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<SEC-DOCUMENT>0001015402-01-503971.txt : 20020413
<SEC-HEADER>0001015402-01-503971.hdr.sgml : 20020413
ACCESSION NUMBER:		0001015402-01-503971
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20010930
FILED AS OF DATE:		20011231

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			YP NET INC
		CENTRAL INDEX KEY:			0001045742
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				85026668
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24217
		FILM NUMBER:		1826424

	BUSINESS ADDRESS:	
		STREET 1:		4840 E JASMINE ST
		STREET 2:		STE 110
		CITY:			MESA
		STATE:			AZ
		ZIP:			85020
		BUSINESS PHONE:		4806549646

	MAIL ADDRESS:	
		STREET 1:		4840 EAST JASMINE STREET
		STREET 2:		SUITE 105
		CITY:			MESA
		STATE:			AZ
		ZIP:			85020

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	RENAISSANCE INTERNATIONAL GROUP LTD
		DATE OF NAME CHANGE:	19980115

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	RIGL CORP
		DATE OF NAME CHANGE:	19980707
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
                       (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, 2001

             [ ] 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
                                                                       ---   ---
 .

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 15,084,917

     The aggregate market value of the common stock held by non-affiliates
computed based on the closing price of such stock on November 23, 2001 was
approximately $3,110,714.

     The number of shares outstanding of the registrant's classes of common
stock, as of November 23, 2001 was 43,813,680.


                                        1
<PAGE>
                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS

     Except for historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties.  Such forward-looking statements include, but are not limited to,
statements regarding future events and our plans and expectations.  Our actual
results could differ materially from those discussed herein.  Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed elsewhere in this Form 10-KSB or incorporated herein by reference,
including those set forth in "Factors Which May Affect Future Results," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," below.

GENERAL

     YP.Net, Inc., a Nevada corporation (the "Company," "we," "us," or "our"),
is in the business of providing Internet-based yellow page listing services on
our Yellow-Page.Net and yp.net websites.  Our websites serve as a search engine
    ---------------     ------
for yellow page listings in the United States and Canada.  We charge our
customers for a "preferred" listing of their businesses on searches conducted by
Internet consumers on our websites.  We currently have approximately 91,348
preferred listing customers subscribing on a monthly basis.

     We were originally incorporated in Nevada in 1996 as Renaissance Center,
Inc.  Our Articles of Incorporation were restated in July 1997 and our name was
changed to Renaissance International Group, Ltd.  Effective July 1998, we
changed our name to RIGL Corporation.  In June 1999, we acquired Telco Billing,
Inc. ("Telco") and commenced our current operations through this entity.  In
October 1999 we amended our Articles of Incorporation to change our corporate
name to YP.Net, Inc. to better identify our company with our business focus.

     From August through December 1999, we abandoned all subsidiaries previously
involved in the multi-media software and medical billing and practice management
areas.  With the acquisition of Telco, our business focus shifted to the
Internet yellow page services business and this business is currently our main
source of revenue.  Telco is operated as our wholly owned subsidiary.

WEBSITES

     We control the domain names Yellow-Page.Net and yp.net and maintain these
                                 ---------------     ------
Web pages for Internet access.  At these websites, consumers can search a
listing database containing approximately 18 million United States and Canadian
businesses.  We provide yellow page listings for these businesses along with
directories and maps to the business location.  We also provide nationwide 800
and 888 directory listings and search engines for e-mail addresses of individual
persons.  Our site offers stock quotes, job searches, travel services, news and
weather information, movie reviews and listings, entertainment, restaurant and
shopping information.


                                        2
<PAGE>
     Our directory search service integrates yellow page information by
utilizing yellow page category headings in combination with a natural word
search feature to provide a user-friendly interface and navigation vehicle.  We
have enhanced accurate responses to user questions by utilizing category
searches in the directory services.  This allows users to search by specific
city, state and business categories.

     We currently derive all of our revenue from selling preferred listings for
the search results on our websites.  A preferred listing is displayed at the
beginning of search results in response to a user's specific questions.  A
preferred listing is enhanced on the display of search results and includes a
"mini-Web page" listing where the preferred lister can use up to 40 words to
advertise and provide additional information regarding its business.  A
preferred listing customer can also link its own Web page to the search results.
We are developing banner advertisements and outside marketing efforts as an
additional source of revenue.  We are also attempting to develop additional
revenue sources and expand services to our customers through logo advertisements
on our direct mailer.

TECHNOLOGY  AND  INFRASTRUCTURE

     One of our principal strengths is our internally developed technology that
we have designed specifically for handling our Internet-based data.  Our
technology architecture features specially designed capabilities to enhance
performance, reliability and scalability of our listing data.  These features
consist of multiple proprietary software modules and processes that support the
core internal functions of operations.  The technologies include Customer
Service Applications, Billing Applications, LEC Filtering Processes and Database
Management.

     Customer Service Applications.  While we have designed proprietary Customer
Service Applications to enable rapid object-oriented development and management
of information related to our preferred listing customers in a variety of
formats we are finding that it might be advisable to purchase a third party
software package from a reliable vendor that can be modified for our needs.  Our
or any that is purchased would need to incorporates an automated retrieval
system that integrates with our other technologies.  This integration enables
real-time updates to our database as our customer service representatives
interact with and obtain data from our preferred listing clientele.  This
application provides detailed notes on each account as well as credit card and
paper check payment processing.  Customer Service Representatives (CSR's)
quickly view all contact information for the subscriber, as well as Service
description, pricing, LOA, and billing history. With these functions in place,
CSR's have the ability to handle every aspect of the call.

     Billing Applications.  We bill primarily through local exchange carriers
("LECs") that are local telephone service providers.  Our LEC billings are
routed to the LEC's and appear on our preferred customers' telephone billing
statements.  To a lesser extent, we direct bill some of our preferred customers.
Our Billing Applications technology facilitates both our LEC and direct billing
functions.


                                        3
<PAGE>
     LEC Filtering Processes.  The LEC Filtering Processes are core technologies
developed to enhance the applications that support our systems.  By using these
processes, we are able to more accurately bill our preferred listings through
the appropriate LEC.  These processes are a vital component of our ability to
aggregate content from multiple sources for our billing process.  Information is
sorted and updated with a method of maintaining an expanding a diverse database
and allows different data sources to be combined and deployed through a single
uniform interface, regardless of data structure or content.  This allows a
single database query to produce a single result set containing data extracted
from multiple databases.  Database clustering in this manner reduces the
dependence on single data sources, facilitates data updates, and reduces
non-conforming data submitted to the LECs.

     Database Management.  We have also developed a proprietary database
technology to address specific requirements of our business strategy and
information infrastructure services.  This technology enables us to provide our
services with fewer service personnel.  Our database is integrated with the
applications modules and the LEC filtering processes.  This database consists of
our current and potential customers and is updated on a real-time basis as a
customer's data is received from new listings or through our customer service
representatives.  We utilize this database to maintain customer service and
monitor the quality of service provided by our customer service personnel.  We
also use the database to determine new products desired by our customers.  Our
technology has been specifically designed to function with a high degree of
efficiency within the unique operating parameters of the Internet, as opposed to
commonly used database systems.

     Custom List Generation. We license the Axiom database technology that
consists of over 18 million business listings throughout the United States,
updated quarterly. Under this licensing agreement, we are able to custom craft
mailing lists that suit our customer's needs. Customers have the ability to
filter their custom list against an array of attributes ranging from gross sales
of the company listed, SIC code, whether or not the listing is a publicly traded
company, or if the company listed is minority owned. These lists can be
generated in various ODBC and text formats. Lists are priced by record and the
criteria provided for the query.


                                        4
<PAGE>
STRATEGIC ALLIANCES

     In order to service users more effectively and to extend our
Yellow-Page.Net brand to other Internet sources, we have entered into strategic
- ---------------
relationships with business partners offering content, technology and
distribution capabilities.  We utilize i411 as our data-listing provider. i411
provides the server for our web pages and our search engine capabilities.

     We are members of the Yellow Page Publication Association and the
Association of Directory Publishers.  These organizations are trade associations
for yellow page publishers that promote quality of published content and
advertising methods.

     In order to broaden Yellow-Page.Net's user base, we have established
                         ---------------
cross-linking relationships with operators of commercial websites and Internet
access providers.  There are over 400 affiliated websites that link to
Yellow-Page.Net.  We believe these arrangements are important to the promotion
- ---------------
of Yellow-Page.Net, particularly among new Internet users who may access the
   ---------------
Internet through these other websites.  These co-promotional arrangements
typically are terminable at will.  We also utilize Fax4free.com in a
                                                   ------------
co-promotional effort to provide services to our website users to allow these
users to receive and send unlimited facsimiles, and receive voicemail and e-mail
at no charge.

     We have also managed a link partnership with Amazon.com that allows
Yellow-Page.net to generate revenue by purchases made through the link on our
- ---------------
home page.  The University of California - Santa Cruz is also participating in a
link exchange as well as having Yellow-Page.Net sponsor a men's college
basketball tournament.  We believe that this directly heightens our brand
awareness.

BILLING SERVICE AGREEMENTS

     In order to bill our preferred listing customers through their LECs, we are
required to use one or more billing service integrators.  These integrators have
been approved by various LECs to provide billing, collection, and related
services through the LECs.  We have entered into customer billing service
agreements with Integretel, Inc. ("IGT") and with Enhanced Services Billing,
Inc. ("ESBI") for these services.  Under these agreements, our service providers
bill and collect our charges to preferred listing customers through LEC
billings.  These amounts, net of reserves for bad debt, billing adjustments,
telephone company fees and billing company fees, are remitted to us on a monthly
basis.  Presently we are primarily billing though IGT and credit card
processing.

     We have entered into a billing agreement with OAN Billing, Inc. ("OAN").
This contract will provide us with another billing integrator that will allow us
to broaden our billing area among all LECs.  OAN is a reputable billing company
that will provide us more flexibility and will reduce our concentration of
billing risk with billing integrators.


                                        5
<PAGE>
COMPETITION

     We operate in a highly competitive and rapidly expanding Internet services
market, however our primary market sector is business-to-business services
instead of a pure technology industry.  We compete with online services, website
operators, and advertising networks.  We also compete with traditional offline
media such as television, radio, and traditional yellow page directory
publishers, and print share advertising.  Our services also compete with
numerous directory website production, and Internet information service
providers.  Our largest competitors are the LECs service providers.

     The principal competitive factors of these markets include personalization
of service, ease and use of directories, quality and responsiveness of search
results, availability of quality content, value-added products and services, and
access to end users.  We compete with the suppliers of Internet navigational and
informational services, high-traffic websites and Internet access providers, and
with other media for advertising listings. This competition could result in
significantly lower prices for advertising and reductions in advertising
revenues.  Increased competition could have a material adverse effect on our
business.

     Our competitors have greater capital resources than us.  These capital
resources could allow our competitors to engage in advertising and other
promotional activities that will enhance their brand name recognition at levels
we cannot match.  The LECs have brand name recognition and access to potential
customers since they have existing local access customers.

     We believe we can successfully compete in this market by providing quality
services at competitive prices and by actively developing new products for
customers and seeking potential acquisitions to broaden services to our
customers.

REGULATION

          The Federal Trade Commission ("FTC") has aggressively pursued what it
perceives as deceptive practices related to direct mailer and other promotions
involving the Internet and/or LEC billing type practices.  We have been involved
in significant FTC enforcement action regarding these matters.

     Existing laws and regulations or ones that may be enacted in the future
could have a material adverse effect on our business.  These effects could
include substantial liability including fines and criminal penalties, preclusion
from offering certain products or services and the prevention or limitation of
certain marketing practices.   As a result of such changes, our ability to
increase our business through Internet usage could also be substantially
limited.

     On July 30, 2001, the Stipulated Final Judgment and Order for Permanent
Injunction and other Equitable Relief (the "Order") was filed with the United
States District Court.  The FTC and the Company agreed to this stipulation and
the complaint states a claim upon which relief may be granted against the
Company.  There have been no findings or admissions of any wrongdoing by us.  We
have been restrained from using the word "rebate" on their solicitation and must
state that the mailer is a solicitation of goods and services.  We have
voluntarily agreed not to use the "walking fingers" logo and further have
extended our refund policy to our new customers from 90 days to 120 days.  Our
test solicitation of 250,000 mail pieces incorporating all of the FTC changes in
different formats, has brought in satisfactory results and based on that we have
resumed our regular mail solicitation program in October 2001 to date over 8,000
customers have decided to order our services. We have replaced all direct
mailers with the required stipulations as agreed with the FTC.  All parties have
been exonerated of the preliminary injunction filed on June 26, 2000. See "Legal
Proceedings," below


                                        6
<PAGE>
MARKETING

     Our primary marketing efforts are through direct mail solicitations that
utilize a promotional discount for listing.  We market exclusively to businesses
and focus on businesses that use traditional published yellow page services.  We
utilize our database as a source for our mailing list.  We have also implemented
a "customer satisfaction" program.  Through this program we have retained a firm
to contact each of our customers to update the customer information regarding
their business and links to their Web page, if applicable.

     We intend to increase market share in our current markets through strategic
acquisitions providing value-added services to our core business, as well as
other marketing campaigns.  We intend to develop marketing strategies to
increase the credibility and visibility of our Web page service to targeted
markets.  We also intend to promote value-added services and product areas.  Our
future success will depend on our ability to continue to integrate and
distribute information services of broad appeal.  Our ability to maintain and
build new relationships with content providers will be critical to our success.
These relationships and strategic acquisitions will, in addition to increasing
revenue, lower dilution by creating a source for businesses to find the services
they need. Our preferred customers will be able to obtain services at discounted
prices as a consequence of their listing with us.

     We have entered into a co-branded syndication with i411.com has provided
our preferred customers and those using our site to find goods and services
easier and faster. This arrangement allows us to have additional advertising
space on our website which we believe will generate additional revenue.  We
believe this syndication will help attract more people to our websites.  We now
have the ability to sell syndicate yellow page sites.  We are able to offer our
clients visible storefronts. Through visible storefronts our clients will be
able to set up "Web Stores" easily and cheaply; complete with the ability to
utilize credit cards to process orders.  We are currently testing these products
and believe that they have the potential to increase income.  Our management is
also in the process of expanding its syndication revenue by offering web page
designs and maps for Internet yellow page customers.  We presently have
approximately 3.5 million hits per month, which we believe will expand our
customer base.


                                        7
<PAGE>
     Management believes that our Direct Response Program whereby we contact our
customers to obtain information for their mini-web-page and if partnered with
other reputable companies, could be an additional source of revenue.  Management
is looking for products and services to sell as part of our direct response
program.

EMPLOYEES

     As of December 15, 2001, we employed 20 full time personnel, including a
Director of Operations, a Director of Technology, five software developers, nine
customer service representatives, and four administrative personnel.  Our
employees are not covered by any collective bargaining agreements.

 ITEM 2.     DESCRIPTION OF PROPERTY

     Our corporate offices are located in Mesa, Arizona.  We lease a 16,772
square foot facility for approximately $120,000 annually on a long-term
operating lease through June 2003. As part of the consideration related to our
license of the Yellow-Page.Net URL, we sublease approximately 8,000 square feet
               ---------------
of leased space to Business Executive Services, Inc., an entity controlled by an
affiliate, for $1.00 annually.  See "Certain Relationships and Related
Transactions," below.

