Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Aug. 31, 2014 | |
Document And Entity Information | ' |
Entity Registrant Name | 'NEW ENERGY TECHNOLOGIES, INC. |
Entity Central Index Key | '0001071840 |
Document Type | 'S-1 |
Document Period End Date | 31-Aug-14 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--08-31 |
Is Entity a Well-known Seasoned Issuer? | 'No |
Is Entity a Voluntary Filer? | 'No |
Is Entity's Reporting Status Current? | 'Yes |
Entity Filer Category | 'Smaller Reporting Company |
Document Fiscal Period Focus | 'FY |
Document Fiscal Year Focus | '2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Current assets | ' | ' |
Cash and cash equivalents | $785,237 | $347,493 |
Deferred research and development costs | 150,000 | 150,000 |
Prepaid expenses and other current assets | 14,257 | 22,379 |
Total current assets | 949,494 | 519,872 |
Equipment, net of accumulated depreciation of $18,128 and $12,025, respectively | 24,597 | 13,823 |
Total assets | 974,091 | 533,695 |
Current liabilities | ' | ' |
Accounts payable | 144,239 | 122,356 |
Interest payable | 193,151 | ' |
Convertible promissory note, net of discount of $2,313,680 as of August 31, 2014 | 686,320 | ' |
Total current liabilities | 1,023,710 | 122,356 |
Commitments and contingencies | ' | ' |
Stockholders' equity (deficit) | ' | ' |
Preferred stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and outstanding | ' | ' |
Common stock: $0.001 par value; 300,000,000 shares authorized, 24,306,612 and 24,194,713 shares issued and outstanding at August 31, 2014 and 2013, respectively | 24,306 | 24,194 |
Additional paid-in capital | 20,872,345 | 17,441,034 |
Retained earnings (deficit) | -20,946,270 | -17,053,889 |
Total stockholders' equity (deficit) | -49,619 | 411,339 |
Total liabilities and stockholders' equity (deficit) | $974,091 | $533,695 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Current assets | ' | ' |
Equipment, net of accumulated depreciation | $18,128 | $12,025 |
Current liabilities | ' | ' |
Convertible promissory note, net of discount | $2,313,680 | ' |
Stockholders' equity | ' | ' |
Preferred stock, par value | $0.10 | $0.10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 24,306,612 | 24,194,713 |
Common stock, shares outstanding | 24,306,612 | 24,194,713 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Consolidated Statements Of Operations | ' | ' |
Revenue | ' | ' |
Operating expense | ' | ' |
Selling, general and administrative | 2,392,276 | 2,885,845 |
Research and development | 620,634 | 356,877 |
Total operating expense | 3,012,910 | 3,242,722 |
Loss from operations | -3,012,910 | -3,242,722 |
Other income (expense) | ' | ' |
Interest expense | -193,151 | -30,325 |
Interest expense - accretion of debt discount | -686,320 | -999,485 |
Total other income (expense) | -879,471 | -1,029,810 |
Net loss | ($3,892,381) | ($4,272,532) |
Basic and Diluted Loss per Common Share | ($0.16) | ($0.19) |
Weighted average number of common shares outstanding - basic and diluted | 24,279,448 | 22,686,892 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash flows from operating activities | ' | ' |
Net loss | ($3,892,381) | ($4,272,532) |
Adjustments to reconcile net loss to net cash used in operating activities | ' | ' |
Depreciation | 6,103 | 6,143 |
Stock based compensation expense | 788,396 | 334,305 |
Reversal of stock based compensation expense due to forfeiture of stock options | -356,973 | -10,075 |
Warrants issued to note holder | ' | 1,059,038 |
Accretion of debt discount | 686,320 | 999,485 |
Changes in operating assets and liabilities: | ' | ' |
Decrease (increase) in deferred research and development costs | ' | -117,405 |
Decrease (increase) in prepaid expenses and other current assets | 8,122 | 5,854 |
Increase (decrease) in accounts payable | 21,883 | 58,953 |
Increase (decrease) in accrued liabilities | 193,151 | 30,325 |
Net cash used in operating activities | -2,545,379 | -1,905,909 |
Cash flows from investing activity | ' | ' |
Purchase of equipment | -16,877 | ' |
Net cash used in investing activity | -16,877 | ' |
Cash flows from financing activities | ' | ' |
Proceeds from the issuance of common stock, exercise of warrants and stock options, net | ' | 1,206,484 |
Proceeds from promissory notes | 3,000,000 | ' |
Net cash provided by financing activities | 3,000,000 | 1,206,484 |
Increase (decrease) in cash and cash equivalents | 437,744 | -699,425 |
Cash and cash equivalents at beginning of period | 347,493 | 1,046,918 |
Cash and cash equivalents at end of period | 785,237 | 347,493 |
Supplemental disclosure of cash flow information: | ' | ' |
Interest paid in cash | ' | ' |
Income taxes paid in cash | ' | ' |
Supplemental disclosure of non-cash transactions: | ' | ' |
Debt discount recorded for value of warrants issued | 1,137,149 | ' |
Debt discount recorded for beneficial conversion feature | 1,862,851 | ' |
Common stock issued for conversion of note payable | ' | $1,056,556 |
Organization_and_Going_Concern
Organization and Going Concern | 12 Months Ended |
Aug. 31, 2014 | |
Notes to Financial Statements | ' |
NOTE 1. Organization, Recent Accounting Pronouncements, Going Concern and Summary of Significant Accounting Policies | ' |
Organization | |
New Energy Technologies, Inc. (the “Company”, “we”, “us”, “our”) was incorporated in the State of Nevada on May 5, 1998, under the name “Octillion Corp.” On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”). | |
KEC was incorporated on June 19, 2008, in the State of Nevada and holds the patents related to the Company’s MotionPower™ technology. The Company’s business activities related to the MotionPower™ technology are conducted through KEC. | |
New Energy Solar was incorporated on February 9, 2009, in the State of Florida and has entered into agreements with USF to sponsor research related to the Company’s SolarWindow™ technology. | |
On March 16, 2011, pursuant to a consent signed by the Company’s shareholders owning a majority of the Company’s then issued and outstanding shares of common stock, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing its authorized shares of common stock, $0.001 par value, from 100,000,000 to 300,000,000. | |
We are a renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. The Company’s proprietary, patent-pending technologies and products are the subjects of one hundred and one (101) patent-filings, and have been invented, designed, engineered, and prototyped in preparation for further field testing, product development and eventual commercial deployment. | |
Our SolarWindow™ technology provides the ability to harvest light energy from the sun and artificial sources and generate electricity from a see-through, semi-transparent, coating of organic photovoltaic solar cells. Our SolarWindow™ technology is the subject of forty-two (42) patent filings. Initially being developed for application on glass surfaces, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone. | |
Our MotionPower™ technology, harvests “kinetic” or “motion” energy from vehicles when they slow down before coming to a stop and converts this captured energy into electricity. Our MotionPower™ technology is the subject of fifty-nine (59) patent filings. | |
The Company’s product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants. | |
The Company continues to assess the ongoing development and value propositions of its novel SolarWindow™ and MotionPower™ technologies. This assessment helps us strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages. | |
Recent Accounting Pronouncements | |
The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its financial statements except as described below. | |
On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Company’s consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. The Company has adopted the amendments and no longer presents inception-to-date information in the statements of operations, statement of changes in stockholders’ deficit and statements of cash flows. In addition, the financial statements will no longer be labeled as those of a development stage entity. | |
Going Concern | |
The Company does not have any commercialized products and has not generated any revenue since inception. The Company has an accumulated deficit of $20,946,270 as of August 31, 2014, and does not have positive cash flows from operating activities. Included in the deficit are non-cash expenses totaling $5,738,112 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discounts. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business. | |
In its report with respect to the Company’s financial statements for the year ended August 31, 2014, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue as a going concern. Because the Company has not yet generated revenues from its operations and does not expect to do so in the near future, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Currently, the Company is seeking additional financing but has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. | |
