UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON, D.C.
20549
 
 
 FORM
10-Q
 
 (Mark
One)
 
 x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
quarterly period ended February 28, 2009
 
 o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the transition period from
___________to___________
 
 Commission
file number 333-127953
 
 
 NEW
ENERGY TECHNOLOGIES, INC.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
                59-3509694(State
      or other jurisdiction of incorporation or organization)
                (I.R.S.
      Employer Identification No.)1050
      Connecticut Avenue NW, 10th
      Floor
                20036Washington,
      DC
                (Zip
      Code)(Address
      of principal executive offices)
 
 (800)
213-0689
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes T   No
o.
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
      accelerated filer
                o
                
                Accelerated
      filer
                oNon-accelerated
      filer (Do not check if a smaller reporting company)
                o
                
                Smaller
      reporting company
                x
 
  Indicate
by check mark whether the registrant is a shell company (as defined in 12b-2 of
the Exchange Act.)  Yes o No T.
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 57,754,600 shares of Common Stock, par
value $0.001, were outstanding on April 1, 2009.
  
 
 
 
 NEW
ENERGY TECHNOLOGIES, INC.
 (Formerly
“Octillion Corp.”)
 FORM
10-Q
 
 For
the Quarterly Period Ended February 28, 2009
 
 Table
of Contents
 
 
 PART
      I    FINANCIAL INFORMATIONItem
      1.
                                      Consolidated
      Financial Statements (Unaudited).Consolidated
      Balance Sheets (Unaudited)
                                      3Consolidated
      Statements of Operations (Unaudited)
                                      4Consolidated
      Statement 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 and Results of
      Operations.
                                      15Item
      4T.
                                      Controls
      and Procedures.
                                      23PART
      II   OTHER INFORMATIONItem
      1.
                                      Legal
      Proceedings.
                                      24Item
      2.
                                      Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                      24Item
      3.
                                      Defaults
      Upon Senior Securities.
                                      24Item
      4.
                                      Submission
      of Matters to a Vote of Security Holders.
                                      24Item
      5.
                                      Other
      Information.
                                      24Item
      6.
                                      Exhibits.
                                      24SignaturesCertifications
 Table
of Contents
  PART
I— FINANCIAL
INFORMATION
 
 Item 1. Consolidated
Financial Statements(Unaudited)
 
 NEW
ENERGY TECHNOLOGIES, INC.
 (Formerly
"Octillion Corp.")
 (A
Development Stage Company)
 
 CONSOLIDATED
BALANCE SHEETS
 FEBRUARY
28, 2009 AND AUGUST 31, 2008
 (Expressed
in U.S. Dollars)
 (Unaudited)
 
 
 February 28,
                            2009
                          
                          
                          August 31,
                            2008ASSETSCurrent
      assetsCash
      and cash equivalents
                          
                          $
                          2,502,290
                          
                          
                          $
                          2,992,010Deferred
      research and development costs
                          
                          
                          -
                          
                          
                          
                          140,519Other
      receivable
                          
                          
                          120,299
                          
                          
                          
                          -Prepaid
      expenses and other current assets
                          
                          
                          833
                          
                          
                          
                          500Total
      current assets
                          
                          
                          2,623,422
                          
                          
                          
                          3,133,029Fixed
      assets, net of accumulated depreciation of $0 and $2,659
                          
                          
                          -
                          
                          
                          
                          -Total
      assets
                          
                          $
                          2,623,422
                          
                          
                          $
                          3,133,029LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                          
                          $
                          24,943
                          
                          
                          $
                          35,331Accrued
      liabilities
                          
                          
                          165,581
                          
                          
                          
                          156,109Total
      current liabilities
                          
                          
                          190,524
                          
                          
                          
                          191,440Commitments
      and ContingenciesStockholders'
      equityPreferred
      stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and
      outstanding
                          
                          
                          -
                          
                          
                          
                          -Common
      stock: $0.001 par value; 100,000,000 shares authorized, 57,754,600 shares
      issued and outstanding at February 28, 2009 and August 31,
      2008
                          
                          
                          57,755
                          
                          
                          
                          57,755Additional
      paid-in capital
                          
                          
                          7,431,169
                          
                          
                          
                          10,986,585Accumulated
      other comprehensive income
                          
                          
                          -
                          
                          
                          
                          10,693Deficit
      accumulated during the development stage
                          
                          
                          (5,056,026
                          )
                          
                          
                          (8,113,444
                          )Total
      stockholders' equity
                          
                          
                          2,432,898
                          
                          
                          
                          2,941,589Total
      liabilities and stockholders' equity
                          
                          $
                          2,623,422
                          
                          
                          $
                          3,133,029
 
 
 (The
accompanying notes are an integral part of these consolidated financial
statements)
  3
 Table
of Contents
  NEW
ENERGY TECHNOLOGIES, INC.
 (Formerly
"Octillion Corp.)
 (A
Development Stage Company)
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008, AND FOR
THE
 PERIOD
FROM INCEPTION (MAY 5, 1998) TO FEBRUARY 28, 2009
 (Expressed
in U.S. Dollars)
 (Unaudited)
 
 CumulativeThree
      Months Ended
                                              
                                              
                                              Six
      Months Ended
                                              
                                              
                                              May
      5, 1998February
      28,
                                              
                                              
                                              February
      29,
                                              
                                              
                                              February
      28,
                                              
                                              
                                              February
      29,
                                              
                                              
                                              (inception)
      to2009
                                              
                                              
                                              2008
                                              
                                              
                                              2009
                                              
                                              
                                              2008
                                              
                                              
                                              February
      28, 2009Revenue
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Operating
      (income) expenseInvestor
      relations
                                              
                                              
                                              5,700
                                              
                                              
                                              
                                              145,235
                                              
                                              
                                              
                                              16,500
                                              
                                              
                                              
                                              524,145
                                              
                                              
                                              
                                              2,156,025Wages
      and benefits
                                              
                                              
                                              40,629
                                              
                                              
                                              
                                              967,153
                                              
                                              
                                              
                                              (3,377,931
                                              )
                                              
                                              
                                              1,925,519
                                              
                                              
                                              
                                              587,529Management
      fees - related party
                                              
                                              
                                              (2,081
                                              )
                                              
                                              
                                              -
                                              
                                              
                                              
                                              4,472
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              207,546Professional
      fees
                                              
                                              
                                              105,852
                                              
                                              
                                              
                                              79,493
                                              
                                              
                                              
                                              168,033
                                              
                                              
                                              
                                              98,123
                                              
                                              
                                              
                                              592,558Research
      and development
                                              
                                              
                                              58,720
                                              
                                              
                                              
                                              78,199
                                              
                                              
                                              
                                              80,970
                                              
                                              
                                              
                                              156,253
                                              
                                              
                                              
                                              517,897Travel
      and entertainment
                                              
                                              
                                              11,991
                                              
                                              
                                              
                                              32,857
                                              
                                              
                                              
                                              34,369
                                              
                                              
                                              
                                              61,218
                                              
                                              
                                              
                                              267,016Other
      operating expenses
                                              
                                              
                                              15,447
                                              
                                              
                                              
                                              44,390
                                              
                                              
                                              
                                              30,431
                                              
                                              
                                              
                                              72,698
                                              
                                              
                                              
                                              257,475Total
      operating (income) expense
                                              
                                              
                                              236,258
                                              
                                              
                                              
                                              1,347,327
                                              
                                              
                                              
                                              (3,043,156
                                              )
                                              
                                              
                                              2,837,956
                                              
                                              
                                              
                                              4,586,046Operating
      income (loss)
                                              
                                              
                                              (236,258
                                              )
                                              
                                              
                                              (1,347,327
                                              )
                                              
                                              
                                              3,043,156
                                              
                                              
                                              
                                              (2,837,956
                                              )
                                              
