Document_and_Entity_Informatio
Document and Entity Information (USD $) | 2 Months Ended | |
Feb. 28, 2014 | Apr. 14, 2014 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'ABAKAN, INC | ' |
Document Type | '10-Q | ' |
Document Period End Date | 28-Feb-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001400000 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 64,489,547 |
Entity Public Float | ' | $0 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
ABAKAN_INC_CONSOLIDATED_BALANC
ABAKAN, INC. CONSOLIDATED BALANCE SHEETS FEBRUARY 28TH 2014 and MAY 31ST 2013 (USD $) | Feb. 28, 2014 | 31-May-13 |
Assets, Current | ' | ' |
Cash and Cash Equivalents, at Carrying Value | $59,653 | $233,040 |
Accounts Receivable, Net, Current | 109,708 | 105,523 |
Due from Related Parties, Current | 4,500 | 4,500 |
Prepaid Expense, Current | 189,966 | 117,028 |
Deferred finance fees, net | 14,070 | 15,799 |
Assets, Current | 377,897 | 475,890 |
Assets, Noncurrent | ' | ' |
Property, Plant and Equipment, Net | 5,576,232 | 5,595,007 |
Patents and licenses, net | 6,221,380 | 7,545,163 |
Assignment agreement Mesocoat | 180,923 | 210,528 |
Investment - Powdermet (Note 3) | 2,153,695 | 2,449,312 |
Goodwill | 364,384 | 364,384 |
Assets | 14,874,511 | 16,640,284 |
Liabilities, Current | ' | ' |
Accounts Payable, Current | 1,773,389 | 890,791 |
Accounts Payable related parties | 568,439 | 251,004 |
Accrued Liabilities, Current | 1,200,575 | 377,392 |
Loans Payable, net of discounts of $0 and $160,472 Current (Note 4) | 4,417,948 | 965,555 |
Loan payable - related parties (Note 4) | 18,530 | 30,000 |
Accrued interest -loans payable | 241,050 | 153,825 |
Accrued interest -related parties | 432 | 1,987 |
Capital Lease Obligations, Current | 29,300 | 28,006 |
Liabilities, Current | 8,249,663 | 2,698,560 |
Liabilities, Noncurrent | ' | ' |
Loans Payable, (Note 4), Noncurrent | 1,482,567 | 4,241,278 |
Capital Lease Obligations, Noncurrent | 57,864 | 63,875 |
Liabilities | 9,790,094 | 7,003,713 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest (Note 9) | ' | ' |
Common Stock, Value, Issued | 6,451 | 6,430 |
Additional Paid in Capital, Common Stock | 22,186,848 | 20,833,426 |
Subscription receivable | ' | -76,244 |
Subscription payable | 236,000 | ' |
Contributed Capital | 5,050 | 5,050 |
Accumulated Deficit during the development stage | -18,479,767 | -13,545,788 |
Stockholders' Equity Attributable to Noncontrolling Interest | 1,129,835 | 2,413,697 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 5,084,417 | 9,636,571 |
Liabilities and Equity | $14,874,511 | $16,640,284 |
Statement_of_Financial_Positio
Statement of Financial Position - Parenthetical Abakan, Inc. February 28, 2014 and May 31, 2013 (USD $) | Feb. 28, 2014 | 31-May-13 |
Condensed Consolidated Balance Sheets Parenthetical | ' | ' |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Shares Authorized | 2,500,000,000 | 2,500,000,000 |
Common Stock, Shares Issued | 64,489,247 | 64,284,855 |
Common Stock, Shares Outstanding | 6,489,247 | 64,284,855 |
Common Stock, Value, Outstanding | $6,451 | $6,430 |
ABAKAN_INC_CONSOLIDATED_STATEM
ABAKAN, INC, CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED FEBRUARY 28, 2014 AND 2013, AND CUMULATIVE (USD $) | 3 Months Ended | 9 Months Ended | 92 Months Ended | ||
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
Revenues | ' | ' | ' | ' | ' |
Sales Revenue, Goods, Net | $69,120 | $61,125 | $206,507 | $131,206 | $474,260 |
Contract and Grants | 94,400 | 224,742 | 229,428 | 1,549,571 | 3,984,682 |
Other Revenue, Net | ' | ' | 10,094 | ' | 774,973 |
Revenues | 163,520 | 285,867 | 446,029 | 1,680,777 | 5,233,915 |
Cost of Revenue | ' | ' | ' | ' | ' |
Cost of Revenue | 77,824 | 105,521 | 264,996 | 647,522 | 2,053,267 |
Gross Profit | 85,696 | 180,346 | 181,033 | 1,033,255 | 3,180,648 |
Operating Expenses | ' | ' | ' | ' | ' |
General and Administrative Expense | 210,582 | 254,360 | 589,692 | 593,037 | 2,316,346 |
