MetaStat, Inc. (Form: 10-K, Received: 05/28/2013 16:31:26)

NOTE 1 - Nature of Operations and Going Concern

MetaStat, Inc., (“we,” “us,” “our,” the “Company,” or “MetaStat”) formerly known as Photovoltaic Solar Cells Inc. (“PVSO”) was incorporated on March 28, 2007 under the laws of the State of Nevada. From inception until November of 2008, PVSO’s business plan was to produce and market inexpensive solar cells and in November 2008, our board of directors determined that the implementation of our business plan was no longer financially feasible. At such time, we discontinued the implementation of our prior business plan and pursued an acquisition strategy, whereby we sought to acquire a business. Based on these business activities, until February 27, 2012, we were considered a development stage company and a "blank check" company, with no or nominal assets (other than cash) and no or nominal operations.

MetaStat BioMedical, Inc. (“MBM”) formerly known as MetaStat, Inc., our Delaware operating subsidiary was incorporated in the state of Texas on July 22, 2009, re-incorporated in the State of Delaware on August 26, 2010, and since inception has been a Development Stage Enterprise as defined by the ASC 915-15. During this time MBM has devoted substantially all of its efforts to activities such as acquiring biomedical technology licenses, funding research and development, engaging in organizational activities, and raising capital. MBM was formed to allow cancer patients to benefit from the latest discoveries in how cancer spreads to other organs in the body.

On February 27, 2012, we consummated a share exchange transaction as more fully described below, whereby we acquired all the outstanding shares of MBM and, MBM became our wholly owned subsidiary. From and after the share exchange, our business has been conducted through our wholly owned subsidiary, MBM, and the discussion of our business is that of our current business which is conducted through MBM.

Prior to April 9, 2012, our company name was Photovoltaic Solar Cells, Inc. For the sole purpose of changing our name, on April 9, 2012, we merged with a newly-formed, wholly owned subsidiary incorporated under the laws of Nevada called MetaStat, Inc. As a result of the merger, our corporate name was changed to MetaStat, Inc. In May 2012 we changed the name of our Delaware operating subsidiary to MetaStat BioMedical, Inc. from MetaStat, Inc.

The Company’s mission is to become an industry leader in the emerging field of personalized cancer therapy. The Company’s first product, projected to be commercially available as early as 2014, will be the first test that can advise a woman and her doctor the probability that her breast cancer will spread to other organs in her body. This distant spread, called systemic metastasis, is responsible for almost 90% of the fatalities in breast cancer. The Company has similar diagnostics in development for lung and prostate cancer. In addition, the Company is in discussions with potential development partners for the first therapeutic agent that can preemptively arrest the systemic spread of cancer.

Share Exchange Agreement

On February 27, 2012 (the “Closing Date”), we entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among us, MBM, the holders of all outstanding shares of MBM (the “MBM Shareholders”) and Waterford Capital Acquisition Co IX, LLC, our principal shareholder (the “Company Principal Shareholder”), whereby we acquired all of the outstanding shares of MBM (the “MBM Shares”) from the MBM Shareholders. In exchange, we issued to the MBM Shareholders an aggregate of 18,369,421 shares of our common stock (the “Exchange Shares”), equal to 95.6% of our outstanding shares of common stock after such issuance. As a result of the transactions contemplated by the Exchange Agreement (collectively, the “Share Exchange”), MBM became our wholly owned subsidiary. Pursuant to the Exchange Agreement, we assumed warrants to purchase up to 780,511 shares of MBM’s common stock, with exercise prices ranging between $1.50 and $2.00 per share on a 2.2-for-1 basis, equivalent to 1,717,122 shares of our common stock with exercise prices ranging from $0.68 to $0.91 per share. Immediately prior to the Share Exchange, we converted approximately $336,075 of debt owed to the Company Principal Shareholder into 309,595 shares of our common stock (the “Debt Conversion”) and issued an aggregate of 36,000 shares of our common stock to certain of our officers, directors and consultants in consideration for services rendered to us, leaving 840,000 shares of our common stock outstanding immediately prior to the issuance of the Exchange Shares and showing on our Statement of Stockholders’ Equity as 840,000 shares as ‘recapitalization of PVSO shareholders’. Additionally, immediately prior to the Share Exchange, we issued five-year

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

warrants to purchase up to an aggregate of 350,000 shares of our common stock at an exercise price of $1.40 per share, of which warrants to purchase 337,500 shares were issued for a purchase price of $21,000 and warrants to purchase 12,500 shares were issued for services rendered to us prior to the Share Exchange (the “Warrant Financing”). We used the proceeds of the Warrant Financing to pay off all of our liabilities prior to the Share Exchange.

On the Closing Date, we assumed MBM’s 2012 Omnibus Securities and Incentive Plan (the “2012 Plan”) and reserved 1,116,789 shares of our common stock for the benefit of our employees, nonemployee directors and consultants. All 507,500 options outstanding under the 2012 Plan were converted, on a 2.2-for-1 basis, into the right to receive options to purchase up to 1,116,500 shares of our common stock with an exercise price of $0.68 per share. On May 21, 2012, we increased the number of authorized and unissued shares of common stock reserved for issuance pursuant to the 2012 Plan to 3,316,789.

Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of February 28, 2013, the Company has an accumulated deficit of $5,362,479. The continuation of the Company as a going concern is dependent upon continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of MetaStat, Inc. and its wholly-owned subsidiary, MetasStat BioMedical, Inc. All significant intercompany accounts and transactions have been eliminated in

consolidation.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risks on cash and cash equivalents.

Property and Equipment

Property and equipment is stated at cost. The cost of property and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Expenditures for major renewals or betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Property and equipment are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

Development Stage

The Company complies with Statement of Financial Accounting Standard ASC 915-15 and the Securities and Exchange Commission Exchange Act 7 for its characterization of the Company as development stage.

Net Loss Per Share

Net income loss per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares.

Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

We have net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future tax benefit, a valuation allowance is established.

Research and Development Costs

Research and development costs are charged to operations when incurred and are included in operating expenses. Research and development costs were $516,798 and $854,550 for the years ended February 28, 2013, and February 29, 2012, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Stock-Based Compensation

We account for stock based compensation in accordance with ASC 718 which requires companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. For stock-based awards granted on or after January 1, 2006, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

NOTE 3 – LICENSE AGREEMENT AND COMMITMENTS

License Agreement

The Company entered in to a Patent and Technology License Agreement (the “License Agreement”) with the Albert Einstein College of Medicine of Yeshiva University, Massachusetts Institute of Technology, Cornell University, and the IFO-Regina Elena Cancer Institute (together the “Licensors”) during August 2010. In conjunction with entering into the License Agreement, the Company also entered into a Stock Subscription Agreement (the “Subscription Agreement”) and a Stockholders Agreement (the “Stockholders Agreement”) with the Licensors, which included provisions such as participation rights in future financings, co-sale rights, and certain limited anti-dilution rights. The License Agreement grants the Company a world-wide exclusive license to materials and methods for use in the diagnosis and treatment of metastatic spread of solid tumor cancers. In return, the Company has agreed to grant Company equity to the Licensors, to reimburse the Licensors patent expenses thus far incurred, to pay all future patent expenses, pay a royalty on any sales of product using licensed technology, as well as certain minimum royalties and milestone payments.

