U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number: 0-24217
YP.NET, INC.
(Name of Small Business Issuer in its Charter)
NEVADA 85-0206668
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4840 EAST JASMINE STREET, SUITE 105
MESA, ARIZONA 85205
(Address of principal executive offices) (Zip Code)
(480) 654-9646
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No .
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Registrant's revenues for its most recent fiscal year were $15,836,422.
The aggregate market value of the common stock held by non-affiliates
computed based on the closing price of such stock on July 24, 2001 was
approximately $6,460,919.
The number of shares outstanding of the registrant's classes of common
stock, as of July 24, 2001 was 43,072,798.
Transitional Small Business Disclosure Format (check one): Yes No X.
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AMENDMENT
The Annual Report filed on Form 10-KSB pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended September 30, 2000
filed by YP.Net, Inc. (the "Company") on January 16, 2001, is amended to add the
information required by Part III of Form 10-KSB as the Company's Proxy Statement
on Schedule 14A was not filed within 120 days of the filing of the 10-KSB and
did not incorporate the information required by Part III by reference:
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of YP.Net, their ages and positions
are as follows:
NAME AGE POSITIONS HELD(1)
- ---------------------- --- -----------------
Angelo Tullo 44 Chairman of the Board, Director, Chief
Executive Officer and President
Walter Vogel 61 Vice Chairman of the Board, Director
Gregory B. Crane 36 Director
Daniel L. Coury, Sr. 47 Director
Harold A. Roberts 75 Director
Wallace Olsen 59 Director
DeVal Johnson 35 Director
Daniel Madero 36 Director of Operations
Pamela J. Thompson CPA 38 Chief Financial Officer, Treasurer,
Secretary
(1) All current directors serve until the next annual shareholders meeting or
their earlier resignation or removal.
Angelo Tullo has served as the Chairman of the Board of YP.Net since
February 2000. Mr. Tullo was hired as Chief Executive Officer and President on
September 10, 2000. Mr. Tullo is the president of Sunbelt Financial Solutions,
Inc., an investment banking and consultant firm in Scottsdale, Arizona. For over
twenty years, Mr. Tullo has been active as a business consultant. Mr. Tullo has
actively worked with commercial financing and factoring for the past ten years.
He has owned and operated factoring companies, leasing companies, consulting
companies, wholesale companies, professional employment organizations, insurance
agencies, heating and air-conditioning contractors, retail oil companies, real
estate companies and restaurants. He is a former member of the CEO Club in New
York.
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In February 2000, American Business Funding Corp. filed for protection
under Chapter 11 of the Bankruptcy Code in the Federal District Court of
Arizona. Mr. Tullo had previously been a director, officer and shareholder of
American Business Funding prior to the time of its bankruptcy filing. Mr. Tullo
and his former fellow shareholders have been involved in intense litigation
regarding certain activities of one of the directors and a group of individuals
that worked directly for that director. Mr. Tullo has been active during that
entire time to protect the interests of all creditors in that case. That
particular director's designees are still in control of the company and
counterclaims have been filed.
Walter Vogel. Mr. Vogel has been a director of YP.Net since February 2000
and was previously a member of its board from March to October 1998. Mr. Vogel
has been involved extensively in international business for many years. From
1996 to present, Mr. Vogel has been the owner and president of MC Management
GmbH, a business-consulting firm in Ottenfing, Germany. Mr. Vogel has served as
a director of several companies both in the United States and Europe.
Gregory B. Crane. Mr. Crane has been a director of YP.Net since February,
2000 and also served as its Director of Operations from February 2000 to
September 2000. From September 1998 to June 1999, Mr. Crane was the General
Manager of Telco Billing, Inc. ("Telco"). Mr. Crane owned and operated several
businesses, including residential and commercial builders, multi-state mail
order, and document-preparation companies, and was also the creator of the
Yellow-Page.Net concept. Mr. Crane is a former member of the Young
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Entrepreneur's Organization ("YEO").
In connection with providing homestead declaration document preparation and
filing services, Mr. Crane and certain of these businesses have been subject to
injunctive actions brought by the states of Arizona, Florida, Texas and
Washington. These actions generally raised legal questions concerning mailer
solicitations for document preparation services. Mr. Crane and various of the
state plaintiffs have entered into consent orders in connection with these
actions that required the modification of mailers and the payment of civil
penalties, restitution, and attorneys' fees. The use of the mail solicitation
for document preparation services was prohibited in the State of Washington.
