UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

         --------------------------------------------------------------

                                   FORM 10-KSB

|X|               Annual report under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                                       OR

|_|               Transition report under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                         Commission File Number: 0-21394

                               GELSTAT CORPORATION

                MINNESOTA                            41-1713474

         State of Incorporation          I.R.S. Employer Identification No.

                              1650 WEST 82ND STREET
                                   SUITE 1200
                          BLOOMINGTON, MINNESOTA 55431

                             ----------------------
                      Address of Principal Executive Office

                                 (952) 881-4105

                                 --------------
                            Issuer's Telephone Number

                 Securities registered pursuant to Section 12(b)
                              of the Exchange Act:

                                      NONE

                  Securities registered under Section 12(g) of
                               the Exchange Act:

                     COMMON STOCK, $0.01 PAR VALUE PER SHARE

Check  whether  the Issuer  (1) has 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 |_|

Check if no disclosure of delinquent  filers  pursuant to Item 405 of Regulation
S-B contained in this form, and no disclosure will be contained,  to the best of
the registrant's  knowledge,  in the definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB |X|

Issuer's revenues for its most recent fiscal year:  $0

<PAGE>

As of March 25, 2004,  6,796,370  shares of the  Registrant's  Common Stock were
outstanding.   The   aggregate   market  value  of  the  Common  Stock  held  by
non-affiliates  of the registrant on such date,  based upon the closing price of
the Common  Stock of $5.35 as  reported by the OTC  Bulletin  Board on March 25,
2004 was $21,069,958.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

    Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

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<PAGE>

                                     PART I

         Certain   statements   in  this  Report   constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements that address expectations or projections about the future,  including
without  limitation  statements  about  product  development,  market  position,
expected expenditures and financial results, are forward-looking statements.

         Some of the forward-looking  statements may be identified by words such
as  "expects,"   "anticipates,"  "plans,"  "intends,"  "projects,"  "indicates,"
"believes," and similar  expressions.  Any statements  contained herein that are
not  statements  of  historical  fact  may  be  deemed  to  be   forward-looking
statements.  These  statements  are not  guarantees  of future  performance  and
involve a large number of risks,  uncertainties  and  assumptions.  Accordingly,
actual  results or  performance  of GelStat  Corporation  ("GelStat")  will most
likely differ  significantly,  positively or  negatively,  from  forward-looking
statements made herein.  Unanticipated  events and  circumstances  are likely to
occur.  Factors that might cause such differences  include,  but are not limited
to, those discussed under the heading "Investment Considerations" included under
"ITEM 1. DESCRIPTION OF BUSINESS,"  which investors  should carefully  consider.
These factors  include,  but are not limited to, risks that GelStat products may
not  perform  as  expected  or may not  receive  the level of market  acceptance
anticipated;  anticipated  funding may prove to be  unavailable;  intense market
competition  may  result in lower  than  anticipated  revenues  or  higher  than
anticipated  costs,  and  general  economic  conditions,  such  as the  rate  of
employment,  inflation,  interest rates and the condition of the capital markets
may change in a way that is not  favorable  to GelStat.  This list of factors is
not exclusive.  GelStat  undertakes no obligation to update any  forward-looking
statements.

         The  Company  cautions  the reader not to place  undue  reliance on any
forward-looking statements.

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         GelStat  Corporation,  a development  stage company  (formerly known as
Developed  Technology  Resource,  Inc.) was incorporated on November 13, 1991 in
the State of  Minnesota.  As of January 1, 2001,  the Company  was not  actively
engaged in operating business  activities.  It generated no revenues during 2002
and 2001. The Company's  principal executive office is located at 1650 West 82nd
Street,  Suite 1200,  Bloomington,  MN 55431,  (telephone  952-881-4105) and its
website is www.gelstat.com

         Effective April 30, 2003, the Company acquired GelStat Corp.  ("GC") as
a  wholly-owned  subsidiary.  GC was  organized  in June 2002 for the purpose of
developing,   manufacturing  and  marketing  over-the-counter  (OTC)  and  other
non-prescription  consumer  health products  related to migraine and sleep.  The
acquisition was accomplished by merger of GC (a Minnesota  corporation) with our
wholly-owned  subsidiary,  NP  Acquisition  (a  Minnesota  corporation).  In the
merger,  the former  owners of GC  received  shares of our  common  stock and GC
became our wholly-owned  subsidiary.  No cash  consideration was exchanged.  The
amount of the merger  consideration  was  negotiated at arms length based on the
then recent trading price of our common stock and our assessment of the business
prospects  of GC.  In July  2003,  the  Company  changed  its  name  to  GelStat
Corporation.  References  in this  Report to the  "Company"  or  "GelStat"  mean
GelStat Corporation and its wholly-owned subsidiary.

         GelStat  Corporation is a consumer  healthcare company dedicated to the
cost-effective  development  and  marketing  of OTC and  other  non-prescription
consumer  healthcare  products.  Development  efforts are focused exclusively on
products for migraine therapy and to improve sleep,  both  multi-billion  dollar
global  markets.  GelStat is  committed  to  building a  portfolio  of  products
addressing

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<PAGE>

these  conditions  and  believes  that each of its  present or planned  products
offers significant  commercial potential.  The Company believes that its current
and planned products could  potentially offer improved  efficacy,  safety and/or
convenience relative to existing products.

         The Company's  first product is GelStatTM  Migraine,  a patent  pending
solution  designed  to  provide  acute  relief  from  migraine   headaches.   In
conjunction with this first product, the Company has developed a delivery system
designed to enhance the efficacy of the active  ingredients in GelStat Migraine,
including  their  speed of action.  The result is a product  that is expected to
provide fast relief from migraine  headaches for most users at a fraction of the
cost of prescription  medications.  GelStat  Migraine is now being introduced to
retailers and wholesalers  across the United States with several purchase orders
having already been received. GelStat Migraine is a homeopathic drug.

         GelStatTM  Sleep is presently  under  development and is intended to be
marketed as a sleep aid. It is expected to be introduced to retailers in 2005 as
the first  offering in GelStat's  second major  product  line.  GelStat Sleep is
expected to be marketed as a nutritional supplement.

OVERVIEW OF REGULATIONS  REGARDING THE MANUFACTURE AND SALE OF HOMEOPATHIC DRUGS
AND NUTRITIONAL SUPPLEMENTS.

         THIS OVERVIEW IS A BRIEF SUMMARY AND DOES NOT PURPORT TO BE COMPLETE.

         In general,  the Company's products are regulated both by the U.S. Food
and Drug  Administration  (the "FDA") and by the U.S.  Federal Trade  Commission
(the "FTC.")

         The  FDA  treats   homeopathic   drugs,   both  prescription  and  OTC,
differently  than   non-homeopathic   drugs.   Unlike   non-homeopathic   drugs,
homeopathic drugs are not required to submit to pre-market  approval and are not
required to be tested for safety and effectiveness.  Homeopathic drugs must meet
the standards set forth by the  Homeopathic  Pharmacopoeia  of the United States
("HPUS.")

         In general,  the FTC and/or the FDA prohibit  fraud in the marketing of
homeopathic  drugs,  monitor OTC versus  prescription use of homeopathic  drugs,
hold homeopathic drugs to several labeling requirements,  and require production
in compliance with current good manufacturing practices (with some exceptions).

         The FDA prohibits "health fraud," defined as:

                  The deceptive promotion,  advertisement,  distribution or sale
                  of  articles,  intended  for  human or  animal  use,  that are
                  presented  as being  effective  to  diagnose,  prevent,  cure,
                  treat, or mitigate disease (or other conditions), or provide a
                  beneficial   effect  on  health,   but  which  have  not  been
                  scientifically  proven safe and effective  for such  purposes.
                  Such  practices may be  deliberate,  or done without  adequate
                  knowledge or understanding of the article.

         Only those homeopathic drugs that treat "self-limiting"  conditions and
that the average  consumer can recognize and diagnose are allowed to be marketed
as OTCs.  Homeopathic  drugs that claim to treat serious  diseases  and/or those
that require diagnosis by a physician,  such as AIDS or cancer, must be marketed
as prescription homeopathic drugs - they cannot be sold as an OTC drug.

         The FDA requires that homeopathic drugs be properly labeled. A "drug or
device  shall  be  deemed  to be  misbranded...  [i]f its  labeling  is false or
misleading in any particular." Furthermore, Section 352 of the Act requires that
the name and place of business of the  manufacturer,  packer,  or distributor be
placed

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<PAGE>

on the  package.  Homeopathic  drugs for  retail  sale  must also bear  adequate
directions for use that can be interpreted by the average lay person,  and their
ingredients  as well as the dilution of each active  ingredient  must be stated.
(with dilution stated as the number of 1:10 dilutions  required to arrive at the
final  concentration  of active  ingredient.) The label must also state at least
one  major  indication  for the  drug,  the  drug's  established  name,  and any
applicable warnings.

         The FDA requires  that  homeopathic  drugs be  manufactured  in general
conformance with current good manufacturing  practice (GMP.) However,  there are
two  exceptions to this  requirement.  First,  homeopathic  drugs do not require
expiration  dating.  Second,  the FDA  does  not  presently  require  laboratory
determination  of the identity and strength of each active  ingredient  prior to
the release and distribution of the drug on the market.

         For further  information on the FDA's regulation of homeopathic  drugs,
see the FDA's Compliance Policy Guide (CPG), "Conditions Under Which Homeopathic
Drugs May be Marketed," which is available on the FDA's website, www.fda.gov.

         Regulations  governing   nutritional   supplements  were  substantially
changed with passage of the U.S. Dietary  Supplement Health and Education Act of
1994 (DSHEA).  Prior to the DSHEA,  the Nutritional  Labeling Act (NLA) gave the
FDA wide interpretive  powers in establishing  appropriate label claims, and all
such claims had to be pre-approved by the FDA.

         Under DSHEA a  manufacturer  must only supply the FDA with  information
adequate to provide  "reasonable  assurance  that the product does not present a
significant or unreasonable  health risk of illness or injury." This information
must be supplied at least 75 days before the product is available to  consumers.
DSHEA  permits  the  labels of  dietary  supplements  to  contain  truthful  and
non-misleading  structure/function  claims and  nutritional  support claims that
describe  the  role  of  the  nutrient  in  supporting   wellness.   Nutritional
supplements are not allowed to make claims to diagnose, prevent, cure, treat, or
mitigate  disease.  In addition,  certain  structure/function  claims  otherwise
allowed  may be  disallowed  for a product  administered  by other  than  normal
ingestion (e.g. sublingually.)


PRODUCTS

         GELSTAT(TM) MIGRAINE

         GelStat Migraine is a patent pending  homeopathic drug intended for use
         in  providing  acute  relief from the pain and  associated  symptoms of
         migraine  and  migraine-like  headaches.  It is  believed  to  be  more
         effective if used early in the course of an attack,  but may be used at
         any time.  GelStat  Migraine is  administered  sublingually  (under the
         tongue), and held in place briefly before being swallowed.

         GelStat Migraine is provided in single dose  (OraDose(TM))  dispensers,
         which  are  intended  to  ensure  ease of use as  well  as  consistent,
         accurate  administration  of  medication.  The  OraDose(TM)  System  is
         GelStat's proprietary, patent pending sublingual administration system.
         It includes not only the patent pending  dispenser,  but also a product
         formulation  specifically  designed  to enable and  enhance  sublingual
         delivery  of  active  ingredients   zingiber  officinale  (ginger)  and
         pyrethrum parthenium (feverfew.)

         A recent clinical trial showed GelStat  Migraine to be effective in 83%
         of patients,  whose migraine pain was either  eliminated or arrested at
         the mild pain phase by early  treatment.  In this study 30 patients who
         consistently  develop  moderate to severe  migraine  headache pain were

                                       5
<PAGE>

         treated with GelStat  Migraine early in the course of an attack,  while
         at the mild  pain  phase.  The  primary  objective  was to  assess  the
         efficacy of GelStat  Migraine in providing  acute relief from  migraine
         headache  pain  and  associated  symptoms.  Results  demonstrated  that
         migraine  headache  pain two hours after  treatment  was either mild or
         none in 83% of  patients.  Pain-free  response  was  obtained by 48% of
         patients,  with 34% reporting  only mild pain, 17% moderate pain and 0%
         severe pain. Of those  pain-free at two hours,  71% remained  pain-free
         during the 24 hour post-dose  period and 85% remained  pain-free or had
         only mild pain. Moderately painful headache recurred in 14% of patients
         and severely painful headache in 0%. Migraine  associated symptoms such
         as photophobia,  phonophobia and nausea were eliminated in 53% of those
         patients   initially   reporting  such  symptoms.   Side  effects  were
         infrequent and minor.

         Initial  clinical trial data suggests that GelStat Migraine may be more
         effective than competing OTC migraine relief products,  and that it may
         not be associated  with the side effects  common to other OTC products,
         such as stomach  upset,  or the  development  of rebound  headaches and
         chronic  daily  headaches.  Prescription  medications  for migraine are
         generally associated with much more severe side effects,  none of which
         have been noted with use of GelStat Migraine.

         GELSTAT(TM) SLEEP

         GelStat Sleep is expected to be introduced at retail in 2005 for use as
         a sleep aid.

         The Company has  internally  conducted  initial  marketing  research on
         GelStat  Sleep and has found the  product to be very well  received  by
         potential consumers who have sampled it.

         Unlike nearly all  non-prescription  sleep aids, GelStat Sleep does not
         contain antihistamines.  Antihistamines cause drowsiness,  but they are
         often  ineffective  sleep  aids,  and have  side  effects  that  create
         problems for many users.

         GelStat  Sleep is  expected  to employ a unique  combination  of active
         ingredients, each of which has independently been shown in some studies
         to be effective in  promoting  healthy  sleep.  Those  ingredients  are
         combined with proprietary  adjuncts as part of the OraDose(TM) Delivery
         System to ensure rapid,  effective and safe administration when used as
         directed.  By  utilizing  the  OraDose  System to deliver  the  planned
         combination of  ingredients,  the Company hopes to offer a product that
         is substantially advantageous relative to competing products.

ORADOSE(TM) DELIVERY SYSTEM

         The  OraDose(TM)  Delivery  System is a patent pending  delivery system
employed by GelStat for sublingual (under the tongue)  administration of GelStat
Migraine and, it is expected,  will be employed for  administration of other OTC
and other non-prescription health products. The OraDose System includes not only
the  OraDose  dispenser,  but also the  specific  formulations  used to  improve
sublingual absorption of each product.

         Sublingual  administration  is often  advantageous but seldom utilized,
especially  with  non-prescription  products.  When  properly  formulated,  many
products may be administered  sublingually and better overall  performance might
therefore   be  realized.   Sublingual   administration   may  be   particularly
advantageous  because  substances  thus  administered  may evidence a more rapid
onset of action,  faster  attainment of peak plasma  concentration,  and greater
overall absorption.

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<PAGE>

         The  OraDose(TM)  Delivery  System is an  important  part of  GelStat's
effort to create products that work faster,  are more effective and offer better
safety profiles than similar products administered by traditional means. GelStat
may employ the OraDose(TM) Delivery System in a number of future products.

SALES AND MARKETING

         MARKET SIZE

         GelStat(TM) Migraine
         --------------------

         Migraine is an extremely common and debilitating illness.  According to
the American Council for Headache Education,  migraines afflict 25 to 30 million
people in the U.S.  alone,  with 92% of all sufferers  reporting  some degree of
disability.  Women  account for  two-thirds  to  three-fourths  of all  migraine
patients,  as gender specific prevalence in the U.S. is 17.6% for females and 6%
for males using the IHS  (International  Headache Society) criteria for migraine
diagnosis.  Twenty-five  percent of women with migraine  experience four or more
severe attacks per month,  35% experience one to three severe attacks per month,
and 40%  experience  one or less than one severe  attacks  per month.  Americans
spend an  estimated  $6 billion  per year on  treatments  to  relieve  migraine,
including approximately $2.6 billion on OTC headache medications.

         The Company believes that GelStat Migraine is a more effective, faster,
and essentially side effect free alternative to presently available OTC migraine
treatments  and  that  it can  therefore  compete  effectively  in the  migraine
treatment market.

