-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HvMc6FeK052k88oOsnPosTXblltbuR/j1n+YFK3luQes9a5cAH22KQ6owFUbz69Y 6ekT8ewYZ5g5fsrZx7oqiw== 0001093801-03-001446.txt : 20031114 0001093801-03-001446.hdr.sgml : 20031114 20031114172656 ACCESSION NUMBER: 0001093801-03-001446 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GELSTAT CORP CENTRAL INDEX KEY: 0000890725 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411713474 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21394 FILM NUMBER: 031006045 BUSINESS ADDRESS: STREET 1: SOUTHPOINT OFFICE CENTER STREET 2: 1650 WEST 82ND STREET, SUITE 1040 CITY: BLOOMINGTON STATE: MN ZIP: 55431 BUSINESS PHONE: 952-881-4105 MAIL ADDRESS: STREET 1: SOUTHPOINT OFFICE CENTER STREET 2: 1650 WEST 82ND STREET, SUITE 1040 CITY: BLOOMINGTON STATE: MN ZIP: 55431 FORMER COMPANY: FORMER CONFORMED NAME: DEVELOPED TECHNOLOGY RESOURCE INC DATE OF NAME CHANGE: 19930309 10QSB 1 x10qsb-1103.txt GELSTAT CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - -------------------------------------------------------------------------------- FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission File Number: 0-21394 GelStat Corporation (Exact name of small business issuer as specified in its charter) Minnesota 41-1713474 --------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Southpoint Office Center 1650 West 82nd Street Suite 1200 Bloomington, Minnesota 55431 ---------------------------- (Address of principal executive offices) (zip code) (952) 881-4105 -------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of November 14, 2003, 5,191,770 shares of the issuer's common stock were outstanding. 1 GELSTAT CORPORATION (A Development Stage Company) INDEX For the Quarter Ended September 30, 2003 Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed consolidated balance sheets 3 Condensed consolidated statements of operations 4 Condensed consolidated statements of shareholders' deficit 5 Condensed consolidated statements of cash flows 6 Notes to condensed consolidated financial statements 7 Item 2. Management's Discussion and Analysis or Plan of Operation 12 Item 3. Controls and Procedures 15 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURES 18 2 ITEM 1. FINANCIAL STATEMENTS GELSTAT CORPORATION (A Development Stage Company) CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 2003 2002 ------------ ------------ (Unaudited) Current Assets: Cash $ 317,950 $ 133,014 Inventory 12,262 -- Prepaids 69,949 5,001 Other current assets 181 -- ------------ ------------ Total current assets 400,342 138,015 Furniture and Equipment, net 171,573 1,276 Deposits 5,692 500 Note Receivable - Phygen 25,000 -- Patents 43,616 11,654 ------------ ------------ $ 646,223 $ 151,445 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Note payable $ -- $ 300,000 Accounts payable 168,945 3,692 Accrued lease commitments 24,671 -- Accrued other 9,275 960 ------------ ------------ Total current liabilities 202,891 304,652 Non-Current Deferred Gain 25,000 -- ------------ ------------ Total liabilities 227,891 304,652 ------------ ------------ Commitments and Contingencies -- -- Shareholders' Equity: Common stock 25,959 3,375 Additional paid-in capital 1,465,422 -- Subscriptions receivable (3,375) (3,375) Accumulated deficit (1,069,674) (153,207) ------------ ------------ Total shareholders' equity 418,332 (153,207) ------------ ------------ $ 646,223 $ 151,445 ============ ============ See accompanying notes to the condensed consolidated financial statements. 3 GELSTAT CORPORATION (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended June 25, 2002 September 30, September 30, (inception) to ----------------------------- ---------------------------- September 30, 2003 2002 2003 2002 2003 ------------ ------------ ------------ ------------ ------------ General and administrative expenses $ 389,476 $ 8,208 $ 920,625 $ 8,363 $ 1,073,832 Less interest income 752 -- 4,158 -- 4,158 ------------ ------------ ------------ ------------ ------------ Net Loss $ (388,724) $ (8,208) $ (916,467) $ (8,363) $ (1,069,674) ============ ============ ============ ============ ============ Net Loss per Common Share: Basic and Diluted $ (0.15) $ (0.46) ============ ============ Weighted Average Shares Outstanding: Basic and Diluted 2,573,113 1,981,560 ============ ============
See accompanying notes to the condensed consolidated financial statements. 4 GELSTAT CORPORATION (A Development Stage Company) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
Common Stock Additional ------------------------- Paid-in Notes Accumulated Shares Amount Capital Receivable Deficit Total ---------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 2002 3,375,000 $ 3,375 $ -- $ (3,375) $ (153,207) $ (153,207) Net loss -- -- -- -- (243,146) (243,146) Recapitalization (814,115) 22,234 1,427,272 -- -- 1,449,506 ---------- ---------- ---------- ---------- ---------- ---------- Balance at May 1, 2003 2,560,885 25,609 1,427,272 (3,375) (396,353) 1,053,153 Exercise of employee stock options 35,000 350 28,150 -- -- 28,500 Purchase of stock warrants -- -- 10,000 -- -- 10,000 Net loss -- -- -- -- (673,321) (673,321) ---------- ---------- ---------- ---------- ---------- ---------- Balance at September 30, 2003 $2,595,885 $ 25,959 $1,465,422 $ (3,375) $(1,069,674) $ 418,332 ========== ========== ========== ========== ========== ==========
