SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 2000
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YP. Net, Inc.
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(Exact name of registrant as specified in charter)
Nevada 0-24217 85-026668
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4840 East Jasmine Street, Suite 105, Mesa, Arizona 85205
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(Address of principal executive offices ) (Zip Code)
(480) 654-9646
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(Registrant's telephone number,
including area code)
N/A
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(Former name or former address, if changed
since last report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On June 26, 2000, the Federal Trade Commission ("FTC") filed a complaint in
the United States District Court of Arizona (CIV '00 1210 PHX SMM) against
YP.NET, Inc. (the "Company"), certain of its past and present officers and
directors and other affiliated companies. The complaint alleged that the
Company and the other defendants had engaged in deceptive advertising practices
and sought certain preliminary injunctive remedies including a freeze of all
defendants' assets. The alleged deceptive practices related to a check mailer
solicitation utilized by the Company in its marketing activities.
On June 26, 2000, the District Court, on motion by the FTC granted without
the Company being given the opportunity to participate, entered a temporary
restraining order implementing the asset freeze and appointed Mr. Lawrence J.
Warfield as a temporary receiver to operate the Company pending hearing on the
merits of the complaint. Company management cooperated fully in transferring
management operations to the receiver upon being notified that the temporary
restraining order was in effect.
On July 13, 2000, the Company and all other defendants entered into a
global settlement of the complaint with the FTC. Under the terms of a
stipulated preliminary order, the Company specifically denied that any of its
practices with respect to the direct mailer were deceptive or otherwise in
violation of applicable law. The stipulated preliminary order specified that
the Company's settlement agreement with the FTC was not an admission of
violation of any applicable law or rule or that any allegation made by the FTC
was true. The Company and the FTC agreed to certain modifications of the
Company's mailer program and the FTC agreed that the modified mailer program
would not be considered by their agency to be deceptive. The Company
specifically reserved certain rights and claims with respect to the temporary
receiver.
Upon hearing on July 13, 2000, the District Court approved the stipulated
preliminary order. Under the terms of the order, the freeze of the Company's
assets was lifted and the temporary receiver was immediately dismissed. Company
management immediately resumed operations of the Company's business. The
Company anticipates that it will enter into a stipulated final order with the
same terms of the stipulated preliminary order upon such final order being
processed for approval by the FTC. Upon entry of the final order, pursuant to
the settlement terms, the FTC's complaint will be dismissed with prejudice.
While the FTC action was disruptive to Company operations during the period
the temporary receiver was in place, management believes the stipulated
preliminary order and anticipated final order will be beneficial to future
operations. While the Company does not believe its practices related to the
check mailer solicitation program were deceptive, by following the criteria
specified in the stipulated order, the Company has assurances that the FTC will
not make further claims of deceptive practices with respect to this mailer
program. The Company believes the stipulated order provides it with clear
guidance to proceed with this program free from further FTC claim.
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ITEM 5. OTHER EVENTS
The action by the FTC caused delay in completing the Company's pending
audit of its financial statements. Management anticipates that the Company's
audit for its fiscal year ended September 30, 1999 will be completed within
approximately 30 days. Management anticipates the Company's annual report for
such fiscal year and its subsequent two quarterly reports will be completed soon
thereafter. Upon completion of filing the required annual and quarterly
reports, management anticipates that the Company's stock will be re-listed on
the OTC Bulletin Board.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YP. NET, INC.
/s/ Angelo Tullo
Date July 18, 2000 ----------------------------
Angelo Tullo, Chairman
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