Pursuant to the License Agreement, we are also obligated to make the following royalties and payments to the Licensors:

•	Royalty payment of a specified percentage of net sales.
•	Royalty payment of minimum of a specified percentage of net sales in case MetaStat pays royalties to unaffiliated third parties for patent rights.
•	Issue 30% of MBM’s outstanding common stock to the Licensors calculated on a fully diluted, as converted basis. Accordingly, on August 26, 2010 MBM issued 3,290,570 common shares valued at $74,786.
•	Non-refundable license fee of $25,000 upon execution of License Agreement.
•	License maintenance fee of $30,000 on each of the first, second, third and fourth anniversary of the License Agreement. The payment may be credited against royalties made during the twelve month period.
•	License maintenance fee of $50,000, and $75,000 on the fifth and sixth anniversaries of the License Agreement, respectively. Each payment may be credited against royalties made during each such twelve month period.
•	License maintenance fee of $100,000 on the seventh and each subsequent anniversary of the License Agreement. Each payment may be credited against royalties made during each such twelve month period.

Anti-dilution Rights for Common Stock

Pursuant to the Subscription Agreement, the Company is obligated, for no additional consideration, to issue additional shares of common stock to the Licensors to ensure that (i) Albert Einstein College of Medicine’s and MIT’s ownership in MetaStat does not fall below 5% of our outstanding common stock (ii) IFO’s ownership in MetaStat does not fall below 3.33% of our outstanding common stock, and (iii) Cornell’s ownership in MetaStat does not fall below 1.67% of our outstanding common stock until certain funding thresholds are reached by the Company. The Licensors were not required to pay additional consideration for these shares. We recorded the fair value of the additional shares of common stock issued under this provision as a consulting expense in the period they were earned. MBM issued 160,158 shares as a result of this antidilution right (see Note 5). The Company has met the funding target mentioned above and the anti-dilution rights under the Subscription Agreement have terminated.

As of February 27, 2012, the Subscription Agreement and the Stockholders Agreement have been terminated.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

Second License Agreement and Third License Agreement

Additionally, effective in March 2012, we entered into two additional license agreements with Einstein. The second license agreement with Einstein (the “Second License Agreement”) and the third license agreement with Einstein (the “Third License Agreement”) both cover pending patent applications, patent disclosures, cell lines and technology surrounding discoveries in the understanding of the underlying mechanisms of systemic metastasis in solid epithelial cancers. The Second License Agreement and the Third License Agreement both require certain customary payments such as a license signing fee, reimbursement of patent expenses, annual license maintenance fees, milestone payments, and the payment of royalties on sales of products or services covered under such agreements.

Pursuant to the Second License Agreement, we are also obligated to make the following royalties and payments to the Einstein:

•	Royalty payment of a specified percentage of net sales.
•	Royalty payment of minimum of a specified percentage of net sales in case MetaStat pays royalties to unaffiliated third parties for patent rights.
•	Non-refundable license fee of $15,000 upon execution of Second License Agreement.
•	License maintenance fee of $12,000 on each of the first and second anniversary of the Second License Agreement. The payment may be credited against royalties made during the twelve month period.
•	License maintenance fee of $30,000, on each of the third, and forth anniversary of the Second License Agreement and $50,000 on the fifth anniversary of the Second License Agreement and $75,000 on the sixth anniversary of the Second License Agreement, respectively. Each payment may be credited against royalties made during each such twelve month period.
•	License maintenance fee of $100,000 on the seventh and each subsequent anniversary of the Second License Agreement. Each payment may be credited against royalties made during each such twelve month period.

Pursuant to the Third License Agreement, we are also obligated to make the following royalties and payments to the Einstein:

•	Royalty payment of a specified percentage of net sales.
•	Royalty payment of minimum of a specified percentage of net sales in case MetaStat pays royalties to unaffiliated third parties for patent rights.
•	Non-refundable license fee of $15,000 upon execution of Third License Agreement.
•	License maintenance fee of $12,000 on each of the first and second anniversary of the Third License Agreement. The payment may be credited against royalties made during the twelve month period.
•	License maintenance fee of $30,000, on each of the third, and forth anniversary of the Third License Agreement and $50,000 on the fifth anniversary of the Third License Agreement and $75,000 on the sixth anniversary of the Third License Agreement, respectively. Each payment may be credited against royalties made during each such twelve month period.
•	License maintenance fee of $100,000 on the seventh and each subsequent anniversary of the Third License Agreement. Each payment may be credited against royalties made during each such twelve month period.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

Sponsored Research Agreement

On April 14, 2011 the Company entered into a Sponsored Research Agreement with Albert Einstein College of Medicine of Yeshiva University (AECOM) and Cornell University for and on behalf of its Joan and Sanford I. Weill Medical College (Cornell) for a 500 patient Large Population Validation study of its MetaSite Breast ™. The purposes of the Large Population Validation study are to (i) study the association between TMEM or MetaSite count at initial diagnosis of invasive ductal carcinoma of the breast and risk of systemic metastasis, and (ii) identify a cut-point for TMEM or MetaSite count that differentiates best between those who develop systemic metastasis and those who do not, and to calculate the sensitivity and specificity of these cut-points. In consideration for the study, we were required to pay $202,798 to Cornell and $514,756 to Einstein for an aggregate amount of $717,554. On September 12, 2012, we entered into a formal amendment to the Sponsored Research Agreement to expand the scope of the research to include a comparison of TMEM or MetaSite count with the IHFC4 score. The consideration for the study was amended to 169,513.76 to Cornell and $595,928.86 to Einstein in the aggregate. The Large Population Validation study was completed in January 2013 and all outstanding payments have been satisfied and connection with the Sponsored Research Agreement, as amended.

Note 4 – INCOME TAXES

MetaStat uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During the fiscal years ended February 29, 2012, and February 28, 2013, MetaStat incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $4,171,701 at February 28, 2013, and will expire in the years 2029, 2030 and 2031.