                                              
                                              (4,586,046
                                              )Other
      income (expense)Interest
      income
                                              
                                              
                                              547
                                              
                                              
                                              
                                              11,699
                                              
                                              
                                              
                                              7,743
                                              
                                              
                                              
                                              24,603
                                              
                                              
                                              
                                              98,582Interest
      expense
                                              
                                              
                                              (161
                                              )
                                              
                                              
                                              (143
                                              )
                                              
                                              
                                              (267
                                              )
                                              
                                              
                                              (143
                                              )
                                              
                                              
                                              (11,002
                                              )Loss
      on disposal of fixed assets
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (5,307
                                              )Gain
      on dissolution of foreign subsidiary
                                              
                                              
                                              59,704
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              59,704
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              59,704Foreign
      exchange gain (loss)
                                              
                                              
                                              635
                                              
                                              
                                              
                                              1,808
                                              
                                              
                                              
                                              (52,918
                                              )
                                              
                                              
                                              4,019
                                              
                                              
                                              
                                              (79,860
                                              )Payable
      forgiven
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              30,000Total
      other income (expense)
                                              
                                              
                                              60,725
                                              
                                              
                                              
                                              13,364
                                              
                                              
                                              
                                              14,262
                                              
                                              
                                              
                                              28,479
                                              
                                              
                                              
                                              92,117Income
      (loss) from continuing operations
                                              
                                              
                                              (175,533
                                              )
                                              
                                              
                                              (1,333,963
                                              )
                                              
                                              
                                              3,057,418
                                              
                                              
                                              
                                              (2,809,477
                                              )
                                              
                                              
                                              (4,493,929
                                              )Loss
      from discontinued operations
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (162,097
                                              )Net
      income (loss)
                                              
                                              $
                                              (175,533
                                              )
                                              
                                              $
                                              (1,333,963
                                              )
                                              
                                              $
                                              3,057,418
                                              
                                              
                                              $
                                              (2,809,477
                                              )
                                              
                                              $
                                              (4,656,026
                                              )Net
      income (loss) per share:Continuing
      operations
                                              
                                              $
                                              (0.00
                                              )
                                              
                                              $
                                              (0.02
                                              )
                                              
                                              $
                                              0.05
                                              
                                              
                                              $
                                              (0.05
                                              )Discontinued
      operations
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -$
                                              (0.00
                                              )
                                              
                                              $
                                              (0.02
                                              )
                                              
                                              $
                                              0.05
                                              
                                              
                                              $
                                              (0.05
                                              )Weighted
      average number of common shares outstanding:Basic
      and diluted
                                              
                                              
                                              57,754,600
                                              
                                              
                                              
                                              53,583,622
                                              
                                              
                                              
                                              57,754,600
                                              
                                              
                                              
                                              54,226,075
 
 
 (The
accompanying notes are an integral part of these consolidated financial
statements)
  4
 Table
of Contents
  NEW
ENERGY TECHNOLOGIES, INC.
 (formerly
"Octillion Corp.")
 (A
Development Stage Company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 FROM
MAY 5, 1998 (INCEPTION) TO FEBRUARY 28, 2009
 (Expressed
in U.S. Dollars)
 (Unaudited)
 
 
 Accumulatedother
                                
                                
                                Deficit
      accumulatedPreferred
      Stock
                                
                                
                                Common
      Stock
                                
                                
                                Additional
                                
                                
                                comprehensive
                                
                                
                                during
      the
                                
                                
                                Comprehensive
                                
                                
                                Total
      stockholders'Shares
                                
                                
                                Amount
                                
                                
                                Shares
                                
                                
                                Amount
                                
                                
                                paid-in
      capital
                                
                                
                                income
      (loss)
                                
                                
                                development
      stage
                                
                                
                                income
      (loss)
                                
                                
                                equity
      (deficit)Restricted
      common stock issued to related parties for management services at $0.003
      per share
                                
                                
                                -
                                
                                
                                $
                                -
                                
                                
                                
                                9,000,000
                                
                                
                                $
                                9,000
                                
                                
                                $
                                (6,000
                                )
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                3,000Unrestricted
      common stock sales to 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 to a related party to satisfy outstanding management
      fees at $0.003 per share on December 19, 2002
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                24,000,000
                                
                                
                                
                                24,000
                                
                                
                                
                                56,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                80,000Restricted
      common stock issued to a related party to satisfy outstanding management
      fees at $0.003 per share on 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 warrants at $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 $0.167 per share during November - December
      2006
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,000,000
                                
                                
                                
                                3,000
                                
                                
                                
                                497,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                500,000Exercise
      of Class B Warrants at $0.183 per share November - May
2007
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,000,000
                                
                                
                                
                                3,000
                                
                                
                                
                                547,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                550,000Exercise
      of Class C Warrants at $0.50 per share during August 2007
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                980,000
                                
                                
                                
                                980
                                
                                
                                
                                489,020
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                490,000Exercise
      of Class D Warrants at $0.55 per share during August 2007
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                880,000
                                
                                
                                
                                880
                                
                                
                                
                                483,120
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                484,000Exercise
      of Class E Warrants  at $0.60 per share during August
      2007
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                880,000
                                
                                
                                
                                880
                                
                                
                                
                                527,120
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                528,000Issuance
      of common stock and warrants at $0.50 per share on April 23,
      2007
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,000,000
                                
                                
                                
                                1,000
                                
                                
                                
                                499,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                500,000Dividend
      paid - spin off of MircoChannel Technologies 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 and services at $1.00 per Unit in
      February 2008
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,675,000
                                
                                
                                
                                3,675
                                
                                
                                
                                3,392,280
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,395,955Exercise
      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 $1.25 per 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 period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (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 forfeiture of stock
    options
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (3,591,093
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (3,591,093
                                )Stock
      based compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                35,677
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                35,677Comprehensive
      incomeForeign
      currency translation adjustments
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (10,693
                                )
                                
                                
                                -
                                
                                
                                
                                (10,693
                                )
                                
                                
                                (10,693
                                )Net
      income for the period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,057,418
                                
                                
                                
                                3,057,418
                                
                                
                                
                                3,057,418Total
      comprehensive income
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                $
                                3,046,725Balance,
      February 28, 2009
                                
                                
                                -
                                
                                
                                $
                                -
                                
                                
                                
                                57,754,600
                                
                                
                                $
                                57,755
                                
                                
                                $
                                7,431,169
                                
                                
                                $
                                -
                                
                                
                                $
                                (5,056,026
                                )
                                
                                
                                
                                
                                
                                $
                                2,432,898
 
 
 (The
accompanying notes are an integral part of these consolidated financial
statements)
  5
 Table
of Contents
  NEW
ENERGY TECHNOLOGIES, INC.
 (Formerly
"Octillion Corp.")
 (A
Development Stage Company)
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008, AND FOR
THE
 PERIOD
FROM INCEPTION (MAY 5, 1998) TO FEBRUARY 28, 2009
 (Expressed
in US Dollars)
 (Unaudited)
 
 
 CumulativeSix
      Months Ended
                          
                          
                          May
      5, 1998February
      28,
                          
                          
                          February
      29,
                          
                          
                          (inception)
      to2009
                          
                          
                          2008
                          
                          
                          February
      28, 2009Cash
      flows from operating activitiesIncome
      (loss) from continuing operations
                          
                          $
                          3,057,418
                          
                          
                          $
                          (2,809,477
                          )
                          
                          $
                          (4,493,929
                          )Add:
      loss from discontinued operations
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (162,097
                          )Adjustments
      to reconcile net income (loss) to net cash used in operating
      activitiesDepreciation
                          
                          
                          -
                          
                          
                          
                          719
                          
                          
                          
                          4,482Reversal
      of stock based compensation expense due to forfeiture of stock
      options
                          
                          
                          (3,591,093
                          )
                          
                          
                          -
                          
                          
                          
