10-Q 1 e85097.txt FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number 000-26451 --------- PRO NET LINK CORP. Incorporated in the IRS Employer Identification State of Nevada Number 88-0333454 645 Fifth Avenue New York, New York 10022 (212) 688-8838 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Registrant had 52,208,070 shares of common stock outstanding as of May 15, 2001. ----------------------------------------------------------- This report consists of 16 pages ================================================================================ PRO NET LINK CORP. (A DEVELOPMENT STAGE ENTERPRISE) INDEX PART I - FINANCIAL INFORMATION PAGE NO. ---- ITEM 1. Financial Statements Condensed Statements of Operations - Nine Months Ended March 31, 2001, and Nine Months Ended March 31, 2000, and from July 25, 1997 (inception) through March 31, 2001 ............................. 3 Condensed Statements of Operations - Three Months Ended March 31, 2001, and Three Months Ended March 31, 2000 ........................................... 4 Condensed Balance Sheets - as of March 31, 2001 and June 30, 2000 ...................................... 5 Condensed Statements of Cash Flows - Nine Months Ended March 31, 2001, Nine Months Ended March 31, 2000, and From July 25, 1997, (inception) through March 31, 2001 .............................. 6 Condensed Statements of Cash Flows - Three Months Ended March 31, 2001, and Three Months Ended March 31, 2000 ..................................... 7 Notes to Condensed Financial Statements ......................... 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ..................................................... 10 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk .............................................. 14 PART II - OTHER INFORMATION ITEM 6. Exhibits and Reports ........................................... 15 SIGNATURES............................................................... 16 -------------------------------------------------------------------------------- Page 2 ITEM 1. FINANCIAL STATEMENTS PRO NET LINK CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Cumulative July 25, Nine Months Ended 1997 (inception) March 31, Through March 31, ----------------------------- ------------------ 2001 2000 2001 ------------ ------------ ----------------- REVENUES $ 14,459 $ 51,816 $ 110,308 ------------ ------------ ------------ EXPENSES Website Development 264,034 312,569 1,454,926 Commissions 127,917 136,250 484,523 Selling, General and Administrative (exclusive of non- cash compensation expense shown below) 2,026,910 1,699,765 6,336,024 Non-Cash Compensation Expense 65,924 1,020,213 2,023,760 Depreciation 55,458 37,428 128,110 Interest Expense (Net) 129,739 15,220 163,934 ------------ ------------ ------------ Total Expenses 2,669,982 3,221,445 10,591,277 ------------ ------------ ------------ Net Loss $ (2,655,523) $ (3,169,629) $(10,480,969) ============ ============ ============ Basic Loss Per Share of Common Stock $ (0.05) $ (0.06) $ (0.20) ============ ============ ============ Weighted Average Common Shares Outstanding 51,810,515 50,663,100 51,810,515 ============ ============ ============ The accompanying notes are an integral part of these financial statements. -------------------------------------------------------------------------------- Page 3 PRO NET LINK CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, ---------------------------------- 2001 2000 ------------ ------------ REVENUES $ 70 $ 24,680 ------------ ------------ EXPENSES Website Development 14,283 51,348 Commissions 30,417 27,375 Selling, General and Administrative (exclusive of non- cash compensation expense shown below) 510,059 668,092 Non-Cash Compensation Expense 35,375 340,071 Depreciation 18,486 12,933 Interest Expense 55,091 2,967 ------------ ------------ Total Expenses 663,711 1,102,786 ------------ ------------ Net Loss $ (663,641) $ (1,078,106) ============ ============ Basic Loss Per Share of Common Stock $ (0.01) $ (0.02) ============ ============ Weighted Average Common Shares Outstanding 52,167,626 51,065,882 ============ ============ The accompanying notes are an integral part of these financial statements. -------------------------------------------------------------------------------- Page 4 PRO NET LINK CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONDENSED BALANCE SHEETS March 31, June 30, 2001 2000 (Unaudited) ----------- ----------- ASSETS CURRENT ASSETS: Cash $ 2,702 $ 47,388 Accounts Receivable 5,850 24,390 Prepaid Expenses 14,583 29,833 Loans Receivable - Employees 17,923 -- ----------- ----------- TOTAL CURRENT ASSETS 41,058 101,611 FIXED ASSETS (NET) 253,195 308,436 OTHER ASSETS 48,667 48,667 ----------- ----------- TOTAL ASSETS 342,920 458,714 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES: Loan Payable - bank $ -- $ 400,000 Accounts Payable and Accrued Expenses 441,899 180,543 Deferred Income 23,494 31,045 ----------- ----------- TOTAL CURRENT LIABILITIES 465,393 611,588 LONG TERM LIABILITIES: Notes Payable to Shareholder 2,110,000 -- ----------- ----------- TOTAL LIABILITIES 2,575,393 611,588 ----------- ----------- SHAREHOLDERS' DEFICIT: Common stock, $.001 par value, 150,000,000 shares authorized; 52,208,070 shares issued at March 31, 2001 and 51,378,070 shares issued at June 30, 2000 52,208 51,378 Additional Paid-in Capital 8,196,288 7,621,196 Deficit Accumulated During Development Stage (10,480,969) (7,825,448) ----------- ----------- TOTAL SHAREHOLDERS' DEFICIT (2,232,473) (152,874) ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 342,920 $ 458,714 =========== =========== The accompanying notes are an integral part of these financial statements. -------------------------------------------------------------------------------- Page 5 PRO NET LINK CORP. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