Professional Fees | 99,275 | 133,195 | 558,810 | 390,432 | 1,641,679 |
Professional fees - related parties | 15,000 | 15,000 | 48,028 | 45,000 | 273,028 |
Consulting | 280,008 | 342,066 | 799,475 | 965,083 | 3,886,254 |
Consulting - related parties | 61,500 | 128,504 | 180,500 | 351,181 | 1,861,730 |
Payroll and benefits expense | 230,890 | 240,452 | 1,070,926 | 584,129 | 2,918,029 |
Depreciation, Nonproduction | 191,859 | 108,359 | 583,924 | 302,291 | 3,118,077 |
Research and Development Expense | 203,623 | 357,213 | 1,033,571 | 893,407 | 2,914,454 |
Impairment of asset | ' | ' | ' | ' | 180,000 |
Stock expense on note conversion | ' | ' | ' | 37,223 | 730,097 |
Stock options expense | 352,816 | 483,365 | 972,481 | 1,382,576 | 5,388,761 |
Operating Expenses | 1,645,553 | 2,062,514 | 5,837,407 | 5,544,359 | 23,647,081 |
Operating Income (Loss) | -1,559,857 | -1,882,168 | -5,656,374 | -4,511,104 | -20,466,433 |
Interest and Debt Expense | ' | ' | ' | ' | ' |
Interest Expense loans | -79,359 | -90,157 | -178,639 | -313,169 | -762,518 |
Interest Expense related parties | ' | ' | -1,113 | -773 | -8,446 |
Liquidated damages | ' | ' | ' | ' | -250,000 |
Amortization of discount on debt | ' | -210,265 | -137,364 | -607,350 | -1,588,517 |
Interest and Debt Expense | -79,359 | -300,422 | -317,116 | -921,292 | -2,573,481 |
Interest Income, Net | 7 | 32 | 14 | 3,787 | 8,179 |
Creditor Fee | ' | ' | ' | ' | -241,051 |
Gain on debt settlement | ' | 17,715 | ' | 17,715 | 274,967 |
Gain (Loss) on Disposition of Assets | -510 | ' | -510 | ' | 428,286 |
Unrealized gain on MesoCoat acquisition | ' | ' | ' | ' | 1,764,345 |
Equity in Powdermet income/ (loss) | -73,047 | -134,261 | -295,617 | -193,362 | 503,695 |
Equity in MesoCoat loss | ' | ' | ' | ' | -586,020 |
Investment Income, Nonoperating | -152,909 | -416,936 | -613,229 | -1,093,152 | -421,080 |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | -1,712,766 | -2,299,104 | -6,269,603 | -5,604,256 | -20,887,513 |
Noncontrolling interest in MesoCoat Loss | 341,231 | 347,246 | 1,335,624 | 672,562 | 2,407,746 |
Net Income (Loss) Attributable to Abakan Inc | -1,371,535 | -1,951,585 | -4,933,979 | -4,933,979 | -18,479,767 |
Net Income (Loss) Attributable to Parent | ($1,371,535) | ($1,951,585) | ($4,933,979) | ($4,933,979) | ($18,479,767) |
Earnings Per Share | ' | ' | ' | ' | ' |
Earnings Per Share, Basic | ($0.02) | ($0.03) | ($0.08) | ($0.08) | ' |
Earnings Per Share, Diluted | ($0.02) | ($0.03) | ($0.08) | ($0.08) | ' |
Weighted Average Number of Shares Outstanding, Basic | 64,481,144 | 62,618,063 | 64,365,475 | 62,073,783 | ' |
Weighted Average Number of Shares Outstanding, Diluted | 64,481,144 | 62,618,063 | 64,365,475 | 62,073,783 | ' |
ABAKAN_INC_CONSOLIDATED_STATEM1
ABAKAN INC CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED FEBRUARY 28, 2014 AND CUMULATIVE (USD $) | 9 Months Ended | 92 Months Ended | |
Feb. 28, 2014 | Feb. 28, 2013 | Feb. 28, 2014 | |
Net Cash Provided by (Used in) Operating Activities | ' | ' | ' |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | ($1,656,379) | ($1,718,730) | ($755,697) |
Net Cash Provided by (Used in) Operating Activities | -1,349,762 | -893,513 | -7,249,079 |
Net Cash Provided by (Used in) Investing Activities | ' | ' | ' |
Payments to Acquire Property, Plant, and Equipment | -434,087 | -1,214,142 | -4,216,289 |
Payments to Acquire Powdermet minority Interest, Net of Cash Acquired | ' | ' | -2,390,266 |
Assignment Agreement MesoCoat Investing | ' | ' | -100,000 |
Proceeds from sale of capital assets | ' | ' | 470,921 |
Investment in MesoCoat Activity | ' | ' | -750,070 |
Powdermet minority interest | ' | ' | -1,650,000 |
Capitalized patents and licenses | -20,200 | -22,451 | -163,468 |
Payments for (Proceeds from) Waste to Energy Group Inc and Interest in Affiliates | ' | ' | -180,000 |
Net Cash Provided by (Used in) Investing Activities | -454,287 | -1,236,593 | -8,979,172 |
Net Cash Provided by (Used in) Financing Activities | ' | ' | ' |
