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As filed with the Securities and Exchange Commission on February 9, 2000
Registration No. 000-26451
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10/A3
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PRO NET LINK CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 88-0333454
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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645 FIFTH AVENUE, SUITE 303, NEW YORK, NEW YORK, 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 688-8838
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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N/A N/A
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(TITLE OF CLASS)
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Certain statements made in this registration statement are not based on
historical facts, but are intended to be forward-looking statements. These
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy. These statements reflect the reasonable judgment of Pro Net Link
Corp. ("Pro Net Link" or the "Company") with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements.
ITEM 1. BUSINESS.
INTRODUCTION
By integrating the Internet's capability with the proprietary design and
technology incorporated into its website, Pro Net Link has formed an interactive
worldwide business-to-business trading community. As the foundation of Internet
technology grows around the world, Pro Net Link believes the need for a singular
hub of trade information and resources will become more critical. Importing and
exporting is currently a large international industry and Pro Net Link believes
that in order for companies to remain competitive, they will have to expand into
the global marketplace.
The Pro Net Link website, known as the Global Trade Internetwork (located
on the Internet at www.ProNetLink.com), combines several functional areas of
value to its members. Firstly, the website (also referred to herein as an
e-commerce portal or a web portal page) brings many global streams of
international import/export information and tools together into one location,
allowing the trade professional, or even a trade beginner, to compete more
efficiently on the global level. Additionally, through the Global Trade
Internetwork, Pro Net Link members can not only read about opportunities, but
can also access the tools needed to complete a trade transaction. These tools
allow members to effectively buy, sell and market their products on a worldwide
basis. For a description of the tools and information available on Pro Net
Link's website, see "The Global Trade Internetwork" and "Competition."
In addition, our website provides its own unique content to our members
through our new broadcasting facility. The facility, also known as the "PNL-TV
Netcast Center", broadcasts worldwide trade news and trade-related programming
24 hours-a-day on the Global Trade Internetwork. Such programming includes trade
news, anchored by an experienced news journalist, and produced and broadcasted
live each business day from the PNL-TV Netcast Center. PNL-TV Netcast Center
also broadcasts trade events and interviews with people involved in the trade
industry.
On April 16, 1999 (the "Launch Date"), Pro Net Link launched the current
and most advanced operational version of its website. Prior to Launch Date,
although fully operational, ProNetLink.com was in the development and testing
stages of operation. As a result, Pro Net Link has experienced a history, since
Inception (as defined below), of limited revenue, significant operating losses
and negative operating cash flows. While we expect our revenues to grow in the
future, we anticipate making significant investments in connection with our
expansion plans. See "Plan of Operations." We expect our investment in expansion
to exceed our revenues. As a result, we expect losses to continue for the
foreseeable future.
For the fiscal year ended June 30, 1999, revenue generated in the U.S.
market was $10,774 and revenue generated in international markets was $3,474.
For the three months ended September 30, 1999, revenue generated in the U.S.
market was $1,802 and there was no revenue generated in international markets.
For the three months ended September 30, 1998, revenue generated in the U.S.
market was $8,615 and revenue generated in international markets was $3,144. For
the period from Inception through June 30, 1998, the Company had no revenue from
U.S. or international markets. For the three months ended September 30, 1999,
barter income in the amount of $240,000 was generated in the U.S. market.
Pro Net Link's Financial Statements reflect that during the period from
Inception through June 30, 1998, the fiscal year ended June 30, 1999, and the
three months ended September 30, 1999, respectively, Pro Net Link spent
approximately $236,000, $604,000 and $277,308, respectively, on research and
development. These expenditures are referred to as "website development" in our
Financial Statements.
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FORMATION
Pro Net Link was formed and began its operations on July 25, 1997
("Inception") as Pro Net Link Corp., a Delaware corporation ("ProNet Delaware").
In September 1997, holders of the common stock of ProNet Delaware acquired
control of Prevention Productions, Ltd., a Nevada corporation ("Prevention
Productions"), a publicly-held corporation with no material operations and no
assets. The acquisition of control of Prevention Productions occurred through an
exchange of securities whereby, following a 30 to 1 reverse stock split of the
outstanding common stock of Prevention Productions (which left the shareholders
of Prevention Productions with an aggregate of 249,500 shares), Prevention
Productions acquired 100% of the outstanding capital stock of ProNet Delaware in
exchange for 28,400,000 shares of common stock of Prevention Productions.
Prevention Productions subsequently changed its name to "Pro Net Link Corp." and
continued the operations of Pro Net Link. The principal offices of Pro Net Link
are located at 645 Fifth Avenue, Suite 303, New York, New York 10022, and its
phone number is (212) 688-8838.
THE GLOBAL TRADE INTERNETWORK
Pro Net Link's Global Trade Internetwork website consists of three
functional areas. The first is a customized web portal page that gives members
important trade information gathered from around the world about virtually any
industry. The web portal page includes trade leads, business news and many other
trade related data streams. The second is the global trade directory and
resource area where members can search the online directory of over 3.2 million
companies from over 120 countries, find products or suppliers, and then
communicate with the companies online. The balance of this second area features
tools and resources that are needed to complete trade transactions such as
shipping forms, insurance, compliance data, financial information, trade
statistics and marketing tools.
The third area is PNL-TV Netcast Center, an interactive broadcast facility
which provides trade specific programming for the Global Trade Internetwork. The
network facility enables members to view or participate in live cybercasts of
key trade events or interviews from around the world. The facility also
broadcasts worldwide trade news and information 24 hours-a-day, and live,
anchored news programs that present the trade news of the then current business
day. Members of our website may retrieve on demand any of the interactive
broadcasts from our archives for a three month period following the initial date
of broadcast.
Pro Net Link's Global Trade Internetwork website currently has
approximately 4300 registered users on the site from over 95 countries.
Pro Net Link believes that one of the major benefits of the Global Trade
Internetwork is that it provides a comprehensive source of information and
interaction to participants in many different types of industries, thus acting
as a "multi-dimensional portal." This is distinguished from other websites which
merely offer a web portal page that acts as a source of information, interaction
and/or e-commerce for a specific industry, which is referred to herein as a
"vertical portal." In addition, Pro Net Link believes that the Global Trade
Internetwork offers great depth to users because it represents a true online
trade community by combining the features of an executive business club, a trade
resource center and a broadcast network all in one easy-to-use website.
Web Portal Page
ProNetLink.com provides a web portal page that is custom-defined by each
member to parse through many resources for specific trade information. These
online resources include trade leads, business news, world time, currency rates,
commodity prices, stock markets, weather and discussion rooms. When a member
first fills out a registration form with Pro Net Link, the member is prompted to
add key words that describe his or her product or service, the markets in which
he or she works and to define other trade data he or she may be looking to have
displayed on such member's personalized web portal page. The ProNetLink.com web
portal program then searches all of the incoming data streams for matches to the
member's requests and prints the results to such web portal page. New
information gets posted to the web portal page 24 hours-a-day. A member can opt
to change, expand or limit the information he or she receives at any time. The
web portal page allows a member to be more efficient by reducing the number of
hours they would have spent searching
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the Internet or other resources for the industry specific information that they
are looking for. The continuous usefulness of the web portal page also gives
members a reason to return to the website on a regular basis throughout the day,
which Pro Net Link believes will result in a higher number of visits to the
website, and should lead to an increase in advertising revenue to Pro Net Link.
In addition to member-generated data, such as information posted in a
discussion room, ProNetLink.com provides its members with access to outside
authorized data streams such as the Dow Jones news stream data, which is
provided by Dow Jones & Company. Additional companies that offer such data
streams include Reuters, Dun & Bradstreet Corporation, the Journal of Commerce,
World Trade Magazine, The U.S. Department of Commerce, STAT-USA, and other
resources from around the world. Information available at these sites includes
news, weather, financial information and trade leads. This information is
provided directly on a member's web portal page, rather than requiring the
member to access such data through links to other websites. Access to this news
stream data is free-of-charge to members who fill out a registration form with
Pro Net Link. For a description of the fee structure for services provided on
the Global Trade Internetwork, see "Business -- Services."
Trade Directory and Resources Area
Pro Net Link has compiled an online directory that contains over 3.2
million companies from more that 120 countries. Approximately 2% of such data
has been generated directly from new Pro Net Link members and associations,
while approximately 98% has been obtained from Dun & Bradstreet pursuant to an
information provider agreement expiring in April of 2000. The directory contains
manufacturers, producers, wholesalers, distributors, importers, exporters and
service companies that include transportation, insurance and banking. Members
can search the directory by using either a simple or advanced search function in
order to find sourcing and trading opportunities and to develop business
relationships. A member seeking information from the directory is able to
perform a search based on a number of different variables including: type of
product or service; company name; country of origin; type of goods or Standard
Industrial Classification Code.
Once a user finds a company (which can be either a member or a non-member)
that it would like to do business with, or a company responds to a trade lead
from the site, communication between the trading parties can occur from within
the site. These online communications are private and confidential, and can be
encrypted by using special programs within the website. In addition, members can
communicate in real time by using the "PNL Live!" instant chat system. Online
forms stored in the website and containing the member's information, which are
designed to reduce the time and expense of producing repetitive documents, such
as estimates, pro-forma invoices and shipping requests, can then be used to
facilitate a trade. Members can then store their digital "paperwork" in an
"online file cabinet" for future reference. These forms can be sent by e-mail or
Internet fax.
Discussion rooms, instant chat features and bulletin boards are designed to
support Pro Net Link's global trade community. Members wishing to participate in
discussions have a number of pre-defined rooms that they may enter, or they can
start a new discussion at any time.
Pro Net Link does not receive a fee or commission for any trading
activities that occur on the website, or as a result of business relationships
formed by their members through interaction on the website.
We believe that the information provider agreement with Dun & Bradstreet
provides our website with data that is very important to the implementation of
our business plan.
Interactive Broadcast Facility
ProNetLink.com's interactive broadcast facility, also known as the PNL-TV
Netcast Center, provides programming to website users that includes worldwide
and local trade news, trade-related interviews, special events, seminars and
presentations and key trade events from around the world. Pro Net Link launched
its interactive broadcast feature on April 21, 1999 with a live cybercast of
events from the International Business Exposition (the "IBE"), presented jointly
with World Trade Magazine. Such interactive broadcast features allow Pro Net
Link members to view the events through its website. Members are also able to
submit questions via e-mail and have them answered by the guests on the show.
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Since the launch of the interactive broadcast feature, Pro Net Link has
broadcast special trade specific programming and interviews as well as trade
events. For example, in conjunction with the U.S. Chamber of Commerce, Pro Net
Link recently broadcast programming entitled "Leaders in Global Trade," in which
trade leaders were interviewed on trade issues.
Pro Net Link also broadcasts worldwide trade news and information 24
hours-a-day. Beginning on October 4, 1999, Pro Net Link began to broadcast daily
a live trade news show, anchored by professional news journalists, that present
the trade news of the business day. PNL-TV Netcast Center currently offers four
channels of information: news; special events; interviews; and broadcasts in
conjunction with the U.S. Chamber of Commerce.
All of the foregoing programming is maintained in the Pro Net Link
archives, and can be retrieved by users 24 hours-a-day for, at a minimum, the
three-month period following the date of initial broadcasting.
Prior to September of 1999, our trade specific programming on the Global
Trade Internetwork was produced in rented facilities as needed. We subsequently
expanded the broadcast module of our website by building a full, in-house
broadcast studio in New York City, the PNL-TV Netcast Center, with cameras,
switches, lighting and audio compression systems to produce the trade-related
programming on our network.
SERVICES
The Pro Net Link business model is based on four primary anticipated
revenue streams: membership fees, advertising, revenue sharing with other
companies that have electronic exchanges on our website and, in the future,
revenues from a pay-per-view charge on some of our Internet broadcasting, such
as training seminars.
Since January 2000, Pro Net Link has allowed 80% of the content of its
website to be provided without charge to users. Fees paid by a user of the Pro
Net Link website depend upon the types of services the user wishes to access on
the website. Services provided free-of-charge to users who access the website
include: access to daily news broadcasts from the PNL-TV Netcast Center, access
to the website's online discussion rooms, posting boards and partner pages,
access to the Pro Net Link Partners Page, and access to general information
about Pro Net Link, its services, press releases and investor relations
materials. In addition to the foregoing services, the following services are
provided free-of-charge when a Pro Net Link registration form is completed by a
member: the ability to create a customized web portal page, access to and
searches of certain portions of the global trade directory, searches of trade
leads and SIC codes, access to shipping and tracking information, PNL-TV
interviews and special events, international trade news, worldwide weather
conditions, currency converters and UPS online courier services, access to trade
resources such as links to chambers of commerce, international trade
associations, government agencies and stock exchanges, and access to credit
reports, printing services, trade publications and the member's personal web
portal page. Pro Net Link regards any individual or entity that registers on its
website as a member. The remaining 20% of the Pro Net Link Global Trade
Internetwork may only be accessed by members who pay a registration fee of
$29.95 per month. Services provided for the payment of this fee include: access
to all remaining portions of Pro Net Link's global trade directory and resource
area, including access to Dun & Bradstreet business listings and Pro Net Link
user records, the ability to place a trade lead page on the website, access to
PNL Live! chat rooms and access to the user's personal files, address book,
calendar and personal catalog page.
Pro Net Link offers a number of services and products online, some within
its website and others through direct links to the websites of other provider
companies with whom we have supportive business relationships, which we refer to
as "cooperative business relationships." We believe the growth of the Internet,
e-commerce and our business are largely dependent on the development and
maintenance of such cooperative business relationships, in which a variety of
companies mutually support and enhance the e-business of their relationship
counterparts at a low cost.
Our cooperative business relationships include those with: AON Insurance,
which offers cargo and credit insurance services directly through
ProNetLink.com; AT&T Corporation and AT&T Secure Buy Service, which offer,
respectively, web hosting and e-commerce and business services; United Parcel
Service and their
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Document Exchange Program, which provides document delivery and tracking
services; Dun & Bradstreet, which offers online credit reports; and SWBC of the
Netherlands, which provides certification of products entering certain markets
(including European markets). Other cooperative business relationships exist
among Pro Net Link and the following companies: Reuters (providing news data);
Dow Jones & Company (providing news data); RealNetworks (providing cybercast
software and show hosting); Amazon.Com (selling books and related products);
Journal of Commerce (providing editorial, news and e-commerce information);
PIERS (providing statistical resources); Royal Impressions (providing online
digital printing); World Trade Magazine (providing cybercast content);
Weathernews, Inc. (reporting on worldwide weather conditions); Unz & Co., Inc.
(providing compliance information and forms); and The National Customs Brokers &
Forwarders Association of America, Inc. (providing shipping resources). Of these
cooperative business relationships, we have written agreements with AT&T
Corporation, Dow Jones & Co., Inc., Dun & Bradstreet, Inc., Aon Risk Services,
The Journal of Commerce, Royal Impressions, SWBC Europe, Weathernews, Inc., Unz
& Co., Inc. and UPS Internet Services, Inc.