~~Page~~Cumulative ~~No.~~July 25, 1997 (inception) Nine Months Ended through March 31, March 31, ----------------------------- ~~ITEM~~------------ 1.2001 ~~Financial~~2000 ~~Statements~~2001 ~~Condensed~~------------ ~~Statements~~------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (2,655,523) $ (3,169,629) $(10,480,969) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 55,458 37,428 128,110 Amortization of ~~Operations~~deferred rental income (7,551) (8,845) (18,831) Stock Issued for Services -- ~~Six~~79,558 ~~Months~~80,124 ~~Ended~~Non-Cash ~~December~~Services 31and compensation 65,924 ~~2000~~1,020,213 2,023,760 Changes in assets and ~~Six~~liabilities: ~~Months~~Decrease ~~Ended~~(increase) ~~December~~in 31prepaid and other current assets (2,673) ~~1999~~86,083 ~~and~~(32,506) ~~from~~Decrease ~~July~~(increase) 25in accounts receivable 18,540 ~~1997~~(24,450) (~~inception~~5,850) ~~through~~Decrease ~~December~~(increase) 31in other assets -- 95,718 ~~2000~~(48,667) ~~................................~~(Decrease) 3increase ~~Condensed~~in ~~Statements~~accounts ofpayable ~~Operations~~and accrued expenses 261,356 (271,194) 484,224 ------------ ~~Three~~------------ ~~Months~~------------ ~~Ended~~NET ~~December~~CASH 31USED IN OPERATING ACTIVITIES (2,264,469) ~~2000~~(2,155,118) ~~and~~(7,870,605) ~~Three~~------------ ~~Months~~------------ ~~Ended~~------------ ~~December~~CASH 31FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (217) (244,355) ~~1999~~(381,305) ~~..............................................~~------------ 4------------ ~~Condensed~~------------ ~~Balance~~CASH ~~Sheets~~USED IN INVESTING ACTIVITIES (217) (244,355) (381,305) ------------ as------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Sale of ~~December~~common 31stock 510,000 ~~2000~~2,500,000 ~~and~~4,534,300 ~~June~~Proceeds ~~30,~~from ~~2000~~notes ~~............................................~~payable 5to ~~Condensed~~shareholder ~~Statements~~2,110,000 -- 2,169,125 Repayment of ~~Cash~~notes ~~Flows~~payable to shareholder -- ~~Six~~-- ~~Months~~(75,311) ~~Ended~~Proceeds ~~December~~from 31(repayment of) note payable - bank (400,000) ~~2000~~-- -- Proceeds received from common stock subscribed -- -- 1,200,000 ~~and~~Cost ~~Six~~related ~~Months~~to ~~Ended~~share ~~December~~exchange 31-- -- (33,500) ~~1999~~Increase ~~and~~in ~~from~~cash ~~July~~overdraft 25-- -- -- ------------ ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 2,220,000 ~~1997~~2,500,000 8,254,614 ------------ ------------ ------------ NET INCREASE (~~inception~~DECREASE) ~~through~~IN ~~December~~CASH 31AND CASH EQUIVALENTS (44,686) ~~2000~~100,527 ~~............................~~2,702 6CASH ~~Notes~~AT toBEGINNING ~~Condensed~~OF ~~Financial~~PERIOD ~~Statements~~47,388 ~~...............................~~285,259 7-- ~~ITEM~~------------ ------------ ------------ CASH AT END OF PERIOD $ 2.,702 ~~Management's~~$ ~~Discussion~~385,786 ~~and~~$ ~~Analysis~~2,702 of============ ~~Financial~~============ ~~Condition~~============ ~~and~~SUPPLEMENTAL ~~Results~~DISCLOSURE ofOF ~~Operations~~CASH ~~............................................................~~FLOW 8INFORMATION: ~~ITEM~~Cash 3.paid ~~Quantitative~~for ~~and~~interest ~~Qualitative~~$ ~~Disclosure~~109,262 ~~About~~$ ~~Market~~15,220 ~~Risk~~$ 84,081 ============ ============ ============ SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING & INVESTING ACTIVITIES: 1.~~....................................................~~Stock 11options ~~PART~~issued IIin conjunction with consulting agreements, non-cash ~~OTHER~~compensation ~~INFORMATION~~$ ~~ITEM~~-- 6$ 1,020,213 $ 1,942,836 2. ~~Exhibits~~Stock options and ~~Reports~~stock grants issued in conjunction with employment agreements $ 65,924 $ -- $ 80,924 3.~~.................................................~~ 12Debt ~~SIGNATURES~~converted to common stock $ -- $ -- $ 443,814 4.~~.....................................................................~~ 13Common stock issued for services $ -- $ 79,558 $ 88,624

