Pro Net Link Corporation Securities Litigation 03-CV-02298-Plaintiffs

UNITED STATES DISTRICT COURT 71-616----ucrco--;-n SCUTHERN DISTRICT OF NEW Y • '1 EB 2 01041 - / (\: IN RE PRO NET LINK )------'z.'re-_,r.- ---- ON NO. 03-CV-2298 Cab , SECURITIES LITIGATION ) II )

PLAINTIFFS' SECOND CONSOLI4 TED AMENDED CLASS ACTION COMPLAINT

VIANALE & VIANALE LLP GAINEY and MeICENNA Kenneth J. Vianale (KY 4607) Thomas J. McKenna (TJM 7109) Julie Prag Vianale (JP 4718) 485 Fifth Avenue, 3 Floor 5355 To Center Road, Suite 801 New York, New York Bcca Raton, Florida 33486 Tel: (212) 983-1300 Tel: (561) 391-4900 Fax: (212) 983-0383 Fax: (561) 368-9274

Lead Counsel for Lead Plaintiffs and the Class Lead Plaintiffs, having received written consent from counsel for all defendants, as required by Rule 15(a), Fed.R.Civ.P., hereby file their Second Consolidated Amended Class Action

Complaint.

Lead Plaintiffs make the following allegations, except as to allegations specifically pertaining to them, based upon the investigation undertaken by plaintiffs' counsel, which investigation included analysis of publicly-available news articles and reports, public filings, press releases, statements issued by defendants on-line, via internet message boards and other internet media, review of the record in the related bankruptcy proceedings in this District, interviews with former employees of

ProNetLink Corp. ("ProNetLink" or the "Company"), and consultation with a forensic accountant.

INTRODUCTION

1. This is a class action on behalf of all purchasers of the common stock of ProNetLink between August 26, 1998 and July 1, 2001, inclusive, (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). As particularized below, the individual defendants, principals of ProNetLink, engaged in a scheme to artificially inflate the price of the Company's shares so that they could reap substantial benefits. The individual defendants issued false and misleading statements to the public regarding, among other things, the Company's present and future financial prospects and the individual defendants' own plans regarding the sale of Company shares.

2. For example, during the Class Period, the individual defendants told the public that the Company was signing up thousands of subscribers for its website through which global trade transactions were to be effected. The individual defendants hid the fact, however, that the vast bulk

-2- of these subscribers were non-paying; it was only later in the class period, in January 2000, that the

Company disclosed that there were only 40 paid subscribers for the ProNetLink website.

3. In addition, the individual defendants told the public repeatedly that they were abiding by a so-called lock-up agreement, under which the Company's President and CEO, defendant Jean

Pierre Collardeau ("Collardeau"), agreed not to sell his ProNetLink stock. Nevertheless, Collardeau executed other sales in the names of nominees, in an intentional effort to hide his sales of

ProNetLink stock from the investing public. As a result, CoIlardcau, and persons associated with him, made millions of dollars on the sale of ProNetLink stock. On November 6, a federal grand jury in Newark, New Jersey, indicted Collardeau and others for securities fraud, wire fraud and money laundering in connection with the sale of Pro Net Link stock. The indictment charges, among other things, that Collardeau and others conspired to use nominee accounts to hide the true ownership of the Pro Net Link stock they were secretly trading. (A copy of the indictment in U.S. v. Pierre

Collardeau, et al., No. Cr. 03-800 (D. N.J.) (unsealed on 11/24/03) is annexed hereto as Ex. A and is incorporated by reference herein ("Collardeau Indictment")), Collardeau is believed to be in custody on these charges. The Company made no disclosure in any of its SEC filings that Collardeau and others were the true owners (and sellers) of millions of shares of Pro Net Link stock.

4. Moreover, Collardeau personally sold approximately $ 4,568,760 in ProNetLink

Stock on April 17, 2000 at prices of $3 and $5 per share; these sales were suspicious in timing and in amount, as discussed below. A separate count is alleged for Collardeau' s liability for this insider trading under Section 20A of the Securities Exchange Act of 1934.

5. Defendant Glenn Zagoren ("Zagoren"), the Company's Co-Chairman of the Board and Executive Vice President, with Collardeau's agreement, was given ProNetLink's television

-3- production division to keep as his own personal asset without paying any consideration to the

Company. Zagoren either knew or was reckless in not knowing, of the fraudulent scheme alleged herein.

6. In 2001, the Company continued to assure the public that it had sufficient operating capital to run the Company for the next 12 months. The individual defendants told the public that the Company still had access to a $5 million line of credit and other capital resources at its disposal.

These statements were blatantly false, as shown by the testimony of the Company's Chief Operating

Officer, David Walker, taken in connection with the Company's bankruptcy proceeding in this

District.

7. Nevertheless, the Company's outside auditor, Feldman Sherb & Co., P.C. and its successors named as defendants herein (collectively referred to herein as "Feldman Sherb"), together with non-defendant Philip Weiner (a partner of Feldman S herb), issued an unqualified audit opinion, dated September 28, 2000 on ProNetLink's financial statements that was contained in the

Company's annual report on SEC Form 10-K for fiscal year ending June 30, 2000. Feldman Sherb also authorized the Company's use of this unqualified audit opinion in a Registration Statement the

Company filed with the SEC on May 4, 2001, Feldman Sherb, however, knew or recklessly disregarded numerous red flags showing that the Company had inadequate resources to sustain operations for 12 months, and accordingly should have at least given ProNetLink a "going concern" opinion, rather than an unqualified opinion on its financial statements. For example, according to the Collardeau Indictment, on March 16, 2000, defendant Collardeau sent instructions to American

Stock Transfer to reissue 1,500,000 shares of Pro Net Link stock previously issued in the name of one individual (Eric Niger) and reissued in the name of another (Muriel Proc has s on). Feldman Sherb

-4- ignored this red flag which should have alerted them to the defendants securities fraud scheme.

Although securities fraud was rife at Pro Net Link -- as the Coll ardeau Indictment readily shows --

Feldman Sherb either knew of the fraud or recklessly ignored it.

8. In a complete surprise to investors, the Company filed for bankruptcy protection on

July 1, 2001, which the Company announced publicly on July 2, 2001, the close of the Class Period.

The Company's shares immediately became worthless and investors have sustained millions of dollars in damages.

JURISDICTION AND VENUE

9. This Court has jurisdiction over the subject matter of this action pursuant to 28 U. S. C .

§§1331, 1337 and 1367 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).

10. This action arises under Sections 10(b), 20(a) and 20A of the Exchange Act (15

U.S.C. § § 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder (17 C.F.R. § 240.10b-5).

1 I . Venue is proper in this District pursuant to Section 27 of the Exchange Act (15 U. S.C.

§ 78aa) and 28 U.S.C. § 1391(b) and (c). Substantial acts in furtherance of the alleged fraud and/or its effects have occurred within this District and ProNetLink maintained its principal executive offices in this District.

12. In connection with the acts and omissions alleged in this complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications, and the facilities of the national securities markets.

-5- PARTIES

13. Lead Plaintiffs Doreen A. Labit, Scot Campbell, Craig Zychal, Daniel P. Provost and

Dennis Bell were appointed by the Court on September 2, 2003. The Lead Plaintiffs purchased

ProNetLink common stock during the Class Period, as set forth in the accompanying certifications

which are incorporated herein by reference, and were damaged thereby.

14. ProNetLink was formed in 1997 and stated in its public filings that its business

focused on facilitating the conduct of international trade through various tools and services

accessible through its internet website. Its primary assets were (1) www.ProNetLink.com ("the

ProNetLink website"), a web site marketed to the public as a resource for facilitating international

business transactions among small and medium sized companies, and (2) PNL-TV, a facility for

producing programming to be aired on-line via the ProNetLink and PNL-TV web sites. ProNetLink

was headquartered at 645 Fifth Avenue, New York, New York. ProNetLink stock traded exclusively

on the "over-the-counter" market. ProNetLink is not named as a defendant because it filed for

bankruptcy protection in July 2001. ProNetLink was a penny stock within the meaning of the

Exchange Act and accordingly any forward-looking statements made by the Company or the

individual defendants are statutorily exempt from the "safe harbor" protection of Section 21E of the

Exchange Act.

15. The Individual Defendants, at all times relevant to this action, served in the capacities

listed below and received substantial compensation:

-6- Name Position

Glenn Zagoren Director since 5/98; Chairman of the Board (418/99 to 817100); Co-Chairman of the Board and Executive VP (8/8/00 to 9/27/00); Chairman and/or Member of the Board (9/12/00 to 7/2/01).

Jean Pierre Collardeau President and Chief Executive Officer; Director and founder of the Company. Collardeau is a French national and currently maintains a residence in France. He also maintains an apartment at 117 Prince Street, Apt.4C, New York, NY 10017 and on Brickell Key, Miami, Florida.'

16. Defendant Feldman Sherb was the Company's outside auditor; it audited the

Company's June 30, 2000 financial statements and provided an unqualified audit opinion that was included in ProNetLink's June 30, 2000 Form 10-K filed with the SEC on October 13, 2000.

Feldman Sherb subsequently authorized this audit opinion to be used in a Form S-1 Registration

Statement that ProNetLink filed with the SEC on May 4, 2001. According to a May 7, 2002 press release issued by defendant Grassi & Co., P.C. ("Grassi"), Grassi merged with Feldman Sherb on

May 7, 2002. According to the same press release, ProNetLink's former outside accountant Philip

Weiner joined Grassi in this merger. Defendant Sherb & Co., LLP broke off from Feldman Sherb at some time at or after the Grassi merger.

17. In addition, according to Philip Weiner, who spoke at ProNetLink's December 4,

2000 annual shareholders' meeting in Manhattan and was the Feldman Sherb engagement partner on ProNetLink: Feldman Sherb represented "approximately 30 to 40 publicly held firms. Some are traded on the American Exchange, many are traded on the Nasdaq exchange." According to the SEC

Auguste Francis Vincent was a named defendant; he is not named as a defendant in this Complaint because plaintiffs were unable to effect service of process on him Vincent was a director of ProNetLink and is a citizen of France, where it is believed he is now living.

-7- filings of Voice Flash, another public company whose financial statements Feldman Sherb audited:

"Feldman Sherb & Co. was ... merged into Grassi & Co., CPA's, P.C. Some of the accountants from the original Feldman Sherb & Co., P.C. left and started their own firm called Sherb & Co., LLP."

Stephen Feldman and Philip Weiner of Feldman Sherb are currently partners at the accounting firm of Marcum & Kleigman LLP, New York. Steven Sherb is a partner in Sherb & Co., LLP.

SUBSTANTIVE ALLEGATIONS

A. The Scheme is Set Up

18. According to ProNetLink's publicly filed documents, ProNetLink was formed by defendant Jean Pierre Collardeau and began its operations on July 25, 1997 ("Inception") as

ProNetLink Corp., a Delaware corporation ("ProNet Delaware"). In September 1997, the fledgling

ProNetLink morphed into being as a public company by a technique commonly known as a "back- end merger." Holders of the common stock of ProNet Delaware, with the assistance of Marc

Armand Rousso and Philippe Hababou2, acquired control of Prevention Productions Inc., a Nevada corporation ("Prevention Productions"), a publicly-held corporation with no material operations.

According to ProNetLink's public statements, 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

According to a personal acquaintance of Philippe Hababou, Mr. Hababou, during the period, sometimes used the names Philippe Solomon, Haim Solomon and Malko. A criminal docket sheet in a case against Mr. Hababou lists as his aliases "Ilaim Solomon" and "Malko." Mr. Hababou will be referred to herein primarily as "Hababou."

-8- of Prevention Productions. Prevention Productions subsequently changed its name to "ProNetLink

Corp., "the publicly-held company at issue in this action.

19. According to a witness ("W-1") who is a friend and business associate of Philippe

Hababou, W-1, an Israeli native, met Hababou because W-1 rented Hababou a residence in Israel.

They subsequently became friendly. Hababou (who was known to W-1 as Philippe Solomon), told

W-1 that he worked in league with defendant Collardeau to execute the back-end merger that allowed Collardeau to convert ProNetLink into a public company. Hababou acknowledged to W-1 that he located the shell company, Prevention Productions, Inc., for Collardeau, which allowed

Collardeau to take ProNetLink public. According to Hababou (as reported by W-1), after

ProNetLink became a public company, Hababou and Collardeau were issued shares in their own names and in the names of nominees. By holding stock in nominee names, Collardeau and others could conceal from the investing public the true identities of the owners of ProNetLink stock.

According to Hababou (as told to W-1), both Collardeau and Hababou made significant sums of money on sales of ProNetlink stock during the class period. According to Hababou (as told to W-1), some of these trades, both for Collardeau and Hababou, were executed through nominee accounts.

20. After "going public" ProNetLink issued millions of shares of stock for pennies per share in a series of private placements. According to publicly available documents, in October and

November 1997, ProNetLinlc 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 ProNetLink was $150,000.

-9- 21. In October 1997, ProNetLink issued an aggregate of 1,700,000 shares of common stock in other 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 ProNetLink was $170,000.

22, Unbeknownst to the investing public, a substantial portion of the common stock issued in these private placements, was issued to alter egos of Collardeau, IIababou and their cohorts, including Collardeau family members. Collardeau issued stock in private placements to these individuals so that he could cause the price of the Company's stock to be artificially driven up, and thereby reap profits by selling shares through his alter egos at inflated prices. On this issue, W-1 learned from Hababou and from other sources that Hababou sold 500,000 ProNetLink shares in April

1999 when ProNetLink was over $5.00, as did Collardeau family member Nicole Piegnier. W-1 further learned that (1) Hababou and Collardcau owned several offshore companies, and huge profits that they made on ProNetLink were sent there, and (2) Hababou and Collardeau also made millions in a similar scheme involving trading in a company called Stamet Communications.

23. According to a January 30, 2001 article in The Record (Bergen County, NJ), Philippe

Hababou pleaded guilty in U.S. District Court in New Jersey in September 2000 to charges arising from his involvement in a series of illegal penny stock fraud schemes.

24. According to press articles describing the cases, Mr. Hababou' s silent partner in this series of stock schemes was Marc Armand Rousso. According to a January 30, 2002 article in The

Record (Bergen County, NJ), law enforcement authorities have 'paint[ed]. . Marc Rousso as the guiding force behind a series of 'pump and dump' schemes in the mid-1990's involving tens of millions of dollars of low-priced stocks." According to the same article, federal authorities have

-10- maintained that "Rousso hid his substantial holdings in a series of penny stocks that he illegally promoted and then sold after the price rose, leaving investors holding near-worthless stock."

According to a January 30, 2002 New York Times article:

Hiding his interest behind other associates like Mr. Hababou, Mr. Rousso bought millions of shares of cheap stock, which he then fraudulently promoted with investors. When the value of the stocks rose, he quietly sold off the shares he controlled, making huge illicit profits.

According to the same New York Times article, the federal prosecutor handling the criminal case described the Rousso-Hababou operation as "a large, complex money-laundering and securities fraud scheme," According to the same article and the docket sheet from the District of New Jersey, Mr.

Rousso pleaded guilty in September 1999 to money laundering and stock fraud charges. According to Mr. Rousso's docket sheet, Rousso is at liberty, awaiting sentencing. Collardeau, Hababou and

Rousso are named as co-conspirators in the Collardeau Indictment annexed hereto and are charged with engaging in the securities fraud scheme alleged herein.

25. Abundant circumstantial evidence demonstrates that Marc Rousso was also involved in setting up and executing the ProNetLink stock scheme alleged herein, along with the individual defendants. The Collardeau Indictment charges that Rousso and Collardeau engineered the reverse merger for the purpose of perpetrating this stock fraud. In addition, press reports and court filings on the IIababou-Rousso criminal cases establish that Hababou and Rousso were partners. As the above-quoted article explained, Rousso routinely used Hababou and others to hide his interest in the companies that he fraudulently promoted. W-1 has provided information regarding Hababou's involvement in ProNetLink. Rousso's involvement can be inferred from his partner Hababou's involvement and from compelling circumstantial evidence, as follows.

-11- 26. First, a Press Release issued by ProNetLink on June 24, 1998 names Leon B. Lipkin as ProNetLink's legal counsel. According to a January 30, 2002 New York Times article, Leon B.