As at February 28, 2013, and February 29, 2012, deferred tax assets consisted of the following:

	2013			2012
Net operating loss carryforwards	$	4,219,686		$	1,933,066

Deferred tax asset	$	1,476,890		$	676,573
Less: Valuation allowance		(1,476,890	)		(676,573	)
Net deferred tax asset	$	-		$	-

NOTE 5 – EQUITY

As referenced in Note 3, the MBM issued 3,290,570 shares of common stock for the partial compensation due to the Licensors pursuant to the License Agreement. The Company accounted for this as a research and development expense valued at $74,786. During February 2012, MBM issued an aggregate of 160,158 shares of common stock to the Licensors in connection with the anti-dilution rights to maintain a certain ownership percentage in the Company. The shares were valued at $72,799.

During the year ended February 29, 2012, MBM sold 2,989,043 shares of common stock for total proceeds of $1,943,324.

On February 27, 2012, we entered into the Exchange Agreement with MBM by issuing 18,369,421 shares of our common stock in exchange for the MBM Shares. Immediately prior to the Share Exchange, we had 840,000 shares outstanding which have been recorded as recapitalization of shareholders on MetaStat’s books at par.

During the year ended February 29, 2012, we sold 865,000 shares of common stock for proceeds of $865,000, however, $865,000 was received subsequent to February 29, 2012 and we disclosed the balance as a subscription receivable on our balance sheet as of February 29, 2012.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

During the year ended February 28, 2013, the Company sold 880,000 shares of common stock for total proceeds of $880,000. Additionally, the Company issued 100,000 shares of restricted common stock to members of the board of directors for services for total expense of $5,270.

NOTE 6 – STOCK OPTIONS

During January 2012, the Company issued options to purchase 1,116,500 shares of common stock at $0.68 per share to its President, members of its scientific advisory board and clinical advisory board, and several consultants involved in the Company’s ongoing research related to cancer. All of the options except 220,000 vest immediately and expire on January 6, 2022. These options have a fair value of $611,250, as calculated using the Black-Scholes model. Assumption used in the Black-Scholes model included: (1) a discount rate of 1.98%; (2) an expected term of 10 years; (3) an expected volatility of 403%; and (4) zero expected dividends.

The following table summarizes common stock options issued and outstanding:

	Options		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual life (years)

Outstanding at February 29, 2012		1,116,500	$	0.68	$	2,052,976		9.86
Granted
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-

Outstanding at February 28, 2013		1,116,500	$	0.68	$	2,526,500		8.86

As of February 28, 2013, 1,116,500 options are exercisable at $0.68 per share with a weighted average life of 8.86 years.

NOTE 7 – WARRANTS

On November 14, 2011, MBM entered into consulting agreement with Burnham Hill Advisors LLC and warrants were issued to purchase 220,000 shares of common stock at $0.68 per share. The fair value of these warrants was determined to be $149,999, as calculated using the Black-Scholes model. Assumption used in the Black-Scholes model included: (1) a discount rate of 0.91%; (2) an expected term of 5 years; (3) an expected volatility of 403%; and (4) zero expected dividends.

On January 31, 2012, MBM granted 1,497,122 warrants together with shares of common stock issued on January 31, 2012 exercisable at $0.91 per share and expiring on January 31, 2017. On February 27, 2012, the Company also granted 216,250 warrants together with shares of common stock exercisable at $1.40 per share and expiring on February 27, 2016.

Immediately prior to the Share Exchange, PVSO issued 350,000 warrants exercisable at $1.40 per share.

On October 4, 2012 we issued 150,000 warrants to a consultant exercisable at $1.50 per share. The fair value of these warrants was determined to be $149,995, as calculated using the Black-Scholes model. Assumption used in the Black-Scholes model included: (1) a discount rate of 0.63%; (2) an expected term of 4 years; (3) an expected volatility of 420%; and (4) zero expected dividends.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

During the year ended February 28, 2013, we issued 220,000 warrants together with shares of common stock issued on May 1, 2012 exercisable at $1.40 per share and expiring on May 1, 2016. These warrants vest immediately.

During the year ended February 28, 2013, we issued 78,700 warrants together with convertible notes exercisable at $3.00 expiring between January and February 2017. The fair value of these warrants was determined to be $78,694, as calculated using the Black-Scholes model. Assumption used in the Black-Scholes model included: (1) a discount rate of 0.82%; (2) an expected term of 4 years; (3) an average expected volatility of 410%; and (4) zero expected dividends.

The following table summarizes common stock warrants issued and outstanding:

	Warrants		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual life (years)

Outstanding at February 28, 2011		-	$	-	$	-		-
Granted by MetaStat		1,933,372		0.94		4,953,038		3.80
Granted by PVSO		350,000		1.40		735,000		4.00
Outstanding at February 29, 2012		2,283,372	$	1.01	$	5,688,038		3.83
Granted by MetaStat		448,700		1.71		826,850		3.46
Outstanding at February 28, 2013		2,732,072	$	1.13	$	6,514,888		3.77

Warrants exercisable at February 28, 2013 are:

Exercise prices		Number of shares		Weighted average remaining life (years)		Exercisable number of shares
$	0.68		220,000		3.71		220,000
$	0.91		1,497,122		3.93		1,497,122
$	1.40		786,250		3.49		216,250
$	1.50		150,000		3.60		150,000
$	3.00		78,700		3.97		78,700

NOTE 8 – CONVERTIBLE NOTES

Convertible promissory notes (the “Notes”) were issued during January and February 2013 with warrants in the principal amount of $787,000. Warrants are valued as a discount to convertible debt of $71,543 and can be converted into common stock within a four year period. The Notes bear interest at the rate of 8% per annum, mature on December 31, 2013 and rank senior to the Company’s currently issued and outstanding indebtedness and equity securities. Upon the closing by MetaStat of an equity or equity based financing or a series of equity or equity based financings (a “Qualified Financing”) resulting in gross proceeds to the Company of at least $3,500,000 in the aggregate, the outstanding principal amount of the Notes together with all accrued and unpaid interest thereunder (the “Outstanding Balance”) shall automatically convert into such securities, including warrants, as are issued in the Qualified Financing, the amount of which shall be determined in accordance with the following formula: (the Outstanding Balance as of the closing of the Qualified Financing) x (1.15) / (the per security price of the securities sold in the Qualified Financing). Commencing six months following the issuance date of the Notes, the Noteholders shall have the right, at their option, to convert the Outstanding Balance into shares of Common Stock at a conversion price of $2.50 per share.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

NOTE 9 – SUBSEQUENT EVENTS

Convertible Notes

Between February 28, 2013 and May 28, 2013, we entered into separate convertible note and warrant purchase agreements with certain institutional and accredited investors for the issuance and sale in a private placement consisting of, in the aggregate: (a) $700,000 principal amount of Notes convertible into shares of our Common Stock, and (b) four-year warrants to purchase up to 70,000 shares of Common Stock at an exercise price of $3.00 per share, for aggregate gross proceeds of $700,000. Warrants are valued at $70,000 and can be converted into common stock within a four year period.