Mr. Crane voluntarily entered into an agreement with the State of Florida in
connection with these matters and due to an error in type size made by the
printing company; Mr. Crane technically violated that order. In connection with
that violation of the Florida order, Mr. Crane is subject to a judgment in the
amount of approximately $1.4 million, plus accrued interest. Mr. Crane is
attempting to resolve the Florida judgment.
Mr. Crane was also named in the action filed by the Federal Trade Commission
("FTC") against YP.Net and has been included in the stipulated preliminary order
entered into by YP.Net and the FTC and approved by the FTC. The Stipulated
Final Judgment and Order for Permanent Injunction and Other Equitable Relief by
and between the FTC, Mr. Crane, Telco and YP.Net and others (the "Order") places
certain restrictions on the way mail solicitations will appear. The Order has
been approved by the U.S. District Court Judge and the matter is closed with no
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findings of wrong doing on the part of the company, its officers and directors
or Mr. Crane. The Company believes that the Judgment will not adversely affect
its operations. See "Legal Proceedings" in the Company's Form 10-KSB, filed
with the SEC on January 14, 2001, for additional information.
Daniel L. Coury. Mr. Coury has served as a director of YP.Net since
February 2000. For the last ten years, Mr. Coury's principal business has been
Mesa Cold Storage, Inc., which owns and operates the largest cold storage
facilities in Arizona. He is also involved in the ownership and operation of
various real estate interests and business ventures.
Harold Roberts. Mr. Roberts has served as a director of YP.Net since
February, 2000 and previously served as a director of its predecessor from 1994
to 1998. Mr. Roberts has practiced law in Santa Fe, New Mexico since 1955 and
since 1975 has engaged primarily in matters regulated by various regulatory
agencies, including the Securities and Exchange Commission. He has served as a
director and president of SunRay Oil Company, a company engaged in drilling,
exploration and distribution, from 1996 to present, as a director and officer of
Candu, Inc., a company engaged in electronic marketing, from 1985 to the
present, and as a director and president of Verilite Aircraft Corporation, a
company engaged in aircraft development, from 1994 to the present. Mr. Roberts
is a graduate of the University of Colorado Law School.
Wallace Olsen, Jr. Mr. Olsen is currently President of Venture 32 L.L.C.,
of Phoenix, AZ., a real estate development and operation company specializing in
commercial real estate and office buildings. Since 1995, he is also chief
executive officer of ITCOB, L.L.C., of Boston, MA., a large distributor of
International parts and trucks in New England. Mr. Olsen is also President and
Treasurer of Alternative Senior Care, L.L.C., "ASO" in Sanford, FL., a company
providing health care services to people who have dementia or are in need of
extended congregate care. ASO also provides for Assisted Living residents.
Since 1995 Mr. Olsen has served as President of Kenilworth Capital Corporation,
in Kenilworth, NJ., which owns and operates hotels and restaurants. Over the
last 20 years, Mr. Olsen has been associated either as an owner or in an
executive capacity with the following industries, Architectural Millwork,
Glass-Mirror, Motion Pictures, Printing, and Transportation.
DeVal Johnson. Mr. Johnson has served as a director since October 1999.
Mr. Johnson was the graphics designer and director of Telco Billing from
September 1998 until June 1999 when the Company acquired it. Mr. Johnson was
responsible for the design of the in-house sales presentation and creation of
the corporate logo and image for YP.Net. From 1995 through 1998, Mr. Johnson
was a graphics designer for Print Pro, Inc. Mr. Johnson is actively involved
with Website promotion, interactive design and Internet advertising. Mr.
Johnson also serves as an officer and board member of Simple.Net a national
Internet service provider.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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Based solely on review of reports under Section 16(a) of the Securities Exchange
Act of 1934, as amended, that were filed by executive officers and directors and
beneficial owners of 10% or more of YP.Net's common stock during the fiscal year
ended September 2000, to the best of the Company's knowledge, all 16(a) filing
requirements have been made through the fiscal year ended September 30, 2000.
This information is based on a review of Section 16(a) reports furnished to
YP.Net and other information.
ITEM 10. EXECUTIVE COMPENSATION
Officer Compensation
The following table reflects all forms of compensation for the fiscal years
ended September 30, 2000, and September 30, 1999 for the Chief Executive Officer
and the other two most highly compensated executive officers of YP.Net, whose
salaries exceed $100,000 annually, for the years stated.