Lipkin also served as legal counsel to Marc Rousso. According to the same article, Mr. Lipkin pleaded guilty in 2001 to securities and wire fraud for his role in Rousso's stock schemes.

27. A further connection between ProNetLink and Rousso arises from their apparent use of the same Canadian brokerage house to execute trades. An October 14, 2002 article in Canadian

Business identifies Pacific International Securities in Vancouver, Canada as one of the brokerage houses frequently used by Marc Rousso.

28. A review of SEC Forms 144 ("Notice of Proposed Sale of Securities Pursuant to Rule

144 Under The Securities Act of 1933") reflecting sales of ProNetLink stock shows that 23 of these forms, filed on behalf of 16 different ProNetLink "investors," lists "Pacific International

Securities, Inc., . . .Vancouver, Canada" as the "Broker Through Whom the Securities are to be

Offered or . . . Market Maker who is Acquiring the Securities."

29. The use of the common brokerage house, Pacific International Securities, Inc., located a continent away from ProNetLink's offices, provides another link between the individual defendants and the activities of Marc Rousso. Many of these "individuals" and "entities" who filed these Forms

144 to sell ProNetLink restricted stock, also list their residence in France or in French territory, as follows:

• Jean E. Mula, 4 Ter Impasse Francois Raymond, Miens 63780, France (According to W-1, Jean

Mula is a relative of Collardeau's); 30,000 shares to be sold approximately 4/15/99;

• Pioneer Infosys Inc., (no address listed on Form 144), 50,000 shares to be sold approximately

9/15/98;

-12- • Gilles Marret, 96 Boulevard Pereire, 75017 Paris, France; 9,200 shares to be sold approximately

4/15/99;

• Claude Delas, 74 Rue Lecourbe, 75015 Paris France, 10,000 shares to be sold

appro xim ate ly12/23/98 ;

• Andre Martinet, 6 Rue Albert Dubout, Le Calypso PS TC Marseille, France 13008; 5,000 shares to be sold approximately 12/23/98;

• Bernard Loller, 76 Ave. Andre Morilet Boulogne France 92100; 2,800 shares to be sold12/23/98;

• Jean Emilio Mula, (no address listed); 8,414 shares to be sold approximately 12/23/98;

• Jean Alain Scarpaci, 32 Rue Du Calvaire, 92110 St. Cloud France; 48,913 shares to be sold

approximately 2/23/99;

• Gerald Testaniere, 104 Rue des Sable, 84100 Orange France; 4,802 shares to be sold approximately 12/22/98;

• "Serge Touitou" or "Serge Touttou", Latisseuer Cariase Allee Curacao 97222 Cose Pilate,

Martinique; 10,000 shares to be sold approximatelyl 2/23/98;

• Gerard Achard, 2 Allee Des Aules, 60150 Villiers Skoudun, France; 56,500 shares to be sold approximately 12/23/98;

• Pioneer Infosys, St Amagasse 16, Oft8027, Zurich, Switzerland; 1,500,000 shares to be sold approximately 9/11/98;

• Usines Diffusion, La Quinta Allee de la Marjolaine 06370 Mouans-Sartoux; 154,000 shares to be sold approximately12/22/98(signed by "Graham Burke").

-13- • Jean Main Searpaci, 32 Rue Du Calvaire, 92110 Saint Cloud, France; 43888 shares to be sold approximately 12/23/98;

• Fade Diop, 01 BP 5280 Abidjan 01, Cote d'Ivoire,West Africa; 500,000 shares to be sold approximately10/1/98. The Form 144 states that these 500,000 shares were acquired from

ProNetLink on 7/31/97 as "Repayment of debt."

• Fode Diop, 01 BP 5280 AN Djandi, Cote D'Ivoire, West Africa; 200,000 shares to be sold on approximately 9/2/98. Acquired from ProNetLink on 7/31/97 as "Repayment of Dette;"

• Fode Plop, 01 BP 5280 Abidjan 01 Cote d'Ivoire, West Africa; 20,000 shares to sell on approximately 8131/98. Acquired from ProNetLink on 7/31/97 as "Dette;"

• Charles Nisenbaum, 2000 Island Rd., Apt. 607, Miami, FL 33160; 79,667 shares to be sold on approximately 8/8/98. (According to the docket sheet for U.S. v.Charks Nisenbaum, Case No. 02-

CR-712-ALL, District of New Jersey, Nisenbaum was arrested in the Southern District of Florida on 11/2/02. He waived indictment and pleaded guilty in Newark federal court on 10/21/03 on charges relating to conspiracy to defraud the United States in connection with currency transactions

(31 USC §5324). According to the Farm 144, Nisenbaum received the PraNetLink shares from

"Fade Div" as a "Finder's Fee" on 7/31/97.

• Amex Corp., 24 Route Demalagnau CH-1208, Geneva Switzerland; 200,000 shares to be sold approximately 8/5/98. According to the Form 144, these shares were received from "Charles

Nissenbaum" on 7/31/97 as "Repayment of debt."

• Firstimpex, 24 Route Demalagnau CH-1208, Geneva, Switzerland; 385,000 shares to be sold approximately 8/5/98. According to the Form 144, the shares were acquired from "Fade Diop" on 7/31/97 as "Repayment of Debt."

-14- • Judith Lerner, 14 Kehilot Yakob BNE Brack Israel; 200,000 shares to be sold approximately

8/5/98. According to the Form 144, the shares were acquired from "Fode Diop" on 7/3/197 as

"Repayment of Debt."

• Fode Diop, 847A Second Avenue, Suite 208, NY, NY 10017 (Collardeau listed his address on Forms 144 as 847A Second Avenue, Suite 329A, New York, NY 10017); 109,998 shares to be sold approximately 5/29/98 at an approximate market value of $800,000. According to the Form

144, the shares were received from "ProNetLink (Prevention Production) on 12/1/96 for

"Services."

30. In addition, Rousso 's business, Pacific Art, leased office space to ProNetLink at 645 nrth Ave., Suite 303 ("the suite"). According to a former employee of Pacific Art, who later also worked for ProNetLink ("W-2"), Rousso brought ProNetLink into the suite as a subtenant, and

ProNetLink and Pacific Art shared space for a number of months. The space shared by ProNetLink and Rousso had a common reception area and neighboring offices. According to W-2, Rousso and

ProNetLink shared space until approximately 6 - 8 months prior to Rousso's arrest W-2 also stated that Hababou had "free room and board" in the suite. According to W-2, this co-tenancy allowed defendants Collardeau and Zagoren to have frequent contact with Rousso and Flubabou.

31. ProNetLink and the individual defendants are also linked to the activities of Marc

Rousso through a supposed ProNetLink investor named "Fode Diop." Based on a Form D ("Notice of Sale of Securities Pursuant to regulation D, Section 4(6), and /or Uniform Limited Offering

Exemption") filed with the SEC on October 28, 1997, "Fade Diop" received shares of ProNelLink as a "beneficial owner." The same form also lists defendant Collardeau and three Collardeau family members as recipients of ProNetLink stock. On this form, the home address of "Fode Diop" is the

-15- same New York street address (different suite) as that of defendant Jean Pierre Collardeau and

Collardeau's family members. Subsequent SEC Forms 144, dated 9/2/1998 and 10/25/1998, reflect

that during the class period , "Fode Diop" made millions of dollars on the sale of ProNetLink stock.

The Forms 144 for "Diop" reflect that these stock sales were handled by Pacific International

Securities. There is a strong inference that "rode Diop," among others, was simply a nominee

through which Collardeau sold ProNetLink stock.

32. Marc Rousso apparently also held property under the name "Fode Diop." In a

"Consent Judgment and Order of Forfeiture" in the case of United States -v. Marc Armand Rousso,

99 Cr. 512 (D.N.J.), Mr. Rousso agreed to forfeit, inter aila, an account at Ivy & Mader Philatelic

Auctions, Inc. in the name of "rode Diop," In addition, according to the Collardeau Indictment,

Marc Armand Rousso caused Fode Diop to be installed as the nominal President and sole director

of Prevention Productions (the original shell corporation) and conspired with Collardeau to trade Pro

Net Link stock in Diop's name. (Collardeau Indictment, 11111143).

33. To accomplish the goal of touting the Company and inflating the stock price,

Collardeau enlisted the aid of defendant Glenn Zagorcn, the president of Zagoren-Zozzora, Inc.

("ZZI"), a strategic development and marketing company. ProNetLink stated in a March 27, 1998 press release that "[ZZI] has been retained to handle all marketing, advertising and promotion for the company." The Press Release stated that "Mr. Glenn Zagoren, President of [ZZI] will personally ben handling the account," and that "[ZZI] plans on a major marketing program for ProNetl,ink that will include direct mail, advertising, telemarketing, intemet marketing and special events." Zagoren

was appointed as a director of the Company in May 1998.

-16- 34. The alliance between Collardeau and Zagoren was formed with the intention of having Zagoren promote ProNetLink, so that Collardeau and others could profit through the sale of

ProNetLink stock at inflated prices, and with the farther intention of benefitting Zagorcn by (1) providing him with substantial income as a paid consultant and employee of ProNetLink, (2) enhancing the value of his shares, and (3) providing him with a means of profiting through the use of other peoples' money to create -- PNL-TV-- a ProNetLink asset which Zagoren would later acquire from ProNetLink at no cost.

B. The Drum Beat of False Statements by the Defendants Begins

35. One of the primary methods by which Zagoren, Collarde au and I Iabab ou and Rousso touted ProNetLink to the investing public was by distributing positive, but often false or misleading, information on the interne, both in promotional materials and by posting messages on message

"threads" on business-oriented websites such as Silicon Investor and Raging Bull. (These intemet and message board postings were printed in hard copy form by plaintiffs). Both Silicon Investor and

Raging Bull had message "threads" devoted to ProNetLink, on which current and prospective

ProNetLink investors could obtain information about the company and the stock. Zagoren and

Phillipe Hababou periodically posted information on these "threads."

36. In or about March 1998, ProNetLink paid thousands of dollars to a website called

"Stock Genie." Stock Genie is essentially an advertising tool, which, for a fee will promote a company and its stock to the investing public. Zagoren, in a posting on the Silicon Investor

ProNetLink thread, acknowledged that ProNetLink paid to be Stock Genie's profiled company of the month for March 1998. In this posting, Zagoren stated:

-17- Please be advised that the fee that ProNetLink paid to Stock Genie is payable over 2 years and not in one lump sum. It is a very inexpensive marketing tool and allows PNLK news to get out very quickly. Sincerely, Glenn Zagoren, President Zagoren- Zozzora, Inc., Marketing firm for ProNetLink.

37. The Stock Genie Report on ProNetLink ("the Stock Genie Report" or "the Report") contained revenue and other financial projections which had absolutely no basis in fact. (According to the Stock Genie, "The information that Stock Genie relies on is generally provided by the featured companies and also may include information from outside sources and interviews conducted by

Stock Genie"). The Report's "Financial Highlights" section states the following:

According to the company's business plan, over the next 12 months the company anticipates signing up approximately 40,000 subscribers at an average of $360 each which would generate revenues of 144 million dollars, which would be classified as subscriber revenue. Other revenue streams include, but are not limited to banner advertising revenue and fees for catalog listings, and others, which would produce gross revenues of approximately 21 million dollars in year one. For the first year the company estimates pre-tax income of approximately 16.1 million dollars, after-tax net income of approximately 8.7 million and an E.P.S. of 23 cents per share.

In the second full year of operation the company anticipates approximately 47,500 new subscribers and 33,600 renewal subscribers for a total subscriber base of 81,100. This estimated subscriber revenue of approximately 29.2 million (81,100 subscribers x 360 annual subscription) combined with additional revenue streams is expected to bring in 42 million dollars.

For the second year the company estimates pre-tax income of approximately 31.4 million dollars and after-tax net income of approximately 17 million dollars with an F.P.S. of 44 cents per share.

During early May 1998, after he had been named a Director of ProNetLink, Zagoren posted a

message on the Silicon Investor ProNetLink thread reiterating that ProNetLink "projects 40,000 members by the end of the year at $360 per year." Shortly after this highly optimistic statement was

made, ProNetI.ink stock reached its all time high on May 13, 1998 of $8,09.

-18- 38. The statements in the Stock Genie Report as reiterated in Zagoren' s May 1998 internet posting, that ProNetLink would have 40,000 paying subscribers by year end 1998 had no basis in fact, and was either knowingly false or made with a conscious disregard for its truth or falsity. In its January 27, 2000, second amendment to its Form 10-Q for the quarterly period ended

September 30, 1999 with the SEC ("the September 30, 1999 Form 10-Q/A2"), the Company stated that "as of September 30, 1998, ProNetLink had approximately 450 members (of which 40 were subscription paying members)." There was no surge in subscriptions after September 1998. Based on the September 30, 1999 Form 10-Q/A2, as of September 30, 1999, ProNetLink had only 22 subscription paying members. There can have been no credible basis for the Company and

Zagoren's March and May 1998 projections of 40,000 paying subscribers by December 1998 if by

September 1998 ProNetLink had sold only 40 subscriptions. According to the Collardeau

Indictment, Collardeau enlisted the efforts of the Stockgenie.com to fraudulently "pump" Pro Net

Link stock. (Collardeau Indictment, IIII22-26). Collardeau and Irving Freiberg (who controlled

Stockaenie.com) are charged with conspiring to artificially inflate Pro Net Link's stock price.

Collardeau signed a sham agreement with Freiberg stating that Freiberg's company (Sutton Capital

Corp.) would receive $50,000 for promoting Pro Net Link. (Collardeau Indictment, 124). Zagoren, as a Director and Executive Vice President of Pro Net Link, was either aware of this fraudulent

"pump and dump" agreement with Stockgenie or was reckless in not knowing of it.

39. Moreover, a former employee of ProNetLink, who worked in the sales division of the

Company for approximately 13 months beginning in mid-1999 ("W-3"), states that W-3 "never saw any focus on building a subscriber base" for the ProNetLink website, This witness states there was no inside sales force at ProNetLink at all prior to August 1999, and nothing in place when this

-19- witness arrived in August 1999 that would have enabled the company to develop any significant paid subscriber base. The only concerted effort to sell subscriptions prior to August 1999 that this employee was aware of was the use of outside telemarketers. Based on this witness' observation, the telemarketing effort had produced a "0% return in terms of producing paid subscriptions." The falsity of the subscription sales projections is supported by W-3' s observation of the absence of any concerted plan for generating subscription sales at ProNetLink, and the dramatic difference between the "projected" sales (40,000 subscriptions) and the actual sales (well under 100).

40. At the Annual Shareholders' meeting held on December 4, 2000 at the Grand Hyatt on East 42 d Street in Manhattan, a ProNetLink investor asked Zagoren how many premium subscribers the Company had. Premium subscribers were paying users of the Company's website.

After attempting to evade answering the question with a non-responsive answer, the shareholder posed the question again. Zagoren told her that ProNetLink had over 8,000 paid subscribers. In truth, however, ProNetLink had fewer than 20 paid or "premium" subscribers in 2000. According to the Company's Annual Report on Form 10-K filed 10/12/00, the Company had approximately

7,500 "registered users," i.e., non-paying users of the Company's website. But the Annual Report makes clear that the Company only received $7,123 in "premium registration fees," which at the

$350 annual fee per user comes out to approximately 20 paying subscribers.

41. Zagoren's next step as chief marketer of ProNetLink was to introduce Jean Pierre

Collardeau to the investing public, via an April 27, 1998 Press Release entitled "ProNetLink

President and Founder . . . Jean Pierre Collardeau A leader in the Import-Export business." This

Press Release stated, among other things, that "Collardeau has been called on to give frequent informative speeches and seminars aimed at educating members of import-export associations such

-20- as the Florida Trade Data Center (FTDC) [and] the World Trade Center (WTC)." This statement

was misleading in that it suggested that Mr. Collardeau had spoken at the World Trade Center in

Manhattan, a prestigious hub of international commerce. Collardeau subsequently acknowledged that the "World Trade Center" referred to in this press release was the Florida World Trade Center,

a regional trade association in Miami. Moreover, the chief operating officer of the Florida Trade

Data Center stated subsequent to this press release that Collardeau was never invited to speak. "He

may have given some sort of speech at the center, but he certainly didn't give a speech for the

center."