As of August 31, 2014, the Company had cash of $785,237. Based upon its current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable it to continue operations through December 31, 2014. | |
If adequate funds are not available on reasonable terms, or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to delay, reduce the scope of or terminate one or more of its research programs, sell rights to its SolarWindow™ technology and/or MotionPowerTM technology or other technologies or products based upon such technologies, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available. | |
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements. | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | |
These consolidated financial statements presented are those of the Company and its wholly owned subsidiaries, KEC, and New Energy Solar. All significant intercompany balances and transactions have been eliminated. | |
Estimates | |
The preparation of the Company’s consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions. | |
Cash and Cash Equivalents | |
Cash and cash equivalents includes highly liquid investments with original maturities of three months or less. The Company has amounts deposited with financial institutions in excess of federally insured limits. | |
Fair Value Measurement | |
The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value: | |
Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities valued with Level 1 inputs. | |
Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company has no assets or liabilities valued with Level 2 inputs. | |
Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs. | |
Fair Value of Financial Instruments | |
The carrying value of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments and their liquidity. It is not practical to determine the fair value of our notes payable due to the complex terms. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. | |
Research and Development | |
Research and development costs represent costs incurred to develop the Company’s technology, including salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed. | |
Stock-Based Compensation | |
The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes-Merton formula to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes-Merton formula requires management to make assumptions regarding the option lives, expected volatility, and risk free interest rates. See “NOTE 3 – Common Stock and Warrants” and “NOTE 4 - Stock Options” for additional information on the Company’s stock-based compensation plans. | |
Income Taxes | |
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively. | |
Segment Reporting | |
The Company’s business is considered to be operating in one segment based upon the Company’s organizational structure, the way in which the operations are managed and evaluated, the availability of separate financial results and materiality considerations. | |
Net Income (Loss) Per Share | |
The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money). See NOTE 5 - Net Loss Per Share” for further discussion. |
Convertible_Promissory_Note
Convertible Promissory Note | 12 Months Ended |
Aug. 31, 2014 | |
Notes to Financial Statements | ' |
Note 2. Convertible Promissory Note | ' |
April 17, 2012 $1,000,000 Bridge Loan | |
On April 17, 2012, the Company entered into a Bridge Loan Agreement (the “2012 Loan Agreement”) with 1420524 Alberta Ltd. (the “Creditor”), pursuant to which the Company borrowed $1,000,000 at an annual interest rate of 7% (the “2012 Loan”). As a condition to the Creditor’s entry into the 2012 Loan Agreement, the Company issued the Creditor a Series G Stock Purchase Warrant to purchase 625,000 shares of the Company’s common stock (the “Series G Warrant”), which is exercisable through April 17, 2015, with an initial exercise price of 84% of the average of the closing price for our common stock as reported on the OTC Markets Group Inc. QB tier (the “OTCQB”) for the five trading days immediately preceding the closing of the Loan, or $1.92 per share, subject to adjustment as provided therein. According to the original terms of the 2012 Loan Agreement, the Creditor could elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of the Company’s common stock at an initial fixed conversion price equal to seventy (70%) percent of the average of the closing price for the Company’s common stock as reported on the OTCQB for the five trading days immediately preceding the closing of the Loan, or $1.60 per share subject to adjustment as provided therein. The debt discount attributable to the relative fair value of the warrants and the beneficial conversion feature amounted to $547,050 and $452,950, respectively, and was to be accreted over the term of the 2012 Loan using the effective interest method. | |
On February 1, 2013, the Company and the Creditor entered into a Loan Conversion Agreement (“LCA”) whereby the Creditor agreed to convert the entire balance outstanding, including $1,000,000 of principal and $56,556 of accrued interest payable into 1,650,869 shares of restricted common stock. In order to induce the Creditor to convert the 2012 Loan into shares of common stock, and eliminate the Company’s obligation to repay the 2012 Loan in cash, the effective conversion price was reduced to $0.64 (the price at which the Company sold shares pursuant to its self-directed registered offering; see “NOTE 3 – Common Stock and Warrants” below) from the initial conversion price of $1.60. In addition, as part of the conversion, the Company issued to the Creditor a Series H Warrant to purchase 825,435 shares of the Company’s common stock (See “NOTE 3 – Common Stock and Warrants” below for additional information). No incremental expense was recognized in these consolidated financial statements related to the reduction in the exercise price of the Series G Warrant, and the conversion of the 2012 Loan, because the transaction did not meet the requirements for an inducement under accounting principles generally accepted in the United States. As such, the 2012 Loan conversion was accounted for as a debt extinguishment with no gain or loss recognized due to the related party nature of the transaction. The Company recognized expense amounting to $1,059,038 for the issuance of the Series H Warrant to the Creditor, representing additional financing costs associated with the 2012 Loan. | |
During the year ended August 31, 2013, the Company recognized $30,325 of interest expense related to the 2012 Loan and $999,485 of accretion related to the debt discount. As a result of the 2012 Loan conversion, the debt discount was fully amortized by February 1, 2013, the date of the LCA. | |
October 7, 2013 $3,000,000 Bridge Loan | |
On October 7, 2013 (the “Closing Date”), the Company entered into a Bridge Loan Agreement (the “2013 Loan Agreement”) with Kalen Capital Corporation (the “Investor”), a private corporation owning in excess of 10% of the Company’s issued and outstanding shares of common stock. Pursuant to the 2013 Loan Agreement, the Company received proceeds of $3,000,000 and issued a 7% unsecured Convertible Promissory Note (the “2013 Note”) due on October 6, 2014 (the 2013 Note has been amended, See “NOTE 8 – Subsequent Events”), with interest compounded quarterly and issued a Series I Stock Purchase Warrant (the “Series I Warrant”) allowing the holder to purchase up to 921,875 shares of the Company’s common stock at an initial exercise price of $1.37 for a period on five (5) years. The Series I Warrant is exercisable on a “cashless basis.” According to the original terms of the 2013 Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the 2013 Note, and any or all accrued and unpaid interest thereon into units (collectively, the “Units”), with each Unit consisting of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock (the “Series J Warrant”); and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock (the “Series K Warrant”). The conversion price for each Unit is the lesser of (i) $1.37, with the exercise price of each Series J Warrant set at $1.47 and the exercise price of each Series K Warrant set at $1.57; or (ii) 70% of the 20 day average closing price of the Company’s common stock prior to conversion, subject to a floor of $1.00 with the exercise price of each Series J Warrant included in the Units issued upon conversion being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant included in the Units issued upon conversion being equal to 114.6% of the unit exercise price. | |
Together with the 2013 Loan Agreement, the Company entered into (a) a Lock-Up Agreement whereby the Investor agreed not to sell any shares of common stock owned by the Investor, including any shares issued upon conversion of the Note or upon exercise of any warrants held by Investor, whether issued pursuant to this 2013 Loan Agreement or otherwise, for a period of one (1) year from the Closing Date (as defined in the 2013 Loan Agreement) and (b) a Registration Rights Agreement that requires the Company to prepare and file a registration statement on Form S-1 no later than the 90th day prior to the expiration of the Lock-Up Agreement covering the resale of all shares of common stock issuable upon conversion of any portion of the 2013 Note and the shares of common stock issuable upon exercise of the Series I, Series J and Series K Warrants. | |
