst
is performing ongoing testing of our vehicle energy harvester and advancing
prototyping.  Additionally, on September 9, 2009, we entered into
an agreement with Veryst, whereby Veryst is developing a commercial scale truck
energy harvester.  During the three and nine months ended May 31,
2010, we recorded $46,969 and $280,259 as research and development expense
pursuant to the agreements with Veryst entered into on September 9, 2009.During the period from inception (May 5, 1998) toMay 31, 2010, we recorded $284,435 as research and development
expense pursuant to these same agreements.  We continue to utilize Veryst, on a consulting
basis, to further test and calibrate ourMotionPowerTM Technology.  Sigma Design Agreement  On
May 1, 2009, KEC entered into a consulting agreement (the Initial Sigma
Consulting Agreement) with Sigma Design Company (Sigma Design) whereby Sigma
Design provides ongoing engineering and product development services relating to
the development of the MotionPowerTM Technology.  On August 25, 2009, KEC
entered into an additional consulting agreement with Sigma Design whereby Sigma
Design continues to provide engineering services relating to the development of
the MotionPowerTM Technology (the Additional Sigma Consulting Agreement and,
together with the Initial Sigma Consulting Agreement, collectively the Sigma
Design Agreements). Each of the Sigma Design Agreements may be terminated by
either Sigma Design or us upon 30 days written notice to the other party.
 The Company has also engaged Sigma Design to assist the Company in
conducting durability field tests of its MotionPowerTM Technology.
  
 22


---



During the three and nine months ended May 31,
2010, we recorded $0 and $121,025 as research and development expense pursuant
to the Sigma Design Agreements and services provided for the durability field
tests.   During both the three and nine month periods ended May 31,
2009, recorded $18,847 as research and development expense pursuant to the Sigma
Design Agreements.    During the period from inception (May 5,
1998) to May 31, 2010, we recorded $202,694 as research and development expense
pursuant to the Sigma Design Agreements and services provided for the durability
field tests.  Nerve Regeneration Technology  On August 22, 2007, we spun off our wholly-owned
biotechnology subsidiary, MicroChannel Technologies Corporation (MicroChannel)
with our shareholders. The net assets and results of operations of MicroChannel
of the prior period have been reclassified as discontinued operations.  Results of Operations  Operating Expenses  A summary of our operating income (expense) for the
three and nine months ended May 31, 2010 and 2009 was as follows:  Three Months
      EndedMay 31,
    
    
    
    Increase /
    
    Percentage2010
    
    2009
    
    
    (Decrease)
    
    ChangeOperating (income) expenseInvestor relations
    $
    30,245
    $
    12,312
    
    $
    17,933
    
    146
    %Marketing
    
    
    222,677
    
    11,015
    
    
    211,662
    
    1,922Wages and benefits
    
    132,463
    
    40,369
    
    
    92,094
    
    228Professional fees
    
    136,847
    
    47,903
    
    
    88,944
    
    186Research and development
    
    72,025
    
    98,868
    
    
    (26,843)
    
    (27)Travel and entertainment
    
    22,380
    
    1,592
    
    
    20,788
    
    1,306Other operating expenses
    
    54,410
    
    19,423
    
    
    34,987
    
    180Total operating (income)
      expense
    $
    671,047
    $
    231,482
    
    $
    439,565
    
    190
    %
   Nine Months
      EndedMay 31,
    
    
    
    Increase /
    
    Percentage2010
    
    2009
    
    
    (Decrease)
    
    ChangeOperating (income) expenseInvestor relations
    $
    98,342
    $
    28,812
    
    $
    69,530
    
    241
    %Marketing
    
    
    436,713
    
    11,465
    
    
    425,248
    
    3,709Wages and benefits
    
    605,250
    
    (3,337,562)
    
    
    3,942,812
    
    *Management fees - related party
    
    -
    
    4,472
    
    
    (4,472)
    
    *Professional fees
    
    364,207
    
    210,935
    
    
    153,272
    
    73Research and development
    
    514,152
    
    179,838
    
    
    334,314
    
    186Travel and entertainment
    
    53,022
    
    35,962
    
    
    17,060
    
    47Other operating expenses
    
    199,662
    
    54,404
    
    
    145,258
    
    267Total operating (income)
      expense
    $
    2,271,348
    $
    (2,811,674)
    