In addition to cooperative business relationships, we have established
selling relationships with international Chambers of Commerce and trade
organizations, including The Israeli Federation of Chambers of Commerce, which
is one of the largest business organizations in Israel, The Chamber of Commerce
of Indonesia and ESAT.Net, which is Ireland's largest Internet Service Provider.
These organizations work with us to sell Pro Net Link services within their
markets. In return, they receive a commission on the Pro Net Link services they
sell.
As of January 31, 2000, we had not derived any revenues from the service
providers and selling relationship counterparties described above.
We also plan during the fiscal year to continue the international expansion
of our business network. The Company has collaborated on projects with the U.S.
Department of Commerce to plan trade missions that are intended to establish
relationships with government trade offices and local Chambers of Commerce. Pro
Net Link has participated in trade missions to Singapore, Thailand, Indonesia,
Ireland, United Kingdom, The Netherlands, Germany, France, Belgium, Italy,
Spain, Israel and the Middle East. In October 1999, Pro Net Link participated in
a Department of Commerce trade mission to the Middle East. The mission included
meetings with trade officials and other business leaders in Jordan, Saudi
Arabia, Israel, Gaza/West Bank, Egypt and the United Arab Emirates. As a result
of these trade missions and other sales and marketing programs, Pro Net Link now
has sales offices in countries in Asia, Europe, India, the Middle East and
Russia. Pro Net Link is negotiating with entities in additional countries to
become part of the Global Trade Internetwork.
PLAN OF OPERATIONS
For the remainder of the fiscal year ending June 30, 2000, and for the
foreseeable future, Pro Net Link plans to continue to work aggressively with its
website developers and cooperative business relationships to keep improving the
quality and scope of the website while marketing its products and services,
including the use of national television and radio commercials.
For the fiscal year ending June 30, 2000, we plan to expand several of our
existing business segments including: increasing our infomercial capabilities,
which is a paid advertising module where companies conduct audio and video
selling online; expanding our catalogue page, which allows companies to post and
advertise products on the Pro Net Link site; and expanding our video
conferencing capabilities, which will allow entities and individuals located in
countries worldwide to communicate in an audio/video environment through the Pro
Net Link site.
In connection with this expansion, we plan to continue to develop the
broadcast module on our website. Currently, trade specific programming is
produced in our new broadcast studio in New York City. Pro Net Link plans to
expand its programming by using local broadcast crews to bring special
international events to ProNetLink.com. Pro Net Link anticipates that this
programming will provide opportunities to sell advertising to international
businesses as well as to companies that will purchase "infomercial" time on the
website.
To facilitate this expansion, we have increased the number of web servers
we use to 16 and we plan to hire additional employees and managers. See
"Personnel."
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INTELLECTUAL PROPERTY RIGHTS
Pro Net Link currently holds registered trademarks for the names "Pro Net
Link" and "The Global Trade Internetwork." We also have proprietary interests in
the URL names "ProNetLink.com," "PNLK.com" and "PNLTV.com." We believe that
these rights and interests will increase in value as Pro Net Link's business
grows. We do not currently believe these rights are of great importance in our
industry segment.
PERSONNEL
Pro Net Link currently employs eight full-time employees, nine part-time
employees and one full-time consultant. In August 1999, we hired a Vice
President of Sales, and a News Editor and Anchor to host our news programs. It
is anticipated that additional employees will be hired as the needs of the
company require. Pro Net Link plans on adding five additional full-time
employees within the next three months, including a chief financial officer and
other executive officers. In addition, Pro Net Link uses third-party contractors
to handle various Pro Net Link needs, including operations in Asia, India,
Europe, Russia and the Middle East. Additionally, there are approximately 12
developers working on ProNetLink.com in the United States and Israel. We also
rely on support from our cooperative business relationships, marketing
consultants, public relations consultants and legal and accounting firms to
provide manpower to our business. Pro Net Link management believes that our
current personnel programs are the most economical way to manage the growth and
business operations of Pro Net Link. Pro Net Link believes that its relationship
with its employees is satisfactory. None of Pro Net Link's employees are
represented by a union.
COMPETITION
The market for a worldwide on-line commerce website is relatively new,
quickly evolving and subject to rapid change and there are few substantial
barriers to entry. We believe that the international trade marketplace is just
beginning to be affected by the Internet. Based on industry research, we expect
to have competition in this market from approximately five to ten existing
competitors, and potential new entrants in the future. Currently the largest
business-to-business website is VerticalNet.com.
However, we believe that ProNetLink.com represents the leading edge of this
industry. The Company believes that its most important competitors, including
VerticalNet.com, are focused on providing very specific information (such as
analysis and other editorial information) concerning different industries. This
provides users with useful information with which they can pursue trade
opportunities. Pro Net Link believes that its website differs from those of its
competitors, including VerticalNet.com, in that it provides on-line tools
required to process the trade-related information, which means information used
specifically in trade relating to such areas as shipping, logistics,
procurement, tariffs, free trade zones, currency exchange rates and cargo
insurance, that is generated from within the website, and to engage in the trade
of products.
Of the five to ten competitive websites, which are smaller (other than
VerticalNet.com) and less advanced sites, none offer the full range and high
level of services provided by Pro Net Link.
Pro Net Link offers a full suite of online services that are designed to
assist businesses in their expansion into the global sales marketplace. These
include the online business directory that includes over 3.2 million companies
from over 120 countries, trade leads, selling opportunities, trade news from Dow
Jones, The Journal of Commerce and World Trade Magazine, insurance services,
international legal and technical advice for exporting into Europe, shipping
support from over 5000 freight forwarders online, country specific information,
printing and marketing support and many others.
We believe that one of our competitive advantages is our live daily netcast
news, unique to Pro Net Link, that specifically targets trade issues.
ProNetLink.com broadcasts trade specific information through the PNL-TV Netcast
Center. This streaming video function of ProNetLink.com allows anyone to tune in
live, 24 hours-a-day and watch programming that is targeted to the global trade
market. PNL-TV Netcast Center also broadcasts live trade news each business day.
This newscast is anchored by an experienced news journalist, and presents the
current trade news of the day. PNL-TV Netcast Center also brings special
programming that
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does in-depth analysis of trade events as well as presenting special guests and
events. The trade specific information, news broadcasts and special programming
are accessible 24 hours-a-day in our archives. Recent examples of our
programming include the United Nations conference on the Internet Impact on
Global Trade with the Keynote address from the Deputy Secretary of Commerce and
the International Business Expo presented live from the Javits Center in New
York City. Each of these broadcasts includes many interviews with special
guests. ProNetLink.com has also arranged for the participation of major trade
news resources in connection with its broadcasting activities. These include
World Trade Magazine and The Journal of Commerce. ProNetLink.com is also a
multi-dimensional portal allowing a business to customize Pro Net Link's website
in a trade specific portal.
ProNetLink.com also offers advanced Internet functions that help set it
apart from many of the websites that purport to provide trade services.
ProNetLink.com goes beyond the typical "linked" site that requires the user to
"surf" the Internet. This means that in order to use these typical Internet
sites one must link from one site to another in order to obtain trade
information. For example, if a member desires information concerning insurance,
he or she will be given the link to an insurance company. The website providing
the link is not responsible for ensuring whether the link works, or that company
can actually provide the product. In some cases, websites provide links without
permission from the company that they are linking to.
On the other hand, ProNetLink.com brings the Internet trade information to
the user. The links between the Company's website and those of its key service
providers are not "links" in the typical sense of the term. The vast majority of
these links are to the databases on the websites of these service providers,
rather than to the websites themselves. The Company has expended significant
managerial and financial resources to create programs under which users of its
website obtain data from other websites without actually leaving the Company's
website. This "Data Mining" solution simplifies the user search for trade
information. For example, if a member desires information on trade insurance,
ProNetLink.com has entered into an alliance with AON Insurance. The AON
information resides on ProNetLink.com's site, as does the electronic forms
needed to process a request for trade insurance. This allows the member to get
insurance without having to leave the ProNetLink.com website. Other services
provided by ProNetLink.com, from trade leads to printing services, also allow a
member to get the information and process an order without leaving the site.
ProNetLink.com also makes it easier for members to use forms that are built
into the site such as pricing requests, program invoices and shipping requests.
All forms on the site for a particular member contain the member's information
(name, address, phone numbers, etc.) so that they do not have to retype that
information every time they need to fill out a new form. One of the most
powerful tools of ProNetLink.com is the directory of companies. Here a member
can search for a particular product, find companies around the world that make
that product, and automatically send a request to all such companies. The
ProNetLink.com system generates new forms with the member information and the
receiving company information, and sends the request out by e-mail or Internet
Fax.
Pro Net Link believes that it enjoys an additional competitive advantage as
a result of the international orientation of its website. The Company has
focused since its Inception on the international aspects of its business. For
example, the Company has invested significant managerial and financial resources
in establishing relationships with United States and foreign governmental trade
organizations such as the U.S. Department of Commerce, and the foreign
governmental entities and chambers of commerce described under
"Business -- Services" above. As noted above, the Company believes that it was
the first dot.com company to participate in U.S. Department of Commerce trade
missions. The Company believes that these efforts have resulted in an expanded
international presence. For example, the Company has established selling
relationships with entities such as the Israeli Federation of Chambers of
Commerce, the Chamber of Commerce of Indonesia and ESAT.Net, Ireland's largest
Internet Services Provider. Additionally, Pro Net Link's website currently
services approximately 4,300 registered members on the website from over 95
countries. The Company believes that its competitors, such as VerticalNet.com,
are only beginning to focus on international trade markets. See
"Business -- Services" above.
The Company believes that it has a significant head start on many of the
new companies that are entering the market today as a result of two factors. As
noted above, the Company has invested significant time and
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expense in creating software programs which allow users of its website to access
data from websites of service providers without ever leaving Pro Net Link's
website. Additionally, the Company has also invested significant time and
expense to develop contracts in the global market includes Government Trade
Organizations, supportive business relationships and international Chambers of
Commerce.
Despite the competitive advantages described above in our website offerings
and business plan, we face potentially significant competition in our industry
segment. Certain competitors, such as VerticalNet.com, have announced
partnerships with and investments by large information services providers that
have large financial resources and information industry contacts. In addition,
the Company believes that the increasing growth of the business-to-business
online market will attract many additional competitors including, potentially,
companies that are dominant leaders in other industry segments of e-commerce.
There can be no assurances that the Company will be able to match the resources
of existing and future competitors to implement its business plan and to
maintain the technological and other advantages of its website.
ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
The following selected financial data has been extracted from the Financial
Statements of Pro Net Link for the three months ended September 30, 1999 and
September 30, 1998, the fiscal year ended June 30, 1999 and for the period from
July 25, 1997 (Inception) through June 30, 1998. This selected financial data
should be read in conjunction with the Financial Statements of Pro Net Link and
the Notes thereto and "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" included elsewhere herein.
SUMMARY OPERATIONS DATA
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THREE THREE JULY 25, 1997
MONTHS MONTHS FISCAL YEAR (INCEPTION)
ENDED ENDED ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenue............................... $ 241,802 $ 11,759 $ 14,248 $ --
Net Loss.............................. $ 998,245 $ 325,615 $ 3,220,850 $ 645,355
Net loss per share.................... $ 0.02 $ 0.01 $ 0.07 $ 0.02
Weighted Average Shares Used in
Computation......................... 50,224,820 38,099,500 43,772,888 27,050,048
</TABLE>
SUMMARY BALANCE SHEET DATA
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1999 1999 1998
------------- -------- ---------
<S> <C> <C> <C>
Total Assets.................................... $425,219 $648,541 $ 316,075
Current Assets.................................. 88,865 390,171 270,139
Total Liabilities............................... 827,432 442,509 650,630
Current Liabilities............................. 827,432 442,509 335,025
Long-term notes payable......................... -- -- 315,605
Working Capital (Deficiency).................... (738,567) (52,338) (64,886)
Shareholders' Equity (Deficit).................. (402,213) 206,032 (334,555)
</TABLE>
As noted above and below, although its website was fully operational prior
to April 1999, Pro Net Link did not initiate revenue generating operations prior
thereto. As a result, this affects the comparability of the financial data
related to the Company's financial performance for the fiscal year 1999 and for
the fiscal period of 1998. See "Business -- Plan of Operations" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
8
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Selected
Financial Data above and the Financial Statements and Notes thereto contained
elsewhere herein.
OVERVIEW
Pro Net Link is a development stage corporation with a limited operating
history, formed in July 1997. Pro Net Link has recently completed its
development and testing stages of operations, having launched the current and
most advanced operational version of its website, the Global Trade Internetwork.
Operating expenses have increased significantly since Inception, reflecting the
costs associated with the formation of Pro Net Link, the building of operating
infrastructure, product development, solicitation of new members and the
promotion of product awareness.
Pro Net Link has a limited operating history on which to base an evaluation
of its business and prospects. Pro Net Link's prospects must be considered in
light of the risks frequently encountered by companies in their early stages of
development, particularly for companies in the rapidly evolving technology
industry. Certain risks for Pro Net Link include, but are not limited to, having
an unproven business model, capital requirements and growth management. To
address these risks, Pro Net Link must, among other things, successfully
continue to develop and execute its business and marketing plan, continue to
expand and otherwise improve its website and increase the operating
infrastructure. There can be no assurances that Pro Net Link will be successful
in addressing its risks, and the failure to do so could prevent us from ever
generating a profit. Since Inception, Pro Net Link has incurred significant
losses, and as of September 30, 1999, had an accumulated deficit of
approximately $4.9 million.
Pro Net Link believes that its success depends, in large part, on its
ability to create market awareness and acceptance for its products, raise
additional operating capital to grow operations, build technology and non-
technology infrastructures and continue product research and development.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 and September 30, 1998
Revenue. Pro Net Link's revenue increased from $11,759 for the three month
period ended September 30, 1998 to $241,802 for the three month period ended
September 30, 1999. 99.3% of the revenue in 1999 occurred as a result of Pro Net
Link's bartering transactions with approximately ten companies in exchange for
website development and marketing expenses. Such revenue increase offsets a
decrease in cash revenues from membership fees from $11,759 to $1,802 in such
periods. This reduction was the result of the Company's gradual modification of
its fee structure which currently emphasizes streams of income other than
membership fees. See Item 1, "Business -- Services."
As of September 30, 1999, Pro Net Link had over 2,300 registered members
from approximately 95 countries (of which 22 were subscription paying members
and 40 were members who had previously paid subscription fees (and for whom the
Company waived further payment)). As of September 30, 1998, Pro Net Link had
approximately 450 members (of which 40 were subscription paying members).
For much of the period beginning from the Company's inception in July 1997
to the fiscal quarter ending June 30, 1999, the Company has been designing,
developing and marketing its website. The Company believes that the increases in
its revenue are generally the result of its transition to its revenue generation
stage, which has provided the Company with opportunities to generate revenues in
cash and in bartering transactions.
Expenses. Total expenses, excluding non-cash compensation expense of
$340,000, increased from $337,374 for the three month period ended September 30,
1998 to $900,047 for the three month period ended September 30, 1999.
Additionally, the expenses during this period include a non-cash compensation
expense of $340,000, which is the fair value of options with respect to
consulting services being provided by a company whose president is also the
Chairman of the Company. See Footnote 8 to Pro Net Link's June 30, 1999
Financial Statements.