The Company calculated the debt discount related to the 2013 Note and Series I Warrants by first allocating the respective fair value of the 2013 Loan and the Series I Warrants based upon their relative fair values to the total 2013 Note proceeds. The fair value of the Series I Warrants issued with the Note was calculated using the Black-Scholes option pricing model and the following assumptions: market price of common stock - $2.12 per share; estimated volatility - 165.67%; risk free interest rate - 1.41%; expected dividend rate - 0% and expected life - 5.0 years. The resulting fair value of $1,137,149 was allocated to the Series I Warrants. | |
The intrinsic value of the beneficial conversion feature amounted to $1,862,851. The resulting $3,000,000 discount to the 2013 Note is being accreted over the one year term of the 2013 Note using the effective interest method. | |
During the year ended August 31, 2014, the Company recognized $193,151 of interest expense related to this 2013 Note and $686,320 of accretion related to the debt discount. The remaining debt discount of $2,313,680 will be amortized during the quarter ended November 30, 2014. |
Common_Stock_and_Warrants
Common Stock and Warrants | 12 Months Ended | |||||||||||||
Aug. 31, 2014 | ||||||||||||||
Notes to Financial Statements | ' | |||||||||||||
Note 3. Common Stock and Warrants | ' | |||||||||||||
Common Stock | ||||||||||||||
At August 31, 2014, the Company had 300,000,000 authorized shares of common stock with a par value of $0.001 per share, with 24,306,612 shares of common stock outstanding and 3,347,496 shares reserved for issuance under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) (See “NOTE 4 - Stock Options”). | ||||||||||||||
During the year ended August 31, 2014, the Company had the following common stock related transactions: | ||||||||||||||
· | On November 11, 2013 and November 13, 2013, the Company issued a total of 81,899 shares of unrestricted common stock as a result of the cashless exercise of 190,000 stock options. | |||||||||||||
· | On January 28, 2014, the Company issued 10,000 shares of common stock to each of the Company’s three directors (30,000 shares total) valued at $2.90 per share, the closing price of the Company’s common stock on the day the stock was issued (See “NOTE 6 - Related Party Transactions” below for additional information). | |||||||||||||
During the year ended August 31, 2013, the Company had the following common stock related transactions: | ||||||||||||||
· | On February 1, 2013, in full satisfaction of the 2012 Loan, the Company issued to the Creditor 1,650,869 shares of restricted common stock upon the conversion of the 2012 Loan, as adjusted in accordance with the terms of the LCA. Additionally, pursuant to the terms of the LCA, the Company issued to the Creditor 825,435 Series H Warrants and reduced the exercise price of the Series G Warrant to $0.64 (See “Note 2 - Convertible Promissory Notes” above for additional information). | |||||||||||||
· | On February 1, 2013, the Company completed a self-directed registered offering of 1,875,000 units at a price of $0.64 per unit for $1,200,000 in aggregate proceeds (the “Registered Offering”). Each unit consisted of one share of the Company’s common stock and one-half Series H Stock Purchase Warrant (“Series H Warrant”) to purchase one-half of a share of common stock at the initial exercise price of $0.83 per share for a period of three years from the date of issuance. The Company issued 937,503 Series H Warrants as part of the Registered Offering. The relative fair value of the common stock was estimated to be $638,717 and the relative fair value of the warrants was estimated to be $561,283 as determined based on the relative fair value allocation of the proceeds received. The Series H Warrants were valued using the Black-Scholes option pricing model using the following variables: $0.83 exercise price, $1.48 stock price, 161% volatility, 0.40% risk-free interest rate, 3 year term and no dividends. | |||||||||||||
· | On March 21, 2013, the Company issued 7,812 shares of common stock upon the exercise of an equal number of Series H Warrants and received proceeds of $6,484. | |||||||||||||
· | On May 7, 2013, the Company issued 22,672 shares of unrestricted common stock as a result of the cashless exercise of 63,333 stock options | |||||||||||||
Warrants | ||||||||||||||
Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. A summary of the Company’s warrants outstanding and exercisable as of August 31, 2014 and 2013 is as follows: | ||||||||||||||
Shares of Common Stock Issuable from Warrants Outstanding as of | ||||||||||||||
Description | 31-Aug-14 | 31-Aug-13 | Exercise Price | Expiration | ||||||||||
Series G | 625,000 | 625,000 | $ | 0.64 | 17-Apr-15 | |||||||||
Series H | 1,755,126 | 1,755,126 | $ | 0.83 | 1-Feb-16 | |||||||||
Series I | 921,875 | - | $ | 1.37 | 7-Oct-18 | |||||||||
Total | 3,302,001 | 2,380,126 | ||||||||||||
The Series G Warrant was issued on April 17, 2012, as a condition to the Creditor entering into the 2012 Loan Agreement. 825,435 of the Series H Warrants were issued in connection with the 2012 Loan conversion. 929,691 of the Series H Warrants were issued on February 1, 2013, in connection with the self-directed registered offering of 1,875,000 units. The Series I Warrant was issued on October 7, 2013, in connection with the 2013 Loan Agreement. In addition, there are a total of 5,249,303 Series J Warrants and Series K Warrants issuable as described above. Additional disclosure related to the warrants is more fully described above under “NOTE 2 - Convertible Promissory Notes.” | ||||||||||||||
During the year ended August 31, 2014 and 2013, the Company received $0 and $6,484, respectively, upon the exercise of 7,812 Series H Warrants by two warrant holders. |
Stock_Options
Stock Options | 12 Months Ended | ||||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||||||||
Note 4. Stock Options | ' | ||||||||||||||||||||||||||
On October 10, 2006, the Company’s Board of Directors (the “Board”) adopted and approved the 2006 Incentive Stock Option Plan (the “2006 Plan”) that provides for the grant of stock options to employees, directors, officers and consultants. Stock option grants vest either immediately or over one to five years and expire ten years after the date of grant. Stockholders previously approved 5,000,000 shares for grant under the 2006 Plan, of which 3,347,496 remain available for grant and 326,667 options have been exercised as of August 31, 2014. All shares approved for grant and subsequently forfeited are available for future grant. The Company does not repurchase shares to fulfill the requirements of options that are exercised. The Company issues new shares when options are exercised. | |||||||||||||||||||||||||||
The Company employs the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options: | |||||||||||||||||||||||||||
Years Ended August 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Expected dividend yield | – | – | |||||||||||||||||||||||||
Expected stock price volatility | 154.0% – 154.5% | 160.1% – 161.1% | |||||||||||||||||||||||||
Risk-free interest rate | 2.21% – 2.41% | 1.14% – 1.24% | |||||||||||||||||||||||||
Expected term (in years) | 7.67 | 7.67 | |||||||||||||||||||||||||
Exercise price | $ | 2.9 | $ | 0.80 – $2.25 | |||||||||||||||||||||||
Weighted-average grant date fair-value | $ | 2.68 | $ | 1.54 | |||||||||||||||||||||||
A summary of the Company’s stock option activity for the year ended August 31, 2014 and 2013 and related information follows: | |||||||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value ($) | ||||||||||||||||||||||||
Outstanding at August 31, 2012 | 861,671 | 2.1 | |||||||||||||||||||||||||
Grants | 177,500 | 1.59 | |||||||||||||||||||||||||
Exercises | (63,333 | ) | 1.65 | ||||||||||||||||||||||||
Forfeitures | (5,000 | ) | 3.27 | ||||||||||||||||||||||||
Outstanding at August 31, 2013 | 970,838 | 2.03 | |||||||||||||||||||||||||
Grants | 805,000 | 2.9 | |||||||||||||||||||||||||
Exercises | (190,000 | ) | 1.65 | ||||||||||||||||||||||||
Forfeitures | (260,001 | ) | 1.69 | ||||||||||||||||||||||||
Outstanding at August 31, 2014 | 1,325,837 | 2.68 | 8.05 years | $ | 19,500 | ||||||||||||||||||||||
Exercisable at August 31, 2014 | 621,337 | 2.43 | 6.41 years | $ | 19,500 | ||||||||||||||||||||||
Available for grant at August 31, 2014 | 3,347,496 | ||||||||||||||||||||||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of the period covered by this report and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all in-the-money option holders exercised their vested options on August 31, 2014. The intrinsic value of the option changes based upon the fair market value of the Company’s common stock. Since the closing stock price was $1.50 on August 31, 2014 and 65,001 outstanding options have an exercise price below $1.50 per share, as of August 31, 2014, there is intrinsic value to the Company’s outstanding, in-the-money stock options. | |||||||||||||||||||||||||||