    $
    5,083,022
    
    *
    %
 * Not
meaningful
  
 23


---



Investor Relations  Investor
relations costs represent fees paid to publicize our technology within the
industry and investor community with the purpose of increasing company
recognition.  The increase in
investor relations expense during the three and nine months ended May 31, 2010
compared to the same time periods in 2009 is primarily due to us entering into a
Shareholder Communications Agreement and a Public Relations Agreement (the PR
Agreement) as described below.  Effective
October 1, 2008, we entered into a one-year Market Access Services Agreement
(the Market Agreement) to publicize our technology within the industry and
increase company recognition and branding.  In accordance with the terms of
the Market Agreement, we pay $1,900 per month for investor and public relations,
corporate branding and corporate image services.  The Market Agreement
automatically renewed on October 1, 2009 for another one-year term.  Effective April
15, 2009, we entered into a one-year Shareholder Communication Services
Agreement (the Shareholder Communications Agreement) with a third party
consultant to provide shareholder communication and related administrative
services.  In accordance with the terms of the Shareholder Communications
Agreement, we initially paid the third party consultant $1,250 per month. As a
result of an increase in services provided to us, effective September 15, 2009,
the Shareholder Communications Agreement was amended, increasing the amount paid
the consultant to $1,500 per month.  The Shareholder Communications
Agreement was subsequently amended again, effective February 1, 2010, increasing
the amount paid to the consultant to $1,667 per month.  Effective July
29, 2009, we entered into a one-year PR Agreement with a third party consultant
to implement a public relations program.  In accordance with the terms of
the PR Agreement, we pay the third party consultant $6,500 per month. 
After the initial one-year term, either party may cancel the PR Agreement upon
60-days written notice.  Marketing  Marketing costs
represent fees paid to advertise our technology, targeting potential
customers.  Marketing costs represent fees paid to advertise
our technology, target potential customers, and maintain shareholder and public
relations.We initially undertook a
targeted marketing program designed to establish our brand name recognition
early on in our corporate development.  During this time our marketing
efforts, in addition to keeping our shareholders apprised of the advances to our
technologies, have generated more than 70 news media stories, including online,
radio, television, and print media coverage in leading mainstream media in the
United States. As
the development of our MotionPowerTM Technology and SolarWindowTM Technology
products advances, we intend to continue to further develop and market our brand
name, pending commercialization of our MotionPowerTM Technology and SolarWindowTM
Technology products, if any. Subject to the receipt of any requisite regulatory
approvals, we believe our marketing strategy ultimately will facilitate the
distribution, sale and public acceptance of our MotionPowerTM Technology and
SolarWindowTM Technology products. We anticipate that as our technologies advance
we may be required to expend increasing amounts in connection with our marketing
efforts.  Wages and benefits  During the three months ended May 31, 2010 and
2009, we incurred $43,969 and $40,369 in wages and benefits expense for services
rendered by Mr. Meetesh Patel, our President, Chief Executive Officer (the
CEO), Chief Financial Officer (the CFO), and Director.  Additionally,
during the three months ended May 31, 2010, we recorded stock compensation
expense of $85,369, $60,229 of which is the amortization of the fair value of
the stock option granted to Mr. Patel on June 24, 2009 and $25,140 of which is
the amortization of the stock option granted to Mr. Patel on April 6, 2010 (see
Note 10. Stock Options).
  