                          (3,591,093
                          )Stock
      based compensation expense
                          
                          
                          35,677
                          
                          
                          
                          1,775,465
                          
                          
                          
                          3,635,980Loss
      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
      in deferred research and development costs
                          
                          
                          140,519
                          
                          
                          
                          -
                          
                          
                          
                          -Increase
      in other receivable
                          
                          
                          (120,299
                          )
                          
                          
                          -
                          
                          
                          
                          (120,299
                          )Increase
      in prepaid expenses and other current assets
                          
                          
                          (333
                          )
                          
                          
                          (3,766
                          )
                          
                          
                          (833
                          )Increase
      (decrease) in accounts payable
                          
                          
                          (10,388
                          )
                          
                          
                          (1,154
                          )
                          
                          
                          24,943Increase
      in accrued liabilities
                          
                          
                          9,472
                          
                          
                          
                          73,674
                          
                          
                          
                          165,581Increase
      in accounts payable - related party
                          
                          
                          -
                          
                          
                          
                          4,375
                          
                          
                          
                          30,000Net
      cash used in operating activities
                          
                          
                          (479,027
                          )
                          
                          
                          (960,164
                          )
                          
                          
                          (4,425,626
                          )Cash
      flows from investing activitiesPurchase
      of fixed assets
                          
                          
                          -
                          
                          
                          
                          (2,271
                          )
                          
                          
                          (9,789
                          )Net
      cash flows used in investing activities
                          
                          
                          -
                          
                          
                          
                          (2,271
                          )
                          
                          
                          (9,789
                          )Cash
      flows from financing activitiesProceeds
      from the issuance of common stock and warrants, net
                          
                          
                          -
                          
                          
                          
                          3,395,955
                          
                          
                          
                          7,337,705Repayment
      of promissory note
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (155,000
                          )Proceeds
      from promissory notes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          155,000Dividend
      paid
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (400,000
                          )Net
      cash flows provided by financing activities
                          
                          
                          -
                          
                          
                          
                          3,395,955
                          
                          
                          
                          6,937,705Increase
      (decrease) in cash and cash equivalents
                          
                          
                          (479,027
                          )
                          
                          
                          2,433,520
                          
                          
                          
                          2,502,290Effect
      of foreign currency translation
                          
                          
                          (10,693
                          )
                          
                          
                          (7,901
                          )
                          
                          
                          -Cash
      and cash equivalents at beginning of period
                          
                          
                          2,992,010
                          
                          
                          
                          1,437,876
                          
                          
                          
                          -Cash
      and cash equivalents at end of period
                          
                          $
                          2,502,290
                          
                          
                          $
                          3,863,495
                          
                          
                          $
                          2,502,290Supplemental
      cash flow information:Interest
      paid in cash
                          
                          $
                          267
                          
                          
                          $
                          143
                          
                          
                          $
                          11,002Income
      taxes paid in cash
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Supplemental
      noncash transaction:Accrued
      management fees converted to equity
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          103,332Warrants
      issued for broker commissions
                          
                          $
                          -
                          
                          
                          $
                          642,980
                          
                          
                          $
                          642,980
 
 
 (The
accompanying notes are an integral part of these consolidated financial
statements)
  6
 Table
of Contents
  NEW
ENERGY TECHNOLOGIES, INC.
 (Formerly
“Octillion Corp.”)
 (A Development
Stage Company)
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 February
28, 2009
 (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
(“Kinetic Energy”), 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. Kinetic Energy 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.
 
 New
Energy Technologies, Inc., together with its wholly owned subsidiaries, is an
alternative and renewable energy technology developer focused on the
identification, acquisition, development, and commercialization of alternative
and renewable energy technologies.  Among the Company’s current research
and development activities is the development of technology to adapt existing
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.
 
 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.
 
 Note
2.  Going Concern Uncertainties
 
 The
Company is a development stage company, has not generated any revenues, has an
accumulated deficit of $5,056,026 as of February 28, 2009, 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 been met by a private placement of common
stock and warrants for net proceeds of $3,395,955 on February 12,
2008.  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. Management believes that its current and future plans
provide the opportunity for the Company to continue as a going concern for the
next twelve months. 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.
  7
 Table
of Contents
  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 February 28, 2009 and August 31, 2008 and the
related results of operations, stockholders’ equity (deficit), and cash flows
for the three and six months ended February 28, 2009 and February 29, 2008 and
for the cumulative period from May 5, 1998 (inception) to February 28,
2009. 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 2008 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 2008 Annual Report on Form
10-K.
  Recently
Issued Accounting Standards
  In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements” (SFAS 157), which establishes a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. In February 2008, the FASB issued FASB Staff Position No. 157-2,
“Effective Date of FASB Statement 157” (FSP 157-2), which allows for the
deferral of the adoption date of SFAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis. The Company is required
to adopt SFAS 157 for the assets and liabilities within the scope of FSP 157-2
on March 1, 2009, the beginning of its fiscal year 2010. In October 2008, the
FASB issued SFAS Staff Position No. 157-3, “Determining the Fair Value of a
Financial Asset in a Market That Is Not Active” (FSP 157-3), which
clarifies the application of SFAS 157 when the market for a financial asset
is inactive. The adoption of SFAS 157 for those assets and liabilities not
subject to the deferral permitted by FSP 157-2 did not have a material impact on
the Company’s consolidated financial statements. The Company does not expect the
adoption of SFAS 157 for non-financial assets and liabilities to have a material
impact on its consolidated financial statements.  The guidance in FSP
157-3 is effective immediately and did not have a material effect on the
Company’s consolidated financial statements.
 
 In June
2008, the FASB issued Staff Position EITF 03-06-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (FSP EITF 03-06-1). FSP EITF 03-06-1 provides that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuant to the
two-class method in SFAS No. 128, “Earnings per
Share.”   FSP EITF 03-06-1 must be adopted for reporting periods
beginning after December 15, 2008.  FSP EITF 03-06-1 will not
have any impact on the Company’s consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early adoption is
prohibited. The Company must adopt SFAS 160 on September 1, 2009, the beginning
of its fiscal year 2010.  The Company does not expect the application
of SFAS No. 160 to have a material effect on its consolidated financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS
141R), which establishes principles and requirements for the reporting entity in
a business combination, including recognition and measurement in the financial
statements of the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after
December 15, 2008, and interim periods within those fiscal years. The
Company must adopt SFAS 141R on September 1, 2009, the beginning of its fiscal
year 2010.  The Company does not expect the application of SFAS 141R
to have a material effect on its consolidated financial
statements.
  8
 Table
of Contents
  Note
4. 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 six months ended February 28, 2009, stock options and warrants to
purchase 4,384,500 shares of common stock with a weighted-average exercise price
of $1.21 per share were not included in the diluted earnings per share
computation as the effects would have been anti-dilutive.
 
 During
the three months ended February 28, 2009 and the three and six months ended
February 29, 2008, the Company recorded a net loss.  Therefore, the
issuance of shares of common stock from the exercise of stock options or
warrants would be anti-dilutive.  Excluded from the computation of
diluted net loss per share for the three and six months ended February 29, 2008,
because their effect would be anti-dilutive, are stock options and warrants to
acquire 5,699,500 shares of common stock with a weighted-average exercise price
of $1.31 per share.
 
 As the
inclusion of all potentially dilutive stock options and warrants outstanding
would have been anti-dilutive during the three and six months ended February 28,
2009 and February 29, 2008, basic and diluted net income (loss) per share are
the same.
 