Proceeds from Issuance of Common Stock | 76,244 | 1,091,101 | 9,300,514 |
Proceeds from (Repayments of) Notes Payable | 1,589,248 | 898,606 | 6,964,360 |
Proceeds from (Repayments of) Related Party Debt | ' | 29,947 | 130,743 |
Proceeds from (Repayments of) Long-term Debt and Capital Securities | -3,115 | -18,023 | -81,048 |
Proceeds from Contributed Capital | ' | ' | 5,050 |
Proceeds from Issuance or Sale of Equity | ' | -15,500 | ' |
Net Cash Provided by (Used in) Financing Activities | 1,662,377 | 1,986,131 | 16,319,619 |
Cash and Cash Equivalents, Period Increase (Decrease) | -141,672 | -143,975 | 91,368 |
Cash Beginning Period | 233,040 | 859,566 | ' |
Cash End Period | $91,368 | $715,591 | $91,368 |
1_Summary_of_Significant_Accou
1. Summary of Significant Accounting Policies | 2 Months Ended |
Feb. 28, 2014 | |
Notes | ' |
1. Summary of Significant Accounting Policies | ' |
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 February 28, 2014, and the results of its operations and cash flows for the nine months ended February 28, 2014, have been made. Operating results for the nine months ended February 28, 2014 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 February 28, 2014 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 February 28, 2014 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 February 28, 2014. | |
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 February 28, 2014, Abakan’s business operations had not fully developed and are dependent upon funding and therefore Abakan is considered a development stage enterprise. | |
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 February 28, 2014 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
2. Going Concern | 2 Months Ended |
Feb. 28, 2014 | |
Notes | ' |
2. Going Concern | ' |
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 from June 27, 2006 (inception) to the period ended February 28, 2014, of $18,479,767 and a working capital deficit of $7,871,766. 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. | |
3_Investment_in_Noncontrolling
3. Investment in Non-controlling Interest | 2 Months Ended | |||||
Feb. 28, 2014 | ||||||
Notes | ' | |||||
3. Investment in Non-controlling Interest | ' | |||||
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 February 28, 2014. 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 minimal financial activity during the quarter ending February 28, 2014, for Terves. The results for Terves Inc. have been consolidated in the results of Powdermet. | ||||||
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 nine months ended February 28, 2014 | (295,617) | |||||
Investment balance, February 28, 2014 | $ | 2,153,695 | ||||
Below is a table with summary financial results of operations and financial position of Powdermet: | ||||||
Powdermet Inc. | ||||||
For the nine months ended | For the nine months ended | |||||
28-Feb-14 | 28-Feb-13 | |||||
Equity Percentage | 41% | 41% | ||||
Condensed income statement information: | ||||||
Total revenues | $ | 1,593,405 | $ | 1,882,043 | ||
Total cost of revenues | 482,462 | 774,137 | ||||
Gross margin | 1,110,942 | 1,107,906 | ||||
Total expenses | -1,401,889 | (906,956) | ||||
Minority interest loss in MesoCoat | (853,525) | (672,562) | ||||
Provision for income tax benefit | 423,455 | - | ||||
Net profit/ (loss) | $ | (721,017) | $ | (471,612) | ||
Abakan’s equity in net profit/(loss): 41% | $ | (295,617) | $ | (193,362) | ||
Condensed balance sheet information: | 28-Feb-14 | 31-May-13 | ||||
Total current assets | $ | 1,099,870 | $ | 536,111 | ||
Total non-current assets | 1,417,763 | 3,077,305 | ||||
Total assets | $ | 2,517,633 | $ | 3,613,416 | ||
Total current liabilities | $ | 408,827 | $ | 260,897 | ||
Total non-current liabilities | 1,447,701 | 1,676,463 | ||||
Total liabilities | 1,856,528 | 1,937,360 | ||||
Total equity | 661,105 | 1,676,056 | ||||
Total liabilities and equity | $ | 2,517,633 | $ | 3,613,416 | ||