         GelStat(TM) Sleep
         -----------------

         The  National  Sleep  Foundation  defines  "insomnia"  as  any  of  the
following symptoms: difficulty falling asleep, frequent waking during the night,
waking  too  early and not being  able to go back to  sleep,  or waking  feeling
unrefreshed.

         Symptoms  of  insomnia,  including  occasional  sleeplessness,   affect
approximately  two-thirds  of  Americans.  Over half of all adults  (58%) report
experiencing  at least one of the four  symptoms of insomnia at least two nights
per week, and 35%  (approximately  70 million) report symptoms of insomnia every
night.  Clinically  significant  insomnia  affects 10 to 17 percent of the adult
U.S.  population,  though  only  about  4%  seek a  physician's  assistance  for
treatment,  most  relying  on  self-medication  and  non-prescription  products.
Insomnia is more common among the elderly,  but a recent survey showed that even
among young adults,  approximately 10% had used non-prescription  medications in
the past year to improve  sleep.  Insomnia  is the second  most  common  medical
complaint after pain.

         DOMESTIC SALES & MARKETING

         The largest distribution channel for OTC and non-prescription  consumer
healthcare  products in the United States is chain and  independent  drug stores
and pharmacies. There are approximately 25,000 chain drug stores in the U.S. and
20,000 independent drug stores and small chains (5 stores or less).

         Food  stores  account  for  another  28,000  retail   locations.   Mass
merchandisers  (Wal-Mart,  Target, etc.) and Club stores (e.g. Sam's Club) total
another  7,400  locations,  approximately  5,000  of  which  have  full  service
pharmacies.

         GelStat intends to market and distribute its products primarily through
these mainstream chain drug store,  food store, and mass merchandise  retailers.
Other potential  distribution channels include

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120,000  convenience  stores,  4,500 specialty  nutrition and health stores, and
direct marketing via television, radio, catalogs and the Internet.

         INTERNATIONAL SALES & MARKETING

         The global incidence of migraine  approximates that found in the United
States. GelStat is pursuing international sales and marketing  opportunities for
GelStat  Migraine  simultaneous  with now  ongoing  domestic  distribution,  and
expects to achieve initial  international  sales in 2004. The Company also plans
on  introducing  GelStat Sleep  internationally  simultaneous  with its domestic
launch, planned for 2005.

COMPETITION

         There are numerous other companies that manufacture and market products
that presently  compete with the intended  products of the Company.  Most of the
companies  that  compete with the Company  have much  greater  market  exposure,
personnel,  and financial resources than the Company.  Most of the products that
compete with the Company's  products have greater  brand  recognition,  and have
already achieved a certain amount of consumer acceptance.

         The Company believes that for GelStat Migraine its primary  competition
is with other OTC migraine medications.  The OTC migraine market is based almost
entirely on common analgesics,  some having been slightly modified for migraines
(e.g. by the addition of caffeine).  Typical  competitors  include products like
Excedrin Migraine(R), Motrin Migraine(R) and Advil Migraine(R).

     Non-steroidal  anti-inflammatory drugs (NSAIDs:  ibuprofen,  aspirin, etc.)
have  significant  harmful  side  effects.  Common  side  effects  of these  OTC
analgesics  include  rebound  headaches  (both  caffeine  and NSAIDs can cause),
chronic daily headache,  liver damage,  kidney damage,  ulcers and, less serious
but more frequently, stomach upset.

         The  Company  also  competes  indirectly  with  prescription   migraine
treatments.  Triptans  are now  recognized  as the  prescription  drug of choice
("gold standard") for most migraine  patients,  and have largely displaced other
prescription  medications.  All triptans bind with serotonin  receptors on blood
vessels,  causing  vasoconstriction  (narrowing) of the arteries, thus relieving
migraine pain.

         One problem with triptans is that they are not specific for arteries in
the brain, but narrow all arteries,  including those in the heart. Chest-related
symptoms,  such as pressure or pain,  occur with all  triptans  and up to 10% of
patients discontinue treatment because of these symptoms. Triptans may also lead
to headache  recurrence (the headache  initially  leaves,  but comes back, often
worse than  originally.)  Headache  recurrence is reported to occur in 26-39% of
those  using  sumatriptan.  Another  side  effect  not  often  discussed  in the
literature,  but  frequently  mentioned by  patients,  is that triptan use often
leaves them feeling weak and exhausted.

PRINCIPAL SUPPLIERS

         GelStat is dependent on numerous  third-parties and strategic partners.
The Company must reach and maintain  agreements with  third-parties to supply it
with the  manufacturing,  packaging,  public  relations,  advertising,  clinical
trials,  product  brokering and  distribution,  and other  products and services
necessary  to effect the  business  plan.  The  Company  believes  that at least
several  alternative  sources exist for each service and component purchased for
and used in the  manufacture  and  marketing of its products.  However,  GelStat
generally  does not have long term  service  agreements  with  those  performing
services  for the  Company or long term  supply  agreements  with  suppliers  to
provide product at any set price or at

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<PAGE>

all.  In  addition,  GelStat  currently  does  not have  the  physical  or human
resources to  independently  manufacture its products or any other products that
might be developed.  The Company  particularly relies on Cardinal Health for the
manufacture  and packaging of its products.  While  believing  that an alternate
vendor could be found,  the need to change  vendors,  should it arise,  would be
likely to have a material adverse effect on the Company.  The Company intends to
outsource  all of its product  manufacturing  and packaging  operations  for the
foreseeable future.

INTELLECTUAL PROPERTY

         The  Company  plans to  continuously  define,  expand  and  defend  the
intellectual  property  related to its products and delivery  systems.  As such,
GelStat has filed several  domestic patent  applications  and has recently filed
for  international  protection on GelStat Migraine under the Patent  Cooperation
Treaty (PCT) protocol. None of the applied for domestic or international patents
have been granted.  As such,  GelStat Migraine is presently  marketed as "patent
pending." GelStat also seeks both domestic and  international  protection of its
name, brands and logo. Intellectual property protection is very important to the
successful  marketing and  distribution of its products.  GelStat will therefore
continue to file patent and other intellectual  property applications to protect
inventions and improvements that are considered  important to the development of
its  products  and  business.  The  Company  plans  to  file  for  international
protection in those markets believed to hold potential  economic  importance for
the  Company.  GelStat  also  relies  on trade  secrets,  know  how,  continuing
technological innovation and licensing opportunities to develop and maintain its
competitive position.

RESEARCH AND DEVELOPMENT

         GelStat is a marketing driven company dedicated to migraine and problem
sleep, both multi-billion dollar international markets.  Nonetheless,  potential
new product opportunities may be evaluated according to their likely competitive
advantage (economic as well as clinical),  potential market size, patentability,
suitability for sale as  non-prescription  products,  likely consumer acceptance
and ability of the Company to successfully execute development and launch within
the constraints of the present opportunities.  Ideally, additional products will
prove suitable for administration  via the OraDose(TM)  Delivery System or other
unique delivery system which the Company might develop in the future.

         GelStat   Migraine  is  currently  being  positioned  as  a  first-line
treatment  for  use as an  early  intervention  in  the  treatment  of  migraine
headaches,  consistent  with clinical data obtained thus far.  However,  several
additional  clinical  trials of GelStat  Migraine  are  presently  underway  and
several  more are  planned.  In addition  to  providing  additional  data on the
efficacy of GelStat  Migraine,  such trials  might create  additional  marketing
opportunities   and  support  the  development  of  new  products  for  migraine
treatment.   Additional  products  could  include  those  specifically  for  the
treatment  of  pediatric  migraine,  for  migraine  prophylaxis  (prevention  of
migraine onset via daily use of product), or for "mini-prophylaxis"  (prevention
of migraine  through  daily use at and around the time of an expected  menstrual
period in women whose  migraine is frequently  associated  with  menses.)  While
there is no data  presently  available  to support  such use,  these  additional
trials could provide such support and thus open substantially larger markets for
GelStat Migraine or some modification  thereof. Of course, the results of future
and ongoing trials are uncertain.

         The Company  incurred  $155,014 and $21,090 in research and development
expense  for the year ended  December  31, 2003 and for the period from June 25,
2002  (inception)  until  December 31, 2002  respectively.  The Company plans to
increase  expenditures  on research and  development  in 2004,  primarily in the
performance of additional clinical trials.

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<PAGE>

         GelStat plans to conduct  clinical trials on every product it develops,
prior to offering that product for sale. It is believed essential to demonstrate
efficacy in a manner recognized and accepted by the medical community as well as
the consumer.

EMPLOYEES

         GelStat maintains an executive office in Bloomington,  Minnesota, and a
branch office in Schofield,  Wisconsin.  The Company  currently employs 9 people
and expects to expand  significantly in 2004.  GelStat will actively seek, among
others, additional accounting personnel and administrative staff.

EXECUTIVE OFFICERS OF THE REGISTRANT

OFFICERS AND DIRECTORS

         The following table sets forth the directors, officers, and significant
employees of the Company,  their ages and positions with the Company as of March
25, 2004:

Name                          Age        Position
----                          ---        --------

Stephen C. Roberts, M.D.      43         Chairman, Chief Executive Officer and
                                         Chief Financial Officer

Russell W. Mitchell           43         Director, President

James W. Higgins              43         Executive Vice President

Richard W. Ringold            40         VP, Managing Director - International

Arthur Pirrone                60         VP, Domestic Sales & Marketing

Michael C. Borman             39         VP, Business Development



         Stephen C. Roberts, M.D., Chairman and Chief Executive Officer

         Dr.   Roberts  is  a  co-founder  of  GelStat  Corp.   (the   Company's
wholly-owned  subsidiary)  and  presently  serves  as  Chairman  and  CEO of the
Company.  He has been a member of the Board of  Directors  of the Company  since
April 30, 2003. Prior to forming GelStat Corp., from June, 2001, Dr. Roberts was
with Oak Ridge Financial Group,  Inc., a  Minneapolis-based  investment  banking
firm, and prior to that, from May, 1999 was President of Naturewell, Inc., which
was  engaged   primarily  in  the  research  and   development   of  proprietary
nutraceutical  products intended for a variety of conditions  including migraine
headaches and allergies.  Dr. Roberts founded AmTech  Scientific,  Inc. in 1998,
primarily  to  develop  and  commercialize  a  unique  diagnostic  test  for the
detection  of active  tuberculosis.  Dr.  Roberts  led the  product  development
activities and FDA submissions  for AmTech  Scientific,  which was  subsequently
acquired  by  LaJolla  Diagnostics,  and the  AmTech  TB test  sold to  Meridian
Bioscience,  Inc. Dr. Roberts has substantial  experience in clinical  research,
basic science research and regulatory  issues. He was a Partner and Principal at
Maven Securities,  Inc., a Minneapolis-based  investment banking firm, from 1996
to 1998.  Dr.  Roberts  received  his  medical  degree  from the  University  of
Minnesota Medical School,  and received a B.A. in Chemistry and Biology from St.
Olaf College in Northfield, Minnesota.

         Russell W. Mitchell, President and Director

         Mr.  Mitchell is a co-founder of GelStat Corp.  and serves as President
of the  Company.  He has been a member of the Board of  Directors of the Company
since  April  30.  2003.   Mr. Mitchell   previously   founded  Mitchell  Health
Technologies, Inc. (MHT), a leading master broker, specializing in the marketing
and  distribution  of  non-prescription  drugs and nutritional  supplements.  As
President of MHT

                                       10
<PAGE>

MHT  since its 1994  founding,  Mr.  Mitchell  was  master  broker  for  Quigley
Corporation  during their national  rollout of Cold-Eeze,  which attained retail
sales of  approximately  $140 million  annually  within 18 months - and which is
widely  considered  the  most  successful  new  product  launch  to  date in its
category. Mr. Mitchell has 20 years of sales and marketing experience, including
15 years of  experience  in new product  development  and sales and marketing of
prescription drugs, OTC drugs and nutritional supplements.  Mr. Mitchell majored
in Business Administration - Marketing at Michigan Technological University.

         James W. Higgins, Executive Vice President

         Mr.  Higgins is a co-founder of GelStat Corp.  and presently  serves as
Executive  Vice  President  of the Company.  Prior to joining the  Company,  Mr.
Higgins was Executive Vice President of Mitchell Health  Technologies,  where he
was  responsible for managing all channels of retail  distribution.  Previously,
Mr. Higgins spent 15 years with the AC Nielsen Co.,  where his  responsibilities
included  accounts  with  some of the  most  prominent  Consumer  Product  Goods
companies in America,  such as Kraft Foods and Good Humor-Breyers Ice Cream. Mr.
Higgins has extensive  experience in the field of consumer  research and applied
market  research for  consumer  response  management.  Mr.  Higgins  received an
undergraduate degree in Business & Marketing for Northern Michigan University.

         Richard W. Ringold, Vice President, Managing Director-International

         Mr.  Ringold  has more  than 15 years of  global  business  management,
corporate  development  and  strategic  marketing  experience.  Prior to joining
GelStat,  Mr.  Ringold  was Vice  President  of  Corporate  Finance at Oak Ridge
Financial  Group,  Inc.,  focusing  on merger  and  acquisition  activities  for
corporate  clients  in the  areas  of  medical  products,  technology,  consumer
products   and   manufacturing.   Previously,   Mr.   Ringold  was  Director  of
International  Marketing  for the Toro  Company  (NYSE:TTC),  where  his  direct
responsibility  included  all Toro  Consumer  products  sold  outside the United
States.  Prior to that,  Mr.  Ringold  spent 7 years  at the  Donaldson  Company
(NYSE:DCI) in a variety of business development, marketing and management roles,
including leading the formation of Donaldson's first joint venture in China. Mr.
Ringold has extensive  experience  building businesses  internationally  through
joint ventures, distribution agreements, acquisitions and strategic alliances in
Europe,  Asia,  Australia,  Canada  and Latin  America.  Mr.  Ringold  began his
business  career with Dow Chemical  Company  (NYSE:DOW).  Mr. Ringold  graduated
magna cum laude  from St.  Olaf  College  with B.A.  degrees  in  Chemistry  and
Biology,  and  received  an MBA from the  Carlson  School of  Management  at the
University of Minnesota.

         Arthur Pirrone, Vice President - Domestic Sales & Marketing

         Mr.  Pirrone has more than 30 years of sales and  marketing  experience
with OTC and  Health and  Beauty  consumer  products  (HBC  products).  Prior to
joining  GelStat in 2003, Mr.  Pirrone spent five years as a well-known  HBC/OTC
consultant, specializing in new product introductions,  distributor development,
promotional  strategies,   national  account  management,  sales  training,  and
establishing  relationships with major drug wholesalers.  From 1989 to 1998, Mr.
Pirrone  was  Vice  President  of  Sales  &  Marketing  for  Inverness   Medical
Technology,  where he  managed  the  growth  and sales of the  retail  division,
including  achieving  100%  chain  drug  distribution  of the One  Touch  brand.
Previously,  Mr.  Pirrone was Vice  President  of Sales &  Marketing  at Roberts
Proprietaries,  Inc.,  National  Sales Manager at Hudson  Vitamin/Pharmaceutical
Corporation,  and held senior sales positions at Abbott Laboratories and Revlon.
Mr.  Pirrone began his career in sales in the  toiletries  division of Proctor &
Gamble  where he  achieved  "Salesman  of the  Year" as well as  numerous  other
awards.  Mr. Pirrone  graduated from New York University  (NYU) with a degree in
Business Administration.

         Michael C. Borman, Vice President - Business Development

         Mr. Borman has over 15 years of experience in executive and  consulting
roles,  having  previously  held senior  positions  in strategic  and  financial
planning, business development, product marketing, and

                                       11
<PAGE>

sales  with  companies  including  Accenture  (formerly  Andersen   Consulting),
Pillsbury,  and  Ceridian.  Prior to joining  GelStat,  Mr.  Borman was Managing
Partner of Growth  Partners,  a management  advisory  firm that  specializes  in
arranging  financing and working with early stage companies to implement  growth
strategies.  Prior to founding Growth  Partners,  Mr. Borman was involved in the
launch of WAM!NET,  which became one of Minnesota's 50 fastest  growing  private
companies  and was a  leading  provider  of data and  network  solutions  to the
Military,  Defense  Department and the Media  industry.  Mr. Borman was a Benton
Scholar at the University of Michigan  Business School where he received his MBA
in Finance,  Marketing,  and Corporate Strategy.  He received a Bachelor of Arts
degree in Economics from the University of Wisconsin - Madison.

