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Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Powdermet, Inc. (Powdermet, or, the Company) was founded in December 1996. The Company is a

manufacturer of nano-engineered metal and ceramic powders, and high value-added components

manufactured from these powders. The Company generates revenues from job shop toll processing

and contract research and design services, primarily through the Small Business Innovative

Research ("SBIR") program.

Accounting Period

The Company’s fiscal year ends on December 31. These financial statements cover the period June 1,

2011 through May 31, 2012.

Basis of Accounting

These financial statements are prepared on the accrual basis of accounting in conformity with

accounting principles generally accepted in the United States of America (GAAP).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect the amounts reported in the financial statements and

accompanying notes. Accordingly, actual results could differ from those estimates.

Accounts Receivable

The Company’s accounts receivable are due from a variety of customers. Credit is extended based on

an evaluation of a customer’s financial condition. Accounts receivable are generally due within 30

days and are stated at amounts due from customers, net of an allowance for doubtful accounts.

Accounts that are outstanding longer than the contractual payment terms are considered past due.

The Company determines its allowance by considering a number of factors, including the length of

time trade receivables are past due, the Company’s previous loss history, the customer’s current

ability to pay its obligations to the Company, and the condition of the general economy and industry

as a whole. The Company writes off accounts receivable when they become uncollectible, and

payments subsequently received on such receivables are credited to an allowance for doubtful

accounts. As of May 31, 2012, management has determined that no allowance for doubtful

accounts is required.

-7-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation of property and equipment is provided by use of the straight-line method over the

following estimated useful lives of the assets:

Machinery and equipment

5 - 10 years

Furniture and fixtures

7 years

Computer equipment

3 - 10 years

Vehicles

5 years

Leasehold improvements

Lesser of useful life of asset, or remaining

life of lease (15 years maximum)

Construction in progress represents assets that are in process of construction and rehabilitation in

order to bring them to operational status. All costs are captured in a separate Construction in

Progress account, and are included in the Property and Equipment – Net on the balance sheet.

Depreciation commences when the asset is ready to be placed into service.

Routine expenditures for maintenance and repairs are expensed as incurred.

Intellectual Property

Intellectual property is recorded at cost and consists primarily of patents and licenses. Patent costs are

being amortized on a straight-line basis over their estimated useful lives, up to 15 years, beginning

when the patent is secured by the Company. License costs are recorded at the cost to obtain the

license and are amortized on a straight-line basis over the effective term of the license, up to 15

years.

Revenue and Cost Recognition

Revenue is generally recorded when earned as defined under the terms of their contractual

agreements. Each contract sets the timing of amounts that are allowed to be billed and how to bill

those amounts. Revenue from cost-plus fee contracts is recognized on the basis of costs incurred

during the year plus the fee earned. Revenue earned under the SBIR program is recognized in the

year in which the related costs are incurred so as to match the revenue against the research costs

being reimbursed.

Cost of revenues include all direct costs and allocations of indirect contract costs.

Shipping and Handling

The Company’s shipping and handling costs are included in cost of revenues as a component of other

direct costs.

-8-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Research and Development Costs

All research, testing, and product development costs are charged to current development activities and

expensed as incurred.

Stock-Based Compensation

The Company values its employee stock-based awards based on the grant-date fair value in

accordance with the provisions of Accounting Standards Codification (ASC) 718, Compensation –

Stock Compensation.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements

and consist of taxes currently due plus deferred taxes. Deferred income taxes reflect the net

tax effects of any temporary differences between the carrying amount of assets and liabilities for

financial reporting purposes and the amounts used for income tax purposes. Valuation allowances

are established when necessary to reduce deferred tax assets to the amount expected to more

likely than not be realized in future tax returns.

Advertising

Advertising costs are expensed as incurred. The Company did not incur any advertising related

expenses during the year ended May 31, 2012.

Equity Method

The equity method of accounting is used when the Company has a 20% to 50% interest in other

entities. Under the equity method, original investments are recorded at cost and adjusted by the

Company’s share of undistributed earnings or losses of those entities.

Subsequent Events

The Company evaluated subsequent events through August 28, 2012, the date these financial

statements were available to be issued. There were no material subsequent events that required

recognition or additional disclosure in these financial statements.