The following table sets forth the share-based compensation cost resulting from stock option grants, including hose previously granted and vesting over time, that were recorded in the Company’s Consolidated Statements of Operations for the years ended August 31, 2014 and 2013 (excludes $87,000 of stock based compensation for restricted stock grants during the year ended August 31, 2014 described in “NOTE 3 - Common Stock and Warrants”): | |||||||||||||||||||||||||||
Years Ended August 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Stock Compensation Expense: | |||||||||||||||||||||||||||
Selling general and administrative expense | $ | 344,423 | $ | 324,230 | |||||||||||||||||||||||
As of August 31, 2014, the Company had $699,763 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a period of 3.5 years. | |||||||||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at August 31, 2014: | |||||||||||||||||||||||||||
Stock Options Outstanding | Stock Options Exercisable | ||||||||||||||||||||||||||
Range of Exercise Prices | Number of Options Outstanding | Weighted Average Contractual Life (years) | Weighted Average Exercise Price | Number of Options Exercisable | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||||||||||
$ | 0.8 | 15,000 | 8.39 | $ | 0.8 | 15,000 | 8.39 | $ | 0.8 | ||||||||||||||||||
1.32 | 50,001 | 0.38 | 1.32 | 50,001 | 0.38 | 1.32 | |||||||||||||||||||||
1.65 | 320,000 | 5.7 | 1.65 | 320,000 | 7.97 | 1.65 | |||||||||||||||||||||
2.3 | 2,500 | 7.75 | 2.3 | 2,500 | 7.75 | 2.3 | |||||||||||||||||||||
2.5 | 10,000 | 6.68 | 2.5 | 8,000 | 6.68 | 2.5 | |||||||||||||||||||||
2.55 | 33,334 | 4.11 | 2.55 | 33,334 | 4.11 | 2.55 | |||||||||||||||||||||
2.9 | 805,000 | 9.49 | 2.9 | 102,500 | 9.47 | 2.9 | |||||||||||||||||||||
3.27 | 11,667 | 0.36 | 3.27 | 11,667 | 0.36 | 3.27 | |||||||||||||||||||||
4.98 | 16,667 | 3.61 | 4.98 | 16,667 | 3.61 | 4.98 | |||||||||||||||||||||
5.94 | 50,001 | 6.4 | 5.94 | 50,001 | 6.4 | 5.94 | |||||||||||||||||||||
6.51 | 11,667 | 0.17 | 6.51 | 11,667 | 0.17 | 6.51 | |||||||||||||||||||||
Total | 1,325,837 | 8.05 | $ | 2.68 | 621,337 | 6.14 | $ | 2.43 |
Net_Loss_Per_Share
Net Loss Per Share | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Note 5. Net Loss Per Share | ' | ||||||||
During the years ended August 31, 2014 and 2013, the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has not included the effects of warrants, stock options and convertible debt on net loss per share for the past two fiscal years because to do so would be antidilutive. | |||||||||
Following is the computation of basic and diluted net loss per share for the years ended August 31, 2014 and 2013: | |||||||||
Years Ended August 31, | |||||||||
2014 | 2013 | ||||||||
Basic and Diluted EPS Computation | |||||||||
Numerator: | |||||||||
Loss available to common stockholders' | $ | (3,892,381 | ) | $ | (4,272,532 | ) | |||
Denominator: | |||||||||
Weighted average number of common shares outstanding | 24,279,448 | 22,686,892 | |||||||
Basic and diluted EPS | $ | (0.16 | ) | $ | (0.19 | ) | |||
The shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented: | |||||||||
Convertible debt | 2,624,651 | - | |||||||
Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Notes" above) | 5,249,303 | - | |||||||
Warrants | 3,302,001 | 2,380,126 | |||||||
Stock options | 1,325,837 | 970,838 |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | ||
Aug. 31, 2014 | |||
Notes to Financial Statements | ' | ||
Note 6. Related Party Transactions | ' | ||
A related party with respect to the Company is generally defined as any person (i) (and, if a natural person, inclusive of his or her immediate family) that holds 10% or more of the Company’s securities, (ii) that is part of the Company’s management, (iii) that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. | |||
For services rendered in the capacity of a Board member, non-employee Board members received $4,250 per quarter. New Board member compensation is pro rated in their first quarter. During the years ended August 31, 2014 and 2013, the Company incurred $38,250 and $59,618, respectively in cash based Board compensation. | |||
The Company grants stock options and common stock for services rendered by certain individuals, including the Company’s non-employee directors and sole officer, Mr. Conklin. During the year ended August 31, 2014, the Company's three directors each received a grant of 30,000 stock options, Mr. Conklin received a grant of 700,000 stock options and each director was issued 10,000 shares of common stock (See “NOTE 3 – Common Stock and Warrants”) described as follows: | |||
· | On January 27, 2014, pursuant to his employment agreement executed on January 1, 2014, John Conklin, CEO received a grant of 700,000 stock options. The 700,000 stock options granted on January 27, 2014 are exercisable at $2.90 per share, expire ten years from the date of grant, on January 27, 2024 and vest at the rate of 50,000 shares every six months beginning on June 30, 2014 through December 31, 2017 (4 years) for 400,000 options with the remaining 300,000 options vesting at such time as the Company shall have generated cumulative revenues of no less than $1,000,000 from the sale of a commercial product (“Performance Stock Options”). The stock option is further subject to the terms and conditions of a stock option agreement between the Company and Mr. Conklin. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date that employee ceases to be one of the Company’s employees. Upon termination of such service, the employee will have 120 days to exercise vested stock options, if any. The grant date fair value of the stock option granted was $1,862,000, or $2.66 per share, with $1,064,000 related to the ratable vesting over 4 years of 400,000 stock options and $798,000 related to the 300,000 Performance Stock Options. The grant date fair value of the stock option was estimated using a Black-Scholes model containing the following assumptions: Exercise price of $2.90, Spot price of $2.75, dividend yield of 0%, volatility of 154.0%, risk-free rate of 2.21%, and term of 7.67 years. During the year ended August 31, 2014, the Company recognized $414,099 of expense related to this grant. Also, during 2014, the Company reversed compensation expense of $324,781 associated with 233,334 unvested performance based stock options originally granted to Mr. Conklin on August 9, 2010. The reversal was recorded when the Company determined it was no longer probable that the performance condition associated with the options would be achieved. The 233,334 performance based stock options were cancelled. | ||
· | On January 9, 2014, the Board approved, and the Company granted, a stock option to each of the Company’s three directors to purchase 30,000 shares of its common stock at an exercise price of $2.90 per share, the fair market value of the Company’s common stock on the date of grant. Each stock option expires ten years from the date of grant, on January 9, 2024, and vests as follows: (a) 15,000 shares immediately on the date of grant, and (b) 15,000 shares on December 31, 2014. The stock options are further subject to the terms and conditions of a stock option agreement between the Company and each director. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date that the director ceases to be one of the Company’s directors. Upon termination of such service, the director will have two years to exercise vested stock options, if any. The grant date fair value of each of the stock options granted to each of the Company’s directors was $84,300, or $2.81 per share, estimated using a Black-Scholes model containing the following assumptions: Exercise price / spot price of $2.90 per share, dividend yield of 0%, volatility of 154.5%, risk-free rate of 2.41%, and a term of 7.67 years. During the year ended August 31, 2014, the Company recognized $210,750 of expense related to this issuance. | ||
· | On each of November 11, 2013 and November 13, 2013, 95,000 stock options (190,000 in the aggregate) were exercised by Mr. Conklin on a cashless basis resulting in the issuance of an aggregate of 81,899 shares of unrestricted common stock. Said shares were registered under Form S-8 filed with the Securities and Exchange Commission on February 28, 2013. | ||
· | On October 31, 2013, Jatinder Bhogal resigned from the Board. As a result of his resignation, Mr. Bhogal forfeited 20,000 unvested stock options originally granted on January 23, 2013, and had vested 20,000 stock options with an exercise price of $1.65 per share. The Company recorded costs relating to stock based compensation totaling $64,386 related to the amortization of the fair value of this stock option grant, including the recognition of $8,049 and $56,337 of expense for the year ended August 31, 2014 and 2013, respectively. Since the stock option was forfeited prior to 20,000 options vesting, $32,192 previously recognized for stock based compensation was reversed in 2014, resulting in total stock based compensation expense related to Mr. Bhogal’s January 23, 2013, stock option grant of $32,194. In total, Mr. Bhogal has 70,001 of vested stock options which will be forfeited if not exercised prior to October 31, 2015. | ||