     We are also obligated on another lease for office space that was entered
into prior to consolidating operations at our Mesa facility.  The lease
terminates in August 2002 and annual rent ranges from $202,000 at inception to
$280,000 for the final rent payment.  This space has been sublet for the full
amount of the lease payment through its term.  However, we remain liable on the
lease if the sub-tenant defaults.

ITEM 3.     LEGAL PROCEEDINGS

We are party to certain legal proceedings and other various claims and lawsuits
in the normal course of our business, which, in the opinion of management, are
not individually or collectively material to our business or financial
condition.

     Due to the rapid growth of Internet communications, laws and regulations
relating to the Internet industry have been adopted.  Such laws include
regulations related to user privacy, pricing, content, taxation, copyrights,
distribution, and product and services quality.  Concern regarding Internet user
privacy has led to the introduction of federal and state legislation to protect
Internet user privacy.  In addition, the FTC has initiated investigations and
hearings regarding Internet user privacy that could result in rules or
regulations that could adversely affect our business.  As a result, the adoption
of new laws or regulations could limit our ability to conduct targeted
advertising, or distribute or to collect user information.

     We entered into a final settlement with the FTC regarding the allegations
that we engaged in deceptive advertising.  We entered into a Final Stipulated
Order for Permanent Injunction or Other Equitable Relief with the FTC on July
30, 2001.  There were no findings or admissions of any wrongdoing by us in this
Order.


                                        8
<PAGE>
     During the marketing moratorium from June 2000 to August 2001 we have been
able to maintain most of our customer base, with only some attrition by
developing a customer contact marketing strategy.  We have been contacting our
customers to update their websites and the descriptions of their businesses.
Through these efforts, we have been able to maintain our customer base without
the direct mail advertising efforts.

     We paid Hudson Consulting Group, Inc. ("Hudson") $82,000 for the settlement
of a lawsuit.  We entered into a settlement agreement with Hudson on July 16,
2001, where we agreed to pay Hudson $82,000 in return for 1,425,334 shares of
our common stock that were issued to Hudson by prior management for services
that were not rendered to us.  Our current management was informed that the SEC
barred one of the principals of Hudson, Allen Wolfson, from working in the
securities industry.  Our current management has assured the NASD that prior
management is no longer an employee, officer or director of us.

     We are plaintiffs in pending law suites against Alan Z. Wolfson and Ruth
Anderson regarding the issuance of common stock by prior management where no
services by the dependents in this action.

ITEM 4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of shareholders was held on September 24, 2001, and the
following matters where submitted to our shareholders to vote.

1.   The election of seven directors.

2.   The ratification of the selection of Marshall & Weber, CPAs, PLC as our
independent auditor for the fiscal year ended September 30, 2001.

3.   The transaction of such other business as may properly come before the
meeting. No such other business came before the annual meeting.

     The following individuals were elected to serve on our Board of Directors
at our annual meeting of shareholders on September 24, 2001:  Angelo Tullo,
Walter Vogel, Gregory B. Crane, Daniel Coury, Harold Roberts, DeVal Johnson, and
Pamela Thompson, by mutual agreement Wallace Olsen declined to service another
term.  See "Directors and Executive Officers, Promoters, and Control Persons;
Compliance with Section 16(A) of the Exchange Act," below.

     The firm of Weber and Company, P.C. was elected to serve as our independent
auditor for the year ended September 30, 2001.

     The following actions were taken by written consent by the majority
stockholders in lieu of a special meeting of the stockholders of YP.Net, Inc.
dated November 20, 2001.  The stockholders voting represented 24,083,118 voting
common shares of stock.


                                        9
<PAGE>
That the capitalization of the Corporation be changed as follows:

     Increase the authorized common stock to 50,000,000 to
100,000,000 shares.

     Create three classes of authorized preferred shares:

     50,000,000 of Blank Check Preferred

     45,000,000 of Series C of Convertible Preferred Stock.  Holders of the
Series C convertible preferred stock shall receive dividends at the rate of 5%
per annum on the liquidation preference of $.30 per share payable each March
31st, June 30th, September 30th, and December 31st starting with the first date
following the issuance of stock.  This stock will be convertible any time after
two years and before five years with the payment by the holder of $1.00 per
converted share.

     45,000,000 of Series D Preferred Stock with no convertible feature.
Holders of the Series D preferred stock shall receive dividends at the rate of
7% per annum on the liquidation preference of $.50 per share payable each March
31st, June 30th, September 30th, and December 31st starting with the first date
following the issuance of stock.  This stock will be convertible any time after
two years and before five years with the payment by the holder of $1.00 per
converted share.

     The Company's outstanding shares of Common Stock, $.001 par value per share
would be allowed a reverse split of up to one-for-ten basis.  The officers of
the YP.Net have the authority to prepare and file an amendment to the company's
Articles of Incorporation to proceed and effectuate the reverse split without
further shareholders approval.  Presently management has not elected to proceed
in effectuating a reverse split.

                                     Part II

      ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock

     Our common stock is traded in the over-the-counter market under the symbol
"YPNT."  Prior to March 23, 2000, our common stock was traded on the OTC
Bulletin Board ("OTCBB"), but was delisted due to our failure to timely file
required reports under the Exchange Act.    We have taken corrective actions to
regain our listing on the OTCBB.  We are hopeful that our common stock will be
relisted soon and we are working toward satisfying all OTCBB listing criteria.


                                       10
<PAGE>
     The following table sets forth the quarterly high and low bid prices per
share for the common stock, as reported by the OTCBB for the periods prior to
March 23, 2000 and by the National Quotation Bureau for the periods on and after
March 23, 2000.  The quotes represent inter-dealer quotations, without
adjustment for retail mark-up, markdown or commission and may not represent
actual transactions.

     FISCAL YEAR  QUARTER ENDED        HIGH   LOW
     -----------  -------------------  -----  ----
            2000  December 31, 1999    $ .24  $.21

                  March 31, 2000       $ .52  $.25

                  June 30, 2000        $ .35  $.30

                  September 30, 2000   $ .50  $.32

            2001  December 31, 2000    $ .22  $.21

                  March 31, 2001       $ .45  $.20

                  June 30, 2001        $ .23  $.18

                  September 30, 2001   $ .17  $.10

     On September 30, 2001, there were approximately 574 shareholders of record
of our common stock.  The transfer agent for our common stock is Continental
Stock Transfer and Trust in New York City, New York.

DIVIDEND POLICY

     Under Nevada law, dividends may only be paid out of net profits.  Prior to
our acquisition of Telco, no significant revenue had been generated.  We have
not paid, and do not intend to pay in the foreseeable future, cash dividends on
our common stock.  The current policy of the Board of Directors is to retain all
earnings to provide funds for operation and expansion of our business.  The
declaration of dividends is subject to the discretion of the Board of Directors,
which may consider such factors as our results of operations, financial
condition, capital needs and acquisition strategies, among others.

SALES OF UNREGISTERED SECURITIES

     During the three month ended period ended September 30, 2001, the following
shares of our common stock were issued.

     On July 10, 2001, we issued 25,000 shares of our common stock at $0.14 per
share to an investment banker that is assisting us with relisting on the OTCBB
for services rendered.  The restricted shares were issued which was the average
bid and ask price as of July 10, 2001 and is in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.


                                       11
<PAGE>
     On September 25, 2001, we issued 50,000 shares of our common stock at $0.09
per share to the newly elected Secretary of the Company as compensation for
services as Secretary for the current year.  The restricted shares were issued
which was the average bid and ask price as of September 25, 2001 and is in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act.

     On September 25, 2001, we issued 4,000,000 shares of our common stock at
$0.09 per shares to Matthew Markson Ltd. as part of a settlement agreement for a
payment of penalty fee for breach of a noncompliance provision in the original
acquisition agreement between the Company and Telco, dated June 16, 1999.  The
restricted shares were issued which was the average bid and ask price as of
September 25, 2001 and is in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act.


ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     This Form 10-KSB, including documents incorporated herein by reference,
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.  Such statements include, but are not limited to,
projections of revenues, income or loss, capital expenditures, acquisitions,
plans for future operations, financing needs or plans, the impact of economic
and business factors and plans relating to our products or services, as well as
assumptions relating to the foregoing.  The words "believe," "expect,"
"estimate," "anticipate," "may," and "project" and similar expressions generally
identify forward-looking statements. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or
quantified.  Future events and actual results could differ materially from those
set forth in, contemplated by, or underlying our forward-looking statements.
Statements in this Form 10-KSB, including those set forth in "Risk Factors," as
well as statements incorporated by reference herein that are included in
"Business," and other sections of this Annual Report on Form 10-KSB describing
factors, among others, that could contribute to or cause such difference.

     Although we believe that the assumptions underlying the forward-looking
statements in this Form 10-KSB are reasonable, any of these assumptions could
prove inaccurate.  In addition, our business and operations are subject to
substantial risks, some of which are identified in this report and which
increase the uncertainties inherent in the forward-looking statements included
in this Form 10-KSB.  There can be no assurance that the results contemplated in
these forward-looking statements will be realized.

     The inclusion of forward-looking information should not be regarded as a
representation by us or any other person that the future events, plans or
expectations contemplated will be achieved.  We disclaim any obligation to
subsequently revise forward-looking statements to reflect subsequent events or
circumstances or the occurrence of unanticipated events.


                                       12
<PAGE>
OVERVIEW

     We provide Internet-based yellow page listing services on our
Yellow-Page.Net and yp.net websites.  We acquired Telco in June 1999 as a wholly
             --     ------
owned subsidiary, and, as a result of this acquisition, changed our primary
business focus to become an electronic yellow page listing service.  Our
websites serve as a search engine for yellow page listings in the United States
and Canada.  We charge our customers for a preferred listing of their businesses
on searches conducted by consumers on our websites.

     The Company was originally incorporated in Nevada in 1996 as Renaissance
Center, Inc.  Renaissance Center and Nuclear Corporation merged in 1997.  Our
articles of incorporation were restated in July 1997 and our name was changed to
Renaissance International Group, Ltd.  Our name was subsequently changed to RIGL
Corporation in July 1998.  With the acquisition of Telco and shift of the focus
of our business, our corporate name was again changed to YP.Net, Inc., effective
October 1, 1999.  The new name was chosen to reflect our focus on Internet-based
yellow page services.

RESULTS OF OPERATIONS

Fiscal Year End September 30, 2001 Compared to Fiscal Year End September 30,
2000.

     Revenue for the year ended September 30, 2001 ("Fiscal 2001") was
$15,984,917 compared to $15,836,422 for the year ended September 30, 2000
("Fiscal 2000").  The slight increase in revenue is principally the result of
Telco generating revenues for the full fiscal period.  Our revenue decreased
marginally primarily due to the completion of the audited financial statements
and at the recommendation of our auditor Weber & Company, PC, we applied the
Staff Accounting Bulletin #101 ("SAB 101") to our subscription revenue.

The Staff Accounting Board at the Securities Exchange Commission promulgated SAB
#101.  Their staff reviewed revenue reorganization and created the criteria that
has implemented as a guideline to SAB #101 and it is believed that revenue
generally is realized or realizable and earned when all of the following
criteria are met:

     1. Pervasive evidence of an arrangement exits
     2. Delivery has occurred or services have been rendered
     3. The seller's price to the buyer is fixed or determinable AND
     4. Collectibility is reasonably assured.

In regards to the subscription/direct invoice gross revenue, and at the
recommendation of our auditor we believed that SAB #101 applies and there should
be impairment to gross revenue since we meet all the criteria except item #4.
The collectibility of subscription revenue, in the past, has been between 7% -
13% and we have recorded an allowance for bad debt to reflect the bad debt as
required.  Therefore this year our gross revenue for subscription revenues has
been reduced by $1,900,000 in compliance with SAB #101.


                                       13
<PAGE>
Presently, our new operations department has reevaluated and re-filtered our
subscription customers and we have experienced increases in cash collected from
the invoice billings.  Progressing forward through the year, we expect a higher
collection of subscription receivable since new procedures and processes have
been implemented in operations.

     We utilize direct mailings as our primary marketing program and this
program generates our principal revenue of the Company.  Our subscribing
customers increased to 114,409 at December 31, 1999, 129,457 at March 31, 2000,
143,292 at June 30, 2000 and 130,592 at September 30, 2000, a 21% increase for
the fiscal year.  Our subscribing customers decreased to 123,408 at December 31,
2000, 103,187 at March 31, 2001, 99,862 at June 30, 2001 and 91,348 at September
30, 2001.  The decrease in our customers for Fiscal 2001 is primarily due to
management's decision to stop all direct mail marketing efforts until we had
entered into a final settlement agreement with the FTC.  In August 2001 we
entered into a settlement agreement and voluntarily complied with the order set
forth by the FTC.  See our Form 10-QSB for the period ended June 30, 2001.

     Sales and marketing expenses for Fiscal 2001 was $688,349 compared to
$1,619,113 for Fiscal 2000.  The decrease was principally the result of our
decreased or ceasing of all marketing efforts.  The marketing expenses are
attributed to our direct response marketing, which is our primary source of
attracting new customers.  The decrease in our marketing expenses for Fiscal
2001 is primarily due to management's decision to cease all direct mail
marketing efforts until we had entered into a final settlement agreement with
the FTC.  In July 2001 we entered into a settlement agreement and voluntarily
complied with the order set forth by the FTC.  See our Form 10-QSB for the
period ended June 30, 2001.

     General and administrative expenses for Fiscal 2001 were $5,320,709
compared to $5,392,860 for Fiscal 2000.  The decrease was principally the result
of billing fees in connection with the operations of Telco and the increase in
consulting fees, legal fees, and accounting fees.  The general expenses are
attributed to the additional costs incurred to become current on our SEC filings
and legal fees incurred to reach a regulatory settlement with the FTC.
Management does not expect the legal expenditures for those periods to continue
in the amounts incurred in Fiscal 2002.

     On July 16, 2001, we paid Hudson Consulting Group ("Hudson") $82,000 for
the settlement of a lawsuit. In connection with this settlement, Hudson has
returned 1,425,334 shares of common stock, Tiger Lewis LLC has returned 82,5000
shares of common stock, Harold Rubenstein has returned 100,000 shares of common
stock, and HK Elrod has returned 154,284 shares of common stock. The common
stock issued to the above parties, issued by prior management, for services that
were never rendered by the recipients of the common stock. The cancellation of
these shares will decrease our total outstanding shares, which will affect our
earnings per share. The return of the common shares was recorded as other income
to the Company. See "Legal Proceedings," above.


                                       14
<PAGE>
     The cost of the Yellow-Page.Net URL was capitalized at its cost of
                     ---------------
$5,000,000.  The URL is amortized on an accelerated basis over the twenty-year
term of the licensing agreement.  Amortization expense on the URL was $447,087
for the year ended September 30, 2001.  Annual amortization expense in future
years related to the URL is anticipated to be approximately $300,000.