42. On May 20. 1998, a ProNetLink message "thread" was launched on the Silicon

Investor website. The messages posted to this "thread" are still available on the Silicon Investor

website and have been read by counsel. This "thread" has received a steady stream of messages

since 1998 from ProNetLink investors and others, including some of the plaintiffs; According to the

Silicon Investor website 40,650 messages have been posted to this "thread" to date.

43. This ProNetLink "thread" was begun by a message from "Malko." This message remains available for review on the Silicon Investor website, "Malko's" message read in part as

follows:

Ladies and Gentleman:

If you've wondered where sound fundamentals have gone in the intemet sector...

If you've thought that profitless PIE ratios are slightly missing in the logic department...

If you wished you could find a substantial company in their infancy for an investment...

If you're looking for a company with great vision and solid execution.

-21- If you think no company could be as good as this seems to imply...

Then we cordially invite you to study the business plan and the execution that has been conceived and achieved by the ProNetLink team. In the PNLK Research Website ... you will learn the history that attests to the vision, capabilities, organization, execution and the results of the Pronetlink Webtool evolution to date.

While gaining insight to ProNetLink consider this: Do you know any other company with the potential that ProNetLink offers as an investment? At the time of this initial updated writing (3-21-99) the share price was about $1.75.

Let us assert that as you examine this information, the investment value will quickly become self-evident. Upon further investigation, you may begin to think that your eyes are deceiving you. However, as you satisfy your own questions, we believe that you too will become members of the ProNetLink family of investors.

As has been stated by the company founders, "ProNetLink is a work in progress, which means that the Webtool is keeping pace with the changes in the technical, e- commerce and customer environments. It is never static. It will stay dynamic to satisfy the rigorous demands of this burgeoning industry -- about which, we believe, ProNetLink will be among its principle pacesetters. We members of this thread, along with many others, represent investors around the globe who applaud the efforts and achievements of all the ProNetLink team, and extend to them our encouragement. And now you have the opportunity to find out why...

Welcome to this thread!

44. Unbeknownst to the investing public, "Mal ko" was Phil lipe Hababou3, the individual who assisted defendant Collardeau in setting up ProNetLink as a public company and who told W-1

that he and Collardeau had registered blocks of ProNetLink shares in nominee names with the intention of running the price up and eventually selling their shares at a profit

45. On June 8, 1998, the Company issued a press release which touted the Company's new Internet trade news broadcast feature stating: "ProNetLink is now 3 weeks old as a live website.

It has achieved many of its initial goals as set forth in Phase 1 of development." Lauding the

The docket sheet in Mr. Hababou's criminal case identifies "Malko" as one of Hababou' s aliases.

-22- Company's daily trade news intemet broadcast, the press release stated: "This feature has been activated and 3 times a day it is updated with current news from around the world."

46. The June 8, 1998 press release was intended to, and did, lull the investment community into believing that the Company's internet news broadcasting operation was a critical component to the success of the business venture.

47. On June 24, 1998, ProNetLink issued a press release entitled "ProNetLink

Management Announces Voluntary Stock Lock-up," stating:

ProNetLink (OTC Bulletin Board: PNLK-news) . . . announced today that the management ofthe company have signed a voluntary "lock-up" agreement that states that they will not sell any of their restricted stock to the public for a period of one year from the date of the agreement. Jean Pierre Collardcau, ProNetLink President and CEO and the other members of the executive staff control 16,500,000 shares of restricted stock.

"We want to show the market and our investors that we are behind ProNetLink and we are here for the long term" said Mr. Collardeau, "Our goal is to build the most comprehensive import-export tool on thc internet."

The stock certificates will be held by the company's counsel Leon B. Lipkin. Contact: Glenn Zagoren[.]

48. According to court records, Attorney Leon B. Lipkin, "counsel" to ProNetLink as of

June 24, 1998, has pleaded guilty to having been legal counsel to Marc Rousso in Rousso's stock schemes. As part of Rousso' s plea, he has agreed to forfeit his ProNetLink stock certificates, among other things, according to court records from the U.S. District Court in Newark, New Jersey.

49. This press release was intended to inspire confidence in investors, by assuring them that insiders, and particularly Collardeau, were holding their shares for the "long term," The June

24, 1998 press release was false and misleading in that it failed to reveal the information provided

-23- by W-1, to wit, that Mr. Collardeau and Hababou owned and were trading ProNetLink shares in the names of nominees at substantial profits.

C. The Class Period Begins

50. The Class Period begins on August 26, 1998. On this date, ProNetLink stock closed

at a price of $1.55 on volume of 346,900 shares. During the class period, and as a result of the false

and misleading statements of the defendants as set out herein, the stock price rose to a high of $7.84

(April 15, 1999). The Company filed for bankruptcy protection on or about July 1, 2001, rendering the company's shares worthless.

51. On August 26, 1998, the Company issued a press release which announced its first

"live" broadcast. This press release was intended to, and did, increase the level of interest in the

Company's internet broadcast operations, and thus the price of the Company's stock. The price of

the Company's stock, which closed at $1.52 on August 25, 1998, closed at $1.55 on August 26, 1998

and rose 11% to close at $1.72 August 27, 1998.

52. This press release was materially false and misleading because it failed to disclose

that Collardeau had entered into the scheme described by W-1 to have Zagoren and others promote

the company, thereby allowing Collardeau to sell shares in secret nominee accounts through the

Pacific International Securities brokerage firm in Vancouver, Canada at artificially inflated prices.

53. During September and October 1998, ProNetLink 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 ProNetLink was

$842,000.

-24- 54. As of December 1998, under a Securities Exchange Agreement between ProNetLink

and Jean Pierre Collardeau, ProNetLink issued 1,162,920 shares of restricted common stock to

Collardeau, pursuant to an exemption from registration under Section 3(a)(9) or 4(2) of the Securities

Act, in exchange for his surrender to ProNetLink of a Promissory Note of ProNetLink in favor of

Collardeau, which then had an outstanding principal balance plus interest of $232,584. (As described more fully below, Collardeau later sold these shares at prices of $3 and $5 per share, reaping profits exceeding $4 million his stock sales were suspicious in timing and amount.)

55. As of December 1998, under a Securities Exchange Agreement between ProNetLink

and Micheline Baron, ProNctLink 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 ProNetLink by Ms. Baron of a Promissory Note of ProNetLink in favor of Ms.

Baron, which at such time had an outstanding principal balance plus interest of $211,230.

56. In February 1999, ProNetLink 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 ProNetLink was $158,000.

57. In February through April 1999, ProNetLink 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 ProNetLink was $1,000,000.

58. As revealed by W-1, and unbeknownst to the investing public, a substantial portion

of the common stock ProNetLink issued in private placements (and thus exempt from registration) was issued to alter egos and family members of Collardeau, pursuant to a scheme whereby

-25- Collardeau would artificially drive up the price of the Company's stock and reap profits by selling through these alter egos and family members. In addition, the Collardeau Indictment charges that defendant Collardeau and others used these nominee accounts to generate trading profits in Pro Net

Link stock for themselves, to avoid disclosure to investors. (Collardeau Indictment, Tf29-30). Each of the Forms 10-Q and Forms 10-K and the Registration Statement that Pro Net Link filed with the

SEC during the Class Period was materially false and misleading because, among other things, they failed to disclose that Collardeau was the true beneficial owner of millions of shares of Pro Net Link stook held in the names of others. (This allegation applies to all of Pro Net Link's quarterly and annual reports as well as the Registration Statement discussed below, and will not be repeated after the mention of each of these SEC filings.)

59, On November 2, 1998, the Company issued a press release entitled "ProNetLink

November Update" ("the November Update"). As of that date, the Company had issued no public statement revising the March and May 1998 projections that ProNetLink would have 40,000 paying subscribers by the end of the year. (It was revealed 14-months later in a SEC Form 10-Q/A filed on

January 27, 2000 that as of September 30, 1998, ProNetLink had only 40 subscription paying members). On the issue of volume of subscription sales, the November Update stated:

The current number of paying members in ProNetLink is lower than the original plan called for by this time but this is partly due to the increased time that was necessary for product development. The marketing program began in September and since then the membership has started going up. 'Due to development issues we were slower then we originally planned to bring the full marketable capabilities of ProNetLink to the end user,' said Jean Pierre Collardeau, President of ProNetLink. 'However, now that the development has reached the advanced stages, we expect accelerated growth in membership.'

-26- This statement was false and misleading when made because subscription sales had not "started going up" in any appreciable degree at that time or any time thereafter. Based on statements in the

Company's own filings (made long after the November Update), subscription sales went from 40 as of September 1998 to 22 as of September 1999. W-3, a former employee in ProNetLink's sales division, has stated that when he joined the company in 1999, he saw no evidence of a sales strategy ever having been in place at ProNetLink that could have generated subscription sales in the thousands, much less the tens of thousands.

60. ProNetLink stock saw a spike in volume of activity in the two days after the

November Update was issued; the price remained in the $1.00 range. The false and misleading statements in the November Update regarding the pace of subscription sales had the effect of artificially maintaining ProNetLink's already artificially elevated stock price.

61. In Press Releases beginning in early 1999, the Company anticipated the upcoming

"launch" of the "full version of the ProNetLink Global Trade Internetwork." This "launch" was scheduled for early April 1999.

62. On April 8, 1999, the Company issued a press release announcing the appointment of Glenn Zagoren as Chairman of the Board:

In a special meeting of the Board of Directors, it was unanimously accepted that it would be in the best interest of the company and its shareholders if Mr. Zagoren, a current Board member, were elevated to the position of Chairman. 'Mr. Zagoren has been working with ProNetLink since the early days of the company,' said Jean Pierre Collardeau, President of ProNetLink. 'He is critical to the continued growth of the company and we respect his business guidance and growth programs,' Mr. Collardeau continued, 'We also feel that this title gives him more prestige when working on our behalf with Governments and strategic alliances around the world.'

Mr. Zagoren is President of Zagoren-Zozzora, Inc. the strategic development and marketing company that has been working with ProNetLink since its inception.. Mr.

-27- Zagoren has been Executive Producer on a number of Network Television Specials. 'Mr. Zagoren has a unique range of talents', Mr. Collardcau said. 'His core competencies includes strategic development, technology introductions, sales development, television production and marketing... all of which we use at ProNetLink. His skills and understanding of ProNetLink will help us reach the next level of penetration into the global marketplace.' ***** Currently the ProNetLink site is in beta testing with its strategic alliances. The full version of the ProNetLink Global Trade Internetwork will be available to the public in early April.

63. On April 12, 1999, the Company issued a press release announcing that it would be

launching its "new Global Trade Internetwork and Portal" on the morning of Friday, April 16th. The

Press Release quoted Zagoren as stating:

'We have invested over two years building this business and preparing for the upcoming release of our Global Trade Internetwork,' said Glenn Zagoren, ProNetLink's Chairman. 'We know that the marketplace has been anticipating the launch as much as we have. Our delivery date was set for the evening of April 14th however, after a long meeting we decided that it would make more sense not to compete with the IRS for attention on the 15 th. After two years of development we wanted everyone focused on the launch of ProNetLink and not on their taxes. So, what's one more day?' ***** Later this month, ProNetLink will debut its Internet broadcast feature when, on April 21', a live cybereast of events from the 1999 International Business Expo (IBE)[.]

ProNetLink stock closed on April 12, 1999 at $6.12, the second highest closing price in the stock's

history.

64. The April 12, 1999 press release was materially false and misleading because it failed to disclose, among other things, that Collardeau was holding stock in nominee names (accumulated

during the "over two years" the individual defendants were "building this business"), awaiting an

advantageous time to sell his shares at a profit. The press release also failed to correct information

-28- the individual defendants previously disseminated regarding the dramatically inflated sales

subscription projections (40,000 subscriptions) and actual sales reality (22 subscriptions sold).

65. On June 15, 1999, the Company issued an announcement entitled "Management of

ProNetLink. corn Continues Stock Lock-Up." This announcement stated:

ProNetLink.com(R) (OTC Bulletin Board: PNLIC), http://www.pronetlink.com (PNL), the Global Trade Intemetwork and Portal specializing in electronic international commerce, announced today that key management of the company will continue to voluntarily lock-up its stock to show its support for the company.

Jean Pierre Collardeau, the President of ProNetLink, who voluntarily locked up his shares last year will continue to do so for an additional year. In addition to the lock- up, Mr. Collardeau has not taken any salary or compensation since the start of the company. He is the only ProNctLink executive that has shares that could be traded in the public market in the immediate future. Mr. Collardeau had agreed with ProNetLink to extend the term of his lock-up agreement with respect to his shares of ProNetLink common stock. Under the terms of the original lock-up agreement, which was entered into as of June 23, 1998, Mr. Collardeau, together with members of his immediate family, agreed with the company not to sell 16,500,000 shares of ProNetLink common stock in the public market for at least one year

66. The foregoing statement was false and misleading because Collardeau had already

set up numerous secret nominee accounts as alleged above, and had traded ProNetLink stock for

substantial profits.

67. On June 21, 1999, the Company filed a Registration Statement (No. 000-26451) on

Form 10 with the SEC ("the June 1999 Registration Statement"). The June 1999 Registration

Statement was signed by Jean Pierre Collardeau. This filing marked the beginning of the Company

becoming a reporting company with the SEC. The June 1999 Registration Statement touted the

uniqueness of the Company's "Global Trade Internetwork" and the import of its internet

broadcasting facility as follows:

-29- ProNetLink's Global Trade Intemetwork website consists of three functional areas. The first is a customized portal page that gives members important trade information gathered from around the world about virtually any industry. The portal includes trade leads, business news and many other trade related data streams. The second is the trade directory and resource area where members can search the online directory of over 2.75 million companies.. .The third area is the interactive broadcast facility which has been designed to enable members to view or participate in live cybercasts of key trade events from around the world and to retrieve such cvbercasts from ProNetLink's archives on demand_ProNetLink considers the Global Trade Intemetwork to be a multi-dimensional portal that 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.

68. Describing the Company's broadcast operations, the June 1999 Registration

Statement stated:

ProNetLink.com's interactive broadcast facility is designed to enable members to view or participate in live cybercasts of key trade events from around the world and retrieve such cybercasts from ProNetLink's archives on demand. ProNetLink launched its interactive broadcast feature on April 21, 1999 with a live cybercast of events from the 1999 International Business Exposition (the "IBE") presented jointly with World Trade Magazine. While the IBE was held at the Jacob Javits Convention Center in New York City, ProNetLink members worldwide were able to view the event by just 'tuning in" to www.pronetlink corn. Members were also able to submit questions via e-mail and have them answered by the guests on the show.

Currently, programming is produced in rented facilities as needed. ProNetLink is planning to build a new broadcast studio in New York City in Fall 1999, where it anticipates producing trade SDeCifiC programming for the Global Trade Intemetwork, including trade news, special events, seminars and presentations as well as interviews. ProNetLink also plans on using local broadcast crews to bring special events from around the world to the ProNetLink.com . ProNetLink anticipates that all programming will be available for advertisers to sponsor and companies will also have the opportunity to purchase "infornercial" time on the website.

ProNetLink continues to build the "global" portion of the website with marketing missions in various regions throughout the world. Currently, ProNetLink has opened sales and development offices in connection with local independent representative firms in Indonesia and Israel, and expects to expand elsewhere in Asia, the Middle East as well as Europe. As of June 9, 1999, ProNetLink was in negotiations with businesses and organizations in seven European markets to open sales and marketing

-30- offices, but no assurances can be given that such negotiations will result in definitive agreements. ProNetLink is also working directly with government representatives and Chambers of Commerce and Trade associations in several nations to increase the amount of information that resides directly on the ProNetLink site... at this time there does not appear to be any competitive site broadcasting trade specific information on a regular basis.

69. The June 1999 Registration Statement also stated four anticipated revenue streams,

"membership fees, advertising, strategic alliance commissions and Internet broadcasting." The June

1999 Registration Statement did not provide information on the number of ProNetLink's paid

subscribers.

70. The audited financial statements attached to the 1999 Registration Statement were prepared by Feldman Sherb Erlich & Co., P.C. -- defendant. Feldman Sherb prior to a name change.

