ABAKAN, INC - FORM 10-Q - October 15, 2013

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ABAKAN, INC	Financial_Report.xls
EX-31.1 - ABAKAN CERTIFICATION - ABAKAN, INC	exhibit311.htm
EX-31.2 - ABAKAN CERTIFICATION - ABAKAN, INC	exhibit312.htm
EX-32.1 - ABAKAN CERTIFICATION - ABAKAN, INC	exhibit321.htm
EX-32.2 - ABAKAN CERTIFICATION - ABAKAN, INC	exhibit322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the

quarterly period ended August 31, 2013.

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the

transition period from

Commission file number: 000-52784

ABAKAN INC.

(Exact name of registrant as specified in its charter)

Nevada

98-0507522

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133

(Address of principal executive offices) (Zip Code)

(786) 206-5368

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or

15(d) of the Exchange Act during the past 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate

Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that

the registrant was required to submit and post such files). Yes þ 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 as defined by Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the

Exchange Act): Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest

practicable date. The number of shares outstanding of the issuer’s common stock, $0.0001 par value (the

only class of voting stock), at October 15, 2013 was 64,284,855.

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item1.

Financial Statements:

Condensed Consolidated Balance Sheets for the period ended

August 31, 2013 (unaudited) and May 31, 2013

Unaudited Condensed Consolidated Statements of Operations for the

Three months ended August 31, 2013 and 2012, and cumulative amounts from

development stage activities (June 27, 2006 (Inception) through August 31, 2013)

Unaudited Condensed Consolidated Statements of Cash Flows for the

Three months ended August 31, 2013 and 2012, and cumulative amounts from

development stage activities (June 27, 2006 (inception) through August 31, 2013)

Condensed Notes to Consolidated Financial Statements (Unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of

Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II-OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

Index to Exhibits

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

As used herein, the terms “Abakan”, “we,” “our,” and “us” refer to Abakan Inc., a Nevada corporation,

and its consolidated subsidiaries, unless otherwise indicated. In the opinion of management, the

accompanying financial statements included in this Form 10-Q reflect all adjustments (consisting only of

normal recurring accruals) necessary for a fair presentation of the results of operations for the periods

presented. The results of operations for the periods presented are not necessarily indicative of the results

to be expected for the full year.

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

August 31,

May 31,

2013

(unaudited)

ASSETS

Current assets

Cash and cash equivalents

26,782 $

233,040

Accounts receivable

85,334

105,523

Note receivable - related parties

4,500

Prepaid expenses

99,112

117,028

Other current assets

12,060

15,799

Total current assets

227,788

475,890

Non-current assets

Property, plant and equipment, net

5,713,273

5,595,007

Patents and licenses, net

6,203,665

7,545,163

Assignment agreement - MesoCoat

200,660

210,528

Investment - Powdermet (Note 3)

2,304,480

2,449,312

Goodwill

364,384

Total Assets

15,014,250 $

16,640,284

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

1,431,905 $

890,791

Accounts payable - related parties

471,101

251,004

Capital leases - current portion

28,006

Loans payable, net of discounts of $11,993 and $160,472 (Note 4)

1,338,338

965,555

Accrued interest - loans payable

140,801

153,825

Loan payable- related parties

30,000

Accrued interest – related parties

2,600

1,987

Accrued liabilities

1,066,635

377,392

Total current liabilities

4,509,386

2,698,560

Non-current liabilities

Loans payable (Note 4)

3,141,360

4,241,278

Capital leases - non-current portion (Note 4)

62,331

63,875

Total liabilities

7,713,077

7,003,713

Commitments and contingencies

Stockholders' equity

Preferred stock, $0.0001 par value, 50,000,000 shares

authorized, none issued and outstanding

Common stock, par value $0.0001, 2,500,000,000 shares

64,284,855 issued and outstanding – August 31, 2013,

64,284,855 issued and outstanding - May 31, 2013

6,430

Subscription receivable

(76,244)

Paid-in capital

21,134,653

20,833,426

Contributed capital

5,050

Accumulated deficit during the development stage

(15,684,591)

(13,545,788)

5,461,542

7,222,874

Non-controlling interest

1,839,631

2,413,697

Total stockholders' equity

7,301,173

9,636,571

Total liabilities and stockholders' equity

15,014,250 $

16,640,284

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

ABAKAN INC.

(A DEVELOPMENT STATE ENTERPRISE)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Cumulative amounts

from development

stage activities

For the three months ended

June 27, 2006

August 31,

(inception) to

Revenues

2013

2012

August 31, 2013

Commercial

25,247 $

19,300 $

293,000

Contract and grants

63,403

547,327

3,818,657

Other income

268,756

764,879

88,650

835,383

4,876,536

Cost of Revenues

80,532

336,774

1,868,803

Gross profit

8,118

498,609

3,007,733

Expenses

General and administrative

186,360

161,687

1,913,014

Professional fees

320,322

120,304

1,403,191

Professional fees - related parties

18,028

15,000

243,028

Consulting

273,809

363,932

3,360,588

Consulting - related parties

78,500

99,427

1,759,730

Payroll and benefits expense

533,985

182,976

2,381,088

Depreciation and amortization

198,419

85,500

947,575

Research and development

488,617

293,608

2,573,123

Impairment of asset

180,000

Stock expense on note conversion

730,097

Stock options expense

318,480

459,784

4,734,760

Total expenses

2,416,520

1,782,218

20,226,194

Loss from operations

(2,408,402)

(1,283,609)

(17,218,461)

Other (expense) income

Interest expense:

Interest – loans

(27,800)

(103,768)

(575,679)

Interest - related parties

(613)

(7,946)

Liquidated damages

(250,000)

Amortization of discount on debt

(148,479)

(181,128)

(1,599,632)

Total interest expense

(176,892)

(284,896)

(2,433,257)

Interest income

3,693

8,168

Creditor Fee

(241,051)

Gain on debt settlement

274,967

Gain on sale of assets

428,796

Unrealized gain on MesoCoat acquisition

1,764,345

Equity in Powdermet income/ (loss)

(144,832)

41,175

654,480

Equity in MesoCoat loss

(586,020)

Total Other (expense) income

(321,721)

(240,028)

(129,572)

Net profit/ (loss) before non-controlling interest

(2,730,123)

(1,523,637)

(17,348,033)

Non-controlling interest in MesoCoat Loss

591,320

116,254

1,663,442

Net profit/ (loss) attributable to Abakan Inc.

(2,138,803)

(1,407,383)

(15,684,591)

Provision for income taxes

Net profit/ (loss)

(2,138,803) $

(1,407,383) $

(15,684,591)

Net profit/ (loss) per share – basic

(0.03) $

(0.02)

Net profit/ (loss) per share – diluted

(0.03) $

(0.02)

Weighted average number of common

shares outstanding – basic

64,284,855

61,615,065

Weighted average number of common

shares outstanding – diluted

64,284,855

61,615,065

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cumulative

amounts from

development

stage

Activities

For the three months ended

June 27, 2006

August 31,

(Inception) to

2013

2012

August 31, 2013

NET CASH (USED IN) DEVELOPMENT STAGE

ACTIVITIES

(572,281) $

(466,972) $

(6,471,598)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant, equipment and website

(297,209)

(282,082)

(4,079,411)

Proceeds from sale of capital assets

470,921

MesoCoat - minority interest, net of cash assumed in

business combination

(2,390,266)

Investment in MesoCoat

(750,070)

Powdermet - minority interest

(1,650,000)

Assignment agreement – MesoCoat

(100,000)

Capitalized patents and licenses

(4,738)

(11,358)

(148,006)

Waste to Energy Group Inc.

(180,000)

NET CASH USED IN INVESTING ACTIVITIES

(301,947)

(293,440)

(8.826,832)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock

76,244

525,000

9,300,514

Proceeds from loans payable

595,267

71,000

6,553,846

Payments on loans payable

(1,997)

(137,028)

(585,464)

Proceeds from loans payable - related parties

66,200

145,880

Payments on loans payable – related parties

(6,253)

(15,137)

Repayments of capital leases

(1,544)

(9,255)

(79,477)

Stock Issuable

Proceeds from capital contributed

5,050

NET CASH PROVIDED BY FINANCING

ACTIVITIES

667,970

509,664

15,325,212

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS

(206,258)

(250,748)

26,782

CASH AND CASH EQUIVALENTS, BEGINNING

OF PERIOD

233,040

859,566

CASH AND CASH EQUIVALENTS, END OF

PERIOD

26,782 $

608,818 $

26,782

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements

have been prepared in accordance with accounting principles generally accepted in the United States of

America (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly,

they do not include all of the information and footnotes required by GAAP for complete financial

statements. In the opinion of management, all adjustments (consisting of normal recurring accruals)

considered necessary for a fair presentation of Abakan’s financial position as of August 31, 2013, and the

results of its operations and cash flows for the three months ended August 31, 2013, have been made.