-9-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

2. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at May 31, 2012:

Machinery and equipment

1,271,556

Furniture and fixtures

24,422

Computer equipment

24,751

Vehicles

8,625

Leasehold improvements

625,221

Construction in progress

177,610

2,132,185

Less: Accumulated depreciation and amortization

(1,456,916)

675,269

Depreciation and amortization expense was $86,458 for the year ended May 31, 2012.

3. INTELLECTUAL PROPERTY

On May 31, 2012, the cost and net book value of definite-lived intangible assets are as

follows:

Intellectual technology

226,880

Accumulated amortization

(124,802)

102,078

Amortization expense was $12,962 for the year ended May 31, 2012. The company expects

amortization expense related to intellectual property for the next five years to be as follows:

YEAR ENDING

MAY 31,

2013

7,661

2014

7,252

2015

7,252

2016

7,252

2017

7,252

-10-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

4. INVESTMENT IN NON-CONTROLLING INTEREST – MESOCOAT, INC.

On July 13, 2011, MesoCoat, Inc. (MesoCoat) authorized the release of newly issued common stock to

Abakan, Inc. (Abakan), a related party, in exchange for cash consideration. The effect of the

transaction diluted Powdermet's ownership of MesoCoat from 65.4% to 47.5% and Powdermet is

accounting for its remaining 47.5% investment using the equity method. The gain on the

remeasurement of the retained non-controlling investment in MesoCoat was $3,412,500 which is

the fair value of Powdermet's non-controlling interest in MesoCoat on the closing date. The fair

value of the investment was a Level 3 measurement (see Note 8) based upon the consideration

paid by Abakan for 86,156 new common shares of MesoCoat including a discount for Powdermet's

lack of marketability of its non-controlling interest.

Powdermet's investment in MesoCoat was $0 directly preceding the closing date. When the

Company's share of losses previously accounted for equaled the carrying value of its investment,

the Company suspended its investment accounting, and no additional losses were recognized since

the Company was not obligated to provide further financial support for MesoCoat. The Company's

unrecorded share of MesoCoat's losses was $236,458 directly preceding the closing date.

The table below reconciles our investment amount and equity method amounts to the amount on the

accompanying balance sheet.

Investment balance, May 31, 2011

Remeasurement of retained investment, July 13, 2011

3,412,500

Equity in MesoCoat income

41,810

Investment balance, May 31, 2012

3,454,310

The table below presents the effects of changes in Powdermet's ownership interest in MesoCoat on

Powdermet's equity for the year ending May 31, 2012:

Net loss attributable to Powdermet (at 65.4%)

(40,912)

Transfer from the non-controlling interest:

Dilution of Powdermet's interest resulting

from MesoCoat issuance of new shares

82,722

Change from net loss attributable to Powdermet

and transfer from the non-controlling interest (47.5%) $

41,810

5. LINES OF CREDIT

The Company has available for its use a secured line of credit with a bank totaling $50,000.

Outstanding borrowings bear interest at the bank's prime rate plus 3.00% (6.25% at May 31, 2012)

and are secured by the personal guarantee of the Company's majority stockholder. Outstanding

borrowings on the line of credit at May 31, 2012 were $20,494. The line of credit is renewed

annually.

-11-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

5. LINES OF CREDIT (continued)

The Company also has available for its use a secured line of credit with another bank totaling $63,575.

Outstanding borrowings bear interest at 8.99% and are secured by the personal guarantee of the

Company's majority stockholder. There were no outstanding borrowings on the line of credit as of May

31, 2012. The line of credit is renewed annually.

6. LONG-TERM DEBT

At May 31, 2012, long-term debt consisted of the following:

Note, payable to an unrelated third-party in monthly installments of $4,250,

plus interest at 7.00% through July 2029; collateralized by certain patents

and contracts, agreements, and know-how related to these patents; at any

time prior to the complete and final payment on this note, the third-party has

the right to exercise stock warrants to purchase 200,000 shares of the

Company's common stock at an exercise price of $1.65 per share.

508,074

Note, payable to a related party in interest-only monthly installments bearing

interest at 0.50% per month through December 2016; with a balloon payment

of remaining outstanding principal due and any accrued interest due on

December 2016; collateralized by substantially all assets of the Company

98,004

Obligation, payable to an unrelated third-party; no stated interest rate; interest

payment frequency and due date for the obligation not specified

202,260

808,338

Less: Current portion

(51,940)

756,398

Future maturities of long-term debt are as follows:

YEAR ENDING

MAY 31,

2013

51,940

2014

53,091

2015

54,327

2016

153,657

2017

21,072

Thereafter

474,251

808,338

-12-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

7. DEFERRED COMPENSATION

The Company has non-qualified deferred compensation arrangements with one key employee and one

former employee. The arrangements allowed the employees to defer payment of a portion of their

annual compensation. Amounts accrued under such arrangements as of May 31, 2012 were

$183,333. The deferred compensation arrangements are unfunded; therefore, benefits will be paid

from the general assets of the Company.