9
<PAGE> 11
Bartering transactions resulted in $240,000 of expenses related to
marketing and website development. Website development expenses increased by
approximately $118,000. General and administrative expenses increased by
approximately $145,000 due to an increase of $120,000 in payroll for new
employees and an increase in insurance costs of $20,000.
Fiscal year ended June 30, 1999
During the period, Pro Net Link was a development stage enterprise, and
accordingly, engaged in limited revenue generating operations. Pro Net Link
generated revenue of $14,248 for the fiscal year ended June 30, 1999.
Operating expenses during this period were $3,235,098 which consisted
primarily of website development costs of $603,884, cost of commissions of
$77,831, selling, general and administrative expenses of $1,600,649 and non-cash
compensation expenses of $922,623, which is the fair value of options with
respect to consulting services being provided by a Company whose president is
also the Chairman of the Company. These expenses consisted primarily of
marketing and promotional fees, professional fees, rent and other office-related
expenses and payroll expenses.
As a result of the foregoing, Pro Net Link incurred a net loss in the
fiscal year ended June 30, 1999 of $3,220,850. The loss is primarily
attributable to the expenses incurred during the period in connection with the
continued development of Pro Net Link's business.
Period from Inception though June 30, 1998
Pro Net Link generated no revenue for the period from Inception through
June 30, 1998. During such period Pro Net Link had cost of website development
of $235,988 and cost of commissions of $112,400, and incurred selling, general
and administrative expenses of $286,369. These expenses consisted primarily of
marketing and promotional fees, professional fees, rent and other office-related
expenses and payroll expenses.
As a result, Pro Net Link incurred a net loss in the period from Inception
through June 30, 1998 of $645,355. The loss is primarily attributable to the
expenses incurred during the period in connection with the development of Pro
Net Link's business.
LIQUIDITY AND CAPITAL RESOURCES
Pro Net Link has used cash in its operating and investing activities in
varying amounts since the Inception of its business in July 1997. For the
quarter ended September 30, 1999, net cash used in operating activities was
$693,222 and net cash used in investing activities was $83,172. Net cash
provided by financing activities during this period was $550,000, which
consisted of $500,000 of borrowings under a revolving credit facility, and of
$50,000 from the proceeds of the issuance of equity of Pro Net Link. At
September 30, 1999, Pro Net Link had $58,865 of cash.
Subsequent to the end of the fiscal quarter ending September 30, 1999, Pro
Net Link received $1,150,000 in payment of certain capital stock subscriptions
(which were priced at $2.00 per share). See Item 10 "Recent Sales of
Unregistered Securities" and Footnote 11 to Pro Net Link's June 30, 1999
Financial Statements. With the proceeds, Pro Net Link funded its operations for
this period and repaid $400,000 of indebtedness it had incurred under its
revolving line of credit. As a result, on December 31, 1999, Pro Net Link had
approximately $26,000 overdraft in its cash position and approximately $400,000
available to it under its revolving credit facility.
Historically, most of Pro Net Link's liquidity has been provided by private
placements of equity securities, which reached approximately $3.9 million,
cumulatively, from the date of Pro Net Link's Inception through December 31,
1999.
The substantial capital investments required to initiate Pro Net Link's
services and the funding of its initial operations has resulted in negative cash
flow in all periods since its Inception. We currently estimate our cash
requirements for the next 12 months, which includes cash to fund our expansion
activities associated with the development of our markets, to equal
approximately $100,000 per month. As a result, Pro Net Link expects to continue
to have negative cash flow throughout 1999 and in 2000. Although we have no
material commitments during the next 12 months or beyond, Pro Net Link expects
that it will continue to have substantial capital requirements in connection
with the continued development, implementation and market-
10
<PAGE> 12
ing of its products and services. There can be no assurances that Pro Net Link
will attain break-even cash flow in any future fiscal periods.
However, we believe the trend for cash flows for Pro Net Link is positive.
Due to our transition from our development stage to the implementation of our
selling phase with the launch of the current version of our website in April of
1999, we have begun to generate more significant revenues. Pro Net Link's recent
activities have included the launch of its Internet trade news facility known as
PNL-TV, whose programming includes paid advertising, and the hiring of
additional sales professionals. Pro Net Link believes that its revenues will
increase as it continues to implement its business plan. Pro Net Link believes
that these revenues will meet some of its capital requirements.
Until sufficient cash flow is generated, Pro Net Link will be required to
utilize its revenues and current and future capital resources to meet all of its
cash flow requirements in the next 12 months and beyond. Pro Net Link's most
significant source of capital resources is currently its revolving credit
facility, which is secured by a standby letter of credit, and which provides a
$500,000 line of credit at terms which include an interest rate of 1% over the
lender's base rate. To the extent the revolving credit facility is insufficient
to meet its capital requirements at any time during the next twelve months and
beyond, Pro Net Link will be required to secure additional credit facilities or
to issue additional debt and/or equity securities.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" ("SFAS 130"), which establishes standards for
reporting and display of comprehensive income and its components, and Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"), which establishes standards for the way public business
enterprises are to report information about operating segments in annual
financial statements and requires those enterprises to report selected
information about operating segments in annual financial statements and requires
those enterprises to report selected information about operating segments in
interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosure about products and services, geographic areas
and major customers. SFAS No. 130 and SFAS No. 131 are effective for years
beginning after December 15, 1997.
In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions
and other Postretirement Benefits", No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and No. 134, "Accounting for Mortgage-Banked
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise".
None of the aforementioned standards will have any significant effect on
the Company's financial position or results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Since indebtedness under our revolving credit facility bears floating
interest rates, we run the risk that our cost of capital under the facility will
fluctuate based on changes in interest rates. Under our current risk management
policies, we do not use interest rate derivative instruments to manage our
exposure to these interest rate changes. However, we do not believe that this
risk exposes the Company to any material losses.
YEAR 2000 ISSUE
Many current installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems have been upgraded or
replaced in order to ensure the correct processing of dates beginning in 2000
and compliance with "Year 2000" requirements. As of January 2000, Pro Net Link
has reviewed its internal programs and has determined that all products and
information/non-information technologies systems are Year 2000 compliant, and
that it has not incurred costs which can be attributed to Year 2000 compliance.
The Company believes that any future actions taken in connection with Year 2000
compliance will not have a material effect on its operating results or financial
condition. The Company believes that this is due in large part to the limited
operating history of Pro Net Link and the emphasis on compliance during the
planning and development stages of Pro Net Link.
11
<PAGE> 13
To date, Pro Net Link has not experienced Year 2000 technical difficulties
with any third parties, including vendors and companies with which it enjoys
cooperative business relationships. The Company does not believe that its
website will be adversely affected by third parties that are not Year 2000
compliant because the website and its content is hosted entirely on the
Company's own servers.
ITEM 3. PROPERTIES.
Pro Net Link occupies approximately 3,650 square feet at 645 Fifth Avenue,
Suite 303, New York, New York 10022 at a monthly rent of approximately $13,700.
Pro Net Link uses the space for administrative offices and as its corporate
headquarters. Pro Net Link believes that such space will provide it with
adequate space for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of November 30, 1999, certain
information with respect to (i) those persons or groups known to Pro Net Link to
be the beneficial owners of more than five percent of the common stock of Pro
Net Link (the "Common Stock"), (ii) each of the directors of Pro Net Link, (iii)
Pro Net Link's executive officers and (iv) all directors and executive officers
of Pro Net Link as a group. Except as otherwise indicated, the stockholders
listed in the table have sole voting and investment power with respect to the
Common Stock owned by them. As of November 30, 1999, there were 50,301,506
shares of Common Stock issued and outstanding.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING(1)
- ------------------------ ------------------ --------------
<S> <C> <C>
Evelyne Collardeau............................ 17,662,920(2) 35.11%
Jean Pierre Collardeau........................ 17,662,920(3) 35.11%
David J. Walker............................... 20,000(4) *
Glenn Zagoren................................. 2,000,000(5) 3.98%
All executive officers and directors as a
group (3 persons)........................... 19,682,920 39.13%
</TABLE>
- ---------------
* Less than 1%.
(1) Calculated on a fully diluted basis assuming the exercise by Mr. Walker of
all of his options to purchase 20,000 shares of Common Stock and by Mr.
Zagoren of all of his options to purchase 2,000,000 shares of Common Stock.
See Notes 4 and 5 below. However, the percentages in this column do not
reflect 550,000 shares of Common Stock that will be issuable to a subscriber
of Pro Net Link Common Stock who has not completed payment for such
subscription. See "Description of Registrant's Securities to be Registered"
and Footnote 11 to Pro Net Link's Financial Statements.
(2) Includes 11,662,920 shares of Common Stock of which Jean Pierre Collardeau,
the husband of Mrs. Collardeau, is the record holder. Mrs. Collardeau denies
beneficial ownership of such 11,662,920 shares. Pursuant to a Shareholders
Agreement among Jean Pierre Collardeau, Evelyne Collardeau, Thomas
Collardeau, Alvina Collardeau and Pro Net Link, dated June 23, 1998 (the
"Lock-up Agreement"), Ms. Collardeau agreed that she would not sell any of
her 6,000,000 shares of Common Stock in the public market until after June
23, 1999 (including 3,000,000 shares which were transferred to Ms.
Collardeau by Alvina Collardeau). The Lock-up Agreement was amended to
restrict the sale of the 6,000,000 shares owned by Ms. Collardeau in the
public market until at least June 23, 2000.
(3) Includes 6,000,000 shares of Common Stock of which Evelyne Collardeau, the
wife of Mr. Collardeau, is the record holder. Mr. Collardeau denies
beneficial ownership of such 6,000,000 shares. Pursuant to the Lock-up
Agreement, Mr. Collardeau agreed that he would not sell 10,500,000 of his
shares of Common Stock until after June 23, 1999 (including 3,000,000 shares
which were transferred to Mr. Collardeau by Thomas Collardeau). The Lock-up
Agreement was amended to restrict the sale of 10,500,000 shares owned by Mr.
Collardeau in the public market until at least June 23, 2000.
12
<PAGE> 14
(4) Represents options to purchase 20,000 shares of Common Stock which are
exercisable at approximately $0.27 per share.
(5) Represents options to purchase 2,000,000 shares of Common Stock which are
exercisable at (i) $0.25 per share for 500,000 shares and (ii) $0.33 per
share for 1,500,000 shares.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The Company's executive officers and directors and their ages as of
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jean Pierre Collardeau.............. 57 President, Treasurer and Director
David J. Walker..................... 45 Chief Operating Officer and Vice President of Operations
Glenn Zagoren....................... 46 Chairman of the Board of Directors
</TABLE>
Each director will hold office until the next annual meeting of
stockholders and until his or her successor is elected and qualified or until
his or her earlier resignation or removal. Each officer serves at the discretion
of the Board of Directors.
Jean Pierre Collardeau founded Pro Net Link in July 1997. He has been
President, Treasurer and a director of Pro Net Link since its formation. Mr.
Collardeau has been involved in international trade and finance for more than 30
years. For the 10 years preceding the founding of Pro Net Link, Mr. Collardeau
an independent consultant, supervising commercial operations and foreign
investments from the European Community to African developing countries and
advising on government tenders and bids to major infrastructure projects funded
by the World Bank in Washington, D.C. and the African Development Bank in
Abidjan, Ivory Coast.
David J. Walker has been the Chief Operating Officer and Vice President of
Operations as of December 1998. Prior to working for Pro Net Link, Mr. Walker
served as Vice President of Operations, and then Vice President of Product
Development for Unz & Co., a leading provider of import/export publications,
software and international trade-related training programs for approximately 15
years. Mr. Walker, whose international trade experience began in 1980 when he
served as export Manager of the Burroughs Corporation, has also served two terms
as a member of the Department of Commerce's District Export Council in New
Jersey both on the Executive Committee and as Chairman of the Education
Committee. Mr. Walker earned a B.A. from Cornell University and a Masters Degree
in International Business from Fairleigh Dickenson University.
Glenn Zagoren has been a director of the Company since May 1998 and
Chairman of Pro Net Link's board of directors, a non-officer position, since
April 1999. Mr. Zagoren is President of Zagoren-Zozzora, Inc. ("ZZI"), a
strategic development and marketing company that has been working with Pro Net
Link since Pro Net Link's Inception. Mr. Zagoren has served as President of ZZI
since 1979, and has been involved in international business development and
marketing programs for over 20 years. He has produced marketing projects for the
Principality of Monaco and the government of Israel as well as many global
corporations including JBL/Harman International and Hachette Filipacchi. In
1984, Mr. Zagoren was named the "Billboard Magazine Trendsetter of the Year
Award" for his involvement in the launch of CD technology. Mr. Zagoren currently
serves on the board of directors of the Tribeca Performing Arts Center of
Manhattan Community College.
ITEM 6. EXECUTIVE COMPENSATION.
For the period from Inception through September 30, 1999, Jean Pierre
Collardeau, the President of Pro Net Link, did not receive any compensation for
services in any capacity to Pro Net Link. In connection with strategic
development and marketing services Mr. Zagoren provided to Pro Net Link in his
capacity as President of ZZI, Mr. Zagoren has received options to purchase
2,000,000 shares of Common Stock. Mr. Zagoren is also a beneficiary, as a
shareholder, of the fees paid by Pro Net Link to ZZI for business consultation
services. See "Certain Relationships and Related Transactions" and Footnote 8 to
Pro Net Link's Financial Statements.
13
<PAGE> 15
COMPENSATION OF DIRECTORS
Other than the compensation granted to Mr. Zagoren described above, the
directors of the Company do not receive compensation for their services as
directors but may be reimbursed for their reasonable expenses for attending
Board meetings. See "Certain Relationships and Related Transactions."
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As of December 15, 1998, pursuant to a Securities Exchange Agreement
between Pro Net Link and Jean Pierre Collardeau, the President of Pro Net Link,
Pro Net Link issued shares of restricted Common Stock to Mr. Collardeau in
exchange for the surrender to Pro Net Link by Mr. Collardeau of a Promissory
Note of Pro Net Link in favor of Mr. Collardeau, which at such time had an
outstanding principal balance plus interest of $232,584, at the exchange rate of
five shares per dollar. This exchange rate was consistent with the price per
share which Pro Net Link offered investors under private placements of Common
Stock in the same time period, as well as the exchange rate set forth pursuant
to a Securities Exchange Agreement between Pro Net Link and Micheline Baron, a
non-affiliate, which was entered into contemporaneously with Mr. Collardeau's
Securities Exchange Agreement.
Glenn Zagoren, Chairman of the Board of Directors of Pro Net Link, is
president of ZZI, a strategic development and marketing company that has been
working with Pro Net Link since Inception. ZZI provides on-going marketing and
business functions for Pro Net Link including developing marketing plans,
general business consultation, supervision of marketing tools and investigating
and recommending strategic alliances and other business opportunities. The
current consulting agreement which expires in February 2000, provides that ZZI
is paid $10,000 per month from Pro Net Link for its services. Additionally, in
connection with the services rendered by Mr. Zagoren in his capacity as
President of ZZI, he has received options to purchase 2,000,000 shares of Common
Stock, (i) 500,000 of which are currently exercisable at $ 0.25 per share and
(ii) 1,500,000 of which are currently exercisable at $0.33 per share. The fair
value of such options has been valued in accordance with SFAS No. 123 using the
Black Scholes option pricing model at approximately $1,900,000. The Company has
recognized expense of $922,623 for the year ended June 30, 1999 with the balance
to be amortized through the remaining period of the consulting agreement. For
additional information concerning Mr. Zagoren's stock options (including the
methodology for the valuation thereof), see Footnote 8 to Pro Net Link's
Financial Statements.