4_Loans_Payable
4. Loans Payable | 2 Months Ended | ||||
Feb. 28, 2014 | |||||
Notes | ' | ||||
4. Loans Payable | ' | ||||
4. LOANS PAYABLE | |||||
As of February 28, 2014, and May 31, 2013, the loans payable balance was comprised of: | |||||
Description | 28-Feb-14 | 31-May-13 | |||
Convertible demand note to an unrelated entity bearing 5% interest per annum 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. | $ | 1,500,000 | $ | 1,500,000 | |
Convertible demand note to an unrelated entity bearing 5% interest per annum 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. | 200,000 | 175,163 | |||
Convertible demand note to an unrelated entity bearing 5% interest per annum 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. | 500,000 | 387,473 | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 70,000 | 70,000 | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 3,850 | 3,850 | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 19,350 | 19,350 | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 20,000 | 20,000 | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 21,308 | - | |||
Uncollateralized demand note to an unrelated entity bearing 8% interest per annum | 30,867 | - | |||
Collateralized term note to an unrelated entity bearing 5% interest per annum which matures on April 29, 2014 | 689,000 | - | |||
Collateralized term note to an unrelated entity bearing 5% interest per annum which matures on April 29, 2014 | 80,000 | - | |||
Collateralized term note to an unrelated entity bearing 5% interest per annum which matures on April 29, 2014 | 180,000 | - | |||
Collateralized term note to an unrelated entity bearing 5% interest per annum which matures on April 29, 2014 | 180,000 | - | |||
Collateralized term note to an unrelated entity bearing 5% interest per annum which matures on April 29, 2014 | 180,000 | - | |||
Uncollateralized demand notes to an unrelated entity bearing 5% interest per annum | 500,000 | - | |||
Uncollateralized demand notes to an unrelated entity bearing 5% interest per annum | 50,000 | - | |||
Uncollateralized demand notes to an unrelated entity bearing 5% interest per annum | 70,000 | - | |||
Uncollateralized demand notes to an unrelated entity bearing 6% interest per annum | 20,000 | ||||
Collateralized note to an unrelated entity bearing 1% interest for the first year and then 7% per annum for years two – seven. | 1,000,000 | 1,000,000 | |||
Uncollateralized demand note to a related entity bearing 8% interest per annum | 18,530 | 30,000 | |||
Convertible demand note to an unrelated entity bearing 7.5% imputed interest per annum which matures on July 10, 2018. | 42,184 | 48,228 | |||
Uncollateralized notes to an unrelated entity bearing 8% interest per annum, matures on September 15, 2014 | 405,000 | 405,877 | |||
Capital leases payable to various vendors expiring in various years through September 2016; collateralized by certain equipment with a cost of $205,157. | 87,164 | 91,881 | |||
Collateralized 5 year term note to an unrelated entity bearing 5.15% interest | 138,956 | - | |||
Uncollateralized demand note to an unrelated entity for royalties shown net of discount of $23,108 | - | 1,576,892 | |||
$ | 6,006,209 | $ | 5,328,714 | ||
Less current liabilities | 4,465,778 | 1,023,561 | |||
Total long term liabilities | $ | 1,540,431 | $ | 4,305,153 | |
On October 30, 2013, Abakan and MesoCoat entered into an agreement with an unrelated entity in which $680,000 of uncollateralized demand notes and $9,000 in accrued interest were exchanged for a $689,000, 5% secured promissory note maturing on April 29, 2014. The agreement also includes the commitment by the unrelated entity to loan MesoCoat $80,000 on closing and three loans of $180,000 loans on November 11, 2013, December 10, 2013 and January 10, 2014 under the same terms of the $689,000 note. As of February 28, 2014, the Company had received the additional $180,000 tranches dated December 10, 2013, and January 10, 2014. |