 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 (loss) per share for the
three and six months ended February 28, 2009 and February 29, 2008:
 
 Three Months Ended
                    
                    
                    Six Months EndedFebruary
      28,
                    
                    
                    February
      29,
                    
                    
                    February
      28,
                    
                    
                    February
      29,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Numerator
      - net income (loss )
                    
                    $
                    (175,533
                    )
                    
                    $
                    (1,333,963
                    )
                    
                    $
                    3,057,418
                    
                    
                    $
                    (2,809,477
                    )Denominator
      - weighted average number of common shares outstanding
                    
                    
                    57,754,600
                    
                    
                    
                    53,583,622
                    
                    
                    
                    57,754,600
                    
                    
                    
                    54,226,075Basic
      and diluted net income (loss) per common share
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    0.05
                    
                    
                    $
                    (0.05
                    )
 
 
 Note 5.OptionInterestin Solar Energy Conversion
Technology
 
 UIUC
Sponsored Research Agreement
 
 On August
25, 2006, through the Company’s 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 February 28,
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 should be
refunded to the Company.
  9
 Table
of Contents
  During
the three and six months ended February 28, 2009 the Company did not record any
research and development expense pursuant to the UIUC Sponsored Research
Agreement. During the three and six months ended February 29, 2008 the Company
recorded $78,054 and $156,109 as research and development expense pursuant to
the UIUC Sponsored Research Agreement.  During the period from
inception (May 5, 1998) to February 28, 2009, 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.
 
 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.  As of February 28, 2009, the Company had advanced
$140,519 to Oakland University in accordance with the terms of 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
right pursuant to Section 9.3 of the Oakland Sponsored Research Agreement, and
provided written notice to Oakland University 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 and is included in research and development expense for the
three and six months ended February 28, 2009.  The remaining $120,299
was refunded to the Company in April 2009 and is included in other receivable at
February 28, 2009.
 
 Note
6. Energy Harvesting Technologies
 
 VERYST
Agreement
 
 On
November 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy, entered into an agreement with VERYST Engineering LLC (the “Veryst
Agreement”) relating to the development of technologies for generating
electricity from the motion of cars and trucks.  The Veryst Agreement
continues until terminated by either Veryst Engineering LLC or the
Company.  Pursuant to a Confidential Treatment Order (“CT ORDER”)
filed with the SEC, payment terms, scope of work and the terms of the license
agreement pursuant to the Veryst Agreement have not been disclosed.
 
 V2G
Letter of Intent
 
 On
December 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy, entered into a Letter of Intent with V2G Enterprises, LLC (the “V2G
Letter of Intent”) to provide development services to produce a roadway embedded
kinetic power capture device that harvests energy from vehicles and converts the
harvested kinetic energy into useable electricity.  Pursuant to the
terms of the V2G Letter of Intent, the payment terms and scope of work are to
remain confidential until a formal agreement has been reached between the two
parties.
 
 Note
7. Capital Stock
 
 Preferred
Stock
 
 At
February 28, 2009 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.
 
 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 proceeds
of $3,675,000 pursuant to the terms of a Securities Purchase Agreement dated
February 8, 2008 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”).
  10
 Table
of Contents
  The Class
F Callable Warrants are exercisable for a period of three years at an initial
exercise price of $1.25 per share beginning on February 12, 2008. 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 warrants, 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 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 Technology, Inc.’s common stock, the
volume weighted average price for each of 5 consecutive Trading Days exceeds
$1.75.
 
 Pursuant
to the Securities Purchase Agreement 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.  In the event that during the twelve month period following the
closing date of the private placement, the Company issues shares at a price per
share which is less than $1.00 (“Base Share Price”), then the Company is
required to issue to the Investors the number of shares equal to (1) the
quotient of the aggregate purchase price payable under the Securities Purchase
Agreement divided by Base Share Price less (2) the quotient
of the aggregate purchase price divided by the per share purchase price under
the Securities Purchase Agreement.
 
 The
Company engaged an agent (the “Agent”) to help in the fund raising efforts of
the Securities Purchase Agreement.  The Agent was paid a total cash
fee of 7% of the aggregate 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.
 
 The fair
value of the 4,189,500 Class F Callable warrants granted was estimated at $1.25
each, for a total amount of $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 Securities
Purchase Agreement allocated to the warrants were $2,337,885.
 
 Note
8.  Warrants
 
 As of
February 28, 2009, the following warrants were outstanding and
exercisable:
 
 (a)
              100,000
      Class D Warrants which entitle the holders to purchase 100,000 shares of
      the Company’s common stock at $0.55 each, expiring on April 23,
      2009.
 
 (b)
              120,000
      Class E Warrants which entitle the holders to purchase 120,000 shares of
      the Company’s common stock at $0.60 each, expiring on April 23,
      2010.
 
 (c)
              4,014,500
      Class F Callable Warrants which entitle the holders to purchase 4,014,500
      shares of the Company’s common stock at $1.25, expiring on February 12,
      2011.
 
 There
were no warrants granted or exercised during the three and six months ended
February 28, 2009.
  Note
9. Stock Options
 
 During
2006, the Company adopted the 2006 Incentive Stock Option Plan (the “2006 Plan”)
which provides for both incentive and nonqualified stock options to be granted
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 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.
  11
 Table
of Contents
  In
September 2007, the Company appointed Mr. Nicholas Cucinelli to the positions of
President and Chief Executive Officer.  Pursuant to an Employment
Agreement between the Company and Mr. Cucinelli, the Company granted Mr.
Cucinelli a stock option to purchase up to 1,500,000 shares of the
Company’s common stock at an exercise price of $4.21, subject to certain vesting
provisions.  On February 15, 2008, the Company cancelled the stock option
granted to Mr. Cucinelli in September 2007 for 1,500,000 stock options and
simultaneously entered into a 10 year stock option agreement with Mr. Cucinelli
for the purchase of 1,250,000 shares of the Company’s common stock at an
exercise price of $1.66 per share, subject to certain vesting provisions. The
cancellation and re-issuance was accounted for as a modification of the
originally issued stock option in accordance with SFAS 123(R) Share-Based Payment,resulting in a total adjusted fair value of $6,895,000 which was being
recognized over the requisite service period.
 
 On
October 15, 2008, Mr. Cucinelli resigned from the positions of President and
Chief Executive Officer of the Company.  As a result, the stock option
granted to Mr. Cucinelli on February 15, 2008 to purchase 1,250,000 shares of
common stock were all forfeited pursuant to the terms of an Employment
Termination Agreement dated October 15, 2008 between the Company and Mr.
Cucinelli.  Pursuant to Mr. Cucinelli’s resignation, stock option
compensation expense of $3,573,778 recorded in fiscal year 2008 for Mr.
Cucinelli’s stock option was reversed during the quarter ended November 30, 2008
and is included in wages and benefits for the six months ended February 28,
2009.
 
 On March
10, 2008, the Company granted a stock option to each of two of its directors
permitting each to purchase, subject to applicable vesting provisions, 50,000
shares of the Company’s common stock at an exercise price of $1.66 per share.
Each stock option vests in five equal annual installments of 10,000 options
each, commencing on February 8, 2009, and annually thereafter. The stock options
are further subject to the terms and conditions of a stock option agreement
between each director and the Company.  Under the terms of the stock option
agreement, the stock option agreement will terminate and there will be no
further vesting of stock options effective as of the date that the director
ceases to be a director of the Company.  Upon termination of such service,
the director will have a specified period of time to exercise vested stock
options, if any.  The fair value of the aggregate 100,000 stock
options granted was estimated at $1.23 each, for a total of $123,000, using the
Black-Scholes Option Pricing Model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 164.88%, risk-free
interest rates of 2.37%, and expected lives of 5 years.
 
 On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  As a result, the stock option granted to Mr. Gladwin on
March 10, 2008 to purchase 50,000 shares of common stock were all forfeited upon
his resignation.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees for the six months ended February 28,
2009.
 
 On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000, using the Black-Scholes Option Pricing Model with
the following weighted average assumptions: dividend yield of 0%, expected
volatility of 126.74%, risk-free interest rate of 3.21%, and expected lives of
6.5 years.
 