     Interest expense for Fiscal 2001 was $571,248 compared to $853,761 for
Fiscal 2000.  The decrease in interest expense was a result of decreased debt
due to the acquisition of Telco and the acquisition of the URL Yellow-Page.Net.
                                                               ---------------
The reduction in interest expense is also related to the payoff of Finovia
Financial credit facility in June 2001

     During Fiscal 2001,we have no available net operating loss carryforwards
under the separate return limitation year and have unavailable net operating
loss carryforwards of $3,985,962.  We may utilize the unavailable net operating
loss carryforwards of $3,985,962 upon generating taxable income in YP.Net or
develop a new product in YP.Net.  Therefore Telco is not allowed to utilize the
unavailable net operating loss carryforward.

          During Fiscal 2001, we had no available net operating loss
carryforwards under the separate return limitation year and has unavailable net
operating loss carryforwards of $1,931,900.  We may utilize the unavailable net
operating loss carryforwards of $1,931,900 upon generating taxable income in
YP.Net or develop a new product in YP.Net.  Therefore Telco is not allowed to
utilize the unavailable net operating loss carryforward.

     Net profits for Fiscal 2001 were $1,812,281, or $.04 per share, compared to
$2,847,977, or $.07 per share for Fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

     Our cash balance increased to $683,847 for Fiscal 2001 from a $219,613 for
Fiscal 2000.  We funded working capital requirements primarily from cash
generated from financing activities and utilized cash in operating activities
and investing activities and the reduction of debt.  We have no credit facility
with Finovia Financial as that debt was paid off in June 2001.

     Operating Activities.  Cash provided by operating activities was $3,880,158
for Fiscal 2001 compared to $960,303 for Fiscal 2000.  The principal source of
our operations revenue is from sales of electronic yellow page advertising.

     Investing Activities.  Cash used by investing activities was $165,672 for
Fiscal 2001 compared to $211,803 for Fiscal 2000.  We purchased $28,520 of
computer equipment in Fiscal 2001 compared to $211,803 of additional computer
equipment to upgrade and replace incompatible equipment for Fiscal 2000.  In
Fiscal 2001 we advanced $137,152 to an affiliate and the note was repaid in full
in October 2001.


                                       15
<PAGE>
     Financing Activities.  Cash flows used from financing activities were
$3,250,252 for Fiscal 2001 compared to $784,211 for Fiscal 2000.  We had cash
outflow from the repaid our credit facility and Matthew Markson Ltd. of
$3,199,452 for Fiscal 2001 compared to $1,657,781 for Fiscal 2000.  We purchased
treasury stock in the amount of $50,800 for Fiscal 2001.  We had cash inflow
from the financing arrangements in the amount of $789,241 for Fiscal 2000 and we
realized inflow from the sale of common stock of $84,329 for Fiscal 2000.

     We incurred debt in the acquisition of the license right to the
Yellow-Page.Net URL.  A total of $4,000,000 was borrowed, $2,000,000 from Joseph
- ---------------
and Helen VanSickle and $2,000,000 as a carry-back from Matthew & Markson Ltd.
Management has dedicated payments in the amount of $100,000 per month for the
payment of the VanSickle note.  Management has also dedicated payments to the
Matthew & Markson note in the amount of $100,000 per month, with the provision
that no payment be made if we have less than 30 days operating capital reserved,
or if we are in an uncured default with any of our lenders.  A total of
4,500,000 shares of our common stock were issued to secure these notes and are
held in escrow.

     Collections on accounts receivables are received primarily through the
billing service integrators under contract to administer this billing and
collection process.  The billing service providers generally do not remit funds
until they are collected.  The billing companies maintain holdbacks for refunds
and other uncertainties.  Generally, cash is collected and remitted to us over a
90 to 120 day period subsequent to the billing dates.

     We market our products primarily through the use of direct mailers to
businesses throughout the United States.  We generally pay for these marketing
costs when incurred and amortize the costs of direct-response advertising on a
straight-line basis over eight months.  The amortization lives are based on
estimated attrition rates.  During Fiscal 2001 we paid $3,781,485 in advertising
and marketing compared to $3,206,576 in Fiscal 2000.  Management anticipates the
outlays for direct-response advertising to remain consistent over the next year.

     We do not intend to incur significant capital expenditures in the near
future.

FUTURE OUTLOOK

     For fiscal year 2002 we expect to continue our customer direct response
program whereby we contact our existing customers for their many mini-web-page
information and to develop and market new products.  We also are generating a
new revenue source to provide customer service and technical services to related
and industry entities.  We presently have agreements with Simple. Net, Inc. to
provide both customer and technical services.  Simple.Net is an Internet service
provider ("ISP") that currently operates with us in a joint venture capacity.


                                       16
<PAGE>
     We have offered our customers a dial-up ISP and are currently gaining
customers weekly.  Our dial-up ISP backbone provider is Level 3 and is providing
a Tier 1 network that will ultimately provide the dial-up service for YP.net
dial-up customers and Simple. Net, Inc. through our joint venture arrangement.
Under our current provider's network, over 65 percent of the US's population has
the ability to dial to a local point of presence.  The remaining population will
be allowed access through an 800 number solution.  This revenue stream will
prove vital in expanding our ability to reach various customer needs.

     Our future success will depend on our ability to integrate continually and
distribute information services of broad appeal.  Our ability to maintain our
relationships with content providers and to build new relationships with
additional content providers is critical to our marketing plan.

     We have entered into a billing agreement with OAN Billing, Inc. ("OAN").
This contract will provide us with another billing integrator that will allow us
to broaden our billing area among all LECs.  OAN is a reputable billing company
that will provide us more flexibility and will reduce our concentration of
billing risk with billing integrators.

     We have entered into a credit card processing agreement with Bank of
American.  This agreement will provide us with the ability to expeditiously
process our subscription invoices on a recurring basis.  That is we will be able
to process monthly billing in a recurring batch by this method we will be able
to have a higher collection of our subscription revenue.

     We have filed a preliminary 14-C information statement to increase our
authorized common stock and create Class B and Class C preferred shares.  We
intend to offer our shareholders class B and C preferred shares.  The preferred
offer was at the request of our shareholders that were looking for an avenue to
receive income rather than waiting for the gains in equity.  "See item 4,
Submission of Matter to Vote to Security Holders" Having received no comments
back from the SEC to our Preliminary 14-C Information Statement, management will
file a 14-C definitive statement and do a formal offering.  See our Form 14-C
filed with the SEC on November 1, 2001

     Management believes that the future of this company will be based on its
ability to market business services to its proprietary business customer base.
We are actively seeking potential acquisitions and mergers to broaden our
services offered to our customer base.  We are presently seeking companies that
will provide a diversified revenue stream with a strong revenue model that will
provide more services to our existing customers.  Management believes its strong
financial controls and operating philosophy will help generate profits from its
future acquisitions for the benefit of its shareholders.


                                       17
<PAGE>
FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS

     Set forth below and elsewhere in this Annual Report and in the other
documents we file with SEC, including the most recent Form 10-QSB, are risks and
uncertainties that could cause actual results to differ materially from the
results contemplated by the forward-looking statements contained in the Annual
Report.

     Gross Margins May Decline Over Time:We expect that gross margins may be
     ------------------------------------
adversely affected because we have determined that profit margins from the
electronic yellow pages offerings that we have profited from in the past have
fluctuated. We have experienced a decrease in revenue from the LEC from the
effects of the Competitive Local Exchange Carriers (CLEC) that are participating
in providing local telephone services to customers.  We have begun to address
this problem and we are implementing data filters to reduce the effects of the
CLEC's.  We have also sought other billing methods to reduce the adverse effects
of the CLEC billings. These other billing methods may be cheaper or more
expensive than our current LEC billing and we have not yet determined if they
will be less or more effective.  We continue to look for profitable Internet
opportunities; however there are no assurances that we will be successful, and
presently we have no acquisitions in progress.

     Dependence on Key Personnel:  Our performance is substantially dependant on
     ----------------------------
the performance of our executive officers and other key employees and our
ability to attract, train, retain and motivate high quality personnel,
especially highly qualified technical and managerial personnel. The loss of
services of any executive officers or key employees could have a material
adverse effect on our business, results of operations or financial condition.
Competition for talented personnel is intense, and there is no assurance that we
will be able to continue to attract, train, retain or motivate other highly
qualified technical and managerial personnel in the future.

     Since our Growth Rate may slow, operating results for a particular quarter
     --------------------------------------------------------------------------
are difficult to predict: We expect that in the future, our net sales may grow
- -------------------------
at a slower rate on a quarter-to-quarter basis than experienced in previous
periods. This may be a direct cause of the projected changes to our direct
marketing pieces as well as the fact that we have not been performing our direct
marketing at this time.  See "Marketing," above. As a consequence, operating
results for a particular quarter are extremely difficult to predict. Our ability
to meet financial expectations could be hampered if we are unable to correct the
billing through the CLEC markets seen in the fourth quarter continue in the
future. Additionally, in response to customer demand, we continue to attempt
develop new products to reduce our customer attrition rates.

     We Expect to make Future Acquisitions where Advisable and Acquisitions
     ----------------------------------------------------------------------
involve Numerous Risks:  The Internet business is highly competitive, and as
- -----------------------
such, our growth is dependent upon market growth, our ability to enhance our
existing products and our ability to introduce new products on a timely basis.
One of the ways we will address the need to develop new products through the
acquisition of other companies. Acquisitions involve numerous risks, including
difficulties in integrating the operations, technologies, and products of the
acquired companies; the risk of diverting management's attention from normal
daily operations of the business; risks of entering markets in which we have no
or limited direct prior experience and where competitors in such markets have
stronger market positions; insufficient revenue to offset increased expenses
associated with acquisitions; and the potential loss of key employees of the
acquired companies.  Mergers and acquisitions of high-technology companies are
inherently risky, and there is no assurance that our previous or future
acquisitions will be successful and not have a material adverse affect on our
business, operating results, or financial condition.  We must also manage any
growth effectively. Failure to manage growth effectively and successfully
integrate acquisitions we may make could have a material adverse effect on our
business and operating results.


                                       18
<PAGE>
     Regulatory Environment.Existing laws and regulations and any future
     -----------------------
regulation may have a material adverse effect on our business.  These effects
could include substantial liability including fines and criminal penalties,
preclusion from offering certain products or services and the prevention or
limitation of certain marketing practices.   As a result of such changes, our
ability to increase our business through Internet usage could also be
substantially limited.

ITEM 7.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                  YP.NET, INC.

                                TABLE OF CONTENTS
                                -----------------


                                                                PAGES
<S>                                                             <C>
  INDEPENDENT AUDITORS' REPORT                                     20

  CONSOLIDATED FINANCIAL STATEMENTS:

     Consolidated Balance Sheet at September 30, 2001              21

     Consolidated Statements of Operations for the years ended
       September 30, 2001 and September 30, 2000                   22

     Consolidated Statements of Stockholders' Equity for the
       years ended September 30, 2001 and September 30, 2000    23-24

Consolidated Statements of Cash Flows for the
       years ended September 30, 2001 and September 30, 2000    25-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      27-41
</TABLE>


                                       19
<PAGE>
                         INDEPENDENT ACCOUNTANTS' REPORT
                         -------------------------------



To  the  Stockholders  and  Board  of  Directors  of
     YP.Net,  Inc.:

We  have  audited the accompanying consolidated balance sheet of YP.Net, Inc. as
of  September  30,  2001  and the related consolidated statements of operations,
stockholders'  equity  and  cash  flows  for each of the two years in the period
ended  September  30, 2001. These financial statements are the responsibility of
the  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 audits 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 our audits provide a reasonable basis for our opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of YP.Net,
Inc.  as  of  September 30, 2001, and the consolidated results of its operations
and cash flows for each of the two years in the period ended September 30, 2001,
in  conformity  with  generally  accepted  accounting  principles.



/s/  WEBER  &  COMPANY,  P.C.
     Scottsdale,  Arizona
     December  20,  2001


                                       20
<PAGE>
<TABLE>
<CAPTION>
YP.NET, INC.

CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
- ------------------


<S>                                                              <C>
ASSETS:
CURRENT ASSETS
   Cash                                                          $  683,847
   Accounts receivable, net of allowance of $1,035,993            2,870,109
   Customer acquisition costs, net of accumulated amortization
     of $3,588,242                                                  193,244
   Prepaid expenses and other assets                                 20,169
   Deferred income taxes                                            414,397
                                                                 -----------
      Total current assets                                        4,181,766

PROPERTY AND EQUIPMENT, net                                         374,885

DEPOSITS                                                             23,287

INTELLECTUAL PROPERTY- URL, net of accumulated
  amortization of $1,077,916                                      3,932,084

ADVANCES TO AFFILIATE                                               116,316
                                                                 -----------
    TOTAL ASSETS                                                 $8,628,338
                                                                 ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
   Accounts payable                                              $  314,904
   Accrued liabilities                                               76,234
   Notes payable - current portion                                  888,236
   Income taxes payable                                           1,222,318
                                                                 -----------
      Total current liabilities                                   2,501,692

NOTES PAYABLE - long term portion                                   410,669

DEFERRED INCOME TAXES                                                17,439


                                                                 -----------
      Total liabilities                                           2,929,800
                                                                 -----------

STOCKHOLDERS' EQUITY:
   Common stock, $.001 par value, 50,000,000 shares authorized,
     41,340,798 issued and outstanding                               43,814
   Paid in capital                                                4,556,806
   Treasury stock at cost                                          (171,422)
   Retained earnings                                              1,269,340
                                                                 -----------
      Total stockholders' equity                                  5,698,538
                                                                 -----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $8,628,338
                                                                 ===========
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       21
<PAGE>
<TABLE>
<CAPTION>
YP.NET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
- -------------------------------------------------------------

                                                      2001          2000
                                                  ------------  ------------
<S>                                               <C>           <C>
NET REVENUES                                      $15,084,917   $15,836,422
                                                  ------------  ------------

OPERATING EXPENSES:
     Cost of services                               6,399,367     5,234,906
     General and administrative expenses            5,320,709     5,392,860
     Sales and marketing expenses                     688,349     1,619,113
     Franchising expense
     Depreciation and amortization                    603,426       616,660
                                                  ------------  ------------
         Total operating expenses                  13,011,851    12,863,539
                                                  ------------  ------------

OPERATING INCOME                                    2,073,066     2,972,883
                                                  ------------  ------------

OTHER (INCOME) AND EXPENSES
     Interest expense and other financing costs       571,248       853,761
     Interest income                                   (7,342)         (802)
     Other Income                                  (1,533,568)      (82,846)
                                                  ------------  ------------

     Total other expense                             (969,662)      770,113
                                                  ------------  ------------

INCOME BEFORE INCOME TAXES                          3,042,728     2,202,770

INCOME TAX  PROVISION (BENEFIT)                     1,230,447      (645,207)
                                                  ------------  ------------

NET INCOME                                        $ 1,812,281   $ 2,847,977
                                                  ============  ============

NET INCOME PER SHARE:
 Basic                                            $      0.04   $      0.07
                                                  ============  ============

 Diluted                                          $      0.04   $      0.07
                                                  ============  ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                            40,623,126    40,120,829
                                                  ============  ============

  Diluted                                          40,623,126    40,120,829
                                                  ============  ============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       22
<PAGE>
YP.NET, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE
YEARS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
- -----------------------------------------------------