ITEM 8. LEGAL PROCEEDINGS.
In June, 1998, the Securities and Exchange Commission (the "SEC") commenced
an investigation of Pro Net Link relating primarily to the alleged manipulation
of the market for securities of Pro Net Link, pursuant to a formal order issued
by the SEC under the authority of Sections 20(a) and 21(a) of the Securities
Exchange Act of 1934, as amended. Pursuant to that formal order, subpoenas for
the production of books, papers, documents and other records were served on Pro
Net Link and on companies doing business with Pro Net Link, and testimony was
demanded of Mr. Collardeau and Mr. Zagoren. Pro Net Link, Mr. Collardeau and Mr.
Zagoren complied with the subpoenas and all related requests of the SEC in June
and July 1998, and have received no further inquiries from the SEC regarding
this investigation. Pro Net Link has no information as to the results, if any,
of such investigation, whom the targets, if any, of such investigation were or
may be, or what action, if any, the SEC may take pursuant to the investigation.
ITEM 9. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Pro Net Link's Common Stock, par value $0.001, has been traded on the OTC
Electronic Bulletin Board under the symbol "PNLK" since October 1997, and, as of
December 8, 1999, there were 22 market makers for the Common Stock.
14
<PAGE> 16
The following table sets forth the high and low sale prices of Pro Net
Link's Common Stock as reported on the OTC Bulletin Board. These price
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH($) LOW($)
- ------------- ------- ------
<S> <C> <C>
March 31, 1998............................................. 2.25 0.62
June 30, 1998.............................................. 8.09 0.71
September 30, 1998......................................... 2.50 0.84
December 31, 1998.......................................... 2.18 0.15
March 31, 1999............................................. 3.81 0.70
June 30, 1999.............................................. 8.00 1.50
September 30, 1999......................................... 3.94 1.50
December 31, 1999.......................................... 3.31 2.03
</TABLE>
NUMBER OF REGISTERED HOLDERS
The number of registered holders of Pro Net Link's Common Stock as of
November 30, 1999 was 315. Pro Net Link believes that there are a greater number
of beneficial owners of its shares of Common Stock because Cede & Co. currently
is the record holder of approximately 25 million shares of Pro Net Link's Common
Stock. Cede & Co. is the name of the nominee of the Depository Trust Company
("DTC"), a depository that holds shares in its own name for other financial
institutions that are participants in DTC. Such participants, generally, in
turn, hold such securities for the beneficial owners of such shares. DTC has
informed the Company that it holds Pro Net Link shares on behalf of 165 DTC
participants.
DIVIDENDS
To date, Pro Net Link has not declared or paid any cash dividends on its
Common Stock. Pro Net Link currently anticipates that it will retain all
available funds for use in the operation and expansion of its business, and no
cash dividends are expected to be paid on the Common Stock in the foreseeable
future. Further, Pro Net Link's accumulated deficit and anticipated future
losses are factors that are likely to limit the future payment of dividends.
There can be no assurance that the operations of Pro Net Link's business will
generate the revenue and cash flow needed to declare cash dividends in the
foreseeable future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
In October and November 1997, Pro Net Link issued a total of 7,500,000
shares of Common Stock in private placements to two foreign companies and three
foreign individuals pursuant to exemptions from registration pursuant to Rule
504 of Regulation D under the Securities Act of 1933, as amended (the "Act").
The aggregate consideration received by Pro Net Link was $150,000.
In October, 1997, Pro Net Link issued an aggregate of 1,700,000 shares of
Common Stock in private placements to two foreign companies and one foreign
individual pursuant to exemptions from registration pursuant to Section 4(2)
under the Act. The aggregate consideration received by Pro Net Link was
$170,000.
In September through October 1998, Pro Net Link issued 4,210,000 shares of
Common Stock in private placements to three foreign companies pursuant to
exemptions from registration pursuant to Rule 504 of Regulation D under the Act.
The consideration received by Pro Net Link was $842,000.
As of December 1998, under a Securities Exchange Agreement between Pro Net
Link and Jean Pierre Collardeau, the President of Pro Net Link, Pro Net Link
issued 1,162,920 shares of restricted Common Stock, pursuant to an exemption
from registration under Section 3(a)(9) or 4(2) of the Act, to Mr. Collardeau in
exchange for the surrender to Pro Net Link by Mr. Collardeau of a Promissory
Note of Pro Net Link in favor of Mr. Collardeau, which at such time had an
outstanding principal balance plus interest of $232,584.
15
<PAGE> 17
As of December 1998, under a Securities Exchange Agreement between Pro Net
Link and Micheline Baron, Pro Net Link issued 1,056,150 shares of Common Stock,
pursuant to an exemption from registration under Section 3(a)(9) or 4(2) of the
Act, to Ms. Baron in exchange for the surrender to Pro Net Link by Ms. Baron of
a Promissory Note of Pro Net Link in favor of Ms. Baron, which at such time had
an outstanding principal balance plus interest of $211,230.
In February 1999, Pro Net Link issued 790,000 shares of Common Stock in
private placements to one foreign individual pursuant to exemptions from
registration pursuant to Rule 504 of Regulation D under the Act. The
consideration received by Pro Net Link was $158,000.
In February through April 1999, Pro Net Link issued 5,000,000 shares of
Common Stock in private placements to three foreign individuals and one foreign
company pursuant to exemptions from registration pursuant to Rule 506 of
Regulation D or otherwise under Section 4(2) of the Act. The consideration
received by Pro Net Link was $1,000,000.
In June 1999, Pro Net Link issued 200,000 shares of Common Stock in private
placements to one individual pursuant to exemptions from registration pursuant
to Rule 506 of Regulation D or otherwise under Section 4(2) under the Act. The
consideration received by Pro Net Link was $400,000.
In October 1999, Pro Net Link issued 200,000 shares of Common Stock in
private placements to one individual pursuant to exemptions from registration
pursuant to Rule 506 of Regulation D or otherwise under Section 4(2) of the Act.
The consideration received by Pro Net Link was $400,000.
In December 1999, Pro Net Link issued 400,000 shares of Common Stock in
private placements to one foreign individual pursuant to exemptions from
registration pursuant to Rule 506 of Regulation D or otherwise under Section
4(2) of the Act. The consideration received by Pro Net Link was $800,000.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $0.001 per share. As of November 30, 1999, there were
50,301,506 shares of Common Stock issued and outstanding (excluding 550,000
shares of Common Stock that will be issuable to a subscriber for such shares
upon full payment for such subscription). See "Security Ownership of Certain
Beneficial Owners and Management" and Footnote 11 to Pro Net Link's Financial
Statements.
The following brief description of the Company's Common Stock does not
purport to be complete and is subject in all respects to applicable Nevada law
and to the provisions of the Company's Amended and Restated Articles of
Incorporation, as amended (the "Articles"), and Amended and Restated Bylaws,
copies of which have been filed as exhibits to this registration statement.
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Holders of Common Stock do not have
cumulative voting rights, and therefore holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of the liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities.
The Common Stock has no preemptive or conversion rights and is not subject
to further call for assessments by the Company. The Common Stock currently
outstanding is validly issued, fully paid and nonassessable.
Certain of our stockholders are bound by a Lock-up Agreement, described in
footnote 2 to the table in Item 4. Pursuant to the Lock-up Agreement, Evelyne
Collardeau agreed that she would not sell any of her 6,000,000 shares of Common
Stock in the public market until after June 23, 1999, and Jean Pierre Collardeau
agreed that he would not sell 10,500,000 of his shares of Common Stock until
after such date. The Lock-up Agreement was amended to restrict the sale of all
of such shares in the public market until at least June 23, 2000. See footnotes
2 and 3 to the table in Item 4.
16
<PAGE> 18
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
RESTRICTIONS ON BUSINESS COMBINATIONS AND CORPORATE CONTROL
Chapter 78 of the General Corporation Laws of the State of Nevada (the
"GCL") contains provisions restricting the ability of a corporation to engage in
business combinations with an "interested shareholder." Under the GCL, except
under certain circumstances, business combinations are not permitted for a
period of three years following the date such shareholders became an interested
shareholder. The GCL defines an "interested shareholder," generally, as a person
who beneficially owns 10% or more of the outstanding shares of a corporation's
voting stock.
In addition, the GCL generally disallows the exercise of voting rights with
respect to "control shares" of an "issuing corporation" (as defined in the GCL).
"Control shares" are the outstanding voting shares of an issuing corporation
acquired in connection with the acquisition of a "controlling interest."
"Controlling interest" is defined in terms of threshold levels of voting share
ownership, which, when crossed, trigger application of the voting bar with
respect to the newly acquired shares. The GCL also permits directors to resist a
change or potential change in control of the corporation if the directors
determine that such a change is opposed to or not in the best interest of the
corporation.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 78.751 et seq. of the GCL allow a company to indemnify its
officers, directors, employees and agents from any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, except under certain circumstances. Indemnification may only
occur if a determination has been made that the officer, director, employee or
agent acted in good faith and in a manner which such person believed to be in
the best interests of Pro Net Link. A determination may be made by the
shareholders; by a majority of the directors who were not parties to the action,
suit, or proceeding confirmed by opinion of independent legal counsel; or by
opinion of independent legal counsel in the event a quorum of directors who were
not a party to such action, suit or proceeding does not exist.
Pro Net Link's Articles provide for indemnity for all persons whom Pro Net
Link may indemnify pursuant to the GCL. Under the Articles, directors of the
Company have no personal liability for monetary damages for breach of a
fiduciary duty, or failure to exercise any applicable standard of care, of a
director, to the fullest extent permitted by the GCL.
Pro Net Link's By-laws provide that the Pro Net Link is required, to the
fullest extent authorized by the GCL to indemnify any and all directors and
officers of Pro Net Link. Under the By-laws, the personal liability of each of
the directors of Pro Net Link is limited to the fullest extent permitted by the
GCL.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See ITEM 15(1) for an index to the audited consolidated financial
statements and supplementary financial information that are attached hereto.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
1. Financial Statements:
The following is a list of each financial statement filed as a part of
this Registration Statement:
a) Report of Independent Certified Public Accountants
b) Balance Sheets:
September 30, 1999 (unaudited)
June 30, 1999 and June 30, 1998
17
<PAGE> 19
c) Statements of Operations:
Three months ended September 30, 1999 and three months ended September
30, 1998 (unaudited)
Year ended June 30, 1999, period from July 25, 1997 (inception) to
June 30, 1998 and for the period July 25, 1997 (inception) to June 30,
1999
d) Cash Flows:
Three months ended September 30, 1999 and three months ended September
30, 1998 (unaudited)
Year ended June 30, 1999, period from July 25, 1997 (inception) to
June 30, 1998 and for the period July 25, 1997 (inception) to June 30,
1999
e) Stockholders' Equity:
Year ended June 30, 1999, period from July 25, 1997 (inception) to
June 30, 1998
Three months ended September 30, 1999 (unaudited)
f) Notes to the Financial Statements
2. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Pro Net
Link.*
3.2 By-laws of Pro Net Link.*
6.1 Credit facility documentation, between Pro Net Link Corp.
and Citibank, N.A., dated November 23, 1998, as extended on
August 20, 1999.**
6.2 Extension of Credit Facility documentation, between Pro Net
Link Corp. and Citibank, N.A., dated December 17, 1999.***
10.1 Master Service Agreement by and between Pro Net Link and Dun
& Bradstreet, Inc., dated as of April 27, 1999(1).
10.2 Consulting Agreement by and between Pro Net Link and
Zagoren-Zozzora, Inc., dated as of February 19, 1999.**
27.1 Financial Data Schedule (for SEC use only).**
</TABLE>
- ---------------
* Filed as an exhibit to Pro Net Link's registration statement on Form 10
filed with the Commission on June 21, 1999.
** Filed as an exhibit to Pro Net Link's registration statement on Form 10/A
filed with the Commission on December 14, 1999.
*** Filed as an exhibit to Pro Net Link's registration statement on Form 10/A2
filed with the Commission on January 27, 2000.
(1) Certain provisions of this exhibit have been filed separately with the
Commission pursuant to an application for confidential treatment.
18
<PAGE> 20
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Financial Statements
Balance Sheets............................................ F-3
Statements of Operations.................................. F-4
Statements of Changes in Shareholders' Equity............. F-5
Statements of Cash Flows.................................. F-6
Notes to Financial Statements............................. F-7 - F-10
</TABLE>
F-1
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Pro Net Link Corp.
New York, New York
We have audited the accompanying balance sheets of Pro Net Link Corp. (A
Development Stage Enterprise) as of June 30, 1999 and 1998, and the related
statements of operations, shareholders' equity and cash flows for the year ended
June 30, 1999, for the period from July 25, 1997 (inception) through June 30,
1998 and for the period from July 25, 1997 (inception) through June 30, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pro Net Link Corp. (A
Development Stage Enterprise) as of June 30, 1999 and 1998, and the results of
its operations and its cash flows for the year ended June 30, 1999, for the
period from July 25, 1997 (inception) through June 30, 1998 and for the period
from July 25, 1997 (inception) through June 30, 1999 in conformity with
generally accepted accounting principles.