 On
September 12, 2008, the Company granted a stock option to the then consultant
Chief Financial Officer (the “CFO”) of the Company, Mr. Frank Fabio, to
purchase, subject to applicable vesting provisions, 50,000 shares of the
Company’s common stock at an exercise price of $0.78 per share. The stock option
vests in five equal annual installments of 10,000 options each, commencing on
September 12, 2009, and annually thereafter. The stock option is further
subject to the terms and conditions of the stock option agreement between the
CFO and the Company.  Under the terms of the stock option agreement, the
stock option agreement will terminate and there will be no further vesting of
stock options effective as of the date that the CFO ceases to serve as a
consultant to the Company.  Upon termination of such service, the CFO will
have a specified period of time to exercise vested stock options, if
any.  The fair value of the 50,000 stock options granted was estimated
at $0.71 each, for a total of $35,500, using the Black-Scholes Option Pricing
Model with the following weighted average assumptions: dividend yield of 0%,
expected volatility of 126.74%, risk-free interest rate of 3.32%, and expected
life of 6.5 years.
 
 On
January 9, 2009, Mr. Fabio resigned from the position of CFO.  As a
result, the stock option granted to Mr. Fabio on September 12, 2008 to purchase
50,000 shares of common stock were all forfeited upon his
resignation.  Pursuant to Mr. Fabio’s resignation, stock option
compensation expense of $4,053 recorded during the quarter ended November 30,
2008 for Mr. Fabio’s stock option was reversed during the quarter ended February
28, 2009 and is included in management fees – related party for the three and
six months ended February 28, 2009.
  12
 Table
of Contents
  A summary
of the Company’s stock option activity for the six months ended February 28,
2009 and related information follows:
 
 Weighted
      AverageRemaining
                        
                        AggregateWeighted
      Average
                        
                        Contractual
                        
                        IntrinsicNumber
      of Options
                        
                        
                        Exercise
      Price
                        
                        Term
                        
                        ValueOutstanding
      at August 31, 2008
                        
                        
                        1,350,000
                        
                        
                        $
                        1.66Granted
                        
                        
                        150,000
                        
                        
                        
                        0.83Forfeited
      due to resignation
                        
                        
                        (1,350,000
                        )
                        
                        
                        1.63Outstanding
      at February 28, 2009
                        
                        
                        150,000
                        
                        
                        $
                        1.12
                        
                        9.37
      years
                        
                        $
                        -Exercisable
      at February 28, 2009
                        
                        
                        10,000
                        
                        
                        $
                        1.66
                        
                        9.03
      years
                        
                        $
                        -Available
      for grant at February 28, 2009
                        
                        
                        14,850,000
 
 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 second
quarter of 2009 (February 28, 2009 was a Saturday.  The last
trading day was February 27, 2009) 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 February 28, 2009. The intrinsic value
changes based on the fair market value of the Company’s common
stock.
 
 During
the three and six months ended February 28, 2009 the Company recorded stock
compensation expense of $15,812 and $35,677 for the amortization of stock
options outstanding at February 28, 2009, which is included in professional
fees.  As of February 28, 2009, the Company had $93,613 of total
unrecognized compensation cost related to unvested stock options which is
expected to be recognized over a period of 4.5 years.
 
 The
following table summarizes information about stock options outstanding and
exercisable at February 28, 2009:
 
 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$ 0.85
                  
                  
                  100,000
                  
                  
                  
                  9.53
                  
                  
                  $
                  0.85
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  —1.66
                  
                  
                  50,000
                  
                  
                  
                  9.03
                  
                  
                  
                  1.66
                  
                  
                  
                  10,000
                  
                  
                  
                  9.03
                  
                  
                  
                  1.66$ 0.85
      – 1.66
                  
                  
                  150,000
                  
                  
                  
                  9.37
                  
                  
                  $
                  1.12
                  
                  
                  
                  10,000
                  
                  
                  
                  9.03
                  
                  
                  $
                  1.66
 
 
 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
10.  Related Party Transactions
 
 Wages
and benefits
 
 During
the three and six months ended February 28, 2009 the Company incurred $0 and
$77,154 in cash wages and benefits expense for services rendered by Mr.
Nicholas Cucinelli, the former President and Chief Executive Officer of the
Company, which includes $50,000 severance pursuant to an Employment Termination
Agreement, dated October 15, 2008 between the Company and Mr.
Cucinelli.  Upon Mr. Cucinelli’s resignation, the Company
simultaneously appointed Mr. Meetesh Patel as the President, Chief Executive
Officer and Director of the Company.  During the three and six months
ended February 28, 2009, the Company incurred $40,629 and $67,990 in cash wages
and benefits expense for services rendered by Mr. Patel.
  13
 Table
of Contents
  Upon Mr.
Cucinelli’s resignation as President and Chief Executive Officer of the Company,
the stock option granted him on February 15, 2008 to purchase 1,250,000 shares
of common stock was forfeited pursuant to the terms of the Employment
Termination Agreement.  As a result of Mr. Cucinelli’s resignation,
stock option compensation expense of $3,573,778 recorded in fiscal year 2008 for
Mr. Cucinelli’s stock option was reversed during the quarter ended November 30,
2008 and is included in wages and benefits for the six months ended February 28,
2009.
 
 Management
fees – related party
 
 During
the three and six months ended February 28, 2009, the Company incurred $1,972
and $4,472 for services rendered by Mr. Frank Fabio, the former consultant Chief
Financial Officer (the “CFO) of the Company.  Mr. Fabio resigned as
CFO, effective January 9, 2009.
 
 On
September 12, 2008, the Company granted a stock option to the then CFO of the
Company to purchase, subject to applicable vesting provisions, 50,000 shares of
the Company’s common stock at an exercise price of $0.78 per share. The stock
option vests in five equal annual installments of 10,000 options each,
commencing on September 12, 2009, and annually thereafter. The stock
option is further subject to the terms and conditions of the stock option
agreement between the CFO and the Company.  Under the terms of the stock
option agreement, the stock option agreement will terminate and there will be no
further vesting of stock options effective as of the date that the CFO ceases to
serve as a consultant to the Company.  Upon termination of such service,
the CFO will have a specified period of time to exercise vested stock options,
if any.  The fair value of the 50,000 stock options granted was
estimated at $0.71 each, for a total of $35,500.  As a result of Mr.
Fabio’s resignation on January 9, 2009, the stock option granted to Mr. Fabio to
purchase 50,000 shares of common stock were all forfeited upon his
resignation.  Accordingly, stock option compensation expense of $4,053
recorded during the quarter ended November 30, 2008 for Mr. Fabio’s stock option
was reversed during the quarter ended February 28, 2009 and is included in
management fees – related party for the three and six months ended February 28,
2009.
 
 Professional
fees
 
 During
the three and six months ended February 28, 2009, the Company incurred $7,500
and $15,833 for services rendered by non-employee directors of the
Company.
 
 On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees for the six months ended February 28,
2009.
 
 On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000.  During the three and six months ended
February 28, 2009, the Company recorded stock compensation expense of $15,812
and $31,624 related to stock options granted to non-employee directors, which is
included in professional fees.
 
 During
the three and six months ended February 28, 2009, the law firm of Sierchio Greco
& Greco, LLP (“SG&G LLP”), the Company’s corporate and securities legal
counsel, provided $31,178 and $48,953 of legal services to the
Company. Joseph Sierchio, a non-employee director of the Company, is a
principal of SG&G LLP.  At February 28, 2009, the Company owed
SG&G LLP $9,110 which is included in accounts payable.
 
 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.
  14
 Table
of Contents
  Item
2.  Management’s discussion and Analysis of Financial
Condition and Results of Operations.
 