8. FAIR VALUE MEASUREMENTS

As discussed in Note 4, on July 13, 2011, the Company revalued its retained non-controlling investment

in MesoCoat to fair value in accordance with ASC 805, Business Combinations. The

remeasurement to fair value only occurs on the date of the business combination event and is not

readjusted to fair value at the end of the reporting period.

GAAP establishes a framework for measuring fair value. That framework provides a fair value

hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. It applies to

fair value measurements already required or permitted by existing standards. The hierarchy gives

the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under GAAP are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or

liabilities in active markets that the Company has the ability to access.

Level 2 - Quoted prices for similar assets or liabilities in active markets or quoted prices for

identical or similar assets or liabilities in inactive markets. Level 2 inputs include those

other than quoted prices that are observable for the asset or liability and that are

derived principally from, or corroborated by, observable market data by correlation or

other means. If the asset or liability has a specified term, the Level 2 input must be

observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value

measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the

lowest level of any input that is significant to the fair value measurement. Valuation techniques

used should maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value of the retained non-controlling interest in MesoCoat, a private entity, was estimated

based on the purchase price of Abakan’s July 13, 2011 investment and corroborated by use of the

income approach. This fair value measurement is based on significant inputs that are not

observable in the market and, therefore, represents a Level 3 measurement as defined above.

Main assumptions include the following:

-13-

Exhibit 99

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

8. FAIR VALUE MEASUREMENTS (continued)

 A value of $32.50 per share implied by the July 13, 2011 Abakan investment (prior to

consideration of adjustments for lack of control or lack of marketability).

 A discount rate of approximately 38% and probability of achieving the projected cash flows

of 4% using the income approach.

 Adjustments because of the lack of marketability that market participants would consider

when estimating the fair value of the retained non-controlling interest in MesoCoat.

The preceding methods described on the previous page may produce a fair value calculation that may

not be indicative of net realizable value or reflective of future fair values. Furthermore, although the

Company believes its valuation methods are appropriate and consistent with other market

participants, the use of different methodologies or assumptions to determine fair value of certain

financial instruments could result in a different fair value measurement at the reporting date.

The following table presents the changes in the Company’s Level 3 investment during the year ended

May 31, 2012:

Investment

MesoCoat

Balance at May 31, 2011

Plus: Remeasurement of retained investment, July 13, 2011

3,412,500

Less: Equity in MesoCoat income

41,810

Balance at May 31, 2012

3,454,310

9. INCOME TAXES

Deferred income taxes are provided to recognize the effects of temporary differences between financial

reporting and income tax reporting. These differences arise principally from Federal net operating

losses and the recognition of equity method investee income for book purposes as opposed to the

recognition of equity method investee income only upon the disposal of the investment for tax

purposes.

In assessing the realization of deferred tax assets, management considers whether it is more likely than

not that some portion or all of the deferred tax assets will be realized. The ultimate realization of

deferred tax assets is dependent upon the generation of future taxable income during the periods in

which those temporary differences become deductible. Management considers the scheduled

reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in

making this assessment. As of May 31, 2012, management has recorded a valuation allowance for

its deferred tax assets relating to the net operating losses, fixed asset basis differences, and other

benefits arising prior to December 31, 2010, as management believes it is more likely than not that

it will be unable to utilize the those deferred tax assets.