During the year ended August 31, 2013, the following stock purchase option activity occurred with related parties: | |||
· | On January 23, 2013, the Board approved, and the Company granted, a stock option to each of the Company’s four directors, including John Conklin, its CEO, to purchase 40,000 shares of its common stock at an exercise price of $1.65 per share, the fair market value of the Company’s common stock on the date of grant. Each stock option expires ten years from the date the applicable stock option agreement was executed, on January 23, 2023, and vests as follows: (a) 20,000 shares vest immediately on the date of grant and (b) 20,000 shares on the one-year anniversary on January 23, 2014. The stock options are further subject to the terms and conditions of a stock option agreement between the Company and each director. Under the terms of the stock option agreement, the stock option agreement will terminate and there will be no further vesting of stock options effective as of the date that the director ceases to be one of the Company’s directors. Upon termination of such service, the director will have a specified period of time to exercise vested stock options, if any. The grant date fair value of each of the stock options granted to each of the Company’s directors was $64,386 estimated using a Black-Scholes model containing the following assumptions: Exercise price / spot price of $1.65 per share, dividend yield of 0%, volatility of 161.1%, risk-free rate of 1.24%, and a term of 7.67 years. During the year ended August 31, 2013, the Company recognized $225,349 of expense related to these four issuances. | ||
· | On December 10, 2012, Mr. Peter Fusaro resigned from the Board. As a result of his resignation, Mr. Fusaro forfeited 5,000 unvested stock options and had vested 11,667 stock options. Total stock based compensation expense related to Mr. Fusaro’s options was $48,850 of which $44,270 was expensed through August 31, 2012. On November 30, 2012, the Company reversed $10,075 of expense related to forfeited options on which expense was previously recorded resulting in total recognized expense related to Mr. Fusaro’s options of $34,195. Mr. Fusaro has until December 10, 2014, to exercise his 11,667 vested stock options. | ||
· | On May 7, 2013, 63,333 stock options were exercised by Mr. Conklin on a cashless basis resulting in the issuance of 22,672 shares of unrestricted common stock. Said shares were registered under Form S-8 filed with the Securities and Exchange Commission on February 28, 2013. | ||
In total, during the years ended August 31, 2014 and 2013 the Company recognized net compensation expense related to stock options and restricted stock issued to the Company’s non-employee directors and executive of $392,743 and $304,249, respectively. These amounts include the reversal of compensation expense due to pre-vesting forfeitures. | |||
The law firm of Sierchio & Company, LLP, of which Joseph Sierchio, one of the Company’s directors, is a principal, has provided counsel to the Company since its inception. In July 2008, the Company asked Mr. Sierchio to join the Company’s Board. During the years ended August 31, 2014 and 2013, the law firm of Sierchio & Company, LLP provided $137,814 and $128,924, respectively, of legal services. At August 31, 2014, the Company owed Sierchio & Company, LLP approximately $24,692 which is included in accounts payable. | |||
On February 1, 2013, Kalen Capital Holdings LLC, a wholly owned subsidiary of Kalen Capital Corporation, a shareholder owning in excess of 10% of the Company’s issued and outstanding stock, purchased 1,843,750 shares of the Company’s common stock and a Series H Warrant to purchase 921,875 shares of the Company’s common stock for an aggregate purchase price of $1,180,000 pursuant to the registered public offering conducted by the Company (See “NOTE 3 – Common Stock and Warrants” above). | |||
On October 7, 2013, the Company entered into the Loan Agreement with Kalen Capital Corporation, a private corporation owning in excess of 10% of the Company’s issued and outstanding shares of common stock. In connection with the Loan Agreement, the Company issued a $3,000,000 Note and Series I Warrants (see “NOTE 2 - Convertible Promissory Notes” above). | |||
All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Notes to Financial Statements | ' | ||||||||||
Note 7. Income Taxes | ' | ||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at August 31, 2014 and 2013 are as follows: | |||||||||||
2014 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Net operating loss carryforwards | $ | 4,421,974 | $ | 3,404,418 | |||||||
Capitalized research and development | 993,062 | 836,568 | |||||||||
Depreciation | (2,625 | ) | (4,700 | ) | |||||||
Stock based compensation | 1,276,788 | 1,130,104 | |||||||||
Research and development credit carry forward | 256,417 | 206,715 | |||||||||
Total deferred tax assets | 6,945,616 | 5,573,105 | |||||||||
Less: valuation allowance | (6,945,616 | ) | (5,573,105 | ) | |||||||
Net deferred tax asset | $ | - | $ | - | |||||||
The net increase in the valuation allowance for deferred tax assets was $1,372,511 and $1,482,268 for the years ended August 31, 2014 and 2013, respectively. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations. | |||||||||||
For federal income tax purposes, the Company has net U.S. operating loss carry forwards at August 31, 2014 available to offset future federal taxable income, if any, of $13,005,807, which will fully expire by the fiscal year ended August 31, 2034. Accordingly, there is no current tax expense for the years ended August 31, 2014 and 2013. In addition, the Company has research and development tax credit carry forwards of $256,417 at August 31, 2014, which are available to offset federal income taxes and begin to expire during the fiscal year ending August 31, 2027. | |||||||||||
The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock. | |||||||||||
The effects of state income taxes were insignificant for the years ended August 31, 2014 and 2013. | |||||||||||
The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 34% for the years ended August 31, 2014 and 2013: | |||||||||||
2014 | 2013 | ||||||||||
Income tax benefit at statutory rate | $ | 1,323,410 | $ | 1,452,66 | |||||||
Non-deductible meals and entertainment | (601 | ) | (2,550 | ) | |||||||
Research and development credit | 49,702 | 32,157 | |||||||||
Change in valuation allowance | (1,372,511 | ) | (1,482,268 | ) | |||||||
$ | - | $ | - | ||||||||
The fiscal years 2012 through 2014 remain open to examination by federal authorities and other jurisdictions in which the Company operates. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2014 | |
Notes to Financial Statements | ' |
Note 8. Subsequent Events | ' |
On October 17, 2014, 3,906 Series H Warrants were exercised and 3,906 shares of common stock were issued in exchange for $3,242. | |
On November 10, 2014, the Company entered into an Amended Bridge Loan Agreement (the “2015 Loan Agreement”) with Kalen Capital Corporation (“Investor”) pursuant to which the Company and Investor amended the 2013 Loan Agreement by amending the 2013 Note to extend the maturity date to December 31, 2015 (the “Amended Note”). According to the terms of the 2015 Loan Agreement, the Investor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Amended Note, and any or all accrued and unpaid interest thereon into units of the Company’s equity securities (collectively, the “Units”), with each Unit consisting of (a) one share of common stock; and (b) one Series L Stock Purchase Warrant for the purchase of one share of common stock (the “Series L Warrant”). The conversion price for each Unit is the lesser of (i) $1.37; or (ii) 70% of the 20 day average closing price of the Company’s common stock prior to conversion, subject to a floor of $1.00 with the exercise price of each Series L Warrant included in the Units issued upon conversion being equal to sixty percent (60%) of the 20 day average closing price of the Company’s common stock prior to conversion. The Series L Warrant will be exercisable for a period of five years from the date of issuance and will be exercisable on a cashless basis. | |