Operating results for the three months ended August 31, 2013 are not necessarily indicative of the results

for the year.

These condensed consolidated financial statements should be read in conjunction with the financial

statements and notes for the year ended May 31, 2013 contained in Abakan’s Form 10-K.

Consolidation Policy

The accompanying August 31, 2013 financial statements include Abakan’s accounts and the accounts of its

subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Abakan’s ownership of its subsidiaries as of August 31, 2013 is as follows:

Name of Subsidiary

Percentage of Ownership

AMP SEZC (Cayman)

100.0%

AMP Distributors (Florida)

100.0%

MesoCoat, Inc.

52.5%

MesoCoat, Inc. (“MesoCoat”) formed a wholly-owned subsidiary, MesoCoat Coating Services, Inc. on

June 13, 2013. There was no financial activity during the quarter ending August 31, 2013.

Non-Controlling Interest

Non-controlling interest represents the 47.5% minority shareholders’ proportionate share of the equity of

MesoCoat. Abakan’s 52.5% controlling interest in MesoCoat requires that its operations be included in

its consolidated financial statements. The equity interest of MesoCoat that is not owned by Abakan is

shown as a non-controlling interest in the consolidated financial statements.

Abakan’s 41% minority interest share of Powdermet, Inc.’s (“Powdermet”) income or loss is shown as

“Equity share of Powdermet income (loss)” in the statement of operations of the consolidated financial

statements. On June 13, 2013, Powdermet formed a wholly owned subsidiary, Terves Inc.

Development Stage Enterprise

At August 31, 2013, Abakan’s business operations had not fully developed and are dependent upon

funding and therefore Abakan is considered a development stage enterprise.

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Accounts Receivable

Accounts receivable are stated at face value, less an allowance for doubtful accounts. Abakan provides an

allowance for doubtful accounts based on management's periodic review of accounts, including the

delinquency of account balances. Accounts are considered delinquent when payments have not been

received within the agreed upon terms, and are written off when management determines that collection is

not probable. As of August 31, 2013 management has determined that no allowance for doubtful accounts

is required.

Subsequent Events

In accordance with ASC 855-10 “Subsequent Events”, Abakan has evaluated subsequent events and

transactions for potential recognition or disclosure in the financial statements through the date the

financial statements were issued (Note 9).

2. GOING CONCERN

The accompanying financial statements have been prepared assuming that Abakan will continue as a

going concern. Abakan had net losses for the period of June 27, 2006 (inception) to the year ended

August 31, 2013, of $15,684,591 and a working capital deficit of $4,669,605. These conditions raise

substantial doubt about Abakan’s ability to continue as a going concern. Abakan’s continuation as a

going concern is dependent on its ability to develop additional sources of capital, and/or achieve

profitable operations and positive cash flows. Since inception Abakan has funded its operations through

the issuance of common stock, debt financing, related party loans and advances. Abakan is committed to

aggressively pursuing its present business plan and, and will seek additional debt and or equity

financing as required to meet its objectives. The accompanying financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

3. INVESTMENT IN NON-CONTROLLING INTEREST

Powdermet, Inc.

Abakan owns a forty one percent (41%) interest in Powdermet. Powdermet owns 47.5% of MesoCoat as

of August 31, 2013. Abakan’s 41% ownership of Powdermet, results in indirect ownership of the shares

of MesoCoat that Powdermet owns. On June 13, 2013, Powdermet formed a wholly owned subsidiary,

Terves Inc. There was no financial activity during the quarter ending August 31, 2013 for Terves.

We have analyzed our investment in accordance of “Investments – Equity Method and Joint Ventures”

(ASC 323), and concluded that the acquisition of our 41% minority interest gives us significant influence

over Powdermet’s business actions, board of directors, and its management, and therefore we account for

our investment using the Equity Method. The table below reconciles our investment amount and equity

method amounts to the amount on the accompanying balance sheet.

Investment balance, May 31, 2013

2,449,312

Equity in loss for three months ended August 31, 2013

(144,832)

Investment balance, August 31, 2013

2,304,480

Below is a table with summary financial results of operations and financial position of Powdermet:

Powdermet Inc.

For the three months

ended

August 31, 2013

August 31, 2012

Equity Percentage

41%

Condensed income statement information:

Total revenues

446,811 $

685,432

Total cost of revenues

128,903

280,499

Gross margin

317,908

404,933

Total expenses

(287,299)

(304,507)

Other income/ (expense)

(591,320)

Provision for income tax benefit

207,463

Net profit/ (loss)

(353,248) $

100,426

Abakan’s equity in net profit/(loss): 41%

(144,832) $

41,175

Condensed balance sheet information:

August 31, 2013

May 31, 2013

Total current assets

569,523 $

536,111

Total non-current assets

2,463,544

3,077,305

Total assets

3,033,067 $

3,613,416

Total current liabilities

211,256 $

260,897

Total non-current liabilities

1,499,003

1,676,463

Total equity

1,322,808

1,676,056

Total liabilities and equity

3,033,067 $

3,613,416

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

4. LOANS PAYABLE

As of August 31, 2013 and May 31, 2013, the loans payable balance comprised of:

Description

August 31, 2013

May 31, 2013

Convertible demand note to an unrelated entity bearing 5% interest per annum

1,500,000 $

1,500,000

which matures on September 15, 2014. The note is shown net of a discount of

$-0- and $-0-, respectively, attributable to the beneficial conversion feature,

and an effective interest rate of 31% due the attached warrants.

Convertible demand note to an unrelated entity bearing 5% interest per annum

200,000

175,163

which matures on September 15, 2014. The note is shown net of a discount of

$-0- and $24,837, respectively, attributable to the beneficial conversion feature,

and an effective interest rate of 176% due to the attached warrants.

Convertible demand note to an unrelated entity bearing 5% interest per annum

500,000

387,473

which matures on July 14, 2014. The note is shown net of a discount of $-0-

and $112,527, respectively, attributable to the beneficial conversion feature,

and an effective interest rate of 143% due to the attached warrants.

Uncollateralized demand note to an unrelated entity bearing 8% interest per

70,000

annum

Uncollateralized demand note to an unrelated entity bearing 8% interest per

3,850

annum

Uncollateralized demand note to an unrelated entity bearing 8% interest per

19,350

annum

Uncollateralized demand note to an unrelated entity bearing 8% interest per

20,000

annum

Uncollateralized demand notes to an unrelated entity bearing 6% interest per

500,000

annum

Uncollateralized demand notes to an unrelated entity bearing 5% interest per

50,000

annum

Uncollateralized demand notes to an unrelated entity bearing 5% interest per

70,000

annum

Collateralized note to an unrelated entity bearing 1% interest for the first year

1,000,000

and then 7% per annum for years two – seven.

Uncollateralized demand note to a related entity bearing 8% interest per annum

30,000

Convertible demand note to an unrelated entity bearing 7.5% imputed interest

46,231

48,228

per annum which matures on July 10, 2018.

Uncollateralized notes to an unrelated entity bearing 8% interest per annum,

405,000

405,877

matures on September 15, 2014

Capital leases payable to various vendors expiring in various years through

90,337

91,881

September 2016; collateralized by certain equipment with a cost of $205,157.

Collateralized 5 year term note to an unrelated entity bearing 5.15% interest

95,267

Uncollateralized demand note to an unrelated entity for royalties shown net of

1,576,892

discount of $23,108

4,600,035 $

5,328,714

Less current liabilities

1,396,344

1,023,561

Total long term liabilities

3,203,691 $

4,305,153

Intangible assets of $1,336,281 and a liability of $1,576,892 related to the 2011 Exclusivity Agreement

with Mattson Technology Inc. have been removed from the August 31, 2013 financial statements based

on the matters discussed on page 20 in the Management Discussion section.

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

5. STOCKHOLDERS' EQUITY

Common Stock Issuances

For the three months ended August 31, 2013, we did not issue any shares for private placements,

conversion of debt to shares, or share based compensation.