The Notes bear interest at the rate of 8% per annum, mature on December 31, 2013 and rank senior to the Company’s currently issued and outstanding indebtedness and equity securities. Upon the closing by MetaStat of an equity or equity based financing or a series of equity or equity based financings (a “Qualified Financing”) resulting in gross proceeds to the Company of at least $3,500,000 in the aggregate, the outstanding principal amount of the Notes together with all accrued and unpaid interest thereunder (the “Outstanding Balance”) shall automatically convert into such securities, including warrants, as are issued in the Qualified Financing, the amount of which shall be determined in accordance with the following formula: (the Outstanding Balance as of the closing of the Qualified Financing) x (1.15) / (the per security price of the securities sold in the Qualified Financing). Commencing six months following the issuance date of the Notes, the Noteholders shall have the right, at their option, to convert the Outstanding Balance into shares of Common Stock at a conversion price of $2.50 per share.

From July 22, 2009 (inception) to May 28, 2013, we issued in the aggregate (a) $1,487,000 principal amount of Notes convertible into shares of our Common Stock, and (b) four-year warrants to purchase up to 148,700 shares of Common Stock at an exercise price of $3.00 per share, for aggregate gross proceeds of $1,487,000. Additionally, we paid Noble a cash fee of $12,496 and issued 6,248 five-year placement agent warrants exercisable for shares of Common Stock with an exercise price per share of $2.50. The Company paid to Rockwell a cash fee of $4,464 and issued 2,232 five-year placement agent warrants exercisable for shares of Common Stock with an exercise price per share of $2.50.

April 2013 Issuances

On April 5, 2013, we issued the following securities pursuant to our Amended and Restated 2012 Omnibus Securities and Incentive Plan: (1) an aggregate of 300,000 options to purchase shares of our common stock to our executive officers and directors and 150,000 shares of restricted stock to one of our directors; (2) an aggregate of 423,500 options to purchase shares of our common stock and an aggregate of 153,013 shares of restricted stock to members of our Scientific Advisory Board and Clinical Advisory Board; and (3) 100,000 options to purchase shares of our common stock to an advisor. The stock options provide for an exercise price per share of $3.25.

The stock options issued to our executive officers and directors vest in four equal installments on each of May 31, 2013, August 31, 2013, November 30, 2013 and February 28, 2014. The restricted stock issued to one of our directors vests upon the earlier of a change in control or upon us achieving $5,000,000 in gross sales from one or more of our products.

Of the 423,500 stock options issued to members of our Scientific Advisory Board and Clinical Advisory Board, 181,500 of such stock options are immediately vested and 242,000 of such stock options vest in four equal installments on each of May 31, 2013, August 31, 2013, November 30, 2013 and February 28, 2014. The restricted stock issued to members of our Scientific Advisory Board and Clinical Advisory Board vests upon (1) the listing of our shares of common stock on a national securities exchange and (2) the shares trade on a national securities exchange with a daily trading volume of at least 50,000 shares per day for 30 consecutive trading days.

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METASTAT INC.

(A Development Stage Company)

Notes to Financial Statements

February 28, 2013 and February 29, 2012

The issuances of the securities referred to above were deemed to be exempt from registration under the Securities Act of 1933, as amended, in reliance on Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were our employees, directors or bona fide consultants or advisors and received the securities under our Amended and Restated 2012 Omnibus Securities and Incentive Plan. Appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions had adequate access, through employment, business or other relationships, to information about us.

Appointment of David M. Epstein, Ph.D.

On April 12, 2013, we entered into an advisory agreement (the “Epstein Agreement”) with David Epstein, Ph.D. to serve as the Company’s Head of Drug Development / Director until terminated in accordance with the terms of the Epstein Agreement. Effective on April 16, 2013 Dr. Epstein was appointed as a director of the Company. Dr. Epstein shall devote up to 30 hours per month, or 360 hours per year, of business time to the performance of his duties under the Epstein Agreement. In exchange for such services, the Company has agreed to pay to Dr. Epstein fees of $250.00 per hour and issue to him 100,000 restricted shares of the Company’s common stock. As such, we issued Dr. Epstein 100,000 shares in April 2013. In addition, upon the achievement of each of the three milestones set forth in the Epstein Agreement, the Company shall issue an additional 200,000 restricted shares of common stock to Dr. Epstein, subject to his continued service with the Company.

Consulting Agreement

On April 18, 2013, we entered into an agreement with a consultant whereby we issued 12,000 shares of our common stock as partial consideration.

Employment Agreements with Executive Officers

Employment Agreement with Dr. Oscar Bronsther

Effective as of May 27, 2013, we entered into an employment agreement with Oscar L. Bronsther, M.D., F.A.C.S., to serve as our chief executive officer and chief medical officer. The employment agreement with Dr. Bronsther provides for a base salary of $175,000 and an annual milestone bonus upon the attainment of certain financial, clinical development and/or business milestones to be established annually by our board of directors or compensation committee. The employment agreement is terminable by either party at any time. In the event of termination by us without cause or by Dr. Bronsther for good reason not in connection with a change of control, as those terms are defined in the agreement, he is entitled to six months’ severance. In the event of termination by us without cause or by Dr. Bronsther for good reason in connection with a change of control, as those terms are defined in the agreement, he is entitled to twelve months’ severance. The employment agreement with Dr. Bronsther is attached to this Annual Report on Form 10-K as Exhibit 10.13 and is incorporated herein by reference.

Employment Agreement with Warren Lau

Effective as of May 27, 2013, we entered into an employment agreement with Warren C. Lau to serve as our president and chief financial officer. The employment agreement with Mr. Lau provides for a base salary of $175,000 and an annual milestone bonus upon the attainment of certain financial, clinical development and/or business milestones to be established annually by our board of directors or compensation committee. The term of the agreement is for an initial period of one year, provided the parties may mutually agree to renew the agreement for an additional one year period by providing written notice to the other party no later than thirty (30) days prior to the expiration of the initial one year term. The employment agreement is terminable by either party at any time. In the event the agreement is not renewed beyond the initial one year term or is terminated by us without cause or by Mr. Lau for good reason not in connection with a change of control, as those terms are defined in the agreement, he is entitled to six months’ severance. In the event of termination by us without cause or by Mr. Lau for good reason in connection with a change of control, as those terms are defined in the agreement, he is entitled to twelve months’ severance. The employment agreement with Mar. Lau is attached to this Annual Report on Form 10-K as Exhibit 10.14 and is incorporated herein by reference.