In order to induce Investor to enter into the 2015 Loan Agreement and extend the maturity date of the 2013 Note, the Company issued a Series J Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.12 and a Series K Warrant to purchase 3,110,378 shares of its common stock at an exercise price of $1.20. Each of the Series J Warrant and Series K Warrant is exercisable through November 9, 2019 and contains a provision allowing the Investor to exercise the warrant on a cashless basis as further set forth therein. The number of shares issuable upon the exercise of the Series J Warrant and Series K Warrant is equal to the number of shares underlying the warrants issuable pursuant to the terms of the 2013 Loan Agreement whereby the conversion price for each unit (a unit consists of (a) one share of common stock; (b) one Series J Stock Purchase Warrant for the purchase of one share of common stock; and (c) one Series K Stock Purchase Warrant for the purchase of one share of common stock) is equal to $1.04, 70% of the 20 day average closing price of the Company’s common stock prior to conversion, subject to a floor of $1.00 with the exercise price of each Series J Warrant being equal to 107.3% of the unit exercise price and the exercise price of each Series K Warrant being equal to 114.6% of the unit exercise price. |
Organization_and_Going_Concern1
Organization and Going Concern (Policies) | 12 Months Ended |
Aug. 31, 2014 | |
Organization And Going Concern Policies | ' |
Organization | ' |
New Energy Technologies, Inc. (the “Company”, “we”, “us”, “our”) was incorporated in the State of Nevada on May 5, 1998, under the name “Octillion Corp.” On December 2, 2008, the Company amended its Articles of Incorporation to effect a change of name to New Energy Technologies, Inc. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Kinetic Energy Corporation (“KEC”), and New Energy Solar Corporation (“New Energy Solar”). | |
KEC was incorporated on June 19, 2008, in the State of Nevada and holds the patents related to the Company’s MotionPower™ technology. The Company’s business activities related to the MotionPower™ technology are conducted through KEC. | |
New Energy Solar was incorporated on February 9, 2009, in the State of Florida and has entered into agreements with USF to sponsor research related to the Company’s SolarWindow™ technology. | |
On March 16, 2011, pursuant to a consent signed by the Company’s shareholders owning a majority of the Company’s then issued and outstanding shares of common stock, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing its authorized shares of common stock, $0.001 par value, from 100,000,000 to 300,000,000. | |
We are a renewable and alternative energy company developing two (2) sustainable electricity generating systems. These novel technologies are branded as SolarWindow™ and MotionPower™. The Company’s proprietary, patent-pending technologies and products are the subjects of one hundred and one (101) patent-filings, and have been invented, designed, engineered, and prototyped in preparation for further field testing, product development and eventual commercial deployment. | |
Our SolarWindow™ technology provides the ability to harvest light energy from the sun and artificial sources and generate electricity from a see-through, semi-transparent, coating of organic photovoltaic solar cells. Our SolarWindow™ technology is the subject of forty-two (42) patent filings. Initially being developed for application on glass surfaces, SolarWindow™ could potentially be used on any of the more than 85 million commercial and residential buildings in the United States alone. | |
Our MotionPower™ technology, harvests “kinetic” or “motion” energy from vehicles when they slow down before coming to a stop and converts this captured energy into electricity. Our MotionPower™ technology is the subject of fifty-nine (59) patent filings. | |
The Company’s product development programs involve ongoing research and development efforts, and the commitment of significant resources to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried-out by its contract engineers, scientists, and consultants. | |
The Company continues to assess the ongoing development and value propositions of its novel SolarWindow™ and MotionPower™ technologies. This assessment helps us strategically focus on specific technology development which best delivers significant long-term commercial competitive advantages. | |
Recent Accounting Pronouncements | ' |
The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its financial statements except as described below. | |
On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity. The amendments are effective for the Company’s consolidated financial statements as of August 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period. The Company has adopted the amendments and no longer presents inception-to-date information in the statements of operations, statement of changes in stockholders’ deficit and statements of cash flows. In addition, the financial statements will no longer be labeled as those of a development stage entity. | |
Going Concern | ' |
The Company does not have any commercialized products and has not generated any revenue since inception. The Company has an accumulated deficit of $20,946,270 as of August 31, 2014, and does not have positive cash flows from operating activities. Included in the deficit are non-cash expenses totaling $5,738,112 relating to the issuance of stock for services, compensatory stock options, warrants granted for value and accretion of debt discounts. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business. | |
In its report with respect to the Company’s financial statements for the year ended August 31, 2014, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue as a going concern. Because the Company has not yet generated revenues from its operations and does not expect to do so in the near future, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Currently, the Company is seeking additional financing but has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. | |
As of August 31, 2014, the Company had cash of $785,237. Based upon its current and near term anticipated level of operations and expenditures, the Company believes that cash on hand should be sufficient to enable it to continue operations through December 31, 2014. | |
If adequate funds are not available on reasonable terms, or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to delay, reduce the scope of or terminate one or more of its research programs, sell rights to its SolarWindow™ technology and/or MotionPowerTM technology or other technologies or products based upon such technologies, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available. | |
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements. | |
Principles of Consolidation | ' |
These consolidated financial statements presented are those of the Company and its wholly owned subsidiaries, KEC, and New Energy Solar. All significant intercompany balances and transactions have been eliminated. | |
Estimates | ' |
The preparation of the Company’s consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions. | |
Cash and Cash Equivalents | ' |
Cash and cash equivalents includes highly liquid investments with original maturities of three months or less. The Company has amounts deposited with financial institutions in excess of federally insured limits. | |
Fair Value Measurement | ' |
The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value: | |
Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities valued with Level 1 inputs. | |
Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company has no assets or liabilities valued with Level 2 inputs. | |
Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs. | |
Fair Value of Financial Instruments | ' |
The carrying value of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments and their liquidity. It is not practical to determine the fair value of our notes payable due to the complex terms. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. | |
Research and Development | ' |
Research and development costs represent costs incurred to develop the Company’s technology, including salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed. | |
Stock-Based Compensation | ' |
The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes-Merton formula to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes-Merton formula requires management to make assumptions regarding the option lives, expected volatility, and risk free interest rates. See “NOTE 3 – Common Stock and Warrants” and “NOTE 4 - Stock Options” for additional information on the Company’s stock-based compensation plans. | |
Income Taxes | ' |
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively. | |
Segment Reporting | ' |
The Company’s business is considered to be operating in one segment based upon the Company’s organizational structure, the way in which the operations are managed and evaluated, the availability of separate financial results and materiality considerations. | |
Net Income (Loss) Per Share | ' |
The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money). See “NOTE 5 - Net Loss Per Share” for further discussion. |
Common_Stock_and_Warrants_Tabl
Common Stock and Warrants (Tables) | 12 Months Ended | |||||||||||||
Aug. 31, 2014 | ||||||||||||||
Common Stock And Warrants Tables | ' | |||||||||||||
Warrants outstanding and exercisable | ' | |||||||||||||
A summary of the Company’s warrants outstanding and exercisable as of August 31, 2014 and 2013 is as follows: | ||||||||||||||
Shares of Common Stock Issuable from Warrants Outstanding as of | ||||||||||||||
