ProNet Link (OTCBB: PNLK)
: $6.37
Sponsored by WallStreet Guru
Weak Link
by Lynn N. Duke, staff writer
ProNet Link claims to have a unique service and a global reach,
but it doesn't appear to have either.
Investors have bid up ProNet Link shares in a frenzy unique among penny stocks - an unproven company with no earnings and or guarantee of such doubling or tripling in value in a matter of days. But whether the company is worth the price, never mind the hype, remains to be seen. It seems unlikely given their shallow resources, competition and broad ambitions.
ProNet Link (OTC BB: PNLK) aims to become a one-stop shopping source for international importers and exporters, providing leads, contacts and tools for navigating bureaucracy. Annual membership is $360.
But anyone interested in checking out what ProNet Link has to offer might have a hard time doing so. Sometime this afternoon, links to the site barred admission without a user name and password. Only problem is, you can't access the site to register. A cyber slip up, or a genuine case of CYA for an empty promise?
Before the service was even available to potential members, the stock was trading as high as $8, giving this unproven company a market cap of more than $300 million. That's on par with Winnebago Industries, the recreational vehicle giant, or Ryland Group, a residential construction company, both of which last year had profits exceeding $12 million. ProNet Link shares closed Friday at $4.66, down $1.71.
ProNet Link's site was scheduled to launch today, but as of noon, all that was available was a rather sparse and ambiguous preview, which has been up for several weeks.
While a handful of investors are enthusiastic about this stock - of the company's 37 million-plus shares outstanding, only 7.8 million are in the public float, which has turned over twice this week - it's not clear what the broader market will be for the stock. Nor is it clear how much capital was raised when the stock was issued. The remaining shares - 30 million - are restricted and will become free trading in incremental blocks starting in September, one year after ProNet Link was formed through a reverse merger into a shell, according to Glenn Zagoren, whose company is handling ProNet Link's marketing.
But it was not clear Friday how many of those shares are held by ProNet Link officers and directors, or how many were attributed to people who held shares in the shell corporation, Prevention Productions Ltd., a company that had something to do with vitamin sprays.
Brokers are leery, too, with one going so far as to blast ProNet Link. Chatfield Dean initiated coverage on Wednesday with these comments: "The Company currently has not completed its web site, and there is no assurance as to when it will be fully functional. As with any start-up company, projections are typically rarely obtained; therefore we believe the Company is grossly overvalued based on our projected market valuation."
This was followed by a research report: "If the Company's projections are right and they can get 40,000 subscribers in 12 months and 80,000 subscribers in 24 months, then the Company may be worth a lot more in the future, but to say it will be worth $300 million in the future is pure speculation, and to say it is worth $300 million now is outrageous."
ProNet Link is non-reporting to the U.S. Securities and Exchange Commission, and has no target date for filing, Zagoren said. The company has released unaudited financials, which paint a bleak picture.
Although it is launching a global marketing and advertising campaign in hopes of attracting 40,000 members the first year, the company has access to less than $1 million in cash - $335,000 in the bank and a $500,000 line of credit. Looking closer at the financials shows that the company lost more than $360,000 last year and has a stockholder equity of negative $20,064.
Trading in wishes and dreams
The financials raise other troubling points. For instance, although ProNet Link is going to run a global Internet-based trade clearing house, it has less than $5,000 worth of computers. That would cover one really nice laptop or a couple of moderate PCs, but hardly the hardware necessary to support the kind of information network it has proposed.
On the logistical side, ProNet Link's services are available in only six languages even though it is casting its net across the global marketplace. Zagoren said the company expects about 60 percent of its members searching for import/export info to come from the U.S. That's nice, but it looks as if U.S. companies have been excluded from the database. ProNet Link's demo site offers browsers access to information on companies in Africa, Europe, Canada, East Asia and the Pacific, South Asia, Middle East, North Africa, Latin America and the Caribbean. There is no mention of U.S. firms.
Citing pressures from the site's imminent launch, which has already been delayed once in April, Zagoren was unable Friday to provide anymore information on either the company's financials or content.
The content itself is licensed from Dun & Bradstreet; ProNet Link has created nothing of its own. And there are other companies who have licensed some of the same information for redistribution, like the Journal of Economics. Moreover, there are other web sites that offer services similar to what ProNet Link is proposing on a pay-as-you-go basis, some for as little as $5 per session. And there are government sites on the Internet that provide some of the information available through ProNet Link for a fee.
So why is there so much investor interest in ProNet Link? Part of it can be attributed to the company's paid promotion by the Stock Genie, which made ProNet Link its March pick of the month. According to the site's disclosure, Stock Genie was paid $50,000 for a two-year contract to promote ProNet Link. But it is not clear whether the payment was in cash or stock. And Zagoren, ProNet Link's marketing guru, takes issue with Stock Genie's projections for ProNet Link's success. That's an unusual move since promoters are generally in the business of dishing up what their clients order. Efforts by the Stock Detective to reach Stock Genie have been unsuccessful. And they're a tough bunch to track down: InterNIC's domain registration records list Sutton Capital Group as the web site's owner. Sutton Capital shows a P.O. Box in Port Washington, N.Y, but directory assistance there had no listing for the company.
While ProNet Link may bill themselves as the missing link in global trade, The Stock Detective sees too many elements of a typical pump 'n dump and considers them the weak link in the chain.
As always, tread lightly………..
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Links to government sites that offer info similar to ProNet Link
ita.doc.gov
info.usaid.gov
mac.doc.gov
fas.usda.gov
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