Employment Agreement with Daniel H. Schneiderman

Effective as of May 27, 2013, we entered into an employment agreement with Daniel H. Schneiderman, to serve as our vice president of finance. The employment agreement with Mr. Schneiderman provides for a base salary of $125,000 and an annual milestone bonus upon the attainment of certain financial, clinical development and/or business milestones to be established annually by our board of directors or compensation committee. The employment agreement is terminable by either party at any time. In the event of termination by us without cause or by Mr. Schneiderman for good reason not in connection with a change of control, as those terms are defined in the agreement, he is entitled to six months’ severance. In the event of termination by us without cause or by Mr. Schneiderman for good reason in connection with a change of control, as those terms are defined in the agreement, he is entitled to twelve months’ severance. The employment agreement with Mr. Schneiderman is attached to this Annual Report on Form 10-K as Exhibit 10.15 and is incorporated herein by reference.

NEVADA	20-8753132
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

8 Hillside Avenue, Suite 207
Montclair, New Jersey	07042
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	[ ]	Non-accelerated filer	[ ]
Accelerated filer	[ ]	Smaller reporting company	[x]



PART I			1

	Item 1.	Business	2
	Item 1A.	Risk Factors	20
	Item 1B.	Unresolved Staff Comments	33
	Item 2.	Properties	33
	Item 3.	Legal Proceedings	33
	Item 4.	Mine Safety Disclosures	33

PART II

	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
	Item 6.	Selected Financial Data	36
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	45
	Item 8.	Financial Statements and Supplementary Financial Data	45
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	45
	Item 9A.	Controls and Procedures	45
	Item 9B.	Other Information	46

PART III

	Item 10.	Directors, Executive Officers and Corporate Governance	47
	Item 11.	Executive Compensation	53
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	57
	Item 14.	Principal Accounting Fees and Services	57

PART IV

	Item 15.	Exhibits and Financial Statement Schedules	59

·	obtain and maintain our clinical reference laboratory accreditations and licenses and any other necessary approvals;
·	initiate marketing efforts for our MetaSite Breast ™ test;

●	not experimental or investigational,
●	medically necessary,
●	appropriate for the specific patient,
●	cost-effective, and
●	supported by peer-reviewed publications.

·	continue to obtain intellectual property and/or other protection for our technologies and products.

	3.	European Patent Application No. 05807467.5 entitled “Isolation, Gene Expression, And Chemotherapeutic Resistance Of Motile Cancer Cells”; inventor: John S. Condeelis (96700/1224); and
	4.	U.S. Provisional Patent Application (pending) entitled “Human Invasion Signature For Prognosis Of Metastatic Risk”; inventors: John S. Condeelis and Antonia Patsialou (96700/1720).


●	Medicare billing and payment regulations applicable to clinical laboratories;

●	the federal Medicare and Medicaid Anti-kickback Law and state anti-kickback prohibitions;

●	the federal physician self-referral prohibition, commonly known as the Stark Law, and the state equivalents;

●	the federal Health Insurance Portability and Accountability Act of 1996;

●	the Medicare civil money penalty and exclusion requirements; and

●	the federal civil and criminal False Claims Act.

●	Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
●	Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
●	“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
●	Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
●	Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

	Common Stock
	High		Low
March 1, 2011 through May 31, 2011	$	1.25	$	0.25
June 1, 2011 through August 31, 2011	$	1.25	$	0.25
September 1, 2011 through November 30, 2011	$	0.25	$	0.25
December 1, 2011 through February 29, 2012	$	1.55	$	0.25
March 1, 2012 through May 31, 2012	$	5.00	$	0.15
June 1, 2011 through August 31, 2011	$	6.00	$	3.00
September 1, 2012 through November 30, 2012	$	4.25	$	3.00
December 1, 2012 through February 28, 2013	$	3.75	$	3.50

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		1,116,500	$	0.68		2,200,289
Total		1,116,500	$	0.68		2,200,289

●	persuasive evidence that an arrangement exists;

●	delivery has occurred or services rendered;

●	the fee is fixed and determinable; and

●	collectability is reasonably assured.

	Payments Due by Period
									More
			Less than						than 5
Contractual Obligations	Total		1 Year		1-3 Years		4-5 Years		Years
	(In thousands)
License Agreement	$	385	$	30	$	155	$	200	$	(a)

Second License Agreement	$	297	$	12	$	110	$	175	$	(b)

Third License Agreement	$	297	$	12	$	110	$	175	$	(c)

●	the rate of progress in establishing reimbursement arrangements with third-party payors;

●	the cost of expanding our commercial and laboratory operations, including our selling and marketing efforts;

●	the rate of progress and cost of research and development activities associated with expansion of products for breast cancer;

●	the rate of progress and cost of research and development activities associated with products in the research phase focused on cancer, other than breast cancer;

●	the cost of acquiring or achieving access to tissue samples and technologies;

●	the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

●	the effect of competing technological and market developments;

●	the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products; and

●	the economic and other terms and timing of any collaborations, licensing or other arrangements into which we may enter.

Name	Age		Position
Oscar L. Bronsther, M.D., F.A.C.S.		61	Chief Executive Officer, Chief Medical Officer and Director (1)
Warren C. Lau		59	President, Chief Financial Officer and Director (2)
Daniel H. Schneiderman		35	Vice President of Finance, Comptroller
Johan M. (Thijs) Spoor		41	Chairman of the Board of Directors (1)
David N. Siegel		51	Director (1)
Patrick T. Mooney, M.D.		45	Director (1)
David M. Epstein, Ph.D.		54	Director (3)

Name and Principal Position	Fiscal Year Ended February, 28	Salary ($)		Bonus ($)		Stock Awards	Option Awards ($)	All Other Compensation ($)	Total ($)

Dr. Oscar L. Bronsther, CEO and Chief Medical Officer	2013		40,000		-	-	-	-		-
	2012		-		-	-	-	-		-

Warren C. Lau, CFO and President	2013		178,125		21,769	-	-	-		199,894
	2012		151,355		55,474	-	-	-		206,829

Harvey Judkowitz, CEO and CFO(1)(2)	2013		-		-	-	-	-		-
	2012		5,000		-	-	-	-		5,000

	Option Awards										Stock Awards
	Equity Incentive Plan Awards:										Equity Incentive Plan Awards:
Name	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date		Number of shares of stock that have not vested (#)		Market value of shares of stock that have not vested ($) (1)		Number of unearned shares that have not vested (#)		Market or payout value of unearned shares that have not vested ($) (1)
Dr. Oscar L. Bronsther		165,000		-		-	$	0.68		1/5/2022		-		-		-		-