71. The foregoing statements in the June 1999 Registration Statement were materially false and misleading because:

a. membership fees were represented as one of the four "primary anticipated revenue streams," when the individual defendants knew that membership fees had fallen dramatically

short of projections and had failed to produce any significant revenue during the Company's preceding two years of operation;

b. the broadcast operations, which was represented to be a key component of the

ProNetLink Global Trade Intemetwork website and a key source of revenue, was being developed

solely for the personal benefit of Zagoren as discussed above;

c. as of June 21, 1999, trade specific information was being broadcast by competitors on a regular basis;

-31- d. it failed to reveal the information reported by W-1, that Collardeau had

entered into an alliance to issue false and misleading statements in order to create a market for the

Company's securities so that Collardeau and others could profit through the clandestine sale of

stocks held in nominee names.

e. A substantial portion of the Company's 50,068,570 shares of common stock was owned by alter egos and nominees of Collardeau.

72. On August 10, 1999, the Company issued a press release entitled "ProNetLink.com

Averages Over 1 Million Hits per Month Since Launch in April," stating:

While a million hits sounds like a small number compared to some of the huge consumer sites, the management of ProNetLink.com is pleased with this volume coming to a targeted business-to-business wide where members have to pay a subscription fee to get access. * * * The number of hits to the site is important for two reasons. First, it shows that the site is getting the attention that it needs in order to reach the next level of international expansion. Second, the number of hits to the site determines the amount the site can charge for advertising.]

73. This press release was false and misleading for several reasons. First, it states

management's satisfaction at having achieved these "hit" numbers on a site "where members have to pay a subscription fee to get access." The individual defendants knew, however, when this press

release was issued that (1) the site had only approximately 22 paying members, a number inadequate

to generate 1,000,000 "hits" per month, and (2) the vast majority of users were receiving free access.

74. Additionally, W-3, a former employee who came to work in sales for ProNetLink at

the time of this press release, has stated that the number of "hits" to ProNetLink's site is a useless

term. It does not reveal whether the site is being accessed for its intended purpose. Additionally,

-32- according to this witness, the ProNetLink's portal-based website was set up in a way that would be likely to generate many "hits" for a single user session. In addition this witness is extremely skeptical of the truthfulness of these "hit" numbers, stating that the computers ProNetLink had at the time of this press release would not have been able to handle this kind of user volume.

75. On August 23, 1999, the Company issued an "August Update" press release, over the name of Glenn Zagoren, stating that the Company's Global Trade Intemetwork(TM), "has received a positive reaction from the international business-to-business marketplace to its global business directory, data mining capabilities and on-line trade tools since its launch in April." The press release further stated:

In June, the company began a national TV advertising campaign that targeted the business-to-business marketplace. Membership from around the world climbed sharply and strong growth continued through July. The marketing and sale program will begin again in September and will have the additional support of new international sales offices and Chambers of Commerce partners. * * * * * The following is a company overview and member activity during the first14 weeks since launch

Current users: 2,337 companies from 53 countries Average monthly hits: 1,182,242 Number of user sessions: 110,152 * * * Revenue Streams: Advertising, Subscriptions, e-com commissions & sales, Broadcasting

76. The August 23, 1999 press release was materially false and misleading because:

a. membership from around the world had not "climbed sharply" or shown

"strong growth" through July 1999, as evidenced by the fact that as of September, 1999, ProNetLink had only 22 paid subscribers, down from the September 1998 total of 40 paid subscribers;

-33- b. the press release falsely suggested that the user activity was attributable to

"members," when the individual defendants knew (1) that there were only a handful of paying

"members" at the time, and (2) ProNctLink was being accessed during this time primarily by non- members;

c. there was no significant or "positive" reaction from the international business- to-business marketplace to the Company's global business directory, data mining capabilities and on-line trade tools; and

d. it failed to disclose that Collardeau and Zagoren had entered into the above described alliance to use Company funds to develop ProNetLink's broadcasting division, which

Zagoren would receive cost free, at the same time that a market for the Company's securities was being developed so that Collardeau could sell his shares secretly at a substantial profit.

e. On September 28, 1999, the Company issued a press release which announced that the Company would "launch PNL-TV, the first internet B2B trade news network, on Monday.

October 4th." The press release stated:

NEW YORK, S ept. 28 /PRNewswire/-ProNetLink.com (OTC Bulletin Board: PNLK - news), the Global Trade Internetwork(TM), today announced that it will launch PNL-TV, the first online news network focusing exclusively on breaking trade news and in-depth analysis of business-to-business international commerce issues, on Monday October 4th. PNL-TV will broadcast a live newscast Monday through Friday at 11:00 a.m. EST featuring current global trade issues, interviews with goverrunent and international business leaders and reports from correspondents from around the world.

ProNetLink.com has built a new, state-of-the-art digital Internet broadcasting studio that features a two-camera stage and Chroma Key backdrop, as well as a standard set. Digital switehers, graphics, effects, encoders and audio systems will provide broadcast standard live programming_ The studio also features non-linear digital editing for taped shows. PNL-TV will be distributed to the internet at three modem

-34- speeds... PNL-TV represents the most advanced stage of the Internet and a great example of the convergence of the computer and television,' said Glenn Zagoren, Chairman of ProNetLink.com . We see PNL-TV as a way for businesses from around the world to not only get current trade news, but to participate in the shows. ProNetLink.com has members in 53 countries which will allow PNL-TV to bridge traditional global news boundaries and change the way executives get their business- to-business and international trade news.'

77. W-2 and W-3, witnesses who were former employees at ProNetLink, both working there at the time of this press release, state that PNL-TV was Glenn Zagoren' s pet project. W-2, who served as office manager for ProNetLink, stated that Zagoren ran PNL-TV essentially as his own personal enterprise. This witness stated that, after PNL-TV was operational, Zagoren in discussions with Company insiders made no secret of his wish to have the Company cede PNLTV to him As will be explained more fully herein, this wish was fulfilled in 2001, when defendant Collardeau gave

PNL-TV to Zagoren.

78. On October 6, 1999, the Company, over the name of Glenn Zagoren, issued a press release stating that the Company's "netcasting division has successfully been launched and that viewer demand has set records in data stream rates according to a spokesperson at AT&T CerfNet, the company that monitors ProNetLink. corn servers." The statement "viewer demand has set records in data stream rates" could reasonably be interpreted to mean that PNL-TV had a large audience.

79. On November 15, 1999, the Company filed its SEC Form 10-Q for the quarterly period ended September 30, 1999 ("the September 30, 1999 Form 10-Q"). This document, which was signed by Collardeau, stated:

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. The Company'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

-35- sales professionals. The Company believes that its revenues will increase as it continues to implement its business plan.

80. The September 30, 1999 10-Q was false and misleading because the individual defendants knew as of the date of this filing that the Company was receiving no significant revenue from subscription sales, a revenue source that supposedly formed the bedrock of the Company's business plan. The filing was misleading because it did not reveal that, contrary to the previously announced projection of thousands of subscribers, as of September 30, 1999 the Company only had approximately 22 paid subscribers.

81. Moreover, the September 30, 1999 10-Q was false and misleading in its representation that the company had left the "development stage" (during which no significant revenue could be expected) and entered the "selling phase" (during which increased revenue could be expected). This transition (and the promise of increasing revenues) is belied by the Company's subsequent 10-Q, for the quarterly period ending December 31, 2000 (filed on February 20, 2001)

("the December 31, 2000 10-Q"). The December 31, 2000 10-Q states that "during the six month period ended December 31, 2000 and December 31, 1999, ProNetLink was a development stage enterprise. Accordingly, it engaged in limited revenue generating operations." This statement is plainly contrary to ProNetLink's pronouncement in the September 30, 1999 10-Q that it had left its development stage and entered the selling phase.

82. The price of ProNetLink's stock rose from a closing price of $2.34 on November 12,

1999 to a closing price of $2.90 on November 15, 1999, based on the rosy, but false, prospects described in the December 30, 1999 10-Q.

-36- 83. A note to the financial statements (Note - 3 Related Party Agreements) which were contained within the September 30, 1999 Form 10-Q purported to describe Zagoren's compensation as follows:

84. During the second quarter of fiscal 1999 (that is, between October 1, 1999 and

December 31, 1999), despite ProNetLink's lack of any meaningful revenue and without contemporaneous disclosure to the investing public, ProNetLink began paying quarterly compensation of $75,000 to defendant Collardeau. Prior to the second quarter of fiscal 1999,

Collardeau had been receiving no compensation from ProNetLink.

85. On December 8, 1999, the Company, over Zagoren's name, issued a Press Release entitled "November-December Update," which described the alleged success of PNL-TV and the plans for its expansion as follows:

November has been quite a month at ProNetLink.com We have been quite busy working on new elements for the PNT, and PNLTV.com sites. As you know we had our news team in Seattle for the WTO meetings. In my opinion, Bruce Blosil, our news anchor, did a great job. Thank you for your nice emails about the shows. Things were a mess in Seattle and yet he and the camera crew managed to duck the tear gas to be in the right places at the right time. In fact, CNN used footage from PNLTV.com on the signing of the U.S./China Agriculture agreement... Some investors have asked why are we taking the time to build PNLTV.com and how does it fit into the ProNetLink.com business plan. The WTO broadcasts are your answer. We were able to bring to the world trade market news

-37- that was targeted to their needs and not to ratings. We were able to broadcast as much material as we could generate without the worry of network time constraints. We interviewed trade leaders from around the world and pushed for answers that affect businesses around the world. In the end we were the only news network dedicated to bringing daily news programming targeted to trade professionals. PNLTV.com helped put ProNetLink.com in the top of minds of the Trade Ministers of the world. It was a great honor to have Ministers that I have met during trade missions send me their regards while being interviewed by PNLTV.corn. If global awareness is what we are looking for, PNLTV.com is certainly helping us get it... ***** PNLTV.com is a news resource that brings business people from around the world to our site on a daily basis. It is also a revenue generator. And it is only the beginning of PNT,TV.com "stay tuned" as they say. Advertising on PNLTV.com is where businesses want to be, since they can run their existing commercials and build their brand image... While PNLTV.com has been showing off in Seattle the rest of us have been working on ProNetLink.com back in New York. Our new and improved in- house tech team has been adding new features to the show on a regular basis... ***** We have also been working on our international footprint. As a result of the trade mission to the Middle East we are now finalizing sales agreements with Jordan, Egypt, Abu Dhabi and Dubai. We see this region as an important area specifically with Dubai building the first free trade zone for e-commerce. We had some very promising meetings with them during our mission.

We have new sales agreements in the Netherlands (the 7th largest Internet user in the world) and California, our first in the US and one of the largest import/export markets in the world. In February, we will begin to expand the ProNetLink.com market into Latin America. ***** As you all have probably seen we have filed our Form 10 and our Form 10Q. We continue to provide our shareholders with the information that is needed to make a sound investment. We will be adding a new investor section to the site in the very near future, where you will be able to get up-to-the-minute information about what is going on at PNL.

86. On December 14, 1999, the Company filed an amendment to its Form 10-Q for the quarterly period ended September 30, 1999 with the SEC ("the September 30, 1999 Form 10-Q/A").

A note to the financial statements (Note -3 Related Party Agreements) which were contained within

-38- the September 30, 1999 Form 10-Q/A disclosed additional data regarding Zagoren's compensation

as follows: "the Company recognized $340,000 of non-cash compensation expense related to options

granted to Mr. Zagoren during the year ended June 30, 1999. An additional $660,000 will be

amortized through the remaining period of the consulting agreement."

87. On December 14, 1999, the Company also filed an SEC Form 10/A, Amendment to

General Form of Registration of Securities ("the December 14, 1999 Form 10A). The December 14,

1999 Form 10A did not correct any of the false and misleading statements contained in the Original

Registration Statement, detailed above. The December 14, 1999 Form 10A has attached to it an

Independent Auditors' Report issued by Feldman Sherb Horowitz & Co., P.C. and audited financial

statements.

88. In addition to the false and misleading statements pointed out in the Initial

Registration Statement, the December 14, 1999 Form 10A states that, "For the period from Inception

through September 30, 1999, Jean Pierre Collardeau, the President of ProNetLink, did not receive

any compensation for services in any capacity to ProNetLink." This statement was misleading

because it failed to state that the Company had begun paying Collardeau a a salary of $75,000 per

quarter beginning in fiscal quarter 1011/1999 - 12/31/1999.

89. On January 27, 2000, the Company filed a second amendment to its SEC Form 10-Q

for the quarterly period ended September 30, 1999 ("the September 30, 1999 Form 10-Q/A2"). This

SEC filing disclosed the following information for the first time:

As of September 30, 1999, ProNetLink 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, ProNetLink had approximately 450 members (of which 40 were subscription paying members).

-39-

_ 90. The September 30, 1999 Form 10-Q/A2 also touted that "The Company'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 ProNetLink's bartering transactions with approximately ten companies in exchange for website development and marketing expenses."

91. These revenue figures were false and misleading, in that they included barter as an element of revenue. In November, 1999, two months prior to the filing of the September 30, 1999

Form 10-Q/A2 (1/27/00), the Financial Accounting Standards Board Emerging Issues Task Force

(EITF # 99-17) issued a ruling concluding that revenue and expense from advertising barter transactions should be recognized only when an entity has an historical practice of receiving or paying cash for similar advertising. EITF # 99-17 prohibited ProNetLink from recognizing the barter revenue reflected in the September 30, 1999 Form 10-Q/A2. This accounting error was compounded by narrative in the 10-Q/A2 touting the alleged increase in revenue. Contrary to the Company's pronouncement of an increase in revenue for the quarter ending September 30, 1999, after discounting the improper barter revenue, revenue actually decreased in September 30, 1999 as compared to the quarter ending September 30, 1998.

92. On January 27, 2000 and February 9, 2000, the Company also filed second and third

Amendments to the SEC Form 10 Registration Statement that it had filed in June 1999 ("the Forms

10/A2 and 10/A3"). The Forms 10/A2 and 10/A3 did not correct any of the false and misleading statements in the original Registration Statement, filed in June 1999 and in the Form 10A amendment filed on December 14, 1999.

-40- 93. On February 14, 2000, the Company filed its SEC Form 10-Q for the quarterly period ended December 31, 1999 ("the December 31, 1999 Form 10-Q"). This filing, signed by Collardeau, stated in a note to the financial statements:

On February 19, 1999, the Company entered into a consulting agreement with Zagoren-Zozzora, Inc. ("ZZI"), under which ZZI provides ongoing marketing and business functions to ProNetLink, including the development of marketing plans, general business consultation, supervision of marketing tools and the investigation and recommendation of strategic alliances and other business opportunities, Glenn Zagoren, the President of ZZI, currently serves as Chairman of the Board of Directors of ProNetLink, and spends substantially all of his time in such capacity. The current consulting agreement which expires in February 2000 provides that ZZI be paid $10,000 per month by ProNetLink for its services. For the six months ended December 31, 1999 ProNetLink paid ZZI $60,000. In addition, the Company recognized $680,142 of non-cash compensation expense related to options granted to Mr. Zagoren during the prior fiscal year. An additional $320,000 will be amortized through the remaining period of the consulting agreement. Mr. Zagoren and the Company are in the process of negotiating a new agreement whereby Mr. Zagoren would become an employee of the Company.

94. Additionally, the December 31, 1999 Form 10-Q stated:

As of December 31, 1999, ProNetLink had over 3,800 registered members from approximately 102 countries (of which 21 were subscription paying members and 42 were members who had previously paid subscriptions fees (and for whom the Company waived further payment)). As of December 31, 1998, ProNetlink had approximately 750 registered members (of which 42 were subscription paying members).

This acknowledgment belied earlier statement by Zagoren and the Company that ProNetLink would grow to have 40,000 paying subscribers.

95. Additionally, the Company's December 31, 1999 Form 10-Q improperly recognized

$622,000 in barter revenue in violation of EITF # 99-17, as is explained more fully above. This accounting error was compounded by narrative in the December 31, 1999 Form 10-Q in which the

-41- Company trumpeted its improved revenue numbers and the "transition to its revenue generation stage."

96. On February 15, 2000, the Company filed the fourth and final amendment to its June

1999 Registration Statement ("the Form l 01A4"). The Form 10/A4 repeated the false and misleading statements contained in the initial Registration Statement arid in the three subsequent amendments.