<TABLE>
<CAPTION>
                                              COMMON STOCK          PREFERRED A       TREASURY    PAID-IN     ACCUMULATED
                                            SHARES    AMOUNT     SHARES     AMOUNT     STOCK      CAPITAL       DEFICIT
                                          ----------  -------  ----------  --------  ----------  ----------  -------------
<S>                                       <C>         <C>      <C>         <C>       <C>         <C>         <C>
BALANCE OCTOBER 1, 1999                   39,156,853  $39,157  1,700,000   $ 1,700   $ (69,822)  $4,892,538  $ (3,390,918)

  Common stock issued for
    consulting services                      500,000      500                                       463,450

  Common stock issued for
    exercised options                         53,611       54                                        84,275

  Common stock issued as board of
    directors' fees                          550,000      550                                       114,950

   Common stock issued to former
    officer to convert preferred shares
    and as final compensation settlement     200,000      200   (200,000)     (200)                  89,800

   Common stock issued to settle
    lease agreement                          100,000      100                                       124,100

   Net income                                                                                                   2,847,977
                                          ----------  -------  ----------  --------  ----------  ----------  -------------
BALANCE
    SEPTEMBER 30, 2000                    40,560,464  $40,561  1,500,000   $ 1,500   $ (69,822)  $5,769,113  $   (542,941)





                                            TOTAL
                                          ----------
<S>                                       <C>
BALANCE OCTOBER 1, 1999                   $1,472,655

  Common stock issued for
    consulting services                      463,950

  Common stock issued for
    exercised options                         84,329

  Common stock issued as board of
    directors' fees                          115,500

   Common stock issued to former
    officer to convert preferred shares
    and as final compensation settlement      89,800

   Common stock issued to settle
    lease agreement                          124,200

   Net income                              2,847,977
                                          ----------
BALANCE
    SEPTEMBER 30, 2000                    $5,198,411
</TABLE>


                                    (CONTINUED)


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       23
<PAGE>
YP.NET, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE
YEARS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000     (CONTINUED)
- -----------------------------------------------------     -----------

<TABLE>
<CAPTION>
                                             COMMON  STOCK            PREFERRED A       TREASURY     PAID-IN      ACCUMULATED
                                           SHARES      AMOUNT     SHARES      AMOUNT     STOCK       CAPITAL        DEFICIT
                                         -----------  --------  -----------  --------  ----------  ------------  -------------
<S>                                      <C>          <C>       <C>          <C>       <C>         <C>           <C>
BALANCE OCTOBER 1, 2000                  40,560,464   $40,561    1,500,000   $ 1,500   $ (69,822)  $ 5,769,113   $   (542,941)

  Common stock issued for
    consulting services                     850,000       850                                          147,950

   Common stock received and retired
      under legal settlements            (1,596,784)   (1,597)                                      (1,723,433)

  Common stock issued for extension
      on debt                             4,000,000     4,000                                          356,000

  Cancellation of preferred stock                               (1,500,000)   (1,500)

  Purchase of treasury stock                                                            (101,600)

  Value of commom stock warrants issued                                                                  7,176

  Net income                                                                                                        1,812,281
                                         -----------  --------  -----------  --------  ----------  ------------  -------------

BALANCE
    SEPTEMBER 30, 2001                   43,813,680   $43,814            -   $     -   $(171,422)  $ 4,556,806   $  1,269,340
                                         ===========  ========  ===========  ========  ==========  ============  =============




                                            TOTAL
                                         ------------
<S>                                      <C>
BALANCE OCTOBER 1, 2000                  $ 5,198,411

  Common stock issued for
    consulting services                      148,800

   Common stock received and retired
      under legal settlements             (1,725,030)

  Common stock issued for extension
      on debt                                360,000

  Cancellation of preferred stock             (1,500)

  Purchase of treasury stock                (101,600)

  Value of commom stock warrants issued        7,176

  Net income                               1,812,281
                                         ------------

BALANCE
    SEPTEMBER 30, 2001                   $ 5,698,538
                                         ============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       24
<PAGE>
<TABLE>
<CAPTION>
YP.NET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
- -----------------------------------------------------


CASH FLOWS FROM OPERATING ACTIVITIES:                           2001          2000
                                                            ------------  ------------
<S>                                                         <C>           <C>
  Net income                                                $ 1,812,281   $ 2,847,977
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
  Depreciation and amortization                                 156,343       144,993
  Issuance of common stock as compensation for services         148,800       669,250
  Penalties related to acquisition debt paid
      by issuance of debt, warrants and stock                   917,967             -
  Non-cash income recognized on recapture of common stock    (1,725,030)
  Deferred income taxes                                         268,556      (645,207)
  Provision for uncollectible accounts                         (760,859)    1,590,840
  Amortization of intellectual property                         447,083       471,667
  Changes in assets and liabilities:
    Trade and other accounts receivable                       1,617,467    (4,345,544)
    Customer acquisition costs                                   37,654       403,002
    Other receivables                                                 -        77,182
    Prepaid and other current assets                             79,060        39,621
    Other assets                                                (11,500)            -
    Accounts payable                                            161,089        48,014
    Accrued liabilities                                        (251,894)     (119,232)
    Deferred Financing Costs                                     21,250       102,500
    Income taxes payable                                        961,891             -
    Deferred revenue                                                  -      (324,760)
                                                            ------------  ------------
          Net cash  provided by operating activities          3,880,158       960,303
                                                            ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Advances made to affiliate                                   (137,152)            -
  Purchases of  equipment                                       (28,520)     (211,803)
                                                            ------------  ------------
          Net cash (used in)  investing activities             (165,672)     (211,803)
                                                            ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal repayments on borrowings from line of credit     (1,577,547)      789,241
  Principal repayments on notes payable                      (1,621,905)   (1,657,781)
  Purchase of treasury stock                                    (50,800)
  Proceeds from sale of common stock                                  -        84,329
                                                            ------------  ------------
          Net cash (used)/provided by financing activities   (3,250,252)     (784,211)
                                                            ------------  ------------

(DECREASE)/INCREASE IN CASH                                     464,234       (35,711)

CASH, BEGINNING OF YEAR                                         219,613       255,324
                                                            ------------  ------------

CASH, END OF YEAR                                           $   683,847   $   219,613
                                                            ============  ============
</TABLE>


    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       25
<PAGE>
YP.NET, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS, (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
- -----------------------------------------------


SUPPLEMENTAL CASH FLOW INFORMATION:

<TABLE>
<CAPTION>
                            2001      2000
                                                                  --------  --------
<S>                                                               <C>       <C>
       Interest Paid                                              $421,013  $833,993
                                                                  ========  ========

       Income taxes paid                                          $    -0-  $    -0-
                                                                  ========  ========
</TABLE>

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

<TABLE>
<CAPTION>
                                                                    2001      2000
                                                                  --------  --------
<S>                                                               <C>       <C>
Common stock issued in settlement of lease                        $    -0-  $124,200
                                                                  ========  ========

Note payable issued in payment of debt extension fee              $550,791  $    -0-
                                                                  ========  ========

Value of common stock issued as payment of debt    extension fee
                                                                  $360,000  $    -0-
                                                                  ========  ========

Liability incurred for purchase of treasury stock                 $ 50,800  $    -0-
                                                                  ========  ========
</TABLE>



    The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       26
<PAGE>
YP.NET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
- -----------------------------------------------

1.   ORGANIZATION AND BASIS OF PRESENTATION

     YP.Net, Inc. (the "Company"), formally RIGL Corporation, had previously
     attempted to develop software solutions for medical practice billing and
     administration. The Company had made acquisitions of companies performing
     medical practice billing services as test sites for its software and as
     business opportunities. The Company was not successful in implementing its
     medical practice billing and administration software products and looked to
     other business opportunities. The Company acquired Telco Billing Inc.
     ("Telco") in June 1999, through the issuance of 17,000,000 shares of the
     Company's common stock. Prior to its acquisition of Telco, RIGL had not
     generated significant or sufficient revenue from planned operations.

     Telco was formed in April 1998, to provide advertising and directory
     listings for businesses on its Internet web site in a "Yellow Page" format.
                                                            -----------
     Telco provides those services to its subscribers for a monthly fee. These
     services are provided primarily to all business throughout the United
     States. Telco became a wholly owned subsidiary of YP.Net, Inc. after the
     June 16, 1999 acquisition.

     At the time that the transaction was agreed to, the Company had 12,567,770
     common shares issued and outstanding. As a result of the merger transaction
     with Telco, there were 29,567,770 common shares outstanding, and the former
     Telco stockholders held approximately 57% of the Company's voting stock.
     For financial accounting purposes, the acquisition was a reverse
     acquisition of the Company by Telco, under the purchase method of
     accounting, and was treated as a recapitalization with Telco as the
     acquirer. Accordingly, the historical financial statements have been
     restated after giving effect to the June 16, 1999, acquisition of the
     Company. The financial statements have been prepared to give retroactive
     effect to October 1, 1998, of the reverse acquisition completed on June 16,
     1999, and represent the operations of Telco. Consistent with reverse
     acquisition accounting: (i) all of Telco's assets, liabilities, and
     accumulated deficit, are reflected at their combined historical cost (as
     the accounting acquirer) and (ii) the preexisting outstanding shares of the
     Company (the accounting acquiree) are reflected at their net asset value as
     if issued on June 16, 1999.

     The accompanying financial statements represent the consolidated financial
     position and results of operations of the Company and includes the accounts
     and results of operations of the Company and Telco, its wholly owned
     subsidiary, for the years ended September 30, 2001 and September 30, 2000.


                                       27
<PAGE>
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Cash includes all short-term highly liquid investments that are readily
     ----
     convertible to known amounts of cash and have original maturities of three
     months or less. At times cash deposits may exceed government insured
     limits. At September 30, 2001, cash deposits exceeded those insured limits
     by $580,000.

     Principles of Consolidation: The consolidated financial statements include
     ----------------------------
     the accounts of the Company and its wholly owned subsidiary, Telco Billing,
     Inc. All significant intercompany accounts and transactions are eliminated.

     Customer acquisition costs represent the direct response marketing costs
     --------------------------
     that are incurred as the primary method by which customers subscribe to the
     Company's services. The Company purchases mailing lists and sends
     advertising materials to prospective subscribers from those lists.
     Customers subscribe to the services by positively responding to those
     advertising materials which serve as the contract for the subscription. The
     Company capitalizes and amortizes the costs of direct-response advertising
     on a straight-line basis over eight months. The amortization lives are
     based on estimated attrition rates. The Company capitalized expenditures of
     $575,000 and $1,177,000 during the years ended September 30, 2001 and 2000
     respectively. The Company amortized those capitalized amounts at $613,000
     and $1,580,000 during the years ended September 30, 2001 and 2000
     respectively.

     The Company also incurs advertising costs that are not considered
     direct-response advertising. These other advertising costs are expensed
     when incurred. These advertising expenses were $75,000 and $30,000 for the
     years ended September 30, 2001 and 2000 respectively.

     Property and equipment is stated at cost less accumulated depreciation.
     ----------------------
     Depreciation is recorded on a straight-line basis over the estimated useful
     lives of the assets ranging from 3 to 5 years. Depreciation expense was
     $156,343 and $144,993 for the years ended September 30, 2001 and 2000
     respectively.

     Revenue recognition: The Company's revenue is generated by customer
     -------------------
     subscriptions of directory and advertising services. Revenue is billed and
     recognized monthly for services subscribed in that specific month. The
     Company utilizes outside billing companies to transmit billing data, much
     of which is forwarded to Local Exchange Carriers ("LEC's") that provide
     local telephone service. Monthly subscription fees are generally included
     on the telephone bills of the customers. The Company recognizes revenue
     based on net billings accepted by the LEC's. Due to the periods of time for
     which adjustments may be reported by the LEC's and the billing companies,
     the Company estimates and accrues for dilution and fees reported subsequent
     to year-end for initial billings related to services provided for periods
     within the fiscal year.

     Revenue for billings to certain customers whom are billed directly by the
     Company and not through the LEC's, is recognized on the basis of cash
     received due to poor experience associated with the collection of such
     billings. The Company recognizes revenue on these billings on estimated
     future collections which are determined on the basis of historical
     collections.


                                       28
<PAGE>
     Income taxes: The Company provides for income taxes based on the provisions
     ------------
     of Statement of Financial Accounting Standards No. 109, Accounting for
     Income Taxes, which, among other things, requires that recognition of
     deferred income taxes be measured by the provisions of enacted tax laws in
     effect at the date of financial statements.

     Financial Instruments: Financial instruments consist primarily of cash,
     ---------------------
     accounts receivable, and obligations under accounts payable, accrued
     expenses and notes payable. The carrying amounts of cash, accounts
     receivable, accounts payable, accrued expenses and notes payable
     approximate fair value because of the short maturity of those instruments.
     The Company has applied certain assumptions in estimating these fair
     values. The use of different assumptions or methodologies may have a
     material effect on the estimates of fair values.

     Net income per share is calculated using the weighted average number of
     --------------------
     shares of common stock outstanding during the year. The Company has adopted
     the provisions of SFAS No. 128 Earnings Per Share.

     Use of Estimates: The preparation of financial statements in conformity
     ----------------
     with generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements and the reported amounts of revenues and
     expenses during the reporting period. Actual results could differ from
     those estimates.

     Stock-Based Compensation: Statements of Financial Accounting Standards No.
     ------------------------
     123, Accounting for Stock-Based Compensation, ("SFAS 123") established
     accounting and disclosure requirements using a fair-value based method of
     accounting for stock-based employee compensation. In accordance with SFAS
     123, the Company has elected to continue accounting for stock based
     compensation using the intrinsic value method prescribed by Accounting
     Principles Board Opinion No. 25, "Accounting for Stock Issued to
     Employees." The proforma effect of the fair value method is discussed in
     Note 15.

     Recently Issued Accounting Pronouncements: In December 1999, the Securities
     -----------------------------------------
     and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101,
     Revenue Recognition in Financial Statements. SAB No. 101 summarizes the
     staff's views in applying generally accepted accounting principles to
     revenue recognition in financial statements. Management believes that the
     Company's revenue recognition policies have complied with those prescribed
     in SAB 101 and therefore, the adoption of SAB No. 101 did not have a
     material effect on the Company's revenues or revenue recognition policy.

     In June 2001, the Financial Accounting Standards Board issued Statements of
     Financial Accounting Standards No.'s 141 Business Combinations and 142
     Goodwill and Other Intangible Assets. The Company has reviewed the
     provisions of the new accounting pronouncements and does not believe the
     adoption of such will have a material effect on the financial position and
     results of operations of the Company. However, the Company will likely be
     required to review its process of analyzing the carrying value of its
     intangible assets.


                                       29
<PAGE>

     Impairment of long-lived assets is assessed by the Company for impairment
     whenever there is an indication that the carrying amount of the asset may
     not be recoverable. Recoverability of these assets is determined by
     comparing the forecasted undiscounted cash flows generated by those assets
     to the assets' net carrying value. The amount of impairment loss, if any,
     is measured as the difference between the net book value of the assets and
     the estimated fair value of the related assets.


                                       30
<PAGE>
3.   ACCOUNTS RECEIVABLE

     The Company provides billing information to third party billing companies
     for the majority of its monthly billings. Billings submitted are "filtered"
     by these billing companies and the LEC's. Net accepted billings are
     recognized as revenue and accounts receivable. The billing companies remit
     payments to the Company on the basis of cash ultimately received from the
     LEC's by those billing companies. The billing companies and LEC's charge
     fees for their services which are netted against the gross accounts
     receivable balance. The billing companies also apply holdbacks for the
     remittances for potentially uncollectible accounts. These dilution amounts
     will vary due to numerous factors and the Company may not be certain as to
     the actual amounts of dilution on any specific billing submittal until
     several months after that submittal. The Company estimates the amount of
     these charges and holdbacks based historical experience and subsequent
     information received from the billing companies. The Company estimates
     uncollectible account balances and provides an allowance for such
     estimates.