Warren C.
Lau		275,000		-		-	$	0.68		1/5/2022		-		-		-		-

Harvey
Judkowitz		-		-		-		-		-		-		-		-		-

Names and Addresses of Beneficial Owners	Amount and Nature of Beneficial Ownership (1)		Percent of Class (2)
Oscar Bronsther, M.D., F.A.C.S, Chief Executive Officer, Chief Medical Officer and Director (3)		749,003		3.4%

Warren C. Lau, President, Chief Financial Officer and Director (4)		1,205,000		5.5%

Daniel H. Schneiderman, Vice President of Finance and Comptroller (5)		484,500		2.2%

David M. Epstein, Ph.D., Head of Drug Development and Director (6)		100,000		*

Johan M. (Thijs) Spoor, Chairman of the Board of Directors (7)		222,003		1.0%

David N. Siegel, Director (8)		913,903		4.2%

Patrick T. Mooney, M.D., Director (9)		100,000		*

Albert Einstein College of Medicine of Yeshiva University, a Division of Yeshiva University (10)		1,150,242		5.4%

MKM Opportunity Master Fund, Ltd. (11)		2,176,000		9.8%

Matthew Balk (12)		1,981,000		9.1%

Jason Adelman (13)		1,408,003		6.5%

All Directors and Officers as a Group (7 Persons)		1,820,406		8.4%
__________________
* Less than 1%

(1)	Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to securities anticipated to be exercisable or convertible at or within 60 days of the date hereof, are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person. The indication herein that shares are anticipated to be beneficially owned is not an admission on the part of the listed stockholder that he, she or it is or will be a direct or indirect beneficial owner of those shares.
(2)	Based on 21,469,431 shares of common stock outstanding on May 28, 2013.
(3)	Consists of (i) 265,000 shares of common stock underlying options, (ii) 476,668 shares of common stock held by Marsha Bronsther, Dr. Bronsther’s wife and (iii) 7,335 shares of common stock underlying warrants held by Marsha Bronsther.
(4)	Consists of (i) 880,000 shares of common stock, and (ii) 325,000 shares of common stock underlying options.
(5)	Consists of (i) 357,500 shares of common stock, (ii) 22,000 shares of common stock underlying warrants, and (iii) 105,000 shares of common stock underlying options.
(6)		Consists of (i) 100,000 shares of common stock.
(7)		Consists of (i) 14,668 shares of common stock, (ii) 7,335 shares of common stock underlying warrants and (iii) 50,000 restricted shares of common stock issued pursuant to the 2012 Plan that vest and become transferable upon the listing of the common stock on a national securities exchange on or before May 21, 2022, and (iv) 150,000 restricted shares of common stock issued pursuant to the 2012 Plan that vest and become transferable upon the earlier of a change in control or upon us achieving $5,000,000 in gross sales from one or more of our products on or before April 5, 2023.
(8)		Consists of (i) 727,500 shares of common stock, (ii) 54,268 shares of common stock held by the David N. Siegel Revocable Trust dated April 7, 2010, (iii) 105,000 shares of common stock underlying options and (iv) 27,135 shares of common stock underlying warrants held by the David N. Siegel Revocable Trust dated April 7, 2010.
(9)		Consists of (i) 50,000 shares of common stock underlying options and (ii) 50,000 restricted shares of common stock issued pursuant to the 2012 Plan that vest and become transferable upon the listing of the common stock on a national securities exchange on or before May 21, 2022.
(10)		Consists of 1,150,242 shares of common stock. J. Michael Gower, Vice President for Business Affairs and Chief Financial Officer of Yeshiva University, is the natural person who exercises voting and investment control over our securities owned by Albert Einstein College of Medicine of Yeshiva University, a Division of Yeshiva University. The address of the stockholder is c/o Office of Biotechnology, Albert Einstein College of Medicine of Yeshiva University, 1300 Morris Park Avenue, Bronx, NY 10461, Attn: Director.
(11)		Consists of (i) 1,533,998 shares of common stock; and (ii) 642,002 shares underlying warrants owned by MKM Opportunity Master Fund, Ltd (“MKM Opportunity”). Does not include (i) 173,250 shares of common stock held by David and Margaret Skriloff Irrev. Des. Trust FBO Olivia Skriloff; and (ii) 173,250 shares of common stock held by David and Margaret Skriloff Irrev. Des. Trust FBO Samuel Skriloff. David Skrillof does not exercise voting and investment control over securities held by David and Margaret Skriloff Irrev. Des. Trust FBO Olivia Skriloff and David and Margaret Skriloff Irrev. Des. Trust FBO Samuel Skriloff. MKM Capital Advisors, LLC (“MKM Capital”) serves as investment manager to MKM Opportunity, and, as such, may be deemed to hold an indirect beneficial interest in the shares of Common Stock that are directly beneficially owned by MKM Opportunity. David Skriloff is the managing member of MKM Capital and the portfolio manager of MKM Opportunity, and, as such, may be deemed to hold an indirect beneficial interest in the shares of Common Stock that are directly beneficially owned by MKM Opportunity.
(12)		Consists of (i) 265,000 shares of common stock underlying options, (ii) 1,573,000 shares of common stock, and (iii) 143,000 shares of common stock underlying warrants.
(13)		Based on the Schedule 13G filed by Jason T. Adelman on April 20, 2012, consists of (i) 762,688 shares of common stock held as Joint Tenants with his spouse Cass G Adelman, (ii) 73,335 shares of common stock underlying warrants held as Joint Tenants with his spouse Cass G Adelman, (iii) 297,000 shares of common stock held by Cass G. Adelman Cust. Jasper G. Adelman UTMA NY and (iv) 275,000 shares of common stock held by Cass G. Adelman Cust. Philippa G. Adelman UTMA NY.

MaloneBailey LLP	Fiscal Year Ended February 29, 2012		Fiscal Year Ended February 28 , 2013

Audit Fees	$	30,175	$	62,920
Audit-Related Fees	$	-	$	-
Tax Fees	$	-	$	-
All Other Fees	$	-	$	-

RBSM LLP	Fiscal Year Ended February 29, 2012		Fiscal Year Ended February 28 , 2013

Audit Fees	$	4,500	$	-
Audit-Related Fees	$	-	$	-
Tax Fees	$	-	$	-
All Other Fees	$	-	$	-