The accompanying notes are an integral part of these financial statements. -------------------------------------------------------------------------------- Page 6 PRO NET LINK CORP. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, --------------------------- 2001 2000 ------------ ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (663,641) $(1,078,106) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 18,486 12,933 Amortization of deferred rental income (2,518) (2,545) Stock Issued for Services -- 79,558 Non-Cash Services and compensation 35,375 340,071 Changes in assets and liabilities: Decrease (increase) in prepaid and other current assets 29,327 1,172 Decrease (increase) in accounts receivable 8,381 (1,450) Decrease (increase) in other assets -- -- (Decrease) increase in accounts payable and accrued expenses 20,929 (84,314) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (553,661) (732,681) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (217) (9,685) ----------- ----------- CASH USED IN INVESTING ACTIVITIES (217) (9,685) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of common stock -- 1,250,000 Proceeds from notes payable to shareholder 460,000 -- Repayment of notes payable to shareholder -- -- Proceeds from (repayment of) note payable - bank -- (100,000) Proceeds received from common stock subscribed -- -- Cost related to share exchange -- -- Increase in cash overdraft -- (21,848) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 460,000 1,128,152 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (93,878) 385,786 CASH AT BEGINNING OF PERIOD 96,580 -- ----------- ----------- CASH AT END OF PERIOD $ 2,702 $ 385,786 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 52,590 $ 3,992 =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING & INVESTING ACTIVITIES: 1. Stock options issued in conjunction with consulting agreements, non-cash compensation $ -- $ 340,071 2. Stock grants and stock options issued in conjunction with employment agreement $ 35,375 $ -- 3. Debt converted to common stock $ -- $ -- 4. Common stock issued for services $ -- $ 79,558 The accompanying notes are an integral part of these financial statements. -------------------------------------------------------------------------------- Page 7 PRO NET LINK CORP. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Note - 1 Interim Financial Statements. The interim financial statements of Pro Net Link Corp. (the "Company" or "Pro Net Link") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. The results of operations for any interim periods are not necessarily indicative of the results that might be anticipated for the full year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto from the Company's annual report on Form 10-K for the year ended June 30,2000. Note - 2 Management Agreement. On August 8, 2000, Pro Net Link entered into an agreement with an entity to provide executive management and marketing services to the Company. This relationship was terminated on September 28, 2000. Compensation and legal expenses related to the agreement were approximately $250,000 for the nine months ended March 31, 2001. Note - 3 Non-Cash Compensation On December 26, 2000, the Company issued a total of 85,000 registered shares of common stock to two employees per employment contracts as compensation. These shares were valued at the market price on December 26, 2000, at $.3594 per share. On December 31, 2000, the Company issued an employee options to purchase restricted shares of common stock per an employment contract at a below market rate; non-cash compensation was valued at $24,000. On February 26, 2001, the Company issued a total of 65,000 Registered shares to an employee per an employment contract as Compensation. These shares were valued at the market price on February 26, 2001, at $0.1755 per share. For the nine months ended March 31, 2001, non-cash compensation expense was $65,924. Note - 4 Note Purchase Agreement The Company has a note purchase agreement ("Agreement") with its President that allows the Company to borrow up to $2,000,000. The Agreement ends on October 12, 2001, or the date by which aggregate borrowings total $2,000,000. On that date, aggregate borrowings will be combined to one note that will be due in two years. The note will bear interest at 12% per annum. At March 31, 2001, the aggregate borrowings totaled $600,000. Subsequently, the Company has borrowed an additional $215,000. Note - 5 Common Stock Purchase Agreement On March 29, 2001, the Company entered into a Common Stock Purchase Agreement with a financial institution for an equity line of credit up to $5,000,000 over an eighteen month period. Under the terms of the Stock Purchase Agreement, Pro Net Link can issue and exercise a put for a number of shares of common stock not to exceed fifteen percent of the aggregate trading volume of the common stock as traded on the Over-the-Counter Bulletin Board during the twenty -------------------------------------------------------------------------------- Page 8 consecutive trading days immediately preceding the date of the notice. The Stock Purchase Agreement requires fifteen trading days between the issuance of puts. The purchase price for the shares to be acquired by Waveland in each put will be 90% of the market price of such shares. The Stock Purchase Agreement defines "Market Price" as the average of the three lowest closing bid prices of Pro Net Link's common stock for the twenty trading days (ten trading days for the initial put) beginning on the commencement date of the put. Note - 6 Asset Purchase Agreement On April 13, 2001, the Company entered into an Asset Purchase Agreement with an entity, ZZTV, whose president is also Chairman of the Company, for the sale of the Company's Internet Broadcast service. Through this Asset Purchase Agreement, the Company retains the right to the display, on its website, any trade-related content produced by ZZTV at no cost; retains 40% of any net revenues received by ZZTV for all advertising supplied by the Company; grants the Company twenty percent (20%) of all net profits earned by ZZTV for all revenues which derive from PNL-TV sales contracts in effect at the Asset Purchase Agreement date; and gives the Company the right to purchase up to ten percent (10%) of the equity in ZZTV, at a price which matches the lowest price paid by any other equity purchaser in ZZTV. ZZTV receives Internet broadcast equipment, PNLTV web pages and programming, past encoded broadcast shows, and the PNLTV name. -------------------------------------------------------------------------------- Page 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INFORMATION REGARDING FORWARD-LOOKING STATEMENTS The following discussion and analysis should be read in conjunction with the financial statements and notes thereto as filed in our Form 10-K for the year ended June 30, 2000. The information set forth below includes forward-looking statements that involve numerous risks and uncertainties including, but not limited to, the demand for the Company's services and the ability of the Company to successfully implement its strategies, each of which may be impacted, among other things, by economic and competitive or technological conditions. Forward-looking statements can be identified by the use of forward-looking terminology such as "estimates," "projects," "anticipates," "expects," "intends," "believes," or the negative thereof or other variations thereon or comparable terminology or by discussions of strategy that involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in such forward-looking statements and readers are cautioned not to place undue reliance on any forward-looking statements contained in this report. The Company undertakes no obligation to publish the results of any adjustments to these forward-looking statements that may be made to reflect events on or after the date of this report or to reflect the occurrence of unexpected events. OVERVIEW We are a development stage corporation formed in July 1997 with a limited operating history. We are a business-to-business firm that has historically focused on facilitating the conduct of international trade through various tools and services accessible through our Internet Website. We have historically based our business model on the delivery of international trade-related news, programming and services through this Website. Sources of revenue to date have included registered "premium" user fees, banner advertising, the Leaders in Global Trade program, and, most recently, broadcast services. We have not generated profits since our mid-1997 start-up. Substantial expenses have been incurred since inception associated with our corporate formation, the conduct of market research, the building of an operating infrastructure, product development, solicitation of users, and the design, development and promotion of our Website and related services. Our revenues have been limited. Since inception, Pro Net Link has incurred significant losses, resulting in an accumulated deficit of $10,480,969 as at March 31, 2001. On February 6, 2001, our Board of Directors announced that we had approved a plan to re-focus Pro Net Link and to engage a financial services firm to raise equity for Pro Net Link. The re-focusing called for a reduction in operating expenses, the sale of Pro net Link's Internet broadcast services, and the completion of Pro Net Link's Application Service Provider trade transaction solution, termed the "Master Transaction Logic". Pro Net Link has significantly reduced staffing, retaining the core executive, administrative and technical staff for the development of the Master Transaction Logic product and maintenance of Pro Net Link's website. We have also elected not to renew the marketing services contract with Zagoren-Zozzora, Inc., which expired on February 15, 2001. Glenn Zagoren, President of Zagoren-Zozzora, remains as non-executive Chairman of the Board of Pro Net Link. These, and other cost reductions, reduced our monthly operating expenses not including research and development of the Master Transaction Logic product by over 50%. On March 29, 2001, we entered into an equity line of credit facility with Waveland Capital, LLC through a Common Stock Purchase Agreement and Registration Rights Agreement. We have the right (but not the obligation) to sell up to $5,000,000 worth of our common stock to Waveland in periodic draw downs made at our election. -------------------------------------------------------------------------------- Page 10 Our Internet broadcast facility, PNL-TV, which was created in October, 1999, and ceased operations in January 2001, was sold to ZZTV Inc. pursuant to an Asset Purchase Agreement dated April 13, 2001. Through this Asset Purchase Agreement, we retain the right to display, through our existing PNL-TV section on our website, any trade-related content produced by ZZTV at no cost to us. We also retain 40% of any net revenues received by ZZTV for all advertising supplied by us in the PNL-TV section of our Global Trade Internetwork. This Asset Purchase Agreement also grants us twenty percent (20%) of all net profits earned by ZZTV for all revenues which derive from PNL-TV sales contracts and sales agreements in effect at the Asset Purchase Agreement date, and gives us the right to purchase up to ten percent (10%) of the equity in ZZTV, at a price which matches the