5_Stockholders_Equity
5. Stockholders' Equity | 2 Months Ended | ||||||||||||
Feb. 28, 2014 | |||||||||||||
Notes | ' | ||||||||||||
5. Stockholders' Equity | ' | ||||||||||||
5. STOCKHOLDERS' EQUITY | |||||||||||||
Common Stock Issuances | |||||||||||||
For the nine months ended February 28, 2014, Abakan issued the following shares for services and compensation: | |||||||||||||
On October 25, 2013, we issued 19,802 shares of our common stock for services performed valued at $60,000. | |||||||||||||
On October 25, 2013, we issued 25,000 shares of our common stock for services performed valued at $73,500. | |||||||||||||
On October 25, 2013, we issued 57,242 shares of our common stock to the MesoCoat Inc. Supplemental Discretionary Tax-Qualified Profit Sharing Plan and Trust valued at $72,728. | |||||||||||||
On October 25, 2013, we issued 25,699 shares of our common stock to the Powdermet, Inc. Supplemental Discretionary Tax-Qualified Profit Sharing Plan and Trust valued at $72,728. | |||||||||||||
On December 4, 2013, we issued 50,000 shares of our common stock for exercise of stock options converted valued at $32,500, and paid for by an outstanding balance of accounts payable. | |||||||||||||
On December 4, 2013, we issued 10,000 shares of our common stock for services performed valued at $12,000. | |||||||||||||
On January 3, 2014, we issued 16,649 shares of our common stock per the terms of his employment agreement valued at $20,000. | |||||||||||||
A summary of the common stock warrants granted, forfeited or expired during the nine months ended February 28, 2014 and the year ended May 31, 2013 is presented below: | |||||||||||||
A summary of the common stock warrants granted, forfeited or expired during the nine months ended February 28, 2014 and the year ended May 31, 2013 is presented below: | |||||||||||||
Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms (In Years) | |||||||||||
Balance at June 1, 2012 | 2,066,296 | $ | 1.64 | 2.00 years | |||||||||
Granted | 1,186,934 | 2.35 | |||||||||||
Exercised | -270,233 | 1.5 | |||||||||||
Forfeited or expired | -140,005 | 1.5 | |||||||||||
Balance at May 31, 2013 | 2,842,992 | $ | 1.8 | 1.18 years | |||||||||
Granted | - | - | |||||||||||
Exercised | - | - | |||||||||||
Forfeited or expired | -706,595 | 1.25 | |||||||||||
Balance at February 28, 2014 | 2,136,397 | $ | 1.98 | .67 years | |||||||||
Exercisable at February 28, 2014 | 2,136,397 | $ | 1.98 | .67 years | |||||||||
Weighted average fair value of | $ | NA | |||||||||||
options granted during the nine months ended February 28, 2014 | |||||||||||||
The following table summarizes information about the common stock warrants outstanding at February 28, 2014: | |||||||||||||
Warrants Exercisable | |||||||||||||
Range of Exercise Price | Number Outstanding | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | ||||||||
$ | 1.25 | 600,000 | .15 Years | $ | 1.25 | $ | 600,000 | $ | 1.25 | ||||
$ | 1.5 | 250,000 | 1.15 Years | $ | 1.5 | $ | 250,000 | $ | 1.5 | ||||
$ | 2 | 574,463 | .29 Years | $ | 2 | $ | 574,463 | $ | 2 | ||||
$ | 2.7 | 576,272 | .89 Years | $ | 2.7 | $ | 576,272 | $ | 2.7 | ||||
$ | 3 | 135,662 | 1.14 Years | $ | 3 | $ | 135,662 | $ | 3 | ||||
2,136,397 | .72 Years | $ | 1.98 | $ | 2,136,397 | $ | 1.98 | ||||||
6_Earningspershare_Calculation
6. Earnings-per-share Calculation | 2 Months Ended | ||
Feb. 28, 2014 | |||
Notes | ' | ||
6. Earnings-per-share Calculation | ' | ||
6. EARNINGS-PER-SHARE CALCULATION | |||
Basic earnings per common share for the three and nine months ended February 28, 2014 and 2013 are calculated by dividing net income by weighted-average common shares outstanding during the period. Diluted earnings per common share for the three and nine months ended February 28, 2014 and 2013 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 February 28, 2014 | For the three months ended February 28, 2013 | ||
Net earnings (loss) from operations | $ (1,371,535) | $ (1,951,858) | |