Exhibit No.		Description
2.1		Share Exchange Agreement dated February 27, 2012. (1)
3.1		Articles of Incorporation of MetaStat, Inc., as amended. (2)
3.2		By-laws. (2)
4.1		Form of Investor Warrant dated February 27, 2012. (2)
4.2		Form of Warrant issued to certain affiliates dated February 27, 2012. (2)
4.3		Form of Investor Warrant dated May 1, 2012. (3)
4.4		Form of Convertible Promissory Note. (4)
4.5		Form of Warrant issued to holders of convertible promissory notes. (4)
10.1		Form of Securities Purchase Agreement dated February 27, 2012. (1)
10.2		Form of Registration Rights Agreement dated February 27, 2012. (2)
10.3		License Agreement with Einstein, M.I.T., Cornell and IFO-Regina dated August 26, 2010. (1)
10.4*		Amended and Restated 2012 Omnibus Securities and Incentive Plan.
10.5		Form of Consultant Non-Qualified Stock Option Agreement. (2)
10.6		Form of Employee Non-Qualified Stock Option Agreement. (2)
10.7		Form of Securities Purchase Agreement dated May 1, 2012. (3)
10.8		Form of Registration Rights Agreement dated May 1, 2012. (3)
10.9		Sponsored Research Agreement with Albert Einstein College of Medicine of Yeshiva University and Cornell University, dated April 2011. (1)
10.10		“Second” License Agreement with Albert Einstein College of Medicine of Yeshiva University effective March 2012. (1)
10.11		“Third” License Agreement with Albert Einstein College of Medicine of Yeshiva University effective March 2012. (1)
10.12		Form of Convertible Note and Warrant Purchase Agreement. (4)
10.13*		Employment Agreement of Oscar Bronsther dated May 27, 2013.
10.14*		Employment Agreement of Warren Lau dated May 27, 2013.
10.15*		Employment Agreement of Daniel Schneiderman dated May 27, 2013.
14.1		Code of Ethics. (5)
21.1		Subsidiaries of the Registrant. (6)
31.1*		Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**		XBRL Instance Document.
101.SCH**		XBRL Taxonomy Extension Schema.
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase.
101.DEF**		XBRL Taxonomy Extension Definition Linkbase.
101.LAB**		XBRL Taxonomy Extension Label Linkbase.
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase.

	METASTAT, INC.

May 28, 2013	By:	/s/ Oscar L. Bronsther
		Oscar L. Bronsther M.D., F.A.C.S., Chief Executive Officer and Chief Medical Officer (Principal Executive Officer)

Signature	Capacity	Date

/s/ Oscar L. Bronsther	Chief Executive Officer, Chief Medical Officer and Director (Principal Executive Officer)	May 28, 2013
Oscar L. Bronsther M.D., F.A.C.S.

/s/ Warren C. Lau	President, Chief Financial Officer and Director	May 28, 2013
Warren C. Lau	(Principal Accounting Officer)

/s/ Johan M. "Thijs" Spoor	Chairman of the Board of Directors	May 28, 2013
Johan M. "Thijs" Spoor

/s/ David N. Siegel	Director	May 28, 2013
David N. Siegel

/s/ Patrick T. Mooney	Director	May 28, 2013
Patrick T. Mooney

/s/ David M. Epstein	Director	May 28, 2013
David M. Epstein, Ph.D.

	Page

Report of Independent Registered Public Accounting Firm	F-2

Balance Sheets as of February 28, 2013 and February 29, 2012	F-3

Statements of Operations for the Years ended February 28, 2013 and February 29, 2012	F-4

Statements of Changes in Shareholders’ Equity for the Years ended February 28, 2013 and February 29, 2012	F-5

Statements of Cash Flows for the Years ended February 28, 2013 and February 29, 2012	F-6

Notes to Consolidated Financial Statements	F-7


	February 28			February 29
	2013			2012
ASSETS

CURRENT ASSETS
Cash	$	969,188		$	878,340
Subscription receivable		-			865,000

Total Current Assets		969,188			1,743,340

PROPERTY AND EQUIPMENT
EQUIPMENT (net of accumulated depreciation of $12,396
and $1,271, respectively)		53,326			19,208

TOTAL ASSETS	$	1,022,514		$	1,762,548


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Accounts payable	$	168,005		$	291,859
Convertible debentures - net of discount of $71,543		716,957			-
Accrued interest payable		1,940			-

TOTAL LIABILITIES		886,902			291,859

STOCKHOLDERS' EQUITY

Preferred stock (50,000,000 shares authorized; none shares issued and outstanding respectively)		-			-
Common stock (Common Stock, $0.0001 par value; 150,000,000 shares authorized; 20,954,418 and 20,074,422 shares issued and outstanding respectively)		2,106			2,008
Paid-in-capital		5,495,985			4,310,581
Accumulated deficit as a development stage company		(5,362,479	)		(2,841,900	)
Total Equity		135,612			1,470,689

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,022,514		$	1,762,548

							Period from Inception (July 22, 2009)
	Year ended			Year ended			to November
	February 28, 2013			February 29, 2012			30, 2012

Revenue
Interest income		596			-			618
Total Revenue		596			-			618

OPERATING EXPENSES
General & administrative	$	1,757,793		$	737,113		$	2,665,184
Research & development		516,798			854,550			1,541,203
Depreciation		11,125			943			12,396
Warrant Expense		230,189			149,999			380,188
Accretion of debt discount		1,500			-			1,500
Stock-based compensation		5,270			684,049			764,104

Total Operating Expenses		2,521,175			2,426,654			5,363,075

NET LOSS	$	(2,520,579	)	$	(2,426,654	)	$	(5,362,457	)

Net loss per share, basic and diluted		(0.12	)		(0.15	)

Weighted average of shares outstanding		20,882,199			16,190,838

	Common Stock
	Common Stock					Paid-in			Accumulated			Total
	Shares			Amount		Capital			Deficit			Equity

Balance at inception July 22, 2009		-		$	-	$	-		$	-		$	-

Issue common stock to founders for cash at $.0001 per share		1,100,000			110		(100	)		-			10

Sale of common stock for cash at $.0018 per share		660,000			66		1,134			-			1,200

Sale of common stock for cash at $.023 per share		3,410,000			341		77,159			-			77,500

Net loss for the period ended February 28, 2010		-			-					(52,071	)		(52,071	)

Balance at February 28, 2010		5,170,000			517		78,193			(52,071	)		26,639

Issue common stock for services at $0.023 per share		3,290,570			329		74,457						74,786

Sale common stock for cash at $.023 per share		6,055,500	*		606		137,169						137,775

Sale of common stock for cash at $.45 per share		515,900			52		232,073						232,125

Sale of common stock for cash at $.68 per share		212,668			21		144,979						145,000

Net loss for the year ended February 28, 2011										(363,175	)		(363,175	)

Balance at February 28, 2011		15,244,638		$	1,525	$	666,871		$	(415,246	)	$	253,150

Sale of common stock for cash at $.023 per share		80,069			8		1,563						1,571

Sale of common stock for cash at $.45 per share		103,004			10		47,060						47,070