97. On February 16, 2000, the SEC approved ProNetLinle s Registration Statement. A press release issued by the Company that day bearing Mr. Zagoren's name stated:

ProNetLink,com. . .announced that the U.S. Securities and Exchange Commission (SEC) has informed the Company that its Form 10 registration statement is complete. While ProNetLink.com has been a fully reporting company since August of 1999, the completion of the Form 10 makes ProNetLink fully compliant with the OTC Bulletin Board's registration requirements.

The company has contacted the compliance division of the OTC Bulletin Board, and has initiated the process to remove the letter "e" from the company's symbol on the exchange. Based on the company's discussions with the OTC Bulletin Board, the company expects that its symbol will appear without the letter "e" within the next few trading days.

"It has been quite an interesting and time consuming process completing this registration statement but it is now behind us and we can once again focus completely on building our Global Trade Intemetwork" commented Glenn Zagorcn, Chairman of ProNetLink.com . "This step moves ProNetLink.com closer to its objective of listing its stock on a major U.S. stock exchange" added Jean Pierre Collardeau, President of ProNetLink.

ProNetLink stock reacted very favorably to this announcement. The stock price had hovered in the

$2.50 - $3.00 range in the months prior to February 16, 2000, By February 23, 2000, the stock price had jumped to $3.47; by March 2, 2000, the stock price was $5.81.

98. The defendants obtained SEC approval of the Company's Registration Statement, and achieved the resulting jump in ProNetLink stock price based on false and misleading statements

-42- made to the SEC. ProNettink completed its Registration Statement by submission to the SEC of false and misleading Forms which failed to alert the SEC to material facts, including the fact, as revealed by W-1, that Collardeau had obtained shares in nominee names with the intention of running up the stock price and selling, and the fact that the Company had previously misled the investing public by disseminating revenue projections that had no basis in fact. Had the SEC known these circumstances, it is highly unlikely that they would have approved ProNetLink's Registration

Statement.

99. On March 16, 2000, the Company held a conference call and Bruce Basil, Vice

President of PNL-TV, stated: "Our goal at PNL-TV is to become the premier broadcaster on the internet for global trade news and information." A key part of reaching that goal, he told listeners, was "hiring a team of broadcast news specialists ......

100. On April 5, 2000, the Company issued a press release announcing that Ms. Nicole

Domenici had joined PNL-TV as a Senior Producer. The press release stated that Ms. Domenici would be responsible for producing the live news broadcasts and would work directly with News

Anchor Bruce Blasi'. The press release also stated: "PNLTV.com now has viewers from over 53 countries "tuning in," said Jean Pierre CoIlardeau, President of ProNetLink.com ... As our network grows we will continue to add broadcast and news executives" like Ms. Domenici.

101. On April 17, 2000, Jean Pierre Collardeau sold 1,162,920 shares of his previously- restricted ProNetLink stock. Coll ardeau sold 622,920 shares at $3 per share, and 540,000 shares at

$5 per share, for total proceeds of $4,568,760. Collardeau's profit on these sales was approximately

$4.3 million. These stock sales were suspicious in both timing and amount because the Company had already issued several press releases stating that PNLTV was being developed and was a

-43- "leader" in its industry. In addition, the Company's Registration Statement was approved in

February 2000 which had the effect of substantially boosting the price of the Company's common stock. The sales were also suspiciously timed because they were prior to the dissemination of any adverse news on the Company which did not come out until much later in the year and into the following year. Collardeau's stock sales were at some of the highest prices for the stock at $3 and

$5 per share. As alleged in Count III these stock sales were made contemporaneously with stock purchases by lead plaintiffs Craig Zychal and Scot Campbell and are the basis for imposing civil liability for Collardeau's insider trading.

102. On May 26, 2000, Zagoren disseminated a letter to shareholders which stated:

I would like to say that I am very proud of the PNL and PNLTV teams and the product that they have brought to the market. Considering the funds that were available to build with I think this is even more outstanding. We have taken a $5 million investment and run the company for over "NM years, built an operational trade site with more functionality than most of the competition and launched a global trade news broadcast network. We have built all of this for the amount of money that some our "competition" burns in about week... Recently there has been quite a lot of discussion as to where ProNetLink.com and PNLTV cam are heading. I want to address some of those questions.

A few months ago we were in meetings with a number of investment banks, value added investors and venture capitalists. Unfortunately, the market took a major turn for the worse and all technology companies paid the price. As a result our conversations were sidetracked. We have re-started those conversations and are moving forward with ways to fund the expanded growth of our company. One of the elements that impress many of the firms that we are meeting with is the fact that we have been able to build so much with so little. Just imagine what we could do with proper funding.

***** In my opinion the credibility of ProNetLink.com and PNLTV.corn are of the highest level.

Yet, there are individuals out in the market that have taken to making false and misleading statements about our company with the intent to drive the price of the

-44- stock downward. I can say that these individuals do not have any information or understanding of what it is we are building to back up what they are posting. While I have offered to speak to anyone who has any question about the company, very few have ever picked up the phone to call me. Frankly, I am surprised, If I had a problem with something and was given the opportunity to find out directly from the Chairman of the company the answers to my questions I would be on the phone in a second. The fact that these people continue to post false and misleading statements about the company without making any effort to contact us for the facts shows me that they are just out to scare investors. I am not sure who they arc or whom they work for but if they are shareholders they serve no purpose in bashing the stock they have purchased. The only other alternative is that they do not own the stock and they are intentionally trying to drive the price downward.

Let me address the level of competition in the market. I have always stated that there will be competition in the area of global trade on the Internet. We welcome it. This is a major undertaking to change the way the world does business. Even if ProNetLink.com had all the funding in the world we could not do this job alone. The more companies join in the effort the faster we all move forward. Global trade is a $7 trillion business. There is plenty of room for many companies offering different services to the market. This is no different than the conventional business marketplace today. In fact, as an example, there are 87 rent-a-car companies in New York City alone that all manage to have a share of the business.

ProNetLink.com is at the center of the development of global trade on the Internet We will continue to grow and continue to have a share of that market. We are working to ensure that we have as large a share as possible...

The management and staff ofProNetLink and PNLTV are giving 110% of their effort. to make this company surpass our expectations...as well as yours.

103, On May 3, 2000, the Company told the public in a press release that PNL TV would

"produce and air exclusive coverage of symposium addressing `E-commerce and the Digital Divide:

The New World Order' in July.

104. On May 24, 2000, the Company issued another press release on PNL TV, stating it would provide coverage of the U.S. House vote to grant China permanent normal trade relations.

105. On June 6, 2000, the Company again told the public about PNL TV. The press release quoted Zagoren stating: "PNLTV.com is growing very quickly as the leader in international

-45- trade news programming." Zagoren announced that Fred Schwartzfarb had left CNBC to join

PNLTV.cona.

106. On June 22, 2000, the Company issued a press release under the headline:

"Management Continues to Show Strong Support of the Company." The press release stated that

"certain key shareholders of the company have voluntarily extended the lock-up restrictions on all of their stock." It further stated:

Jean Pierre Collardeau, the President and Founder of ProNetLink, and members of his immediate family, who have voluntarily agreed over the last two years to abstain from trading any of their shares in the public markets, have agreed to extend the voluntary lock-up for a minimum of three months to September 23, 2000. Mr. Collardeau is the only ProNetLink executive who currently has shares that can be traded in the public market.

The Board of Directors of ProNetLinic, Corp. may release the Collardeaus from the lock-up restrictions if the company consummates what the Board determines to be a significant financing transaction involving either ProNetLink.com and/or PNLTV.com.

107. On August 8, 2000, the Company filed a Form 8-K with the SEC which reported that

John A. Bohn was appointed Chairman of the Board of Directors of the Company (and that Glenn

Zagoren, was appointed Co-Chairman of the Board and Executive Vice President of the Company).

It further stated: "In that capacity he [Zagoren] will focus his attention and energy on accelerating the development of the Company's PNLTV.com broadcast unit."

108. The August 8, 2000 Form 8-K was materially false and misleading because it led the investment community to believe that the Company intended to continue to expand development of the Company's principal revenue-producing unit when, as particularized below, the Company planned to cease operations of this unit in a few months and transfer it to Zagoren in a cashless transaction.

-46- 109. On October 13, 2000, the Company tiled its SEC Form 10-K for the fiscal year ended

June 30, 2000 ("the Fiscal 2000 Form 10-K"). The document, which was signed by defendants

Collardeau and Zagoren, touted the "unique content" of its Internet broadcasting facility, also known as PNL-TV, which included live trade news, anchored by an experienced news journalist each business day, coverage of trade events and interviews with people involved in the trade industry.

Citing an increased activity associated with the Company's PNL-TV news and special events coverage, the document stated:

PNL-TV has been active in broadcasting trade-related special events since its inception. Key special event broadcasts for the year ended June 30, 2000 included coverage of the World Trade Organization meetings in Seattle (November 1999), the Free Trade of the Americas conference in Guatemala (April 2000), the House vote on the China Permanent Normal Trade Relations bill (May 2000), the United States Department of Commerce's Alternate Dispute Resolution and Small Business E-Commerce summits (both June 2000), and the United Nation's New Millennium conference (June 2000). We believe that producing and broadcasting such special events increases user access of the website, increases the sales possibilities for sponsorships of such broadcasts, and allows us to create valuable relationships with organizations such as the U.S. Department of Commerce and the United Nations _ . • we recently signed a contract with Corporate Fairs and Exhibitions for the exclusive rights to broadcast the International Aid & Trade show, planned for June 2001. . . We have. . . expanded the broadcast module of our website by building a full, in-house digital broadcast studio in our corporate offices in New York City. ProNetLink-owned cameras, digital switchers, non-linear digital editing, lighting and audio/video encoding systems are used to produce the trade-related programming...We intend to add to our sales and broadcast staff during fiscal year 2001."

110. The Fiscal 2000 Form 10-K also stated: "ProNetLink's website currently services approximately 7,500 registered users on the website from over 120 countries."

111. In addition, the Fiscal 2000 Form 10-K also disclosed that the Company had generated negative cash flows from operations in all periods since its inception and that it had previously relied upon funding through a series of private placements of equity securities, conversion

-47- of debt placements to common equity and shareholder loan advances, in addition to periodic bank borrowing under a secured credit facility.

112. Reassuring the investment community that the Company had sufficient liquidity to operate through September 30, 2001, the Fiscal 2000 Form 10-K stated:

Subsequent to June 30, 2000, further debt and equity capital was injected into ProNetLink as described below:

• On August 8, 2000, ProNetLink's President, Jean Pierre Collardeau, loaned ProNetLink an aggregate of $1,000,000 represented by a convertible note bearing interest at 12% per annum and due August 8, 2001. The note is convertible into shares of the Company's common stock at $1.89 per share, subject to adjustments as defined in the convertible note. On October 10, 2000, the note maturity date was extended by one year to August 8, 2002.

• On October 10, 2000, ProNetLink's President, Jean Pierre Collardeau, loaned ProNetLink $500,000 bearing interest at 12% per annum. The loan is repayable on October 10, 2002.

• On October 10, 2000, ProNetLink sold 666,667 of its shares of Common Stock in a private placement for $500,000.

• On October 10, 2000, the Company and its President entered into a Note Purchase Agreement (the "Agreement"). Pursuant to the Agreement, the President is obligated to lend the Company 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.

It is projected that the arrangements described above will provide sufficient capital resources to meet our operating needs through September 30, 2001.

We currently estimate that our base cash requirements for the next 12 months, which will include operating and marketing expenses, in addition to further technology and product development, will approximate 52,500,000. As at October 10,2000, ProNetLink's cash balance stood at $656,309. At that date no borrowings had been made under the referenced $2 million Note Purchase Agreement.

-48- 1/ 3. The Fiscal 2000 Form 10-K was materially false and misleading because at the time the foregoing representations were made, the Individual Defendants knew and failed to disclose that the Company had no intention of:

a. Continuing to develop its "unique" Internet broadcasting facility;

b. Adding personnel to its broadcast staff during fiscal year 2001;

c. Operating the Company's broadcast operations beyond January 2001 and had planned to transfer it to Zagoren;

d. Renewing the marketing services contract with Zagoren' s alter ego,

Zagoren-Zozzora, Inc., which was scheduled to expire on February 15, 2001; and

e. Broadcasting the International Aid & Trade show, planned for June 2001.

114. In addition, the Fiscal 2000 Form 10-K was materially false and misleading because, at the time the foregoing representations were made, the Individual Defendants knew and failed to disclose that:

a. The Company would soon file a provisional patent application for an integrated trade transaction ASP (Application Service Provider) solution called Master Transaction

Logic ("Nat") whose purpose is described below;

b. The Company did not have the technical capability to create the mu_ software product and would have to pay millions above and beyond the projected cash need of $2,500,000 to have an experienced software developer develop it for the Company;

c. The Company's base cash requirements for the next 12 months, which included operating and marketing expenses, in addition to further technology and product development, would approximate $10 million; and

-49- d. The Company did not have sufficient capital resources to meet its operating

needs through September 30, 2001.

D. The Individual Defendants Conceive the "MTL" Idea

115. According to testimony given on October 5, 2002 by David Walker, the Company's

Chief Operating Officer (11/98 to 7/2/01), given in the ProNetLink bankruptcy proceeding, in mid-

2000, the individual defendants conceived "the MTh idea" a concept which constituted an entirely

new business endeavor and direction for the Company.

116. As the individual defendants envisioned, the Master Transaction Logic ("MTL")

concept was intended to be a stand-alone transaction software module that could be accessed from

within the ProNetLink.com site and licensed as an Application Service Provider ("ASP") system to

any Internet e-commerce entity seeking to engage in international trade. The Company intended the

MTL software to generate revenues by charging a transaction fee on each level of service selected by the users, and by licensing fees. In other words, it was intended to establish the Company as the

"America Online" of the international commerce world.

117. According to Walker, the Company's officers and directors recognized that they would have to either "train people to do this [create the MTL software] or hire somebody who

already did it." They decided to engage the services of Commerce One because, in the words of

Walker: "Commerce One is in the business of building commerce systems, top of the line where people can E trade and do all of the things we needed to do."

118. Walker further testified: "We had negotiated with them since probably, September of the year, 2000" and finally struck a deal at approximately "one point two million for the market

site" and "one point four million for the labor."

-50- 119. As a result of the individual defendants' decision to embark upon the MTL path, the

Company decided to sell the Internet broadcast unit and funnel all resources into the development of MTL.

120. Also, according to Walker, at this time, the Board charged Zagoren with responsibility for finding a buyer for the Company's Internet broadcasting operations, and "throughout the fall" of 2000, Zagoren advised the Board that he had been searching for buyers but that "there were no takers."

121. The Fiscal 2000 Form 10-K was materially false and misleading because none of the foregoing facts, particularly the individual defendants' decision to gift the Company's existing intemet broadcasting business to an officer (Zagoren) and to embark upon a new bet-the-Company venture, were disclosed.

122. The foregoing facts were required to be disclosed pursuant to SEC Financial

Reporting Release No. 36 which states that the MD&A should "give investors an opportunity to look at the registrant through the eyes of management by providing a historical and prospective analysis of the registrant's financial condition and results of operations, with a particular emphasis on the registrant's prospects for the future." Examples of such revenue transactions or events that the staff of the SEC has asked to be disclosed and discussed in accordance with its Financial Reporting

Release No. 36 are: "Changing trends in. . a sales channel or separate class of customer that could be expected to have a significant effect on future sales or sales returns . . . An increasing trend toward sales to a different class of customer, such as a reseller distribution channel that has a lower gross profit margin than existing sales that are principally made to end users."

-51- 123. The financial statements which were contained within the Fiscal 2000 Form 10-K were materially false and misleading because they failed to comply with the GAAP (FASI3

Statement No. 121) which required the Company's financial statements to reflect the assets of the

Company's Broadcasting operations as "assets held for sale" at the lower of its carrying amount or fair value less cost to sell, and to provide, among other things, the following information:

a. A description of assets to be disposed of, the facts and circumstances leading to the expected disposal, the expected disposal date, and the carrying amount of those assets;

b. The loss resulting from the requirement that "assets held for sale" are to be reflected at the lower of its carrying amount or fair value less cost to sell; and

c. The results of operations for assets to be disposed of to the extent that those results are included in the entity's results of operations for the period and can be identified.