A summary of the common stock warrants granted, forfeited or expired during the three months ended

August 31, 2013 and the year ended May 31, 2013 is presented below:

Weighted

Average

Remaining

Number of

Exercise

Contractual

Warrants

Price

Terms (In Years)

Balance at June 1, 2012

2,066,296

1.64

2.0 years

Granted

1,186,934

2.35

Exercised

(270,233)

1.50

Forfeited or expired

(140,005)

1.50

Balance at May 31, 2013

2,842,992

1.80

2.0 years

Granted

Exercised

Forfeited or expired

Balance at August 31, 2013

2,842,992

1.80

2.0 years

Exercisable at August 31, 2013

2,842,992

1.80

2.0 years

Weighted average fair value of

options granted during the three

months ended August 31, 2013

The following table summarizes information about the common stock warrants outstanding at August

31, 2013:

Warrants Exercisable

Weighted

Range of

Average

Exercise

Number

Remaining

Exercise

Number

Exercise

Price

Outstanding

Contractual Life

Price

Exercisable

Price

1.25

1,306,595

2.00 Years

1.25

1,306,595 $

1.25

1.50

250,000

2.00 Years

1.50

250,000 $

1.50

2.00

574,463

2.00 Years

2.00

574,463 $

2.00

2.70

576,272

2.00 Years

2.70

576,272 $

2.70

3.00

135,662

2.00 Years

3.00

135,662 $

3.00

2,842,992

2.00 Years

1.80

2,842,992 $

1.80

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

6. EARNINGS-PER-SHARE CALCULATION

Basic earnings per common share for the three months ended August 31, 2013 and 2012 are calculated by

dividing net income by weighted-average common shares outstanding during the period. Diluted earnings

per common share for the three months ended August 31, 2013 and 2012 are calculated by dividing net

income by weighted-average common shares outstanding during the period plus dilutive potential

common shares, which are determined as follows:

For the three months ended

August 31, 2013

August 31, 2012

Net earnings (loss) from operations

(2,138,803)

$ (1,407,383)

Weighted-average common shares

64,284,855

61,515,065

Effect of dilutive securities:

Warrants

Options to purchase common stock

Dilutive potential common shares

64,284,855

61,515,065

Net earnings per share from operations:

Basic

(0.03)

$ (0.02)

Diluted

(0.03)

$ (0.02)

Dilutive potential common shares are calculated in accordance with the treasury stock method, which

assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock

at market value. The amount of shares remaining after the proceeds are exhausted represents the

potentially dilutive effect of the securities. The increasing number of warrants used in the calculation is a

result of the increasing market value of Abakan’s common stock.

In periods where losses are reported the weighted-average number of common shares outstanding

excludes common stock equivalents because their inclusion would be anti-dilutive.

These securities below were excluded from the calculations above because to include them would be anti-

dilutive:

For the three months

ended August 31, 2013

ended August 31, 2012

Common Stock Equivalents:

Warrants

2,842,992

2,216,296

Options to purchase common stock

3,796,667

5,860,000

Total of Common Stock Equivalents:

6,639,659

8,076,296

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

7. STOCK – BASED COMPENSATION

2009 Stock Option Plan – Abakan

Our board of directors adopted and approved our 2009 Stock option Plan (“Plan”) on December 14, 2009,

as amended on June 14, 2012, which provides for the granting and issuance of up to 10 million shares of

our common stock.

The total value of employee and non-employee stock options granted during the three months ended

August 31, 2013 and 2012, was $234,271 and $1,315,619, respectively.

For the three months ended August 31, 2013, Abakan granted 80,000 stock options to an officer of

MesoCoat on June 14, 2013. These options were issued at an exercise price of $2.94 per share, and these

options will expire ten years from the grant date, and will vest in equal one third parts on the anniversary

of the option grant date.

A summary of the options granted to employees and non-employees under the plan and changes during

the three months ended August 31, 2013 year ending May 31, 2013 is presented below:

Weighted

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Options

Price

Terms(In Years)

Value

Balance at June 1, 2012

5,160,000

0.77

9.00 years

185,000

Granted

1,135,000

2.39

Exercised

Forfeited or expired

(2,495,000)

0.69

Balance at May 31, 2013

3,800,000

1.26

7.78 years

108,750

Granted

80,000

2.94

Exercised

Forfeited or expired

(83,333)

1.30

Balance at August 31, 2013

3,796,667

1.26

7.52 years

108,750

Exercisable at August 31, 2013

2,513,329

0.90

7.52 years

Weighted average fair value of

options granted during the 3

months ending August 31, 2013

2.94

8. COMMITMENTS

There were no new commitments for the three months period ending August 31, 2013.

ABAKAN INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended August 31, 2013 and 2012

9. SUBSEQUENT EVENTS

Management has evaluated subsequent events after the balance sheet date, through the issuance of the

financial statements, for appropriate accounting and disclosure. Abakan has determined that there were no

such events that warrant disclosure or recognition in the financial statements, except for the following:

Other Business

In September, Petrobras made the final payment for balance of “Phase Two” payments of the original

Cooperation Agreement.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITIONAND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other

parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below.

The following discussion should be read in conjunction with our financial statements and notes thereto

included in this quarterly report and with the financial statements, notes and the Management

Discussion and Analysis of Financial Conditions and Results of Operations section for the year ended

May 31, 2013 contained in Abakan’s Form 10-K. Our fiscal year end is May 31.

Abakan

Abakan, through its subsidiaries, designs, develops, manufactures, and markets advanced nano-composite

materials, innovative fabricated metal products, highly engineered metal composites, and

engineered reactive materials for applications in the oil and gas, petrochemical, mining, aerospace and

defense, energy, infrastructure and processing industries. Our technology portfolio currently includes

high-speed, large-area metal cladding technology, long-life nano-composite anti-corrosion and-

wear coating materials, high-strength, lightweight metal composites, and energetic materials.

Operations are conducted through our subsidiary, MesoCoat, Inc. (“MesoCoat”) and our affiliate,

Powdermet, Inc. (“Powdermet”).

Abakan holds a 52.5% controlling interest in MesoCoat and a 41% non-controlling interest in Powdermet.

Powdermet directly owns the remaining 47.5% of MesoCoat. Abakan’s interest in Powdermet represents

an additional 19.5% indirect interest in MesoCoat. The combined direct and indirect interest equals a

total 72.0% ownership of MesoCoat by Abakan.

MesoCoat

MesoCoat’s Business

MesoCoat is an Ohio based materials science company intending to become a technology leader in metal

protection and repair based on its metal coating and metal cladding technologies designed to address

specific industry needs related to conventional oil and gas, oil sands, mining, aerospace, defense,

infrastructure, and shipbuilding. The company was originally formed as a wholly owned subsidiary of

Powdermet, known as Powdermet Coating Technologies, Inc., to focus on the further development and

commercialization of Powdermet’s nano-composite coatings technologies. The company was renamed as

MesoCoat in March of 2008. Thereafter, in July of 2008, the coatings and cladding assets of Powdermet

were conveyed to MesoCoat through an asset transfer, an IP license and technology transfer, and a

manufacturing support agreement.

MesoCoat has exclusively licensed and developed a proprietary metal cladding application process as

well as advanced nano-composite coating materials that combine corrosion and wear resistant alloys, and

nano-engineered cermet materials with proprietary high-speed coating or cladding application systems.

The result is protective cladding and dimensional restoration coating solutions that will be offered on a

competitive basis with existing market solutions. The company’s PComP™ coating solutions unite high

wear and corrosion resistance, toughness, and a low coefficient of friction into one product structure using

patented micro structural engineering techniques. MesoCoat’s Cermaclad™ cladding solutions offer

improved metallurgy and 1-2 orders of magnitude higher application rates compared to other hardfacing

and weld cladding alternatives. Three of the company’s PComP™ wear products, PComP™-W333,

PComP™ W104, and PComP™-T48 are utilized by original equipment manufacturers (OEM’s) and are

in commercial sales, while the companies PComP™-M solution for molten metal resistance is undergoing

extensive field testing in preparation for market launch. MesoCoat’s Cermaclad™ CRA solutions,

primarily alloy 625 claddings, but also 825 and 316 are undergoing extensive internal and external

evaluation, certification, and qualification to API (American Petrochemical Institute) and major oil

company standards to ensure meeting rigorous industry requirements. Cermaclad™ WRA (wear resistant

alloys), including tungsten carbine, nano-composite chromium carbide, and structurally amorphous metal

(SAM) alloy claddings are also undergoing advanced testing and qualification for the construction

equipment, mining, and oil sands extraction industries.