See accompanying notes to the condensed consolidated financial statements. 5 GELSTAT CORPORATION (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, ------------------------ 2003 2002 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (916,467) $ (8,363) Adjustments to reconcile net loss to cash used by operating activities: Depreciation 399 -- Loss on asset disposal 191 -- Changes in operating assets and liabilities: Inventory (12,262) -- Prepaids 12,442 -- Other current assets 37,493 -- Accounts payable 165,253 -- Accrued liabilities (1,033) -- ---------- ---------- Net cash used by operating activities (713,984) (8,363) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired in merger 400,478 -- Purchase of equipment (170,123) -- Patent acquisition costs (31,962) -- Increase in deposits (5,192) -- Proceeds from notes receivable 467,219 -- ---------- ---------- Net cash provided by investing activities 660,420 -- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 200,000 50,000 Proceeds from sale of warrant 10,000 -- Proceeds from exercise of stock option 28,500 -- ---------- ---------- Net cash provided by financing activities 238,500 50,000 ---------- ---------- INCREASE IN CASH 184,936 41,637 CASH, Beginning of period 133,014 -- ---------- ---------- CASH, End of period $ 317,950 $ 41,637 ========== ========== See accompanying notes to the condensed consolidated financial statements. 6 GELSTAT CORPORATION (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Business and Merger ------------------- In November 2002, Developed Technology Resource, Inc. ("DTR") and its wholly-owned subsidiary NP Acquisition Corp. ("NP Acquisition"), a Minnesota corporation, entered into an Option Agreement with GelStat Corp., a Minnesota corporation incorporated on June 25, 2002, ("GelStat Corp."), and its three shareholders Stephen Roberts, James Higgins and Russell Mitchell which gave DTR the option to enter into an agreement providing for the merger of NP Acquisition into GelStat Corp. On April 30, 2003, NP Acquisition merged with GelStat Corp, and GelStat Corp. became the surviving corporation. In the merger, the former owners of GelStat Corp. received 1,471,530 shares of DTR's common stock in exchange for 3,375,000 shares of GelStat Corp. common stock and GelStat Corp. became DTR's wholly owned subsidiary. No cash consideration was exchanged. Upon completion of the merger, the officers, directors, and former owners of GelStat Corp. owned a majority of the outstanding common stock of DTR and comprised a majority of its Board of Directors, thus constituting a change of control. GelStat Corp. changed its name to GS Corp. on June 4, 2003, and DTR changed its name to GelStat Corporation on July 14, 2003. GS Corp. is now the operating business and wholly-owned subsidiary of GelStat Corporation (as consolidated "the Company"). From June 25, 2002 (inception) until the acquisition, GS Corp. had no operating business activities. The merger transaction was accounted for as a purchase of DTR by GelStat Corp. (a reverse acquisition in which GelStat Corp. is considered the acquirer for accounting purposes), since the shareholders of GelStat Corp. obtained a majority of the voting rights of DTR as a result of the transaction. The financial statements presented herein reflect the transactions of GelStat Corp. prior to the merger. The following table summarizes the estimated fair values of the DTR assets acquired and liabilities assumed on April 30, 2003 (the date of acquisition). Current and other assets $ 515,542 Notes receivable 992,219 Property and equipment 764 ---------- Total assets acquired 1,508,525 ---------- Current liabilities 34,019 Deferred gain 25,000 ---------- Total liabilities assumed 59,019 ---------- Net assets acquired $1,449,506 ========== The Company is a development stage company, which develops and markets over-the-counter consumer healthcare products. The Company expects to introduce two new consumer healthcare products to the retail market. The first product will provide acute relief from the pain and associated symptoms of migraine and migraine-like headaches and is expected to be distributed in the retail market by the fourth quarter of 2003. The second product is intended for use as a sleep aid. 7 Unaudited Financial Statements ------------------------------ The unaudited condensed consolidated financial statements have been prepared by the Company, under the rules and regulations of the Securities and Exchange Commission. The accompanying condensed consolidated financial statements contain all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of such financial statements. Certain information and disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted under such rules and regulations although the Company believes that the disclosures are adequate to make the information presented not misleading. The year-end balance sheet data was derived from the audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in Form 10-KSB for the year ended December 31, 2002 for DTR and in conjunction with the Form 8-K/A as filed on July 15, 2003 which presented the financial statements and notes for the year ended December 31, 2002 for GelStat Corp. Interim results of operations for the nine-month period ended September 30, 2003 may not necessarily be indicative of the results to be expected for the full year. Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of GS Corp (formerly known as GelStat Corp.) since its inception on June 25, 2002. Subsequent to the merger with NP Acquisition Corp on April 30, 2003, the consolidated financial statements include the activity of GelStat Corporation (formerly known as Developed Technology Resource, Inc.) and its wholly-owned subsidiary GS Corp. All intercompany transactions and accounts have been eliminated. Net Income (Loss) per Common Share ---------------------------------- Basic and diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period. Stock options and warrants are included in the calculation of diluted net income per share, using the treasury stock method, when the result is dilutive. An aggregate of 458,005 stock options for the three and nine months ended September 30, 2003, have not been included in the computation of diluted earnings per common share, as their effect would be antidilutive. Stock Based Compensation ------------------------ The Company accounts for its stock-based employee compensation plans under the accounting provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and has furnished the pro forma disclosures required under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", and SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure". SFAS No. 123, "Accounting for Stock Based Compensation", requires the Company to provide pro- forma information regarding net income (loss) and net income (loss) per share amounts as if compensation cost for the Company's employee and director stock options had been determined in accordance with the fair market value-based method prescribed in SFAS No. 123. The Company estimates the fair value of each stock option at the grant date by using a Black-Scholes option-pricing model. There were no options granted during 2002. See Note 4 for options granted in 2003. The following assumptions were used for options granted during the periods: 8 Nine Months Ended September 30, 2003 --------------------------------- ------------------ Dividend Yield None Volatility 36% to 49% Risk Free Interest Rate 2.60% to 3.07% Expected Lives in Months 60 Under the accounting provisions of SFAS No. 123, the Company's net income (loss) and net income (loss) per basic and diluted share would have been reduced to the pro forma amounts indicated below:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ------------------------- 2003 2002 2003 2002 ---------- ---------- ---------- ---------- Net loss as reported $ (388,724) $ (8,208) $ (916,467) $ (8,363) Add: Stock-based compensation expense included in reported net income -- -- -- -- Deduct: Stock-based compensation expense determined under fair value based method for all awards (41,725) -- (78,786) -- ---------- ---------- ---------- ---------- Pro forma net loss $ (430,449) $ (8,208) $ (995,253) $ (8,363) ========== ========== ========== ========== Net loss per common share: Basic - as reported $ (0.15) $ (0.46) Basic - pro forma $ (0.17) $ (0.50) Diluted - as reported $ (0.15) $ (0.46) Diluted - pro forma $ (0.17) $ (0.50)
Use of Estimates ---------------- The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expense during the reporting period. The Company's significant estimates include the valuation of its Phygen notes receivable (see Note 2). Actual results could differ from those estimates. New Accounting Pronouncements ----------------------------- In July 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities," which is effective January 1, 2003. SFAS 146 provides that an exit cost liability should not always be recorded at the date of an entity's commitment to an exit plan, but instead should be recorded when the obligation is incurred. An entity's commitment to a plan, by itself, does not create an obligation that meets the definition of a liability. The adoption of SFAS 146 did not have a material impact on the Company's financial condition and results of operations. In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FAS 123" ("SFAS No. 148"). This statement amends Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), to provide alternative methods of 9 transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements to SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002. The Company adopted the disclosure provisions of SFAS No. 148 during its fourth quarter ended December 31, 2002 and it did not have a material impact on the Company's financial statements in 2002. 2. NOTES RECEIVABLE AND PAYABLE ---------------------------- In March 2002, FoodMaster International LLC ("FMI") redeemed DTR's 30% ownership interest in FMI for a purchase price of $1,500,000. According to the terms of the agreement, FMI paid $500,000 cash and issued two promissory notes for $500,000 each to DTR. At the time of the merger, DTR held one remaining promissory note with a remaining principal balance of $467,219. The Company received $479,792 on May 14, 2003 representing full payment on the principal balance plus $12,573 in accrued interest thereon. In January 2001, DTR sold its 10% ownership in Phygen, Inc. consisting of 96,818 shares of Phygen, Inc. common stock to Phygen, Inc's president and principal shareholder for $314,658. DTR received $85,000 in cash plus a $229,658 note for the remainder of the balance. In December 2002, the DTR discounted the note by $129,658 in exchange for receiving an early cash payment of $75,000 and a revised note for $25,000 bearing interest at 6% per annum and due on December 27, 2005. This note is secured by 70,664 shares in Phygen, Inc. Due to collectibility concerns, the Company has deferred the remaining $25,000 gain and recognition of interest income until the receipt of future cash. In accordance with an Option Agreement that was signed in November 2002 as further discussed in Note 1, DTR loaned $300,000 to GS Corp. prior to December 31, 2002 and $200,000 subsequent to December 31, 2002 and prior to April 30, 2003 under several promissory notes. Upon the merger of GS Corp. and NP Acquisition on April 30, 2003, as discussed under Note 1, these loans have been eliminated in consolidation. At the time of the merger DTR had cash of $400,478, which was transferred to GS Corp for operations. 3. COMMITMENTS AND CONTINGENCIES ----------------------------- In order to reduce costs, DTR abandoned its leased premises in January 2001 and moved its remaining assets to an office space that it rents on a month-to-month basis for $100 per month. At September 30, 2003, the Company has $24,671 accrued for all unpaid and future amounts due under the old lease, net of its security deposit. 4. CAPITAL STOCK ------------- The amount due for subscriptions receivable represents the amount due from the founding shareholders of GS Corp. in exchange for 3,375,000 shares of GS Corp. stock issued to them at par value on September 30, 2002. Upon the merger, these 3,375,000 GS Corp. shares were exchanged for 1,471,530 shares of DTR's common stock. 