Description | 31-Aug-14 | 31-Aug-13 | Exercise Price | Expiration | ||||||||||
Series G | 625,000 | 625,000 | $ | 0.64 | 17-Apr-15 | |||||||||
Series H | 1,755,126 | 1,755,126 | $ | 0.83 | 1-Feb-16 | |||||||||
Series I | 921,875 | - | $ | 1.37 | 7-Oct-18 | |||||||||
Total | 3,302,001 | 2,380,126 |
Stock_Options_Tables
Stock Options (Tables) | 12 Months Ended | ||||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||||
Stock Options Tables | ' | ||||||||||||||||||||||||||
Fair value of each option award | ' | ||||||||||||||||||||||||||
The Company employs the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options: | |||||||||||||||||||||||||||
Years Ended August 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Expected dividend yield | – | – | |||||||||||||||||||||||||
Expected stock price volatility | 154.0% – 154.5% | 160.1% – 161.1% | |||||||||||||||||||||||||
Risk-free interest rate | 2.21% – 2.41% | 1.14% – 1.24% | |||||||||||||||||||||||||
Expected term (in years) | 7.67 | 7.67 | |||||||||||||||||||||||||
Exercise price | $ | 2.9 | $ | 0.80 – $2.25 | |||||||||||||||||||||||
Weighted-average grant date fair-value | $ | 2.68 | $ | 1.54 | |||||||||||||||||||||||
Stock option activity | ' | ||||||||||||||||||||||||||
A summary of the Company’s stock option activity for the year ended August 31, 2014 and 2013 and related information follows: | |||||||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value ($) | ||||||||||||||||||||||||
Outstanding at August 31, 2012 | 861,671 | 2.1 | |||||||||||||||||||||||||
Grants | 177,500 | 1.59 | |||||||||||||||||||||||||
Exercises | (63,333 | ) | 1.65 | ||||||||||||||||||||||||
Forfeitures | (5,000 | ) | 3.27 | ||||||||||||||||||||||||
Outstanding at August 31, 2013 | 970,838 | 2.03 | |||||||||||||||||||||||||
Grants | 805,000 | 2.9 | |||||||||||||||||||||||||
Exercises | (190,000 | ) | 1.65 | ||||||||||||||||||||||||
Forfeitures | (260,001 | ) | 1.69 | ||||||||||||||||||||||||
Outstanding at August 31, 2014 | 1,325,837 | 2.68 | 8.05 years | $ | 19,500 | ||||||||||||||||||||||
Exercisable at August 31, 2014 | 621,337 | 2.43 | 6.41 years | $ | 19,500 | ||||||||||||||||||||||
Available for grant at August 31, 2014 | 3,347,496 | ||||||||||||||||||||||||||
Share-based compensation cost | ' | ||||||||||||||||||||||||||
Years Ended August 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Stock Compensation Expense: | |||||||||||||||||||||||||||
Selling general and administrative expense | $ | 344,423 | $ | 324,230 | |||||||||||||||||||||||
Stock options outstanding and exercisable | ' | ||||||||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at August 31, 2014: | |||||||||||||||||||||||||||
Stock Options Outstanding | Stock Options Exercisable | ||||||||||||||||||||||||||
Range of Exercise Prices | Number of Options Outstanding | Weighted Average Contractual Life (years) | Weighted Average Exercise Price | Number of Options Exercisable | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||||||||||
$ | 0.8 | 15,000 | 8.39 | $ | 0.8 | 15,000 | 8.39 | $ | 0.8 | ||||||||||||||||||
1.32 | 50,001 | 0.38 | 1.32 | 50,001 | 0.38 | 1.32 | |||||||||||||||||||||
1.65 | 320,000 | 5.7 | 1.65 | 320,000 | 7.97 | 1.65 | |||||||||||||||||||||
2.3 | 2,500 | 7.75 | 2.3 | 2,500 | 7.75 | 2.3 | |||||||||||||||||||||
2.5 | 10,000 | 6.68 | 2.5 | 8,000 | 6.68 | 2.5 | |||||||||||||||||||||
2.55 | 33,334 | 4.11 | 2.55 | 33,334 | 4.11 | 2.55 | |||||||||||||||||||||
2.9 | 805,000 | 9.49 | 2.9 | 102,500 | 9.47 | 2.9 | |||||||||||||||||||||
3.27 | 11,667 | 0.36 | 3.27 | 11,667 | 0.36 | 3.27 | |||||||||||||||||||||
4.98 | 16,667 | 3.61 | 4.98 | 16,667 | 3.61 | 4.98 | |||||||||||||||||||||
5.94 | 50,001 | 6.4 | 5.94 | 50,001 | 6.4 | 5.94 | |||||||||||||||||||||
6.51 | 11,667 | 0.17 | 6.51 | 11,667 | 0.17 | 6.51 | |||||||||||||||||||||
Total | 1,325,837 | 8.05 | $ | 2.68 | 621,337 | 6.14 | $ | 2.43 |
Net_Loss_Per_Share_Tables
Net Loss Per Share (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Net Loss Per Share Tables | ' | ||||||||
Computation of basic and diluted net loss per share | ' | ||||||||
Following is the computation of basic and diluted net loss per share for the years ended August 31, 2014 and 2013: | |||||||||
Years Ended August 31, | |||||||||
2014 | 2013 | ||||||||
Basic and Diluted EPS Computation | |||||||||
Numerator: | |||||||||
Loss available to common stockholders' | $ | (3,892,381 | ) | $ | (4,272,532 | ) | |||
Denominator: | |||||||||
Weighted average number of common shares outstanding | 24,279,448 | 22,686,892 | |||||||
Basic and diluted EPS | $ | (0.16 | ) | $ | (0.19 | ) | |||
The shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented: | |||||||||
Convertible debt | 2,624,651 | - | |||||||
Warrants issuable upon conversion of debt (See "NOTE 2 - Convertible Promissory Notes" above) | 5,249,303 | - | |||||||
Warrants | 3,302,001 | 2,380,126 | |||||||
Stock options | 1,325,837 | 970,838 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Income Taxes Tables | ' | ||||||||||
Deferred tax assets | ' | ||||||||||
Significant components of the Company’s deferred tax assets at August 31, 2014 and 2013 are as follows: | |||||||||||
2014 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Net operating loss carryforwards | $ | 4,421,974 | $ | 3,404,418 | |||||||
Capitalized research and development | 993,062 | 836,568 | |||||||||
Depreciation | (2,625 | ) | (4,700 | ) | |||||||
Stock based compensation | 1,276,788 | 1,130,104 | |||||||||
Research and development credit carry forward | 256,417 | 206,715 | |||||||||
Total deferred tax assets | 6,945,616 | 5,573,105 | |||||||||
Less: valuation allowance | (6,945,616 | ) | (5,573,105 | ) | |||||||
Net deferred tax asset | $ | - | $ | - | |||||||
Income tax benefit | ' | ||||||||||
The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 34% for the years ended August 31, 2014 and 2013: | |||||||||||
2014 | 2013 | ||||||||||
Income tax benefit at statutory rate | $ | 1,323,410 | $ | 1,452,66 | |||||||
Non-deductible meals and entertainment | (601 | ) | (2,550 | ) | |||||||
Research and development credit | 49,702 | 32,157 | |||||||||
Change in valuation allowance | (1,372,511 | ) | (1,482,268 | ) | |||||||
$ | - | $ | - |
Organization_Recent_Accounting
Organization, Recent Accounting Pronouncements, Going Concern and Summary of Significant Accounting Policies (Details Narrative) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 |
Organization And Going Concern Details Narrative | ' | ' | ' |
Accumulated deficit | $20,946,270 | $17,053,889 | ' |
Cash and cash equivalents | $785,237 | $347,493 | $1,046,918 |
Convertible_Promissory_Note_De
Convertible Promissory Note (Details Narrative) (USD $) | 12 Months Ended |
Aug. 31, 2014 | |
2012 Note [Member] | ' |
Interest expense related to the Loan | $30,325 |
Accretion related to the debt discount | 999,485 |
2013 Note [Member] | ' |
Interest expense related to the Loan | 193,151 |
Accretion related to the debt discount | $686,320 |
Common_Stock_and_Warrants_Deta
Common Stock and Warrants (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Shares of Common Stock Issuable from Warrants | 3,302,001 | 2,380,126 |
Series G [Member] | ' | ' |
Shares of Common Stock Issuable from Warrants | 625,000 | 625,000 |
Exercise Price | $0.64 | ' |
Expiration | '2015-04-17 | ' |
Series H [Member] | ' | ' |
Shares of Common Stock Issuable from Warrants | 1,755,126 | 1,755,126 |
Exercise Price | $0.83 | ' |
Expiration | '2016-02-01 | ' |
Series I [Member] | ' | ' |
Shares of Common Stock Issuable from Warrants | 921,875 | ' |
Exercise Price | $1.37 | ' |
Expiration | '2018-10-07 | ' |
Common_Stock_and_Warrants_Deta1
Common Stock and Warrants (Details Narrative) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 24,306,612 | 24,194,713 |
Common stock, shares outstanding | 24,306,612 | 24,194,713 |
Series H [Member] | ' | ' |
Amount received upon the exercise of warrants | $0 | $6,484 |
Exercise of warrants | 7,812 | 7,812 |
2006 Long-Term Incentive Plan [Member] | ' | ' |
Common stock, shares authorized | 300,000,000 | ' |
Common stock, shares issued | 24,306,612 | ' |
Common stock, shares outstanding | 24,306,612 | ' |
Stock reserved | 3,347,496 | ' |
Stock_Options_Details
Stock Options (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Expected dividend yield | ' | ' |
Expected term (in years) | '7 years 8 months 1 day | '7 years 8 months 1 day |
Exercise price | $2.90 | $1.59 |
Weighted-average grant date fair-value | $2.68 | $1.54 |
Minimum [Member] | ' | ' |
Expected stock price volatility | 154.00% | 160.10% |
Risk-free interest rate | 2.21% | 1.14% |
Exercise price | ' | $0.80 |
Maximum [Member] | ' | ' |
Expected stock price volatility | 154.50% | 161.10% |
Risk-free interest rate | 2.41% | 1.24% |
Exercise price | ' | $2.25 |
Stock_Options_Details_1
Stock Options (Details 1) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Number of Options | ' | ' |
Outstanding Beginning | 970,838 | 861,671 |
Grants | 805,000 | 177,500 |
Exercises | -190,000 | -63,333 |
Forfeitures | -260,001 | -5,000 |
Outstanding Ending | 1,325,837 | 970,838 |
Exercisable Ending | 621,337 | ' |
Available for grant Ending | 3,347,496 | ' |