/s/ Feldman Sherb Horowitz & Co.,
P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
August 9, 1999
except for Notes 5 and 11
which is as of December 6, 1999
F-2
<PAGE> 22
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
SEPTEMBER 30, -----------------------
1999 1999 1998
------------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................... $ 58,865 $ 285,259 $ 258,139
Prepaid expenses....................................... 30,000 104,912 12,000
----------- ----------- ---------
TOTAL CURRENT ASSETS................................ 88,865 390,171 270,139
FIXED ASSETS, net........................................ 191,469 113,985 45,936
OTHER ASSETS............................................. 144,885 144,385 --
----------- ----------- ---------
$ 425,219 $ 648,541 $ 316,075
=========== =========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Loan payable-bank...................................... $ 500,000 $ -- $ --
Accounts payable and accrued expenses.................. 284,132 396,664 111,525
Deferred income........................................ 39,780 42,325 --
Demand loan, non-interest bearing...................... -- -- 23,500
Notes payable shareholders, current portion............ 3,520 3,520 200,000
----------- ----------- ---------
TOTAL CURRENT LIABILITIES........................... 827,432 442,509 335,025
----------- ----------- ---------
NOTES PAYABLE TO SHAREHOLDERS -- non-current portion..... -- -- 315,605
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value, 150,000,000 shares
authorized; issued 50,268,570, 50,068,570 and
37,849,500 shares issued and outstanding............ 50,269 50,069 37,850
Common stock to be issued, 600,000 shares at September
30, 1999 and 800,000 at June 30, 1999............... 600 800 --
Additional paid-in-capital............................. 5,561,368 5,221,368 272,950
Deficit accumulated during the development stage....... (4,864,450) (3,866,205) (645,355)
Stock subscriptions receivable......................... (1,150,000) (1,200,000) --
----------- ----------- ---------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)................ (402,213) 206,032 (334,555)
----------- ----------- ---------
$ 425,219 $ 648,541 $ 316,075
=========== =========== =========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 23
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CUMULATIVE
JULY 25, 1997 JULY 25, 1997
THREE MONTHS (INCEPTION) (INCEPTION)
ENDED SEPTEMBER 30, YEAR ENDED THROUGH THROUGH
------------------------- JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998 1999
----------- ----------- ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Membership....................................... $ 1,802 $ 11,759 $ 14,248 $ -- $ 14,248
Barter........................................... 240,000 -- -- -- --
----------- ----------- ----------- ----------- -----------
TOTAL REVENUE...................................... $ 241,802 $ 11,759 $ 14,248 $ -- $ 14,248
=========== =========== =========== =========== ===========
EXPENSES:
Barter expenses.................................. 240,000 -- -- -- --
Website development.............................. 277,308 159,701 603,884 235,988 839,872
Commission....................................... 66,500 12,375 77,831 112,400 190,231
Selling, general and administrative.............. 307,040 161,724 1,600,649 286,369 1,887,018
Non-cash compensation expense.................... 340,000 -- 922,623 -- 922,623
Depreciation..................................... 5,688 3,271 17,839 4,909 22,748
Interest expense (net)........................... 3,511 303 12,272 5,689 17,961
----------- ----------- ----------- ----------- -----------
TOTAL EXPENSES..................................... $ 1,240,047 337,374 3,235,098 645,355 3,880,453
----------- ----------- ----------- ----------- -----------
NET LOSS........................................... $ (998,245) $ (325,615) $(3,220,850) $ (645,355) (3,866,205)
=========== =========== =========== =========== ===========
BASIC LOSS PER SHARE OF COMMON STOCK............... $ (0.02) $ (0.01) $ (0.07) $ (0.02) $ (0.11)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......... 50,224,820 38,099,500 43,772,888 27,050,048 35,406,811
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 24
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL STOCK
-------------------- PAID-IN ACCUMULATED SUBSCRIPTIONS
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL
---------- ------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE -- JUNE 30, 1997...... -- -- -- -- --
Issuance and sale of
stock.................... 28,400,000 $28,400 $ (4,100) $ -- $ $ 24,300
Issuance of common stock for
exchange................. 249,500 250 (250) -- --
Expenses pursuant to
exchange of stock........ -- -- (33,500) -- (33,500)
Sale of stock............... 9,200,000 9,200 310,800 -- 320,000
Net loss...................... -- -- -- (645,355) (645,355)
---------- ------- ---------- ----------- ----------- -----------
BALANCE -- JUNE 30, 1998...... 37,849,500 $37,850 $ 272,950 $ (645,355) $ -- $ (334,555)
Issuance of common stock for
conversion of debt....... 2,219,070 2,219 441,595 -- 443,814
Sale of stock............... 10,000,000 10,000 1,970,000 -- 1,980,000
Common stock to be issued... 800,000 800 1,599,200 1,600,000
Issuance of options in
conjunction with
marketing
agreement -- non-cash
compensation............. 922,623 922,623
Issuance of options in
conjunction with
employment agreement..... 15,000 15,000
Stock subscription
receivable............... -- -- -- -- (1,200,000) (1,200,000)
Net loss...................... -- -- -- (3,220,850) (3,220,850)
---------- ------- ---------- ----------- ----------- -----------
BALANCE -- JUNE 30, 1999...... 50,868,570 $50,869 $5,221,368 $(3,866,205) $(1,200,000) $ 206,032
Stock subscription
received................. -- -- -- -- 50,000 50,000
Non-cash compensation....... 340,000 340,000
Net loss...................... (998,245) (998,245)
---------- ------- ---------- ----------- ----------- -----------
BALANCE -- SEPTEMBER 30, 1999
(UNAUDITED)................. 50,868,570 $50,869 $5,561,368 $(4,864,450) $(1,150,000) $ (402,213)
========== ======= ========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 25
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
CUMULATIVE
JULY 25, 1997 JULY 25, 1997
THREE MONTHS (INCEPTION) (INCEPTION)
ENDED SEPTEMBER 30, THROUGH THROUGH
--------------------- JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998 1999
--------- --------- ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(998,245) $(325,615) $(3,220,850) $(645,355) $(3,866,205)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation.......................................... 5,688 3,271 17,839 4,909 22,748
Amortization of deferred rental income................ (2,545)
Non-cash services and compensation.................... 340,000 -- 937,623 -- 937,623
Changes in assets and liabilities:
Increase in prepaid and other current assets.......... 74,912 7,713 (92,912) (12,000) (104,912)
Increase in other assets.............................. (500) -- (144,385) (144,385)
Increase in accounts payable and accrued expenses..... (112,532) 13,955 327,464 111,525 438,989
--------- --------- ----------- --------- -----------
NET CASH USED IN OPERATING ACTIVITIES................... (693,222) (300,676) (2,175,221) (540,921) (2,716,142)
--------- --------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets................................ (83,172) (30,382) (85,888) (50,845) (136,733)
--------- --------- ----------- --------- -----------
CASH USED IN INVESTING ACTIVITIES....................... (83,172) (30,382) (85,888) (50,845) (136,733)
--------- --------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock.................................... 50,000 200,000 2,380,000 344,300 2,724,300
Cost related to share exchange.......................... -- -- -- (33,500) (33,500)
Proceeds from (repayment of) debt....................... 500,000 156,500 (23,500) 23,500 --
Repayment of notes payable to shareholders.............. -- (60,300) (71,791) -- (71,791)
Proceeds from notes payable to shareholders............. -- -- 3,520 515,605 519,125
--------- --------- ----------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES............... 550,000 296,200 2,288,229 849,905 3,138,134
--------- --------- ----------- --------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS...... (226,394) (34,858) 27,120 258,139 285,259
CASH AT BEGINNING OF THE PERIOD........................... 285,259 258,139 258,139 -- --
--------- --------- ----------- --------- -----------
CASH AT END OF THE PERIOD................................. $ 58,865 $ 223,281 $ 285,259 $ 258,139 $ 285,259
========= ========= =========== ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................. $ 1,083 $ 1,250 $ 21,897 $ 1,572 $ 23,469
========= ========= =========== ========= ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING & INVESTING
ACTIVITIES:
1. Barter sales in exchange for website and marketing
expenses............................................. $ 240,000 $ -- $ -- $ -- $ --
========= ========= =========== ========= ===========
2. Security deposits of previous tenant credited on new
leases............................................... -- 52,073 -- -- --
========= ========= =========== ========= ===========
3. Debt converted to common stock....................... $ -- $ -- $ 443,814 $ -- $ 443,814
========= ========= =========== ========= ===========
4. Common stock issued for services..................... $ -- $ -- $ -- $ 8,500 $ 8,500
========= ========= =========== ========= ===========
5. Stock options issued in conjunction with consulting
agreement -- non-cash compensation................... $ 340,000 $ -- $ 922,623 $ -- $ 922,623
========= ========= =========== ========= ===========
6. Stock options issued in conjunction with employment
agreement............................................ $ -- $ -- $ 15,000 $ -- $ 15,000
========= ========= =========== ========= ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 26
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND ORGANIZATION
Prevention Productions, Ltd. ("Prevention") is a Nevada chartered
development stage corporation incorporated on March 1, 1995. Pro Net Link Corp.
was incorporated on July 25, 1997 in the state of Delaware. In September, 1997,
all of the outstanding 7,485,000 shares of common stock of Prevention were
reverse split 1 for 30 into 249,500 shares of common stock. Immediately after
the reverse split, Prevention acquired 100% of Pro Net Link Corp. by issuing
28,400,000 shares for all of the shares of Pro Net Link Corp and changed its
name to Pro Net Link Corp.
The exchange has been accounted for as a reverse acquisition under the
purchase method for business combinations. Accordingly, the combination of the
two companies is recorded as a recapitalization of Pro Net Link Corp., pursuant
to which Pro Net Link Corp. is treated as the continuing entity for accounting
purposes and the historical financial statements presented are those of Pro Net
Link Corp. (The "Company").
On September 18, 1998, the Company amended its articles of incorporation to
increase its authorized common shares to 150,000,000 and to authorize the
issuance of 5,000,000 shares of preferred stock at $1.00 par value per share.
The Company is developing a website which gives access to an exclusive data
base of information in order to efficiently seek and find companies, products
and services. The data base includes manufacturers-producers,
wholesalers-distributors, and importers-exporters, of goods and services
including transportation, insurance, banking, etc., in countries throughout the
world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Property, Equipment and Depreciation: Property and equipment are stated
at cost. Depreciation and amortization are provided on either the straight-line
basis or accelerated methods on useful lives of 7 years for furniture and
fixture and 5 years for machinery and equipment.
b. Use of Estimates: In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
c. Revenue recognition: Revenue derived from membership fees is recognized
ratably over the applicable membership period. Revenues from advertising is
recognized when the advertisement is shown and revenue from revenue sharing is
recognized when the related goods are shipped or services provided. Revenues
from barter transactions are recognized in the period when the related revenue
and expense transaction is completed at the fair value of the product or service
received.
d. Development Costs: Costs related to the development of websites are
charged to expense when incurred.
e. Fair Value of Financial Instruments: The carrying amounts of certain
financial instruments, including cash, payable, and short-term debt,
approximated fair value as of June 30, 1999.
f. Earnings Per Share: The Company has adopted the provisions of Financial
Accounting Standard No. 128, "Earnings per share", which became effective for
financial statements for fiscal years ending after December 15, 1997. Basic
earnings per share are based on the weighted average number of common and common
equivalent shares outstanding.
g. Stock based compensation: The Company accounts for employee stock
transactions in accordance with APB Opinion No. 25, "Accounting For Stock Issued
To Employees." The Company has adopted the
F-7
<PAGE> 27
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
proforma disclosure requirements of Statement of Financial Accounting Standards
No. 123, "Accounting For Stock-Based Compensation". The Company accounts for all
stock transactions with other than employees in accordance with SFAS No. 123,
based on the fair value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable.
h. Interim Financial Statements (Unaudited): The financial statements as
of September 30, 1999 and for the three months ended September 30, 1999 and 1998
are presented as unaudited. In the opinion of management, these financial
statements include all adjustments necessary to present fairly the information
set forth therein. These adjustments consist solely of normal recurring
accruals. The interim results of operations for the three months ended September
30, 1999 and 1998 are not necessarily indicative of the results to be expected
for the full year or for any other interim period.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
USEFUL -------------------
LIFE 1999 1998
------- -------- -------
<S> <C> <C> <C>
Furniture and Fixtures............................... 7 Years $ 26,057 $ 6,123
Office Equipment and Computer........................ 5 Years 110,676 44,722
-------- -------
136,733 50,845
Less: accumulated depreciation....................... (22,748) (4,909)
-------- -------
$113,985 $45,936
======== =======
</TABLE>
4. NOTES PAYABLE -- SHAREHOLDERS
Notes payable to shareholders together with accrued interest of $443,814
were converted to 2,219,070 common shares pursuant to security exchange
agreements dated December 15, 1998. Such notes payable aggregated $515,605 at
June 30, 1998.
5. LINE OF CREDIT
The Company has a $500,000 line of credit which expires on December 5,
1999, with an interest rate of 1% over the bank base rate. The line is secured
by a standby letter of credit. At June 30, 1999 there were no amounts
outstanding under such credit line. The Company is in the process of seeking a
six month renewal on such line.
6. TAXES ON INCOME
The Company accounts for income taxes using an asset and liability approach
which generally requires the recognition of deferred income tax assets and
liabilities based on the future income tax consequences of events that have
previously been recognized in the Company's financial statements or tax returns.
Since the Company cannot currently conclude that it is more likely than not that
some or all of the deferred income tax asset will be realized, the related net
deferred tax assets have been fully offset by a valuation allowance. As of June
30, 1999, the Company has net operating losses carry forwards for federal income
tax purposes of approximately $2,943,000, $645,000 expiring in 2013 and
$2,298,000 expiring in 2019. The Company has established a valuation allowance
equal to its deferred tax asset.
F-8
<PAGE> 28
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of the deferred tax assets as of June 30, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1999 1998
---- ----
<S> <C> <C>
Net operating loss carryforward............................. $ 2,943,000 $ 645,000
----------- ----------
Total gross deferred tax asset.............................. $ 1,000,000 $ 219,000
Less valuation allowance.................................... (1,000,000) (219,000)
----------- ----------
Net deferred tax assets..................................... $ -- $ --
=========== ==========
</TABLE>
The increase in the valuation allowance of $781,000 during the year ended
1999 was due to the additional allowance provided for the 1999 net operating
loss.
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1999 1998
---- ----
<S> <C> <C>
Benefit computed at the statutory rate...................... $ 1,095,000 $ 219,000
Losses for which no benefit recognized...................... (1,095,000) (219,000)
----------- ----------
Benefit recorded............................................ $ -- $ --
=========== ==========
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
Office Rent: The Company leases its office facility at a monthly base
rental $13,688 through July 31, 2003. For the years ending June 30, 1999 and
1998 rent expense was $155,083 and $66,000, respectively.
Website Hosting Service: The Company entered into a website hosting
agreement effective from February 1, 1999 for a fee of $7,900 per month. The
term of the agreement is for one year.
8. RELATED PARTY TRANSACTION
The Company entered into a consulting agreement on February 19, 1999 with a
company, whose President is also Pro Net Link's Chairman, for marketing and
business consulting services for a fee of $10,000 per month. The term of
agreement is from February 19, 1999 to February 18, 2000. Previously, such
individual and the Company were party to a consulting agreement from February
18, 1998 through February 19, 1999 for a fee of $7,500 a month. The Company has
also issued 2,000,000 stock options, 500,000 exercisable at $.25 and 1,500,000
exercisable at $.33 to the Chairman. The quoted market price of the Company's
stock on the respective dates of the grants are $1.00 and $1.25, respectively.
The fair value of the options issued has been valued in accordance with SFAS No.
123 using the Black Scholes option pricing model at approximately $1,900,000
using the following weighted average assumptions: annual dividends $0.00,
expected volatility of 50%, risk free interest rate of 6% and expected life of
five years. The Company has recognized expense of $922,623 for the year ended
June 30, 1999 with the balance to be amortized through the remaining period of
the consulting agreement.
F-9
<PAGE> 29
PRO NET LINK CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. STOCK OPTIONS
The following table summarizes the activity with regard to options for the
year ended June 30, 1999:
<TABLE>
<CAPTION>
DATE OPTION OUTSTANDING AT
GRANTED SHARES PRICE OPTION ISSUED RELATED TO JUNE 30, 1999
- -------- --------- ------ -------------------------- --------------
<C> <C> <C> <S> <C>
12/31/98 20,000 $0.27 Employee stock options 20,000
8/11/98 500,000 $0.25 Non-employee stock options 500,000
2/17/99 1,500,000 $0.33 Non-employee stock options 1,500,000
--------- ---------
2,020,000 2,020,000
========= =========
</TABLE>
10. STOCK-BASED COMPENSATION
The Company accounts for its stock options in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. As such, compensation
would be recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. Accordingly, the Company
recognized $15,000 compensation cost for the stock options issued to one
employee.