         Each  officer of the  Company is elected or  appointed  by the Board of
Directors of the Company and holds office until a successor is elected, or until
the earlier of death, resignation or removal.

         To the knowledge of the Company,  no officer or director of the Company
is a party  adverse  to the  Company  or has  material  interest  adverse to the
Company in any legal proceeding.

         There are no family  relationships  between any  directors or executive
officers of the Company, either by blood or by marriage.

         The  information  given in this  Report on Form 10-KSB  concerning  the
directors and officers is based upon statements made or confirmed to the Company
by or on behalf of such  directors and officers,  except to the extent that such
information appears in the Company's records.

INVESTMENT CONSIDERATIONS

PROSPECTIVE  INVESTORS IN THE COMPANY SHOULD BE AWARE OF AND CAREFULLY  CONSIDER
THE  FOLLOWING  MATTERS AND OTHER  INFORMATION  PROVIDED  BY THE COMPANY  BEFORE
MAKING A DECISION TO INVEST.  THE RISKS  DESCRIBED  BELOW ARE NOT AN  EXHAUSTIVE
LIST  OF THE  RISKS.  ADDITIONAL  RISKS  THAT  ARE NOT YET  KNOWN,  OR THAT  ARE
CURRENTLY  BELIEVED TO BE  IMMATERIAL  MAY ALSO  SUBSTANTIALLY  IMPAIR  BUSINESS
OPERATIONS.  IF ANY OF THE EVENTS OR  CIRCUMSTANCES  DESCRIBED IN THE  FOLLOWING
RISK FACTORS  ACTUALLY  OCCURS,  GELSTAT'S  BUSINESS,  FINANCIAL  CONDITION,  OR
RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED.  IN SUCH CASE, THE
TRADING PRICE OF THE COMPANY'S COMMON STOCK COULD DECLINE,  AND YOU MAY LOSE ALL
OR PART OF YOUR INVESTMENT.

THE COMPANY HAS A LIMITED OPERATING HISTORY.

         GelStat  Corporation  is the result of a merger  completed on April 30,
2003. At that time the Company, formerly known as Developed Technology Resource,
Inc.,   entered   the   intensely   competitive   over-the-counter   (OTC)   and
non-prescription  consumer  healthcare  products  market by merging with GelStat
Corp.  To  date,  efforts  in this  business  have  been  limited  primarily  to
developing products, negotiating relationships with strategic business partners,
conducting clinical trials, applying for patent protection, preparing to execute
initial marketing  strategies,  test marketing  GelStat  Migraine,  working with
brokers  and other key  parties to  implement  our  product  introductions,  and
implementing  internal  processes and procedures in preparation  for anticipated
significant customer and revenue growth.  Accordingly,  we have not achieved any
revenue  to date and have only  limited  operating  history  on which to base an
evaluation of our business and  prospects.  There are numerous  other  companies
that  manufacture and market  products that presently  compete with the intended
products of the  Company.  Most of the  companies  that compete with the Company
have much greater market exposure,  personnel,  and financial resources than the
Company.  Most of the products  that compete with the  Company's  products  have
greater  brand  recognition,  and have  already  achieved  a  certain  amount of
consumer  acceptance.  There can be no assurance  that the  Company's  plans for
developing, manufacturing, and

                                       12
<PAGE>

marketing our initial products, or any products, will be successful, or that the
Company will ever attain significant sales or profitability.  We anticipate that
we will incur  development stage losses for some time into the future until such
time, if any, that we achieve  sufficient  sales to support our operations.  Our
prospects  must be considered in light of the risks,  expenses and  difficulties
frequently  encountered  by  companies  in their  early  stages of  development,
especially in challenging and fiercely  competitive  industries such as ours. We
cannot assure you that we will be successful in addressing any of the many risks
we may encounter.

THE COMPANY IS NOT CURRENTLY GENERATING REVENUE TO FUND ITS ONGOING EXPENSES.

         The Company had no  operating  revenue in 2003 and does not  anticipate
that revenues will be sufficient to satisfy the Company's  ongoing  expenses for
some time, if ever. As such, the Company may continue to incur operating  losses
for the  foreseeable  future.  While the Company  believes  that its selling and
marketing  activities  in 2004 will be sufficient to result in its emerging from
the development stage, there can be no assurance of that. Our operating expenses
may substantially  increase as we expect to spend significant funds on marketing
initiatives  to develop  product and brand  awareness.  Until such time, if any,
that we achieve  positive  cash flow,  we will be entirely  dependent on outside
investor capital to support  operations.  The Company's ability to raise capital
now and in the future is subject to the Risk  Factors  described in this section
and general  economic,  competitive,  regulatory  and other  factors  beyond the
Company's control. This capital may not be available at all, or may be available
only under terms which are highly dilutive or otherwise  highly  disadvantageous
to  shareholders.  While the  Company  believes  that,  in the event  additional
capital  is  unavailable,  cash on hand plus  results of  operations  could fund
operations  for the next 12 months,  the  Company's  ability to fund its ongoing
business  activities,  including  product research and  development,  marketing,
manufacturing  and all  other  activities  contemplated  by the  Company  may be
severely  impacted or  altogether  prevented  by a lack of access to  sufficient
additional capital.

WE MAY NEED TO SUCCESSFULLY MANAGE RAPID GROWTH IN THE NEAR FUTURE.

         We plan to grow at a rapid pace. Rapid growth, if achieved,  will place
a significant strain on our managerial,  operational,  reporting,  and financial
resources.  We have taken preliminary steps to put in place the necessary legal,
accounting,  human resource  management,  and other  relationships  and tools to
enable  us to deal with  this  growth  more  efficiently.  However,  there is no
assurance that we will be able to  successfully  manage rapid growth,  should it
occur.  If we do not properly  meet the  increasing  expenses and demands on our
resources from future growth, we will be adversely affected.  To properly manage
our  growth,  we must,  among other  things,  implement  additional  and improve
existing  administrative,  financial,  marketing,  operational  and research and
development systems, procedures and controls.

WE ARE HIGHLY DEPENDENT ON CERTAIN KEY PERSONNEL.

         The  Company  is  dependent  on  Stephen C.  Roberts,  M.D.,  its Chief
Executive Officer, Russell W. Mitchell, its President, and other key executives.
The loss of  services of any of these  individuals  could  impair the  Company's
ability to complete the national rollout of its products,  bring its products to
a significant  level of consumer  acceptance,  or manage  operational and growth
issues.  The Company does not currently  carry  "key-man"  life insurance on any
member of its management  team. We may also need to expand our staff. We may not
be  able to  hire,  train,  integrate,  retain,  motivate  and  manage  required
personnel.

THE PERFORMANCE OF THE COMPANY'S PRODUCTS IS NOT FULLY KNOWN.

                                       13
<PAGE>

         Our success depends upon the extent to which our products  perform well
and as anticipated.  Although we believe that our products are efficacious,  and
believe we have  sufficient  data as well as sufficient  experience with them to
reasonably assert that they perform well enough to be economically viable, we as
yet have only limited third-party evaluations.  The complete performance profile
for the  Company's  initial  two  products  will  not be known  for  some  time.
Additional  clinical  trial data,  if and when  obtained for any  product,  will
provide  additional,  but not  all,  information  on any  given  product,  since
clinical trials are performed under very specific circumstances and measure very
specific outcomes.

THE COMPANY'S PRODUCTS ARE SUBJECT TO ONGOING AND ADDITIONAL CLINICAL TRIALS.

         The  Company's  migraine  product  is  currently  under  study in three
clinical trials,  with two additional trials planned and with one clinical trial
having  already been  successfully  completed.  The  Company's  sleep product is
expected to  commence  clinical  testing in late 2004 or early  2005.  The first
clinical trial of GelStat  Migraine,  which was performed by well known and well
respected   investigators  and  conducted  at  a  respected  research  facility,
demonstrated  efficacy  in 83% of  users,  but was  nonetheless  limited  by its
open-label  protocol and small sample size. We believe that presentation of this
trial has provided substantial credibility for the Company and GelStat Migraine,
and that  publication  of this  trial  may  result  in  additional  credibility.
However,  additional  trials are needed,  and some  consumers  and retailers may
defer  purchasing  the product  until such time,  if any,  that such  additional
trials are successfully completed.  In addition,  there can be no assurance that
said additional trial results will be favorable,  or that they will be favorably
received by either the medical community or consumers.  In addition, the results
of future  clinical  trials,  including  trials now  ongoing,  are  expected  to
strongly  affect the economic  viability  and  perceived  value of our products.
There can be no  assurance  as to the outcome of now ongoing or future  clinical
trials.  Despite this,  the  successful  completion of clinical  trials is a key
aspect of the Company's marketing plan. If the clinical trial results for one or
both of the Company's  initial products suggest that either or both of these are
not efficacious, or reveal unexpected problems such as serious side effects, the
Company may be unable to successfully  market said product(s) even if we desired
to do so.

WE ARE DEPENDENT ON NUMEROUS THIRD-PARTIES AND STRATEGIC PARTNERS.

         We must reach and maintain  agreements with  third-parties to supply us
with the  manufacturing,  packaging,  public  relations,  advertising,  clinical
trials,   product   brokering  and   distribution,   software  and  the  general
infrastructure  necessary to effect our business  plan. We believe that at least
several alternate sources exist for each service and component purchased for and
used in the manufacture and marketing of our products.  However, we generally do
not have long term service  agreements  with those  performing  services for the
Company or long term supply  agreements with our suppliers to provide product at
any set price or at all. In  addition,  we currently do not have the physical or
human resources to independently  manufacture our products or any other products
that we may develop.  The Company particularly relies on Cardinal Health for the
manufacture  and packaging of its products.  While  believing  that an alternate
vendor could be found,  the need to change  vendors,  should it arise,  would be
likely to have a material adverse effect on the Company.  We intend to outsource
all of our product  manufacturing  and packaging  operations for the foreseeable
future.  Our success therefore depends  substantially on our relationships  with
these  strategic  partners  and  suppliers.  If,  in the  future,  we  decide to
establish  our  own  manufacturing   facilities,  we  will  require  substantial
additional  funds  and  significant   additional  personnel  to  undertake  such
operations.  We cannot be certain that such  funding or a  sufficient  number of
such qualified persons will be available for such an undertaking.

                                       14
<PAGE>

UNANTICIPATED PROBLEMS ASSOCIATED WITH PRODUCT DEVELOPMENT AND COMMERCIALIZATION
COULD DEVELOP.

         Our  successful  development of existing and new products is subject to
the risks of failure and delay inherent in the development and commercialization
of products based on innovative technologies. We may experience unanticipated or
otherwise  negative  research  and  development  results.  Existing  or proposed
products may be found to be  ineffective  or unsafe,  or may  otherwise  fail to
receive required regulatory clearance or approval.  We may find that existing or
proposed products, while effective, are uneconomical to commercialize or market.
Existing or proposed products may not achieve broad market acceptance.

THE CONSUMER  HEALTHCARE PRODUCT MARKET IS SUBJECT TO SUBSTANTIAL  REGULATION BY
SEVERAL REGULATORY AGENCIES.

         We  believe  that  all of our  current  and  planned  products  will be
marketed either as homeopathic products or as dietary supplements, and that each
will  therefore  be  exempt  from the new drug  approval  process  required  for
prescription  pharmaceuticals.   The  Company's  products,  product  development
activities and manufacturing  processes are nonetheless subject to extensive and
rigorous  regulation  by  the  Food  and  Drug  Administration  ("FDA")  and  by
comparable  agencies  in  foreign  countries.  In the  United  States,  the  FDA
regulates  manufacturing,  labeling  and  record  keeping  procedures  even  for
non-prescription  products.  We  use  qualified  third-party  manufacturers  and
believe  these   manufacturers   to  be  in  compliance   with  all  appropriate
regulations.  Nonetheless,  the  failure  of such  third  parties  to  adhere to
regulations  could have a material  adverse affect on the Company.  In addition,
product claims, labels, advertising and other communications with the public are
closely  monitored by the Federal Trade  Commission  ("FTC"),  as well as by the
FDA.  Failure to comply with any of the  numerous  regulations  which govern our
industry  could result in regulatory or  enforcement  actions which would have a
material adverse affect the Company. In addition,  we are subject to those risks
associated with any highly regulated industry wherein regulations are subject to
change  that is both  substantial  and  rapid.  Regulatory  change may force the
Company to expend  substantial time and money becoming  compliant,  may make the
Company's  business more expensive to operate and the products less  profitable,
or not  profitable at all, and might even prevent the Company from marketing one
or more of its  products.  In  addition,  the  marketing  of our first  product,
GelStat Migraine,  involves claims that this product is effective in alleviating
migraine  headaches.  Under  FDA  and  FTC  rules,  we are  required  to  obtain
scientific  data to support any health claims we make  concerning  our products.
Although we have neither  provided nor been  requested to provide any scientific
data to the FDA in support of this claim, we have obtained supporting scientific
data. We cannot be certain,  however,  that the scientific data we have obtained
or will obtain in the future in support of our claims will be deemed  acceptable
or sufficient to the FDA or FTC,  should either agency  request any such data in
the future.  If the FDA or the FTC requests any supporting  information,  and we
are unable to provide  support that is acceptable to the FDA or the FTC,  either
agency  could force us to stop making the claims in  question,  which would most
likely  have a  negative  impact on sales.  Regulatory  actions  may  materially
adversely  affect the  Company's  business,  financial  condition and results of
operations  in ways that are  entirely  unpredictable  and  entirely  beyond the
Company's control.

WE MUST SUCCESSFULLY DISTRIBUTE OUR PRODUCTS TO RETAILERS.

         The Company intends to sell its products primarily through  traditional
retail  outlets,  and to achieve this,  will work with a large number of brokers
and  distributors  currently  serving  that  market.  We  believe  we have  good
relationships  already  in place  with  those  brokers  and  distributors  whose
assistance  will be required to promote broad retail  distribution,  and we have
entered a marketing  agreement  with Euro American  Marketing  and Sales,  which
agreement is intended to further  bolster our retail  sales force.  Nonetheless,
there can be no assurance that any broker or  distributor  will be able to place
the  product(s)

                                       15
<PAGE>

with  retailers,  or that they will  continue  working  with the Company and our
products. If brokers or distributors are unable to place the Company's products,
or cease  working with the Company and its  products,  it may not be possible to
find a suitable replacement for any broker or distributor.  In addition, we must
dedicate significant capital and other resources to marketing our products. Even
with such efforts, there can be no assurance that we will be successful.

THE MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS IS UNCERTAIN.

         Our success  depends  upon the  acceptance  by retail  consumers of our
products.  Although we believe that our products are efficacious,  and that they
will meet with consumer acceptance,  we have no assurance of that. While GelStat
Migraine  has been  successfully  test  marketed,  this does no assure that wide
scale marketing will be successful. GelStat Sleep has not been test marketed. In
sum, there is only limited data by which to gauge possible consumer  acceptance.
Most of the products that compete with the Company's  products have  substantial
brand  recognition,  and have  already  achieved  a certain  amount of  consumer
acceptance.  Those consumers who presently use a competitor's product to treat a
condition  designed to be treated by our  products  will have to be convinced to
switch  products,  which is often  difficult.  We  believe  that the  successful
completion of clinical trials  demonstrating the efficacy of our products or, in
the case of GelStat Migraine,  additional clinical trials, will be essential for
the successful  marketing of these  products,  especially in light of entrenched
competition.  There  can be no  assurance  that  any  clinical  trials  will  be
completed  beyond the first trial of GelStat  Migraine which has been completed,
or that such  additional  clinical  trials will  demonstrate  the same degree of
efficacy  as the  first  trial,  or any  efficacy  at all.  Insufficient  market
acceptance of our products would have a material adverse effect on our business,
financial condition and results of operations.

CONSUMER USE OF THE COMPANY'S  PRODUCTS  CREATES  POTENTIAL  LIABILITIES FOR THE
COMPANY.