 Forward-Looking
Statements
 
 Except
for the historical information presented in this document, the matters discussed
in this Form 10-Q for the three months ended February 28, 2009, and specifically
in the items entitled "Management’s Discussion and Analysis of Financial
Condition and Results of Operations," or otherwise incorporated by reference
into this document, contain "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995). These
statements are identified by the use of forward-looking terminology such as
"believes," "plans," "intend," "scheduled," "potential," "continue,"
"estimates," "hopes," "goal," "objective," expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and
uncertainties.
 
 The safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company. The reader is cautioned that no
statements contained in this Form 10-Q should be construed as a guarantee or
assurance of future performance or results. These forward-looking statements
involve risks and uncertainties, including those identified within this Form
10-Q. The actual results that the Company achieves may differ materially from
any forward-looking statements due to such risks and uncertainties. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. Readers are urged to carefully
review and consider the various disclosures made by the Company in this Form
10-Q and in the Company's other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect the Company's business.
 
 Overview
 
 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
(“Kinetic Energy”), 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. Kinetic Energy 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.
 
 The
Company’s 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.
 
 Because
the Company is a smaller reporting company certain disclosures otherwise
required to be made in a Form 10-Q are not required to be made by the
Company.
 
 Photovoltaic
Technologies
 
 UIUC
Sponsored Research Agreement
 
 On August
25, 2006, through the Company’s 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.
  15
 Table
of Contents
  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 February 28,
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
should be refunded to the Company.
 
 During
the three and six months ended February 28, 2009 the Company did not record any
research and development expense pursuant to the UIUC Sponsored Research
Agreement. During the three and six months ended February 29, 2008 the Company
recorded $78,054 and $156,109 as research and development expense pursuant to
the UIUC Sponsored Research Agreement.  During the period from
inception (May 5, 1998) to February 28, 2009, 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.
 
 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.  As of February 28, 2009, the Company had advanced
$140,519 to Oakland University in accordance with the terms of 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
right pursuant to Section 9.3 of the Oakland Sponsored Research Agreement, and
provided written notice to Oakland University 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 and is included in research and development expense for the
three and six months ended February 28, 2009.  The remaining $120,299
was refunded to the Company in April 2009 and is included in other receivable at
February 28, 2009.
 
 Energy Harvesting
Technologies
 
 VERYST
Agreement
 
 On
November 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy, entered into an agreement with VERYST Engineering LLC (the “Veryst
Agreement”) relating to the development of technologies for generating
electricity from the motion of cars and trucks.  The Veryst Agreement
continues until terminated by either Veryst Engineering LLC or the
Company.  Pursuant to a Confidential Treatment Order (“CT ORDER”)
filed with the SEC, payment terms, scope of work and the terms of the license
agreement pursuant to the Veryst Agreement have not been disclosed.
 
 V2G
Letter of Intent
 
 On
December 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy, entered into a Letter of Intent with V2G Enterprises, LLC (the “V2G
Letter of Intent”) to provide development services to produce a roadway embedded
kinetic power capture device that harvests energy from vehicles and converts the
harvested kinetic energy into useable electricity.  Pursuant to the
terms of the V2G Letter of Intent, the payment terms and scope of work are to
remain confidential until a formal agreement has been reached between the two
parties.
 
 Nerve Regeneration
Technology
 
 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.
  16
 Table
of Contents
  Results of
Operations
 
 Operating
Expenses
 
 A summary
of the Company’s operating income (expense) for the three and six months ended
February 28, 2009 and February 29, 2008 was as follows:
 
 Three Months Ended
                                
                                
                                
                                
                                
                                Six Months EndedFebruary 28,
                                
                                
                                February 29,
                                
                                
                                Percentage
                                
                                
                                February 28,
                                
                                
                                February 29,
                                
                                
                                Percentage2009
                                
                                
                                2008
                                
                                
                                Change
                                
                                
                                2009
                                
                                
                                2008
                                
                                
                                ChangeOperating
      income (expense)Investor
      relations
                                
                                $
                                5,700
                                
                                
                                $
                                145,235
                                
                                
                                
                                (96
                                )
      %
                                
                                $
                                16,500
                                
                                
                                $
                                524,145
                                
                                
                                
                                (97
                                )
      %Wages
      and benefits
                                
                                
                                40,629
                                
                                
                                
                                967,153
                                
                                
                                
                                (96
                                )
                                
                                
                                (3,377,931
                                )
                                
                                
                                1,925,519
                                
                                
                                
                                *Management
      fees - related party
                                
                                
                                (2,081
                                )
                                
                                
                                -
                                
                                
                                
                                *
                                
                                
                                
                                4,472
                                
                                
                                
                                -
                                
                                
                                
                                *Professional
      fees
                                
                                
                                105,852
                                
                                
                                
                                79,493
                                
                                
                                
                                33
                                
                                
                                
                                168,033
                                
                                
                                
                                98,123
                                
                                
                                
                                71Research
      and development
                                
                                
                                58,720
                                
                                
                                
                                78,199
                                
                                
                                
                                (25
                                )
                                
                                
                                80,970
                                
                                
                                
                                156,253
                                
                                
                                
                                (48
                                )Travel
      and entertainment
                                
                                
                                11,991
                                
                                
                                
                                32,857
                                
                                
                                
                                (64
                                )
                                
                                
                                34,369
                                
                                
                                
                                61,218
                                
                                
                                
                                (44
                                )Other
      operating expenses
                                
                                
                                15,447
                                
                                
                                
                                44,390
                                
                                
                                
                                (65
                                )
                                
                                
                                30,431
                                
                                
                                
                                72,698
                                
                                
                                
                                (58
                                )Total
      operating income (expense)
                                
                                $
                                236,258
                                
                                
                                $
                                1,347,327
                                
                                
                                
                                (82
                                )
      %
                                
                                $
                                (3,043,156
                                )
                                
                                $
                                2,837,956
                                
                                
                                
                                *
                                %
 
 * Not
meaningful
 
 Investor
Relations
 
 Investor
relations costs represent fees paid to publicize the Company’s technology within
the investor community with the purposes of increasing company recognition and
branding, and to facilitate the efforts to raise funds in equity or debt
financings.
 
 The
decrease in investor relations is due to the Company focusing on fund raising
efforts during the three and six months ended February 29, 2008 compared to the
three and six months ended February 28, 2009, which required increased company
branding and information distribution.  The fund raising efforts
during the prior year is evidenced by the consummation of the sale of an
aggregate of 3,675,000 shares of the Company’s common stock and Class F Callable
Warrants to purchase up to an additional 3,675,000 share of the Company’s common
stock for aggregate proceeds of $3,675,000 pursuant to a Securities Purchase
Agreement dated February 8, 2008.
 
 Wages
and benefits
 
 On
October 15, 2008, Mr. Nicholas Cucinelli resigned as President and Chief
Executive Officer of the Company.  As a result, the stock option
granted 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 the Company and Mr. Cucinelli.  As a result of Mr. Cucinelli’s
resignation, stock option compensation expense of $3,573,778 recorded in fiscal
year 2008 for Mr. Cucinelli’s stock option was reversed during the quarter ended
November 30, 2008 and is included in wages and benefits for the six months ended
February 28, 2009.  Pursuant to the terms of Mr. Cucinelli’s
Employment Termination Agreement, he also received $50,000 severance, which is
included in wages and benefits for the six months ended February 28,
2009.
 
 In
contrast, during the three and six months ended February 29, 2008, stock
compensation expense of $889,069 and $1,776,194 was recorded in connection with
Mr. Cucinelli’s stock option grant.
 
 Upon Mr.
Cucinelli’s resignation, the Company simultaneously appointed Mr. Meetesh Patel
as the President, Chief Executive Officer and Director of the
Company.  During the three and six months ended February 28, 2009, the
Company incurred $40,629 and $67,990 in cash wages and benefits expense for
services rendered by Mr. Patel.
 