 24


---



During the nine months ended May 31, 2010, we
incurred $581,187 in wages, benefits, and stock compensation expense for
services rendered by Mr. Patel.  We also incurred $566 in wages and
benefits expense for services rendered by Mr. Nicholas Cucinelli, our former
President and CEO and $23,497 in wages and benefits expense for services
rendered by Mr. James B. Wilkinson.On February 1, 2010 we entered into an
at will employment agreement with Mr. Wilkinson pursuant to which Mr.
Wilkinson was to serve as the Vice President Corporate Development and Chief
Operating Officer of the Company, in consideration for which Mr. Wilkinson was
to receive an annual salary of $150,000 (the Wilkinson Agreement).
On February 15, 2010, we received Mr. Wilkinsons resignation, effective as
of February 15, 2010, and his concurrence to the mutual termination of the
Wilkinson Agreement.  The termination was not based upon any disagreement
between us and Mr. Wilkinson.As of February 28, 2010, Mr.
Wilkinson had resigned from all positions with us.  During the nine months ended May 31, 2009, we
incurred $108,359 in wages and benefits expense for services rendered by Mr.
Patel.  We also incurred $77,154 in wages and benefits expense for services
rendered by Mr. Cucinelli, which includes $50,000 severance pursuant to an
Employment Termination Agreement, dated October 15, 2008 between us and Mr.
Cucinelli.  On
October 15, 2008, Mr. Cucinelli resigned as President and Chief Executive
Officer.  As a result, the stock option granted to him on February 15, 2008
to purchase 1,250,000 shares of common stock was forfeited pursuant to the terms
of an Employment Termination Agreement between us and Mr. Cucinelli.As
a result of Mr. Cucinellis resignation, stock option compensation expense of
$3,573,778 previously recorded for Mr. Cucinellis stock option was reversed
during the quarter ended November 30, 2008 and is included in wages and benefits
for the nine months ended May 31, 2009.  Wages and
benefits for the nine months ended May 31, 2009 also includes $50,703 for
severance paid to employees in our former administrative office in Vancouver,
British Columbia, which was closed effective August 31, 2008.  Management fees  related party  During the nine months ended May 31, 2009, we
incurred $4,472 for services rendered by Mr. Frank Fabio, our former consultant
Chief Financial Officer (the CFO).  Mr. Fabio resigned as CFO, effective
January 9, 2009.  Professional fees  Professional
fees primarily consist of accounting, audit and tax fees, legal fees,
non-employee Board fees, SEC related filing fees, and consulting services
provided to advance ourMotionPowerTM Technology and
SolarWindowTM Technology products(Energy Consulting Services).  Professional
fees increased $88,944 during the three months ended May 31, 2010 compared to
the same period in 2009 primarily as a result of increases in accounting and
audit related fees of approximately $6,600, legal fees of approximately $28,300,
SEC filing fees of approximately $11,200, and Energy Consulting Services of
approximately $37,200.  The increases in accounting, audit, legal and SEC
filing fees are directly related to the preparation and filing of our Form S-1,
and amendments thereto. Energy Consulting Services were incurred pursuant to a
consulting agreement that we entered into on April 1, 2010, with Mr. John A.
Conklin whereby Mr. Conklin provides technical advice, guidance, and management
oversight to help advance the commercial development of our technologies,
including but not necessarily limited to our SolarWindowTM and MotionPowerTM
technologies.  In consideration of Mr. Conklins services, we pay Mr.
Conklin $11,000 per calendar month for the first three calendar months of the
consulting agreement and $12,444 for each calendar month of service
thereafter.  In additional consideration of Mr. Conklins services, we
granted Mr. Conklin a stock option to purchase up to 250,000 shares of our
common stock at an exercise price of $0.54 per share, expiring five years from
the date of grant on April 1, 2015. The stock option granted Mr. Conklin vests
upon the achievement of specific technical, product development, and/or business
milestones.  The grant date fair value of the 250,000 stock options granted
Mr. Conklin was $119,975, estimated using the Black-Scholes option pricing model
(see Note 10. Stock Options).  Included in professional fees for the nine
months ended May 31, 2010 is $13,131 for the amortization of the fair value of
this stock option.
  