MesoCoat’s commercial revenues are comprised of sales of PComP™ powder and thermal spray

applications. CermaClad^TM clad products are in the development and qualification stage and are nearing

commercialization, including the cladding of the inside of a full length pipe for the oil and gas industries.

Additional revenue is realized from grants that are awarded to MesoCoat to further product development.

MesoCoat has expanded its technical team to complete the various developments and is working towards

the expansion of PComP™ powder and coating services.

CermaClad™

CermaClad™ is a premier metallurgically bonded clad carbon steel solution optimized to manage the

risks and consequences of wear and corrosion damage and the failure of large assets including oil and gas

risers and flowlines, refinery/chemical processing towers and transfer lines, power plant heat exchanger

tubes, ships, and bridges. In corrosive environments, including seawater, road salt, mining slurry transport

lines, unprocessed oil containing water and carbon dioxide, chemical processing and transportation

equipment, metals production, and other large industrial applications, asset owners and operators either

need to continually maintain and replace major assets, or fabricate these assets using expensive, corrosion

resistant alloy (CRA) materials, which substantially run up costs. CermaClad™ offers a competing,

lower cost solution allowing the owner or operator to clad their carbon steel with a corrosion resistant

alloy coating at typically less than ½ the cost of using solid CRA. Cladding solutions such as

CermaClad™ is estimated to save up to 75% of the cost of using solid alloys, while providing equivalent

maintenance free corrosion lifetimes equal to the life of the asset. Clad metals are widely used in oil and

gas exploration and production, marine transportation, mining, petrochemical processing and refining,

nuclear, paper and pulp, desalination, and power generation industries. Each industry sector has slightly

different needs and requirements. For instance, to meet growing global energy demands, oil companies

continue to extend their offshore drilling efforts into deeper seas. The higher temperatures and corrosivity

(carbon dioxide and hydrogen sulfide content) of these deeper reserves eliminate plastics and other

competing material solutions from consideration, resulting in a significantly increased use of corrosion

resistant alloys - and lower-cost clad pipe alternatives.

CermaClad™ is MesoCoat’s proprietary cladding process which utilizes a high density infrared fusion

heat source – an arc lamp – to melt, fuse, and metallurgically bond (make inseparable) metals, corrosion

resistant alloys and/or cermets onto metal substrates such as plate, pipe, or large components. Using this

process, products like risers and flowlines can be protected against harsh operating environments with

great efficiency and speed compared to competing weld overlay products. Today, clad steel is a

specialized segment of the steel industry where it is projected that demand will outstrip supply in the next

few years. Management believes that the CermaClad™ process and equipment offers the lowest capital

cost per unit production, and is scalable to large volumes with low to modest capital investment and plant

requirements.

Despite unanticipated delays associated with scaling the CermaClad™ process to be used to coat 12 meter

pipe, due primarily to mechanical and integration problems related to the first of its kind, prototype nature

of the new full scale manufacturing equipment, MesoCoat has made significant progress in quality control

and reliability of the pipe cladding process, including development of correlations between control

variables, dependant variables, and cladding quality. Working with EWI and with additional internal

resources, the Company continues to develop and refine detailed analytical models of the fusion process

to predict and understand what goes on inside the pipe during the fusion cladding process, and how that

relates to cladding and base metal quality and performance. Based on these models MesoCoat has been

able to develop fully clad short sections of pipe with strong metallurgical bond, uniform quality, and good

surface finish, which after completing additional internal testing will be released to Petrobras and others

for initial qualification. MesoCoat has also strengthened its development team by adding two individuals

holding PhD’s with significant experience in metallurgy and coatings, completed installation and

integration of an additional pipe cladding system, and restructured the cladding development team to

allow development of manufacturing development and engineering validation activities to run in parallel

instead of in series. The investment into development of validated simulation tools, the additional

cladding system, and the restructuring and team expansion is intended to reduce development time line

and risk of further delays to ensure availability of the final product at the earliest date possible.

PComP™

PComP™ is a series of nanocomposite cermet coatings that are used to impart wear and corrosion

resistance, and to restore dimensions, of metal components. PComP™ competes against chrome and

nickel plating, and tungsten carbide in the multibillion dollar inorganic metal finishing market.

Competing materials like hexavalent chrome, carbides and tungsten carbide cobalt have become major

headaches for industrial producers in the metal finishing industry since these materials are on the EPA’s

hazardous materials watch list and are legally banned in several countries. Industry currently spends

billions annually on these hazardous materials, and MesoCoat’s customers can gain a competitive

advantage while mitigating environmental liabilities by adopting green products and processes such as

PComP™ thermal spray coatings into their product offerings. While businesses grapple with the need to

transition away from these harmful products, MesoCoat has developed a performance leading solution

platform which has shown order of magnitude improvements in head to head wear and corrosion

performance testing.

PComP™, named for its particulate composite powders, is one of the few economically viable industry

replacement solutions for hard chrome and carbides due to the product line’s advanced corrosion, friction,

wear and thermal barrier properties.

MesoCoat scientists have developed and patented a family of corrosion resistant coating solutions that

combine extreme wear resistance, fracture toughness (resiliency), and a low friction coefficient all in one

product. In conventional materials science toughness normally decreases as hardness and wear resistance

increase. By combining nano-level structure control and advanced ductile phase toughening materials

science, MesoCoat has developed a patented coating structure that can be both very tough and very wear

resistant. Equally important, the hardness of a wear coating normally limits the ease with which it can be

machined. The unique nano-structural design of the PComP™ coating solutions results in a coatings that

can be machined through a finish grinder much faster than a product with a traditional carbide coating.

The speed of coating application and final machining results in higher productivity and lower costs in

metal finishing operations.

The unique nano-structure of the PComP™ coatings also result in friction properties approaching those of

diamond-like carbon films and solid lubricants, but with the ability to be used structurally and applied to

large components at a fraction of the cost of coatings such as diamond-like carbon. The low friction

reduces wear, and improved energy efficiency and life in sliding components such as drilling rotors,

plungers, mandrels, ball and gate valves, and metal processing equipment.

The PComP™ product lines are currently being positioned to compete with two dominant product

alternatives: hard chrome plating and tungsten carbide thermal spray coatings. The PComP™ family of

nano-composite coatings consists of five products, all of which have shown, in testing by third parties, to

provide better wear, corrosion and mechanical properties at a lower life cycle cost than most of today’s

alternatives.

The PComP™ product platform, combined with the CermaClad™ large area weld overlay technologies

provide a high degree of product differentiation and a sustainable competitive advantage in the $10 billion

inorganic metal finishing markets, which include OEM components and the maintenance, repair, and

overhaul of industrial assets and machinery in the “components and coatings” segment of MesoCoat’s

business (as opposed to the clad steel business lines discussed under the CermaClad™ product line

above).

MesoCoat is currently selling PComP™ coating materials through different channels appropriate to the

specific market. In the future, the majority of commercial sector accounts will be able to order coating

application services from MesoCoat on a regional basis. Large OEM’s and government agencies like the

U.S. Air Force procure raw powders and apply them for their specific products under license as such

agencies are vertically integrated to do their own thermal spray and coating applications using dedicated

maintenance and repair depots. Recently, several defense organizations have been given congressional

mandates to make better use of their existing equipment (planes, helicopters, jets, tanks and other armored

vehicles, etc.) as budgets for the purchase of new equipment is to be limited over the next few years.

MesoCoat’s low-cost, long-life coating materials appeal to government buyers striving to meet budgetary

restrictions. An effort to expand geographically the market for coating services is now underway, as

MesoCoat is actively qualifying licensed application partners that already have an existing customer base

in certain territories (Houston, Alberta, and Los Angeles) to provide services in territories that it is not

currently able to service directly. We believe that this strategy will lead to acquisition or market entry

into these markets, while supporting economies of scale for the powder production needed to meet

product cost targets.