The Company has adopted the disclosure only provisions of SFAS No. 123
"Accounting for Stock Based Compensation". Had compensation cost for the options
granted been determined based on fair value at the grant date for the awards
consistent with the provisions of SFAS No. 123, the Company's net loss would
have been increased by $4,000 and would not effect net loss per share for the
year ended June 30, 1999.
11. SUBSCRIPTIONS RECEIVABLE
During the year ended June 30, 1999 the Company sold 800,000 shares of
common stock for $1,600,000, of which $400,000 cash was received prior to June
30, 1999. An additional $1,100,000 was received through December 6, 1999.
12. SEC INVESTIGATION
In June 1998, the Company was informed that the United States Securities
and Exchange Commission (the "SEC") had commenced an investigation involving the
Company. The SEC served subpoenas on the Company for the production of books,
papers, documents and other records. The Company complied with the subpoenas in
June and July, 1998. Since that time, the Company has not received any further
inquiries from the SEC regarding this investigation, although, it is the
Company's understanding that the investigation is still pending. The Company has
no information as to the results, if any, of such investigation, whom the
targets, if any, of such investigation may be, or what action, if any the SEC
may take pursuant to the investigation.
F-10
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Registration Statement on Form
10/A3 to be signed on its behalf by the undersigned, thereunto duly authorized.
PRO NET LINK CORP.
By: /s/ JEAN PIERRE COLLARDEAU
------------------------------------
Jean Pierre Collardeau
President, Treasurer and Secretary
Dated: February 9, 2000
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Pro Net
Link.*
3.2 By-laws of Pro Net Link.*
6.1 Credit facility documentation, between Pro Net Link Corp.
and Citibank, N.A., dated November 23, 1998, as extended on
August 20, 1999.**
6.2 Extension of Credit Facility documentation, between Pro Net
Link Corp. and Citibank, N.A., dated December 17, 1999.***
10.1 Master Service Agreement by and between Pro Net Link and Dun
& Bradstreet, Inc., dated as of April 27, 1999(1).
10.2 Consulting Agreement by and between Pro Net Link and
Zagoren-Zozzora, Inc., dated as of February 19, 1999.**
27.1 Financial Data Schedule (for SEC use only).**
</TABLE>
- ---------------
* Filed as an exhibit to Pro Net Link's registration statement on Form 10
filed with the Commission on June 21, 1999.
** Filed as an exhibit to Pro Net Link's registration statement on Form 10/A
filed with the Commission on December 14, 1999.
*** Filed as an exhibit to Pro Net Link's registration statement on Form 10/A2
filed with the Commission on January 27, 2000.
(1) Certain provisions of this exhibit have been filed separately with the
Commission pursuant to an application for confidential treatment.
<PAGE> 1
EXHIBIT 10.1
(MATERIAL DENOTED *** HAS BEEN SEPARATELY FILED WITH THE COMMISSION
PURSUANT TO AN APPLICATION FOR CONFIDENTIALITY)
MASTER SERVICE AGREEMENT
This Master Service Agreement ("Agreement") sets forth the terms and conditions
under which Dun & Bradstreet, Inc. ("D&B") licenses its information and
software, including services and documentation associated therewith
(collectively, "Information") to Customer. The Information to be licensed by D&B
is set forth on the information schedule, including the initial information
schedule on the reverse side hereof (collectively, "Schedule[s]"), to be
executed from time to time by D&B and Customer. The terms of each Schedule are
incorporated herein by reference and the terms of this Agreement shall apply to
all Schedules that are in effect at any time and all references herein to "this
Agreement" shall be deemed to include all such Schedules.
1. LICENSE GRANT - D&B grants Customer a non-exclusive license to use the
Information as set forth on the applicable Schedule(s) subject to these terms.
2. DURATION AND LOCATION OF LICENSE - Where Information is licensed for
one-time use, Customer agrees to use such Information to generate a single
mailing and for no other purpose. Except for information provided for one-time
use, and except as otherwise set forth on any Schedule, Information may be used
by Customer throughout the continuous twelve (12) month period commencing the
sooner of the date of the initial shipment of any Information or thirty (30)
days after the signing of the applicable Schedule, unless this Agreement is
terminated earlier as provided below. Unless otherwise specified on the
applicable Schedule or agreed in writing, Customer is permitted to use
Information only at the "Bill To" (or "Ship To", if applicable) address on such
Schedule. Upon the expiration of the term of any Schedule, Customer shall
immediately return to D&B (if requested by D&B) all Information (including
copies) provided pursuant to that Schedule, or, if D&B has not requested their
return within thirty (30) days of such expiration. Immediately destroy all of
such Information (including copies).
3. RESTRICTIONS ON USE - All Information licensed to Customer pursuant to this
Agreement is provided for the exclusive use of Customer. None of the Information
may be available in whole or in part to any third party except that Customer may
furnish information to a third party for handling or processing upon the signing
by Customer and the third party of D&B's Processor's Agreement and its
acceptance by D&B. Unless otherwise specified on the applicable Schedule or
agreed in writing, Customer may not provide information to, or permit its use by
or for, any parent, subsidiary, affiliated entity or franchise of or dealer for
Customer. If Customer is a publisher, however, Information may be made available
to independent audit bureaus solely as an aid in auditing Customer's
circulation. Customer is expressly prohibited from using Information as a factor
in establishing an individual's eligibility for (i) credit or insurance to be
used primarily for personal, family or household purposes, or (ii) employment.
Customer is further prohibited from using Information to engage in unfair or
deceptive practices. Customer shall not copy any software licensed hereunder
except for backup/archival purposes. Except for mailing records and software or
unless otherwise agreed in writing, Customer may use Information in the medium
in which it is delivered or may, at Customer's expense, copy information into
any one or more other media. Customer agrees that pressure-sensitive or Cheshire
mailing records on which Information is provided may be used only once and may
not be duplicated in whole or in part in any form or manner whatsoever.
4. LIMITED WARRANTY - Customer acknowledges that the amounts to be paid to D&B
for the Information will in most instances represent a small portion of
Customer's overall costs of the project, task or function for which the
Information will be used. Customer also acknowledges that the type of
Information
<PAGE> 2
licensed by D&B will contain a degree of error. Finally, Customer acknowledges
that the prices that D&B charges its customers for the information are based, in
part, upon D&B's expectation that the risk of any loss or injury that might be
incurred by a user of the Information in reliance upon the Information will be
borne by Customer. For these reasons, Customer agrees that it is responsible for
determining that all Information licensed by D&B is sufficiently accurate for
Customer's purposes. If Customer finds that the Information is not sufficiently
accurate for its purposes following receipt by Customer and Inspection of the
same, then it must so notify D&B within fifteen (15) days after receipt. Upon
its receipt of such notice D&B shall, at its option, either correct the defect
at D&B's expense or refund any amounts paid by Customer for defective
Information. D&B DOES NOT GUARANTEE OR WARRANT THE CORRECTNESS, COMPLETENESS,
CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
INFORMATION OR OF THE MEDIA ON WHICH THE INFORMATION IS PROVIDED AND SHALL NOT
BE LIABLE TO CUSTOMER FOR ANY LOSS OR INJURY ARISING OUT OF OR CAUSED IN WHOLE
OR IN PART, BY D&B'S NEGLIGENT ACTS OR OMISSIONS IN PROCURING, COMPILING,
COLLECTING, INTERPRETING, REPORTING, COMMUNICATING, OR DELIVERING THE
INFORMATION OR IN OTHERWISE PERFORMING ITS OBLIGATIONS UNDER THIS AGREEMENT.
CUSTOMER AGREES THAT D&B WILL NOT BE LIABLE FOR CONSEQUENTIAL DAMAGES, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS PARAGRAPH STATES D&B'S ENTIRE
LIABILITY AND CUSTOMER'S REMEDY FOR BREACH OF THIS AGREEMENT.
5. LIMITATION OF LIABILITY - IF, NOTWITHSTANDING PARAGRAPH 4 ABOVE, LIABILITY
CAN BE IMPOSED ON D&B, THEN CUSTOMER AGREES THAT D&B'S AGGREGATE LIABILITY FOR
ANY AND ALL LOSSES OR INJURIES TO CUSTOMER ARISING OUT OF ANY ACTS OR OMISSIONS
OF D&B IN CONNECTION WITH ANYTHING TO BE DONE OR FURNISHED UNDER THIS AGREEMENT,
REGARDLESS OF THE CAUSE OF THE LOSS OR INJURY (INCLUDING NEGLIGENCE) AND
REGARDLESS OF THE NATURE OF THE LEGAL OR EQUITABLE RIGHT CLAIMED TO HAVE BEEN
VIOLATED, SHALL NEVER EXCEED THE AMOUNT PAID BY CUSTOMER FOR THE INFORMATION
FURNISHED UNDER THE SUBJECT SCHEDULE OR $25,000.00, WHICHEVER IS GREATER, AND
CUSTOMER COVENANTS AND PROMISES THAT IT WILL NOT SUE D&B FOR AN AMOUNT GREATER
THAN SUCH SUM AND THAT IT WILL NOT SEEK PUNITIVE DAMAGES IN ANY SUIT AGAINST
D&B.
6. USE OF D&B'S NAME - Neither D&B, Dun & Bradstreet nor any of their trade
names, trademarks or service marks may be used for any purpose as the
identification of Customer's source or reference.
7. RIGHTS - Customer acknowledges that the Information is proprietary to D&B
and comprises: (a) works of original authorship, including compiled information
containing D&B's selection, arrangement and coordination and expression of such
information or pre-existing material it has created, gathered or assembled; (b)
confidential and trade secret information; and (c) information that has been
created, developed and maintained by D&B at great expense of time and money such
that misappropriation or unauthorized use by others for commercial gain would
unfairly and irreparably harm D&B. Customer shall not commit or permit any act
or omission that would impair D&B's rights in the Information. Customer shall
reproduce D&B's copyright notice on all authorized copies of the Information.
8. ACCEPTANCE AND TERMINATION - This Agreement and any Schedule hereto shall not
be binding upon D&B until accepted by it. D&B may elect to terminate this
Agreement and any Schedule prior to expiration upon written notice in the event
of a breach thereof by Customer, and otherwise upon thirty (30) days written
notice. The termination of this Agreement or any Schedule shall, at D&B's
option, be deemed to terminate all
<PAGE> 3
Schedules then in effect. In the event of termination, Customer shall
immediately return to D&B all Information provided by D&B (including copies)
and, if the termination is elected by D&B in the absence of a breach by
Customer, then D&B shall refund the unearned portion of any consideration paid
by Customer.
9. CUSTOMER INFORMATION - If in connection with this Agreement D&B is provided
with proprietary information from Customer (such as customer lists), then D&B
agrees to treat that information in the same manner as D&B treats its own
proprietary information that it does not wish to be disclosed to anyone else and
D&B agrees not to use that information except for the purpose of performing its
obligation under this Agreement.
10. GENERAL - This Agreement contains the entire and only agreement between
Customer and D&B regarding the subject matter hereof, and there are merged
herein all prior and collateral representations, warranties, promises and
conditions. Any representation, warranty, promise or condition not incorporated
herein shall not be binding upon either party. Paragraph headings are for
convenience only and shall not be used in construing this Agreement. In the
event of a conflict between the terms and conditions of this Agreement and the
terms and conditions of any Schedule, the terms and conditions of this Agreement
shall control. This Agreement and each Schedule shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns except that neither this Agreement nor any Schedule may be
assigned by Customer without the prior written consent of D&B. If any provision
of this Agreement or any Schedule is held invalid by a court of competent
jurisdiction, the remainder of this Agreement or any Schedule shall remain in
effect and the invalid provision shall be deemed amended to the extent necessary
to make it valid while still giving effect to the agreement of the parties. No
waiver or amendment of this Agreement or any Schedule shall be binding on either
part unless it is in writing and is signed by an authorized official of D&B and
Customer.
BY SIGNING ON THE FRONT SIDE HEREOF, D&B AND CUSTOMER AGREE TO AND INTEND TO BE
BOUND BY THE MASTER SERVICE AGREEMENT ABOVE.
-2-
<PAGE> 4
INFORMATION PROVIDER AGREEMENT
(ELECTRONIC DIRECTORIES)
This Information Provider Agreement ("Agreement") is entered into the
27 day of April, 1999 by and between Pro Net Link Corporation ("Company"), with
its office at 645 5th Avenue, Suite 303, New York, New York 10022 and Dun &
Bradstreet, Inc. ("Provider"), with its office at one Diamond Hill Road, Murray
Hill, New Jersey 07974.
1. DEFINITIONS. The definition of terms set forth in this Section shall
apply in this Agreement.
(a) "D&B Data" means Provider's proprietary information on
individual businesses and made up of the data elements (if available) and
containing the number of records set forth on Schedule A.
(b) "Company Directory" means an electronic directory of
businesses using D&B Data as the source of such information to be accessed via a
graphical interface on the "Internet" commonly known as the "world wide web",
which directory is not intended to be used as a source of marketing or
telemarketing lists.
(c) "Company Directory Users" means users of the Company
Directory. A user (member) is further defined as a paying member and not a free
tour guest. Members will have full access to the database.
2. LICENSE.
(a) During the term of this Agreement, subject to the terms
and conditions hereof, Provider hereby grants to Company, a non-exclusive,
non-transferable license as follows:
(i) to reasonably use, reproduce and display the D&B
Data internally for development of the Company Directory.
(ii) to reproduce and display D&B Data in the Company
Directory as set forth herein.
(iii) to present the Company Internet Directory
solely on the Company's website located at the Internet addresses of
www.pronetlink.com and www.pnlk.com.
(iv) to utilize the D&B Data to support Company's
internal marketing campaigns.
(b) Except as set forth herein no right to use or distribute
any D&B Data is granted herein. The license granted herein permits the use of
the D&B Data by Company in the Company Directory and for its internal marketing
or telemarketing applications as described herein. The D&B Data may not be
provided to any third party, except to Company Directory Users and except as
otherwise set forth herein, it being agreed that the D&B Data is being licensed
primarily for the use of company in the Company Directory application as set
forth herein.
(c) The license granted herein permits Company's
subcontractors who are assisting Company in the development of the Company
Directory to have full access to the D&B Data solely for the purpose of
assisting Company in the creation of the Company Directory subject to the
following: (i) Company identifies such subcontractor(s) to Provider and they are
reasonably acceptable to Provider, (ii) such subcontractor(s) execute
non-disclosure agreements with Company that are acceptable to Provider, and
(iii) such subcontractor(s) execute D&B Processor's Agreements as set forth on
Schedule D. Company shall be liable for any breach of the above requirements or
the terms of the aforementioned non-disclosure agreements and the D&B
Processor's Agreements by such subcontractor.
3. ROYALTIES, BILLING, PAYMENT AND AUDIT RIGHTS.
(a) Royalties payable to D&B by Company for the license
granted herein shall be as stated in Schedule B attached hereto ("Royalties").