Exhibit 99

-14-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

9. INCOME TAXES (continued)

The following reconciles the Company’s effective income tax rate with that which would be expected if

the Federal statutory rate of 34% were applied to income before income taxes for the year ended

May 31, 2012:

Income tax provision at US Federal

statutory rates

1,214,563

Permanent differences

(53,373)

Income tax expense

1,161,190

Deferred tax assets and liabilities at May 31, 2012 consist of the following:

Current

Deferred tax asset:

Accrued vacation

20,790

Non-current

Deferred tax assets:

Net operating loss carryforward

680,271

Deferred compensation

62,334

Fixed asset basis difference

29,550

Total non-current deferred tax assets

772,155

Deferred tax liabilities:

Unremitted income from subsidiary

(14,215)

Book fair market value adjustment of investment

(1,160,250)

Total non-current deferred tax liabilities

(1,174,465)

Net non-current deferred tax liability

(402,310)

Net deferred tax liability before valuation allowance

(381,520)

Valuation allowance

(779,670)

Net deferred tax liability

$ (1,161,190)

GAAP requires the Company to evaluate tax positions taken and recognize a tax liability (or asset) if

the Company has taken an uncertain position that more likely than not would be sustained upon

examination by the IRS. The Company has analyzed the positions taken, and has concluded that

as of May 31, 2012, there are no uncertain positions taken or expected to be taken that would

require recognition of a liability (or asset) or disclosure in the financial statements.

The Company is subject to routine income tax audits by taxing jurisdictions; however, there are

currently no audits for any tax periods in progress. Management believes it is no longer subject to

income tax examinations for years prior to the year ended December 31, 2008.

Exhibit 99

-15-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

9. INCOME TAXES (continued)

The net operating loss carryforward as of May 31, 2012 expires as follows:

Expiring Year

2023

659,928

2024

563,441

2025

563,678

2029

150

2030

195,233

2031

13,782

2032

4,586

Total

2,000,798

10. STOCK OPTIONS AND WARRANTS

The Company may grant incentive stock options to its directors and employees and nonstatutory stock

options to service providers under the provisions of its stock option plan (the Stock Plan). Under

the Stock Plan, 500,000 shares of common stock have been reserved for the granting of these

options. There were 90,000 outstanding options as of May 31, 2012. The Stock Plan provides that

the exercise price of these options shall not be less than 85% of the fair market value of the

common stock on the date granted, depending upon the optionee and type of option. Options begin

vesting after one year from date of grant at a rate of 25% per year and may not be exercised in

fractional options. Options expire as stated in the individual agreement, but may not exceed 10

years after date of grant. As of May 31, 2012, options outstanding under the Stock Plan had an

exercise price ranging from $0.25 and $1.65.

A summary of the status of the Company's stock option plan as of May 31, 2012 and changes during

the year then ended are as follows:

Weighted

Average

Exercise

Price

Outstanding at May 31, 2011

90,000 $

1.03

Exercised

Granted

Forfeited

Outstanding at May 31, 2012

90,000 $

1.03

Exercisable at May 31, 2012

81,875

Exhibit 99

-16-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

10. STOCK OPTIONS AND WARRANTS (continued)

The following table summarizes information about employee stock options under the Stock Plan

outstanding at May 31, 2012:

Options Outstanding

Options Exercisable

Range

Number

Weighted

Outstanding

Average

Weighted

Number

Weighted

Exercise

at May 31,

Remaining Average

Exercisable

Average

Price

2012

Contractual Exercise

at May 31,

Exercise

Life (years)

Price

2012

Price

$ 0.25

40,000

3.08333

$ 0.25

31,875 $ 0.25

$ 1.65

50,000

0.08333

$ 1.65

50,000 $ 1.65

90,000

1.42

$ 1.03

81,875 $ 1.10

As part of the Company's initial financing, lenders were granted warrants to purchase 215,000 shares

of the Company's common stock at an exercise price of $1.65 per share. The purchase rights are

exercisable at any time before or at the date of an initial public offering, or the sale of a majority

ownership interest in the Company. The Company determined that as of the date of the grant the

warrants had no significant fair market value.

The Company also granted each of its eight Advisory Board members' warrants to purchase 2,000

shares each of the Company's common stock at an exercise price of $1.65 per share. The

purchase rights are exercisable at any time before the date of an initial public offering, or the sale of

a majority ownership interest in the Company.

No stock warrants have been exercised as of May 31, 2012.

11. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) Plan (the Plan) covering substantially all of its employees who are at least

age 21 and have completed three months of service. Participating employees may elect to

contribute, on a tax deferred basis, a portion of their compensation in accordance with Section

401(k) of the Internal Revenue Code. Additional matching contributions may be made to the Plan

at the discretion of the Company. For the year ended May 31, 2012, the Company contributed

$12,905.

