AdZone Signs Web Wise Kids Contract; Irrational Exuberance Follows at 2006-02-06 23:45:40
AdZone Research, Inc. (ADZR) today reported it has signed a contract with Web Wise Kids, Inc. purported to be worth "more than $50,000,000 annually." Under terms of the agreement, AdZone will be responsible for "securing OPPS online predator profiling system licenses starting with the more than 2,000 Web Wise Kids community partners it has already engaged." John A. Cardona, President and COO of AdZone said that "what we came to realize, once the Letter of Intent was signed two weeks ago, was that the 2,300 orders AdZone has already received from some 80 communities represents an average of 25 to 30 OPPS licenses per police department." While the company has reason to be excited with its new contract, it does not clearly give light to exactly how much revenue will be brought in by these online predator profiling system licenses. Does it justify a $50,000,000 price tag annually? Also, investors should ask why 20,950,000 shares of common stock were registered in late December for its stock option incentive plan. Would these new licenses not provide the cash for strengthening employee salaries as an alternative to diluting the company's common stock and creating a drop in shareholder value? Look for future filings and news releases to answer some of these questions. In the meantime, investors should put on their glasses of "cautious optimism" before getting too excited and watching shares of AdZone become overextended as it has tripled in just one day.
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