 Management
fees – related party
 
 During
the three and six months ended February 28, 2009, the Company incurred $1,972
and $4,472 for services rendered by Mr. Frank Fabio, the former consultant Chief
Financial Officer (the “CFO) of the Company.  Mr. Fabio resigned as
CFO, effective January 9, 2009.
  17
 Table
of Contents
  On
September 12, 2008, the Company granted a stock option to the then CFO of the
Company to purchase, subject to applicable vesting provisions, 50,000 shares of
the Company’s common stock at an exercise price of $0.78 per share. The stock
option vests in five equal annual installments of 10,000 options each,
commencing on September 12, 2009, and annually thereafter. The stock
option is further subject to the terms and conditions of the stock option
agreement between the CFO and the Company.  Under the terms of the stock
option agreement, the stock option agreement will terminate and there will be no
further vesting of stock options effective as of the date that the CFO ceases to
serve as a consultant to the Company.  Upon termination of such service,
the CFO will have a specified period of time to exercise vested stock options,
if any.  The fair value of the 50,000 stock options granted was
estimated at $0.71 each, for a total of $35,500.  As a result of Mr.
Fabio’s resignation on January 9, 2009, the stock option granted to Mr. Fabio to
purchase 50,000 shares of common stock were all forfeited upon his
resignation.  Accordingly, stock option compensation expense of $4,053
recorded during the quarter ended November 30, 2008 for Mr. Fabio’s stock option
was reversed during the quarter ended February 28, 2009 and is included in
management fees – related party for the three and six months ended February 28,
2009.
 
 Professional
fees
 
 Professional
fees primarily consist of accounting, audit, and tax fees, legal fees and
non-employee Board fees.  Professional fees increased partially as a
result of the Company closing its administrative office in Vancouver, British
Columbia, Canada, effective August 31, 2008, terminating all of the employees in
Vancouver, Canada.  Due to this downsizing, as of September 1, 2008,
the Company began outsourcing its accounting function to third parties resulting
in increases in accounting, audit and tax fees of approximately $20,000 and
$40,000 during the three and six months ended February 28, 2009 as compared to
the same periods of the prior year.
 
 Non-employee
Board fees increased approximately $23,000 and $48,000 during the three and six
months ended February 28, 2009 as compared to the same periods of the prior
year.  Non-employee Board members receive $2,500 per quarter for
services rendered in the capacity of a Board member.  This increase
from prior year is substantially the result of stock compensation expense
recorded during the three and six months ended February 28, 2009 related to the
grant of stock options previously granted to non-employee board
members.
 
 On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000.  During the three and six months ended
February 28, 2009, the Company recorded stock compensation expense of $15,812
and $31,624 related to stock options granted to non-employee directors, which is
included in professional fees.
 
 On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees for the six months ended February 28,
2009.
 
 The
increases in accounting, audit, and tax fees and non-employee Board fees are
offset by a decrease in legal fees of approximately $23,000 and $17,000 during
the three and six months ended February 28, 2009 as compared to the same periods
of the prior year.  Legal fees were higher in the prior year due to
the Company undergoing fund raising efforts which resulted in the Company
raising aggregate proceeds of $3,675,000 pursuant to a Securities Purchase
Agreement dated February 8, 2008.
 
 Research
and development
 
 Research
and development costs represent costs incurred to develop the Company’s
technology and are incurred pursuant to the Company’s sponsored research
agreements with UIUC and Oakland University, a development agreement with
VERYST Engineering LLC and a letter of intent with V2G Enterprises, LLC. These
agreements include salaries and benefits for research and development personnel,
allocated overhead and facility occupancy costs, contract services and other
costs. The Company charges all research and development expenses to operations
as they are incurred except for prepayments which are capitalized and amortized
over the applicable period.
 
 Research
and development expense for the three and six months ended February 28, 2009
consists substantially of costs incurred pursuant to the Veryst Agreement and
the Oakland Sponsored Research Agreement.  Research and development
expense for the three and six months ended February 29, 2008 consists entirely
of costs incurred pursuant to the UIUC Sponsored Research
Agreement.
  18
 Table
of Contents
  Travel
and entertainment
 
 Travel
and entertainment decreased during the three and six months ended February 28,
2009 as compared to the same periods of the prior year primarily as a result of
the Company closing its administrative office in Vancouver, British Columbia,
Canada, effective August 31, 2008, terminating all of the employees in
Vancouver, Canada.
 
 Other
operating expenses
 
 Other
operating expenses includes rent, utilities, office supplies, information
technology related fees and other administrative costs.  Other
operating expenses decreased primarily as a result of the Company closing its
administrative office in Vancouver, British Columbia, Canada, effective August
31, 2008.  Rent for the Vancouver, Canada administrative office was
CAD$3,200 per month.
  19
 Table
of Contents
  Other
income (expense)
 
 A summary
of the Company’s other income (expense) for the three and six months ended
February 28, 2009 and February 29, 2008 was as follows:
 
 Three Months Ended
                        
                        
                        
                        
                        
                        Six Months EndedFebruary 28,
                        
                        
                        February 29,
                        
                        
                        Percentage
                        
                        
                        February 28,
                        
                        
                        February 29,
                        
                        
                        Percentage2009
                        
                        
                        2008
                        
                        
                        Change
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        ChangeOther
      income (expense)Interest
      income
                        
                        $
                        547
                        
                        
                        $
                        11,699
                        
                        
                        
                        (95
                        )
      %
                        
                        $
                        7,743
                        
                        
                        $
                        24,603
                        
                        
                        
                        (69
                        )
      %Interest
      expense
                        
                        
                        (161
                        )
                        
                        
                        (143
                        )
                        
                        
                        13
                        
                        
                        
                        (267
                        )
                        
                        
                        (143
                        )
                        
                        
                        87Gain
      on investment in foreign subsidiary
                        
                        
                        59,704
                        
                        
                        
                        -
                        
                        
                        
                        *
                        
                        
                        
                        59,704
                        
                        
                        
                        -
                        
                        
                        
                        *Foreign
      exchange gain (loss)
                        
                        
                        635
                        
                        
                        
                        1,808
                        
                        
                        
                        (65
                        )
                        
                        
                        (52,918
                        )
                        
                        
                        4,019
                        
                        
                        
                        *Total
      other income (expense)
                        
                        $
                        60,725
                        
                        
                        $
                        13,364
                        
                        
                        
                        354
                        %
                        
                        $
                        14,262
                        
                        
                        $
                        28,479
                        
                        
                        
                        (50
                        )
      %
 
 * Not
meaningful
 
 Interest
income
 
 Despite
the higher average cash balance maintained during the three and six months ended
February 28, 2009 compared to the same period in 2008, interest income decreased
as a result of the sharp decline in the interest rate on the Company’s
interest-bearing cash accounts.  In addition, in connection with the
closing its administrative office in Vancouver, British Columbia, Canada, as of
December 31, 2008, the Company transferred all of the funds in its interest
bearing cash account maintained at a Canadian owned financial institution to
non-interest bearing bank accounts at U.S. financial institutions.
 
 Gain
on investment in foreign subsidiary
 
 Octillion
Technologies Limited (“Octillion Technologies”) provided administrative services
to the Company’s Canadian office. The Company ceased to conduct business in
Canada, effective August 31, 2008 and closed this office. As a result, the
Company dissolved Octillion Technologies and eliminated all intercompany
balances.  In accordance with SFAS No. 152, “Foreign Currency
Translation”, the Company recorded a gain on its investment in Octillion
Technologies equal to the accumulated other comprehensive income at December 1,
2008, the time of the dissolution.
 
 Foreign
exchange gain (loss)
 
 The
Company translates assets and liabilities of its foreign subsidiaries, other
than those denominated in United States Dollars, at the rate of exchange at the
balance sheet date.  The foreign exchange loss during the six months
ended February 28, 2009 is substantially the result of cash infusions made from
New Energy Technologies to the Company’s former foreign subsidiary, Octillion
Technologies (denominated in Canadian dollars), thereby increasing the
intercompany payable on Octillion Technologies’ balance sheet.  As
noted above, Octillion Technologies was dissolved, effective December 1,
2008.
 