10 In June and August 2003, a former member of the Company's Board of Directors exercised his option to purchase a total of 10,000 and 5,000 respective shares of the Company's common stock at $0.70 and $1.50 per share, respectively. The Company received proceeds of $7,000 in June 2003 and $7,500 in August 2003 related to these exercises. In September 2003, two former employees exercised their option to purchase a total of 20,000 shares of the Company's common stock at $0.70 per share. The Company received proceeds of $14,000 in September 2003 related to these exercises. In January 2003, GS Corp sold a stock purchase warrant in the amount of $10,000 to its Chief Executive Officer. This warrant was for 500,000 shares at an exercise price of $.20 per share, which was equal to the fair value of the GS Corp. stock at the grant date. After the merger, this warrant for GS Corp. stock was exchanged for a warrant to purchase 218,005 shares of DTR's common stock at an exercise price of $0.45 per share. This warrant is fully vested and expires on January 12, 2008. In May 2003, the Company received the payment of $10,000 from its Chief Executive Officer for this warrant purchase. During the quarter ended September 30, 2003, the Company granted 240,000 options with an exercise price of $2.75, which was equal to the closing price of the Company's stock on July 9, 2003. These options vest between one and five years and expire in July 2008. On September 25, 2003, the Company declared a one-for-one stock dividend payable on or about October 20, 2003 to the shareholders of record on October 6, 2003. 5. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION ------------------------------------------------- The Company has eliminated all non-cash effects of the merger transaction on April 30, 2003 as discussed in Note 1. There was no cash paid for interest or taxes during the three and nine months ended September 30, 2003 and 2002. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION STATEMENTS OTHER THAN CURRENT OR HISTORICAL INFORMATION INCLUDED IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS AND ELSEWHERE IN THIS FORM 10-QSB, IN FUTURE FILINGS BY GELSTAT CORPORATION (THE "COMPANY" OR "GELSTAT") WITH THE SECURITIES AND EXCHANGE COMMISSION AND IN GELSTAT'S PRESS RELEASES AND ORAL STATEMENTS MADE WITH THE APPROVAL OF AUTHORIZED EXECUTIVE OFFICERS, SHOULD BE CONSIDERED "FORWARD-LOOKING STATEMENTS" MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL EARNINGS AND THOSE PRESENTLY ANTICIPATED OR PROJECTED. GELSTAT WISHES TO CAUTION THE READER NOT TO PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS. GelStat Corporation was formerly known as Developed Technology Resource, Inc. ("DTR"). In November 2002, DTR and its wholly-owned subsidiary NP Acquisition Corp. ("NP Acquisition"), a Minnesota corporation, entered into an Option Agreement with GelStat Corp., a Minnesota corporation, ("GelStat Corp."), and its three shareholders Stephen Roberts, James Higgins and Russell Mitchell which gave the DTR the option to enter into an agreement providing for the merger of NP Acquisition into GelStat Corp. On April 30, 2003, NP Acquisition merged with GelStat Corp. In the merger, the former owners of GelStat Corp. received 1,471,530 shares of the Company's common stock and GelStat Corp. became the Company's wholly owned subsidiary. No cash consideration was exchanged. The officers, directors, and former owners of GelStat Corp. now own a majority of the outstanding common stock of the Company and comprise a majority of its Board of Directors. This constitutes a change of control. GelStat Corp., the surviving wholly owned subsidiary, changed its name to GS Corp. on June 4, 2003, and DTR changed its name from Developed Technology Resource, Inc. to GelStat Corporation on July 14, 2003. GS Corp. is now the operating business and wholly-owned subsidiary of GelStat Corporation. From June 25, 2002 (inception) until the acquisition, GS Corp. had no operating business activities. The consolidated financial statements include the accounts of the GS Corp. since its inception on June 25, 2002. Subsequent to the merger with NP Acquisition Corp. on April 30, 2003, the consolidated financial statements include the activity of GelStat Corporation and its wholly-owned subsidiary GS Corp (as consolidated "the Company"). The Company is a development stage company, which develops and markets over-the-counter consumer healthcare products. The Company expects to introduce two new consumer healthcare products at retail. The first product will be for relief of migraine headaches and migraine-like headaches and is expected to be distributed in the retail market by the fourth quarter of 2003. The second product is a sleep aid. 12 RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 Revenues The Company is a development stage company and has not generated revenues since the date of inception on June 25, 2002. The Company's ability to continue its present operations and successfully implement its business plan is contingent upon its ability to market its products in order to generate revenues and ultimately attain and sustain profitable operations. General and administrative General and administrative expenses for the three months and nine months ended September 30, 2003 were $389,476 and $920,625, respectively. General and administrative expenses for the nine months ended September 30, 2003 are comprised primarily of expenses related to research and development ($77,000), advertising and marketing ($197,000), travel ($65,000), legal and professional fees ($126,000), insurance ($24,000), rent ($18,000), consulting fees ($91,000), personnel costs ($296,000) and other miscellaneous office costs ($27,000). General and administrative expenses for the three months and nine months ended September 30, 2002 were $8,208 and $8,363, respectively. The expenses for 2002 are significantly less than for 2003 because GS Corp commenced its business on June 25, 2002. GelStat added substantially to its general and administrative expenses during the nine months ended September 30, 2003, and has continued to increase such ongoing expenses, primarily through the addition of key personnel and for product development work required prior to the envisioned national launch