         The  consumer  health  products  industry  is  subject  to  substantial
litigation,  and the  Company  faces an  inherent  business  risk of exposure to
product liability claims in the event that the use of its products is alleged to
have resulted in adverse  effects.  Any such claims would likely have an adverse
effect on the Company. The Company currently has product liability insurance for
claims against it up to $2 million  dollars and, in some cases, up to $5 million
dollars. However, there can be no assurance that such coverage would protect the
Company in every instance,  or that a claim might not  substantially  exceed the
limit of coverage beyond the Company's  ability to pay. While the present policy
is now in  effect,  there  can be no  assurance  that  such  insurance  will  be
available to the Company in the future on commercially  reasonable  terms, or at
all.

NEW PRODUCT DEVELOPMENT IS AN IMPORTANT PART OF OUR BUSINESS PLAN.

         The  Company  proposes as an  important  part of its  business  plan to
complete  development  of  additional  products  related  to  problem  sleep and
migraine.  No  assurance  can be given  that the  Company  will  ever be able to
successfully design, develop, and market any such additional new products.

THE  MARKET  IS  SUBJECT  TO  RAPID  TECHNOLOGICAL   CHANGE  AND  RAPID  PRODUCT
OBSOLESCENCE.

         The   consumer   healthcare   products   market  is  subject  to  rapid
technological  advances and the  continuing  introduction  of new products  that
could render the products of the Company  obsolete or  non-competitive.  Most of
the companies that compete with the Company are better positioned than we are to
adapt to or promote  rapid change.  These other  companies  have greater  market
exposure, personnel, and financial resources than we do.

                                       16
<PAGE>

OUR  PATENT  POSITIONS  AND  INTENDED  PROPRIETARY  OR SIMILAR  PROTECTIONS  ARE
UNCERTAIN.

         Although we have filed patent  applications,  we cannot assure you that
our  pending  applications  will be issued as patents or that any of our patents
will afford adequate  protection to us. We intend to rely  significantly  on the
protections afforded by patent and trademark  registrations with the U.S. Patent
and  Trademark  Office  (USPTO) and similar  agencies in foreign  countries.  We
cannot be certain that any patent or trademark  application that we file will be
approved by the USPTO or other foreign agencies.  We also rely on trade secrets,
unpatented proprietary technologies and continuing technological  innovations in
the development and commercialization of our products. We cannot assure you that
others will not independently develop the same or similar technologies or obtain
access to our proprietary technologies.

YOUR  PERCENTAGE OF OWNERSHIP AND VOTING POWER AND THE PRICE OF OUR COMMON STOCK
MAY DECREASE AS A RESULT OF EVENTS THAT  INCREASE THE NUMBER OF OUR  OUTSTANDING
SHARES.

         We may conduct future offerings of our Common Stock or other securities
with rights to covert the securities  into shares of our common stock.  Exercise
of outstanding  options and warrants into our Common Stock may significantly and
negatively affect the market price for our Common Stock as well as decrease your
percentage ownership and voting power.

THE MARKET PRICE OF THE COMMON STOCK IS EXPECTED TO BE VOLATILE.

         The market prices for our  securities and for securities of development
stage companies have  historically  been highly volatile.  Future  announcements
concerning us or our  competitors  may have a  significant  impact on the market
price of our common stock. Some of the factors which may affect the market price
of the shares include  progress of our  relationships  with strategic  partners,
results of clinical studies, technological innovations by us or our competitors,
sales or the  possibility  of sales of our  common  stock,  and our  results  of
operations  and  financial  condition.  General  economic  conditions or general
market  fluctuations  may also  adversely  affect the market price of our Common
Stock.

WE ARE  EFFECTIVELY  CONTROLLED  BY  PRESENT  MANAGEMENT,  WHICH MAY LIMIT  YOUR
ABILITY TO INFLUENCE SHAREHOLDER MATTERS OR TO RECEIVE A PREMIUM FOR YOUR SHARES
THROUGH A CHANGE IN CONTROL.

         Our  executive  officers  and  directors  currently   beneficially  own
2,843,060 shares of Common Stock, or 41.83% of the outstanding  shares of Common
Stock  prior to the  issuance  of any  additional  shares for cash as  presently
contemplated.  As a result,  they effectively control the Company and direct its
affairs, will continue to do so for the foreseeable future, and have significant
influence  in the election of directors  and approval of  significant  corporate
transactions.  The  interests of these  shareholders  may conflict with those of
other  shareholders.  This  concentration of ownership may also delay,  defer or
prevent a change in control of our  company  and some  transactions  may be more
difficult or impossible without the support of these shareholders.

NO CASH DIVIDENDS.

         No cash  dividends  have  been  paid on our  Common  Stock and none are
anticipated.  It is anticipated that any future profits received from operations
will be retained for the Company's  operations.  Any investors who  anticipate a
need for immediate income from their investment should,  therefore, not purchase
any of the Company's Common Stock shares.

WE MAY BE IMPACTED BY GENERAL ECONOMIC CONDITIONS.

                                       17
<PAGE>

         The consumer  healthcare  products  market is  susceptible  to negative
trends in the national  and/or regional  economies.  The success of our business
depends,  in part,  on a number of factors  related to spending  patterns in the
overall economy.  The U.S. economy has suffered  significantly over the last two
years,  and some recent  economic  reports  indicate that consumers are spending
less.  While the consumer  healthcare  products  market  tends to be  relatively
resistant  to such  forces,  these  trends  may  nonetheless  substantially  and
adversely  affect the consumer  healthcare  products  industry and could have an
adverse impact on our ability to grow or achieve profitability.

ITEM 2.  DESCRIPTION OF PROPERTY

         GelStat maintains an executive office in Bloomington,  Minnesota, and a
branch office in Schofield,  Wisconsin pursuant to a shared-use arrangement with
Mitchell Health Technologies, Inc. (MHT). MHT is owned and controlled by Russell
W.  Mitchell,  president  and a  director  of the  Company,  and James  Higgins,
executive  vice  president  of the  Company.  Collectively,  the Company  leases
approximately  2500  square  feet of office  space,  which  includes  some areas
suitable to short-term  storage of production  materials and finished goods. The
Company does not presently  lease any warehouse  space,  but ships directly from
the manufacturer  (Cardinal Health) to various distribution centers. The Company
believes that the leased property is adequate for operations for the foreseeable
future.

ITEM 3.  LEGAL PROCEEDINGS

         There  are no legal  proceedings  pending  or  threatened  against  the
Company as of December  31, 2003 or as of the date of filing this Report on Form
10-KSB.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of the  shareholders  during the
fourth quarter ended December 31, 2003.

                                       18
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The  Company's  $0.01 par value common  stock (the  "Common  Stock") is
quoted on the OTC Bulletin  Board under the symbol  "GSAC." The following  table
sets  forth  the low and the high  closing  sales  prices  for each  quarter  as
reported on the OTC Bulletin  Board during the years ended December 31, 2003 and
2002. These quotations reflect inter-dealer prices, without retail mark up, mark
down or commissions, and may not represent actual transactions.

                                             Closing Price*
                                             --------------

CALENDAR 2003                    Low                               High
-------------                    ---                               ----
First Quarter                   $0.40                              $0.88
Second Quarter                  $0.62                              $1.50
Third Quarter                   $1.05                              $1.60
Fourth Quarter                  $1.15                              $2.30

                                             Closing Price

CALENDAR 2002                    Low                               High
-------------                    ---                               ----
First Quarter                   $0.25                              $0.65
Second Quarter                  $0.55                              $0.15
Third Quarter                   $0.15                              $0.33
Fourth Quarter                  $0.33                              $0.65

*    All prices  reflect a 2:1 forward  stock split  effected by means of a 100%
     dividend and effective October 21, 2003.

         As of March 25, 2004, the Company had 105 shareholders of record of its
Common Stock.  The Company  estimates  there are  approximately  450  beneficial
owners of its Common Stock. The transfer agent for the Company's Common Stock is
Wells Fargo Shareowner  Services,  161 North Concord  Exchange,  South St. Paul,
Minnesota 55075-0738, telephone: (800) 468-9716 or (651) 450-4058.

NO CASH DIVIDENDS DECLARED

         The  Company has never  declared or paid a cash  dividend on its Common
Stock and does not anticipate paying any dividends in the foreseeable future.

RECENT ISSUANCES AND SALES OF SECURITIES

         During the fiscal year ended  December  31,  2003,  the Company  issued
shares of its common stock to the persons and groups indicated  below.  With the
exception  of those  shares  indicated  as having  been  issued  pursuant to the
Company's 1992 Stock Option Plan, its 1997 Outside  Director's Stock Option Plan
or its 2003 Incentive  Plan,  all shares are  restricted  shares and were issued
without registration under the Securities Act of 1933 (the "Securities Act").

         During April, 2003, Peter L. Hauser, a then affiliated party, exercised
20,000 stock options for cash at $0.35 per share1.

         On April 30,  2003,  in  connection  with the  merger of GS and DTR the
Company issued  2,158,710  shares to the shareholders of DTR for the fair market
value of the assets and liabilities.

                                       19
<PAGE>

         During June,  2003,  Roger  Schnobrich,  a formerly  affiliated  party,
exercised 20,000 stock options for cash at $0.35 per share1.

         During August,  2003,  Roger  Schnobrich,  a formerly  affiliated party
exercised 10,000 stock options for cash at $0.75 per share1.

         During  September,  2003, two formerly  affiliated  parties exercised a
total of 20,000 stock options1 and 20,000  warrants for cash at $0.35 per share:
John Hupp for 20,000 shares, and; LeAnn Hitchcock for 20,000 shares.

         During November,  2003, 348,000 shares were issued to four unaffiliated
parties in exchange  for services to be rendered:  Insight  Capital  Consultants
Corp.  received 200,000 shares;  Shradco,  Inc. received 100,000 shares;  Thomas
Krosschell  received 40,000 shares,  of which 20,000 were issued pursuant to the
Company's 2003 Incentive Plan2, and; Wall Street Resources,  Inc. received 8,000
shares, for a total value of $465,800.

         From November 14, 2003 through  December 31, 2003,  550,000 shares were
issued  for cash at $1.00 per share  through a private  placement  offering  for
$550,000  in gross  proceeds,  less  expenses  of $24,000  for net  proceeds  of
$526,000.  Marquette Securities,  Inc. acted as placement agent for $100,000 and
received a selling  commission  of  $10,000.  The Oak Ridge  Financial  Services
Group,  Inc.  acted as  placement  agent for  $450,000  and  received  a selling
commission of $14,000/3/.

         During  December,  2003,  44,100 shares were issued in lieu of cash for
services rendered:  IR Plus, Inc. received 12,000 shares; Kim Martinson received
20,000  shares2;  Bruce Braverman  received 6,050 shares2,  and; David Essertier
received 6,050 shares2, for a total value of $79,310.

         All of the above  securities  were  issued to persons  who were  either
"accredited   investors,"  or  "sophisticated   investors"  who,  by  reason  of
education,  business acumen,  experience or other factors, were fully capable of
evaluating  the risks and merits of an investment  in the Company;  and each had
prior access to all material  information about the Company.  The offer and sale
of these  securities  was made in reliance upon an exemption  from  registration
provided by Section  4(2) and Section  4(6) of the  Securities  Act of 1933,  as
amended,  Rule 506 of  Regulation D hereunder  and under  various  similar state
exemptions.

         All  unregistered  issuances of securities in fiscal 2002 and 2001 have
been previously reported.

1  All  options  exercised  in  2003  were  pursuant to and from  shares held in
reserve for either to the Company's 1997 Outside Director's Stock Option Plan or
to its 1992 Stock  Option Plan.  As of December 31, 2003,  both the 1997 Outside
Director's Stock Option Plan and the 1992 Stock Option Plan had been terminated,
and all  options  issued  thereunder  had  been  either  exercised,  expired  or
cancelled. No options remain outstanding under those plans.

2  Issued  pursuant to  the Company's  2003  Incentive  Plan,  from shares held
in reserve for that plan.

3  Marquette Securities, Inc. was paid a commission of 10% of the gross proceeds
and a five year stock  purchase  warrant  for the  purchase of a total of 15,000
shares at $1.00 per share, and The Oak Ridge Financial  Services Group, Inc. was
paid $14,000 and a five year stock purchase  warrant for the purchase of a total
of 82,500 shares at $0.01 per share.

                                       20
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION

Please refer to the financial  statements  and related notes thereto which are a
part of this report for further information  regarding the results of operations
of the Company.

OVERVIEW

The Company is engaged in research,  development  and marketing of OTC and other
non-prescription  consumer  healthcare  products.  The Company believes that its
current and planned products could potentially offer improved  efficacy,  safety
and/or convenience relative to existing products.

GelStat  intends  to  market  and  distribute  its  products  primarily  through
mainstream chain drug store,  food store, and mass  merchandise  retailers,  and
first  introduced  its  initial  product,  GelStat  Migraine,  at  the  National
Association of Chain drug Stores (NACDS)  "Marketplace  2003" convention in late
June,  2003. That exposure  created initial interest among a number of retailers
and led to the scheduling of follow-on meetings, many with national retailers.

In December, 2003, the Company commenced its first shipments of GelStat Migraine
to certain select  retailers in three test markets.  Test markets  selected were
the Washington/Baltimore area, the Minneapolis area and the Raleigh/Durham area.
No revenue was recognized in relation to these initial product placements due to
their use as promotional and test marketing venues.

Early in the first  quarter of 2004 the Company  announced  preliminary  results
from its  first  clinical  study  in  which  GelStat  Migraine  was  shown to be
effective in relieving acute migraine and preventing migraine progression in 83%
of patients treating early in the course of an attack.

The Company has since received its first  purchase order from a national  chain.
Presentation  of these trial results appears to have  significantly  accelerated
retailer acceptance, and the Company believes that a number of retailers will be
placing initial orders for GelStat Migraine over the coming months.

Given the nature of the  retailing  industry,  and the terms under which GelStat
anticipates  initially placing its product with retailers,  the Company does not
anticipate recognizing  substantial revenues prior to the third quarter of 2004.
Many retailers,  especially  large,  national chains,  require as a provision of
stocking  the product  that they retain the right to return  product that is not
sold within a certain period of time (usually six to twelve  months.) Also, some
of these  retailers may not be required to pay the Company until the time that a
consumer actually purchases the product from them.

The  Company  is a  development  stage  company  that has been,  on  account  of
continuing losses and because of its pre-revenue  status,  entirely dependent on
outside  capital for its ability to continue as a going  concern.  However,  the
Company  believes  that its selling  and  marketing  activities  in 2004 will be
sufficient to result in its emerging from the development stage.

PLAN OF OPERATION

         The Company had no revenues from operations for fiscal 2003 or 2002.

         Prior to the  acquisition  of GC on April 30, 2003,  the Company had no
operating business,  and GC had only slightly more than six months of operations
from June 25, 2002 (inception) to the close of the 2002 fiscal year.

                                       21
<PAGE>

         The  Company  anticipates  generating  its first  substantial  revenues
beginning in fiscal 2004.

         The  Company   currently   employs  9  people  and  expects  to  expand
significantly  in 2004.  GelStat will actively  seek,  among others,  additional
accounting  personnel and administrative  staff. The Company does not expect any
material  purchase or sale of plant and  equipment  in 2004,  but does expect to
expend  substantial  capital on marketing  (including  national  advertising and
regional  advertising based on then current  distribution of GelStat  Migraine),
research and development (consisting primarily of additional clinical trials for
GelStat  Migraine)  and  additional  product  development  (which is expected to
consist of both  preparations  for the  retail  marketing  of GelStat  Sleep and
additional  development  of GelStat  Migraine.)  The Company's  principal  fixed
committment consists of a long term lease on its corporate offices.

         In January 2004, the Company issued 100,000 shares of common stock with
gross proceeds of $125,000 and expenses of $12,500 in connection  with a private
placement  offering.  In February  2004,  the Company  issued  424,000 shares of
common  stock with gross  proceeds  of  $1,060,000  and  expenses  of $51,000 in
connection with a private placement offering.

         As of March 25, 2004, the Company had cash of $955,936.  While planning
to raise additional capital,  the Company believes that, in the event additional
capital  is  unavailable,  cash on hand plus  results of  operations  could fund
operations  for the next 12  months.  However,  there can be no  assurance  that
additional  capital will be available on terms  acceptable  to the Company or on
any  terms  whatsoever.   In  addition,   the  Company  may  evaluate  potential
acquisitions  and  alliances,  which may require equity or cash  resources.  The
Company's ability to continue the present operations and successfully  implement
its development  plans is contingent  upon its ability to increase  revenues and
ultimately attain and sustain profitable operations.