MesoCoat’s PComP™-W high performance materials are now established with initial customers and

adoption is expected to increase through qualified regional application partners, with capacity being

expanded to match growing demand. PComP™-T best-value chrome plating products are in initial sales

and final field testing trials, though coating applicators and partnerships with original equipment

manufacturers. A six fold capacity expansion and the introduction of higher value application

(component) services is underway. The CermaClad™ corrosion resistant (CRA) product is undergoing

manufacturing scale-up and detailed process and quality engineering to enable the production of a full

scale, commercially acceptable product, leading to qualification for critical, major oil and gas production

projects.

MesoCoat’s wholly-owned subsidiary MesoCoat Coating Services, Inc. was formed on June 2013 to

extract maximum value from the PComP™ family by offering high margin coating services starting in

late 2013.

Sales Agency Agreement for Mexico and Central America

Abakan announced on September 16, the entry into the Mexican and Central American markets by

signing an exclusive sales agent agreement with Metallurgic Solutions, S.A. de CV (“MetalSol”) to

introduce MesoCoat’s products into Mexico, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica,

and Panama. MetalSol will also assist MesoCoat in the establishment of production and service

operations in Mexico for its PComP™ long-life metal coatings, CermaClad™ clad steel, and future

products that are currently under development.

Product Development Timeline

PRODUCT

COMMERCIAL TIMELINE

TIME (MONTHS)

As of 8/31/13

PComP™ W

Growth and expansion

Current

PComP™ T

Partner sales

Current

PComP™ M

Market entry

PComP™ S

Qualification

ZComP™

Development

CermaClad™ CRA

Full scale product API qualification

CermaClad™ WR

Development

CermaClad™ LT

Development

CermaClad™ HT

Incubation

Product Commercial Expansion Timeline

Our near term plan is to expand the presence of our products into Brazil and the Asia-Pacific market. We

remain in the process of negotiating the terms of a “build to suit” agreement to construct a manufacturing

plant in the Recife, Brazil free trade zone that might give us direct access to Brazilian markets.

Meanwhile, we have incorporated an Asian operating subsidiary, PT MesoCoat Indonesia, which is

currently negotiating the terms of a “build-to-suit” agreement to construct a manufacturing plant on the

island of Batam, Indonesia. The expected time-frame for the completion of each project has not yet been

finalized.

PRODUCT

COMMERCIAL EXPANSION

TIMELINE

TIME (MONTHS)

As of 8/31/13

PComP™ Coating Services

Market entry for PComP™-M

CermaClad™ CRA

Demonstration order for full scale

pipe

MesoCoat's Exclusivity Agreement with Mattson Technology, Inc.

On April 7, 2011, MesoCoat and Mattson Technology Inc. (“Mattson”) entered into an Exclusivity

Agreement for the supply of customized arc lamps for cladding applications. That agreement required

MesoCoat to pay non-recurring engineering and exclusively purchase plasma arc lamp systems and power

supplies customized by Mattson for Mesocoat’s field of use. Matson agreed to develop these specialized

plasma arc lamp systems and exclusively sell such modified systems to MesoCoat in our field of use. The

Exclusivity Agreement also required MesoCoat and Mattson to enter into a separate supply agreement for

plasma arc lamps over a fixed number of years on terms set by the Exclusivity Agreement.

Mattson failed to provide plasma arc systems that were adequate in Mesocoat’s field of use, and has

refused to enter into a long term supply agreement on the terms required by the Exclusivity Agreement.

On July 12, 2013, MesoCoat sent its notice of breach of the terms of the Exclusivity Agreement and

breach of related purchase orders. Mattson’s attempt to cure the breaches to date have been unsuccessful.

MesoCoat continues to work with Mattson to achieve its goal of developing fully operational plasma arc

lamp systems.

As a consequence of Mattson’s failure to provide fully functional and reliable plasma arc lamps as

required, MesoCoat may be required to develop alternative technology and suppliers. Delays caused by

late deliveries, the design and manufacturing defects, and insufficient technical support of the two lamp

systems acquired from Mattson, and the breach of the Exclusivity Agreement have interfered with the

MesoCoat’s ability to commence production as projected.

Results of Operations

For the three months ended

August 31,

Change

Revenues

2013

2012

Commercial

25,247 $

19,300 $

5,947

Contract and grants

63,403

547,327

(483,924)

(88)

Other income

268,756

(268,756)

(100)

88,650

835,383

(746,733)

(89)

Gross profit

8,118

498,609

(490,491)

(98)

General and administrative

2,098,040

1,322,434

775,606

Stock options expense

318,480

459,784

(141,304)

(31)

Operation Loss

(2,408,402)

(1,283,609)

(1,124,793)

Interest exp & amort of discount on debt

(176,892)

(284,896)

108,004

(62)

Other income (expense)

(144,829)

44,868

(189,697)

(423)

Loss before non-controlling interest

(2,730,123)

(1,523,637)

(1,206,486)

Non-Controlling interest in MesoCoat loss

591,320

116,254

475,066

409

Loss before income taxes

(2,138,803)

(1,407,383)

(731,420)

Income taxes

Net Income

(2,138,803)

(1,407,383)

(731,420)

Revenues

The decrease in contract and grant revenue in the three month period ending August 31, 2013 over the

three month period ending August 31, 2012 is due to the reduction in grant applications as MesoCoat has

focused on developing and commercializing its products. The decrease in revenue in the current three

month period when compared to the prior three month period is in other revenue which was comprised

mostly of amounts paid by Petrobras in the prior period.

We expect grant revenue to continue to decrease over the next nine months as government sponsored

contracts that commenced late last year are completed. However, we do expect a significant increase in

commercial revenue over the next twelve months as the PComP™ powder production capacity is brought

online. During the current three month period MesoCoat began the acquisition and installation of larger

scale manufacturing equipment required to expand PComP™ sales. Qualifying process changes with the

larger batch sizes and downtime while installing the new larger production equipment temporarily

impacted PcomP™ production during the period. We remain focused on the development of both current

and new products while continuing to commercialize existing products lines.

Gross Profit

Gross profits in both periods can be wholly attributed to the operations of MesoCoat. The $490,491

decrease in gross profit in the three month period ending August 31, 2013 over the three month period

ending August 31, 2012, is the result of the decrease in other revenue generated under the terms and

conditions of the cooperation agreement with Petrobras.

We expect gross profit to decrease over the next twelve months as result of the reduction in grant

applications. This reduction is expected to be offset at an increase in profit margin throughout the year as

MesoCoat expands its PComP™ product line.

Net Losses

We do not expect to realize net income in the near term as anticipated operational expenses associated

most significantly with research and development, consulting, payroll expenses and the depreciation and

amortization of existing assets are expected to increase. The increases are expected to be the direct result

of continued research and development costs associated with the CermaClad™ product line in addition to

costs anticipated for the building of the planned manufacturing plant in Batam, Indonesia.

Despite management’s focus on ensuring operating efficiencies, we expect to continue to operate at a loss

through fiscal 2014.

Expenses

The $775,606 increase in operating expenses in the three month period ending August 31, 2013, over the

three month period ending August 31, 2012, can be attributed in part to: payroll and related costs

increased by $351,009 as the result, in part, of Abakan agreeing to place approximately $235,000 of

Abakan’s restricted stock into the respective MesoCoat and Powdermet retirement plans, which cost and

related expense was accrued in the current fiscal quarter; the $195,009 increase in research and

development costs as Abakan continues to develop its products for commercial applications; professional

fees increased by $200,018 for the three month period as result of increased legal fees associated the legal

representation for the exclusive sales agent agreement for the Mexican and Central American markets,

legal representation in the negotiation and drafting of an agreement with a European equipment

manufacturer, and with on-going litigation. In addition to the increases noted above, payroll and benefits

also increased due to Abakan employing a chief financial officer and MesoCoat employing a chief

operating officer during the quarter. Depreciation and amortization increased by $112,919 due to the

commencement of depreciation on the new Cermaclad™ equipment and leasehold improvements in

Euclid, Ohio offset by the elimination of the amortization expense relating to the Mattson Exclusivity

Agreement. Stock option expense decreased since stock options that were previously granted have started

to become fully vested and expensed.

We expect that operating expenses will continue to increase as our aggressive growth strategy over the

next five years will require significant increases in personnel and facilities along with significant research

and development to ensure that products nearing commercialization are brought to market as quickly and

as effectively as possible.

Interest Expense and Amortization of Discount on Debt

The $108,004 decrease in interest and amortization expenses in the three month period ending August 31,

2013, over the three month period ending August 31, 2012, was due to the prior discounts becoming fully

amortized. The future amortization of the discount of debt will further decrease and be partially offset by

higher interest on debt.