     The Company entered into a customer billing service agreement with
     Integretel, Inc. Integretel provides billing and collection and related
     services. Determining the net realizable value requires an estimation of
     both uncollectible receivables or any returns and allowances. The trade
     receivable due from Integretel at September 30, 2001 was $2,126,219. These
     receivables have been reduced by an allowance for doubtful accounts of
     $637,866.

     The Company also entered into a customer billing service agreement with
     Enhanced Services Billing, Inc. (ESBI). ESBI provides billing and
     collection and related services very similar to Integretel discussed above.
     Determining the net realizable value requires an estimation of both
     uncollectible receivables or any returns and allowances. The trade
     receivable due from ESBI at September 30, 2001 was $1,146,644 less
     aggregated amounts for telco fees, and reserve holdbacks based on dilution.
     This trade receivable has been reduced by an allowance for doubtful
     accounts of $298,127.

     Trade subscription receivables, which are directly administered and carried
     by the Company, are valued and reported at net realizable value, the net
     amount expected to be received. This amount may or may not be necessarily
     the amount received. Determining the net realizable value requires an
     estimation of both uncollectible accounts or any returns and allowances.
     The net trade subscriptions receivable at September 30, 2001 was $395,000.

     The Company experiences significant dilution from the billing companies.
     The Company negotiates collections with the billing companies on the basis
     of the contracted terms and historical experience. The Company's cash flow
     can be affected by holdbacks, fees and other matters that are determined by
     the LEC's and the billing companies.


                                       31
<PAGE>
4.   INTELLECTUAL PROPERTY

     In connection with the Company's acquisition of Telco, the Company was
     required to provide accelerated payment of license fees for the use of the
     Internet domain name or Universal Resource Locator (URL) Yellow-page. net.
                                                              ----------------
     Telco had previously entered into a 20-year license agreement for the use
     of the URL with one of its two 50% stockholders. The original license
     agreement required annual payments of $400,000. However, the agreement
     stated that upon a change in control of Telco, a $5,000,000 accelerated
     payment is required to maintain the rights under the licensing agreement.
     The URL holder agreed to discount the accelerated payments from $8,000,000
     to $5,000,000 at the time of the acquisition. The Company agreed to make
     that payment upon effecting the acquisition of Telco.

     The Company made a $3,000,000 cash payment and issued a note payable for
     $2,000,000 to acquire the licensing rights of the URL. The Company also
     issued 2,000,000 shares of its common stock to be held as collateral on the
     note. The note payable was originally due on July 15, 1999. The Company
     failed to make the $2,000,000 payment when due. The repayment terms were
     renegotiated to extend the due date to January 15, 2000. An extension fee
     of $200,000 was paid by the Company at that time. The Company again
     renegotiated the repayment terms on April 26, 2000, to a demand note, with
     monthly installments of $100,000 subject to all operating requirements,
     which, management believes, have subsequently been met by the Company.

     In the year ended September 30, 2001, the former URL holder claimed that it
     was due additional amounts for the prior loan extensions. The Company
     reached a settlement with the former URL holder that required the Company
     to issue to the former URL holder, 4,000,000 shares of the Company's common
     stock, warrants to purchase 500,000 shares of the Company's common stock
     and a note payable for $550,000. The Company recorded an expense of
     approximately $917,000 related to the settlement representing the principal
     amount of the note payable, $360,000 as the fair value of the 4,000,000
     common shares and $7,176 as the fair value of the warrants. The value of
     the common stock was determined on the basis of the quoted trading price of
     the shares on the date of the agreement. The fair value of the warrants was
     determined on the using the Black-Scholes option pricing model.

     The URL is recorded at its cost net of accumulated amortization. Management
     believes that the Company's business is dependent on its ability to utilize
     this URL given the recognition of the Yellow page term. Also, its current
                                           -----------
     customer base relies on the recognition of this term and URL as a basis for
     maintaining the subscriptions to the Company's service. Management believes
     that the current revenue and cash flow generated through use of
     Yellow-page.net substantiates the net book value of the asset. The Company
     ---------------
     will periodically analyze the net book value of this asset and determine if
     impairment has occurred. The URL is amortized on an accelerated basis over
     the twenty-year term of the licensing agreement. Amortization expense on
     the URL was $447,083 and $471,667 for the years ended September 30, 2001
     and 2000 respectively.


                                       32
<PAGE>
5.   PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at September 30, 2001:

               Leasehold improvements         $    319,150
               Furnishings and fixtures            197,261
               Office and computer equipment       275,364
                                              -------------
               Total                               791,775
               Less accumulated depreciation      (416,889)
                                              -------------

               Property and equipment, net    $    374,886
                                              =============

     The Company has provided certain equipment and improvements to an
     affiliated entity at no cost to that affiliated entity. This arrangement
     was made as part of the Company's original default settlement with the
     prior owners of the URL discussed in Note 4. The Company retains title and
     control of these assets. However, they are not being utilized by the
     Company. The net book value of the office equipment and leasehold
     improvements being utilized by the affiliated entity was approximately
     $136,000 at September 30, 2001.


6.   NOTES PAYABLE AND LINE OF CREDIT

     Notes payable at September 30, 2001 are comprised of the following:

<TABLE>
<CAPTION>
<S>                                                              <C>
     Term loan from bank.  Original balance of $40,525.
     Repayment terms require monthly installments of
     principal and interest of $1,844.  Interest at 8.5% per
     annum.  Due January 13, 2001.  Collateralized by
     equipment.                                                  $    1,805

     Note payable to stockholders, original balance of
     2,000,000, interest at 10% per annum.  Repayment
     terms require monthly installments of $100,000 plus
     interest.  Due January 11, 2001.  Collateralized by
     2,000,000 shares of the Company's common stock.
     Note is currently in default.                                  400,000

     Note payable to former Telco shareholder for balance
     of URL purchase price (Note 4). Repayment terms
     require monthly installments of principal and interest at
     20% per annum of $100,000 and due upon demand.
     Collateralized by 2,000,000 shares of the Company's
     common stock.  Note is currently in default.                   346,309


                                       33
<PAGE>
     Note payable to former Telco shareholder, original
     balance of $550,000, interest at 10.5% per annum.
     Repayment terms require monthly installments of
     principal and interest of $19,045 beginning December
     15, 2001.  Due September 25, 2004.  Collateralized by
     all assets of the Company.                                     550,791


                                                                 -----------
     Totals                                                       1,298,905

     Less current portion                                          (888,236)
                                                                 -----------

     Long-term portion                                           $  410,669
                                                                 ===========
</TABLE>


7.   PROVISION FOR INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences
     between the carrying amounts of assets and liabilities for financial
     reporting purposes and the amounts used for income tax purposes.

     The deferred tax consequences of temporary differences in reporting items
     for financial statement and income tax purposes are recognized, if
     appropriate. Realization of the future tax benefits related to the deferred
     tax assets is dependent on many factors, including the Company's ability to
     generate taxable income within the net operating loss period. The Company
     has considered these factors in reaching its conclusion as to the valuation
     allowance for financial reporting purposes.

     At September 30, 2001 the Company has unused federal net operating losses
     of $3,985,962 that may be unavailable under Internal Revenue Code 382 -
     change in control rules - expiring from 2011 through 2014. The Company may
     utilize the unavailable net operating loss carryforwards upon generating
     taxable income in that operating entity. At September 30, 2001 the Company
     had unused state net operating losses of $1,931,900 that may be unavailable
     under the change in control rules expiring 2003.

     Income taxes for years ended September 30, is summarized as follows:

<TABLE>
<CAPTION>
                                             2001         2000
                                          ----------  ------------
<S>                                       <C>         <C>

     Current Provision                    $  961,891  $ 1,527,389
     Deferred Provision (Benefit)            268,556   (2,172,596)
                                          ----------  ------------

     Net income tax (benefit) provision   $1,230,447  $ (645,207))
                                          ==========  ============
</TABLE>

A  reconciliation for the differences between the effective and statutory income
tax  rates  for  years  ended  September  30,  is  as  follows:

<TABLE>
<CAPTION>
                   2001                           2000
                   ----                           ----

<S>                                      <C>           <C>    <C>         <C>
     Federal statutory rates             $ 1,034,527     34%  $ 748,942     34%
     State income taxes                      197,777      6%    132,166      6%
     Utilization of valuation allowance   (1,527,389)  (69)%
     Other                                    (1,857)     -       1,074      -
                                         ------------  -----  ----------  -----
     Effective rate                      $ 1,230,447     40%  $(645,207)  (29)%
                                         ============  =====  ==========  =====
</TABLE>


                                       34
<PAGE>
     Deferred tax assets totaling $1,983,000 are comprised of $512,000 for
     differences in book and tax bases of accounts receivable and intangible
     assets and approximately $1,471,000 relates to net operating loss
     carryforwards which is offset by a an equal valuation allowance resulting
     in a net deferred income tax asset of $512,000. The valuation allowance was
     provided due to the uncertainty of future realization of federal and state
     net operating loss carryforwards that give rise to approximately $1,471,000
     of the deferred tax asset because of restrictions on the utilization of
     such carryforwards due to the change in control rules under Internal
     Revenue Code Section 382. The valuation allowance decreased $1,070,000 in
     the year ended September 30, 2000, due to resolution of uncertainties as to
     the Company's ability to generate sufficient taxable income to utilize the
     net operating loss carryforwards that could be utilized. There was no
     change in the valuation allowance in the year ended September 30, 2001.

     At September 30, 2001, there was a deferred tax liability of $114,739
     related to the differences in book and taxes bases of property and
     equipment.

8.   LEASES

     The Company leases its office space under long-term operating leases
     expiring through 2003. Rent expense under these leases was $175,464 and
     $176,637 for the years ended September 30, 2001 and 2000.

     The Company consolidated office space from a variety of locations to a
     single facility effective with the Telco merger. The Company has subleased
     the former Telco office space.

     Future minimum annual lease payments and sublease rentals under operating
     lease agreements for years ended September 30:

<TABLE>
<CAPTION>
                     Sublease
             Rents   Rentals
           --------  --------

<S>        <C>       <C>
     2002  $392,862  $203,500
     2003    95,598         -
           --------  --------

           $488,460  $203,500
           ========  ========
</TABLE>


9.   STOCKHOLDERS' EQUITY

Telco Acquisition

     The Company issued 17,000,000 shares of its Common Stock in connection with
     the Telco acquisition. The transaction was valued at the book value of the
     net assets of RIGL as of the date of the transaction.

     Common Stock Issued for Services
     --------------------------------

     The Company has historically granted shares of its common stock to
     officers, directors and consultants as payment for services rendered. The
     value of those shares was determined based on the trading value of the
     stock at the dates on which the agreements were made for the services.
     During the year ended September 30, 2001, the Company issued 850,000 shares
     of common stock to officers, directors and consultants valued at $148,800.

     During the year ended September 30, 2000, the Company issued 500,000 shares
     to consultants valued at $464,950. Also in the year ended September 30,
     2000, the Company issued 550,000 shares of its common stock valued at
     $115,500 to members of the board of directors as consideration and payment
     for directors' fees.

     Common Shares Rescinded
     -----------------------

     The Company made claims against numerous parties for return of common
     shares issued to consultants by former management. Some of these claims
     resulted in litigation. During the year ended September 30, 2001, the
     Company settled with six of those parties resulting in 1,596,784 shares of
     the Company's common stock being returned and retired. These transactions
     have been recognized as other income of $1,725,030 in the accompanying
     statement of operations for the year ended September 30, 2001. The
     rescissions and returns of the common stock were recorded at the value of
     the original transactions that were rescinded, that is, the recorded
     expense for the original issuance of the shares was, in effect, reversed in
     the year ended September 30, 2001.

     Common Stock Issued for Debt Extension
     --------------------------------------

     The former holder of the Yellow-page. net. URL made a claim against the
                              ----------------
     Company in the year ended September 30, 2001. The former URL holder claimed
     that it was owed $1,000,000 that represented a loan extension fee for an
     extension given in 1999. The Company disputed the claim but ultimately
     settled with the former URL holder. The settlement agreement required the
     Company to pay the former URL holder $550,000, 4,000,000 shares of the
     Company's common stock and warrants for and additional 500,000 shares of
     the Company's common stock. The Company recorded an expense of
     approximately $917,000 related to the settlement representing the principal
     amount of the note payable, $360,000 as the fair value of the 4,000,000
     common shares and $7,176 as the fair value of the warrants. The value of
     the common stock was determined on the basis of the quoted trading price of
     the shares on the date of the agreement. The fair value of the warrants was
     determined on the using the Black-Scholes option pricing model.

     Treasury Stock
     --------------

     During the year ended September 30, 2001, the Company acquired 254,000
     shares of its common stock from a single stockholder. The Company agreed to
     purchase the common stock for $101,600. The Company paid cash of $50,800
     prior to September 30, 2001 and accrued the remaining $50,800 due at
     September 30, 2001

     Other
     -----

     During the year ended September 30, 2000, the Company issued 100,000 shares
     of its common stock to a sub lessee of certain office space for which the
     Company is the primary lessee. Management agreed to issue these shares as
     an inducement to the sub-lessee and allow the Company to eliminate the
     monthly obligation under that lease.


                                       35
<PAGE>
     Also in the year ended September 30, 2000, the Company agreed to settle all
     outstanding issues with a former officer by agreeing to convert 200,000
     shares of Series B preferred stock held by this individual to 200,000,
     shares of common stock. The conversion was set at the original conversion
     rate for the preferred shares. However, under the original terms, the
     preferred shares were not convertible until the occurrence of certain
     "trigger events". Those "trigger events" had not occurred but the former
     officer was allowed to convert as part of the settlement agreement. The
     conversion was recorded at the estimated value of the common stock on the
     date of the conversion.

     The Company granted 1,700,000 shares of Series B preferred stock to certain
     employees during the year ended September 30, 1999. The Series B preferred
     stock has no stated dividend. The preferred shares are convertible to
     common stock at the option of the holder. The shares are convertible at
     varying rates depending upon the trading price of the common stock at the
     time of conversion. The initial conversion rate is one share of common for
     each share of preferred. Conversion may not occur until certain "trigger
     events" occur and all rights with respect to the preferred shares terminate
     on November 30, 2004. "Trigger events" are defined as trading prices of the
     Company's common stock reaching or exceeding $5 through $10 per share and
     net income reaching or exceeding $5,000,000. No value was assigned to the
     preferred shares in the accompanying balance sheet nor was any compensation
     expense recognized for the year ended September 30, 2000, because the
     preferred shares were not exercisable at the time of issuances because of
     the failure of the Company to meet the "trigger events". Subsequently,
     management has cancelled the Series B preferred stock and rescinded those
     issuances and all shares of the Series B preferred stock were returned as
     of September 30, 2001.