Weighted-average common shares | 64,481,144 | 62,618,063 | |
Effect of dilutive securities: | |||
Warrants | - | - | |
Options to purchase common stock | - | - | |
Dilutive potential common shares | 64,481,144 | 62,618,063 | |
Net earnings per share from operations: | |||
Basic | $ (0.02) | $ (0.03) | |
Diluted | $ (0.02) | $ (0.03) | |
For the nine months ended February 28, 2014 | For the nine months ended February 28, 2013 | ||
Net earnings (loss) from operations | $ (4,933,979) | $ (4,931,694) | |
Weighted-average common shares | 64,365,475 | 62,073,783 | |
Effect of dilutive securities: | |||
Warrants | - | - | |
Options to purchase common stock | - | - | |
Dilutive potential common shares | 64,365,475 | 62,073,783 | |
Net earnings per share from operations: | |||
Basic | $ (0.08) | $ (0.08) | |
Diluted | $ (0.08) | $ (0.08) | |
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. | |||
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 February 28, 2014 | For the three months ended February 28, 2013 | ||
Common Stock Equivalents: | |||
Warrants | 2,136,397 | 2,136,397 | |
Options to purchase common stock | 4,166,667 | 4,545,000 | |
Total of Common Stock Equivalents: | 6,303,064 | 7,166,307 | |
For the nine months ended February 28, 2014 | For the nine months ended February 28, 2013 | ||
Common Stock Equivalents: | |||
Warrants | 2,136,397 | 2,136,397 | |
Options to purchase common stock | 4,166,667 | 4,545,000 | |
Total of Common Stock Equivalents: | 6,303,064 | 7,166,307 | |
7_Stock_Based_Compensation
7. Stock Based Compensation | 2 Months Ended | |||||||
Feb. 28, 2014 | ||||||||
Notes | ' | |||||||
7. Stock Based Compensation | ' | |||||||
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 nine months ended February 28, 2014 and 2013, was $824,362 and $2,334,912, respectively. | ||||||||
For the nine months ended February 28, 2014, Abakan granted 580,000 stock options, of these, 80,000 were granted to an officer of MesoCoat on June 14, 2013. The officer is no longer employed with the company and the options were not vested and no longer outstanding. | ||||||||
We granted 100,000 stock options to an employee of MesoCoat on December 5, 2013, at an exercise price of $1.25 per share that expire ten years from the grant date, and vest in equal one third parts on each anniversary of the option grant date. | ||||||||
We granted 100,000 stock options to an employee of MesoCoat on December 5, 2013,at an exercise price of $1.25 per share that expire ten years from the grant date, and vest in equal one third parts on each anniversary of the option grant date. | ||||||||
We granted 200,000 stock options to a consultant of Abakan on December 5, 2013, at an exercise price of $1.25 per share that expire ten years from the grant date, and vest in equal one third parts on each anniversary of the option grant date. | ||||||||
2009 Stock Option Plan – Abakan - continued | ||||||||
We granted 50,000 stock options to a legal advisor of Abakan on December 5, 2013, at an exercise price of $1.25 per share that expire ten years from the grant date, and vest in equal one third parts on each anniversary of the option grant date. | ||||||||
We granted 50,000 stock options to a consultant of Abakan on December 5, 2013, at an exercise price of $1.25 per share that expire ten years from the grant date, and vest in equal halves on December 5, 2013, and the first anniversary of the option grant date. | ||||||||
A summary of the options granted to employees and non-employees under the plan and changes during the nine months ended February 28, 2014 and the year ending May 31, 2013 is presented below: | ||||||||
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms(In Years) | Aggregate Intrinsic 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 | 580,000 | 1.48 | ||||||
Exercised | -50,000 | 0.65 | ||||||
Forfeited or expired | -163,333 | 2.1 | -16,754 | |||||
Balance at February 28, 2014 | 4,166,667 | $ | 1.26 | 7.27 years | $ | 91,996 | ||