Other Expense/Income

The $189,697 decrease in other expense / income in the three month period ending August 31, 2013, over

the three month period ending August 31, 2012, was due to Abakan a $41,175 equity gain in Powdermet

income in the period ending August 31, 2012, versus a $144,632 loss in the period ending August 31,

2013.

We expect to continue to incur other expense in future periods due to the interest accruing on convertible

debt and the anticipated increase in interest on new debentures that are required for future growth.

Income Tax Expense (Benefit)

Abakan may have a prospective income tax benefit resulting from a net operating loss carry-forward and

start up costs that will offset any future operating profit once taxable income is generated.

Capital Expenditures

Abakan has spent significant amounts of investment activities for the period from June 27, 2006,

(inception) to August 31, 2013, which amounted to $8,826,832. A large portion of these expenditures are

related to plant, property and equipment in the construction of the manufacturing facility in Euclid, Ohio,

and a minority interest in Powdermet.

Liquidity and Capital Resources

Abakan has been in the development stage since inception, and has experienced significant changes in

liquidity, capital resources, and stockholders’ equity.

Abakan had stockholders’ equity of $7,301,173 and a working capital deficit of $4,669,605 at August 31,

2013.

Cash flows

Key elements to the Consolidation Statement of Cash Flows for the three months ended August 31, 2013

and 2012:

Since

2013

2012

Inception

Net Change in Cash and Cash Equivalents

Provided by (used in):

Development Stage activities

(572,281) $

(466,972) $

(6,471,598)

Investing activities

(301,947)

(293,440)

(8,826,832)

Financing activities

667,970

509,664

15,325,212

Net Change in cash and cash equivalents

(206,258) $

(250,748) $

26,782

Net cash used in development stage activities resulted from current period loss plus certain non-cash

items which included depreciation, amortization of discount on debt, stock issued for services and stock

option expense plus net change accrued liabilities, accounts payable, accrued interest on loans payable,

prepaid expenses and accounts receivable. We expect to continue to generate negative cash flow in

operating activities until such time as net losses transition to net income.

Net cash used in investing activities in the current period can be primarily attributed to the purchase of

property, plant and equipment, and capitalized patents and licenses. We expect to continue to generate

negative cash flow in investing activities as Abakan increases its investment in property, plant and

equipment through MesoCoat.

Net cash provided by financing activities in the current period is attributable to proceeds from loans

payable, offset by payments on loans payable and repayments on capital leases. We expect to continue to

generate positive cash flow from financing activities as Abakan seeks new rounds of financing to build its

business.

Our current assets are insufficient to meet our current obligations or to satisfy our cash needs over the

next twelve months and as such Abakan will require additional debt or equity financing. We had no firm

commitments or arrangements for financing at August 31, 2013. To date most of Abakan’s financings

have come from current shareholders that we expect will continue in the immediate future, as we continue

to pursue a number of prospective sources that include engaging an investment bank, industry and/or

strategic partners, sale of additional equity, and the procurement of short and long term debt. We face

certain financial obstacles to attracting new financing due to our status as a technology company just

entering sales with a historical record of net losses and working capital deficits. Therefore, despite our

efforts we can provide no assurance that Abakan will be able to obtain the financing required to meet its

stated objectives or even to continue as a going concern.

Abakan does not expect to pay cash dividends in the foreseeable future.

Abakan has a defined stock option plan titled “The Abakan Inc., 2009 Stock Option Plan” and contractual

commitments with all of its officers and directors.

Abakan has plans for the purchase of plant or equipment in connection with expansion of the PComP™

powder production commercial line. MesoCoat has obtained verbal commitments for future capital

expenditures from Abakan to fund any shortfalls (including plant and equipment) in the expansion of the

PComP™ powder equipment required for expansion should it not be able to raise funds in the normal

course of business.

Abakan intends to increase the number of employees engaged by MesoCoat on completion on the

PComP™ product line expansion and upon completion of development and commercialization of the

Cermaclad™ product in the new Euclid, Ohio manufacturing facility.

Off Balance Sheet Arrangements

As of August 31, 2013, Abakan had no off-balance sheet arrangements that have or are reasonably likely

to have a current or future effect on our financial condition, changes in financial condition, revenues or

expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to

stockholders.

Going Concern

Abakan’s auditors have expressed an opinion that refers to our ability to continue as a going concern as a

result of net losses of $13,545,788 and a working capital deficit of $2,222,670 as of May 31, 2013. Our

ability to continue as a going concern is dependent on realizing net income from operations, gains on

investment, obtaining funding from outside sources or realizing some combination of these objectives.

Management’s plan to address Abakan’s ability to continue as a going concern includes: (i) obtaining

funding from the private placement of debt or equity; (ii) revenue from operations; (iii) converting debt to

equity; and (iv) obtaining loans and grants from financial or government institutions. Management

believes that it will be able to obtain funding to allow Abakan to remain a going concern through the

methods discussed above, though there can be no assurances that such methods will prove successful.

Forward Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Results of Operations and Description of Business, with the

exception of historical facts, are forward looking statements. We are ineligible to rely on the safe-harbor

provision of the Private Litigation Reform Act of 1995 for forward looking statements made in this

quarterly report. Forward looking statements reflect our current expectations and beliefs regarding our

future results of operations, performance, and achievements. These statements are subject to risks and

uncertainties and are based upon assumptions and beliefs that may or may not materialize. These

statements include, but are not limited to, statements concerning:

§ our anticipated financial performance;

§ uncertainties related to the commercialization of proprietary technologies held by entities in which

we have an investment interest;

§ our ability to generate net revenue from operations or gains on investments;

§ our ability to raise additional capital to fund cash requirements for operations;

§ the volatility of the stock market; and

§ general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that

could cause our actual results to differ materially from those discussed or anticipated including the factors

set forth in the section entitled Risk Factors included elsewhere in this report.

We also wish to advise readers not to place any undue reliance on the forward looking statements

contained in this report, which reflect our beliefs and expectations only as of the date of this report. We

assume no obligation to update or revise these forward looking statements to reflect new events or

circumstances or any changes in our beliefs or expectations, other that is required by law.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Derivative Instruments

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash

deposited in interest bearing accounts. The cash and cash equivalents are held for working capital

purposes. We have not used derivative financial instruments. We have not been exposed nor do we

anticipate being exposed to material risks due to changes in market interest rates. Declines in interest

rates, however, will reduce future investment income, at our current balance levels the change in our

interest income will not be material, assuming consistent balance levels.

Interest rate risk also refers to our exposure to movements in interest rates associated with our interest

bearing liabilities. The interest bearing liabilities are denominated in U.S. dollars and the interest expense

is based on the market rates of interest. If the credit markets in the United States changed significantly it

could cause a material change in our interest expense and our costs of borrowing.

Credit Risk

Credit risk refers to our exposures to financial institutions, suppliers and customers that have in the past

and may in the future experience financial difficulty, particularly in light of recent conditions in the credit

markets and the global economy. As of May 31, 2013, our cash and cash equivalents were held in

deposits with maturities of three months or less with banks and other financial institutions having credit

ratings of BBB or above. We generally monitor the financial performance of our suppliers and customers,

as well as other factors that may affect their access to capital and liquidity. Presently, we believe that we

will not incur material losses due to our exposures to such credit risk.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by Abakan’s

management, with the participation of the chief executive officer and the chief financial officer, of the

effectiveness of Abakan’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the

Securities Exchange Act of 1934 (“Exchange Act”)) as of August 31, 2013. Disclosure controls and

procedures are designed to ensure that information required to be disclosed in reports filed or submitted

under the Exchange Act is recorded, processed, summarized, and reported within the time periods

specified in the Commission’s rules and forms, and that such information is accumulated and

communicated to management, including the chief executive officer and the chief financial officer, to

allow timely decisions regarding required disclosures.

Based on that evaluation, Abakan’s management concluded, as of the end of the period covered by this

report, that Abakan’s disclosure controls and procedures were effective in recording, processing,

summarizing, and reporting information required to be disclosed, within the time periods specified in the

Commission’s rules and forms, and such information was accumulated and communicated to

management, including the chief executive officer and the chief financial officer, to allow timely

decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

Since the end of the prior reporting period, there have been no changes in internal control over financial

reporting that have materially affected, or are reasonably likely to materially affect, Abakan’s internal

control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Uptick Capital, LLC.