of the Company's first product. The Company anticipates that it will continue to experience growth in its general and administrative expenses for the foreseeable future and that its general and administrative expenses will be a material use of cash resources. Other income and expense At the time of the merger on April 30, 2003, DTR held one remaining promissory note due from FoodMaster International LLC ("FMI") with a remaining principal balance of $467,219. From the time of the merger to May 14, 2003, when the Company received full payment of the note and accrued interest, the Company recorded interest income of $2,895. The Company also recorded $1,263 related to interest that it received from banks on its cash balances. LIQUIDITY AND CAPITAL RESOURCES Operating Activities The Company used cash of $713,984 primarily for current period expenses during the nine months ended September 30, 2003. The Company funded its operations exclusively from proceeds received from investing and financing activities. 13 Investing Activities During the nine months ended September 30, 2003, the Company purchased tooling equipment for $167,000 and office supplies for $3,123. This tooling equipment will be used to form the capsules that will hold the Company's products. The Company also spent $31,962 in costs related to the acquisition of patents for its products and $5,192 for deposits on its additional office space in Wisconsin. At the time of the merger on April 30, 2003, DTR held one remaining promissory note due from FoodMaster International LLC ("FMI") with a remaining principal balance of $467,219. The Company received $479,792 on May 14, 2003 representing full payment on the principal balance plus $12,573 in accrued interest thereon. Financing Activities During the nine months ended September 30, 2003, the Company received $638,978 in proceeds from financing activities. Subsequent to December 31, 2002 and prior to the merger on April 30, 2003, Developed Technology Resource, Inc. loaned $200,000 to GS Corp. under several promissory notes. Upon the merger of GS Corp. and NP Acquisition on April 30, 2003, as discussed above, these loans have been eliminated in consolidation. At the time of the merger DTR had cash of $400,478, which was transferred to GS Corp for operations. In May 2003, the Company received $10,000 from its Chief Executive Officer related to the purchase of a warrant for 218,005 shares of the Company's common stock at an exercise price of $0.45 per share. In June and August 2003, a former member of the Company's Board of Directors exercised his option to purchase a total of 10,000 and 5,000 respective shares of the Company's common stock at $0.70 and $1.50 per share, respectively. The Company received proceeds of $7,000 in June 2003 and $7,500 in August 2003 related to these exercises. In September 2003, two former employees exercised their option to purchase a total of 20,000 shares of the Company's common stock at $0.70 per share. The Company received proceeds of $14,000 in September 2003 related to these exercises. Liquidity The Company's ability to continue in its present operations and successfully implement its business plan is contingent upon its ability to increase revenues and ultimately attain and sustain profitable operations. The Company believes that the existing cash and the results of its operations will be sufficient to fund operations for at least the next 12 months. The Company may raise additional capital, either through a common stock, preferred stock or debt offering. There can be no assurance that 14 additional capital, if needed, will be available on terms acceptable to the Company or on any terms whatsoever. In addition, the Company may continue to evaluate potential new products and alliances, which may require equity or cash resources. Critical Accounting Policies During 2001, DTR sold its interests in Phygen, Inc. Due to uncertainties related to the collectibility and realization of the proceeds from this transaction, the Company will recognize the remaining $25,000 gain from this sale on a cash basis of accounting. Additionally, the Company will not recognize interest income on the Phygen note until the cash is received. Contractual Obligations and Commitments In order to reduce costs, DTR abandoned its leased premises in January 2001. However, this operating lease did not expire until April 30, 2002. As of September 30, 2003, the Company has accrued a net amount of $24,671. This includes all unpaid amounts of $28,034 due under the lease less its security deposit of $3,363. The Company has presently outstanding commitments to pay approximately $50,000 for a clinical trial about to commence, as well as a commitment to purchase at least $75,000 in trade advertising. With the exception of employment agreements, the Company does not have any other significant contractual obligations or commitments. ITEM 3. CONTROLS AND PROCEDURES As of the end of the quarter ended September 30, 2003, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO"), and the Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. As a result of the merger of GS Corp. with NP Acquisition on April 30, 2003, the Company's internal control over financial reporting has changed with respect to new management overseeing this control. The internal control environment in place subsequent to the merger reflects the internal control in effect at GS Corp. prior to the merger. 