Exhibit 99

-17-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

12. RELATED PARTIES

In June, 2010, the Company entered into a sublease of expanded office and manufacturing facilities

with a related party. The terms of the sublease agreement expire in May, 2020. The related party

is responsible for its prorated partial share of executor costs, such as insurance, real estate taxes,

maintenance and other related expenses. The Company has accounted for this sublease income in

Other Income in the accompanying statement of income.

The Company has a license agreement (the Agreement) with MesoCoat, which grants MesoCoat an

exclusive license to the use of technical information, proprietary know-how, data and patent rights

assigned to and/or owned by the Company. The agreement will end upon the last to expire valid

claim of licensed patents, unless terminated within the terms of the agreement.

As part of the Agreement, MesoCoat has a commitment to purchase consumable powders from the

Company through July 1, 2013. Also, as part of the Agreement the Company will provide

technology transition and development services to MesoCoat to support their research and

development activities on a cost reimbursement basis. Total cost reimbursement was $275,365 for

the year ended May 31, 2012 and is included in Revenues - Other Income in the accompanying

statement of income.

The following is a summary of transactions and balances with related parties as of and for the year

ended May 31, 2012:

Due from related parties (included in accounts

receivable in the accompanying balance sheet)

63,286

Due to related parties (included in accounts payable

and long-term debt in the accompanying balance

sheet)

98,319

Revenues from related party

275,365

Purchases from related parties

33,384

Rent paid to related party (as described in Note 13)

162,000

Rental income from related party

80,800

Exhibit 99

-18-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

13. COMMITMENTS

In November 2005, the Company entered into a fifteen year lease agreement with Sherman Properties,

LLC (Sherman Properties) for its corporate office and manufacturing facilities located in Euclid,

Ohio, at the rate of $13,500 per month. The Company is liable for executor costs, such as

insurance, real estate taxes, maintenance, and other related expenses. Rental expense paid to

Sherman Properties was $162,000 during the year ended May 31, 2012, which management

believes approximates a rental rate for comparable properties in the geographic area. The

Company's Chief Executive Officer and majority stockholder of the Company is a member of

Sherman Properties and, as more fully-described below, the Company guarantees the commercial

mortgage loan indebtedness of Sherman Properties.

The Company also leases equipment under capital lease arrangements, expiring at various times

through June 2013. These leases are payable in various monthly installments, including

interest between 6.50% and 14.75%, and are included as capital lease obligations in the

accompanying balance sheet. At May 31, 2012, the related assets, with a net book value of

$161,761, have been capitalized and are included in property and equipment in the

accompanying balance sheet.

Total future minimum payments under the lease agreements at May 31, 2012 are as follows:

YEAR ENDING

Capital

Operating

MAY 31,

Leases

2013

56,698

162,000

2014

4,143

162,000

2015

162,000

2016

162,000

2017

162,000

Thereafter

553,500

60,841

1,363,500

Less: Interest component

(2,719)

58,122

Less: Current portion

(54,021)

4,101

The Company is contingently liable as guarantor with respect to $1,150,000 of commercial mortgage

loan indebtedness of Sherman Properties (an entity owned by the Company's majority stockholder

and related individuals) to Cuyahoga County, Ohio (the County) for property acquired and leased to

the Company. The guarantee was issued in November 2002 and provides that if at any time

Sherman Properties defaults on its obligation under the loan, the Company will be obligated to

perform under the guarantee by making the required payments. The value of the property

associated with the guarantee is estimated at $1,820,000 and the liabilities associated with the

guarantee are estimated to be $1,280,000 as of May 31, 2012.

Exhibit 99

-19-

POWDERMET, INC.

NOTES TO THE FINANCIAL STATEMENTS

13. COMMITMENTS (continued)

The Company is involved in various matters and litigation in the normal course of business including

proceedings based on product liability claims and employment matters for which the Company

carries commercial insurance. Management regularly reviews the probable outcome of these

matters, the expenses expected to be incurred, the availability and limits of the insurance coverage,

and monitors the established accruals for liabilities. While the outcome of pending matters cannot

be predicted with certainty, management believes that any liabilities that may result from these

matters will not have a material adverse effect on the Company's liquidity, financial condition, or

results of operations.

14. CONCENTRATIONS

During the year ended May 31, 2012, revenues from two customers comprised approximately 31% of

total revenues. At May 31, 2012, accounts receivable from these customers accounted for

approximately 32% of total receivables.

As more fully-described in Note 1, a significant portion of the Company's revenue is generated through

government grants under the Federal SBIR program.