Weighted Average Exercise Price ($) | ' | ' |
Weighted-average exercise price Beginning | $2.03 | $2.10 |
Grants | $2.90 | $1.59 |
Exercises | $1.65 | $1.65 |
Forfeitures | $1.69 | $3.27 |
Weighted-average exercise price Ending | $2.68 | $2.03 |
Exercisable Ending | $2.43 | ' |
Weighted Average Remaining Contractual Term | ' | ' |
Outstanding at May 31, 2014 | '8 years 18 days | ' |
Exercisable at May 31, 2014 | '6 years 1 month 21 days | ' |
Aggregate Intrinsic Value ($) | ' | ' |
Outstanding at May 31, 2014 | $19,500 | ' |
Exercisable at May 31, 2014 | $19,500 | ' |
Stock_Options_Details_2
Stock Options (Details 2) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Stock Compensation Expense net of reversals: | ' | ' |
Selling general and administrative expense | $344,423 | $324,230 |
Stock_Options_Details_3
Stock Options (Details 3) (USD $) | 12 Months Ended |
Aug. 31, 2014 | |
Number of options outstanding | 1,325,837 |
Weighted average contractural life (years) | '8 years 18 days |
Weighted-average exercise price | $2.68 |
Number of options exercisable | 621,337 |
Weighted average contractural life (years) of options exercisable | '6 years 1 month 21 days |
Weighted-average exercise price of options exercisable | $2.43 |
$ 0.80 Per Share [Member] | ' |
Number of options outstanding | 15,000 |
Weighted average contractural life (years) | '8 years 6 months 22 days |
Weighted-average exercise price | $0.80 |
Number of options exercisable | 15,000 |
Weighted average contractural life (years) of options exercisable | '8 years 6 months 22 days |
Weighted-average exercise price of options exercisable | $0.80 |
$ 1.32 Per Share [Member] | ' |
Number of options outstanding | 50,001 |
Weighted average contractural life (years) | '4 months 17 days |
Weighted-average exercise price | $1.32 |
Number of options exercisable | 50,001 |
Weighted average contractural life (years) of options exercisable | '4 months 17 days |
Weighted-average exercise price of options exercisable | $1.32 |
$ 1.65 Per Share [Member] | ' |
Number of options outstanding | 320,000 |
Weighted average contractural life (years) | '5 years 10 months 2 days |
Weighted-average exercise price | $1.65 |
Number of options exercisable | 320,000 |
Weighted average contractural life (years) of options exercisable | '7 years 11 months 19 days |
Weighted-average exercise price of options exercisable | $1.65 |
$ 2.30 Per Share [Member] | ' |
Number of options outstanding | 2,500 |
Weighted average contractural life (years) | '7 years 10 months 28 days |
Weighted-average exercise price | $2.30 |
Number of options exercisable | 2,500 |
Weighted average contractural life (years) of options exercisable | '7 years 10 months 28 days |
Weighted-average exercise price of options exercisable | $2.30 |
$ 2.50 Per Share [Member] | ' |
Number of options outstanding | 10,000 |
Weighted average contractural life (years) | '6 years 10 months 6 days |
Weighted-average exercise price | $2.50 |
Number of options exercisable | 8,000 |
Weighted average contractural life (years) of options exercisable | '6 years 10 months 6 days |
Weighted-average exercise price of options exercisable | $2.50 |
$ 2.55 Per Share [Member] | ' |
Number of options outstanding | 33,334 |
Weighted average contractural life (years) | '4 years 1 month 10 days |
Weighted-average exercise price | $2.55 |
Number of options exercisable | 33,334 |
Weighted average contractural life (years) of options exercisable | '4 years 1 month 10 days |
Weighted-average exercise price of options exercisable | $2.55 |
$ 2.90 Per Share [Member] | ' |
Number of options outstanding | 805,000 |
Weighted average contractural life (years) | '9 years 5 months 27 days |
Weighted-average exercise price | $2.90 |
Number of options exercisable | 52,500 |
Weighted average contractural life (years) of options exercisable | '9 years 5 months 19 days |
Weighted-average exercise price of options exercisable | $2.90 |
$ 3.27 Per Share [Member] | ' |
Number of options outstanding | 11,667 |
Weighted average contractural life (years) | '4 months 10 days |
Weighted-average exercise price | $3.27 |
Number of options exercisable | 11,667 |
Weighted average contractural life (years) of options exercisable | '4 months 10 days |
Weighted-average exercise price of options exercisable | $3.27 |
$ 4.98 Per Share [Member] | ' |
Number of options outstanding | 16,667 |
Weighted average contractural life (years) | '3 years 7 months 10 days |
Weighted-average exercise price | $4.98 |
Number of options exercisable | 16,667 |
Weighted average contractural life (years) of options exercisable | '3 years 7 months 10 days |
Weighted-average exercise price of options exercisable | $4.98 |
$ 5.94 Per Share [Member] | ' |
Number of options outstanding | 50,001 |
Weighted average contractural life (years) | '6 years 4 months 24 days |
Weighted-average exercise price | $5.94 |
Number of options exercisable | 50,001 |
Weighted average contractural life (years) of options exercisable | '6 years 4 months 24 days |
Weighted-average exercise price of options exercisable | $5.94 |
$ 6.51 Per Share [Member] | ' |
Number of options outstanding | 11,667 |
Weighted average contractural life (years) | '2 months 1 day |
Weighted-average exercise price | $6.51 |
Number of options exercisable | 11,667 |
Weighted average contractural life (years) of options exercisable | '2 months 1 day |
Weighted-average exercise price of options exercisable | $6.51 |
Stock_Options_Details_Narrativ
Stock Options (Details Narrative) (USD $) | 12 Months Ended |
Aug. 31, 2014 | |
Stock option available for grant shares | 3,347,496 |
Closing stock option exercise price | $1.50 |
Stock option outstanding | $65,001 |
Stock based compensation expense | 87,000 |
Stock based compensation unrecognized | $699,763 |
Expected period for recognition | '3 years 6 months |
2006 Incentive Stock Option Plan [Member] | ' |
Stock option approved | 5,000,000 |
Stock option available for grant shares | 3,347,496 |
Stock option exercise | 326,667 |
Net_Loss_Per_Share_Details
Net Loss Per Share (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Numerator: | ' | ' |
Loss available to common stockholders' | ($3,892,381) | ($4,272,532) |
Denominator: | ' | ' |
Weighted average number of common shares outstanding | 24,279,448 | 22,686,892 |
Basic and diluted EPS | ($0.16) | ($0.19) |
Earnings Per Share, Diluted, Other Disclosures | ' | ' |
Convertible debt | 2,624,651 | ' |
Warrants issuable upon conversion of debt | $5,249,303 | ' |
Warrant [Member] | ' | ' |
Earnings Per Share, Diluted, Other Disclosures | ' | ' |
Potentially dilutive common shares | 3,302,001 | 2,380,126 |
Stock Option [Member] | ' | ' |
Earnings Per Share, Diluted, Other Disclosures | ' | ' |
Potentially dilutive common shares | 1,325,837 | 970,838 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
31-May-14 | 31-May-13 | Aug. 31, 2014 | Aug. 31, 2013 | |
Cash based Board compensation | $8,500 | $12,750 | $38,250 | $59,618 |
Stock based compensation expense related to stock options granted | 231,883 | 48,820 | 30,000 | ' |
Stock based compensation expense related to stock options issued | ' | ' | 10,000 | ' |
Mr. Conklin [Member] | ' | ' | ' | ' |
Stock based compensation expense related to stock options granted | ' | ' | 700,000 | ' |
Expense related to grant or issuance | ' | ' | 414,099 | ' |
Three Director [Member] | ' | ' | ' | ' |
Expense related to grant or issuance | ' | ' | 210,750 | ' |
Jatinder Bhogal [Member] | ' | ' | ' | ' |
Cash based Board compensation | ' | ' | 64,386 | ' |
Stock based compensation recognized | ' | ' | 8,049 | 56,337 |
Four Director [Member] | ' | ' | ' | ' |
Expense related to grant or issuance | ' | ' | 225,349 | ' |
Non-employee directors and executive [Member] | ' | ' | ' | ' |
Cash based Board compensation | ' | ' | 392,743 | 304,249 |
Sierchio Company LLP [Member] | ' | ' | ' | ' |
Legal services | ' | ' | 137,814 | 128,924 |
Accounts payable | ' | ' | $24,692 | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Deferred tax assets: | ' | ' |
Net operating loss carryforwards | $4,421,974 | $3,404,418 |
Capitalized research and development | 993,062 | 836,568 |
Depreciation | -2,625 | -4,700 |
Stock based compensation | 1,276,788 | 1,130,104 |
Research and development credit carry forward | 256,417 | 206,715 |
Total deferred tax assets | 6,945,616 | 5,573,105 |
Less: valuation allowance | -6,945,616 | -5,573,105 |
Net deferred tax asset | ' | ' |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Income Taxes Details 1 | ' | ' |
Income tax benefit at statutory rate | $1,323,410 | $1,452,661 |
Non-deductible meals and entertainment | -601 | -2,550 |
Research and development credit | 49,702 | 32,157 |
Change in valuation allowance | -1,372,511 | -1,482,268 |
Effective income tax | ' | ' |
Income_Taxes_Details_Nerrative
Income Taxes (Details Nerrative) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Income Taxes Details Nerrative | ' | ' |
net increase in the valuation allowance | $1,372,511 | $1,482,268 |
Research and development credit carry forward | $256,417 | $206,715 |