15 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of shareholders of the Company was held on July 14, 2003. As of the record date on June 10, 2003, there were 2,560,885 shares of common stock issued and outstanding. There were present and voting at the meeting, in person or by proxy, 2,352,274 shares of common stock (approximately 91.85% of the total issued and outstanding). Matters voted upon and the results thereof are as follows: 1. Election of Directors: For Withheld --- -------- Stephen C. Roberts MD 2,349,738 2,536 Russell W. Mitchell 2,349,738 2,536 Peter L. Hauser 2,352,274 - 0 - 2. Amendment of the Articles of Incorporation to increase the authorized shares of common stock from 3,333,334 to 50,000,000 and the authorized undesignated stock from 1,666,667 to 10,000,000. For: 1,816,188 Against: 3,369 Abstain: 2,167 Broker Non-Vote: 530,550 3. Amendment of the Articles of Incorporation to change the name of Developed Technology Resource, Inc. to GelStat Corporation. For: 2,349,607 Against: 2,267 Abstain: 400 Broker Non-Vote: -0- 4. Adoption of the 2003 Incentive Plan. For: 1,817,220 Against: 3,170 Abstain: 1,334 Broker Non-Vote: 530,550 5. Amendment of the Bylaws to create two classes of directors. For: 1,817,354 Against: 2,536 Abstain: 1,834 Broker Non-Vote: 530,550 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The following new Exhibits are filed as part of this Form 10-QSB: (a) List of Exhibits 20.1 Audit Committee Charter, as amended on October 15, 2003 31.1 Certification of the Company's Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 31.2 Certification of the Company's Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 32.1 Certification of the Company's Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 32.2 Certification of the Company's Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (b) Reports on Form 8-K On July 14 and July 15, 2003, the Company filed amendments to its Form 8-K as filed on May 9, 2003 to file the historical and pro forma financial statements required to be filed in connection with the acquisition. There was one report on Form 8-K filed by the Company on August 1, 2003. The purpose of which was to (i) file of record the Articles and Bylaws, as amended and restated, (ii) to file of record the 2003 Incentive Plan as adopted, (iii) to file of record the Audit Committee Charter, and (iv) to provide a description of the capital stock of the Company as provided in the amended and restated Articles of Incorporation. There was one report on Form 8-K filed by the Company on September 25, 2003 announcing a one-for-one stock dividend payable to the shareholders of record on October 6, 2003. 17 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GELSTAT CORPORATION Date: November 14, 2003 By /s/ Stephen C. Roberts -------------------------------- Name: Stephen C. Roberts Title: Chief Executive Officer By /s/ Garry N. Lowenthal -------------------------------- Name: Garry N. Lowenthal Title: Chief Financial Officer 18 EX-20.1 3 ex201-1103.txt AUDIT COMMITTEE CHARTER Adopted June 2, 2003 Amended October 15, 2003 GELSTAT CORPORATION AUDIT COMMITTEE CHARTER Objective - --------- The audit committee of the board of directors of GelStat shall use its best efforts to ensure the independence of the company's independent accountants, the integrity of management, and the adequacy of disclosure to the company's shareholders, potential shareholders, and the investment community. Members - ------- The audit committee shall be appointed annually by the board of directors, with its chairperson to be selected by the committee. The committee shall have at least one member. Each member must also be a member of the board of directors. In selecting members of the audit committee, the board shall give consideration to each nominee's capacity to serve, business experience, knowledge of GelStat operations, finance, accounting, and auditing, facility in obtaining information by inquiry, and commitment and available time. Each member shall have the ability to read and understand fundamental financial statements. The committee shall annually elect one of its members as chairperson. The chairperson shall schedule meetings, preside over meetings, and report to the board. Vacancies on the committee shall be filled by the board of directors. Meetings - -------- The committee shall meet a minimum of two times per year and as scheduled by the committee chairman. A majority of members shall constitute a quorum. Each member shall be entitled to one vote. At the request of the committee, meetings may be held with members of management or the company's internal accounting staff or representatives of the company's independent accountants or consultants. The committee shall prepare and preserve written minutes of its meetings. The committee may appoint a committee member or a non-committee member as secretary. The committee may take action by conference telephone call, which shall constitute a meeting, or by written action signed by all members. The activities and findings of the committee and minutes of committee meetings shall be made available to each member of the board. Authority - --------- The committee shall have unrestricted access to the company's personnel and records and will be given the resources to discharge its duties. The committee shall have the authority to engage independent counsel and other advisors, as it deems necessary, to carry out its duties. The committee may conduct investigations into significant matters brought to its attention during the conduct of its duties and may retain persons having special competence as necessary. The committee shall have the sole authority and responsibility to select, evaluate, and, where appropriate, replace the outside auditors. The committee also has the sole authority and responsibility to approve any significant non-audit relationship with the independent auditors. Responsibility - -------------- While the fundamental responsibility for the company's financial statements and disclosures rests with management and the independent auditor, the audit committee must review: o major issues regarding accounting principles and financial statement presentations, including any significant changes in the company's selection or application of accounting principles, and major issues as to the adequacy of the company's internal controls and any special audit steps adopted in light of material control deficiencies; o analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements; o the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the company; and o earnings press releases (paying particular attention to any use of "pro forma," or "adjusted" non-GAAP, information), as well as financial information and earnings guidance provided to analysts and rating agencies. o establish procedures for (1) the receipt, retention, and treatment of complaints received by the company regarding accounting, internal accounting controls, or auditing matters; and (2) the confidential, anonymous submission by employees of the company of concerns regarding questionable accounting or auditing matters. The audit committee shall have such other responsibilities as may be designated to it from time to time by the board of directors. In addition, the audit committee shall annually review and assess the adequacy of its Charter and recommend to the board of directors any modifications in its duties and responsibilities. 