124. On November 14, 2000, the Company filed its SEC Form 10-Q for the fiscal quarter ended September 30, 2000 with the SEC ("the September 30, 2000 Form 10-Q"), signed by

Collardeau, which stated:

. in fiscal year 2001, we are focused on supplementing our revenue base and realizing a return on the product development expenditures incurred to date by creating or penetrating markets for our various content remarketing, Leaders in Global Trade, Virtual Trade Show and other products that we believe are sufficiently developed to market. Website enhancement and the development of additional products and technology innovations also characterize our fiscal 2001 efforts.

125. The September 30, 2000 Form 10-Q, and in particular the foregoing statement, was materially false and misleading because the September 30, 2000 Form 10-Q failed to disclose all of the facts specified above.

-52- 126, The financial statements which were contained within the September 30, 2000 Form

10-Q were also materially false and misleading because they failed to reflect the assets of the

Company's Broadcasting operations as "assets held for sale" at the lower of its canying amount or fair value less cost to sell and to provide the disclosures which were required by GAAP as particularized above.

E. The December 4, 2000 Annual Shareholders' Meeting

127. On December 4, 2000, the Company held its annual shareholder's meeting at the

Grand Hyatt on East 42 Street, in Manhattan. Lead plaintiffs Doreen Labit and Craig Zychal attended the meeting. Lead plaintiff Craig Zychal video taped the meeting in its entirety. Present at the meeting from the Company were Zagoren, Collardeau and Auguste Francis Vincent, a Director of the Company. Zagoren introduced Philip Weiner from the Company's auditor, Feldman Sherb, as well as Steven Cutler from Kronish, Lieb, the Company's outside counsel. Zagoren first delivered some prepared remarks about the Company's past performance and Zagoren stated the Company had also signed a 5-year contract to produce "virtual trade shows" for the United Nations. Zagoren stated the Company had very strong revenue-producing possibilities, like the UN contract. Zagoren also stated that the Company had immediate revenue generators, like PNL-TV. Going forward, Zagoren stated: "I personally believe that the convergence concept of ProNetLink is strong and the right path to profitability."

128. Zagoren then took questions from the investors in the audience who attended the

Annual Meeting. One investor asked:

I have two questions. First, could you comment on management's current planning and positioning with regard to the lock up of shares because I think Mr. Collardeau had some shares to be sold in February and so I'd like to know about that.

-53- And the second thing is I read where the burn rate of cash would take you through approximately September 30, 2001. I assume it's critical for the company. But the specific question is: a) is that correct; and b) will current funding take us through September 30?

129. Zagoren first told the audience that "I think that as shareholders you all have to agree that Mr. Collardeau has gone above and beyond the call of duty of any founder and CEO as having locked up his shares since the beginning of the Company." Collardeau was sitting through these statements in the front row of the audience alongside Director Auguste Francis Vincent, but said nothing.

130. Zagoren also stated that Collardeau had always done what was in the best interest of the Company. Zagoren told the audience that Collardeau could not sell his shares even if he wanted to because the market prevents him from selling all his stock into the market all at once: "The market and SEC prevents him [Collardeau] from putting all his shares into the market." Zagoren then asked

outside counsel, Steven Cutler, to comment. Cutler stated: "There are some restrictions on shares that have been held for a certain period of time." Cutler stated that an insider just could not drop a

large number of shares into the market because it would depress the price of the shares.

131. Zagoren then stated: "I think we're all in this together and! think that we'd be having

a very different conversation today if we'd been selling our shares all along and we haven't been."

"It would have been very attractive to all of us to sell when the shares were much higher .., ."

Collardeau, of course, remained silent about his trades through the nominees in the Vancouver

brokerage account, Pacific Securities, and other accounts as charged in the Collardeau Indictment.

(See Collardeau Indictment, r3(c), (d), (e), 16-19, 21).

-54- 132. Zagoren then addressed the investor's question whether the Company would have

enough money to last until September 30, 2001. Zagoren evaded answering this question by stating:

As far as the burn rate, we are doing what we can to control that burn rate knowing that we have a finite amount of funds available to us. We will make them go as far as we can, but the mission in front of us is not to just see bow long we can extend that burn rate, but to one, get additional funding to the company, and two, increase our revenues so that burn rate is offset by revenues rather than constantly be paying out money. Believe me, this is something we are frightfully aware of in the office and working now to reverse that process.

133. Zagoren thus never answered the investor's simple question, which was, does the

Company have sufficient capital to operate through September 2001. Zagoren's evasion of this

question with rhetoric about the desirability of increasing the Company's revenues was a red flag to the Company's auditor, Philip Weiner, who was sitting in the audience throughout the Annual

Meeting. As discussed below, Feldman Sherb should not have issued a clean audit opinion on the

Company's financial statements contained in the 2000 Form 10-K. But even after issuing the clean

audit opinion, the engagement partner, Philip Weiner witnessed Zagoren's evasion of a simple

question that called for a yes or no answer on whether ProNetLink had funding adequate to operate the Company until September 30, 2001. This should have alerted Accountant Weiner. Zagoren's failure to answer a direct question about the Company's available cash and financing to fund operations through the next 10 months -- through September 2001 -- put the auditor on notice that it needed to inquire further, but it did not.

134. Far from inquiring further, Feldman Sherb never retracted its clean audit opinion, dated September 28, 2000 (except note 12, as to which the date was October 10, 2000) contained in the Company's 2000 Form 10-K, filed October 13, 2000. Moreover, Feldman Sherb consented to the inclusion of its clean audit opinion in the Company's Registration Statement filed May 4, 2001,

-55- five months after the December 4, 2000 Annual Shareholders' Meeting. (On May 1, 2001,

Collardeau sent instructions to American Stock Transfer to cancel 1,500,000 shares of stock previously issued in the name of a Monbaron company and reissue those shares in the name of Eric

Niger, according to the Collardeau Indictment (T37q)). As alleged below, Feldman Sherb should have issued a "going concern" opinion, meaning that the Company did not have sufficient funds to continue operations for more than 12 months.

135. On February 5, 2001, the Company issued a press release stating that the Company had "signed an engagement agreement and draft term sheet to obtain up to $10 million with an equity line of credit with Corpfin.com, Inc. .. . a financial services company and member of NASD and

SIPC that raises private capital for small to mid-cap public companies across all industries, as well as providing access to such investment opportunities to institutional investors. The company has been introduced to potential investors by Corpfin.com and has begun negotiations with them."

136. According to the press release: "The additional capital is needed to complete the development ofthe company's patent-pending integrated trade transaction ASP (Application Service

Provider) solution called Master Transaction Logic(TM) (MTL(TM)). A provisional patent application was filed for the MTL(TM) in January, 2001."

137. In addition, the February 5, 2001 press release stated that its Board of Directors had approved a plan to restructure the Company, focusing "on a reduction in operating expenses" and the sale of the Company's Internet broadcast services as follows:

The company is currently in negotiations with various parties for the sale of all or the majority of its Internet broadcast services, and expects to retain an equity interest in the broadcast services as a condition of sale. 'Broadcasting trade information is a solid business concept', said Glenn Zagoren, Chairman of ProNetLink.com , 'However, I believe that it is in the best interest of the company and its shareholders

-56- to allow the broadcast services to be sold to an organization that has the fin-ding and resources needed to build an international news organization while allowing ProNetLink to retain equity and shareholder value in that new entity.'

All ongoing development will be focused on the Master Transaction Logic(TM) (MTL(TM)) platform, for which technical specifications have been completed and development has begun. The company intends for the MTL(TM) system to be an independent and open standard based Application Service Provider (ASP) solution that integrates a seamless "end-to-end" online process for SMEs engaged in international trade. The MTL(TM) is being developed to be a stand-alone transaction module that can be accessed from within the ProNetLink.com site and licensed as an ASP system to any Internet e-commerce entity that wants to profit from its capabilities.

The company intends for the MTI,(TM) system to generate revenues by charging a transaction fee on each level of service selected by the users and by licensing fees. 'Focusing on the delivery of a tailored trade solution, and delivering a rich user interface across a wide variety of networks, will help to position PNL in the fast growing Application Services Provider market', said Stephan Kneipp, Director of Technology for ProNetLink.

138. The February 5, 2001 press release was materially false and misleading because it failed to disclose the fact that the Company had discontinued its Internet broadcast operations (PNL

TV) in January 2001.

139. Moreover, the February 5, 2001 press release was materially false and misleading because the Company was not "in negotiations with various parties for the sale of all or the majority of its Internet broadcast services" as represented. According to Walker's testimony in the

Bankruptcy Proceeding, no prospective purchaser ever asked to look at the PNL-TV financial data;

"there were no takers;" there were no offers. This is not surprising given the fact that Zagoren, who was purportedly charged with finding a purchaser for the Company's broadcasting operations in the fall of 2000, had his own agenda -- the cashless acquisition of the Company's broadcasting for his own personal gain.

-57- 140. Zagoren's February 5, 2001 statements quoted above were materially false and

misleading because, at the time they were made, he knew that it was not in the best interest of the

Company and its shareholders to allow the broadcast services unit to be sold. This unit was the only portion of the Company's operations that consistently earned revenue and had the potential to

operate at a profit in the future as evidenced by the following testimony by Walker:

Q. Did PNL TV ever make any money for the company up until the point where you sold it?

A. Yes. PNL TV if, by meaning, that is all Internet broadcast activities under that umbrella, it did sell as a U.N. contract to video tape a U.N. event. It made some money . . . the leaders of global trade, as I had mentioned earlier. It was an audio/video, and that made some money, as well.

Q. Do you know approximately, how much revenue came from those two sources?

A. I believe, the U.N. was twenty thousand. Then, maybe, one hundred thousand total for the other one over the course of the year.

141. Moreover, the statements made by Zagoren in the February 5, 2001 press release were materially false and misleading because, at the time they were made, he knew, as co-Chairman of the Board of directors and the sole individual responsible for finding a buyer for the Company's broadcasting unit, that:

a. He would not seek to sell it to "an organization that has the funding and resources needed to build an international news organization.";

b. Through self dealing, he would acquire it (without shareholder approval) in a cashless transaction; and

c. The stockholders of the Company would not obtain any "shareholder value" upon the sale of the broadcasting unit to Zagoren.

-58- 142. On February 7, 2001, the Company filed a Form 8-K with the SEC which reported that its Board of Directors had approved a plan to restructure the Company, focusing "on a reduction in operating expenses, the sale of its Internet broadcast services, and the completion of the company's integrated trade transaction solution", and that the Company had engaged a financial services company to raise equity for the Company. As stated in this Form 8-K:

ProNetLink is currently in negotiations with various parties for the sale of all or the majority of its interests in its Internet broadcast services. The Company currently intends to retain an equity interest in the broadcast services as a condition of sale. However, there can be no assurances that such a transaction will be consummated., or that any such transaction will be consummated in a form currently contemplated by the Company.

All ongoing development will be focused on the Master Transaction Logic (MTL) transaction platform, for which technical specifications have been completed and development has begun. The company intends for the MTh system to be an independent and open standard based Application Service Provider (ASP) solution that integrates a seamless "end-to-end" online process for SMEs engaged in international trade. The MTL is being developed to be a stand-alone transaction module that can be accessed from within the ProNetLink.com site and licensed as an ASP system to any Internet e-commerce entity that wants to profit from its capabilities.

143. Addressing the Company's PNL- TV, the February 7, 2001 Form 8-K stated: "Pending the sale of the Company's broadcast services, the Company intends to retain the capability to fulfill broadcast services contracts."

144. The February 7, 2001 Form 8-K was materially false and misleading because it failed to disclose that the Company's Internet broadcast facility had ceased operations in January 2001, that the Company had no intention of fulfilling its broadcast services contracts, and because it led the investment community to believe that negotiations with various parties for the sale of the broadcast unit were ongoing, when this was not true.

-59- 145. On February 20, 2001, the Company filed its SEC Form 10-Q for the fiscal quarter ended December 31, 2000 ("the December 31, 2000 Form 10-Q). This document, which was signed by Collardeau, stated:

On February 6, 2001, our Board of Directors announced that we had approved a plan to re-focus the Company and to engage a financial services firm to raise equity for the Company. The re-focusing called for a reduction in operating expenses, the sale of the Company's Internet broadcast services, and the completion of the Company's ASP (Application Service Provider) trade transaction solution, termed the "Master Transaction Logic," or "MTL". The Company has significantly reduced staffing, retaining the core executive, administrative and technical staff for the development of the MTh product and maintenance of the Company's website. We have also elected not to renew the marketing services contract with Zagoren-Zozzora, Inc. ("ZZI"), which expired on February 15, 2001. These, and other cost reductions, we see as reducing monthly operating expenses (not including research and development of the MTh product) by over 50%. Glenn Zagoren, President of ZZI, remains as non-executive Chairman of the Board of the Company.

We are currently in negotiations with various parties for the sale of all or the majority of our interests in our Internet broadcast services, which include the Virtual Trade Show product, PNLTV, and various broadcast services. We currently intend to retain an equity or other interest in the broadcast services as a condition of sale. However, there can be no assurances that such a transaction will be consummated, or that any such transaction will be consummated in the form currently contemplated by us.

All ongoing development will be focused on the Master Transaction Logic (MTL) transaction platform, for which technical specifications have been completed and development has begun. We intend the MTh system to be an independent and open standard based Application Service Provider (ASP) solution that integrates a seamless "end-to-end" online process for SMEs (Small to Mid-Sized Enterprises) engaged in international trade. The MTL is being developed to be a stand-alone transaction module that can be accessed from within the ProNetLink.com site and licensed as an ASP 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 MTL on January 18, 2001,

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 the website. Pending the sale of our broadcast services, we intend to retain the capability to fulfill broadcast services contracts.

-60- 146. The December 31, 2000 Form 10-Q was materially false and misleading for the same reasons that the February 7, 2001 Form 8-K was materially false and misleading.

147. The financial statements which were contained within the December 31, 2000 Form

10-Q were materially false and misleading because they failed to reflect the assets of the Company's

Broadcasting operations as "assets held for sale" at the lower of its carrying amount or fair value less cost to sell and to provide the disclosures which were required by GAAP as particularized above.

148. On April 13, 2001, the Board of Directors (Collardeau and Vincent voting), voted to give the PNL-TV assets to Zagoren for practically nothing, according to the minutes of the Board of Directors. Collardeau and Vincent. voted to enter into an Asset Purchase Agreement on behalf of the Company with Zagoren's Company, ZZZTV. All of PNL-TV's assets were given to Zagoren under the agreement; ProNetLink received nothing for the assets except Zagoren's promise to pay

20% of his profits and 40% of Zagoren' s profits received from advertising supplied by the Company.

149. On May 4, 2001, the Company filed a Form 5-1 with the SEC which disclosed the fact that the Company's Internet broadcast facility had "ceased operations in January 2001" and

"was sold to ZZTV Inc. [a company owned by Zagoren] pursuant to an Asset Purchase Agreement dated April 13, 2001" in a transaction in which Zagoren paid nothing.

150. Discussing the Company's MTL project, the Form S-1 stated:

All ongoing development has been focused on the Master Transaction Logic transaction platform, for which technical specifications have been completed and development has begun. * * "

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.

-61- 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.

151. Discussing liquidity and monetary commitments the Form S-1 stated: "We believe that current financing arrangements and available funds will be sufficient to meet anticipated needs for working capital and capital expenditures for at least the next six months."

152. The foregoing statement was materially false and misleading because, as of May 4,

2001, as the individual defendants knew, the Company did not have the financing and available funds needed to meet the Company's anticipated needs for working capital and capital expenditures for at least the next six months. In fact, the Company did not even have the resources needed to make the initial June 2001 payment to Commerce One which had been contracted to develop the

Company's MTL product. According to testimony by Walker in the Bankruptcy Proceeding:

A. We signed the agreement in April.

Q. Was there any financial transfer of either money or was it stock between your company and Commerce One?

A. No.

Q. You just paid them for their service?

A. We didn't pay them. We signed the deal.

Q. There was an agreement to pay them?

-62- A. They extended over one hundred-and-twenty days. They said that there was no cash now, but in the future. But, that they would take a risk with us.