SUMMARY COMPENSATION TABLE SEPTEMBER 30, 2000 AND 2001
Annual Compensation
--------------------------------
FISCAL OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION
- ------------------------------------ ------ -------- --------------
Angelo Tullo (1) 2001 $210,000 $ 44,000 (1)
Chief Executive Officer 2000 $ 21,000 (2)
President
Daniel Madero 2001 $100,000 $ 16,500 (3)
Director of Operations
Pamela Thompson 2001 $125,000 -
Chief Financial Officer, Secretary,
Treasurer
(1) Includes a bonus of 200,000 shares of YP.Net stock valued at $.22 per
share.
(2) Includes 100,000 shares of YP.Net stock valued at $.21 per share.
(3) Includes 75,000 shares of YP.Net stock valued at $.22 per share.
Compensation Pursuant to Stock Options
No options were granted to executive officers during the fiscal year ended
September 30, 2000, and through the nine-month period ended July 24, 2001.
Director Compensation
Upon appointment to the Board, Mr. Tullo was awarded 100,000 shares of
YP.Net common stock and Mr. Vogel was awarded 75,000 shares. All other
directors were awarded 50,000 shares. The 425,000 shares of common stock paid to
the directors as compensation for their services were valued at $.22 per share
for a total value of $93,500. Additionally, the directors receive $2,000 per
meeting or per quarter for their service on the Board and may receive $250 per
hour for services related to any Board Committee on which they serve.
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Employment Agreements
Since February 2000 to August 2000, Gregory B. Crane has served as the
Director of Operations of YP.Net. His services are provided through Business
Executive Services, Inc., which began to receive compensation in May of 2000 in
the amount of $13,000 per month for these services. These services were
provided "at will" and no written agreement exists.
1998 Stock Option Plan
YP.Net's Board of Directors adopted and its shareholders approved in June
1998 the 1998 Stock Option Plan (the "Plan"). The purpose of the Plan was to
provide incentives to employees, directors and service providers to promote the
success of YP.Net. The Plan provided for the grant of both qualified and
non-qualified options to purchase up to 1,500,000 shares of its common stock at
prices determined but in the case of incentive options, at a price not less than
the fair market value of the stock on the date of the grant. The Plan is
administered by the Board of Directors or by a committee appointed by the Board.
As of July 24, 2001, all outstanding options to purchase YP.Net stock have
expired and no options are currently outstanding under the Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 24, 2001, the ownership of each
person known by the Company to be the beneficial owner of five percent or more
of the Company's Common Stock, each officer and director individually, and all
officers and directors as a group. The Company has been advised that each
person has sole voting and investment power over the shares listed below unless
otherwise indicated.
Name and Address AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF OWNERSHIP OF CLASS(1)
- ------------------------------------ ------------------ -----------
Angelo Tullo 300,000(2) .74%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
Walter Vogel 195,000(2) .48%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
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Name and Address AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF OWNERSHIP OF CLASS(1)
- ------------------------------------ ------------------ -----------
Gregory B. Crane 75,500(2) .18%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
Daniel L. Coury, Sr. 180,000(2) .44%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
Harold A. Roberts 258,000(2) .63%
P.O. Box 101
Santa Fe, NM 87504
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Wallace Olsen, Jr. 547,500(2) 1.34%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
DeVal Johnson 125,000(2) .31%
4840 East Jasmine Street
Suite 105
Mesa, AZ 85205
Matthew & Markson Ltd. (3) 7,600,000 18.7%
Woods Centre, Frair's Road
P.O. Box 1407
St. John's
Antigua, West Indies
Morris & Miller Ltd. 9,325,000 23%
Woods Centre, Frair's Road
P.O. Box 1407
St. John's
Antigua, West Indies
All Directors as a Group (7 persons) 1,656,000 4.07%
(1) Based on 40,615,464 shares outstanding as of July 24, 2001. This amount
excludes litigation & Collateral shares as well as returned shares held by
the treasury. Collateral shares had been issued as collateral for
obligations of YP.Net under two promissory notes. Upon payment of the
notes, the shares will be returned to YP .Net.
(2) Less than 0.01%.
(3) The number of shares held by Matthew & Markson, Ltd. excludes 2,000,000
shares issued as collateral for a note payable issued by YP.Net see (1)
above. These shares will be returned to YP.Net upon payment of the note.