Sale of common stock for cash at $.68 per share		2,781,539			278		1,896,226						1,896,504

Subscription receivable		865,000			87		864,913						865,000

Warrents expense		0			0		149,999						149,999

Stock option expense		0			0		611,250						611,250

Issued common stock for services at $0.45 per share		160,158			16		72,783						72,799

Recapitalization of PVSO shareholders		840,000			84		-84						-

Rounding		10											-

Net loss for the year ended February 29, 2012										(2,426,654	)		(2,426,654	)

Balance at February 29, 2012		20,074,418		$	2,008	$	4,310,581		$	(2,841,900	)	$	1,470,689

Sale of common stock for cash at $1.00 per share		880,000			88		879,912						880,000

Shares issued for service		100,000			10		5,260			-			5,270

Warrants issued		-			-		228,689						228,689

Debt discount							71,543						71,543

Net loss for the year ended February 28, 2013		-			-		-			(2,520,579	)		(2,520,579	)

		21,054,418		$	2,106	$	5,495,985		$	(5,362,479	)	$	135,612

	Year ended February 28, 2013			Year ended February 29, 2012			Period from Inception (July 22, 2009) to February 28, 2013

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,520,579	)	$	(2,426,654	)	$	(5,362,479	)
Adjustments to reconcile net loss to net cash used by operating activities
Shares issued for services		5,270			684,049			764,105
Depreciation		11,125			943			12,396
Warrant Expense		228,689			149,999			378,688
Accretion of debt discount		1,500			-			1,500
Changes in assets and liabilities
Accounts receivable		-			39,267			-
Accounts payable		(123,854	)		260,535			168,005
Interest payable		1,940			-			1,940

NET CASH USED IN OPERATING ACTIVITIES		(2,395,909	)		(1,291,861	)		(4,035,845	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		(45,243	)		(17,200	)		(65,722	)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on convertible debentures		787,000						787,000
Proceeds from sale of common stock		880,000			1,945,145			3,418,755
Proceeds from subscriptions		865,000			-			865,000

NET CASH PROVIDED BY FINANCING ACTIVITIES		2,532,000			1,945,145			5,070,755

NET INCREASE (DECREASE) IN CASH		90,848			636,084			969,188

Cash at the beginning of the year		878,340			242,256			-

Cash at the end of the year	$	969,188		$	878,340		$	969,188

SUPPLEMENTAL DISCLOSURES:
Interest Paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

NON-CASH TRANSACTIONS
Subscription receivable	$	-		$	865,000		$	-
Recapitalization of PVSP shareholders	$	-		$	8		$	8
Discount for warrants issued with debt	$	71,543		$	-		$	71,543

ARTICLE I	PURPOSE	1
ARTICLE II	DEFINITIONS	1
ARTICLE III	EFFECTIVE DATE OF PLAN	6
ARTICLE IV	ADMINISTRATION	6
Section 4.1	Composition of Committee	6
Section 4.2	Powers	6
Section 4.3	Additional Powers	7
Section 4.4	Committee Action	7
ARTICLE V	STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON	7
Section 5.1	Stock Grant and Award Limits	7
Section 5.2	Stock Offered	7
Section 5.3	Lock-Up Agreement	7
ARTICLE VI	ELIGIBILITY FOR AWARDS; TERMINATION OF EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT STATUS	8
Section 6.1	Eligibility	8
Section 6.2	Termination of Employment or Director Status	8
Section 6.3	Termination of Consultant Status	9
Section 6.4	Special Termination Rule	9
Section 6.5	Termination for Cause	10
ARTICLE VII	OPTIONS	10
Section 7.1	Option Period	10
Section 7.2	Limitations on Exercise of Option	10
Section 7.3	Special Limitations on Incentive Stock Options	10
Section 7.4	Option Agreement	11
Section 7.5	Option Price and Payment	11
Section 7.6	Stockholder Rights and Privileges	11
Section 7.7	Options and Rights in Substitution for Stock Options Granted by Other Corporations	11
Section 7.8	Prohibition Against Repricing	12

ARTICLE VIII	RESTRICTED STOCK AWARDS	12
Section 8.1	Restriction Period to be Established by Committee	12
Section 8.2	Other Terms and Conditions	12
Section 8.3	Payment for Restricted Stock	12
Section 8.4	Restricted Stock Award Agreements	12
ARTICLE IX	UNRESTRICTED STOCK AWARDS	13
ARTICLE X	RESTRICTED STOCK UNIT AWARDS	13
Section 10.1	Terms and Conditions	13
Section 10.2	Payments	13
ARTICLE XI	PERFORMANCE UNIT AWARDS	13
Section 11.1	Terms and Conditions	13
Section 11.2	Payments	13
ARTICLE XII	PERFORMANCE SHARE AWARDS	14
Section 12.1	Terms and Conditions	14
Section 12.2	Stockholder Rights and Privileges	14
ARTICLE XIII	DISTRIBUTION EQUIVALENT RIGHTS	14
Section 13.1	Terms and Conditions	14
Section 13.2	Interest Equivalents	14
ARTICLE XIV	STOCK APPRECIATION RIGHTS	15
Section 14.1	Terms and Conditions	15
Section 14.2	Tandem Stock Appreciation Rights	15
ARTICLE XV	RECAPITALIZATION OR REORGANIZATION	16
Section 15.1	Adjustments to Common Stock	16
Section 15.2	Recapitalization	16
Section 15.3	Other Events	16
Section 15.4	Powers Not Affected	16
Section 15.5	No Adjustment for Certain Awards	17

ARTICLE XVI	AMENDMENT AND TERMINATION OF PLAN	17
ARTICLE XVII	SPECIAL RULES	17
Section 17.1	Right of First Refusal	17
Section 17.2	Call Option	18
ARTICLE XVIII	MISCELLANEOUS	18
Section 18.1	No Right to Award	18
Section 18.2	No Rights Conferred	18
Section 18.3	Other Laws; No Fractional Shares; Withholding	19
Section 18.4	No Restriction on Corporate Action	19
Section 18.5	Restrictions on Transfer	19
Section 18.6	Beneficiary Designations	19
Section 18.7	Rule 16b-3	19
Section 18.8	Section 162(m)	20
Section 18.9	Section 409A	20
Section 18.10	Indemnification	21
Section 18.11	Other Plans	21
Section 18.12	Limits of Liability	21
Section 18.13	Governing Law	21
Section 18.14	Severability of Provisions	21
Section 18.15	No Funding	21
Section 18.16	Headings	21
Section 18.17	Terms of Award Agreements	21
Section 18.18	California Information Requirements	21

		METASTAT, INC.

		By: / s / Warren C. Lau Its: Chief Executive Officer	May 22, 2012 Date