Abakan initiated legal proceedings against Uptick Capital, LLC. (“Uptick”) on November 7, 2012, in the

United States District Court for the Southern District of New York Superior Court. The claim is based on

Uptick’s alleged failure to perform according to the terms of a consulting agreement dated November 1,

2010, pursuant to which Uptick was to identify and introduce suitable investors to Abakan in exchange

for certain consideration including 60,000 shares. Abakan seeks the return of the 60,000 shares delivered

which were subsequently sold or in the alternative for a judgment in an amount to be ascertained in excess

of $1,000,000 for damages in addition to reasonable attorney’s fees and court costs. The parties are

currently in the process of exchanging document disclosure. Abakan believes that is will be successful in

the pursuit of its claims.

Paloma Capital Group Ltd.

Abakan initiated legal proceedings against Paloma Capital Group Ltd (“Paloma”) on July 2, 2013, in the

Circuit Court in and for Miami-Dade County. The claim is based on Paloma’s failure to perform

according to the terms of a consulting agreement dated May 2, 2011, pursuant to which Paloma was to

introduce suitable investors to Abakan in exchange for certain consideration including 50,000 shares of

Abakan and 150,000 stock options to purchase shares of Abakan. The suit demands the return of the

Abakan shares and the stock options. Paloma is yet to be served with the complaint. Abakan believes it

will be successful in the pursuit of its claims.

ITEM 1A.

RISK FACTORS

Abakan’s operations and securities are subject to a number of risks. Below we have identified and

discussed the material risks that we are likely to face. Should any of the following risks occur, they will

adversely affect our business, financial condition, and/or results of operations as well as the future trading

price and/or the value of our securities.

Abakan has a history of significant operating losses and such losses may continue in the future.

Abakan has incurred net losses of $15,684,591 for the period from June 27, 2006 (inception) to August

31, 2013. Since we have been without significant revenue since inception and have only recently

transitioned to producing limited revenue, as a result of the business combination with MesoCoat,

historical losses may continue into the future.

Abakan has a history of uncertainty about continuing as a going concern.

Abakan’s audits for the periods ended May 31, 2013 and 2012 expressed an opinion as to its ability to

continue as a going concern as a result of net losses of $13,545,788 since inception and a working capital

deficit of $2,222,670 as of May 31, 2013. Unless Abakan is able to produce net income over successive

future periods its ability to continue as a going concern will be in jeopardy.

Abakan requires additional capital funding.

Abakan requires additional funds, either through equity offerings, debt placements or joint ventures to

develop our operations. Such additional capital will result in dilution to our current shareholders. Our

ability to meet long-term financial commitments will depend on future cash. There can be no assurance

that any future income will generate sufficient funds to enable us to meet our financial commitments.

Abakan’s success is dependent on its ability to commercialize proprietary technologies to the point of

generating sufficient revenues to sustain and expand operations.

Abakan’s near term future operation is dependent on its ability to commercialize proprietary technologies

to produce sufficient revenue to sustain and expand operations. The success of these endeavors will

require that sufficient funding be available to assist in the development of its business interests. Currently,

Abakan’s financial resources are limited, which limitation may slow the pace at which proprietary

technologies can be commercialized. Should the Company be unable to improve its financial condition

through debt or equity offerings, the ability to successfully advance its business plan will be severely

limited.

We face significant commercialization risks related to technological businesses.

The industries in which MesoCoat and Powdermet operate and plan to operate are characterized by the

continual search for higher performance at lower cost. Our growth and future financial performance will

depend on the ability of MesoCoat and Powdermet to develop and market products that keep pace with

technological developments and evolving industry requirements. Further, the research and development

involved in commercializing products requires significant investment and innovation to keep pace with

technological developments. Should we be unable to keep pace with outside technological developments,

respond adequately to technological developments or experience significant delays in product

development, our products might become obsolete. Should these risks overcome our ability to keep pace

there is a significant likelihood that our ability to successfully advance our business will be severely

limited.

The coatings industry is likely to undergo technological change so our products and processes could

become obsolete at any time.

Evolving technology, updated industry standards, and frequent new product and process introductions are

likely to characterize the coatings industry going forward so our products or processes could become

obsolete at any time. Competitors could develop products or processes similar to or better than our own,

finish development of new technologies in advance of our research and development, or be more

successful at marketing new products or processes, any of which factors may hurt our prospects for

success.

MesoCoat and Powdermet compete with larger and better financed corporations.

Competition within the industrial coatings industry and other high technology industries is intense. While

each of MesoCoat and Powdermet’s products are distinguished by next-generation innovations that are

more sophisticated and cost effective than many competitive products currently in the market place, a

number of entities and new competitors may enter the market in the future. Some of MesoCoat’s and

Powdermet’s existing and potential competitors have longer operating histories, greater name recognition,

larger customer bases and significantly greater financial, technical and marketing resources than we do,

including well known multi-national corporations. Accordingly, MesoCoat’s and Powdermet’s products

could become obsolete at any time. Competitors could develop products similar to or better than our own,

finish development of new technologies in advance of either MesoCoat’s or Powdermet’s research and

development, or be more successful at marketing new products, any of which factors may hurt our

prospects for success.

Market acceptance of the products and processes produced by MesoCoat and Powdermet is critical to

our growth.

We expect to generate revenue from our interest in MesoCoat and realize a gain on our interest in

Powdermet from the sale of products and processes produced by MesoCoat and Powdermet. Market

acceptance of those products is therefore critical to our growth. If our customers do not accept or purchase

those products or processes produced by MesoCoat and Powdermet, then our revenue, cash flow and

operating results will be negatively impacted.

General economic conditions will affect our operations.

Changes in the general domestic and international climate may adversely affect the financial performance

of Abakan, MesoCoat and Powdermet. Factors that may contribute to a change in the general economic

climate include industrial disputes, interest rates, inflation, international currency fluctuations and

political and social reform. Further, the delayed revival of the global economy is not conducive to rapid

growth, particularly of technology companies with newly commercialized products.

MesoCoat and Powdermet rely upon patents and other intellectual property.

MesoCoat and Powdermet rely on a combination of patent applications, trade secrets, trademarks,

copyrights and licenses, together with non-disclosure and confidentiality agreements, to establish and

protect proprietary rights to technologies they develop. Should either of MesoCoat or Powdermet be

unable to adequately protect their intellectual property rights or become subject to a claim of

infringement, their businesses and that of the Company may be materially adversely affected.

MesoCoat and Powdermet expect to prepare patent applications in accordance with their respective

worldwide intellectual property strategies on acquiring new technologies. However, neither they nor the

Company can be certain that any patents will be issued with respect to future patents pending or future

patent applications. Further, neither they nor Abakan know whether any future patents will be upheld as

valid, proven enforceable against alleged infringers or be effective in preventing the development of

competitive patents. Abakan believes that MesoCoat and Powdermet have each implemented a

sophisticated internal intellectual property management system to promote effective identification and

protection of their products and know-how in connection with the technologies they have developed and

may develop in the future

We may not be able to effectively manage our growth.

We expect considerable future growth in our business. Such growth will come from the addition of new

plants, the increase in global personnel, and the commercialization of new products. Additionally, our

products should have an impact on the cladding industry; as companies learn that they can receive

materials with a short lead time at a higher quality and lower price, market demand should grow,

expanding the overall market itself. To achieve growth in an efficient and timely manner, we will have to

maintain strict controls over our internal management, technical, accounting, marketing, and research and

development departments. We believe that we have retained sufficient quality personnel to manage our

anticipated future growth though we are still striving to improve financial accounting oversight to ensure

that adequate reporting and control systems in place. Should we be unable to successfully manage our

anticipated future growth by adherence to these strictures, costs may increase, growth could be impaired

and our ability to keep pace with technological advances may be impaired which failures could result in a

loss of future customers.

Environmental laws and other governmental legislation may affect our business.

Should the technologies which each of MesoCoat and Powdermet have under development not comply

with applicable environmental laws then Abakan’s business and financial results could be seriously

harmed. Furthermore, changes in legislation and governmental policy could also negatively impact us.

Although we are currently unaware of any introduced or proposed bills, or policy, that might cause us to

make specific changes to our operations, no assurance can be given that if new legislation is passed we

will be able to make the changes to comport our technologies with future regulatory requirements.