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Note Conversion. YP.Net borrowed $500,000 from Mr. Wallace Olsen, a
shareholder who later became a member of the Board of Directors effective
February 4, 2000. In September 1999, YP.Net repaid $250,000 of the balance in
cash and Mr. Wallace Olsen converted the remaining $250,000, plus $100,000 in
accrued interest. into 400,000 shares of YP.Net's common stock with a total
value of $200,000; the stock was issued at a price of 50 cents per share
Acquisition of Telco. In June 1999, YP.Net's predecessor acquired all of
the outstanding stock of Telco Billing, Inc. in exchange for 17,000,000 shares
of YP.Net.'s common stock. Matthew & Markson, Ltd. and Morris & Miller, Ltd.,
as the shareholders of Telco, were issued 7,650,000 and 9,350,000 shares,
respectively. As to these shares, the original acquisition agreement provided
for certain put rights that were later terminated. In exchange for cancellation
of the put rights, YP.Net agreed to provide the former Telco shareholders with a
$5,000,000 credit facility. Any loans made to these shareholders under this
facility are to be secured by a pledge of YP.Net stock. Interest for borrowings
under this facility is to be at least 0.25% higher than YP.Net's average
borrowing costs. No advances in excess of $1,000,000 may be made at any one
time and no advances in excess of $1,000,000 are to be made unless YP.Net has
available at least 30 days operating capital plus other reserves. No advances
are permitted to be made if YP.Net is in default with respect to any of its
lender obligations. The credit facility has not been formally documented and no
advances have been made or are expected until documentation is completed.
Gregory B. Crane and DeVal Johnson were employees of and primarily involved
in the start-up of Telco. Mr. Crane continues to serve as one of the liaisons
for Matthew & Markson, Ltd. and Morris & Miller, Ltd. and negotiated the
acquisition of Telco by YP.Net's predecessor on behalf of the former Telco
shareholders.
License of URL. In connection with the acquisition of Telco, YP.Net's
predecessor also agreed to pay Matthew & Markson, Ltd. $5,000,000 as a
discounted accelerated royalty payment for a 20-year license of the URL
Yellow-Page.Net. The accelerated payment was made under the terms of an
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Exclusive Licensing Agreement dated September 21, 1998, between Telco and
Matthew & Markson, Ltd. The payment was originally to be paid in full upon the
acquisition of Telco. The Company paid $3,000,000 as a down payment; however,
the Company defaulted on payment of the $2,000,000 balance on August 15, 1999.
To extend the payment obligations, YP.Net agreed to provide, for the benefit of
Mathew & Markson, $250,000 in tenant improvements for approximately one-half of
its Mesa facility. The premises were leased to Matthew & Markson's designee for
$1.00 per year throughout the term of the 5-year lease. The annual fair rental
value of the lease premises is $4,500 per month. A one million dollars
($1,000,000.00) extension fee may also be due. On November 15, 1999, YP.Net
paid an extension fee of $200,000. The $200,000 extension fee was applied
against the $5,000,000 accelerated royalty payment and an additional $2,000,000
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was paid on the royalty payment in July 1999. Matthew & Markson, Ltd. also
agreed to take a $2,000,000 note for the balance due that remains due and
outstanding.
After defaulting on the November 1999 property extension, on January 15,
2000, the note was renegotiated to a demand note with monthly installments of
$100,000 per month. The payments may be suspended if YP.Net does not have
certain cash reserves or is otherwise in default under other obligations. The
note is secured by 2,000,000 shares of YP.Net common stock held in escrow, to be
returned for cancellation upon payment of the note.
Business Executive Services, Inc. ("BESI"), as the nominal rent sublessee,
leases portions of the facility to other businesses associated with other third
parties Mr. Crane is employed by BESI and receives a salary of approximately
$2,000 per month from BESI and bonuses in an undetermined amount.
Related Party Transaction Policy. The Company's general policy requires
adherence to Nevada corporate law regarding transactions between YP.Net, a
Nevada corporation, and a director, officer or affiliate of the corporation.
Transactions in which such persons have a financial interest are not void or
voidable if the interest is disclosed and approved by disinterested directors or
shareholders or if the transaction is otherwise fair to the corporation. It is
the policy of the Company that transactions with related parties are conducted
on terms no less favorable to the Company than if they were conducted with
unaffiliated third parties. During fiscal year ended September 30, 2000, through
July 24, 2001, there have been no related party transactions.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
3.1 1 Certificate of Restated Articles of Incorporation of Renaissance
International, Inc.
3.2 7 Amended Articles - To change the name to YP.Net, Inc., and
Authorized Capital Increase to 50,000,000 Form 8-K 7/6/98
3.3 7 Amended Articles - Name Change to YP.Net
3.4 7 Certificate of Designation - Series B preferred shares
3.5 1 Bylaws of Renaissance International Group, Ltd.