         Year to year  comparisons  are of only limited  value owing to the fact
that the Company is a new,  development stage company,  had no revenue in either
of its is two most recent fiscal years, and had operations during only a portion
of 2002 (its  inception  being June 25,  2002.)  However,  the  following  is an
overview of non-operating income and expenses during the last fiscal year.

         General and  administrative  expenses for the years ended  December 31,
2003 and 2002 were  $1,322,346  and $132,117,  respectively.  GC had general and
administrative  expenses of $132,117 from June 25, 2002  (inception) to December
31, 2002. The increase is attributable to the fact that GC had only very limited
operations throughout 2002, including having only 3 employees at that time.

         Cash was  $417,839 at December 31,  2003,  representing  an increase of
$284,825  from the cash  position  of GC as of  December  31,  2002,  which  was
$133,014.

         The Company  anticipates that it will continue to experience  growth in
its income  and  expenses  for the  foreseeable  future  and that its  operating
expenses will be a material use of cash resources. The Company believes that the
existing  sources of liquidity  and the results of its  operations  will provide
cash to fund  operations  for at least the next 12 months.  The Company plans to
raise additional  capital but can make no assurance that additional capital will
be available on terms acceptable to the Company or on any terms whatsoever.

         The Company  incurred  $155,014 and $21,090 in research and development
expense  for the year ended  December  31, 2003 and for the period from June 25,
2002  (inception)  until  December 31, 2002  respectively.  The Company plans to
substantially  increase  expenditures  on  research  and  development  in  2004,
primarily in the performance of additional clinical trials.

            The  Company  recorded  net  interest  income of $4,251 for the year
ended December 31, 2003.  Interest and investment income is not expected to make
a material contribution to revenue for the foreseeable future.

                                       22
<PAGE>

CRITICAL ACCOUNTING POLICIES

            IMPAIRMENT OF LONG-LIVED ASSETS

            The Company's  long-lived  assets  include  property,  equipment and
leasehold  improvement.  At December 31, 2003,  the Company had net property and
equipment of $206,950, which represents approximately 17% of the Company's total
assets.  The estimated  fair value of these assets is dependent on the Company's
future performance.  In assessing for potential impairment for these assets, the
Company  considers  future  performance.  If these  forecasts  are not met,  the
Company may have to record an impairment charge not previously recognized, which
may be  material.  During the year ended  December  31, 2003 and the period from
June 25, 2002  (inception)  to December 31, 2002, the Company did not record any
impairment losses related to long-lived assets.

            INVENTORIES

            For the year ending  December 31, 2004 and forward we expect to have
inventory.  We will value our  inventory  at the lower of the actual cost or the
current  estimated  market value of the inventory.  We plan to regularly  review
inventory  quantities  on hand and record a  provision  for excess and  obsolete
inventory if considered necessary. Changes in the medical field and introduction
of new products could result in an increase in the amount of obsolete  inventory
quantities.

            REVENUE RECOGNITION

            Revenues will be recognized at the time of shipment to  unaffiliated
customers.  The Securities and Exchange  Commission's Staff Accounting  Bulletin
(SAB) No. 104,  "Revenue  Recognition"  provides  guidance on the application of
accounting  principles  generally  accepted  in the United  States of America to
selected revenue  recognition issues. The Company will evaluate that its revenue
recognition  policy is appropriate and in accordance with accounting  principles
generally accepted in the United States of America and SAB No. 104.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

         The Company  leases office space in  Bloomington,  Minnesota  requiring
base monthly rent of $2,738 through August,  2005. Future minimum lease payments
in  connection  with  that  lease  are  $30,117  and  $24,641  for 2004 and 2005
respectively.

                                       23
<PAGE>

ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS - GELSTAT CORPORATION

                         REPORT OF INDEPENDENT AUDITORS

Stockholders, Audit Committee and Board of Directors
GelStat Corporation and Subsidiary (formerly known as Developed Technology
Resource, Inc.)
Bloomington, Minnesota

We  have  audited  the  accompanying  consolidated  balance  sheets  of  GelStat
Corporation  and Subsidiary (a development  stage  company)  (formerly  known as
Developed  Technology  Resource,  Inc.) as of December 31, 2003 and 2002 and the
related  consolidated  statements of operations,  stockholders' equity (deficit)
and cash flows for the year ended  December 31,  2003,  for the period from June
25, 2002  (inception) to December 31, 2002 and for the period from June 25, 2002
(inception) to December 31, 2003. These  consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting  principles used and significant estimates made by management as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of GelStat Corporation
and  Subsidiary  as of  December  31,  2003 and 2002  and the  results  of their
operations  and cash flows for the year ended  December 31, 2003, for the period
from June 25, 2002 (inception) to December 31, 2002 and for the period from June
25,  2002  (inception)  to  December  31,  2003 in  conformity  with  accounting
principles generally accepted in the United States of America.


/s/ Virchow, Krause & Company, LLP

Minneapolis, Minnesota
March 18, 2004

                                       24
<PAGE>

<TABLE>
<CAPTION>
                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002
--------------------------------------------------------------------------------
                                     ASSETS

                                                                                           2003              2002
                                                                                 ---------------  ---------------
CURRENT ASSETS

<S>                                                                              <C>              <C>
    Cash and cash equivalents                                                    $      417,839   $       133,014
    Prepaid consulting                                                                  433,513                 -
    Prepaid expenses                                                                     71,012             5,001
    Other current assets                                                                 10,248                 -
                                                                                 ---------------  ---------------
        Total Current Assets                                                            932,612           138,015
                                                                                 ---------------  ---------------

PROPERTY AND EQUIPMENT, NET                                                             206,950             1,276
                                                                                 ---------------  ---------------

OTHER ASSETS

    Patents                                                                              59,118            11,654
    Note receivable                                                                      25,000                 -
    Lease deposits                                                                        5,692               500
                                                                                 ---------------  ---------------
        Total Other Assets                                                               89,810            12,154
                                                                                 ---------------  ---------------

           TOTAL ASSETS                                                          $    1,229,372   $       151,445
                                                                                 ===============  ===============


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

    Note payable                                                                 $            -   $       300,000
    Accounts payable                                                                    132,778             3,692
    Accrued expenses                                                                    118,572               960
                                                                                 ---------------  ---------------
        Total Current Liabilities                                                       251,350           304,652

LONG-TERM LIABILITIES

    Deferred gain                                                                        25,000                 -
    Accrued marketing fees                                                               20,222                 -
                                                                                 ---------------  ---------------

        Total Liabilities                                                               296,572           304,652
                                                                                 ---------------  ---------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)

    Undesignated 10,000,000 shares
    Common stock, $.01 par value per share
        50,000,000 shares authorized
         6,133,870 and 2,943,060 shares issued and outstanding                           61,339            29,431
    Additional paid-in capital (Discount on common stock)                             2,501,152          (26,056)
    Subscriptions receivable                                                             (3,375)          (3,375)
    Deficit accumulated during the development stage                                 (1,626,316)        (153,207)
                                                                                 ---------------  ---------------
           Total Stockholders' Equity (Deficit)                                         932,800         (153,207)
                                                                                 ---------------  ---------------

               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)              $    1,229,372   $       151,445
                                                                                 ===============  ===============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

<TABLE>
<CAPTION>
                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

                                                                                   June 25, 2002        June 25, 2002
                                                               Year Ended         (inception) to       (inception) to
                                                             December 31,           December 31,        December 31,
                                                                     2003                   2002            2003
                                                         ----------------       ----------------      ----------------

<S>                                                      <C>                    <C>                   <C>
REVENUES                                                 $             -        $             -       $             -
                                                         ----------------       ----------------      ----------------

OPERATING EXPENSES

    Selling, general and administrative                         1,322,346                132,117             1,454,463
    Research and development                                      155,014                 21,090               176,104
                                                         ----------------       ----------------      ----------------
        Total Operating Expenses                                1,477,360                153,207             1,630,567
                                                         ----------------       ----------------      ----------------

           Loss from Operations                               (1,477,360)              (153,207)           (1,630,567)
                                                         ----------------       ----------------      ----------------
                                                                                                                    -

OTHER INCOME (EXPENSE)

    Interest expense                                                 (72)                     -                   (72)
    Interest income                                                 4,323                     -                  4,323
                                                         ----------------       ----------------      ----------------
        Net Other Income                                            4,251                     -                  4,251
                                                         ----------------       ----------------      ----------------

    NET LOSS                                             $    (1,473,109)       $      (153,207)      $    (1,626,316)
                                                         ================       ================      ================

    NET LOSS PER COMMON SHARE: BASIC AND DILUTED         $         (0.33)       $         (0.05)      $         (0.41)
                                                         ================       ================      ================

    WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC AND

      DILUTED                                                   4,519,298              2,943,060             3,981,556
                                                         ================       ================      ================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       26
<PAGE>

                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                Additional
                                                                  Paid-in                       Deficit
                                                                  Capital                     Accumulated      Total
                                          Common Stock         (Discount on       Stock       During the    Stockholders'
                                      --------------------        Common      Subscription    Development     Equity
                                        Shares     Amount          Stock)      Receivable        Stage       (Deficit)
                                      ---------- ---------     ------------  -------------   ------------  -------------

<S>                                   <C>        <C>           <C>           <C>             <C>           <C>
BALANCES, JUNE 25, 2002
    (INCEPTION)                               -  $        -    $             $          -    $         -   $         -

    Common stock issued to
      founders at incorporation,
      $.01 per share through
      stock subscriptions
      receivable                      2,943,060       29,431      (26,056)        (3,375)              -             -

    Net loss                                  -           -             -               -       (153,207)     (153,207)
                                   ------------- -----------   -----------   -------------   ------------- -------------

BALANCES, DECEMBER 31, 2002           2,943,060       29,431      (26,056)        (3,375)       (153,207)     (153,207)

    Exercise of 20,000 stock
      options on April 30, 2003
      for cash at $.35 per share         20,000          200         6,800              -              -         7,000

    Issuance of shares of common
      stock for the exchange of
      the fair market value of
      the assets and liabilities
      of Developed Technology
      Resource, Inc. on April 30,
      2003                            2,158,710       21,587     1,420,919              -              -     1,442,506

    Purchase of five-year
      warrants for 436,010 common
      shares for cash exercisable
      at $.225 per share on
      May 6, 2003                             -            -        10,000              -              -        10,000

    Exercise of 20,000 stock
      options on June 6, 2003 for
      cash at $.35 per share             20,000          200         6,800              -              -         7,000

    Exercise of 10,000 stock
      options on August 11, 2003
      for cash at $.75 per share         10,000          100         7,400              -              -         7,500

    Exercise of 20,000 stock
      options on September 21,
      2003 for cash at $.35 per
      share                              20,000          200         6,800              -              -         7,000

    Exercise of 20,000 warrants
      on September 22, 2003 for
      cash at $.35 per share             20,000          200         6,800              -              -         7,000
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       27
<PAGE>

<TABLE>
<CAPTION>
                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

<S>                                   <C>        <C>           <C>           <C>             <C>           <C>
    Common stock issued on
      November 1, 2003 in lieu of
      cash for services to be
      rendered at $1.40 per share        40,000          400        55,600              -              -         56,000

    Common stock issued on
      November 10, 2003 in lieu
      of cash for services to be
      rendered at $1.15 per share       100,000        1,000       114,000              -              -        115,000

    Common stock issued on
      November 12, 2003 in lieu
      of cash for services to be
      rendered at $1.40 per share       200,000        2,000       278,000              -              -        280,000

    Common stock issued on
      November 13, 2003 in lieu
      of cash for services to be
      rendered at $1.85 per share         8,000           80        14,720              -              -         14,800

    Common stock issued from
      November  14, 2003  through
      December 15, 2003 for cash
      at $1.00 per share through a
      private placement offering,
      less expenses of $24,000          550,000        5,500       520,500              -              -        526,000

    Common stock issued on
      December 30, 2003 in lieu
      of cash for services
      rendered at $1.69 per share        24,100          241        40,469              -              -         40,710

    Common stock issued on
      December 31, 2003 in lieu
      of cash for services
      rendered at $1.93 per share        20,000          200        38,400              -              -         38,600

    Net loss                                  -           -             -               -     (1,473,109)   (1,473,109)
                                   ------------- -----------   -----------   -------------   ------------- -------------

BALANCES, DECEMBER 31, 2003           6,133,870  $    61,339   $ 2,501,152   $    (3,375)    $(1,626,316)  $    932,800
                                   ============= ===========   ===========   =============   ============= =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       28
<PAGE>

<TABLE>
<CAPTION>
                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
                                                                                      June 25, 2002    June 25, 2002
                                                                     Year Ended      (inception) to    (inception) to
                                                                    December 31,      December 31,     December 31,
                                                                        2003              2002             2003
                                                                        ----              ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                               <C>               <C>               <C>
    Net loss                                                      $    (1,473,109)  $      (153,207)  $    (1,626,316)
    Adjustments to reconcile net loss to net cash flows from
      operating activities:
        Depreciation and amortization                                        1,820                30             1,850
        Loss on disposal of property and equipment                           1,805                -              1,805
        Common stock issued for services                                   545,110                -            545,110
        Expense from stock based transaction                                20,222                -             20,222
        Changes in operating assets and liabilities:
           Prepaid consulting                                            (433,513)                -          (433,513)
           Prepaid expenses                                                 11,379           (5,001)             6,378
           Other current assets                                             27,426                -             27,426
           Accounts payable                                                129,086             3,692           132,778
           Accrued expenses                                                 83,593               960            84,553
                                                                  ----------------  ----------------  ----------------
               Net Cash Flows from Operating Activities                (1,086,181)         (153,526)       (1,239,707)
                                                                  ----------------  ----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Cash received from merger with Developed Technology                                                        393,478
      Resource, Inc.                                                       393,478                -
    Proceeds from note receivable acquired in merger                       467,219                -            467,219
    Purchases of property and equipment                                  (208,535)           (1,306)         (209,841)
    Patent acquisition costs                                              (47,464)          (11,654)          (59,118)
    Lease deposits                                                         (5,192)             (500)           (5,692)
                                                                  ----------------  ----------------  ----------------
               Net Cash Flows from Investing Activities                    599,506          (13,460)           586,046
                                                                  ----------------  ----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from note payable                                             200,000           300,000           500,000
    Issuance of common stock, net of expenses                              526,000                -            526,000
    Exercise of stock options                                               28,500                -             28,500
    Exercise of warrants                                                     7,000                -              7,000
    Purchase of warrants                                                    10,000                -             10,000
                                                                  ----------------  ----------------  ----------------
               Net Cash Flows from Financing Activities                    771,500           300,000         1,071,500
                                                                  ----------------  ----------------  ----------------

        NET CHANGE IN CASH                                                 284,825           133,014           417,839

CASH AND CASH EQUIVALENTS - Beginning of Period                            133,014                -                  -
                                                                  ----------------  ----------------  ----------------
    CASH AND CASH EQUIVALENTS - END OF YEAR                       $        417,839  $        133,014  $        417,839
                                                                  ================  ================  ================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       29
<PAGE>

                       GELSTAT CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

--------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

    Nature of Operations

GelStat  Corporation  and  Subsidiary  (formerly  known as Developed  Technology
Resource, Inc.) (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 throughout
the United States. The Company's first product, GelStat Migraine, is intended to
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
in the second  quarter of 2004.  The  Company's  second  anticipated  product is
intended for use as a sleep aid.

    Principles of Consolidation

On May 9, 2003, Developed Technology Resource, Inc. (DTR) filed a Current Report
on Form 8-K with the Securities and Exchange Commission  reporting the merger of
GelStat Corp. with NP Acquisition  Corp. (NP  Acquisition),  then a wholly owned
subsidiary of DTR. As described in the Current Report, for accounting  purposes,
the merger was accounted for as a reverse acquisition, with GelStat Corp. as the
acquirer.  The  historical  financial  statements  of GelStat  Corp.  become the
historical  financial  statements of DTR, and the assets and  liabilities of DTR
are accounted for as required under the purchase  method of accounting.  Results
of  operations of DTR are included in the  financial  statements  from April 30,
2003, the effective date of the merger.  On October 6, 2003, the Company's Board
of Directors approved a stock dividend in the amount of one share for each share
held of record.  All share data is presented  to give effect to the  retroactive
application  of the stock dividend as if it occurred on June 25, 2002. All share
data has been  restated  to give effect of the merger  under which each  GelStat
Corp. share was converted into .4360083 shares of DTR (Note 3).