10.  COMMITMENTS AND CONTINGENCIES

     Telco Billing
     -------------

     The acquisition of Telco by the Company called for the issuance of
     17,000,000 new shares of stock in exchange of the existing shares of Telco.
     As part of that agreement, the Company gave the former shareholders the
     right to "Put" back to the Company certain shares of stock at a minimum
     stock price of 80% of the current trading price with a minimum strike price
     of $1.00. The net effect of which was that the former Telco shareholders
     could require the Company to repurchase shares of stock of the Company at a
     minimum cost of $10,000,000. The agreement required the Company to attain
     certain market share levels.

     New management has renegotiated the "Puts", by which the "Puts" were
     retired and the Company provided a credit facility of up to $5,000,000 to
     the former Telco shareholders, collateralized by the stock held by the
     shareholders, with interest at least 0.25 points higher than the Company's
     average cost of borrowing. Additional covenants warrant that no more that
     $1,000,000 can be advanced at any point in time and no advances can be made
     in excess with out allowing at least 30 days operating capital plus reserve
     or if the company is in an uncured default with any of its lenders.

     Billing Service Agreements
     --------------------------

     The Company has entered into a customer billing service agreement with
     Integretel, Inc. (IGT). IGT provides billing and collection and related
     services associated to the telecommunications industry. The agreement term
     is for two years, automatically renewable in two-year increments unless
     appropriate notice to terminate is given by either party. The agreement
     will automatically renew on September 1, 2003, unless either party gives
     notice of termination 90 days prior to that renewal date. Under the
     agreement, IGT bills, collects and remits the proceeds to Telco net of
     reserves for bad debts, billing adjustments, telephone company fees and IGT
     fees. If either the Company's transaction volume decreases by 25% from the
     preceding month, less than 75% of the traffic is billable to major
     telephone companies, IGT may at its own discretion increase the reserves
     and holdbacks under this agreement. IGT handles all billing information and
     collection of receivables. The Company's cash receipts on trade accounts
     receivable are dependent upon estimates pertaining to holdbacks and other
     factors as determined by IGT. IGT may at its own discretion increase the
     reserves and holdbacks under this agreement.


                                       36
<PAGE>
     The Company has also entered into a customer billing service agreement with
     Enhanced Services Billing, Inc. (ESBI). ESBI provides billing and
     collection and related services associated to the telecommunications
     industry. The agreement term is for two years, automatically renewable in
     one-year increments unless appropriate notice to terminate is given by
     either party. The agreement automatically renews on December 3, 2001,
     unless either party gives notice of termination 91 days prior to that
     renewal date. Under the agreement, ESBI bills, collects and remits the
     proceeds to Telco net of reserves for bad debts, billing adjustments,
     telephone company fees and ESBI fees. If either the Company's transaction
     volume decreases by 25% from the preceding month, less than 75% of the
     traffic is billable to major telephone companies, ESBI may at its own
     discretion increase the reserves and holdbacks under this agreement.

     These agreements with the billing companies provide significant control to
     the billing companies over cash receipts and ultimate remittances to the
     Company. The Company estimates the net realizable value of its accounts
     receivable on historical experience and information provided by the billing
     companies reflecting holdbacks and reserves taken by the billing companies
     and LEC's.

     United States Federal Trade Commission (FTC)
     --------------------------------------------

     The Company was a subject of an FTC investigation pertaining to claims made
     of deceptive marketing practices. The Company has reached an agreement with
     the FTC requiring the Company to make certain changes to mailing and
     promotional materials and notify certain customers that a refund of past
     paid service fees is available. The settlement requires the Company to
     notify approximately 11,000 customers. Each of those customers may receive
     a refund of up to $12.50. At September 30, 2001, the Company accrued
     $45,413 which was all paid after September 30, 2001. Management does not
     believe that there will be any additional material refunds. The Company may
     also be required to pay certain expenses incurred in the FTC investigation.
     The Company intends to contest payment of these expenses but believes that
     if such is a requirement of any final settlement with the FTC, the amount
     could range from $50,000 to $70,000.

11.  NET INCOME PER SHARE

     Net loss per share is calculated using the weighted average number of
     shares of common stock outstanding during the year. Preferred stock
     dividends are subtracted from the net income to determine the amount
     available to common shareholders. There were no preferred stock dividends
     in the years ended September 30, 2001 and 2000. Warrants to purchase
     500,000 shares of common stock were excluded from the calculation for the
     year ended September 30, 2001. The exercise price of those warrants was
     greater than the trading value of the common stock and therefore inclusion
     of such would be anti-dilutive.


                                       37
<PAGE>
     Preferred stock convertible to 1,500,000 shares of common stock were not
     considered in the calculation for diluted earnings per share for the year
     ended September 30, 2000 because the ability to convert is contingent upon
     the Company attaining certain stock price and profitability goals. None of
     which was met at September 30, 2000. Also, warrants to purchase 350,000
     shares of common stock were not considered in the calculation for diluted
     earnings per share for the year ended September 30, 2000 because the
     exercise price of the warrants is greater than the average common stock
     price for the period, therefore the effect of their inclusion would be
     antidilutive. Also excluded from the calculation for the year ended
     September 30, 2000, were 890,334 shares of common stock that are in
     dispute.

     The following presents the computation of basic and diluted loss per share
     from continuing operations:

<TABLE>
<CAPTION>
              20012000
              --------
                                                                        Per
                                                 Income      Shares    Share     INCOME      Shares   Per share
                                               ----------                      ----------  ----------  ----------
<S>                                            <C>         <C>         <C>     <C>         <C>         <C>
Net  Income (Loss)                             $1,812,281                      $2,847,977
Preferred stock dividends
                                               ----------                      ----------
Income from continuing operations
                                                1,812,281                       2,847,977

BASIC EARNINGS PER SHARE:

Income Loss available to common stockholders
                                               $1,812,281  40,623,126  $ 0.07  $2,847,977  40,120,829  $     0.07
                                               ==========              ======  ==========              ==========

Effect of dilutive securities                  N/A                             N/A

DILUTED EARNINGS PER SHARE                     $1,812,281  40,623,126  $ 0.07  $2,847,977  40,120,829  $     0.07
                                               ==========              ======  ==========              ==========
</TABLE>


12.  RELATED PARTY TRANSACTIONS

     The Company from time to time advances and borrows funds from Board members
     and other related entities. At September 30, 2001, the Company was owed
     approximately $116,000 along with $6,190 in accrued interest and also owed
     $10,386 to such entities.

     The Company engaged an entity owned by the Chief Executive Officer for
     consulting services. The costs related to this engagement for the year
     ended September 30, 2001 were approximately $158,000. The Company's Chief
     Financial Officer also provided other professional services to the Company
     through an entity wholly owned by this officer. The costs related to these
     services for the year ended September 30, 2001 were approximately $67,000.

     The Board of Directors' fees for the year ended September 30, 2001 were
     approximately $45,000. The Company also compensated certain members of the
     Board of Directors for services other than routine duties of the Board.
     Fees paid to Board members for other services in the year ended September
     30, 2001 were approximately $147,000. Fees paid to Board members in the
     year ended September 30, 2000 were $150,000. The Company also granted
     550,000 shares of common stock to members of the Board of Directors as
     directors' fees in the year ended September 30, 2000.


                                       38
<PAGE>
     As part of the Company's original default settlement with the prior owners
     of the URL discussed in Note 4, the Company has provided certain equipment
     and improvements to an affiliated entity at no cost to that affiliated
     entity. The Company retains title and control of these assets. However, the
     assets are not being utilized by the Company. The net book value of the
     office equipment and leasehold improvements being utilized by the
     affiliated entity was approximately $136,000 at September 30, 2001. The
     Company is also providing office space to this entity for substantially
     below market rental rates. This entity is affiliated through commonality of
     certain management members.

     The Company has contracted the services of several related entities in its
     daily operations. The Company leases its employees from an entity in which
     certain officers have financial interests. The Company also has a contract
     with a related entity to provide dial-up services to the Company's
     customers. This affiliated entity's president is on the Company's Board of
     Directors. For the year ended September 30, 2001, the Company had recorded
     $10,000 in deposits due from this entity. Another affiliated entity
     provides customer service and technical support to the Company's customers,
     and this entity's president is also on the Company's Board of Directors.
     The Company has recorded revenues of $22,813 and costs of sales of $67,948
     related to the activities contracted for form this entity for the year
     ended September 30, 2001.


13.  CONCENTRATION OF CREDIT RISK

     The Company maintains cash balances at banks in Arizona. Accounts are
     insured by the Federal Deposit Insurance Corporation up to $100,000. At
     September 30, 2001, the Company had bank balances exceeding those insured
     limits of $580,000.

     Financial instruments that potentially subject the Company to
     concentrations of credit risk are primarily trade accounts receivable. The
     trade accounts receivable are due primarily from business customers over
     widespread geographical locations within the LEC billing areas across the
     United States. The Company historically has experienced significant
     dilution and customer credits due to billing difficulties and uncollectible
     trade accounts receivable. The Company estimates and provides an allowance
     for uncollectible accounts receivable. The handling and processing of cash
     receipts pertaining to trade accounts receivable is maintained by two third
     party billing companies. The Company is dependent upon those two billing
     companies for collection of its accounts receivable.


14.  STOCK BASED COMPENSATION

     From time to time, the Company issues stock options to executives, key
     employees and members of the Board of Directors. The Company has adopted
     the disclosure-only provisions of Statement of Financial Accounting
     Standards No. 123, "Accounting for Stock-Based Compensation," and continues
     to account for stock based compensation using the intrinsic value method
     prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
     Stock Issued to Employees". Accordingly, no compensation cost has been
     recognized for the stock options granted to employees. There were no
     options granted in the years ended September 30, 2001 and 2001 nor was
     there any additional vesting of options previously granted.


                                       39
<PAGE>
     Under the Employee Incentive Stock Option Plan approved by the stockholders
     in 1998, the total number of shares of common stock that may be granted is
     1,500,000. The plan provides that shares granted come from the
     Corporation's authorized but unissued common stock. The price of the
     options granted pursuant to this plan shall not be less than 100 percent of
     the fair market value of the shares on the date of grant. The options
     expire from five to ten years from date of grant. At September 30, 2001,
     the Company had granted an aggregate of 1,212,000 options under this plan.

     In addition to the Employee Incentive Stock Option Plan, the Company will
     occasionally grant options to consultants and members of the board of
     directors under specific stock option agreements. There were no such
     options granted in the years ended September 30, 2001 and 2000.

     The summary of activity for the Company's stock options is presented below:

<TABLE>
<CAPTION>
                                                                                                   Weighted
                                                                                                    Average
                                                                       2001              2000      Exercise
                                                                     ---------       ------------  ---------
                                                                                                     Price
                                                                                                   ---------
<S>                                                                  <C>        <C>  <C>           <C>

     Options outstanding at beginning of year                              -0-  N/A
                                                                                       1,107,000   $    1.34
     Granted                                                               -0-               -0-
     Exercised                                                             -0-  N/A      (53,611)  $    1.00
     Terminated/Expired                                                    -0-       ( 1,053,389)
     Options outstanding at end of year                                    -0-               -0-
     Options exercisable at end of year                                    -0-               -0-
     Options available for grant at end of year
                                                                     1,341,389         1,341,389


     Price per share of options outstanding                          N/A             N/A


     Weighted average remaining contractual lives
                                                                     N/A


     Weighted Average fair value of options granted during the year
                                                                     N/A
</TABLE>


     The Company has issued warrants in connection with certain debt and equity
     transactions. Warrants outstanding are summarized as follows:


                                       40
<PAGE>
<TABLE>
<CAPTION>
                                                  2001                    2000
                                                  ----                    ----
                                                      Weighted                Weighted
                                                       Average                 Average
                                                      Exercise                Exercise
                                                        Price                   Price
                                                      ---------               ---------
<S>                                        <C>        <C>        <C>          <C>
     Warrants outstanding at beginning of
     year                                   350,000   $    2.00   1,355,000   $    2.00
     Granted                                500,000   $    2.12         -0-
     Expired                               (350,000)  $    2.00  (1,005,000)  $    2.00
      Exercised                                 -0-                     -0-
                                           ---------  ---------  -----------  ---------
        Outstanding at September 30,        500,000   $    2.12     350,000   $    2.00
                                           =========  =========  ===========  =========
</TABLE>

     The warrants granted in the year ended September 30, 2001 were issued in
     connection with the settlement with the former URL holder (NOTE 4). The
     exercise prices of the warrants range from $1.00 to $3.00. The fair value
     of each warrant grant is estimated on the date of grant using the
     Black-Scholes option-pricing model with the following assumptions for year
     ended September 30, 2001:

          Dividend yield           None
          Volatility                   0.491
          Risk free interest rate       4.18%
          Expected asset life      2.5 years


     The 500,000 warrants outstanding at September 30, 2001, expire in September
     2006.


15.  EMPLOYEE BENEFIT PLAN

     The Company maintains a 401(k) profit sharing plan for its employees.
     Employees are eligible to participate in the plan upon reaching age 21 and
     completion of three months of service. The Company made no contributions to
     the plan for the years ended September 30, 2001 and 2000.


                                *  *  *  *  *  *


                                       41
<PAGE>
ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURES

     On March 14, 2000, we reported that we replaced McGladry and Pullen LLP as
our principal certified public accountants.  McGladry and Pullen LLP had been
engaged as the independent auditors, but had not issued any audited reports.

     On March 30, 2000, we appointed King, Weber & Associates, P.C., as our
independent auditors to conduct the audit of our September 30, 2000 fiscal year
financial statements.  On December 31, 2000 King, Weber & Associates, P.C.
changed its corporate name to Marshall & Weber, CPA's, PLC and subsequently
changed its corporate name to Weber and Company P.C.

                                    PART III

ITEM 9.      DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors and Executive Officers

     The following biographical information is provided for each of the
Company's Directors and Executive Officers:

     Angelo Tullo has served as our Chairman of the Board 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 20
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 and is a currently a member of the Republican Presidential Roundtable.

     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 a director.

     Walter Vogel.  Mr. Vogel has been a director since February 2000 and was
previously a member of our 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.


                                       42
<PAGE>
     Gregory B. Crane.  Mr. Crane has been a director of the Company since
February, 2000 and also served as our 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
- ---------------
Entrepreneur's Organization ("YEO").

     In connection with providing homestead declaration document preparation and
filing services to the public, Mr. Crane and certain of his associated
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 printer, which was a technical violation of that order, a judgment
was placed based on that agreement.  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 this
Florida judgment.

     Mr. Crane was also named in the action filed by the Federal Trade
Commission ("FTC") against us and has been included in the stipulated
preliminary order entered into by the FTC and us 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, us 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 findings of wrong doing on the part of the company, its officers
and directors or Mr. Crane.

     Daniel L. Coury.  Mr. Coury has served as a director of the Company since
February 2000.  For the last ten years, Mr. Coury's principal business has been
Mesa Cold Storage, Inc. that 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 the Company 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.


                                       43
<PAGE>
     DeVal Johnson.  Mr. Johnson has served as a director since October 1999.
Mr. Johnson was the graphics designer and director of Telco 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.

