SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-KA
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 13, 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 110, Mesa, Arizona 85205
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (480) 654-9646
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On March 14, 2000, Registrant filed its Form 8-K indicating (Item 4) those
pertinent matters incident to a full disclosure pursuant to Item 304(a)(3) of
Regulation S-K relating to a change in Registrant's Certifying Accountant.
Although McGladrey & Pullen, LLP, did furnish to the Commission its March
22, 2000, letter that incorporated its February 4, 2000, letter addressed to
Registrant, inadvertently, Registrant failed (i) to include as an Exhibit to its
March 14, 2000 Form 8-K as filed with the Commission, the McGladrey & Pullen,
LLP letter dated February 4, 2000, attached hereto; and, (ii) Registrant
further failed to deliver to McGladrey & Pullen, LLP, a copy of its definitive
Form 8-K dated March 14, 2000.
The purpose of this Form 8-KA is to amend the failings of Registrant noted
above. A copy of this Form 8-KA, together with a copy of the Form 8-K dated
March 14, 2000, as previously filed with the Commission will also be delivered
to McGladrey & Pullen, LLP, concurrently with the filing of this Form 8-KA.
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.
Date: May 19, 2000 By: /s/ Angelo Tullo
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Angelo Tullo, Chairman
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February 4, 2000
Board of Directors
YP.Net, Inc
4840 East Jasmine Street, #105
Mesa, Arizona 85205
Dear Sir's:
As you requested in our meeting on February 3, 2000, we are providing additional
information and recapping the points covered in the meeting.
1. Due to the change in the Board of Directors and the changes in
management, we need to perform our internal client reevaluation
procedures. In connection therewith, we need the Public Record Search
Request form for all the Directors and management as soon as possible.
This process must be completed and accepted before we will perform any
further substantive audit procedures.
2. We are having significant difficulties completing the audit of the
Company's financial statements. As you know, the Company's Form 1OKSR
was due at the end of December 1999; a notification of late filing was
submitted to the SEC and the 15 day "grace period" provided in the
notification of late filing has expired. Since we have not completed
the audit and will need to perform substantial procedures after
management or others produce the missing information, we are not in
position to reach any opinion on the financial statements taken as a
whole. However, we have identified indications that past financial
statements are likely to be materially misstated. These matters effect
a number of your past filings under the Securities Exchange Act of
1934 such as the Form IOQSB, 1OKSB and 8K's tiled in the past year. We
previously provided management with descriptions of the significant
accounting issues and lists of information we are missing. Attached is
a list of the most significant issues we discussed with you. It is
important to understand that as the requested information is provided,
it is likely that more questions will arise and more information will
be needed.
3. We indicated to you that we are evaluating our responsibilities under
Section LOA of Securities Exchange Act of 1934. We have included a
photocopy of 17 CFR Parts 210 and 240, Implementation of Section 1OA
of the Securities Exchange Act of 1934 for your review. Under Section
10A, we are waiting to hear your timely response for your remedial
actions with respect to the Company's financial statements. We need
you to respond to us in writing by February 8, 2000.
4. We have included information for your review on accounting for reverse
acquisitions. This includes portions of the November 1999 paper issued
by the staff members of the Division of Corporation Finance of the
Securities and Exchange Commission, portions of the Division of
Corporation Finance Accounting Disclosure Rules and Practices Training
Manual and portions of the Arthur Andersen publication Accounting for
Business Combinations
We want to re-iterate that we need you to respond to us in writing by February
8, 2000 regarding your appropriate remedial actions to rectify the past
financial statements which are likely to be
materially misstated.
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Issues noted in the audit as of February 3, 2000 since the audit is not
completed as of this date due to lack of audit evidence, this listing is not
complete.
INDICATIONS THAT PAST FINANCIAL STATEMENTS ARE LIKELY TO BE MATERIALLY
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MISSTATED:
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- There was a $5,000,000 payment to a related party in June 1999
pursuant to an agreement related to the "yellow-page.net" URL. This
payment was all recorded as an asset.
- There was a "contingent asset" of $3,250,000 recorded for company
shares issued as collateral.
- There has been no amount recorded nor a calculation performed for
deferred revenue on amounts billed in advance
- The accounting for the RIGL acquisition of Telco does not appear
correct in that reverse acquisition accounting applies and Telco
should be considered the accounting acquirer
- There is an amount ($820,251) capitalized for proprietary technology
that we have been unable to determine the support for
- There is an amount ($824,625) capitalized for prepaid marketing Costs
that we have been unable to determine the support for nor the
proprietary of the accounting treatment
- We have been unable to determine the propriety of the Company's
revenue recognition policy
- Goodwill - proper recording as a result of the RIGL/Telco combination,
amortization period and valuation for impairment
- There are significant equity transactions, including options, warrants
and stock for services, that have not been given appropriate
accounting recognition.
- The accounting is not proper and there is not an adequate allowance
for doubtful accounts Receivable - ESBI
- Use of pooling method of accounting for certain business combinations.
INFORMATION NEEDED TO COMPLETE AUDIT PROCEDURES:
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- The propriety of the accounting for the IGT arid Olympic accounts
receivables has not been determined nor has the adequacy of the
allowance for doubtful accounts.
- Determination of what constitutes related party transactions and the
related testing of those transactions
- Cut-off information for the financial statements which need to be
included in the amended 1OQ and 8K
- income tax returns (none have been filed for Telco since inception)
- Determination of the completeness of agreements and contracts
- Cash receipts for direct bill receivables
- Financial statements for subsequent periods
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INFORMATION NEEDED TO COMPLETE AUDIT PROCEDURES (CONTINUED):
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- Going concern support including, but not limited to, the following:
address the ability of the company to pay off the past due debt and
debt due within the next 12 months, address the ability of the company
to perform under the put options, cash projections for next year's
operations, etc.
- Visit to IGT on 2/11/00 to determine the proprietary of the balance
and the related controls
- Visit to Olympic to determine the proprietary of the balance arid the
related controls
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