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10QSB/A: WELLSTONE FILTERS INC /DE/
By Edgar Online - (EDG = 10Q, 10K)
Last Update: 12/12/2003 12:15:52 PM Data provided by
(EDGAR Online via COMTEX) -- Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
We have never received revenues from operations. Currently our operations are being funded by shareholder advances. These shareholder advances totalled $85,456 as of September 30, 2003. Until we receive funding from outside sources, such as debt or equity financing, we will continue to have limited operations. We are seeking $3 million in initial funding to finance the first 12 months of our business plan as follows:
Testing Facility. All cigarettes sold in the United States must be tested for levels of nicotene, tars and other chemicals present in each formulation of tobacco and filter. Testing is accomplished with machines that mechanically smoke sample cigarettes and record chemical levels. In order to assure comparability between tests and testing centers, testing must be conducted according to rigid conditions, and testing machines must be correctly configured, calibrated and certified. Since we plan to sell the filter with numerous tobacco formulations, we decided it would be cost effective to establish our own testing facility. This testing facility could also generate revenue for us from outside testing contracts. Cerami Consulting Corp., a company affiliated with our President, has experience in conducting scientific tests but no commercial experience in cigarette testing. We would need to hire three to five persons for this testing facility.
About five persons will be needed to be hired for general and administrative functions.
We need to produce small quantities of test filters for marketing and testing. Initially it will be more cost and time effective to produce filters by hand. However, within one year of funding we expect to have established a prototype manufacturing facility. We can then better determine our production costs and feasible levels of production.
We intend to hire three persons to assist in marketing our filter technology. We will also have significant general and administrative expenses for salary, legal and regulatory expenses.
We hope that after testing and marketing 3C904 for one year we will be able to obtain a supply contract with one or more cigarette or filter manufacturers, but it might take significantly more time than one year. We might also never be able to sell 3C904 in significant quantities. The terms of any supply contract have not been determined and will depend on negotiations.
We do not have any agreements or understandings with respect to sources of capital. We have not identified any potential sources. Its likely that we will not be able to raise the entire amount required initially, in which case our development time will be extended until such full amount can be obtained. Even if we are successful in obtaining the required $3 million, we probably will need to raise additional funds at the end of 12 months.
We are a development stage company as that term is defined in paragraphs 8 and 9 of SFAS No. 7. Our activities to date have been limited to seeking capital; seeking supply contracts and development of a business plan. Our auditors have included an explanatory paragraph in their report on our financial statements, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds. We do not believe that conventional financing, such as bank loans, is available to us due to these factors. Management believes that it will be able to raise the required funds for operations from one or more future offerings, and to be able to effect our business plan. However, Management believes that Wellstone's ability to raise significant amounts of financing, including the $3 million required as set forth above, will be dependent on favorable capital markets and also on obtaining either a small supply contract or other validation of our technology by an independent source, and other risks inherent in the business as discussed under the caption "Risks and Uncertainties" in our Form 10-KSB for the year ended December 31, 2002 may affect the outcome of Management's plans.
When used in this Form 10-QSB, the words "expects," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties, including those set forth under "Risks and Uncertainties" in our Form 10-KSB for the year ended December 31, 2001, that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. Wellstone expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. This discussion should be read together with the financial statements and other financial information included in this Form 10-QSB.
Dec 12, 2003
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