lowest price paid by any other equity purchaser in ZZTV. All ongoing development has been focused on the Master Transaction Logic transaction platform, for which technical specifications have been completed and development has begun. We intend the Master Transaction Logic system to be an independent and open standard based solution that integrates a seamless "end-to-end" online process for Small to Mid-Sized Enterprises engaged in international trade. The Master Transaction Logic is being developed to be a stand-alone transaction module that can be accessed from within the ProNetLink.com site and licensed as an Application Service Provider system to any Internet e-commerce entity that wants to profit from its capabilities. We filed a provisional patent application with the U.S. Patent Office for the Master Transaction Logic on January 18, 2001. On April 20, 2001, we signed a Master Software License Agreement, a Master Services Agreement, and a Task Order with Commerce One to build our Master Transaction Logic product. Although we will maintain our website and associated businesses (such as banner advertising and membership fees), we do not currently intend to focus any significant financial and managerial resources on sales and marketing to develop the revenue models associated with our website. We believe that our success will depend, in large part, on our ability to develop the Master Transaction Logic/Application Service Provider product, to increase market awareness and acceptance for this product, to raise additional operating capital to build technology and non-technology infrastructures and to continue product research and development. An evaluation of our prospects must be considered in light of the risks associated with companies in the early stages of development, particularly for ones in the rapidly evolving business-to-business Internet marketplace. Certain risks for us include, but are not limited to, having an unproven business model, capital requirements and, if we successfully expand our operations, management of growth. To address these risks, we must, among other things, raise significant capital by drawing on our equity credit line with Waveland Capital, LLC, to develop our Master Transaction Logic product, continue to develop and successfully execute our business and marketing plans, and complete the development of the Master Transaction Logic product technologically and to market it. There can be no assurance that we will be successful in addressing these risks, and the failure to do so could prevent Pro Net Link from generating profitable operations. RESULTS OF OPERATIONS Nine months ended March 31, 2001 and March 31, 2000 Revenues. As noted, during the nine month periods ended March 31, 2001 and March 31, 2000, Pro Net Link was a development stage enterprise. Accordingly, it engaged in limited revenue generating operations. Revenue decreased from $51,816 for the nine months ended March 31, 2000 to $14,459 for the nine months ended March 31, 2001. Expenses. Total expenses decreased from $3,221,445 for the nine months ended March 31, 2000 to $2,669,982 for the nine months ended March 31, 2001, resulting in a net loss of $2,655,523 for the current period, compared to a loss of $3,169,629 for the previous period. Three months ended March 31, 2001 and March 31, 2000 -------------------------------------------------------------------------------- Page 11 Revenues. As noted, during the three month periods ended March 31, 2001 and March 31, 2000, Pro Net Link was a development stage enterprise. Accordingly, it engaged in limited revenue generating operations. Revenue decreased from $24,680 for the three months ended March 31, 2000 to $70 for the three months ended March 31, 2001. Expenses. Total expenses decreased from $1,102,786 for the three months ended March 31, 2000 to $663,711 for the three months ended March 31, 2001, resulting in a net loss of $663,641 for the current period, compared to a loss of $1,078,106 for the previous period. The decrease in expenses was primarily attributable to the factors described below: On August 8, 2000, Pro Net Link entered into an agreement with GlobalNet Venture Partners, Inc., to provide executive management and marketing services to the Company. This relationship was terminated on September 28, 2000. Compensation and legal expenses related to the GlobalNet Venture Partners, Inc., relationship were approximately $250,000 for the quarterly period ended September 30, 2000, and thus account for the principal decrease in expense between the two periods. Additional cost increases primarily relate to higher professional fees attributable to filings with the Securities and Exchange Commission associated with our becoming a "reporting company" pursuant to the Securities Exchange Act of 1934, and specifically to the filing of our first 10-K and Proxy Statement during the period. We also incurred significant expenses in holding our Shareholders meeting during the period. These expenses exceeded $100,000. Expenses attributable to Website development declined, as in-house staff performed many of the development and maintenance functions previously outsourced. On February 6, 2001, we announced our decision to focus on the development of our MTL product, and subsequently ceased development and production of our PNLTV Internet