Exercisable at February 28, 2014 | 2,629,997 | $ | 0.92 | 7.27 years | $ | -- | ||
Weighted average fair value of | $ | 1.48 | ||||||
options granted during the nine months ending February 28, 2014 | ||||||||
8_Commitments
8. Commitments | 2 Months Ended |
Feb. 28, 2014 | |
Notes | ' |
8. Commitments | ' |
8. COMMITMENTS | |
There were no new commitments for the nine months period ending February 28, 2014. | |
9_Subsequent_Events
9. Subsequent Events | 2 Months Ended |
Feb. 28, 2014 | |
Notes | ' |
9. Subsequent Events | ' |
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: | |
Share Issuances | |
On February 21, 2014, we closed a private placement for $20,000, or 20,000 units consisting of one share of our restricted common stock and one-half common stock warrant to purchase shares of our common stock, with a purchase price of $1.50 per share and an expiration date of two years from the closing. In connection with this placement we had no offering costs for a net of $20,000. But the Company did not issue the share until April 9, 2014, and as such this is reflected in Stock issuable on the Condensed Consolidated Balance Sheet as of February 28, 2014. | |
On February 24, 2014, we agreed to issue $216,000 or 216,000 units consisting of one share of our restricted common stock and one-half common stock warrant to purchase shares of our common stock, with a purchase price of $1.50 per share and an expiration date of two years from the closing for services to be rendered. In connection with this placement we had no offering costs for a net of $216,000. But the Company did not issue the share until April 9, 2014, and as such this is reflected in Stock issuable on the Condensed Consolidated Balance Sheet as of February 28, 2014. | |
On March 4, 2014, we closed a private placement for $20,000, or 20,000 units consisting of one share of our restricted common stock and one-half common stock warrant to purchase shares of our common stock, with a purchase price of $1.50 per share and an expiration date of two years from the closing. In connection with this placement we had no offering costs for a net of $20,000. | |
Private Placement | |
The Company authorized a new private placement offering on April 8, 2014, to be sold to accredited investors of up to six million (6,000,000) units on or before April 11, 2014 at a price of $0.80 per unit, each unit comprised of one (1) share of common stock, par value $0.0001 and one (1) share purchase warrant that would entitle the holder thereof to purchase one (1) additional share of Common Stock in exchange for two (2) share purchase warrants at an exercise price of $1.20 for a period of two years from the date of each placement in exchange for one (1) whole share purchase warrant at a price per share of $1.20 per share. | |
On April 9, 2014, we closed a private placement for $400,000, or 500,000 units consisting of one share of our restricted common stock and one-half common stock warrant to purchase shares of our common stock, with a purchase price of $1.20 per share and an expiration date of two years from the closing. In connection with this placement we had no offering costs for a net of $400,000. | |
Conversion of debt to shares | |
On April 9, 2014, we converted several debt obligations for an aggregate total of $751,414, or 939,268 units consisting of one share of our restricted common stock and one-half common stock warrant to purchase shares of our common stock, with a purchase price of $1.20 per share and an expiration date of two years from the closing. | |
On April 9, 2014, we agreed to issue, an aggregate amount of $70,000 or 70,000 shares of our restricted common stock, for debt owed to two unrelated vendors. In connection with this placement we had no offering costs for a net of $70,000. | |
Consulting agreement | |
On March 31, 2014, Prosper Financial Inc., a related party, terminated its consulting agreement with the Company. | |