2 Operations - ---------- The audit committee shall: o Assist board oversight of (1) the integrity of the company's financial statements, (2) the company's compliance with legal and regulatory requirements, (3) the independent auditor's qualifications and independence, and (4) the performance of the company's independent auditors. o Prepare the report that SEC rules require be included in the company's annual proxy statement. o Retain and terminate the company's independent auditors (subject, if applicable, to shareholder ratification). o At least annually, obtain and review a report by the independent auditor describing: such firm's internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the auditor's independence) all relationships between the independent auditor and the company. The audit committee should present its conclusions with respect to the independent auditor to the full board o Discuss the annual audited financial statements and quarterly financial statements with management and the independent auditor, including the company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations." o Discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. The audit committee's responsibility to discuss earnings releases as well as financial information and earnings guidance may be done generally (i.e., discussion of the types of information to be disclosed and the type of presentation to be made). The audit committee need not discuss in advance each earnings release or each instance in which the company may provide earnings guidance. o As appropriate, obtain advice and assistance from outside legal, accounting or other advisors. o Discuss policies with respect to risk assessment and risk management. The audit committee should analyze the company's major financial risk exposures and discuss with management the steps management has taken to monitor and control such exposures. The audit committee is not required to be the sole body responsible for risk assessment and management. o Periodically meet separately with management, with personnel responsible for the internal preparation of financial reports and records, and with independent auditors. 3 o Review with the independent auditor any audit problems or difficulties and management's response. Among the items the audit committee may want to review with the auditor are: any accounting adjustments that were noted or proposed by the auditor but were "passed" (as immaterial or otherwise); any communications between the audit team and the audit firm's national office respecting auditing or accounting issues presented by the engagement; and any "management" or "internal control" letter issued, or proposed to be issued, by the audit firm to the company. The review should also include discussion of the responsibilities, budget and staffing of the company's internal financial functions. o Set clear hiring policies for employees or former employees of the independent auditors which shall comply in all respects with the rules of the Securities and Exchange Commission concerning independence of auditors and similar rules of any stock exchange on which the company's securities are listed. o Report regularly to the board of directors. The audit committee should review with the full board any issues that arise with respect to the quality or integrity of the company's financial statements, the company's compliance with legal or regulatory requirements, the performance and independence of the company's independent auditors, or the performance of the internal financial accounting. o Annually evaluate the performance of the audit committee. o Review, discuss and report to the board of directors concerning changes, if any, made or proposed by the government, accounting profession, or the company relating to accounting principles and their applications that could materially affect the company. o Review, discuss and report to the board of directors concerning significant issues reviewed by legal counsel concerning litigation, contingencies, claims, or assessments. o Review, discuss and report to the board of directors concerning significant adjustments proposed by the independent accountants. o Inquire of the independent accountants as to whether there have been any disagreements with management which, if not satisfactorily resolved, would have caused them to issue a nonstandard report on the company's financial statements. o Review unusual reporting issues prior to the issuance of any press release on financial results. o Advise the independent accountants and members of the internal accounting staff that they may communicate directly with any member of the committee on a confidential basis. 