broadcast service, reduced our staff and operating expenses significantly, and eliminated all non-essential website services. We also utilized less expensive Alternate and in-house resources to process our legal corporate responsibilities and SEC filings. This accounted for a 40% overall reduction in total operating expenses compared to the previous quarter. The decrease in revenues was primarily attributable to the factors described below: The revenue decreases, for the nine month periods ended March 31, 2001 as compared to March 31, 2000, are attributable to the measures we took to reduce operating expenses, in part by eliminating the operation and development of our PNLTV Internet broadcast service and related revenues, and our focus on developing our Master Transaction Logic product. INFLATION Inflationary factors did not directly bear on our operations during the fiscal periods since our inception. LIQUIDITY AND CAPITAL RESOURCES Pro Net Link has generated negative cash flows from operations in all periods since its inception in July 1997. At March 31, 2001, our net cash position of $2,702 represented a decrease of $44,686, compared to June 30, 2000. During the Nine months ended March 31, 2000, net negative cash from operations of $2,264,469 primarily reflected our $2,655,523 net loss in the period. Net cash provided by financing during this period was $2,220,000, comprised of new loans from a shareholder of $2,110,000, private placement of shares of $510,000, and the repayment of bank debt of $400,000, as follows: - On August 8, 2000, our President, Jean Pierre Collardeau, loaned Pro Net Link an aggregate of $1,000,000 in consideration of the issuance of a convertible note bearing interest at 12% per annum and due August 8, 2001. The note is convertible into shares of our common stock at $1.89 per share, subject to adjustments as -------------------------------------------------------------------------------- Page 12 defined in the convertible note. On October 10, 2000, the note maturity date was extended by one year to August 8, 2002. - In September, 2000, our President, Jean Pierre Collardeau, loaned us $500,000. In consideration of the aforesaid loan, we issued a 12% Note to Jean Pierre Collardeau, dated October 10, 2000. Under this note, the loan was repayable on October 12, 2001 and bears interest at the Note of 12% per annum. On October 10, 2000, the note maturity date was extended by one year to October 12, 2002. - On October 10, 2000, we sold 680,000 of our shares of common stock in a private placement for $510,000. - On October 10, 2000, we entered into a Note Purchase Agreement (the "Agreement") with our President, Jean Pierre Collardeau. Pursuant to the Agreement, subject to certain conditions, the President is obligated to lend us up to an aggregate principal amount of $2,000,000. The commitment terminates at the earlier of October 10, 2001 or the date by which the cumulative principal amount of borrowings under the Agreement reaches $2 million. On the date that the commitment terminates, amounts then outstanding will be combined into one note that will be due in two years. Borrowings will bear interest at 12% per annum. As of March 31, 2001, we had borrowed $600,000 under this Note Purchase Agreement. Subsequent to March 31, 2000, we have drawn down an additional $215,000. - On March 29, 2001, Pro Net Link entered into an equity line financing arrangement with Waveland Capital. This financing arrangement is in the form of a Stock Purchase Agreement providing for the purchase by Waveland Capital of up to $5,000,000 worth of shares of common stock of Pro Net Link over an eighteen month period. We currently estimate that our base operating cash requirements (excluding projected expenses for research, development and marketing of the Master Transaction Logic product) for the next six months will approximate $700,000. Additionally, we will need to secure funding through the equity line of credit arrangement we recently entered into with Waveland Capital, LLC, or from other sources, to complete the development and marketing of the Master Transaction Logic/Application Services Provider product. We have a material commitment with Commerce One for $2,600,000 in connection with the development, implementation and marketing of our Master Transaction Logic/ Application Service Provider product. There can be no assurances that we will successfully raise the capital required to develop the product or to attain break-even cash flow in any future periods. In the absence of such funding, we will not be able to pursue our primary product, and be forced to curtail operations. NEW ACCOUNTING STANDARDS In June 1999, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting standards (SFAS) No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133." SFAS No. 137 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which was issued in June 1998. SFAS defers the effective date of SFAS No. 133 to all fiscal years beginning after June 15, 2000. Accordingly, the Company will adopt the provisions of SFAS No. 133 for the fiscal year 2001 which commences on November 1, 2000. This statement should not have a material effect on the Company's financial statements. In December 1999, the United States Securities and Exchange Commission released Staff Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition in Financial Statements". (The implementation date of SAB No.101, was subsequently amended by SAB No.101A and SAB No. 101B.) Under SAB No.101 additional guidance on revenue recognition criteria and related disclosure requirements are required. Implementation of SAB No.101 is required no later than the than the fourth fiscal quarter of fiscal years beginning after December 15, 1999, but is effective retroactively to the beginning of that fiscal period (per SAB No. 101B). Company management has evaluated the standard and the reporting implications thereof, and -------------------------------------------------------------------------------- Page 13 has determined that there will not be a significant impact on the Company's operating results. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK INTEREST RATE RISK AND USE OF DERIVATIVES During fiscal year 2000, we had available to us a $500,000 secured bank line of credit. Indebtedness under the revolving credit facility was priced on a floating interest rate basis and, accordingly, we were subject to a risk of rising interest rates. Outstanding liabilities under the facility were repaid on August 2, 2000 and we allowed the facility to lapse on August 6, 2000. On October 10, 2000, we entered into a Note Purchase Agreement with our President, Jean Pierre Collardeau, pursuant to which he is obligated to lend the Company up to an aggregate amount of $2,000,000. To date, Mr. Collardeau has funded $400,000 to the Company under this agreement. Under our current risk management policies we do not contemplate using interest rate derivative instruments to manage exposure to rate changes. Since indebtedness under our note purchase facility with Mr. Collardeau does not bear floating interest rates, we do not run the risk that our cost of capital under the facility will fluctuate based upon changes in interest rates. -------------------------------------------------------------------------------- page 14 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following exhibits are filed as part of this Form 10-Q. Exhibit Number Description ----------- --------------- 3.1 Amended and Restated Articles of Incorporation. (1) 3.2 Amended and Restated Bylaws. (1) 10.1 Subscriber Agreement by and between Pronetlink and Corpfin.com, Inc., dated as of February 5, 2001. (2) 10.2 Common Stock Purchase Agreement by and between Pro Net Link and Waveland Capital, LLC, dated as of March 29, 2001. (2) 10.3 Registration Rights Agreement by and between Pro Net Link and Waveland Capital, LLC, dated as of March 29, 2001. (2) 10.4 Escrow Agreement by and between Pro Net Link and Waveland Capital, LLC and the Bank of New York, dated as of March 29, 2001. (2) 10.5 Warrant to purchase 1,465,416 shares of Pro Net Link's common stock issued to Waveland Capital, LLC, dated as of March 29, 2001. (2) 10.6 Asset Purchase Agreement by and between Pro Net Link and ZZTV, Inc., dated as of April 13, 2001. (2) 10.7 Amendment to Common Stock Purchase Agreement by and between Pro Net Link and Waveland Capital, LLC, dated as of April 30, 2001. (2) -------------------------------------------------------------------------------- (1) Filed as an exhibit to the Registrant's Registration Statement on Form 10 filed with the Commission on June 21, 1999. (2) Filed on Form S-1 with the Commission on May 4, 2001. (b) Reports on Form 8-K. Report on Form 8-K, dated February 7, 2001, announcing a re-organization of the Company and the retention by the Company of a financial services firm. Report on Form 8-K, dated April 3, 2001, announcing the execution of certain agreements between Pro Net Link and Waveland Capital, LLC, whereby Waveland Capital will open an equity line of credit of up to $5 million in exchange for Pro Net Link's common stock. Report on Form 8-K, dated April 17, 2001, announcing the sale to ZZTV, Inc., of substantially all of Pro Net Link's assets directly related to the operation of PNL-TV. -------------------------------------------------------------------------------- Page 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 21, 2001 PRO NET LINK CORP. (Registrant) By: /s/ JEAN PIERRE COLLARDEAU ------------------------------------- Jean Pierre Collardeau President and Chief Executive Officer -------------------------------------------------------------------------------- Page 16

Six Months Ended Cumulative July 25, December 31, 1997 (inception) Through December 31, 2000 1999 2000 ------------ ------------ ----------- REVENUES $ 14,389 $ 27,136 $ 110,238 ------------ ------------ ----------- EXPENSES Website Development 249,751 261,221 1,440,643 Commissions 97,500 108,875 454,106 Selling, General and Administrative 1,516,851 1,031,673 5,840,967 Non-Cash Compensation Expense 30,549 680,142 1,973,385 Depreciation 36,972 24,495 109,624 Interest Expense 74,648 12,253 108,843 ------------ ------------ ----------- Total Expenses 2,006,271 2,118,659 9,927,568 ------------ ------------ ----------- Net Loss $ (1,991,882) $ (2,091,523) $(9,817,330) ============ ============ =========== Basic Loss Per Share of Common Stock $ (0.04) $ (0.04) $ (0.19) ============ ============ =========== Weighted Average Common Shares Outstanding 51,635,842 50,435,578 42,260,359 ============ ============ ===========