     Pamela J Thompson.  Mrs. Thompson was hired to serve as Chief Financial
Officer, Secretary and Treasurer of the Company on January 15, 2001.  Mrs.
Thompson holds a Bachelor of Science from Moorhead State University in
Accountancy and holds her licenses as a Certified Public Accountant in the State
of Arizona.  She is a member of the Arizona Society of Certified Public
Accountants, American Institute of Certified Public Accountants, and Arizona
Women's Society of Certified Public Accountants and is the founder and principle
Executive Officer of The Thompson Group, CPA's.  She is also a member of Behind
the Bench: National Basketball Wives Association exclusive of wives of NBA
players.

Prior to joining the Company, Mrs. Thompson practiced public accounting for the
international firm of Arthur Andersen and Pannell Kerr Forester, and one of the
larger regional firms Eide, Bailey and Company.  She has had over 18 years of
experience in tax, accounting, and SEC compliance for publicly traded companies.
Ms. Thompson has been featured in Arizona Women's Success Magazine, National
Basketball Players Association Magazine, and Behind the Bench: National
Basketball Wives Association Magazine.


SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     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 our 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, and September 30, 2001.  This information is based on a review of
Section 16(a) reports furnished to us and other information.


                                       44
<PAGE>
ITEM 10.     EXECUTIVE COMPENSATION

DIRECTORS  AND  EXECUTIVE  OFFICERS

     The  directors  and  executive officers of YP.Net, their ages and positions
are  as  follows:

<TABLE>
<CAPTION>
NAME                     AGE                             POSITIONS HELD(1)
- -----------------------  ---  -----------------------------------------------------------------------
<S>                      <C>  <C>
Angelo Tullo              45  Chairman of the Board, Director, Chief Executive Officer and President
Walter Vogel              61  Director, Vice Chairman of
        the Board
Gregory B. Crane          37  Director
Daniel L. Coury, Sr.      47  Director
Harold A. Roberts         75  Director
DeVal Johnson             36  Director
Donald Reese              38  Director of Operations
Pamela J. Thompson, CPA   38  Chief Financial Officer, Treasurer,
          Secretary
<FN>
(1)  All  current  directors  serve  until  the  next  annual  shareholders  meeting or their earlier
resignation  or  removal.
</TABLE>

OFFICER  COMPENSATION

     The following table reflects all forms of compensation for the fiscal years
ended  September  30,  2001,  and  September  30,  2000, for the Chief Executive
Officer  and the other two most highly compensated executive officers of YP.Net,
Inc.,  whose  salaries  exceed  $100,000  annually,  for  the  years  stated.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                   Annual Compensation
- ----------------------------  ---------------------------------
                              FISCAL              OTHER ANNUAL
NAME AND PRINCIPAL POSITION    YEAR    SALARY     COMPENSATION
- ----------------------------  ------  ---------  --------------
<S>                           <C>     <C>        <C>
Angelo Tullo (1)                2001  $ 210,000  $   44,000 (1)
Chairman, Chief Executive       2000             $   21,000 (2)
Officer,
President
- ----------------------------  ------  ---------  --------------
Daniel Madero                   2001  $ 100,000  $   16,500 (3)
Director of Operations          2000  Resigned
- ----------------------------  ------  ---------  --------------
Pamela Thompson                 2001  $ 125,000  $    4,500 (4)
Chief Financial Officer,
Secretary,
Treasurer
- ----------------------------  ------  ---------  --------------
Donald Reese                    2001  $ 120,000
Director of Operations
- ----------------------------  ------  ---------  --------------
<FN>
(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.
(4)     Includes 50,000 shares of YP.Net stock valued at $.09 per share.
</TABLE>


                                       45
<PAGE>
COMPENSATION  PURSUANT  TO  STOCK  OPTIONS

     No stock options were granted to executive officers during the fiscal years
ended  September  30,  2000,  and  September  30,  2001.

DIRECTOR  COMPENSATION
     Upon appointment to the Board, Mr. Tullo was awarded 100,000 shares of our
common stock and Mr. Vogel was awarded 75,000 shares.  All other directors were
awarded 50,000 shares.  The shares awarded were earned monthly for director
services performed.  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 and the value is considered based upon the average bid and ask price
as of date of issuance by the Board of Directors and is in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
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.

1998 Stock Option Plan

     In June 1998, our Board of Directors adopted, and our shareholders
approved, the 1998 Stock Option Plan (the "Plan").  The purpose of the Plan was
to provide incentives to employees, directors and service providers to promote
our success.  The Plan provides for the grant of both qualified and
non-qualified options to purchase up to 1,500,000 shares of our common stock at
prices determined by the Board of Directors, 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 September 31, 2001, all outstanding
options to purchase our stock have expired and there are no options currently
outstanding under the Plan.


                                       46
<PAGE>
ITEM 11.     SECURITY OWNERSHIP OF OWNERS AND MANAGEMENT

     The following table sets forth, as of December 15, 2001, the ownership of
each person known by us to be the beneficial owner of five percent or more of
our common stock, each officer and director individually, and all officers and
directors as a group.  We have been advised that each person has sole voting and
investment power over the shares listed below unless otherwise indicated.

<TABLE>
<CAPTION>
     NAME AND ADDRESS                      AMOUNT AND NATURE    PERCENT
     OF BENEFICIAL OWNER                     OF OWNERSHIP     OF CLASS(1)
     ------------------------------------  -----------------  -----------

<S>                                        <C>                <C>
     Angelo Tullo                                    300,000           *
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205

     Walter Vogel                                    195,000           *
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205

     Gregory B. Crane                                 75,500           *
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205

     Daniel L. Coury, Sr.                            180,000           *
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205

     Harold A. Roberts                               258,000           *
     P.O. Box 101
     Santa Fe, NM 87504

     Wallace Olsen, Jr.                              547,500        1.34%
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205

     DeVal Johnson                                   125,000           *
     4840 East Jasmine Street
     Suite 105
     Mesa, AZ  85205


                                       47
<PAGE>
     NAME AND ADDRESS                      AMOUNT AND NATURE    PERCENT
     OF BENEFICIAL OWNER                     OF OWNERSHIP     OF CLASS(1)
     ------------------------------------  -----------------  -----------

     Matthew & Markson Ltd. (3)                   11,600,000          27%
     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)          1,133,500           3%

*  Represents less than one percent (1%) of our issued and outstanding common
stock.

(1)  Based on 43,813,680 shares outstanding as of December 15, 2001.  This
amount excludes 4,500,000 shares issued and held as collateral for obligations
of YP.Net under two promissory notes.  Upon payment of the notes, the shares
will be returned to YP.Net for cancellation.
 (2) 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.  These shares
will be returned to YP.Net and cancelled upon payment of the note.
</TABLE>


ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Note Conversion.  We 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, we repaid $250,000 of the balance in cash
and Mr. Wallace Olsen converted the remaining $250,000, plus $100,000 in accrued
interest. This notes was exchanged into 400,000 shares of our 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, the Company's predecessor acquired all
of the outstanding stock of Telco in exchange for 17,000,000 shares of our
common stock.  Matthew & Markson, Ltd. and Morrison & 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, we agreed to provide the former Telco shareholders with a $10,000,000
credit facility. Loans made to these shareholders under this facility are to be
secured by a pledge of our stock.  Interest for borrowings under this facility
is to be at least 0.25% higher than our 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 we have available at least 30 days operating
capital plus other reserves.  No advances are permitted to be made if we are in
default with respect to any of our lender obligations.  The credit facility has
not been formally documented and no advances have been made or are expected
until documentation is completed.


                                       48
<PAGE>
     Gregory B. Crane and DeVal Johnson were employees of and primarily involved
in the start-up of Telco.  Mr. Crane continues to serve as a liaison for Matthew
& Markson, Ltd. and Morrison & Miller, Ltd. and negotiated the acquisition of
Telco by the Company's predecessor entity on behalf of the former Telco
shareholders.

     License of URL.  In connection with the acquisition of Telco, the Company's
predecessor entity 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 royalty was made under the terms of an 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, we agreed to provide, for the benefit of
Mathew & Markson, $250,000 in tenant improvements for approximately one-half of
our 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 dollar
($1,000,000.00) extension fee may also be due if exercised.  On November 15,
1999, we 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 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 we defaulted on the November 1999 extension agreement, 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 we do not have certain
cash  reserves or are otherwise in default under other obligations.  The note is
secured  by  2,000,000 shares of our common stock held in escrow, to be returned
for  cancellation  upon  payment  of  the  note.

On September 25, 2001, we agreed in settlement of the company's breach and
noncompliance with the original acquisition agreement and extension agreement
with Telco dated June 16, 1999 to pay Matthew Markson, Ltd., $550,000 and issued
4,000,000 shares of our common stock at $0.09, and the value is considered based
upon the average bid and ask price as of September 25, 2001 and is in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act.

     The $550,000 will be paid over a thirty-six month term at a 10.5% annual
interest rate.  Matthew Markson Ltd. has agreed and waived any future payments
for the original default of the and extension fee for the acquisition of Telco.
Matthew Markson Ltd will continue its security interest in the company and
collateral shares held by Matthew Markson. Ltd.


                                       49
<PAGE>
     Business  Executive Services, Inc. ("BESI"), as the nominal rent sublessee,
leases  portions  of our Mesa 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.

     We have entered into a joint venture with Simple. Net, Inc., an Internet
service provider ("Simple") where we manage certain Simple operations for a fee.
Such operations include customer service, technology and billing.  The Thompson
Group P.C.  also performs accounting services for Simple.  Matthew & Markson,
Ltd. is Simple's primary investor.

     Related  Party  Transaction  Policy.  The Company's general policy requires
adherence to Nevada corporate law regarding transactions between the Company 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  our policy that
transactions with related parties are conducted on terms no less favorable to us
than  if they were conducted with unaffiliated third parties. During fiscal year
ended September 30, 2000, through September 31, 2001, there have been no related
party  transactions.


ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

EXHIBITS
<C>                  <S>

            3.1 (1)  Certificate of Restated Articles of Incorporation of Renaissance
                     International, Inc.

            3.2 (4)  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 (4)  Amended Articles - Name Change to YP.Net

            3.4 (4)  Certificate of Designation - Series B preferred shares

            3.5 (1)  Bylaws of Renaissance International Group, Ltd.

            3.5 (4)  Amended Bylaws

           10.1 (2)  1998 Stock Option Plan

          10.18 (5)  Agreement dated November 1, 2000 between Intelligenx, Inc. d/b/a
                     i411.com and YP.Net


                                       50
<PAGE>
          10.19 (5)  Forbearance Letter Agreement dated February 8, 2001 between Telco and
                     Finova Capital Corporation

          10.20 (7)  Federal Trade Commission Settlement Agreement

          10.21 (7)  Hudson Consulting Group, Inc. Settlement Agreement

          10.22 (6)  S.G. Martin Securities LLC agreement with investment banker

            10.23*   OAN contract with billing integrator

            10.24*   Level 3, Inc. contract for ISP dial-up services

                11   Statement Regarding Computation of Per Share Earnings: incorporated in Item
                     7 of the Audited Financial Statements for period ending September 30, 2000 and
                     September 30, 2001

                21   Subsidiaries of YP.Net, Inc.: Telco Billing, Inc.
<FN>
1     Incorporated by reference from Form 10-QSB as filed May 6, 1998.
2     Incorporated by reference from Form S-8 as filed July 10, 1998.
3     Incorporated by reference from Form 10-QSB for the quarter ended June 30, 2000.
4     Incorporated by reference from Form 10-QSB for the fiscal year ended September 30, 2000.
5     Incorporated by reference from Form 10-QSB for the quarter ended December 31, 2000
6     Incorporated by reference from Form 10-QSB for the quarter ended March 31, 2001
7     Incorporated by reference from Form 10-QSB for the quarter ended June 30, 2001
*     Filed herewith.
</TABLE>

REPORTS ON FORM 8-K

     One report on Form 8-K was filed in the fiscal quarter ended September 30,
2001.  A Form 8-K filed on September 20, 2001 disclosed the resignation of
Wallace Olsen from being a member of the Board of Directors.

     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: December 29, 2001           By  /s/  Angelo Tullo
                                     --------------------------------------
                                        Angelo Tullo, Chairman of the Board


                                   BOARD OF DIRECTORS


Dated: December 29, 2001           By  /s/  Angelo Tullo
                                     --------------------------------------
                                        Angelo Tullo


                                       51
<PAGE>
Dated: December 29, 2001           By  /s/  Walter Vogel
                                     --------------------------------------
                                        Walter Vogel


Dated: December 29, 2001           By  /s/  Gregory B. Crane
                                     --------------------------------------
                                        Gregory B. Crane


Dated: December 29, 2001           By  /s/  Daniel L. Coury, Sr.
                                     --------------------------------------
                                        Daniel L. Coury, Sr.


Dated: December 29, 2001           By  /s/  Harold A. Roberts
                                     --------------------------------------
                                        Harold A. Roberts


Dated: December 29, 2001           By  /s/  DeVal Johnson
                                     --------------------------------------
                                        DeVal Johnson


                                       52
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>3
<FILENAME>doc2.txt
<TEXT>
<TABLE>
<CAPTION>
                     BILLING AND RELATED SERVICES AGREEMENT

                                     between

                            ACI COMMUNICATIONS, INC.

                                       and

                                  YP.NET, INC.