Effective July 14, 2003, DTR changed its name to GelStat Corporation.

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned  subsidiary.  Significant intercompany accounts and
transactions have been eliminated in consolidation.

    Cash and Cash Equivalents

The Company includes as cash equivalents,  investments with original  maturities
of three months or less when purchased, which are readily convertible into known
amounts of cash. The Company deposits its cash in high credit quality  financial
institutions. The balances, at times, may exceed federally insured limits.

                                       30
<PAGE>

    Intangible Assets

Patent  costs will be  amortized  over  their  estimated  useful  life using the
straight-line method upon the patent issuance date. As of December 31, 2003, the
Company has applied for several patents and none have been issued.

    Advertising

Advertising costs are charged to operations when incurred.  Advertising  expense
was $238,984,  $1,275 and $240,259 for the year ended December 31, 2003, for the
period from June 25, 2002  (inception)  to December 31, 2002 and the period from
June 25, 2002 (inception) to December 31, 2003, respectively.

    Research and Development Costs

The Company expenses research and development costs as incurred.

    Prepaid consulting

Prepaid  consulting  includes cash and/or common stock issued to consultants for
services to be rendered related to research and development,  equity  financing,
marketing and investor relations.  These costs are being expensed over the terms
of the contracts,  which expire through November 2004,  using the  straight-line
method.

    Depreciation

Property and equipment are recorded at cost.  Depreciation is provided for using
the straight-line method over estimated useful lives ranging from three to seven
years.  Leasehold  improvements are amortized over the shorter of the lease term
or the  estimated  useful  life.  Maintenance,  repairs and minor  renewals  are
expensed when incurred.

    Impairment of Long-Lived Assets

The Company reviews  long-lived assets,  including  property and equipment,  for
impairment  whenever events or changes in business  circumstances  indicate that
the carrying amount of an asset may not be fully recoverable. An impairment loss
would be  recognized  when the  estimated  future cash flows from the use of the
asset are less than the carrying amount of that asset. To date,  there have been
no such losses.

    Income Taxes

The Company utilizes the liability method of accounting for income taxes.  Under
this method, deferred tax assets and liabilities are recognized for the expected
future tax  consequences  attributable  to  temporary  differences  between  the
financial  statement and income tax reporting  bases of assets and  liabilities.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amounts expected to be realized.

    Stock-Based Compensation

In accordance with Accounting  Principles Board (APB) Opinion No. 25 and related
interpretations, the Company uses the intrinsic value-based method for measuring
stock-based compensation cost which measures compensation cost as the excess, if
any, of the quoted market price of the Company's  common stock at the grant date
over the  amount the  employee  must pay for the stock.  The  Company's  general
policy is to grant stock options at fair value at the date of grant. Options and
warrants  issued to  nonemployees  are  recorded at fair  value,  as required by
Statement of Financial Accounting Standards

                                       31
<PAGE>

(SFAS) No. 123 "Accounting for Stock-Based  Compensation," (SFAS No. 123), using
the Black Scholes  pricing model.  The Company has adopted the  disclosure  only
provision of SFAS No. 148, "Accounting for Stock-Based Compensation."

Had compensation cost been recognized based on the fair values of options at the
grant dates  consistent  with the  provisions of SFAS No. 123, the Company's net
loss and basic and diluted  loss per common  share would have  increased  to the
following pro forma amounts:

<TABLE>
<CAPTION>
                                                                   June 25, 2002      June 25, 2002
                                                                   (inception) to     (inception) to
                                                   December 31,    December 31,       December 31,
                                                           2003          2002         2003
                                               ----------------    ----------------   ----
<S>                                            <C>                 <C>                <C>
Net Loss                                       $    (1,473,109)    $      (153,207)   $    (1,626,316)
Pro forma net loss                             $    (1,550,609)    $      (153,207)   $    (1,703,816)

Basic and diluted net loss per share:

   As reported                                 $         (0.33)    $         (0.05)   $         (0.41)
   Pro forma net loss                          $         (0.34)    $         (0.05)   $         (0.43)

Stock-based compensation:

   As reported                                 $              0    $              0   $              0
   Pro forma                                   $         77,500    $              0   $         77,500
</TABLE>

The estimated  fair value of each option grant is estimated on the date of grant
using  the Black  Scholes  pricing  model  with the  following  weighted-average
assumptions  used for options  granted  during the year ended December 31, 2003:
dividend yield of 0%,  expected  volatility of 90%,  risk-free  interest rate of
2.85% and expected lives of five years.

    Net Loss per Common Share

Basic net loss per common  share is  computed  by  dividing  the net loss by the
weighted average number of common shares  outstanding for the reporting  period.
Diluted net loss per common share is computed by dividing net loss by the sum of
the weighted  average  number of common shares  outstanding  plus all additional
common stock that would have been  outstanding  if potentially  dilutive  common
shares  related to stock  options and warrants had been issued.  All options and
warrants  outstanding  during the year ended  December 31, 2003, the period from
June 25, 2002 (inception) to December 31, 2002 and the period from June 25, 2002
(inception) to December 31, 2003 were anti-dilutive.

    Recently Issued Accounting Pronouncements

In June 2002, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
146,  "Accounting for Costs Associated with Exit or Disposal  Activities."  SFAS
No. 146 requires the  recognition of a liability for a cost  associated  with an
exit or disposal  activity  when the  liability is incurred  versus the date the
Company commits to an exit plan. In addition,  SFAS No. 146 states the liability
should be initially measured at fair value. The requirements of SFAS No. 146 are
effective for exit or disposal  activities that are initiated after December 31,
2002.  The  adoption  of SFAS No.  146 did not  have a  material  effect  on the
Company's consolidated financial statements.

In  October  2002,  the FASB  issued  SFAS No.  147,  "Acquisitions  of  Certain
Financial Institutions." SFAS No. 147 is effective October 1, 2002. The adoption
of SFAS No. 147 did not have a  material  effect on the  Company's  consolidated
financial statements.

                                       32
<PAGE>

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation - Transition and Disclosure."  SFAS No. 148 is an amendment to SFAS
No. 123 providing  alternative  methods of transition for a voluntary  change to
the fair value based method of accounting for stock-based employee  compensation
and also provides required additional disclosures about the method of accounting
for  stock-based  employee  compensation.   The  amendments  are  effective  for
financial statements for fiscal years ending after December 15, 2002 and for the
interim  periods  beginning  after  December 15, 2002.  The Company  adopted the
annual  disclosure  provisions of SFAS No. 148. The Company has currently chosen
not to adopt the  voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation,  pursuant to SFAS No. 148,  which,  if
adopted,  could have a material effect on the Company's  consolidated  financial
statements.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging Activities," effective for contracts entered
into or modified after June 30, 2003.  This amendment  clarifies when a contract
meets the characteristics of a derivative,  clarifies when a derivative contains
a financing  component and amends  certain other  existing  pronouncements.  The
adoption  of SFAS  No.  149 did not  have a  material  effect  on the  Company's
consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
lnstruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
is  effective  for  financial  instruments  entered  into or modified  after May
31,2003, and otherwise is effective at the beginning of the first interim period
beginning  after June 15, 2003.  SFAS No. 150 requires the  classification  as a
liability of any financial  instruments with a mandatory  redemption feature, an
obligation to repurchase equity shares, or a conditional obligation based on the
issuance of a variable  number of its equity  shares.  The Company does not have
any financial  instruments  as defined by SFAS No. 150. The adoption of SFAS No.
150 did not have a  material  effect  on the  Company's  consolidated  financial
statements.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of   Indebtedness   of  Others"  (FIN  45).  FIN  45  clarifies  the
requirements  for  a  guarantor's  accounting  for  and  disclosure  of  certain
guarantees  issued  and  outstanding.   The  initial   recognition  and  initial
measurement provisions of FIN 45 are applicable to guarantees issued or modified
after December 31, 2002. The disclosure requirements of FIN 45 are effective for
financial statements for periods ending after December 15, 2002. The adoption of
FIN 45 did not have a  material  effect  the  Company's  consolidated  financial
statements.

In December 2003, the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation  No. 46  (Revised  December  2003),  "Consolidation  of  Variable
Interest  Entities,  an  Interpretation  of ARB No. 51" (FIN 46R). This standard
replaces FIN 46, Consolidation of Variable Interest Entities" that was issued in
January 2003.  FIN 46R modifies or clarifies  various  provisions of FIN 46. FIN
46R addresses the  consolidation  of business  enterprises of variable  interest
entities  (VIEs),  as defined by FIN 46R. FIN 46R exempts certain  entities from
its requirements and provides for special effective dates for entities that have
fully or  partially  applied  FIN 46 prior to  issuance  of FIN 46R.  Otherwise,
application  of FIN 46R is required in financial  statements of public  entities
that have  interest  in  structures  commonly  referred  to as  special  purpose
entities for periods ending after December 15, 2003.  Application by the Company
for all other  types of VIEs is  required in  financial  statements  for periods
ending no later than the quarter  ended  January 31, 2005.  The Company does not
expect  the  adoption  of FIN 46R to have a  material  effect  on the  Company's
consolidated financial statements.

                                       33
<PAGE>

    Financial Instruments

The carrying amounts for all financial instruments  approximates fair value. The
carrying  amounts for cash and cash  equivalents,  accounts  payable and accrued
expenses  approximate  fair  value  because  of  the  short  maturity  of  these
instruments.

    Management's Estimates

The preparation of 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  and disclosure of contingent  assets and liabilities at the date of
the consolidated  financial  statements and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

--------------------------------------------------------------------------------
NOTE 2 - DEVELOPMENT STAGE COMPANY
--------------------------------------------------------------------------------

The Company is a development  stage company that has not yet generated  revenues
and has incurred net losses since inception totaling approximately $1,626,000.

To fund its  operations to date during the  development  stage,  the Company has
issued common stock for cash (Note 8). The accompanying  consolidated  financial
statements  have been  prepared  assuming the Company  will  continue as a going
concern  that  contemplates  the  realization  of  assets  and  satisfaction  of
liabilities in the normal course of business.  The Company's ability to continue
as a going concern is dependent on it  ultimately  generating  revenues  through
sales of its product, achieving profitability and/or raising additional capital.
Management  intends to obtain  additional  debt or equity capital to meet all of
its  existing  cash  obligations  and to fund  expenses to bring its products to
market, however, there can be no assurance that the sources will be available or
available on terms  favorable to the Company.  During January and February 2004,
the  Company  issued  524,000  shares of common  stock  for  gross  proceeds  of
$1,185,000 (Note 12).

Management  believes  the Company will  commence  active  selling and  marketing
operations  during the year  ending  December  31, 2004 and will emerge from the
development stage.

--------------------------------------------------------------------------------
NOTE 3 - MERGER
--------------------------------------------------------------------------------

Effective  April 30, 2003, DTR completed its merger pursuant to an Agreement and
Plan of Merger  dated  April 18,  2003 by and among DTR,  GelStat  Corp.  and NP
Acquisition,  a wholly owned  subsidiary of DTR. In the Merger,  NP  Acquisition
merged with GelStat  Corp.  with GelStat  Corp being the  surviving  company and
becoming a wholly-owned subsidiary of DTR.

In the Merger, the former  stockholders of GelStat Corp.  received shares of DTR
common  stock.  In  addition,  in the Merger,  warrants  and options to purchase
shares of GelStat Corp. common stock were converted into warrants and options to
purchase  shares of DTR common stock.  Each share of GelStat Corp.  common stock
was converted into .4360083 shares of DTR common stock.  Each warrant and option
to purchase one share of GelStat Corp. common stock was converted into a warrant
or option to purchase .4360083 shares of DTR common stock.

Immediately  after the Merger,  the former  GelStat Corp.  stockholders,  option
holders and warrant holders together owned a total of  approximately  60% of DTR
common stock on a fully-diluted basis, (assuming

                                       34
<PAGE>

the exercise of all options and warrants to purchase DTR common stock),  and the
pre-merger DTR  stockholders  owned a total of  approximately  40% of DTR common
stock on a  fully-diluted  basis.  The merger involved the issuance of 2,158,710
shares of DTR common stock valued at  $1,442,506  and no cash  consideration  or
other  consideration  was  issued  or used in the  merger.  In  addition  to the
ownership of the common stock,  GelStat Corp. board members controlled the board
of  directors  post  merger  and the  management  of  GelStat  Corp.  became the
controlling management team of the Company.

The Merger was accounted  for as a reverse  acquisition  by GelStat  Corp,  and,
accordingly,  was  deemed to be  equivalent,  for  accounting  purposes,  to the
issuance of GelStat Corp. capital stock in exchange for the fair market value of
the assets and  liabilities  of DTR.  Since DTR had only  monetary  assets,  the
assets  and  liabilities  of  DTR  were  recorded  at  historical   cost,  which
approximated fair value and no goodwill was recorded.

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.  From June 25, 2002
(inception)  until  the  acquisition,   GS  Corp.  had  no  operating   business
activities.

The fair value of the assets acquired,  liabilities  assumed, and purchase price
were as follows:

Cash                                           $        393,478
Other current assets                                    115,064
Notes receivable                                        967,219
Property and equipment                                      764
Other assets                                             25,000
                                               ----------------
     Total assets acquired                            1,501,525
                                               ----------------
Current liabilities                                      34,019
Deferred gain                                            25,000
                                               ----------------
     Total liabilities assumed                           59,019
                                               ----------------
         Total                                 $      1,442,506
                                               ================

--------------------------------------------------------------------------------
NOTE 4 - PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------

Property and equipment consisted of the following at December 31:

                                                          2003              2002
                                                ---------------  --------------

      Furniture and equipment                   $       10,240   $        1,115
      Production equipment                             167,000              191
      Computer equipment and software                   36,665                -
      Leasehold improvements                             1,640                -
                                                ---------------  --------------
         Total                                         215,545            1,306
      Less: accumulated depreciation
         and amortization                               (8,595)             (30)
                                                ---------------  --------------
         Total property and equipment, net      $      206,950   $        1,276
                                                ===============  ==============

Depreciation  expense and  amortization of computer  software for the year ended
December 31, 2003, for the period from June 25, 2002 (inception) to December 31,
2002 and for the period from June 25, 2002  (inception) to December 31, 2003 was
$1,820, $30, and $1,850, respectively.

                                       35
<PAGE>

--------------------------------------------------------------------------------
NOTE 5 - NOTE RECEIVABLE
--------------------------------------------------------------------------------

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,  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 cash.

In accordance  with an Option  Agreement  that was signed in November  2002, DTR
loaned  $300,000  to GelStat  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 GelStat Corp. and NP Acquisition on April
30, 2003, these loans have been eliminated in consolidation.

--------------------------------------------------------------------------------
NOTE 6 - ACCRUED EXPENSES
--------------------------------------------------------------------------------

Accrued expenses consisted of the following at December 31:

                                                       2003             2002
                                             --------------   --------------

      Accrued payroll and payroll taxes      $       13,108   $          960
      Accrued rent                                   10,461                -
      Deferred rent                                   8,670                -
      Accrued professional fees                      21,333                -
      Accrued consulting fees                        25,000                -
      Due to officers                                40,000                -
                                             ---------------  --------------
         Total accrued expenses              $      118,572   $          960
                                             ===============  ==============

--------------------------------------------------------------------------------
NOTE 7 - INCOME TAXES
--------------------------------------------------------------------------------

The  Company  has  generated   federal  and  state  net   operating   losses  of
approximately  $3,060,000 and $3,016,000,  respectively which, if not used, will
begin to expire in 2008.  Future  changes  in the  ownership  of the  Company or
change of business may place  limitations on the use of these net operating loss
carryforwards.

The Company has  recorded a full  valuation  allowance  against its deferred tax
asset due to the  uncertainty of realizing the related  benefits.  The change in
the valuation allowance was approximately $1,730,000, $55,000 and $1,785,000 for
the year ended December 31, 2003, for the period from June 25, 2002

                                       36
<PAGE>

(inception)  to December 31, 2002 and the period from June 25, 2002  (inception)
to December 31, 2003, respectively.