 25


---



Professional
fees increased $153,272 during the nine months ended May 31, 2010 compared to
the same period in 2009 primarily as a result of increases in accounting and
audit related fees of approximately $13,500, legal fees of approximately
$53,400, SEC filing fees of approximately $27,300, Board fees of approximately
$23,900, and Energy Consulting Services of approximately $37,200.  The
increases in accounting, audit, legal and SEC filing fees are directly related
to the preparation and filing of our Form S-1, and amendments thereto. The
increase in Board fees is entirely due to stock compensation related to stock
options that were granted to non-employee board members on December 15,
2009.  Energy Consulting Services were incurred pursuant to the consulting
agreement that we entered into with Mr. John A. Conklin (see previous
paragraph).  Research and development  Research and development costs represent costs
incurred to develop our technology and are incurred pursuant to our sponsored
research agreements with USF, development agreements with Veryst, consulting
agreements with Sigma Design, and agreements with other third party providers.
These agreements include salaries and benefits for research and development
personnel, allocated overhead and facility occupancy costs, contract services
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.  Please refer to the appropriate sections above for
disclosure of the specific terms and amounts incurred for each research and
development agreement.  Travel and entertainment  Travel and
entertainment increasedduring both the three and nine months
ended May 31, 2010 compared to the same periods of the prior yearprimarily due
to executive and Board member travel required as part of the ongoing research
and development efforts as well as in connection with the preparation and filing
of our Form S-1 and amendments thereto.  Other operating expenses  Other operating
expenses includes rent, patent filing costs, utilities, office supplies,
insurance, press releases, information technology related fees, printing costs,
and other administrative costs.  Other operating
expenses increased $34,987 during the three months ended May 31, 2010 as
compared to the same period of the prior year as a result of increases in
printing and postage costs of approximately $5,300, patent expense of
approximately $2,900, rent of approximately $3,200, press release of
approximately $12,100 and directors and officers insurance of approximately
$11,100.  During the quarter ended May 31, 2010 we distributed a letter
from our President to all of our stockholders providing them an update on the
results of our testing of our MotionPowerTM and SolarWindowTM Technologies, thus
incurring printing and postage for this mailing.  The increase in rent of
$3,200 is due to the one year sublease agreement we entered into, effective
December 1, 2009, with MVP Law Group, P.A., of which our Chief Executive Officer
and President is a founder and managing attorney, with respect to this office
space.  Monthly rent is $900.  As we continue to advance our
MotionPowerTM and SolarWindowTM Technologies we will continue to make
announcements by way of press releases, resulting in additional fees for press
releases.  Other operating
expenses increased $145,258 during the nine months ended May 31, 2010 as
compared to the same period of the prior year as a result of increases in
printing and postage costs of approximately $10,200, patent expense of
approximately $47,900, rent of approximately $6,700, press releases of
approximately $39,900, directors and officers insurance of approximately
$27,800, and website re-design fees of approximately $6,000.  In both
October 2009 and May 2010 we distributed letters from our President to all of
our stockholders providing them an update on the results of our testing of our
MotionPowerTM and SolarWindowTM Technologies, thus incurring printing and postage
for this mailing.  Patent expense increased as a result of filing United
States and international patent applications for our MotionPowerTM Technology and
SolarWindowTM Technology.  The increase in rent of $3,200 is due to the one
year sublease agreement we entered into, effective December 1, 2009, with MVP
Law Group, P.A., of which our Chief Executive Officer and President is a founder
and managing attorney, with respect to
  
 26


---



this office
space.  Monthly rent is $900.  As we continue to advance our
MotionPowerTM and SolarWindowTM Technologies we will continue to make
announcements by way of press releases, resulting in additional fees for press
releases.  Other income (expense)  A summary of our other income (expense) for the
three and nine months ended May 31, 2010 and 2009 was as follows:  Three Months
      EndedMay 31,
    
    
    Increase /
    
    Percentage2010
    
    2009
    
    
    (Decrease)
    
    ChangeOther income (expense)Foreign exchange loss
    $
    (638)
    $
    -
    
    $
    638
    
    *
    %Change in fair value of warrant
      liability
    165,660
    
    -
    
    
    165,660
    
    *Total other income
(expense)
    $
    165,022
    $
    -
 * Not
meaningful  Nine Months
      EndedMay 31,
    
    
    Increase /
    
    Percentage2010
    
    2009
    
    
    (Decrease)
    
    ChangeOther income (expense)Interest income
    $
    -
    $
    7,743
    
    $
    (7,743)
    
    *
    %Interest expense
    
    -
    
    (267)
    
    
    (267)
    
    *Gain on dissolution of foreign
      subsidiary
    -
    
    59,704
    
    
    (59,704)
    
    *Foreign exchange loss
    
    (1,344)
    
    (52,918)
    
    
    (51,574)
    
    (97)Change in fair value of warrant
      liability
    1,721,658
    
    -
    
    
    1,721,658
    
    *Total other income
(expense)
    $
    1,720,314
    $
    14,262
 * Not
meaningful  Change in fair
value of warrant liability  On September 1,
2009, we adopted guidance which is now part of ASC 815-40,Contracts in
Entitys Own Equity.We determined that our Class F Callable Warrants
contained a Dilutive Issuance provision.  As a result, we reclassified
3,188,500 of our Class F Callable Warrants to warrant liability, resulting in a
cumulative adjustment to accumulated deficit as of September 1, 2009 of
$342,771.  Our Class F
Callable Warrants are considered derivative financial liabilities and are
therefore required to be adjusted to fair value each quarter.  We have
valued our warrant liability at May 31, 2010 using a Black-Scholes model
containing the following assumptions:  dividend yield of 0%,
volatility of 104.62%, risk-free rate of 0.22%, and a term of 0.7
years.    Decreases in the remaining term and volatility of the
Class F Callable Warrants during three months ended May 31, 2010 resulted in a
decrease in the warrant liability and a non-cash gain related to the Class F
Callable Warrants of $165,660 during the three months ended May 31,
2010.  Decreases in the
remaining term and volatility of the Class F Callable Warrants during the nine
months ended May 31, 2010 and a decline in the fair value of our common stock
from September 1, 2009 to May 31, 2010 resulted in a decrease in the warrant
liability and a non-cash gain related to the Class F Callable Warrants of
$1,721,658 during the nine months ended May 31, 2010.
  