Three Months Ended December 31, 2000 1999 ------------ ------------ REVENUES $ 12,259 $ 25,334 ------------ ------------ EXPENSES Website Development 194,524 121,913 Commissions 48,750 42,375 Selling, General and Administrative 724,661 586,633 Non-Cash Compensation Expense 30,549 680,142 Depreciation 18,486 18,807 Interest Expense 50,310 8,742 ------------ ------------ Total Expenses 1,067,280 1,458,612 ------------ ------------ Net Loss $ (1,055,021) $ (1,433,278) ============ ============ Basic Loss Per Share of Common Stock $ (0.02) $ (0.03) ============ ============ Weighted Average Common Shares Outstanding 51,893,613 50,646,335 ============ ============

December 31, June 30, 2000 2000 (Unaudited) ----------- ----------- ASSETS CURRENT ASSETS: Cash $ 96,580 $ 47,388 Accounts Receivable 14,231 24,390 Prepaid Expenses 58,333 29,833 Loans Receivable - Employees 3,500 -- ----------- ----------- TOTAL CURRENT ASSETS 172,644 101,611 FIXED ASSETS (NET) 271,464 308,436 OTHER ASSETS 48,667 48,667 ----------- ----------- TOTAL ASSETS 492,775 458,714 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES: Loan Payable - bank $ -- $ 400,000 Accounts Payable and Accrued Expenses 420,970 180,543 Deferred Income 26,012 31,045 ----------- ----------- TOTAL CURRENT LIABILITIES 446,982 611,588 LONG TERM LIABILITIES: Notes Payable to Shareholder 1,650,000 -- ----------- ----------- TOTAL LIABILITIES 2,096,982 611,588 ----------- ----------- SHAREHOLDERS' DEFICIT: Common stock, $.001 par value, 150,000,000 shares authorized; 52,129,737 shares issued at December 31, 2000 and 51,378,070 shares issued at June 30, 2000 52,143 51,378 Additional Paid-in Capital 8,160,980 7,621,196 Deficit Accumulated During Development Stage (9,817,330) (7,825,448) ----------- ----------- TOTAL SHAREHOLDERS' DEFICIT (1,604,207) (152,874) ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 492,775 $ 458,714 =========== ===========

Cumulative July 25, 1997 (inception) Six Months Ended through December 31, December 31, 2000 1999 2000 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (1,991,882) $ (2,091,523) $ (9,817,330) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 36,972 24,495 109,624 Amortization of deferred rental income (5,033) (6,300) (16,313) Stock Issued for Services 80,124 Non-Cash Services and compensation 30,549 680,142 1,988,385 Changes in assets and liabilities: Decrease (increase) in prepaid and other current assets (32,000) 84,911 (61,833) Decrease (increase) in accounts receivable 10,159 (23,000) (14,231) Decrease (increase) in other assets -- 95,718 (48,667) (Decrease) increase in accounts payable and accrued expenses 240,427 (186,880) 463,295 ----------- ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (1,710,808) (1,422,437) (7,316,946) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets -- (234,670) (381,088) ----------- ----------- ----------- CASH USED IN INVESTING ACTIVITIES -- (234,670) (381,088) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of common stock 510,000 1,250,000 4,534,300 Proceeds from notes payable to shareholder 1,650,000 -- 2,169,125 Repayment of notes payable to shareholder -- -- (75,311) Proceeds from (repayment of) note payable - bank (400,000) 100,000 -- Proceeds received from common stock subscribed -- -- 1,200,000 Cost related to share exchange -- -- (33,500) Increase in cash overdraft -- 21,848 -- ----------- ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,760,000 1,371,848 7,794,614 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 49,192 (285,259) 96,580 CASH AT BEGINNING OF PERIOD 47,388 285,259 -- ----------- ----------- ----------- CASH AT END OF PERIOD $ 96,580 $ -- $ 96,580 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 56,672 $ 11,228 $ 31,491 =========== =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING & INVESTING ACTIVITIES: 1.Stock options issued in conjunction with consulting agreement-non-cash compensation $ -- $ 680,142 $ 1,942,836 2.Stock options issued in conjunction with employment agreement $ 30,549 $ -- $ 45,549 3.Debt converted to common stock $ -- $ -- $ 443,814 4. Common stock issued for services $ -- $ -- $ 88,624

Exhibit Number Description ----------- --------------- 3.1 Amended and Restated Articles of Incorporation (1) 3.2 Amended and Restated Bylaws (1) 10.1 2000 Stock Option Plan (3) 10.2 Amendment to the Pro Net Link Corp. 2000 Stock Option Plan, dated August 8, 2000(4) 10.3 Consulting Agreement by and between Pro Net Link and Zagoren-Zozzora, Inc., dated as of February 19, 1999 (2) 10.4 Shareholder and Voting Agreement, by and among Pro Net Link, Jean Pierre Collardeau, Glenn Zagoren and certain other parties, dated as of August 8, 2000. (4) 10.5 Registration Rights Agreement, by and among Pro Net Link, Jean Pierre Collardeau, Glenn Zagoren and certain other parties, dated as of August 8, 2000. (4) 10.6 Information Provider Agreement by and between Pro Net Link and Dun and Bradstreet, Inc., dated as of May 1, 2000.(5) 10.7 Note Purchase Agreement, by and between Pro Net Link and Jean Pierre Collardeau, dated October 10, 2000.(5) 10.8 12% Convertible Note issued by Pro Net Link to Jean Pierre Collardeau, dated August 8, 2000(4) 10.9 S-8 registration of shares of common stock for the Company's Pronetlink 2000 employee stock option program.(6) 10.10 Notification of Late Filing. (7)

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