(b) If Royalties are not paid when due, Company will be
subject to interest on any unpaid balances at the rate of one and one-half
percent (1.5%) per month.
(c) Provider shall have the right at its expense on reasonable
notice to enter Company's offices to audit Company's records to determine its
compliance with any of the terms and
-3-
<PAGE> 5
conditions of this Agreement,
4. OBLIGATIONS AND RESTRICTIONS.
(a) Company shall only use D&B Data in the Company Directory in the
manner set forth herein and will only permit access and searching of D&B Data
as set forth herein. Downloading of D&B Data from the Company Directory shall
not be permitted.
(b) Company will provide Provider with an opportunity to review the
format and functionality of the Company Directory to determine its compliance
with the terms of this Agreement prior to and after implementation and will
incorporate changes necessary to bring the Company Directory into compliance
with this Agreement.
(c) D&B Data may only be displayed in "hypertext markup language".
(d) Company will monitor access to the Company Directory by Company
Directory Users and shall provide written notice (which notice shall contain the
IP address and the number of searches executed) to Provider on a weekly basis
when any single IP address has executed over one hundred (100) searches in any
one (1) calendar week. Provider may then request that Company deny further
access to such Company Directory User and Company shall promptly deny access.
(e) Data or information may be added to the D&B Data by Company or
Company may update the D&B Data in cases of data correction, as long as D&B
branding is not used in association with the site.
(f) Search results displayed to Company Directory Users will be
limited to 15 (fifteen) candidates per search. The parties agree to discuss
such limitation in good faith during the term of this Agreement and to modify it
if mutually agreed to. The list of candidates will be presented on two (2)
sequential screens. The first screen will contain a list of all candidates and
for each candidate will display company name, street address, city and state or
province. Any additional data on a candidate will be contained and displayed on
the second screen and will only be accessible on a one-at-a time basis. Such
additional candidate data will be telephone number and ZIP code and will be
accessible only via hypertext link or check box.
(g) Company shall have the right to cosmetically reformat the D&B
Data via using bold type, producing candidate lists in the order specified by
Company and by other reasonable cosmetic means.
(h) Company shall have the right to link the D&B Data to the
advertisements of the subject of such D&B Data record and display such
advertisement adjacent to the D&B Data.
(i) The D&B Data shall be housed at Company locations and web site
host only. Company may make one (1) copy of the D&D Data for backup purposes
only.
(j) The first screen of the Company Directory will prominently
display the following language: "The information contained in the Company
Directory ("Information") is provided for business lookup purposes and is not be
to used for marketing or telemarketing applications. The information may not
be, copied or redistributed and is provided "AS IS" without warranty of any
kind. In no event will Pro Net Link Corporation or its suppliers be liable in
any way with regard to such information. Your use of the Company Directory
indicates your agreement to these terms. If you do not agree to these terms,
please exit the Company Directory now."
(k) Company agrees to develop and implement, prior to the commercial
availability of the Company Directory, and on an ongoing basis thereafter,
reasonable technical devices to protect the D&B Data from unauthorized access
and use.
(l) Company represents and warrants that its use of the D&B Data
delivered hereunder by Provider shall in all cases comply with all federal,
state and local laws, statutes, rules, regulations and ordinances. Company
further represents that all mail or other marketing program using any D&B Data
delivered hereunder shall conform to generally recognized standards of high
integrity and good taste.
5. DELIVERY. Provider shall provide Company with a copy of the D&B Data
on a date to be agreed upon by the parties. When Provider provides Company with
the D&B Data, Company agrees to promptly load same into its copy of such file
and to make same commercially available in the Company Directory.
6. DISCLAIMER OF WARRANTY, LIMITATION OF LIABILITY, INDEMNITY.
(a) PROVIDER DOES NOT GUARANTEE OR WARRANT THE CORRECTNESS,
COMPLETENESS, CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OF THE D&B DATA AND SHALL NOT BE LIABLE TO COMPANY OR COMPANY DIRECTORY USERS
FOR ANY LOSS OR INJURY ARISING OUT OF OR CAUSED IN WHOLE OR IN PART BY
PROVIDER'S NEGLIGENT ACTS OR OMISSIONS IN PROCURING, COMPILING, COLLECTING,
INTERPRETING, REPORTING, COMMUNICATING, OR DELIVERING THE D&B DATA OR IN
OTHERWISE PERFORMING ITS OBLIGATIONS UNDER THIS AGREEMENT. PROVIDER WILL HAVE NO
LIABILITY WHATSOEVER FOR CONSEQUENTIAL, PUNITIVE, INDIRECT OR INCIDENTAL
DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) PROVIDER'S LIABILITY FOR ANY AND ALL LOSSES OR INJURIES TO
COMPANY ARISING OUT OF ANY ACTS OR OMISSIONS OF PROVIDER IN CONNECTION WITH
ANYTHING TO BE DONE OR FURNISHED UNDER THIS AGREEMENT, REGARDLESS OF THE CAUSE
OF THE LOSS OR INJURY (INCLUDING NEGLIGENCE) AND REGARDLESS OF THE NATURE OF THE
LEGAL OR EQUITABLE RIGHT CLAIMED TO HAVE BEEN VIOLATED (WHETHER IN CONTRACT OR
IN TORT), SHALL NOT EXCEED THE AMOUNT OF ROYALTIES RECEIVED BY PROVIDER
HEREUNDER.
(c) Notwithstanding anything to the contrary set forth herein,
Company agrees to fully indemnify, defend and hold Provider harmless from
liability resulting from or bearing on any and all claims, suits and causes of
action asserted or brought against Provider by a Company Directory User or any
third party based on any allegation regarding the Company Directory but
unrelated to the D&B Data contained in the Company Directory.
(d) Notwithstanding anything to the contrary set forth herein, each
party shall defend, indemnify and save the other harmless from and against all
costs, losses, damages and liabilities, including without limitation reasonable
attorneys' fees, which may be incurred by such party on account of the breach by
the other of any of such party's warranties contained in this Agreement, as
applicable. In addition, (i) Provider shall indemnify Company under this
paragraph from and against any claim that the D&B Data infringes on the United
States copyright, trade secret or trademark rights of any third party (provided
that the D&B Data is used as permitted by this Agreement) and (ii) Company shall
indemnify Provider under this paragraph from any claim that the Company
Directory (except for the D&B Data contained therein) or any of the technology
utilized by Company in developing, creating or distributing the Company
Directory infringes the copyright, patent, trademark or trade secret rights of
any third party.
(e) The foregoing indemnities are conditioned upon prompt written
notice to the indemnifying party by the indemnified party of any claim or
proceeding subject to indemnity; reasonable cooperation by the indemnified party
in the defense and settlement of such claim at the expense of the indemnifying
party; and prior written approval by both parties of any settlement or
compromise of the claim, which approval shall not be unreasonably withheld. An
indemnified party may elect to take control of the defense of a claim or
proceeding at its expense.
7. PROPRIETARY RIGHTS OF PROVIDER. Company acknowledges that the D&B
Data is proprietary to Provider and comprises: (a) works of original authorship,
including compiled information containing the Provider's selection, arrangement
and coordination and expression of such information or pre-existing material it
has created, gathered or assembled; (b) confidential and trade secret
information; and (c) information that has been created, developed and maintained
by the Provider at its expense such that misappropriation or unauthorized use by
others for commercial gain would harm Provider. Company shall not commit, nor
assist Company Directory Users to commit any act or omission that would impair
Provider's rights in the D&B Data.
8. USE OF PROVIDER'S NAME. Company shall not use the Provider's name or
trademarks in any way under this Agreement without Provider's prior written
consent.
9. TERM AND TERMINATION.
(a) This Agreement and the license granted herein shall commence on
the date of execution and shall continue in force for a period of one (1) year
from such date.
-4-
<PAGE> 6
(b) This Agreement may be terminated as follows:
(i) by either party in the event of the default by the other
party as provided in Paragraph 12.
(ii) by either party immediately upon written notice to the
other party if the other party becomes insolvent, makes an assignment for the
benefit of creditors, suffers or permits the appointment of a receiver for its
business or assets, files or otherwise becomes the subject of any proceeding
under any bankruptcy or insolvency law, or has wound up or liquidated its
business.
(iii) by Provider upon ten (10) days written notice to
Company if Company becomes affiliated through common ownership or control with
any of the entities set forth on Schedule C.
(iv) by Provider on ten (10) days notice if Provider has
reasonable evidence that Company Directory Users are accessing and downloading
D&B Data for use in direct marketing or telemarketing applications.
(v) by Provider immediately if Company charges Company
Directory Users for accessing, searching or obtaining D&B Data. Both parties
agree that the charge to Company Directory Users is for an annual membership fee
to subscribe to the Company Directory and entitles the user to certain
membership privileges, which privileges do not include accessing, searching or
obtaining the D&B Data as a stand-alone service.
(vi) by either party on written notice if the other party is
indicted or subject to adverse publicity such that the terminating party
reasonably believes that it is no longer in its interest to maintain this
relationship.
(c) Termination of this Agreement in accordance with its terms shall
not affect the rights or obligations of either Party that are vested as of the
effective date of such termination or intended by the parties to survive such
termination.
(d) upon expiration or termination of this Agreement, Company shall
immediately stop using the D&B Data and shall return it and all copies thereof
to Provider.
10. PROTECTION OF PROPRIETARY RIGHTS.
(a) Provider acknowledges that the tangible and intangible
information specifically designated by Company as confidential, including the
design, Plans, specifications, software manuals, customer lists, supplier data,
customer data, cost and price data, marketing information (other than D&B Data)
and other information relating to the Company Directory that is designated as
confidential, whether disclosed to Provider in connection with this Agreement or
otherwise, constitutes valuable confidential and proprietary information of
Company (collectively, "Company Confidential Information"). Notwithstanding the
foregoing, Company Confidential Information shall not include information that
was lawfully disclosed to Provider free of any obligation to keep it
confidential, information that is or that becomes publicly available by other
than unauthorized disclosure and information that is independently developed by
Provider. Provider shall not use or disclose and shall not suffer or permit its
employees, agents or any other parties to use or disclose such Company
Confidential Information other than as contemplated by this Agreement without
Company's prior written consent. Provider shall inform Company promptly after
discovery
-5-
<PAGE> 7
of any unauthorized use or disclosure of any of the Company Confidential
Information and shall furnish to Company all available information and
reasonably cooperate with Company regarding such disclosure.
(b) Company acknowledges that the tangible and intangible information
specifically designated by Provider as confidential, including data, formats and
layouts, the terms of this Agreement, and other information relating to the D&B
Data, whether disclosed to Company in connection with this Agreement or
otherwise, constitutes valuable confidential and proprietary information of
Provider (collectively, "Provider Confidential Information"). Notwithstanding
the foregoing, Provider Confidential Information shall not include information
that was lawfully disclosed to Company free of any obligation to keep it
confidential, information that is or that becomes publicly available by other
than unauthorized disclosure and information that is independently developed by
Company. Company shall not use or disclose and shall not suffer or permit its
employees, agents or any other parties to use or disclose such Provider
Confidential Information other than as contemplated by this Agreement without
Provider's prior written consent. Company shall inform Provider promptly after
discovery of any unauthorized use or disclosure of any Provider Confidential
Information and shall furnish to Provider all available information and
reasonably cooperate with Provider regarding such disclosure.
(c) Each party recognizes and agrees that its breach of the provisions
of this Paragraph 10 may cause immediate and irreparable harm to the other
party, and that in the event of such breach, the other party, in addition to any
damages to which it may be entitled, shall have the right to seek injunctive
relief against the other party.
11. ENTIRE AGREEMENT. This Agreement, including all Schedules, embodies
the entire understanding between the parties with respect to the subject matter
hereof and supersedes any and all prior understandings and agreements, oral or
written, relating thereto. Any amendment to this Agreement, including its
Schedules, must be in writing and signed by each party.
12. DEFAULT. Upon the breach of any material obligation under this
Agreement by either party, the aggrieved party may give to the defaulting party
written notice of such breach, which notice shall specify the exact nature of
the breach and shall expressly state the aggrieved party's intention to
terminate this Agreement in the event the breach is not remedied and any damages
to be paid within ten (10) days after the receipt of such notice. If, after the
expiration of such period, the defaulting party has filed or refuses to remedy
such breach and to pay the damages caused thereby, this Agreement may be
terminated forthwith effective upon dispatch of notice by the aggrieved party to
the defaulting party. The right of either party to terminate this Agreement on
default is not an exclusive remedy, and an aggrieved party shall be entitled
alternatively or cumulatively to seek damages for breach of this Agreement, to
seek an order requiring performance of the obligations of this Agreement, or to
seek any other appropriate remedy.
13. NOTICES. Every notice or other communication required or
contemplated by this Agreement by either party shall be delivered in person or
sent by postage prepaid mail, which shall
-6-
<PAGE> 8
be air mail if posted in a country other than that of the addressee, telex,
facsimile transmission, express delivery or courier, addressed to the party for
whom intended at the address specified at the beginning of this Agreement or at
such other address as the intended recipient previously shall have designated by
written notice to the other party. Notice shall be effective on delivery. Notice
not given in writing shall be effective only if explicitly or implicitly
acknowledged in writing by the party to whom it was given.
14. ASSIGNMENT. This Agreement shall not be assigned by either party
without the other party's prior written consent, except that Provider may assign
this Agreement to a successor corporation that results from a merger or
corporate reorganization, or to its parent or any affiliate, without such
consent.
15. SEVERABILITY. Should any provision of this Agreement be held to be
void, invalid, unenforceable or illegal by a court, the validity and
enforceability of the other provisions shall not be affected thereby.
16. NO WAIVER. Failure of either party at any time to require
performance by the other party of any obligation under this Agreement shall not
affect the right of such party to require performance of that obligation. Any
waiver by either party of any breach of any provision of this Agreement shall
not be construed as a waiver of any continuing or succeeding breach of such
prevision, a waiver or modification of the provision itself or a waiver of
modification of any right under this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed
under the law of the State of New Jersey.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
PRO NET LINK CORPORATION DUN & BRADSTREET, INC.
By: /s/ David Walker By:
------------------------- --------------------------------
Title: Chief Operating Officer Title:
------------------------- --------------------------------
Date: 4/27/99 Date:
------------------------- --------------------------------
-7-
<PAGE> 9
SCHEDULE A
List of Data Elements
Approximately 3 million worldwide business records comprised of the
following data elements:
Top Contact Name
Company Name
Address
City, State, ZIP Code
Country Code
Telephone Number
FAX Number (International records only, where available)
Line of Business description
SIC Code (Primary, 4-digit)
URL (U.S. records only)
<PAGE> 10
SCHEDULE B
Royalties
---------
Company agrees to pay Provider an annual license fee of $*** for the use
of the D&B Data as described in this Agreement, Payments of this annual license
fee will be exercised according to the following schedule:
Schedule:
- --------
$*** due May 30, 1999
$*** due June 30, 1999
$*** due July 30, 1999
In addition to the aforementioned license fee, Company also agrees to pay
Provider royalties based on the annual membership fees generated by Company
from its Internet-based directory site, which site includes D&B Data as its
primary source of information. The royalty structure is based on the number of
members Company signs up on an annual basis and is as follows:
Number of Members Royalty Rate
- ----------------- ------------
0-4,999 %***
5,000-9,999 %***
10,000 or more %***
Royalty payments will be made on a quarterly basis, with each payment due
thirty (30) days after each calendar quarter. Company agrees to pay Provider a
minimum royalty guarantee of $*** during the term of this Agreement.