 27


---



Interest income ****** Interest income
decreased during the nine months ended May 31, 2010 as compared to the same
period in the prior year primarily due to theclosing of the administrative office in Vancouver,
British Columbia, Canada. Asof December 31, 2008, we transferred all of the
funds in our interest bearing cash account maintained at a Canadian owned
financial institution to non-interest bearing bank accounts at U.S. financial
institutions.  Gain on
dissolution of foreign subsidiary  Octillion Technologies provided administrative
services to our Canadian office. We ceased to conduct business in Canada,
effective August 31, 2008 and closed this office. As a result,we dissolved
Octillion Technologies and eliminated all intercompany balances and recorded a
gain on our investment in Octillion Technologies equal to the accumulated other
comprehensive income at December 1, 2008, the time of the
dissolution.  Foreign exchange loss  We
translate assets and liabilities of our foreign subsidiaries, other than those
denominated in United States Dollars, at the rate of exchange at the balance
sheet date.  Theforeign exchange loss during the nine months ended
May 31, 2009 is substantially the result of cash infusions made from New Energy
Technologies to our former foreign subsidiary, Octillion Technologies
(denominated in Canadian dollars), thereby increasing the intercompany payable
on Octillion Technologies balance sheet.  Octillion Technologies was
dissolved, effective December 1, 2008.  Liquidity and Capital Resources  The
accompanying financial statements have been prepared assuming we will continue
as a going concern.  We have incurred cumulative losses of $7,046,074
through May 31, 2010.  Due to the "start up" nature of our business, we
expect to incur losses as we continue development of our photovoltaic 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 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.  Our
principal source of liquidity is cash in the bank.  At May 31, 2010, we had
a cash and cash equivalents balance of $1,048,347. We have financed our
operations primarily pursuant to a Securities Purchase Agreement in which we
received net proceeds of $3,395,955 in February 2008 and from the exercise of
warrants.  Net
cash used in operating activities was $1,687,874 for the nine months ended May
31, 2010, compared to net cash used of $575,589 for the same period in 2009.
 The increase in cash used of $1,112,285 substantially reflects increases
in amounts paid for investor relations of approximately $70,000, marketing of
$357,000, and research and development of $401,000.  Securities Purchase Agreement  On
February 12, 2008, we consummated the sale of an aggregate of 3,675,000 shares
of our common stock and Class F Callable Warrants to purchase up to an
additional 3,675,000 shares of our common stock for aggregate gross proceeds of
$3,675,000 pursuant to the terms of a Securities Purchase Agreement dated
February 8, 2008 (the 2008 Private Placement ) with certain institutional and
other accredited investors (the Investors).  We
engaged an agent (the Agent) to help in the fund raising efforts of the 2008
Private Placement. The agent was paid a total cash fee of 7% ($257,250) of the
aggregate proceeds ($257,250) and received Class F Callable Warrants to purchase
514,500 shares of our common stock valued at $642,980 and representing 7% of the
total number of shares purchased by the Investors. In addition, the Agent was
reimbursed $6,045 for expenses incurred on our behalf.
  