Q. What was the term of repayment?

A. It was I think, ninety days for a piece of it and another one hundred-and-twenty days payments in the summer. So, it would fall in June and July.

Q. Ninety days from the April date?

A. No. June was the first payment; then spread out thereafter.

Q. How much was to be paid to them?

A. One point two million for the market site, basic platform. They estimated the labor to be I think, one point four million for the labor. That stretched out over eighteen weeks in terms. They would be flexible they said, on this.

Q. Was any money paid to them?

A. No.

153. On May 21, 2001, the Company filed its SEC Form 10-Q for the fiscal quarter ended

March 31, 2001 ("the March 31, 2001 Form 10-0). This document, which was signed by

Collardeau, stated:

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. ***** 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.

-63- ***** 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.

154. The foregoing statements were materially false and misleading because they led the investment community to believe that the Company had a 85 million line of credit to draw upon, when it did not, and because it led the investment community to believe that this $5 million line of credit was sufficient to cover the Company's operating expenses (purported to approximate $700,000 for the next six months) and for the Company's cost of developing, implementing and marketing its

Master Transaction Logic/Application Service Provider product (purported to approximate

$2,600,000). According to a principal at Waveland Capital, LLC, who was also responsible for

ProNetLink funding under the line of credit, ProNetLink's stock became too "diluted" to permit

Waveland Capital, LLC to extend any additional financing to ProNetLink. According to this witness, Waveland Capital, LLC was unwilling to extend further capital to ProNetLink under these circumstances.

155. One week later, on May 28, 2001, the Company's Board of Directors met to discuss the fact that the Company did not have sufficient resources to continue operating. According to testimony by Walker:

-64- Q. You must have come to a conclusion at some point and raised to the other principals of this entity, "Things are looking bad. We have to consider closing at some point"?

A. The beginning of June.

Q. Was there a meeting of the parties, the Directors and Officers? Or, was it just the Officers?

A, Directors met on the 28th of May.

Q. What was the discussion, at that point in time?

A, Our discussion was, since the funding didn't seem to be like a return or a comeback, it didn't -- the task was to talk to Commerce One, our other partners, and to see if we could get it [the Company] purchased or bought or funding, or something. So, we had a whole list of things to do.

Q. Now, was there a discussion at the time, as to the alternative, that you would have to close shop if it didn't work?

A. Yes, at some point.

THE TRUTH IS REVEALED

156. On July 2, 2001, the Company issued a press release stating that it had filed a voluntary petition for bankruptcy under Chapter 7 of the United States Bankruptcy Code in the

United States Bankruptcy Court for the Southern District of New York. The case was assigned to

Judge Gerber, (case number 01-41827). According to the press release:

ProNetLink, which is a development stage corporation, elected to file for Chapter 7 bankruptcy due to: I) ProNetLink's inability to meet its financial obligations as said obligations become due, 2) the continued absence of any significant revenue from business operations or otherwise, and 3) ProNetLink's inability to obtain new investment capital or to find a merger or acquisition partner to allow operations to continue.

-65- AUDITOR LIABILITY

157. The books and records of the Company, which were openly available to Feldman

Sherb, plainly reflected the nature of the foregoing improper and undisclosed transactions and the amounts involved. Moreover, all of the Company's personnel had been made available to Feldman

Sherb without restriction or limitation. Thus, there was no concealment of any of the material facts particularized above.

158. In view of the fact that nothing was concealed from Feldman Sherh, it is apparent that, in connection with its audit of the Company's financial statements during the Class Period,

Feldman Sherb did not comply with GAAS in that it either (i) performed audit procedures in a manner which constituted an extreme departure from the standards of ordinary care or it (ii) failed to perform those audit procedures which were appropriate and necessary under the circumstances.

In this regard, Feldman's audit was so deficient that it amounted to no audit at all.

159. GAAS (AU Section 150) mandates that: "Due professional care is to be exercised in the planning and performance of the audit and the preparation of the report." Providing guidance on the concept of due professional care, GAAS (AU Section 230) states:

Due professional care requires the auditor to exercise professional skepticism. Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence. The auditor uses the knowledge, skill, and ability called for by the profession of public accounting to diligently perform, in good faith and with integrity, the gathering and objective evaluation of evidence.

Gathering and objectively evaluating audit evidence requires the auditor to consider the competency and sufficiency of the evidence. Since evidence is gathered and evaluated throughout the audit, professional skepticism should be exercised throughout the audit process.

-66- The auditor neither assumes that management is dishonest nor assumes unquestioned honesty. In exercising professional skepticism, the auditor should not be satisfied with less than persuasive evidence because of a belief that management is honest.

160. During the performance of its audit, Feldman Sherb either learned of and ignored, or recklessly failed to learn numerous facts showing that the Company did not have sufficient funds on hand to finance its operations for the next 12 months, and accordingly Feldman Sherb should not have given the Company a clean audit opinion. Based on the facts below which Feldman Sherb knew or recldessly disregarded, ProNetLink had insufficient funds at the time Feldman Sherb issued its clean audit opinion to continue in operation for the next 12 months. Feldman Sherb knew of or recklessly disregarded these red flags.

161. The Company's base cash requirements for the next 12 months, which included operating and marketing expenses, in addition to further technology and product development, would approximate well more than the Company had on hand and would approach $6 to $10 million, even according to the Company's COO, David Walker. Feldman Sherb either knew this and ignored it, or recklessly disregarded this fact.

162. The Company's own Form 10-Q for the six months ended December 31, 2000 (filed

2/20/01) stated that the Company would need a minimum of $700,000 to meet base operating requirements, excluding research and development of the MTh. To develop MTL, the Company estimated that it would need another $4 million, bringing total cash needs to $4.7 million for the next

6 months. As alleged above, the Company disclosed that at most it had far less than $4.7 million in available financing for the next 12 months.

-67- 163. In addition, COO David Walker testified in connection with the Company's bankruptcy proceeding that the Company would need $6 to $10 million to fund its business plan and operations:

A. Well, our goals, we needed --

Q. Company goals?

A. We need about six to ten million dollars to fund everything. (Walker Tr. at 12).

164. Walker testified that the Company had begun developing its MTL project in mid-2000

(Walker Tr. at 15-16). He also testified that by August 2000, the Company had already been moving in a new direction to build out its MTL project. (Walker Tr. at 13). The Company had already begun negotiating with Commerce One to build the MTh software by September 2000. (Walker Tr. at 18). According to Walker, it would cost several million dollars just to develop the MTL software, well more than the Company had on hand. (Walker Tr. at 12- 26).

165. In addition, as alleged above, Philip Weiner of Feldman Sherb was present at the

Annual Shareholders' Meeting on December 4, 2000, when Zagoren evaded an investor's direct question whether the Company had enough money to fund operations through September 30, 2001.

This was a red flag that Weiner either consciously or recklessly ignored showing that the Company understood it did not have sufficient money to fund operations until September 30, 2001. Feldman

Sherb nevertheless consented to the use of its clean audit opinion in the Company's Registration

Statement, filed May 2, 2001.

166. Moreover, according to the Collardeau Indictment, the Company sent instructions on

March 26, 2001 to American Stock Transfer to reissue 1,500,000 shares of Pro Net Link stock previously issued in the name of Eric Niger to be reissued in the name of Muriel Prochasson.

-68- (Collardeau Indictment, 137(o)). The reissue of a large number of shares of Company stock was a

red flag that Feldman Sherb failed to investigate. Had it investigated this large and unusual transaction, it would have discovered the fraudulent scheme alleged herein, namely, the issuance of

Pro Net Link stock to various nominees, including Eric Niger and Muriel Prochasson as alleged in the Collardeau Indictment. (Collardeau Indictment, ¶15, 13, 21, 29, 34, 37(1), 37(n), 37(o), 37(q);

Count Three, 119.)

167. In addition, Feldman Sherb consented to the inclusion of its clean audit opinion in the Company's Registration Statement filed May 4, 2001. On May 1, 2001, however, Collardeau

sent instructions to American Stock Transfer to cancel 1,500,000 shares of stock previously issued

in the name of Monbaron Company and reissue those shares in the name of Eric Niger, according

to the Collardeau Indictment, 1137q. This stock reissue was a red flag that Feldman Sherb ignored.

168. Feldman Sherb also knew or recklessly ignored the following facts which rendered

their clean audit opinion materially false and misleading:

a. The Company had no intention of continuing to develop its "unique" Internet

broadcasting facility;

b. The Company had no intention of adding personnel to its broadcast staff

during fiscal year 2001;

c. The Company had no intention of broadcasting the International Aid & Trade

show, planned for June 2001;

d. The Company had no intention of operating and/or retaining the Company's

broadcast operations beyond January 2001;

-69- e. The Company had no intention of renewing the marketing services contract with Zagoren-Zozzora, Inc. ("ZZI"), which was scheduled to expire on February 15, 2001;

f. The Company did not have the technical capability to create the MTL software product and would have to pay millions to have an experienced software developer develop it for the Company; and

g. The Company did not have sufficient capital resources to meet its operating needs through September 30, 2001.

169. Feldman Sherb either knew and ignored all of the foregoing and permitted the

Company to conceal these facts from the investing public, by among other things, failing to comply with the GAAP (FASB Statement No. 121) disclosure requirements particularized above, and also permitted the Company to represent that its financing arrangements, as of October 10, 2000, "will provide sufficient capital resources to meet our operating needs through September 30, 2001."

170. Due to the Company's fraudulent concealment of material facts and its failure to make those disclosures which were necessary to make the Company's financial statements not misleading, the overall impression created by the Fiscal 2000 Form 10-K was inconsistent with the business realities of the Company and, as a result, they were deceptive and materially misleading.

171. On September 28, 2000 (except note 12, as to which the date was October 10, 2000),

Feldman issued its unqualified opinion on the Company's June 30, 2000 financial statements. This opinion, which was included in ProNetLink's Form 10-K filed on October 13, 2000 for the fiscal year ended June 30, 2000 and which was addressed "To the Board of Directors and Shareholders of

ProNetLink Corp." stated:

-70- We have audited the accompanying balance sheets of ProNetLink Corp. (A Development Stage Enterprise) as of June 30, 2000 and 1999, and the related statements of operations, shareholders' equity and cash flows for the years ended June 30, 2000 and 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, 2000. These financial statements are the responsibility ofthe 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 ProNetLink Corp. (A Development Stage Enterprise) as of June 30, 2000 and 1999, and the results aits operations and its cash flows for the years ended June 30, 2000 and 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, 2000 in conformity with generally accepted accounting principles.

172. Feldman Sherb's unqualified auditor's opinion on the June 30, 2000 financial statements were materially false and misleading because these financial statements were not presented in accordance with GAAP, nor were they audited in accordance with GA AS.

173. GAAS (AU Section 411) describes the meaning of "present fairly in conformity with generally accepted accounting principles in the auditor's report" as follows:

The auditor's opinion that financial statements present fairly an entity's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles should be based on his judgement as to whether (a) the accounting principles selected and applied have general acceptance; (b) the accounting principles are appropriate in the circumstances; (c) the financial statements, including the related notes, are informative of matters that may affect their use, understanding, and interpretation; (d) the information presented in the financial statements is classified and summarized in a reasonable manner, that is,

-71- neither too detailed nor too condensed; and (e) the financial statements reflect the underlying events and transactions in a manner that presents the financial position, results of operations, and cash flows stated within a range of acceptable limits, that is, limits that are reasonable and practicable to attain in financial statements.

174. The June 30, 2000 financial statements which were disseminated to the investing public during the Class Period were not presented "fairly in conformity with generally accepted accounting principles" because, as particularized above, the:

a. Accounting principles selected and applied in the preparation of the June 30,

2000 financial statements did not have general acceptance;

b. Accounting principles which pervasively impacted the June 30, 2000 financial statements were not appropriate in the circumstances;

c. June 30, 2000 financial statements, including the related notes, were not informative of matters that affected their use, understanding, and interpretation; and

d. June 30, 2000 financial statements did not reflect the underlying events and transactions in a manner that presented the financial position and the results of operations within a range of acceptable limits that were reasonable and practicable to attain in financial statements.

175. Feldman Sherb knew or recklessly disregarded that it was required to adhere to standards and principles of GAAS, including the requirement that the financial statements comply in all material respects with GAAP. Feldman, in issuing its unqualified opinion, as alleged herein, knew that by doing so it was engaging in a gross departure from GAAS, or issued such certification with reckless disregard for whether or not GAAS was being complied with.

176. In the introductory portion of Accounting Series Release No. 173, the SEC made the following comments pertaining to economic substance:

-72- Another problem. . . is the need for emphasizing the importance of substance over form in determining accounting principles to be applied to particular transactions and situations. In addition to considering substance over form in particular transactions, it is important that the overall impression created by the financial statements be consistent with the business realities of the company's financial position and operations,

We believe that the auditor must stand back from his resolution of particular accounting issues and assess the aggregate impact of the particular issues upon a reasonable investor's perception of the economic substance of the enterprise for which the financial statements arc being presented.

177. In opining on the fairness of the June 30, 2000 financial statements, Feldman Sherb specifically represented that its audit included "assessing the accounting principles used . . by management, as well as evaluating the overall financial statement presentation." This representation was materially false and misleading because Feldman either failed to assess the propriety of the accounting principles used by the Company and the overall financial statement presentation, or did so in an egregiously reckless manner.

178. Feldman Sherb's September 28, 2000 (except note 12, as to which the date was

October 10, 2000) unqualified opinion, insofar as it stated that Feldman Sherb's audit of the

Company's financial statements were conducted in accordance with GAAS, was false and misleading because the following GAAS (AU Section 150) were knowingly or recklessly violated:

a. General Standard No. 1 was violated, which standard requires that the audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor;

b. General Standard No. 3 was violated, which standard requires that due professional care is to be exercised in the performance of the audit and in the preparation of the report;

-73- c. Standard Of Field Work No. I was violated, which standard requires that the work is to be adequately planned and assistants, if any, are to be properly supervised;

d. Standard Of Field Work No. 2 was violated, which standard requires that a sufficient understanding of the internal control structure is to be obtained to plan the audit and to determine the nature, timing and extent of tests to be performed;

e. Standard Of Field Work No. 3 was violated, which standard requires that sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under examination;

f. Standard Of Reporting No. I was violated, which standard requires that the report shall state whether the financial statements are presented in accordance with generally accepted accounting principles; and

g- Standard Of Reporting No. 3 was violated, which standard requires that informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report.

179. The Company was required to disclose in its financial statements the existence of the material facts described above and to appropriately report transactions in conformity with GAAP.

The Company failed to make such disclosures and to account for and to report transactions in the

June 30, 2000 financial statements in conformity with GAAP. Feldman Sherb was, therefore, required pursuant to GAAS, to issue a report which expressed a qualified opinion (AU Sections 340 and 508) on the Company's financial statements and which included an explanatory paragraph

-74- describing an uncertainty about the Company's ability to continue as a going concern for a reasonable period of time.

180. Feldman S herb knew or recklessly disregarded the facts which indicated that the June

30, 2000 financial statements were false and misleading for the reasons set forth herein and it either knowingly or recklessly violated GAAS in failing to issue a report which expressed a qualified opinion on the Company's June 30, 2000 financial statements and which included an explanatory paragraph describing an uncertainty about the Company's ability to continue as a going concern for a reasonable period of time.

181. As particularized above and more fully below, Feldman Sherb failed to comply with

GAAS in that it failed to perform its audit of the June 30, 2000 financial statement with a proper degree of professional skepticism. In this regard, Feldman either identified and ignored evidence that the Company's financial statements were materially misstated via fraudulent accounting or recklessly failed to identify such fraudulent accounting.

182. Further, as particularized above and more fully below, Feldman Sherb either identified and ignored, or recklessly failed to investigate extremely questionable transactions, and made audit judgments that no reasonable auditor would have made if confronted with the same facts.

Accordingly, Feldman's audit was so deficient that it amounted to no audit at all.

183. Had Feldman Sherb undertaken the performance of those audit procedures which were required by GAAS, and with the due professional care which was required by GAAS, it would have known that the June 30, 2000 financial statements were materially false and misleading because these financial statements were not presented in accordance with GAAP. In reckless disregard of

-75- professional standards, as particularized above and more funy below, Feldman failed to audit the

June 30, 2000 financial statements in conformity with GAAS.