4 Internal Accounting Controls - ---------------------------- The committee shall undertake such review as it deems necessary to ensure that there exists an effective system of internal accounting controls. Without limitation and as it deems appropriate, the committee shall: o Meet privately with the independent accountants and appropriate members of the company's financial staff to discuss pertinent matters. o Review with the chief financial officer the activities, organizational structure, and qualifications of the internal financial staff. o Inquire of the chief financial officer and independent accountants the extent to which their planned audit scope can be relied on to detect material weaknesses in internal controls or the occurrence of fraudulent financial reporting. Corporate Compliance - -------------------- The committee shall conduct such review as it deems necessary to ensure that the company is maintaining effective controls against employee conflict of interest and fraud and is in reasonable compliance with related laws. Without limitation and as it deems appropriate, the committee shall: o Review management's program to monitor compliance with the company's code of conduct and the Foreign Corrupt Practices Act. o Review significant related party transactions. o Review the policies and procedures in effect for the review of officer expenses and purchases. o Review periodically the impact of significant accounting or reporting developments that may affect the company. o Review any legal matters that could have a significant impact on the company's financial statements. o If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist. Qualified Legal Compliance Committee - ------------------------------------ The committee shall be the company's "qualified legal compliance committee" as defined in the rules of the Securities and Exchange Commission. In this capacity, the committee shall: 5 o Adopt written procedures for the confidential receipt, retention and consideration of any report of a material violation of federal securities laws, breach of fiduciary duty or similar violations by the company or any officer, director, employee or agent of the company. o Inform the company's chief legal officer and chief executive officer of any report of evidence of a material violation. o Determine whether an investigation is necessary regarding any report of evidence of a material violation by the company, its officers, directors, employees or agents and, if it determines an investigation is necessary or appropriate: o Notify the full board of directors; o Initiate an investigation, which may be conducted either by the chief legal officer (or the equivalent thereof) or by outside attorneys; and o Retain such additional expert personnel as the committee deems necessary. o At the conclusion of any such investigation: o Recommend, by majority vote, that the company implement an appropriate response to evidence of a material violation; o Inform the chief legal officer and the chief executive officer (or the equivalents thereof) and the board of directors of the results of any such investigation and the appropriate remedial measures to be adopted; and o Acting by majority vote, take all other appropriate action, including the notification of the Securities and Exchange Commission in the event that the company fails in any material respect to implement an appropriate response that the qualified legal compliance committee has recommended. Miscellaneous - ------------- As to other related matters, without limitation and as it deems appropriate, the committee shall: o Discuss with the independent accountants the quality of the company's financial and accounting personnel and any relevant recommendations that the independent accountants may have, including those in their "Report to Management." o Review the extent of nonaudit services provided by the independent accountants in relation to the objectivity needed in the audit. o Evaluate the cooperation received by the independent accountants during their audit examination, including the access to all requested records, data, and information and elicit the comments of management regarding the responsiveness of the independent accountants to the company's needs. 6 o Request from outside auditors a formal written statement regarding all relationships between the outside auditors and the company. o Maintain an active dialogue with the outside auditors regarding any undisclosed relations or services that could affect the objectivity and independence of the outside auditors. o Take, or recommend that the board of directors take, appropriate action to oversee the outside auditors' independence. 7 EX-31.1 4 ex311-1103.txt CERTIFICATION PURSUANT TO SECTION 302 CERTIFICATION I, Stephen C. Roberts, certify that: 1. I have reviewed this report on Form 10-QSB of GelStat Corporation (formerly Developed Technology Resource, Inc.); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and 5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2003 /s/ Stephen C. Roberts -------------------------------- Stephen C. Roberts Chief Executive Officer EX-31.2 5 ex312-1103.txt CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.2 CERTIFICATION I, Garry N. Lowenthal, certify that: 1. I have reviewed this report on Form 10-QSB of GelStat Corporation (formerly Developed Technology Resource, Inc.); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and 5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2003 /s/ Garry N. Lowenthal -------------------------------- Garry N. Lowenthal Chief Financial Officer EX-32.1 6 ex321-1103.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of GelStat Corporation (formerly Developed Technology Resource, Inc.) (the "Company") on Form 10-QSB for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen C. Roberts, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Stephen C. Roberts -------------------------------- Stephen C. Roberts Chief Executive Officer November 14, 2003 EX-32.2 7 ex322-1103.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of GelStat Corporation (formerly Developed Technology Resource, Inc.) (the "Company") on Form 10-QSB for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Garry N. Lowenthal, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Garry N. Lowenthal --------------------------- Garry N. Lowenthal Chief Financial Officer November 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----