 28


---



Related Party
Transactions  Non-employee
Board members receive $2,500 per quarter for services rendered in the capacity
of a Board member.  During the three months ended May 31, 2010, we
incurred $20,927, including stock compensation of $13,427, for services rendered
by our non-employee directors, which is included in professional fees.  During thenine months ended May 31, 2010, weincurred $79,623, including stock compensation of
$57,123, for services rendered by our non-employee directors, which is included
in professional fees.  During the three and nine months ended May 31,
2010, the law firm of Sierchio & Company, LLP (S&C LLP), our corporate
and securities legal counsel, provided $121,892 and $203,232 of legal services
to us.  Joseph Sierchio, one of our non-employee directors, is a principal
of S&C LLP.  At May 31, 2010, we owed S&C LLP $26,185 which is
included in accounts payable.  Our corporate
office is located at 3905 National Drive, Suite 110, Burtonsville, Maryland
20866. On December 1, 2009, we entered into a one year sublease agreement with
MVP Law Group, P.A., of which our Chief Executive Officer and President is a
founder and managing attorney, with respect to this office space.  Monthly
rent is $900.  Additionally, we paid a $900 security deposit.  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.  Other
Contractual Obligations  In addition to
the contractual obligations discussed above for the research and development
agreement with USF, as of May 31, 2010, we have future minimum lease payments of
$8,300 under our corporate and other office operating leases.  In addition,
we have future minimum payments totaling $7,600 pursuant to theMarket Agreement
entered into on October 1, 2008, $17,500 pursuant to the Shareholder
Communications Services Agreement entered into on April 15, 2009, and $6,500
pursuant to the PR Agreement entered into on July 29, 2009.  Off-Balance
Sheet Arrangements  Wehave no off-balance sheet arrangements.  Recently Issued Accounting
Pronouncements  SeeNote 3.  Presentation of Interim Information
to the Consolidated Financial Statements in this Form 10-Q.
  
 29


---



Item 4T.   Controls and
Procedures  (a) Disclosure
Controls and Procedures  Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the Exchange Act), as of the end of the
period covered by this quarterly report. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that as of May 31, 2010
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.  (b) 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.
  
 30


---



PART II  OTHER
INFORMATION  Item 1.   Legal
Proceedings  None.  Item 2.   Unregistered Sales of Equity
Securities and Use of Proceeds  None.  Item 3.   Defaults Upon Senior
Securities  None.  Item 4.   Submission of Matters to a Vote
of Security Holders  None.  Item 5.   Other
Information  None.  Item 6.   Exhibits  3.1         
Articles of Incorporation (1)  3.2         
Certificate of Amendment to the Articles of Incorporation changing name to New
Energy Technologies, Inc. (1)  3.3
         By Laws (1)  4.1
         Securities Purchase Agreement
dated February 8, 2008 (1)  10.1
       Employment Termination Agreement with Mr.
Cucinelli (1)  10.2
       Employment Agreement dated June 24, 2009
between New Energy Technologies, Inc. and Mr. Meetesh Patel (1)  10.3       Amendment
to the Employment Agreement dated April 6, 2010 between New Energy Technologies,
Inc. and Meetesh Patel (1)  10.4       Stock
Option Agreement Dated April 6, 2010 between New Energy Technologies,
Inc. and Meetesh Patel(1)  10.5       Employment
Agreement dated February 1, 2010 between New Energy Technologies, Inc. and
James B. Wilkinson (1)  10.6
      Resignation and Mutual Determination to
terminate employment between New Energy Technologies, Inc. and Brent
Wilkinson, dated February 15, 2010 (1)  10.7
       Redacted USF Sponsored Research Agreement
(1)  10.8
       Redacted USF Option Agreement
(1)
  
 31


---



10.9        Redacted Veryst Agreement (1)  10.10      Redacted Sigma Design Agreement (1)  10.11      Amended Form of Stock Option Agreement dated as of December 15, 2009 between Meetesh Patel and New Energy Technologies, Inc., correcting the grant date (1)  10.12      Amended Form of Stock Option Agreement dated as of December 15, 2009 between New Energy Technologies, Inc. and its non-employee directors, correcting the grant date (1)  10.13      Redacted Standard Exclusive License Agreement with Sublicensing Terms entered into on June 21, 2010 by and between the University of South Florida Research Foundation and New Energy Solar Corporation. (2)  31.1Certification 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 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *  ____________________  (1)Incorporated by reference to the exhibits filed as part of the report on Form 10-Q filed by New Energy Technologies, Inc. on April 16, 2010.  (2) Incorporated by reference to the Form 8-K filed by New Energy Technologies, Inc. on June 28, 2010.  *Filed herewith
  
 32


---



SIGNATURE  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned  thereunto duly  authorized.  New Energy Technologies, Inc. (Registrant)    July 15, 2010
     By:/s/ Meetesh Patel
Meetesh Patel
President, Chief Executive Officer,Chief Financial Officer, Secretary, Director
  
 33


---