posted September 22, 2004 01:34            

http://www.fool.com/ddow/2000/ddow000321.htm

Wellstone currently has 300,000,000 shares authorized. That means the company is authorized by shareholders to issue that many shares, but it has not. The shares outstanding are about 79,064,095.

So, what does all this mean when there is a proposed 3-for-1 forward split? Take the 79,064,095 shares outstanding and multiply by 3. This will yield 237,192,285 shares outstanding, which is below the authorized limit of 300,000,000 shares. Every shareholder, restricted or float, will receive 3 shares for every 1 share they have. Oh, the pre-split share price will be adjusted to 1/3rd of its value, so it if was at 1.50/share pre-split, it'll be 0.50/share, post-split, but you'll have 3 times the number of shares.

Net result? More liquidity. See, WLSF is very very very closely held by management. They own some 80% of the shares outstanding. This means that a hostile takeover is pretty much impossible. If you really want to read a document of substance, check out this filing, it should answer a lot of your questions:

http://app.quotemedia.com/quotetools/showFiling.go?name=WELLSTONE FILTERS INC /DE/: 10KSB/A, Sub-Doc 1&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frepo%3Dtenk%26ipage%3D2832684%26doc%3D1

Believe it or not, I read the entire thing. Have to know what you are investing in. ;-)

Big tobacco can't takeover Wellstone because the company is tightly held. Big tobacco could propose an offer to Wellstone management for the company (a buyout), if Wellstone management is open to it. I don't think they would be at this point in time. Reasons?

1) The company is in its infancy. It may be worth a significant amount if allowed to bloom. Any present offers would likely undervalue the future value of the company.

2) Management might want to see how far they can grow this company, and how much of an impact their product may make in the tobacco industry in the future.

Their filter does not dissuade addiction. They are pretty clear about this. Why? Their filtering technology allows nicotine to pass through (which is a good thing to smokers, because they smoke for the pleasurable effects caused by nicotine).

Another note, a forward 5-for-1 split was proposed earlier this year at the same time the shares authorized was changed from 80 million to 300 million. The 5-for-1 split was dropped from the filing (although the initial erroneous filing can still be referenced). They corrected this in a subsequent filing, thereby eliminating the proposed 5-for-1 foward split. Now, instead, they are proposing a 3-for-1 split.

So, to the best of my knowledge, the shares outstanding will be increased to some 237,192,285 shares. This will definitely assist with liquidity (which is exactly why they are conducting the split in the first place). If the company's shares weren't so tightly held then perhaps the split wouldn't be required.

My thoughts, management has the company's best interest at heart, obviously, since they own most of the company. Hop along for the ride and let them manage their company to success. They stand the most to gain and lose, so you better believe they are doing things for the best possible reasons. Also, they seem like a pretty smart bunch and I wish them all the best. :-)

Any other questions, feel free to ask away.

Cheers,

Geronimo

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Originally posted by whatwhatwho:
Has anybody had any experience with stocks at this price splitting? Also, is the 14 million float accurate? Seems like there would be more out there if the stock is trading as much as it has lately with not much volatility. My guess is I am incorrect on the 14 million number. Also, is it possible that the big cig companies don't want to deal with a small time player like wlsf and they are therefore forced to start their own cigarette in order to bring it to the public? Maybe BIG Tobacco doesn't want anything of their filter out there because it would dissuade addiction. Does their filter dissuade addiction? I haven't seen anything on this. Comments?

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