Abakan and those entities in which it holds an interest may face liability claims.

Although MesoCoat and Powdermet intend to implement exhaustive testing programs to identify

potential material defects in technology they develop, any undetected defects could harm their reputation

and that of Abakan, diminish their customer base, shrink revenues and expose themselves and us to

product liability claims. Any imposition of liability that is not covered by insurance or is in excess of

insurance coverage could have a material adverse effect on our business, results of operations and

financial condition.

The market for our stock is limited and our stock price may be volatile.

The market for our common stock has been limited due to low trading volume and the small number of

brokerage firms acting as market makers. Due to the limitations of our market and the volatility in the

market price of our stock, investors may face difficulties in selling shares at attractive prices when they

want to sell. The average daily trading volume for our stock has varied significantly from week to week

and from month to month, and the trading volume often varies widely from day to day.

Abakan’s common stock is currently deemed to be “penny stock”, which makes it more difficult for

investors to sell their shares.

Abakan’s common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of

the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the

NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or

that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for

three or more years). These rules require, among other things, that brokers who trade penny stock to

persons other than “established customers” complete certain documentation, make suitability inquiries of

investors and provide investors with certain information concerning trading in the security, including a

risk disclosure document and quote information under certain circumstances. Many brokers have decided

not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number

of broker-dealers willing to act as market makers in such securities is limited. If Abakan remains subject

to the penny stock rules for any significant period, it could have an adverse effect on the market, if any,

for our securities. If Abakan’s securities are subject to the penny stock rules, investors will find it more

difficult to dispose of our securities.

The elimination of monetary liability against Abakan’s directors, officers and employees under Nevada

law and the existence of indemnification rights to our directors, officers and employees may result in

substantial expenditures by Abakan and may discourage lawsuits against our directors, officers and

employees.

Abakan’s articles of incorporation contains a specific provision that eliminates the liability of directors for

monetary damages to us and our stockholders; further, Abakan is prepared to give such indemnification to

its directors and officers to the extent provided by Nevada law. Abakan may also have contractual

indemnification obligations under its employment agreements with its executive officers. The foregoing

indemnification obligations could result in our incurring substantial expenditures to cover the cost of

settlement or damage awards against directors and officers, which Abakan may be unable to recoup.

These provisions and resultant costs may also discourage us from bringing a lawsuit against directors and

officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative

litigation by our stockholders against the Abakan’s directors and officers even though such actions, if

successful, might otherwise benefit the us and our stockholders.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page

34 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

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.

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.

Abakan Inc.

Date

/s/ Robert H. Miller

October 15, 2013

By: Robert H. Miller

Its: Chief Executive Officer, and Director

/s/ David G. Charbonneau

October 15, 2013

By: David G. Charbonneau

Its: Chief Financial Officer and Principal Accounting Officer

INDEX TO EXHIBITS

Exhibit No.

Exhibit Description

3.1*

Articles of Incorporation and Certificate of Amendment, incorporated hereto by reference to

the Form SB-2, filed with the Commission on June 19, 2007.

3.2*

Bylaws, incorporated hereto by reference to the Form SB-2, filed with the Commission on

June 19, 2007.

10.1*

Lease Agreement between Powdermet and Sherman Properties, LLC dated March 7, 2007,

incorporated hereto by reference to the Form 10-K filed with the Commission on September

13, 2011.

10.2*

License agreement between MesoCoat and Powdermet dated July 22, 2008, incorporated

hereto by reference to the Form 10-K/A-2 filed with the Commission on December 27, 2011.

10.3*

Exclusive license between MesoCoat and UT-Battelle, LLC, dated September 22, 2009,

incorporated hereto by reference to the Form 10-K/A-2 filed with the Commission on

December 27, 2011.

10.4*

Articles of Merger dated November 9, 2009, incorporated hereto by reference to the Form 8-

K filed with the Commission on December 9, 2009.

10.5*

Agreement and Plan of Merger dated November 9, 2009, incorporated hereto by reference to

the Form 8-K filed with the Commission on December 9, 2009.

10.5*

Consulting agreement dated December 1, 2009, between the Company and Mr. Greenbaum,

incorporated hereto by reference to the Form 8-K filed with the Commission on May 28,

2010.

10.7*

Employment agreement dated December 1, 2009, between MesoCoat and Andrew Sherman,

incorporated hereto by reference to the Form 10-K filed with the Commission on September

13, 2011.

10.8*

Consulting agreement date December 1, 2009 between the Company and Prosper Financial

Inc., incorporated hereto by reference to the Form 10-K filed with the Commission on

September 13, 2011.

10.9*

Consulting agreement dated December 8, 2009 between the Company and Robert Miller,

incorporated hereto by reference to the Form 10-K filed with the Commission on September

13, 2011.

10.10*

Investment Agreement dated December 9, 2009, between the Company, MesoCoat and

Powdermet, incorporated hereto by reference to the Form 8-K filed with the Commission on

December 17, 2009.

10.11*

Agreement date March 17, 2010 between the Company and Sonnen Corporation,

incorporated hereto by reference to the Form 10-K filed with the Commission on September

13, 2011.

10.12*

Agreement dated April 30, 2010 between the Company and Mr. Buschor, incorporated hereto

by reference to the Form 8-K filed with the Commission on May 11, 2010.

10.13*

Commercial lease agreement date June 1, 2010, between Powdermet and MesoCoat,

incorporated hereto by reference to the Form 10-K filed with the Commission on September

13, 2011.

10.14*

Stock Purchase Agreement dated June 29, 2010 between the Company and Kennametal,

incorporated hereto by reference to the Form 8-K filed with the Commission on September

15, 2010.

10.15*

Employment agreement dated August 20, 2010, between the Company and Mr. Takkas,

incorporated hereto by reference to the Form 8-K filed with the Commission on August 26,

2010.

10.16*

Amendment No. 1 to Stock Purchase Agreement between the Company and Kennametal

dated September 7, 2010, incorporated hereto by reference to the Form 8-K filed with the

Commission on September 15, 2010.

10.17*

Amendment to the Investment Agreement dated December 8, 2010, between the Company,

MesoCoat and Powdermet, incorporated hereto by reference to the Form 10-Q filed with the

Commission on January 19, 2011.

10.18*

Cooperation Agreement between MesoCoat and Petroleo Brasileiro S.A. dated January 11,

2011, incorporated by reference to the Form 8-K/A-3 filed with the Commission on March 6,

2012. (Portions of this exhibit have been omitted pursuant to a request for confidential

treatment.)

10.19*

Amendment No. 2 to Stock Purchase Agreement between the Company and Kennametal

dated January 19, 2011, incorporated hereto by reference to the Form 8-K filed with the

Commission on July 13, 2011.

10.20*

Accord and Satisfaction Agreement dated March 21, 2011 between the Company and

Kennametal, Inc., incorporated hereto by reference to the Form 8-K filed with the

Commission on March 25, 2011.

10.21*

Assignment Agreement dated March 25, 2011 with Polythermics LLC and MesoCoat,

incorporated hereto by reference to the Form 10-Q/A filed with the Commission on

September 27, 2011.

10.22*

Exclusivity Agreement between MesoCoat and Mattson Technology, Inc. dated April 7,

2011, incorporated hereto by reference to the Form 8-K/A-3 filed with the Commission on

March 6, 2012. (Portions of this exhibit have been omitted pursuant to a request for

confidential treatment.)

14*

Code of Business Conduct & Ethics adopted on June 13, 2012, and incorporated hereto by

reference to the Form 10-K filed with the Commission on September 13, 2012.

21*

Subsidiaries of the Company, incorporated hereto by reference to the Form 10-K filed with

the Commission on August 29, 2013.

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, attached.

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, attached.

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached.

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached.

99*

Powdermet audited financial statements for the period ended May 31, 2013, incorporated

hereto by reference to the Form 10_K filed with the commission on August 29^th 2013.

101. INS XBRL Instance Document^†

101. PRE XBRL Taxonomy Extension Presentation Linkbase^†

101. LAB XBRL Taxonomy Extension Label Linkbase^†

101. DEF XBRL Taxonomy Extension Label Linkbase^†

101. CAL XBRL Taxonomy Extension Label Linkbase^†

101. SCH XBRL Taxonomy Extension Schema^†

Incorporated by reference to previous filings of the Company.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished”

and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or

12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of

Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to

liability under these sections.

Attached files

ABAKAN, INC Reports

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