 Liquidity and Capital
Resources
 
 The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  The Company incurred cumulative losses
of $4,656,026 through February 28, 2009.  Due to the "start up" nature
of the Company's business, the Company expects to incur losses as it continues
development of its photovoltaic and energy harvesting technologies and
expands.  These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.  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 investment in order to 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.  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.  The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
 
 The
Company's principal source of liquidity is cash in the bank, which the Company
anticipates will be sufficient to fund its operations for the next twelve
months.  The Company's future funding requirements will depend on
numerous factors, including: the time and investment required to invest in the
Company’s research and development projects; to recruit and train qualified
management personnel; and the Company's ability to compete against other, better
capitalized corporations in similar businesses.
  20
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  As of
February 28, 2009, the Company had a cash balance of $2,502,290. The Company has
financed its operations primarily pursuant to a Securities Purchase Agreement in
which the Company received $3,395,955 net proceeds in February 2008 and from the
exercise of warrants.
 
 Net cash
used in operating activities was $479,027 for the six months ended February 28,
2009, compared to net cash used of $960,164 for the same period in
2008.  The decrease in cash used of $481,137 primarily reflects a
decrease in investor relations expense of $507,645, offset by an increase in
professional fees of $69,910 as a result of the Company outsourcing its
accounting function to third parties, effective September 1, 2008 and a $50,000
severance payment made to Mr. Cucinelli, the Company’s former Chief Executive
Officer and President pursuant to his Termination Employment Agreement dated
October 15, 2008.
 
 Net cash
used in investing activities was $0 for the six months ended February 28, 2009,
compared to $2,271 during the same period in 2008.  During the six
months ended February 29, 2008, the Company purchased $2,271 of equipment, all
of which was for use by the administrative office in Vancouver, B.C. and
subsequently disposed of on August 31, 2008.
 
 Net cash
provided by financing activities was $0 for the six months ended February 28,
2009 compared to $3,395,955 for the same period in 2008.  In February
2008, the Company received net proceeds of $3,395,955 pursuant to a Securities
Purchase Agreement.
 
 Securities
Purchase Agreement
 
 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 proceeds
of $3,675,000 pursuant to the terms of a Securities Purchase Agreement dated
February 8, 2008 with certain institutional and other accredited investors (the
“Investors”).
 
 The
Company engaged an agent (the “Agent”) to help in the fund raising efforts of
the Securities Purchase Agreement.  The agent was paid a total cash
fee of 7% of the aggregate proceeds ($257,250) and received 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.
 
 Related Party
Transactions
 
 Wages
and benefits
 
 During
the three and six months ended February 28, 2009 the Company incurred $0 and
$77,154 in cash wages and benefits expense for services rendered by Mr.
Nicholas Cucinelli, the former President and Chief Executive Officer of the
Company, which includes $50,000 severance pursuant to an Employment Termination
Agreement, dated October 15, 2008 between the Company and Mr.
Cucinelli.  Upon Mr. Cucinelli’s resignation, the Company
simultaneously appointed Mr. Meetesh Patel as the President, Chief Executive
Officer and Director of the Company.  During the three and six months
ended February 28, 2009, the Company incurred $40,629 and $67,990 in cash wages
and benefits expense for services rendered by Mr. Patel.
 
 Upon Mr.
Cucinelli’s resignation as President and Chief Executive Officer of the Company,
the stock option granted him on February 15, 2008 to purchase 1,250,000 shares
of common stock was forfeited pursuant to the terms of the Employment
Termination Agreement.  As a result of Mr. Cucinelli’s resignation,
stock option compensation expense of $3,573,778 recorded in fiscal year 2008 for
Mr. Cucinelli’s stock option was reversed during the quarter ended November 30,
2008 and is included in wages and benefits for the six months ended February 28,
2009.
 
 Management
fees – related party
 
 During
the three and six months ended February 28, 2009, the Company incurred $1,972
and $4,472 for services rendered by Mr. Frank Fabio, the former consultant Chief
Financial Officer (the “CFO) of the Company.  Mr. Fabio resigned as
CFO, effective January 9, 2009.
 
 On
September 12, 2008, the Company granted a stock option to the then CFO of the
Company to purchase, subject to applicable vesting provisions, 50,000 shares of
the Company’s common stock at an exercise price of $0.78 per share. The stock
option vests in five equal annual installments of 10,000 options each,
commencing on September 12, 2009, and annually thereafter. The stock
option is further subject to the terms and conditions of the stock option
agreement between the CFO and the Company.  Under the terms of the stock
option agreement, the stock option agreement will terminate and there will be no
further vesting of stock options effective as of the date that the CFO ceases to
serve as a consultant to the Company.  Upon termination of such service,
the CFO will have a specified period of time to exercise vested stock options,
if any.  The fair value of the 50,000 stock options granted was
estimated at $0.71 each, for a total of $35,500.  As a result of Mr.
Fabio’s resignation on January 9, 2009, the stock option granted to Mr. Fabio to
purchase 50,000 shares of common stock were all forfeited upon his
resignation.  Accordingly, stock option compensation expense of $4,053
recorded during the quarter ended November 30, 2008 for Mr. Fabio’s stock option
was reversed during the quarter ended February 28, 2009 and is included in
management fees – related party for the three and six months ended February 28,
2009.
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  Professional
fees
 
 During
the three and six months ended February 28, 2009, the Company incurred $7,500
and $15,833 for services rendered by non-employee directors of the
Company.
 
 On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees for the six months ended February 28,
2009.
 
 On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000.  During the three and six months ended
February 28, 2009, the Company recorded stock compensation expense of $15,812
and $31,624 related to stock options granted to non-employee directors, which is
included in professional fees.
 
 During
the three and six months ended February 28, 2009, the law firm of Sierchio Greco
& Greco, LLP (“SG&G LLP”), the Company’s corporate and securities legal
counsel, provided $31,178 and $48,953 of legal services to the Company.
Joseph Sierchio, a non-employee director of the Company, is a principal of
SG&G LLP.  At February 28, 2009, the Company owed SG&G LLP
$9,110 which is included in accounts payable.
 
 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
 
 As of
February 28, 2009, the Company has future minimum lease payments of $4,625 under
its corporate office operating leases.
 
 Off-Balance Sheet
Arrangements
 
 The
Company has no off-balance sheet arrangements.
 
 Recently IssuedAccounting
Pronouncements
 
 See Note
3. “Presentation of Interim Information” to the Consolidated Financial
Statements in this Form 10-Q.
  22
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  Item
4T.   Controls and Procedures
 
 (a)
Evaluation of Disclosure Controls and Procedures
 
 Under the
supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, the Company conducted
an evaluation of the effectiveness of the design and operation of its 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, the Company’s
Chief Executive Officer and Chief Financial Officer concluded as of February 28,
2009 that the Company’s disclosure controls and procedures were effective such
that the information required to be disclosed in the Company’s 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 the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required
disclosure.
 
 (b)
Changes in Internal Control over Financial Reporting
 
 There
were no changes in the Company’s 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, the Company’s internal control over
financial reporting.
  23
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  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
 
 31.1
              Certification
      of Principal Executive Officer and Principal Financial Officer Pursuant to
      Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.
*
 
 32.1
              Certification
      of Principal Executive Officer and Principal Financial Officer Pursuant to
      18 USC. Section 1350, As Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002. *
  ____________________
  *Filed
herewith.
  24
 Table
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  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)April
      13, 2009
                By:
      /s/ Meetesh
      PatelMeetesh
      PatelPresident,
      Chief Executive Officer, Chief Financial Officer, Secretary,
      Director
 
 25