<PAGE> 11
SCHEDULE C
List of Restricted Entities
Pro NetLink will restrict these names from becoming members of the site.
American Business Information infoCanada
American Business Lists InfoUSA
American List Counsel, Inc. International Business Lists
CCS/Acxiom Lead Source
Customer Decision Corp. List America
Chilton Publishing MAGI
Claritas/NPDC Market Pulse/Praxis
CMP Metromail Corporation
Compilers Plus May & Speh
Computer Intelligence Names and Addresses, Inc.
Contacts Influential Names in the News
Customer Insight National Decision Systems
Metromail/R.R. Donnelley & Sons Co. National Register Publishing
Customized Mailing List Inc. Neodata
Database America, Inc. Pagex
Direct Marketing Technologies, Inc. PCS Mailing List Co.
Direct Media, Inc. Penton Publishing
Dunhill International List Co., Inc. R.L. Polk & Co.
Ed Baurnett Consultants Research Projects Corporation
Edith Roman Associates, Inc. Standard & Poor's
EDS (Electric Data Systems) Technimetrics (Finex)
Epsilon United Insurance
Experian (TRW Target Marketing Svcs.) Unibase
Equifax Walter Karl Co.
Fred Woolfe List Co. Worlddata
Great Universal Stores (GUS) Zeller & Letica
Harte Hanks Ziff Davis List Services
Hugo Dunhill Mailing Lists, Inc.
IDG Publishing
<PAGE> 12
SCHEDULE D
PROCESSOR'S AGREEMENT
This D&B/Processor Data Processing Agreement Is entered into this ___
day of __________, 1999, by and among Dun & Bradstreet, Inc., acting for itself
and on behalf of all other companies of The Dun & Bradstreet Corporation, 1
Diamond Hill Road, Murray Hill, New Jersey 07974 ("D&B"), Rare Medium, Inc.,
having an address at 44 West 18th Street, New York, New York 10011 ("Processor")
and Pro Net Link Corporation ("Customer").
This D&B/Processor Data Processing Agreement is based upon the
following:
A. D&B is the owner of a valuable, proprietary and copyrighted database
containing information on businesses that D&B licenses to third parties for use
in their credit, marketing and other business decision-making.
B. D&B and Customer are parties to an Agreement dated April _, 1999
(the "License Agreement") under which D&B is licensing information from its
database to Customer. The "Licensed Information"), as that term is used herein,
means all or any portion of the information that is licensed to Customer
pursuant to the License Agreement.
C. Customer wishes to provide the Licensed Information to Processor
solely for processing and handling for and on behalf of Customer. D&B is willing
to permit Customer to provide the Licensed Information to Processor for this
purpose subject to Customers and Processor's joint and several agreement to the
terms and conditions of this D&B/Processor Data Processing Agreement.
NOW, THEREFORE, in consideration of the foregoing, and with the intent
to be legally bound hereby, the parties agree as follows:
1. As between Processor and D&B, all Licensed Information provided to
Processor is and shall remain the property of D&B and is and shall be subject to
the copyright of D&B that covers the gathering of large amounts of information,
the selection therefrom and the rendition thereof into usable forms and formats,
Processor shall do nothing inconsistent with the copyright or other proprietary
rights of D&B In and to the Licensed Information.
2. No Licensed Information, whether provided directly to Processor by
D&B or provided to Processor by Customer, shall be either duplicated by
Processor or integrated with information belonging to Processor or any parent,
subsidiary or affiliate of Processor for the benefit of Processor, or any
parent, subsidiary or affiliate of Processor or any third party other than
Customer or be made available by Processor to any parent, subsidiary or
affiliate of Processor or any third party other than Customer.
3. All Licensed information, including all copies thereof, shall be
returned to D&B or otherwise destroyed at the expiration or earlier termination
of the License Agreement and none of
<PAGE> 13
the Licensed information shall be retained by Processor. In addition, if
Customer is provided with one (1) or more periodic updates of the Licensed
Information during the term of the License Agreement, then Processor shall
promptly return all previously-provided Licensed Information, including all
copies thereof, upon its receipt of an update thereof.
4. Upon the expiration or earlier termination of this D&B/Processor
Data Processing Agreement, Processor shall provide D&B with a letter, signed by
an officer of Processor, certifying that Processor has fully complied with all
of the terms and conditions of Sections 2 and 3 hereof.
5. a. Except as expressly authorized by subparagraph 5(b) below,
Processor shall not analyze or otherwise use the Licensed Information to
familiarize itself with the nature, character or quality of the Licensed
Information nor shall Processor use any information it obtains as a result of
its handling, processing or possession of the Licensed Information for its
benefit, for the benefit of any parent, subsidiary or affiliate or for the
benefit of any third party other than Customer. Without limiting the generality
of the foregoing, Processor shall not use the Licensed Information or
Information obtained as a result of its handling, processing or possession of
the Licensed Information in connection with the creation, testing, enhancement,
promotion, marketing, selling and/or licensing of products or services offered
by Processor, any parent, subsidiary or affiliate of Processor or any third
party other than Customer.
b. Notwithstanding the prohibitions contained in subparagraph 5(a)
above, D&B agrees that Processor may analyze the Licensed Information for the
sole benefit of Customer, provided that Customer promptly provides D&B with
copies of all reports that Processor provides Customer that in any way refer to
or reflect upon the results of such analysis.
6. During the term of this D&B/Processor Data Processing Agreement, and
for a period of one (1) year thereafter, D&B shall have the right, no more than
three (3) times per year, and upon five (5) business days written notice, to
enter Processor's premises during normal business hours to conduct an audit to
determine if Processor has complied with the material terms of this
D&B/Processor Data Processing Agreement. Such audit shall be limited to an
examination of files In Processor's possession, including all hard copy and
machine readable databases which D&B reasonably believes pertinent to
Processor's uses of the Licensed Information. D&B agrees that it shall use best
efforts to minimize any adverse impact such audit may have upon Processor's
normal business operations. Processor agrees to reasonably cooperate with D&B in
connection With such audit and to make the pertinent files in its possession
accessible to D&B and its auditors.
7. Customer agrees to Indemnify D&B from any losses or damages that D&B
may incur as a result of Processor's failure or refusal to comply with any of
the material terms and conditions of this D&B/Processor Data Processing
Agreement provided that D&B: (a) provides Customer and Processor with prompt
notice of any Such claim, (b) allows Customer the ability to participate, at
Customer's expense, in the defense of any such claim and (c) does not settle or
otherwise dispose of any such claim without the prior written consent of
Customer. Processor agrees to indemnify Customer from any losses, damages or
expenses (including, without limitation, attorneys', accountants' and outside
advisors' fees and disbursements) that Customer may incur as a result of
<PAGE> 14
Processor's failure or refusal to comply with any of the material terms and
conditions of this D&B/Processor Data Processing Agreement; provided that
Customer (a) provides Processor with prompt notice of any such claim, (b) allows
Processor the ability to participate, at Processor's expense, in the defense of
such claim and (c) does not settle or otherwise dispose of any such claim
without the prior written consent of the Processor. Notwithstanding the
foregoing, Processor shall not be liable to Customer for any losses, damages or
expenses in excess of the amount actually paid by Customer to Processor pursuant
to the terms of that certain Development Agreement, dated as of August 28, 1998,
between Customer and Processor (the "Development Agreement") and nothing
contained herein is intended to amend or modify any limitation on the aggregate
amount payable by Processor to Customer pursuant to the Indemnification
provisions of the D&B/Processor Data Processing Agreement.
8. D&B and Customer hereby represent and warrant that, as of the date
hereof, D&B has not asserted any claim that Processor has failed to comply with
material terms and conditions hereof and Customer is not otherwise aware of any
facts constituting a basis for such claim.
9. Processor may terminate this D&B/Processor Data Processing Agreement
upon written notice to Customer who shall promptly notify D&B of Processor's
termination. This D&B/Processor Data Processing Agreement shall also terminate
automatically upon the expiration or earlier termination of the underlying
contract or other arrangement under which Customer engages Processor to process
the Licensed Information. Customer shall give D&B prompt written notice of any
such expiration or earlier termination. No termination of this D&B/Processor
Data Processing Agreement shall be effective, however, until Processor has
compiled with its obligations under paragraphs 3 and 4 above.
10. This D&B/Processor Data Processing Agreement represents the entire
agreement among Customer, Processor and D&B with regard to the subject matter
hereto and there are merged herein all prior and collateral promises, terms and
conditions. D&B and Customer acknowledge that they are parties to another
Agreement that also concerns the subject matter hereof but that the two-party
agreement is not affected by the foregoing "merger" provision. This
D&B/Processor Data Processing Agreement shall bind and inure to the benefit of
the parties and their successors and permitted assigns. This D&B/Processor Data
Processing Agreement may not be assigned, nor may any party's obligations
hereunder be subcontracted, without the prior written consent of the other
parties which shall not be unreasonably withheld or delayed, except that no
consent shall be required for either an assignment of this D&B/Processor Data
Processing Agreement by D&B to another company of The Dun & Bradstreet
Corporation as a subcontractor. This D&B/Processor Data Processing Agreement may
not be amended, nor shall any waiver of rights hereunder be effective, unless
the amendment or waiver is in writing and is signed by all of the parties
hereto. If any provision of this Agreement is found by a court of competent
jurisdiction to be unenforceable, then the court is hereby authorized to modify
that provision to make it enforceable and, failing that, to
<PAGE> 15
reform the contract by removing the unenforceable provision. This Agreement
shall be governed by the law of the State of New Jersey, without giving effect
to its conflicts of laws provisions.
Customer: Processor:
- ---------------------------------- -----------------------------------
[Type or print legal name] [Type or print legal name]
By: By:
--------------------------- -----------------------------
Name: Name:
--------------------------- -----------------------------
Title: Title:
--------------------------- -----------------------------
Accepted By:
DUN & BRADSTREET, INC.
By:
-------------------------------
Name:
-------------------------------
Date:
-------------------------------
<PAGE> 16
MASTER SERVICE AGREEMENT AND DUN & BRADSTREET
INITIAL INFORMATION SCHEDULE INFORMATION SERVICES
No. 751265 Three Sylvan Way, Parsippany,
NJ 07054 - (201) 605-6000
The undersigned ("Customer") hereby employs Dun & Bradstreet, Inc. to furnish
the information listed below pursuant to this Schedule:
Description of Information:
3,000,000 Telemarketing Records Geography Worldwide
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Price: $ *** up-front commitment, $ *** Guaranteed Royalty
- --------------------------------------------------------------------------------
Prices may be based upon an estimated yield. If such yield does not meet the
estimate, Customer will accept any yield and price within the following ranges:
<TABLE>
<CAPTION>
MINIMUM QUOTED ESTIMATE MAXIMUM
<S> <C> <C> <C>
Yield:
-------- --------------------------- -------------
Price: $ ***
-------- --------------------------- -------------
</TABLE>
SHIPPING: Method of shipping will be as requested by Customer and will be billed
accordingly.
SALES TAX: Customer shall pay all applicable state and local taxes.
TERMS OF PAYMENT: Promptly, but no later than 30 days
after receipt of invoice.
/ / Check if use is one-time only.
CUSTOMER BILLING INFORMATION: Circle one for credit card charges:
MasterCard / Visa / Amercian Express
Card No: Exp. Date: Card Holder's Name:
---------------- -------- --------------
- --------------------------------------------------------------------------------
Company Name P R O N E T L I N K C O R P
- --------------------------------------------------------------------------------
Address 6 4 5 5 T H A V E N U E -
S U I T E 3 0 3
- --------------------------------------------------------------------------------
City N E W Y O R K STATE N Y
ZIP 1 0 0 2 2 SIC 4 8 1 3
- --------------------------------------------------------------------------------
Attention D A V E W A L K E R
- --------------------------------------------------------------------------------
Telephone 2 1 2 - 6 8 8 - 8 8 3 8
- --------------------------------------------------------------------------------
FAX 2 1 2 - 3 1 9 - 4 5 9 8
- --------------------------------------------------------------------------------
CUSTOMER SHIPPING INFORMATION:
- --------------------------------------------------------------------------------
Company Name P R O N E T L I N K C O R P
- --------------------------------------------------------------------------------
Address 6 4 5 5 T H A V E N U E -
S U I T E 3 0 3
- --------------------------------------------------------------------------------
City N E W Y O R K STATE N Y
ZIP 1 0 0 2 2 SIC 4 8 1 3
- --------------------------------------------------------------------------------
Attention D A V E W A L K E R
- --------------------------------------------------------------------------------
Telephone 2 1 2 - 6 8 8 - 8 8 3 8
- --------------------------------------------------------------------------------
FAX 2 1 2 - 3 1 9 - 4 5 9 8
- --------------------------------------------------------------------------------
A.E. Name Joan Greco
Center 1 1 1 1 4 SID 3 5 6
- --------------------------------------------------------------------------------
A.E. Telephone 973-605-6713
- --------------------------------------------------------------------------------
IMPORTANT: THIS SCHEDULE IS SUBJECT TO THE TERMS AND CONDITIONS OF THE MASTER
SERVICE AGREEMENT ON THE REVERSE SIDE, WHICH TERMS AND CONDITIONS ARE
INCORPORATED HEREIN.
AGREED BY: ACCEPTED BY:
Company Name: Pronetlink Corp. DUN & BRADSTREET, INC.
--------------------------
Authorized Signature: /s/ David Walker By:
------------------ --------------------------------
Name (Please Print): David Walker Title:
------------------- -----------------------------
Title: Chief Operating Officer Date:
--------------------------------- ------------------------------
Date: April 27, 1999
----------------------------------
REVIEWED: By:___________________ Title:__________________ Date:______________
By:___________________ Title:__________________ Date:______________
<PAGE> 17
DB
Dun & Bradstreet
04/28/99
DAVE WALKER
PRO NET LINK CORP.
645 5TH AVENUE #303
NEW YORK, NY 10022-0000
Dear DAVE WALKER:
We have enclosed the business information you requested and we thank you for
your order that includes the following items:
<TABLE>
<CAPTION>
ITEM # QUANTITY DESCRIPTION OUTPUT MATERIALS
- ------ -------- ----------- ----------------
<S> <C> <C> <C>
1 3,225,636 Worldbase Telemarketing Floppy Disk
</TABLE>
If you have any questions about this information or if you would like to hear
about other D&B Sales, Marketing or Credit solutions, please don't hesitate to
call JOAN GRECO, your Account Executive at 800-526-0651. For technical support,
contact our Customer Service Center at 800-234-3867.
Please refer to order number 0000654613 when calling.
Again, thank you for choosing Dun & Bradstreet. We appreciate your business.
Regards,
/s/ MARYANN WASIK
Maryann Wasik
Vice President
Marketing