Components of net deferred income taxes are as follows at December 31:

                                                      2003            2002
                                          -----------------    -----------------
Deferred income tax assets:
     Net operating loss carryforwards     $      1,236,000     $              -
     Capitalized start-up costs                    556,000                55,000
                                          -----------------    -----------------
                                                 1,792,000                55,000
Less valuation allowance                       (1,785,000)              (55,000)
                                          -----------------    -----------------
                                                     7,000                    -
Deferred income tax liabilities
     - depreciation                                (7,000)                    -
                                          -----------------    ----------------
Net deferred income tax assets            $              -     $              -
                                          =================    ================

Reconciliation between the federal statutory rate and the effective tax rate for
the year ended December 31, 2003, for the period from June 25, 2002  (inception)
to  December  31,  2002 and for the period  from June 25,  2002  (inception)  to
December 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                                                          Period from       Period from
                                                                         June 25, 2002     June 25, 2002
                                                                        (inception) to    (inception)  to
                                                      December 31,        December 31,      December 31,
                                                          2003               2002              2003
                                                    ----------------  ----------------- -----------------
<S>                                                          <C>                <C>               <C>
       Federal statutory tax rate                            (34.0)%            (34.0)%           (34.0)%
       State taxes, net of federal benefit                     (4.5)              (4.5)             (4.5)
       Change in valuation allowance                           125.6               38.5             116.6
       Net operating losses acquired in merger                (87.1)                0.0            (78.1)
                                                    ----------------  ----------------- -----------------
          Effective tax rate                                    0.0%               0.0%              0.0%
                                                    ================  ================= =================
</TABLE>

--------------------------------------------------------------------------------
NOTE 8 - STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------------------------------------------

On June 25, 2002,  the Company  issued  2,943,060  shares of common stock to its
founders in exchange for stock subscriptions  receivables  totaling $3,375 (Note
12).

During the year ended  December 31, 2003,  the Company  issued 550,000 shares of
common  stock  with  gross  proceeds  of  $550,000  and  expenses  of $24,000 in
connection  with a private  placement  offering.  The Company also issued 97,500
five-year  warrants at exercise  prices ranging from $.01 to $1.00 as commission
in connection with the private placement offering.

During the year ended  December 31, 2003,  the Company  issued 392,100 shares of
common stock at prices  ranging from $1.15 to $1.85 for services  rendered or to
be rendered  valued at $545,110 based on the fair market value of services to be
provided  or  the  stock  price  at the  date  of  issuance  whichever  is  more
determinable.

                                       37
<PAGE>

     Stock Option Plan

The  Company had a stock  option plan (1997 Plan) in which the Company  reserved
100,000 shares of common stock for issuance to outside directors as compensation
for their  services as board members.  During 2003,  the Company  terminated the
1997 Plan.

During 2003, the Company adopted the 2003 Incentive Plan (the Plan), pursuant to
which stock options to acquire an aggregate of 2,400,000 shares of the Company's
common stock may be granted to employees, directors and consultants. In general,
options  vest over a period of up to three  years and expire five years from the
date of grant.

Information regarding the Company's stock options is summarized below:

<TABLE>
<CAPTION>
                                                                                                     Weighted-
                                                                                                      Average
                                                                                    Number of         Exercise
                                                                                     Options           Price
                                                                                 ---------------- ----------------
<S>                                                                                     <C>                   <C>
            Options outstanding - June 25, 2002                                                 -  $             -
                Granted                                                                         -                -
                Canceled or expired                                                             -                -
                Exercised                                                                       -                -
                                                                                 ---------------- ----------------
            Options outstanding - December 31, 2002                                             -                -
                Granted                                                                   667,500             1.38
                Granted in Merger of DTR                                                   70,000             0.41
                Canceled or expired                                                     (240,000)             1.38
                Exercised                                                                (70,000)             0.41
                                                                                 ---------------- ----------------
            Options outstanding - December 31, 2003                                       427,500 $           1.38
                                                                                 ================ ================
            Options exercisable - December 31, 2003                                         7,500 $           1.80
                                                                                 ================ ================
            Weighted average fair value of options granted during the year
            ended December 31, 2003                                                               $           0.98
                                                                                                  ================
            Weighted average fair value of options granted during the year
            ended December 31, 2002                                                               $              -
                                                                                                  ================
</TABLE>

Options outstanding at December 31, 2003 have exercise prices ranging from $1.38
to $1.80 and a weighted average remaining contractual life of 4.53 years.

                                       38
<PAGE>

         Stock Warrants

The Company has also issued warrants in connection with equity offerings and for
cash received (Note 10) which are summarized below:

<TABLE>
<CAPTION>
                                                                                Weighted-
                                                                                 Average
                                                               Number of         Exercise
                                                                Warrants          Price
                                                            ---------------- ----------------
<S>                                                                 <C>                  <C>
            Warrants  outstanding - June 25, 2002                          - $              -
                Granted                                                    -                -
                Exercised                                                  -                -
                Forfeited                                                  -                -
                                                            ---------------- ----------------
            Warrants outstanding - December 31, 2002                       -                -
                Granted                                              533,510             0.19
                Granted in Merger of DTR                              20,000             0.35
                Exercised                                           (20,000)             0.35
                Forfeited                                                  -                -
                                                            ---------------- ----------------
            Warrants outstanding - December 31, 2003                 533,510 $           0.19
                                                            ================ ================
</TABLE>

The  weighted-average  grant-date fair value of warrants granted during the year
ended  December  31,  2003 and the  period  from June 25,  2002  (inception)  to
December 31, 2002 was $0. No warrants  were issued for services  during the year
ended December 31, 2003.

Warrants outstanding at December 31, 2003 are as follows:

                                                                Remaining
                 Range of                                    contractual life -
              exercise prices             Warrants                years
        --------------------------  --------------------- ---------------------
                   $.01                            82,500                  5.00
                   $.225                          436,010                  4.04
                   $1.00                           15,000                  5.00
        --------------------------  --------------------- ---------------------
               $.01 - $1.00                       533,510                  4.21
        ==========================  ===================== =====================

--------------------------------------------------------------------------------
NOTE 9 - COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------

    Operating Leases

The Company leases office space in Bloomington, Minnesota requiring base monthly
rent of $2,738 including real estate taxes and operating expenses through August
2005.  The  Company  leases  the  Schofield,  Wisconsin  facility  and a storage
facility on a month-to-month basis. Rent expense was $15,219, $1,795 and $17,014
for the year  ended  December  31,  2003,  for the  period  from  June 25,  2002
(inception)  to  December  31,  2002  and for the  period  from  June  25,  2002
(inception) to December 31, 2003, respectively.

                                       39
<PAGE>

Future minimum lease payments are as follows for the years ending December 31:

             2004                                              $       30,117
             2005                                                      24,641
                                                               --------------
                Total                                          $       54,758
                                                               ==============

    Employment Contracts

The Company has an employment agreement with one of its employees, which expires
in July 2006. The agreement requires minimum annual  compensation of $72,000 and
severance  during the first twelve  months of the agreement in the amount of 50%
of the current base pay through the remaining entirety of one year or 90 days of
severance thereafter if terminated without good cause.

The Company has an employment agreement with another employee,  which expires in
July 2006. The agreement  requires  minimum annual  compensation  of $72,000 and
severance  during the first twelve  months of the agreement in the amount of 50%
of the current base pay through the remaining entirety of one year if terminated
without good cause.

--------------------------------------------------------------------------------
NOTE 10 - RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

The Company entered into a contract with Mitchell Health  Technologies  (MHT) in
which the Company paid MHT for the use of office space, personnel, equipment and
other  facilities  at the  principal  offices  of MHT in  Schofield,  Wisconsin,
provided that the usage fee shall not exceed the Company's  proportionate  share
of the actual cost paid by MHT. In association with this agreement,  the offices
in Schofield,  Wisconsin have been designated as a branch office of the Company.
During  the year  ended  December  31,  2003,  the  period  from  June 25,  2002
(inception)  to December 31, 2002 and the period from June 25, 2002  (inception)
to December 31, 2003, the Company paid $600,  $12,367 and $12,967,  respectively
to MHT in  accordance  with the  contract.  Two  officers  and  directors of the
Company are  shareholders  or employees  of MHT.  This  contract was  terminated
during 2003.

The Company  entered into an agreement  with MHT in September  2002 in which MHT
was to provide  consulting  services,  in exchange for a  performance  bonus not
exceeding  $75,000,  based on certain  milestones to be achieved by MHT prior to
December 31, 2003. On May 9, 2003, the Company's Board of Directors  amended the
agreement to allow for performance bonus payments of up to $125,000.  During the
year ended  December  31,  2003,  the period from June 25, 2002  (inception)  to
December 31, 2002 and the period from June 25, 2002  (inception) to December 31,
2003,  the Company paid  $60,000,  $25,000 and $85,000,  respectively  to MHT in
accordance  with this  agreement.  At  December  2003 and 2002,  the Company had
accrued expenses due to MHT of $25,000 and $0,  respectively.  The final payment
in accordance with the agreement was made on March 9, 2004 and the agreement was
terminated.

During the year ended  December 31,  2003,  the Company  purchased  supplies and
research in process from Medicine Tree,  Inc.,  which is owned by an officer and
director of the Company,  in exchange for a $10,000 demand note.  Medicine Tree,
Inc. demanded payment on the note in March 2003 and was paid accordingly.

In May 2003, a shareholder of the Company purchased  436,010 five-year  warrants
exercisable at $.225 per share for total consideration of $10,000 (Note 8).

                                       40
<PAGE>

At December 31, 2002,  accrued  expenses payable to an officer of the Company of
$3,000 were included in accounts payable.

During the year ended  December  31,  2003,  the Company was involved in a legal
proceeding which was subsequently  released by all parties involved.  Due to the
release,  the Company agreed to pay certain  officers of the Company  $40,000 as
compensation  for lost  settlement  awards.  This  amount is included in accrued
expenses at December 31, 2003 (Note 6).

--------------------------------------------------------------------------------
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 June 25, 2002      June 25, 2002
                                                                                 (inception) to     (inception) to
                                                              December 31,       December 31,       December 31,
                                                                  2003               2002               2003
                                                                  -----              -----              ----
Supplemental cash flow disclosures:

<S>                                                        <C>                 <C>                <C>
    Cash paid for interest                                 $             72    $             -    $               72

    Cash paid for income taxes                             $          2,587    $             -    $            2,587

Noncash investing and financing activities
    Issuance of common stock in exchange for assets and
      liabilities in connection with merger
      Other current assets                                 $        115,064    $             -    $          115,064
      Notes receivable                                              967,219                  -               967,219
      Property and equipment                                            764                  -                   764
      Other assets                                                   25,000                  -                25,000
      Current liabilities                                            34,019                  -                34,019
      Deferred gain                                                  25,000                  -                25,000
</TABLE>

--------------------------------------------------------------------------------
NOTE 12 - SUBSEQUENT EVENTS
--------------------------------------------------------------------------------

In January 2004,  the Company  issued  100,000 shares of common stock with gross
proceeds  of  $125,000  and  expenses  of $12,500 in  connection  with a private
placement offering.  The Company issued 15,000 five-year warrants at an exercise
price of $1.25 as commission for financing.

In February  2004,  the Company issued 424,000 shares of common stock with gross
proceeds of  $1,060,000  and  expenses of $51,000 in  connection  with a private
placement offering.  The Company issued 30,600 five-year warrants at an exercise
price of $2.50 as commission for financing.

In March 2004, the Company received payments in full for the stock subscriptions
receivable (Note 8).

Effective March 17, 2004, GS Corp. merged with and into GelStat Corporation.

                                       41
<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         On June 27,  2002,  KPMG LLP,  the  principal  independent  accountants
previously  engaged by the Company to conduct an audit of its  accounts for more
than the past two years,  resigned as the Company' auditors.  The resignation of
KPMG LLP was not sought, recommended or approved by the Audit Committee or Board
of Directors of the Company.

         In  connection  with the audits of the two fiscal years ended  December
31, 2001,  and the  subsequent  interim  period through June 27, 2002, (i) there
were no  disagreements  with KPMG LLP on any matter of accounting  principles or
practices,  financial  statement  disclosure,  or auditing  scope or procedures,
which disagreements if not resolved to their satisfaction would have caused them
to make reference with their opinion to the subject matter of the  disagreement,
and (ii) there were no reportable  events,  as defined in Item  304(a)(1)(v)  of
Regulation S-B of the U.S. Securities and Exchange Commission.

         The audit reports of KPMG LLP on the consolidated  financial statements
of the Company as of and for the years ended December 31, 2001 and 2000, did not
contain  any  adverse or  disclaimer  of  opinion,  nor were they  qualified  or
modified as to  uncertainty,  audit scope or  accounting  principles,  except as
follows:

         KPMG LLP's independent  auditors' report on the consolidated  financial
statements  for the  Company as of and for the year  ended  December  31,  2000,
contained a separate  paragraph  stating that "the  Company has a  shareholders'
deficit and has suffered recurring losses from operations that raise substantial
doubt  about its  ability  to  continue  as a going  concern.  The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty."  Management's plans in regard to these matters are
described  in  Note 2 to the  Company's  financial  statements  included  in the
Company's annual report on form 10-KSB for the year ended December 31, 2000.

         On August 12, 2002, the Company engaged Gallogly,  Fernandez and Riley,
LLP  ("GFR"),  with  offices  in  Orlando,   Florida,  to  audit  the  Company's
consolidated financial statements for 2002. At no time prior to August 12, 2002,
has DTR consulted with GFR regarding the application of accounting principles to
a specific or contemplated transaction, regarding the type of audit opinion that
might be rendered on the  registrant's  financial  statements,  or regarding any
other matter.

         On January 6, 2004,  GelStat dismissed GFR as its independent  auditor.
The  dismissal  of GFR  was  recommended  and  adopted  by the  Company's  Audit
Committee  and  approved by its Board of  Directors.  GFR audited the  Company's
financial statements for the fiscal year ended December 31, 2002.

         GFR's report on the Company's financial  statements for the fiscal year
ended  December 31, 2002 did not contain any adverse  opinion or  disclaimer  of
opinion and was not  qualified  as to  uncertainty,  audit  scope or  accounting
principles.  During the fiscal years ended  December 31,  2003 and 2002, and the
subsequent interim period ending January 6, 2004 (i) there were no disagreements
between the Company and GFR on any matter of accounting principles or practices,
financial  statement  disclosure or auditing  scope or procedure  which,  if not
resolved to the satisfaction of GFR, would have caused them to make reference to
the subject matter of the disagreement in connection with their reports and (ii)
there were no "reportable events," as defined in Item 304(a)(1)(v) of Regulation
S-K of the Securities and Exchange Commission (SEC). The decision to replace GFR
was not the  result  of any  disagreement  between  us and GFR on any  matter of
accounting  principle  or  practice,  financial  statement  disclosure  or audit
procedure.

         Concurrently,  on January 6, 2004, the Audit  Committee of the Board of
Directors and the Board of Directors approved the appointment of Virchow, Krause
& Company,  LLP ("Virchow  Krause") as the Company's new independent  accountant
and  auditor.  Virchow  Krause has audited the  Company's  financial  statements
included in this Report on Form  10-KSB for the fiscal year ended  December  31,
2003  and the  Company  intends  to have  Virchow  Krause  continue  to serve as
independent  accounting and audit firm  thereafter.  The Company did not consult
with Virchow Krause on any matters related to accounting principles or practice,
financial  statement  disclosures or audit procedures during its two most recent
fiscal years and the subsequent interim periods through January 6, 2004 prior to
selecting and appointing Virchow Krause as auditor.

                                       42
<PAGE>

ITEM 8A.  CONTROLS AND PROCEDURES

         An  evaluation  made at the end of the period was  performed  under the
supervision  and  with  the  participation  of the  Company's  president,  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 insure that the Company  records,  processes,  summarizes and
reports  in a  timely  and  effective  manner  the  information  required  to be
disclosed  in reports  filed with or submitted  to the  Securities  and Exchange
Commission.  Based on that evaluation,  the Company's management,  including the
CEO and CFO,  concluded  that the Company's  disclosure  controls and procedures
were  effective  in timely  bringing  to their  attention  material  information
related  to the  Company  required  to be  included  in the  Company's  periodic
Securities and Exchange Commission  filings.  Since the date of this evaluation,
there have been no significant  changes in the Company's internal controls or in
other factors that could significantly affect those controls.