184. GAAS (AU Section 311) states that:

The auditor should obtain a level of knowledge of the entity's business that will enable him to plan and perform his audit in accordance with generally accepted auditing standards. That level of knowledge should enable him to obtain an understanding of the events, transactions, and practices that, in his judgment, may have a significant effect on the financial statements. . Knowledge of the entity's business helps the auditor in:

a. Identifying areas that may need special consideration.

b. Assessing conditions under which accounting data are produced, processed, reviewed, and accumulated within the organization.

c. Evaluating the reasonableness of estimates . . .

d. Evaluating the reasonableness of management representations.

e. Making judgments about the appropriateness of the accounting principles applied and the adequacy of disclosures.

185. In planning and performing its audit, Feldman either failed to:

a. Identify areas that needed special consideration (such the Company's accounting for its broadcast operations and the Company's ability to continue as a going concern) or identified such areas and audited them in a manner which was so deficient that it amounted to no audit at all, while making audit judgments that no reasonable auditor would have made if confronted with the same facts;

b. Assess the conditions under which accounting data, such as asset impairments were produced, processed, reviewed, and accumulated within the organization or assessed such

-76- conditions and made audit judgments based upon said assessment that no reasonable auditor would have made if confronted with the same facts;

c. Evaluate the reasonableness of management's representations, such as its representations that the Company's financing arrangements would provide sufficient capital resources to meet the Company's operating needs through September 30, 2001, or evaluated it in a manner which was so deficient that it amounted to no evaluation at all;

d. Judge the appropriateness of the accounting principles applied and the adequacy of disclosures in the Company's financial statements, or did so and arrived at judgments that no reasonable auditor would have arrived at if confronted with the same facts. In this regard, although Feldman Sherb's unqualified opinion stated that Feldman Sherb had assessed the accounting principles used by the Company, Feldman Sherb failed to recognize that management had selected and used non-GAAP and inappropriate accounting policies and failed to make those disclosures which were required in order to make the financial statements not misleading as particularized above.

186. GAAS (AU Section 311) states that audit planning involves developing an overall

strategy for the expected conduct and scope of the audit. Accordingly, GAAS recognizes that the nature, extent, and timing of audit planning vary with the size and complexity of the company, experience with the company, and knowledge of the company's business. Ti this regard, GAAS (AU

Section 311) provides that in planning the audit, the auditor should "prepare a written audit program

(or set of written audit programs) for every audit" and that this audit program:

. should set forth in reasonable detail the audit procedures that the auditor believes are necessary to accomplish the objectives of the audit . . . In developing the program, tho auditor should be guided by the results of the planning considerations

-77- and procedures. As the audit progresses, changed conditions may make it necessary to modify planned audit procedures.

187. In preparing this audit program, GAAS provided that the auditor should consider, among other things (AU Section 311):

a. Matters relating to the entity's business and the industry in which it operates;

b. The entity's accounting policies and procedures;

c. The methods used by the entity to process significant accounting information;

d. Planned assessed level of control risk;

e. Preliminary judgment about materiality levels for audit purposes;

f. Financial statement items likely to require adjustment;

g. Conditions that may require extension or modification of audit tests.

188. Feldman Sherb failed to comply with the foregoing provisions of GAAS in that

Feldman Sherb knew and ignored or recklessly failed to know, prior to commencement of its audit of the Company's June 30, 2000 financial statements, of each of the material facts particularized above, and either failed to utilize this information in planning and performing its audit or utilized this information in a marmer that no reasonable auditor would have used if confronted with the same facts.

189. The Company held its annual shareholders' meeting on Monday, December 4, 2000 at the Grand Hyatt New York, Park Avenue at Grand Central Station (on 42nd Street between

Lexington Avenue and Park Avenue, New York, New York 10017). Representatives of Feldman

Sherb were present at this annual meeting, namely Mr. Phil Weiner, and were afforded an opportunity to make a statement regarding the Company's accounting practices and to answer

-78- questions that might have been asked by stockholders. At this annual meeting, Feldman Sherb's representative failed to disclose the fact that the Company was in violation of SEC rules which require a reporting company to make and keep books, records, and accounts, which in reasonable detail, accurately and fairly reflect the transactions of the company. Further, the Feldman Sherb representative failed to disclose the fact that the June 30, 2000 financial statements were not prepared in compliance with GAAP and that they were materially misleading.

PLAINTIFFS' CLASS ACTION ALLEGATIONS

190. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased or otherwise acquired ProNetLink common stock between August 26, 1998 and July 1, 2001, inclusive (the

"Class Period"), and who were damaged thereby. Excluded from the Class are defendants, members of the immediate family of each of the Individual Defendants, any subsidiary or affiliate of

ProNetLinic and the directors, officers and employees of ProNetLink or its subsidiaries or affiliates, or any entity- in which any excluded person has a controlling interest, and the legal representatives, heirs, successors and assigns of any excluded person.

191. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to plaintiffs at this time and can only be ascertained through appropriate discovery, plaintiffs believe that there are thousands of members of the Class located throughout the United States. As of November 10, 2000, there were reportedly more than 52 million shares of ProNetLink conunon stock outstanding. Throughout the

Class Period, ProNetLink common stock was actively traded on the Over-The-Counter market (an open and efficient market) under the symbol "PNTX." (The stock currently trades under the symbol

-79- PNLKQ.PK.) Record owners and other members of the Class may be identified from records maintained by ProNetLink and/or its transfer agents and may be notified of the pendency of this action by mail, using a form of notice similar to that customarily used in securities class actions.

192. Plaintiffs' claims are typical of the claims of the other members of the Class as all members of the Class were similarly affected by defendants' wrongful conduct in violation of federal law that is complained of herein.

193. Plaintiffs will fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class and securities litigation.

194. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are:

a. whether the federal securities laws were violated by defendants' acts and omissions as alleged herein;

b. whether defendants participated in and pursued the common course of conduct complained of herein;

c. whether documents, press releases, and other statements disseminated to the investing public and the Company's shareholders during the Class Period misrepresented material facts about the business, finances, financial condition and prospects of ProNetLink;

d. whether statements made by defendants to the investing public during the

Class Period misrepresented and/or omitted to disclose material facts about the business, finances, value, performance and prospects of ProNetLink;

-80- e. whether the market price of ProNetLink common stock during the Class

Period was artificially inflated due to the material misrepresentations and failures to correct the material misrepresentations complained of herein; and

f. the extent to which the members of the Class have sustained damages and the proper measure of damages.

195. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this suit as a class action,

APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD-ON-THE-MARKET DOCTRINE

196. At all relevant times, the market for ProNetLink common stock was an efficient market for the following reasons, among others:

a. ProNctLink common stock was listed and actively traded, on the over-the- counter market, a highly efficient market;

b. As a regulated issuer, ProNetLink filed periodic public reports with the SEC;

c. ProNetLink stock was followed by securities analysts employed by major brokerage firms who wrote reports which were distributed to the sales force and certain customers of their respective brokerage firms. Each of these reports was publicly available and entered the public marketplace.

-81- d. ProNetLink regularly issued press releases which were carried by national newswires. Each of these releases was publicly available and entered the public marketplace.

197. As a result, the market for ProNetLink securities promptly digested current information with respect to ProNetLink from all publicly-available sources and reflected such information in Pro N et Li nk' s s stock price. Under these circumstances, all purchasers of ProNetLink common stock during the Class Period suffered similar injury through their purchase of stock at artificially inflated prices and a presumption of reliance applies.

NO SAFE HARBOR

198. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this complaint. The specific statements pleaded herein were not identified as "forward-looking statements" when made.

Nor was it stated with respect to any of the statements forming the basis of this complaint that actual results "could differ materially from those projected." To the extent there were any forward-looking statements, there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements,

Alternatively, to the extent that the statutory safe harbor does apply to any forward-looking statements pleaded herein, defendants are liable for those false forward-looking statements because at the time each of those forward-looking was made the particular speaker knew that the particular forward-looking statement was false, and/or the forward-looking statement was authorized and/or approved by an executive officer of ProNetLink who knew that those statements were false when made. The statutory safe harbor does not apply to the statements at issue in this action because

-82- ProNetLink issued penny stock and is thus exempt from safe harbor protection under Section 21E

of the Exchange Act.

SCIENTER ALLEGATIONS

199. As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements, issued or disseminated by or in the name of the Company were

materially false and misleading; knew or recklessly disregarded that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially

participated or acquiesced in the issuance or dissemination of such statements or documents as primary violators of the federal securities laws. As set forth elsewhere herein in detail, defendants,

by virtue of their receipt of information reflecting the true facts regarding ProNetLinic and its

business practices, their control over and/or receipt of ProNetLink' s allegedly materially misleading

misstatements and/or their associations with the Company which made them privy to confidential

proprietary information concerning ProNetLink were active and culpable participants in the

fraudulent scheme alleged herein. The Individual Defendants knew and/or recklessly disregarded

the falsity and misleading nature of the information which they caused to be disseminated to the

investing public. This case does not involve allegations of false forward-looking statements or

projections but instead involves false statements concerning the Company's business, finances and

operations. The ongoing fraudulent scheme described in this complaint could not have been

perpetrated over a substantial period of time, as has occurred, without the knowledge and complicity

of the personnel at the highest level of the Company, including the Individual Defendants.

200. The Individual Defendants engaged in such a scheme to inflate the price of

ProNetLink common stock in order to: (i) protect and enhance their executive positions and the

-83- substantial compensation and prestige they obtained thereby; and (ii) enhance the value of their personal holdings of ProNetLink common stock and options.

201. Pierre Collardeau sold his ProNetLink stock through secret nominees, as alleged above, arid in the Collardeau Indictment, annexed hereto and incorporated herein.

202. Pierre Collardeau sold his stock at a suspicious time and in a suspicious amount.

Collardeau sold 1,162,920 shares for $4,568,760.

203. Defendant Zagoren was motivated to commit the fraud alleged herein because he sought to obtain -- and did obtain -- the Company's valuable PNL-TV assets for virtually nothing.

In addition, by virtue of his Executive Position in a small company with few employees, Zagoren either knew of the fraudulent stock scheme alleged herein whereby Pro Net Link stock was sold secretly in nominee accounts, or was reckless in not knowing it. According to Zagoren's own statements at the December 4, 2000 Annual Shareholder's Meeting at the Grand Hyatt in New York city, Pro Net Link had only himself and Collardeau as the original employees of the Company for the first year (1997-1998) and then added David Walker (the COO). At its height, according to

Zagoren, Pro Net Link had only approximately one dozen employees. Given the small number of employees, there is a strong inference that Zagoren knew or recklessly disregarded the stock fraud scheme alleged herein.

204. Defendant Feldman Sherb knew of or recklessly disregarded numerous red flags described above in conducting its audit of the Company's year-end 2000 financial statements, including the large stock transfers charged in the Collardeau Indictment.

-84- 205. Defendant Zagoren told an investor at the annual meeting on December 4, 2000 that the Company had 8,000 paid subscribers when in fact, as he well knew, the Company had fewer than

20.

206. Defendant Zagoren intentionally evaded an investor's question at the December 4,

2000 shareholder meeting on whether the Company could fund operations through September 30,

2001.

FIRST CLAIM

Violations Of Section 10(b) Of The Exchange Act And Rule 10b-5 Promulgated Thereunder Against All Defendants

207. Plaintiffs repeat and reallege each and every allegation contained above.

208. Each of the defendants: (a) knew or recklessly disregarded material adverse non- public information about ProNetLink's financial results and then existing business conditions, which was not disclosed; and (b) participated in drafting, reviewing and/or approving the misleading statements, releases, reports and other public representations of and about ProNetLink.

209. During the Class Period, defendants, with knowledge of or reckless disregard for the truth, disseminated or approved the false statements specified above, which were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

210. Defendants have violated § 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in that they: (a) employed devices, schemes and artifices to defraud; (b) made untrue statements of material facts or omitted to state material facts necessary in order to make statements made, in light of the circumstances under which they were made, not misleading; or (c) engaged in

-85- acts, practices and a course of business that operated as a fraud or deceit upon the purchasers of

ProNetLink stock during the Class Period.

211. Plaintiffs and the Class have suffered damage in that, in reliance on the integrity of the market, they paid artificially inflated prices for ProNetLink stock. Plaintiffs and the Class would not have purchased ProNetLink stock at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by defendants' false and misleading statements.

SECOND CLAIM

Violation of Section 20(a) of The Exchange Act Against Individual Defendants Za_goren and Collardeau

212. Plaintiffs repeat and reallege each and every allegation contained above.

211 The Individual Defendants (Zagoren, Collardeau and Vincent) acted as controlling persons of ProNetLink within the meaning of Section 20(a) of the Exchange Act. By reason of their senior executive and/or Board positions they had the power and authority to cause ProNetLink engage in the wrongful conduct complained of herein.

214. By reason of such wrongful conduct, the Individual Defendants, Zagoren and

Collardeau, are liable pursuant to §20(a) of the Exchange Act. As a direct and proximate result of these defendants' wrongful conduct, plaintiffs and the other members of the Class suffered damages in connection with their purchases of ProNetLink stock during the Class Period.

-86- THIRD CLAIM

Violation of Section 20A of the Exchange Act Against Defendant 'lean Pierre Collardeau: Liability for Contemporaneous Trading

215. Plaintiffs repeat and reallege each and every allegation set forth above as if fully set forth herein.

216. Defendant Collardeau sold 1,162,920 shares of his ProNetLink stock for proceeds of

4,568,760 on April 17, 2000, according to SEC-filed records.

217. According to the Company's publicly-filed documents, defendant Collardeau obtained these shares in exchange for Collardeau's forgiveness of a $232,584 loan to the Company.

218. When defendant Collardeau made these sales he was in possession of the adverse material non-public information set forth above about ProNetLink's true financial condition and prospects.

219. Lead plaintiff Scot Campbell purchased 5,000 shares of ProNetLink common stock at $2.00 per share on April 17, 2000_

220. Lead plaintiff Craig Zychal purchased 2,650 shares of ProNetLink common stock at

$1.875 per share on April 17, 2000.

221. Defendant Collardeau's shares were sold contemporaneously with the purchases of

ProNetLink common stock by lead plaintiff's Campbell and Zychal.

222. Defendant Collardcau is liable to lead plaintiffs and the class for the profits he received from his sales transactions under Section 20A(b)(1) of the Exchange Act, to wit, $4,336,

172.

WHEREFORE, plaintiffs pray for relief and judgment, as follows:

-87- 1. Determining that this action is a proper class action and certifying plaintiffs as class representatives under Rule 23 of the Federal Rules of Civil Procedure;

2. Awarding compensatory damages in favor of plaintiffs and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

3. Awarding plaintiffs and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and

4. Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury.

DATED: February 19, 2004

VIANALE & VIAiNALE L P By: r • eth J. Vianale (KY 4607) Ju ie Prag Vianale (JP 4718) (Members of the Bar of this Court) 5355 Town Center Road, Suite 801 Boca Raton, FL 33486 Tel: (561) 391-4900 Fax: (561) 368-9274

-and-

-88- GAINEY and MeKENNA Thomas J. McKenna 485 Fifth Avenue, 3' Floor New York; NY Tel: (212) 983-1300 Fax: (212) 983-0383

Lead Counsel for Lead Plaintiffs and the Class

-89-

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished via U.S. First Class Mail, this 19th day of February, 2004, to the following:

WILSON, ELSER, MOSKOWITZ, CLAYMAN & ROSENBERG EDELMAN & DICKER LLP Brian D. Linder, Esq. Joseph Franeoeur 305 Madison Ave. Matthew Greenberg New York NY 10165 3 Gannett Drive White Plains NY 10604 Attorneys for Glenn Zagoren

Attorneys for Grassi & Co. and FRIEDMAN KAPLAN SEILER Sherb & Co. & ADELMAN LLP Paul Fishman LESTER, SCHWAB, KATZ 1633 Broadway, 46th Floor & D-VVYER, LLP New York NY 10019 Lawrence Steekman Tel: (212) 833-1100 120 Broadway Fax: (212) 833-1250 New York NY 10271 1 Attorneys for Jean Pierre Collardeau Attorneys for Feldman Sherb & Co. f

Julie 'rag Vianale

-90-