3.5 7 Amended Bylaws
10.1 2 1998 Stock Option Plan
10.2 7 Agreement with Worldpages.com
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10.3 7 Agreement with Integretel
10.4 7 Agreement with Enhanced Services Billing, Inc.
10.5 7 Lease regarding Mesa Facility
10.6 7 Sub-Lease to BESI
10.7 7 Van Sickle Loan Agreement
10.8 3 First Amendment to Loan Agreement between YP.Net, Inc. and
Joseph and Helen VanSickle dated March 31, 2000
10.9 4 Stock Purchase Agreement between RIGL Corporation, Telco
Billing, Inc. and Matthew & Markson, Ltd. dated March 16, 1999
10.10 4 Amendment to Stock Purchase Agreement between RIGL Corporation,
Telco Billing, Inc., Morris & Miller, Ltd.
10.11 4 Exclusive License Agreement between Matthews & Markson, Ltd.
and Telco Billing, Inc. dated September 21, 1998
10.12 7 Modification to Matthew & Markson Promissory Note.
10.14 8 International Profits Associates, Inc. Consulting Agreement
10.15 8 BJM Consulting, Inc. Advisory Agreement
10.16 8 International Profit Associates Organization for Management
10.17 8 Sublease Agreement between Y.P.Net, Inc. and Empire Capital
Group, LLC
10.18 9 Loan and Security Agreement dated August 31, 1999 between
Fremont Financial Corporation and Telco
10.19 9 Forbearance Letter Agreement dated August 4, 2000 between Telco
and Finova Capital Corporation as successor by merger to Fremont
Financial Corporation
10.20 9 Forbearance Letter Agreement Dated September 28, 2000 between
Telco and Finova Capital Corporation as successor by merger to
Fremont Financial Corporation
10.21 9 Forbearance Letter Agreement dated November 7, 2000 between
Telco and Finova Capital Corporation as successor by merger
to Fremont Financial Corporation
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10.22 10 Forbearance Letter Agreement dated January 5, 2001 between
Telco and Finova Capital Corporation as successor by merger
to Fremont Financial Corporation
11 Statement Regarding Computation of Per Share Earnings:
incorporated in Item 7 of the Audited Financial Statements for
period ending September 30, 1999 and September 30, 2000
16.1 5 Letter of Singer Lewak Greenbaum & Goldstein LLP dated November
24, 1999
16.2 6 Letter of McGladrey & Pullen LLP dated March 23, 2000; Letter of
McGladrey & Pullen, LLP dated February 4, 2000
21 Subsidiaries of YP.Net, Inc.: Telco Billing, Inc.
1 Incorporated by reference from Form 10-SB as filed May 6, 1998.
2 Incorporated by reference from Form S-8 as filed July 10, 1998.
3 Incorporated by reference from Form 8-K as filed on May 22, 2000.
4 Incorporated by reference from Form 8-K/A as filed on June 30, 1999.
5 Incorporated by reference from Form 8-K as filed on December 3, 1999.
6 Incorporated by reference from Form 8-K as filed on March 29, 2000 and Form
8-K/A as filed on May 22, 2000.
7 Incorporated by reference from Form 10-QSB for the fiscal year ended
September 30, 1999.
8 Incorporated by reference from Form 10-QSB for the quarter ended December
31, 2000.
9 Incorporated by reference from Form 10-QSB for the quarter ended June 30,
2000.
10 Incorporated by reference from Form 10-KSB for the fiscal year ended
September 30, 2000.
REPORTS ON FORM 8-K
One report on Form 8-K was filed in the fiscal quarter ended September 30,
2000. A Form 8-K filed on July 18, 2000 disclosed the FTC litigation and that a
receiver for YP.Net had been appointed on June 26, 2000 and subsequently removed
as if it had not occurred by order of the court July 13th, 2000.
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In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
YP.NET, INC.
Dated: August 13, 2001 By /s/
-------------------------------------
Angelo Tullo, Chairman of the Board
BOARD OF DIRECTORS
Dated: August 13, 2001 By /s/
-------------------------------------
Angelo Tullo
Dated: August 13, 2001 By /s/
-------------------------------------
Walter Vogel
Dated: August 13, 2001 By /s/
-------------------------------------
Gregory B. Crane
Dated: August 13, 2001 By /s/
-------------------------------------
Daniel L. Coury, Sr.
Dated: August 13, 2001 By /s/
-------------------------------------
Harold A. Roberts
Dated: August 13, 2001 By /s/
-------------------------------------
Wallace Olsen
Dated: August 13, 2001 By /s/
-------------------------------------
DeVal Johnson
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