         However,  due to the limited number of Company employees engaged in the
authorization,  recording,  processing and reporting of  transactions,  there is
inherently a lack of segregation of duties.  The Company  periodically  assesses
the cost versus  benefit of adding the  resources  that would remedy or mitigate
this  situation,  and  currently  does not consider the benefits to outweigh the
costs of adding  additional staff in light of the limited number of transactions
related to the Company's operations.

                                       43
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

         For  information  concerning our directors,  officers,  and significant
employees,  see the section entitled  "Executive  Officers of the Registrant" in
Part I, Item 1 of this Report.

MEETINGS OF THE BOARD AND COMMITTEES

         The Board of  Directors  held three  formal  meetings  during  2003 and
adopted certain resolutions by written minutes of action. All directors attended
all of the meetings.

         The Board of Directors has two standing committees;  an audit committee
and a compensation  committee.  The audit committee is responsible for reviewing
the services rendered by the Company's  independent  auditors and the accounting
standards and principles  followed by the Company.  The audit committee held one
meeting during 2003, which was attended by all committee  members.  During 2003,
Peter L Hauser was the sole member of the audit  committee until his resignation
form the Board on December 30, 2003. Mr. Hauser was  "independent" as defined in
the rules of the Nasdaq Stock Market. Following his resignation, Stephen Roberts
and  Russell  Mitchell  (neither  of  whom  was  "independent")  served  on  the
committee.  None of the persons on the committee in 2003  qualified as an "audit
committee  financial  expert"  as defined  in Rule  10A-3  under the  Securities
Exchange Act of 1934.  To date,  the Company has been unable to attract  persons
with such qualifications to serve on its Board.

         The compensation committee is responsible for making recommendations to
the Board of Directors  regarding the salaries and compensation of the Company's
executive  officers.  The compensation  committee held one meeting during fiscal
2003 and all committee members attended.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT

         Section 16(a) of the Exchange Act requires the  Company's  officers and
directors,  and persons who own more than 10 percent of the registered  class of
the Company's equity  securities to file reports of ownership on Forms 3, 4, and
5 with the SEC. Officers, directors and greater than 10 percent shareholders are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4,
and 5 they file.

         Based upon the Company's review of the copies of such forms and reports
it has received from certain persons that they were not required to file Forms 5
for the year ended  December  31,  2003,  the Company  believes  that all of its
executive  officers,  directors  and  greater  than 10%  beneficial  owners have
complied  with all  filing  requirements  applicable  to them  with  respect  to
transactions during 2003.

CODE OF ETHICS

         The Company has adopted a code of ethics  applicable  to its  principal
executive officer,  principal financial officer,  principal  accounting officer,
and persons performing  similar functions.  The code is filed as Exhibit 14.0 to
this Report on Form 10-KSB.  A copy of the Code will be provided  without charge
to any person upon request in writing to Stephen C. Roberts, CEO, at the address
of the Company in Bloomington, Minnesota.

                                       44
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth the cash and non-cash  compensation  for
years ended  December 31, 2003,  2002 and 2001 awarded to or earned by the Named
Executive Officers (as defined in Item 402 of Regulation S-B of the SEC):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                           Long-Term Compensation
                                  Annual Compensation                        Awards           Payouts
----------------------------------------------------------------------------------------------------------------------
                                                                                  Securities
                                                                      Restricted  Underlying
Name and Principal                                    Other Annual      Stock      Options/       LTIP     All Other
Position             Year     Salary       Bonus      Compensation      Awards       SARs       Payouts  Compensation
-------------------- ------ ------------ ----------- --------------- ------------ ----------- ---------- -------------
<S>                   <C>     <C>            <C>           <C>            <C>         <C>         <C>         <C>
Stephen Roberts, CEO  2003    $102,893        0             0              0           0           0           0
                      2002     $24,000        0             0              0           0           0           0
                      2001       N/A         N/A           N/A            N/A         N/A         N/A         N/A
</TABLE>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                            Individual Grants                               Potential realizable value   Alternative
                                                                            at assumed annual rates of    to (f) and
                                                                             stock price appreciation     (g): grant
                                                                                 for option term          date value
---------------------------------------------------------------------------------------------------------------------
                                Percent of
                   Number of       total
                  securities    options/SARs
                  underlying     granted to
                   Options/      employees    Exercise or                                               Grant date
                 SARs granted    in fiscal     base price    Expiration                                   present
     Name            (#)           year         ($/Sh)          date         5% ($)         10% ($)       value $

      (a)             (b)           (c)            (d)           (e)            (f)            (g)           (f)
---------------- -------------- ------------- -------------- ------------- -------------- -------------- ------------
<S>                    <C>           <C>           <C>           <C>            <C>            <C>           <C>
Stephen
Roberts, CEO           0             0             N/A           N/A            N/A            N/A           N/A
</TABLE>


  AGGREGATED OPTION EXERCISES IN FISCAL 2003 AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                                   Number of            Value of
                                                                                  securities          unexercised
                                                                                  underlying          in-the-money
                                                                                  unexercised       options/ SARs at
                                                                               options/ SARs at        fiscal year
                                                                              fiscal year end (#)        end ($)
                                                                              -------------------- -------------------
                                     Shares Acquired on                          Exercisable/         Exercisable/
    Name and Principal Position           Exercise          Value Realized       unexercisable       unexercisable
------------------------------------ -------------------- ------------------- -------------------- -------------------
<S>                                           <C>                 <C>                 <C>                <C>
Stephen Roberts, CEO                          0                   0                   0/0                $0/$0
</TABLE>


COMPENSATION AGREEMENTS OF OFFICERS

The  Company  has an  employment  agreement  with  one of  its  employees  which
commenced in July 2003 and expires in July, 2006. The agreement requires minimum
annual  compensation of $72,000 and severance pay during the first twelve months
of the  agreement  in the  amount of 50% of the  current  base pay  through  the
remaining  entirety  of one  year  or  severance  pay of 90 days  thereafter  if
terminated without good cause.

                                       45
<PAGE>

The Company has an  employment  agreement  with another of its  employees  which
commenced in July 2003 and expires in July 2006. The agreement  requires minimum
annual  compensation of $72,000 and severance pay during the first twelve months
of the  agreement  in the  amount of 50% of the  current  base pay  through  the
remaining entirety of one year if terminated without good cause.

The  Company  does not  have  long-term  employment  agreements  with its  Chief
Executive  Officer,  President  or  Executive  Vice  President.  The  employment
agreements for these individuals  require that each be paid a minimum of $72,000
per year, subject to periodic adjustment by the Board, and provide that each may
resign  at  will  or  be  terminated  at  will,  without  severance  or  further
consideration.  The  Company  anticipates  entering  into more  substantial  and
long-term employment agreements with these individuals in 2004.

COMPENSATION OF DIRECTORS

The  Company  at  present  has no  outside  directors,  and does not  separately
compensate  inside directors for services related to their  participation on the
board. The Company  anticipates  adding three new, outside directors in 2004 and
will adopt a compensation plan for these individuals.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table  contains  information  as  of  March  25,  2004,
concerning  the  beneficial  ownership of the Company's  Common Stock by persons
known to the Company to  beneficially  own more than 5% of the Common Stock,  by
each  director,  by each  executive  officer  named in the Summary  Compensation
Table,  and by all current and nominated  directors and executive  officers as a
group.  Shares reported as beneficially  owned include those for which the named
persons may exercise voting power or investment  power,  and all shares owned by
persons  having  sole  voting  and  investment  power  over such  shares  unless
otherwise  noted.  The number of shares reported as  beneficially  owned by each
person as of March 25, 2004,  includes the number of shares that such person has
the right to acquire  within 60 days of that date,  such as through the exercise
of stock options or warrants that are exercisable within that period.

<TABLE>
<CAPTION>
                                               Amount and Nature of Beneficial
Name and Address of Beneficial Owner                      Ownership                  Percentage Ownership
------------------------------------          --------------------------------       --------------------
<S>                                           <C>                                    <C>
Stephen C. Roberts                            944,786 common shares and              20.32%
                                              436,010 warrants
Russell W. Mitchell                           1,456,814 common shares                21.44%
James W. Higgins                              441,460 common shares                  6.50%
All directors and executive
  officers as a group                         3,279,070 common shares                48.25%
                                              including options and warrants
</TABLE>

                                       46
<PAGE>

EQUITY COMPENSATION PLANS

         The following  table describes the Company's  compensation  plans under
which the Company's  common stock are authorized for issuance as of December 31,
2003:

<TABLE>
<CAPTION>
                   EQUITY COMPENSATION PLAN INFORMATION TABLE

                                                   (a)                         (b)                      (c)
                                         Number of securities to       Weighted-average
                                         be issued upon exercise      exercise price of        Number of securities
                                         of outstanding options,     outstanding options,    remaining available for
Plan Category                              warrants and rights       warrants and rights         future issuance
--------------------------------------- -------------------------- ------------------------- -------------------------

<S>                                            <C>                          <C>                     <C>
Equity compensation plans approved by          427,500 (1)                  $1.382                  1,920,400
security holders

Equity compensation plans not                  535,510 (2)                  $0.19                        0
approved by security holders
</TABLE>

(1) Employee  incentive  stock options issued under the Company's 2003 Incentive
Plan. Options outstanding at December 31, 2003 have exercise prices ranging from
$1.38 to $1.80,  vest over a period of up to three years,  and expire five years
from the date of grant,  with a weighted average  remaining  contractual life of
4.53 years.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  CERTAIN TRANSACTIONS

         On February 1, 2000, Erlan Sagadiev,  a former employee,  exercised his
right under an option to purchase  125,000 shares of the Company's Common Stock.
He paid the Company $70,000 and gave the Company a non-recourse  promissory note
bearing  interest  at 4.87% per  annum  for the  balance  owed of  $82,500.  The
principal and interest were due in five equal  installments  beginning  February
2001 and each year thereafter.  This note was secured by 90,000 of the exercised
shares. In February 2003, the remaining principal balance of $52,457 was paid in
full.

         On February 2, 2001, the Company's former president exercised his right
to purchase  247,500 shares of the Company's Common Stock and gave the Company a
non-recourse  promissory  note for $310,750.  This note bearing  interest at the
rate of 5% per  annum  was  due in  four  equal  annual  installments  beginning
December 31,  2003,  and was secured by all the shares  exercised.  On April 30,
2003, the Company redeemed  142,700 of these shares at $1.50 per share,  thereby
reducing the note balance to $96,700. The former president then paid the balance
of the note, plus the outstanding $20,863 of accrued interest, for the remaining
104,800 shares.

         In April 2001, two members of the Board of Directors  exercised options
to  purchase  a total of 30,000  shares of Common  Stock by giving  the  Company
$41,875 in cash. In April 2003, Peter L. Hauser, a director, exercised an option
to purchase 10,000 shares of Common Stock by paying the Company $7,000 in cash.

         On November  17, 2001,  the Board of  Directors  agreed to borrow money
from the Company's chief  financial  officer to have funds available for working
capital.  The funds  received would be unsecured and would bear interest at 12%.
Additionally,  the Board also agreed to issue 10,000 stock options at the market
price of $.90 per share. By December 31, 2001, the Company  borrowed $4,067 from
the chief financial officer. In January 2002, the Company borrowed an additional
$2,750.  In April  2002,  the  Company  repaid  approximately  $7,000  including
principal and interest on all amounts received.

                                       47
<PAGE>

          The Company has an agreement with Mitchell Health  Technologies,  Inc.
("MHT"),  a corporation owned and controlled by Russell W. Mitchell and James W.
Higgins (executive officers and, as to Mr. Mitchell,  a director of the Company)
for sublease of office space and services, and for marketing and promotions. The
Company pays its  proportionate  share of lease and  administrative  costs under
MHT's office lease  agreement.  The Company does not pay for MHT's marketing and
promotions services unless certain benchmarks are attained. Maximum compensation
to MHT under the  agreement  for  marketing  and  promotions  is  $125,000.  The
agreement was terminated on March 9, 2004.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(b)  Documents  required to be filed by Item 601 of Regulation  S-B are included
     as exhibits to this report as follows:

NO.     EXHIBIT DESCRIPTION
---     --------------------

3.3.    Bylaws of the Company (1)

3.6     Amended and Restated Articles of Incorporation (2)

9.0     Voting Agreement (3)

10.50   Option Agreement among the Company, NP Acquisition Corp., GelStat Corp.,
        and Stephen Roberts, James Higgins and Russell Mitchell dated November
        26, 2002 (4)

10.51   Agreement and Plan of Merger of GelStat Corp. and NP Acquisition, Inc.
        (3)

14.0    Code of Ethics (5)

21.0    List of Subsidiaries (5)

23      Consent of Virchow, Krause & Company, LLP

31.1    Rule 13a-14(a)/15d-14(a) Certification (5)

32.1    Section 1350 Certification (5)

--------------------

(1)  Incorporated  by  reference  to the same  exhibit  number  included  in the
     Company's  registration  statement on Form SB-2, as Amended, filed with the
     Commission as file number 33-58626C in 1993.
(2)  Incorporated  by reference to the same exhibit number  included in Form 8-K
     filed August 1, 2003.
(3)  Incorporated  by reference to the same exhibit number  included in Form 8-K
     filed April 30, 2003.
(4)  Incorporated  by reference to the same exhibit number  included in Form 8-K
     filed November 29, 2002.
(5)  Filed herewith.

     (b)  Reports on Form 8K.

                                       48
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The  following  table  details  the  fees  paid to Gary  Lundeen,  CPA;
Gallogly,  Fernandez,  & Riley, LLP; LeAnn Hitchcock,  CPA, James  Vandergriend,
CPA; Kevin F. Smith,  Tax Services;  during the year ended December 31, 2003 and
the period ended June 25, 2002 (inception) to December 31, 2002.

                                                     2003                2002
                                                 ----------         ------------
                  Audit Fees                     $23,713            $0
                  Audit-Related Fees
                  Tax Fees                       $1,470             $0
                  All Other Fees
                                                 ----------         ------------
                  Total                          $25,183            $0
                                                 ==========         ============

     (1)  Fees  related  to :  Financial  Statement  review,  SAS 100  overview,
          10-QSB,   review,   financial  statement  audit,  financial  statement
          preparation, officer background checks corporate tax preparation

         On  January  6,  2004,  the Audit  Committee  of the  Company  selected
Virchow,  Krause & Company,  LLP,  certified public  accountants with offices in
Minneapolis, Minnesota, to audit the Company's financial statements for the year
ended  December  31,  2003 and the period  ended June 25,  2002  (inception)  to
December  31,  2002.  No fees were  incurred to Virchow,  Krause & Company,  LLP
during the year ended  December  31,  2003 and the  period  ended June 25,  2002
(inception) to December 31, 2002.

         The policy of the Company's audit committee is to review and preapprove
both audit and  non-audit  services to be provided by the  independent  auditors
(other than with de minimis  exceptions  permitted by the  Sarbanes-Oxley Act of
2002). This duty may be delegated to one or more designated members of the audit
committee with any such approval reported to the committee at its next regularly
scheduled  meeting.  Approval  of  non-audit  services  shall  be  disclosed  to
investors  in  periodic  reports  required  by section  13(a) of the  Securities
Exchange  Act of  1934.  Approximately  100% of the  fees  paid  to  independent
auditors were pre-approved by the audit committee.

         No  Services  in  connection  with  appraisal  or  valuation  services,
fairness  opinions  or   contribution-in-kind   reports  were  rendered  by  the
independent auditors.

                                       49
<PAGE>

                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                   GELSTAT CORPORATION


Date:  March 30, 2004     By /s/ Stephen C. Roberts
                             --------------------------------------------------
                                 Name:   Stephen C. Roberts
                                 Title:  Chief Executive Officer

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant in the  capacities and on
the dates indicated.

Date:  March 30, 2004     By /s/ Stephen C. Roberts
                             --------------------------------------------------
                                 Name:   Stephen C. Roberts

                                 Title:  Director, Chief Executive Officer and
                                         Chief Financial Officer (Principal
                                         Executive, Financial, and
                                         Accounting Officer)

Date:  March 30, 2004     By /s/ Russell W. Mitchell
                             -----------------------------------------
                                 Name:  Russell W. Mitchell
                                 Title:  President and Director

                                       50
<PAGE>