                            ACI Communications, Inc.
                               9255 Corbin Avenue
                          Northridge, California 91324
TABLE  OF  CONTENTS

<S>                                                                  <C>
  ARTICLE 1. AGREEMENT AND TERM . . . . . . . . . . . . . . . . . .        1
  SECTION 1.01 AGREEMENT. . . . . . . . . . . . . . . . . . . . . .        1
  SECTION 1. 02 TERM AND RENEWAL. . . . . . . . . . . . . . . . . .        1
  ARTICLE 11. DEFINITIONS . . . . . . . . . . . . . . . . . . . . .        2
  SECTION 2.01 DEFINITIONS. . . . . . . . . . . . . . . . . . . . .        2
  ARTICLE 111. ACI'S OBLIGATIONS. . . . . . . . . . . . . . . . . .        5
  SECTION 3.01 BILLING SERVICES . . . . . . . . . . . . . . . . . .        5
  SECTION 3.02 SAFEGUARDING AND RETENTION OF CUSTOMER DATA. . . . .        5

  ARTICLE IV. PAYMENTS TO ACI . . . . . . . . . . . . . . . . . . .        5
  SECTION 4.01 COMPENSATION To ACI. . . . . . . . . . . . . . . . .        5
  SECTION 4.02 OTHER EXPENSES . . . . . . . . . . . . . . . . . . .        6
  SECTION 4.03 COST OF LIVING ADJUSTMENT. . . . . . . . . . . . . .        6
  SECTION 4.04 REIMBURSEMENT OF EXPENSES. . . . . . . . . . . . . .        6

  SECTION 4.05 PASS-THROUGH OF CERTAIN TAXES. . . . . . . . . . . .        6
  SECTION 4.06 INVOICE AND TIME OF PAYMENT. . . . . . . . . . . . .        6
  ARTICLE V. CUSTOMER OBLIGATIONS . . . . . . . . . . . . . . . . .        7
  SECTION 5.01 BILLING OBLIGATIONS. . . . . . . . . . . . . . . . .        7
  SECTION 5.02 VALIDATION OBLIGATIONS . . . . . . . . . . . . . . .        7
  SECTION 5.03 INSPECTION OF REPORTS AND REMITTANCES. . . . . . . .        7
  SECTION 5.04 COMPLIANCE WITH LAW AND B&C PROCESSOR POLICIES . . .        7
  SECTION 5.05 DATA TRANSMISSION FEES . . . . . . . . . . . . . . .        8
  SECTION 5.06 CUSTOMER REPRESENTATIVE. . . . . . . . . . . . . . .        8
  SECTION 5.07 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . .        8
  SECTION 5.08 PRIORITIES AND COOPERATION . . . . . . . . . . . . .        9
  ARTICLE VI. PROPRIETARY RIGHTS, SOFTWARE, AND DATA. . . . . . . .        9
  SECTION 6.01 ACI SOFTWARE . . . . . . . . . . . . . . . . . . . .        9
  SECTION 6.02 MAINTENANCE AND SECURITY OF CUSTOMER DATA. . . . . .        9
  SECTION 6.03 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . .       10


                                       i
<PAGE>
  ARTICLE VII. CLAIM REVIEW AND ARBITRATION . . . . . . . . . . . .       10
  SECTION 7.01 CLAIM REVIEW . . . . . . . . . . . . . . . . . . . .       10
  SECTION 7.02 ARBITRATION. . . . . . . . . . . . . . . . . . . . .       11
  SECTION 7.03 EXCLUSIVE REMEDY . . . . . . . . . . . . . . . . . .       11
  SECTION 7.04 TAX DISPUTES . . . . . . . . . . . . . . . . . . . .       11
  ARTICLE VIII. TERMINATION                                               12
  SECTION 8.01 TERMINATION FOR CAUSE. . . . . . . . . . . . . . . .       12
  SECTION 8.02 SPECIAL TERMINATION RIGHTS . . . . . . . . . . . . .       12
  SECTION 8.03 TERMINATION FOR BANKRUPTCY AND RELATED EVENTS. . . .       12
  SECTION 8.04 TERMINATION FOR CERTAIN FORCE MAJEURE EVENTS . . . .       13
  SECTION 8.05 TERMINATION FOR REGULATORY EVENT AND/OR LEC POLICIES       13
  SECTION 8.06 RIGHTS UPON TERMINATION. . . . . . . . . . . . . . .       13
  SECTION 8.07 SUSPENSION OF SERVICE. . . . . . . . . . . . . . . .       13
  ARTICLE IX. INDEMNITIES AND LIABILITY . . . . . . . . . . . . . .       14
  SECTION 9.01 INDEMNITIES. . . . . . . . . . . . . . . . . . . . .       14
  SECTION 9.02 INDEMNITY PROCEDURES . . . . . . . . . . . . . . . .       14
  SECTION 9.03 LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES       14
  SECTION 9.04 ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . .       15
  ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . .       15
  SECTION 10.01 FORCE MAJEURE . . . . . . . . . . . . . . . . . . .       15
  SECTION 10.02 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . .       15
  SECTION 10.03 MEDIA RELEASES. . . . . . . . . . . . . . . . . . .       15
  SECTION 10.04 NOTICES . . . . . . . . . . . . . . . . . . . . . .       16
  SECTION 10.05 RIGHTS OF ACI TO PROVIDE SERVICES TO OTHERS . . . .       16
  SECTION 10.06 RELATIONSHIP OF PARTIES . . . . . . . . . . . . . .       16
  SECTION 10.07 AUTHORIZATION . . . . . . . . . . . . . . . . . . .       16
  SECTION 10.08 SEVERABILITY. . . . . . . . . . . . . . . . . . . .       17
  SECTION 10.09 WAIVERS . . . . . . . . . . . . . . . . . . . . . .       17
  SECTION 10. 10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . .       17
  SECTION 10. 11 ASSIGNMENT . . . . . . . . . . . . . . . . . . . .       17
  SECTION 10. 12 No THIRD PARTY BENEFICIARY . . . . . . . . . . . .       18
  SECTION 10. 13 GOVERNING LAWNENUEJURISDICTION . . . . . . . . . .       18
  SECTION 10. 14 CONSTRUCTION . . . . . . . . . . . . . . . . . . .       18
  SECTION 10. 15 COUNTERPARTS . . . . . . . . . . . . . . . . . . .       18


                                       ii
<PAGE>
SCHEDULES:

  SCHEDULE 2.01 ACCEPTABLE CALL TYPES . . . . . . . . . . . . . . .       19
  SCHEDULE 3.01 BILLING SERVICES. . . . . . . . . . . . . . . . . .       20
  SCHEDULE 3.02 BILLING RELATED SERVICES. . . . . . . . . . . . . .       30
  SCHEDULE 3.03 ADDITIONAL SERVICES . . . . . . . . . . . . . . . .       32
  SCHEDULE 3.04 SAFEGUARDING AND RETENTION OF CUSTOMER DATA . . . .       33
  SCHEDULE 4.01 TERM AND COMPENSATION To ACI. . . . . . . . . . . .       34
  SCHEDULE5.01 CUSTOMER BILLING OBLIGATIONS . . . . . . . . . . . .       37
  SCHEDULE 5.07 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . .       39
</TABLE>


                                       iii
<PAGE>
                     BILLING AND RELATED SERVICES AGREEMENT

     This  Billing and Related Services Agreement (the "Agreement"), dated as of
September 1, 2001 (the "Effective Date"), is between ACI Communications, Inc., a
Delaware  corporation  ("Aff'),  and  YP.Net,  Inc.,  a  Nevada  corporation
("Customer").

RECITALS:

WHEREAS,  ACI  is  a  party  to  various  B&C  Contracts  (as  defined  below);

     WHEREAS,  Customer provides various telecommunications services directly or
indirectly  to  End  Users  (as  defined  below)  and desires to utilize the B&C
Contracts  to  bill  End Users for certain of such services provided by Customer
and  such  other  services  as  may  be  offered  by  ACI;  and

     WHEREAS,  ACI  desires  to  assist  Customer,  through  the  use of its B&C
Contracts  and  other  information technology capabilities, in billing End Users
and  providing  other services, all upon the terms and subject to the conditions
set  forth  in  this  Agreement.

     NOW,  THEREFORE,  in  consideration  of  the  foregoing, and other good and
valuable  consideration,  the  receipt  and  adequacy  of  which  are  hereby
acknowledged,  the  parties  agree  as  follows:



                          ARTICLE 1. AGREEMENT AND TERM

Section  1.01     Agreement
During  the  Term (as defined below), ACI will provide to Customer, and Customer
will  purchase  from  ACI,  the  Services, all upon the terms and subject to the
conditions  set  forth  in  this  Agreement.

Section  1.02  Term  and  Renewal

(a)  The  term  of  this  Agreement shall be for thirty-six (36) calendar months
commencing  on  the  first  day  a  Message  is forwarded to ACI by Customer for
Services  (the  "Services  Commencement  Date")  (the "Terrrf'). On or after the
Effective  Date,  Customer  will  subrnit  its  Messages  (as defined below) and
related  data  to ACI for Services under this Agreement and ACI will, during the
Term,  be the provider of such Services to Customer. The last day of the Term as
so  determined  will  be referred to as the expiration date ("Expiration Date").

(b)  Notwithstanding  the  provisions  of  Section  1.02(a),  the  Term  will
automatically  be  extended for successive one-year periods after the Expiration
Date  unless  either of the parties notifies the other party in writing at least
ninety  (90)  days  prior  to  the Expiration Date, or at least ninety (90) days
prior to the end of any such one-year extension period, as the case may be, that
the  Term  will  not  be  so  extended.


                                        1
<PAGE>
                             ARTICLE 11. DEFINITIONS

Section  2.01  Definitions

As  used in this Agreement (including the Schedules attached to this Agreement),
the  terms  set forth below will have the following respective meanings and will
be  equally  applicable  to  both  the  singular  and  plural forms of the terms
defined:

"ACI"  has  the  meaning  set  forth  in  the  preamble  of  this  Agreement.

"ACI  Software"  means any Software that is owned by ACI (and not proprietary to
any other party), including but not limited to the ProAct software, and operated
by  ACI in connection with the providing of Services pursuant to Section 6.01 of
this  Agreement.

"Additional  Services"  has  the  meaning  set  forth  in  Section.3.01.

"Agreement"  has  the  meaning  set  forth  in  the  preamble  hereof.

"Approved  Message Format" has the meaning set forth in Section l(c) of Schedule
3.01.

"B&C  Contract" means any contract or agreement to which ACI is a party relating
to  billing  and  collection  services.

"B&C  Processor" means a LEC (as defined below) or other entities with which ACI
has  a  B&C  Contract.

"B&C  Processor-Calculated  Taxes"  has the meaning set forth in Section 3(a) of
Schedule  3.01.

"B&C  Processor  Fees"  means  any  fee  charged  by  a  B&C  Processor.

"B&C  Processor  Policies"  means those current and revised policies required by
the  B&C  Processors  on  ACI  and  required  of  ACI's  customers.

"Base  Index"  has  the  meaning  set  forth  in  Section  4.03.

"Billable Messages" means those Messages that: (i) consist of telephone calls to
be  billed to telephone numbers having NPA area code numbers and NXX code prefix
numbers  that  (a) are listed on ACI's then current On-Net File and (b) have not
been  rejected  by  ACI  and (c) are in an acceptable calltype, as identified in
Schedule  2.01  hereto; or (ii) any other service(s) provided to End Users which
are billed to an End User by the B&C Processors and which have been approved for
billing  by the applicable B&C Processor and ACI. Notwithstanding the foregoing,
Messages  that  do  not  otherwise  meet the tenns of this Agreement will not be
accepted  by  ACI  for  billing.

"Billing  Services"  has  the  meaning  set  forth  in  Section  3.01.

"Billing  Services  Charges"  has  the  meaning  set  forth  in  Section  4.01.

"Billing-Related  Services"  has  the  meaning  set  forth  in  Section  3.01.

"Billing-Related  Services  Charges"  has the meaning set forth in Section 4.01.


                                        2
<PAGE>
"Business  Day"  means  any day except a Saturday, Sunday, or other day on which
national  banking  associations  in  Los  Angeles,  California are authorized or
required  by  law  to  close.

"Certifications"  has  the  meaning  set  forth  in  Section  5.04.

"Complaint  Processing  Services"  has  the  meaning  set  forth in Section 2 of
Schedule  3.02.

"Confidential  Information"  has  the  meaning  set  forth  in  Section  6.03.

"CPI"  has  the  meaning  set  forth  in  Section  4.03.

"Current  Index"  has  the  meaning  set  forth  in  Section  4.03.

"Customer-Calculated  Taxes"  has  the  meaning  set  forth  in  Section 2(a) of
Schedule  5.01.

"Customer  Data"  means  the  data  specific to the business, customers, and End
Users  of  Customer with respect to which Services are to be provided under this
Agreement.

"Customer  Representative"  has  the  meaning  set  forth  in  Section  5.06.

"Data  Files"  has  the  meaning  set  forth  in  Section l(e) of Schedule 3.01.

"Deduction"  has  the  meaning  set  forth  in  Section  2(f)  of Schedule 3.0l

"Disbursements"  has  the  meaning  set  forth in Section 2(b) of Schedule 3.01.

"Effective  Date"  has  the meaning set forth in the preamble of this agreement.

"End  User" means the ultimate customer of the telephone or information services
provided  by  Customer.

"Equipment"  has  the meaning set forth in Section 4 of Attachment I to Schedule
3.0  1

"Expiration  Date"  has  the  meaning  set  forth  in  Section  1.02(a).

"FCC"  means  the  Federal  Communications  Commission.

"Foreign  Intrastate  Taxes"  means  all  local  and  state  intrastate  levies,
surcharges,  taxes,  or  tax-like  charges  applicable  to  each  Message  that
originates  and  terminates  within  the same state and that is billed to an End
User  residing  in  any  other  state.

"Governmental  Authority"  means  any  nation  or government, any state or other
political  subdivision  thereof  and  any entity exercising executive, judicial,
regulatory,  or  administrative  functions  of  or  pertaining  to  government
(including,  without  limitation,  the  FCC  and  any  PUC  (as defined below)).

"Inquiry  Services"  has  the  meaning  set forth in Section I of Schedule 3.02.


                                        3
<PAGE>
"Late  Payment Rate" means an annual rate of interest equal to the lesser of (a)
4% per annum more than the prime rate established from time to time by Citibank,
N.A.,  New  York,  New  York,  or  (b)  the  maximum rate of interest allowed by
applicable  law.

"Laws"  has  the  meaning  set  forth  in  Section  5.04.

"LEC"  means  any Bell Operating Company, independent local exchange company, or
provider  of  local telephone services that is a party to a B&C Contract through
which  ACI  is  able  to  provide  Billing  Services.

"License"  means the license granted during the Term by ACI to Customer pursuant
to  Section  I  of  Attachment  2  to  Schedule  3.01.

"Licensed  Program"  means  the  ProAct  program  licensed  to  Customer by ACI.

"Message"  means  a call record for direct dialed calls, operator-assisted third
party  calls,  collect  calls,  telephone  calling  card calls, person-to-person
calls,  and  such  other  legally  permitted telephone calls and services as the
parties  may mutually agree, each of which was originated by an End User through
Customer.

"Minimum  Message Requirement" means the obligation of Customer to submit to ACI
for  billing at least the number of Billable Messages each month during the Term
specified  in  Section  l(b)  of  Schedule  4.01.

"On-Net  File"  means the listing from time to time of (a) NPA area code numbers
and  NXX  prefix  numbers and (b) Special Calling Card Numbers applicable to the
LECs.

"Person"  means  any  individual,  corporation,  partnership,  joint  venture,
association,  trust,  or  any  other  entity  or  organization  of  any  kind or
character,  including  a  Governmental  Authority.

"PUC" means the public utility commission, public service commission, or similar
commission  or  agency of any state exercising authority over telecommunications
services.

"Refund"  has  the  meaning  set  forth  in  Section  2(f)  of  Schedule  3.01.

"Rejected  Messages" has the meaning set forth in Section l(d) of Schedule 3.01.

"Remittances"  has  the  meaning  set  forth  in  Section 2(a) of Schedule 3.01.

"Reserve"  means the reserve for bad debts established by ACI upon expiration or
termination  of  this  Agreement  pursuant  to  Section  2(c)  of Schedule 3.01.

"Reserve  Event"  has  the  meaning  set forth in Section 2(c) of Schedule 3.01.

"Returned  Messages" has the meaning set forth in Section l(f) of Schedule 3.01.

"Services"  means the services to be provided by ACI pursuant to this Agreement,
consisting  of  the  Billing  Services,  the  Billing-Related  Services, and the
Additional  Services.


                                        4
<PAGE>
"Services  Commencement  Date"  has  the  meaning  set forth in Section 1.02(a).

"Software"  means: (a) computer programs, including without limitation software,
application  programs,  operating  systems, files, and utilities; (b) supporting
documentation for such computer programs, including without limitation input and
output  formats,  program  listings,  narrative  descriptions,  and  operating
instructions;  and  (c)  the  tangible  media  upon  which  such  programs  and
documentation  are  recorded, including without limitation hard copy, tapes, and
disks.


                                        5
<PAGE>
"Special  Calling Card Numbers" means non-line number-based calling card numbers
applicable  to  the  LECs  from  time  to  time.

"Special  Service Message" has the meaning set forth in Section 1(h) of Schedule
3.01.

"Sub-CIC"  has  the  meaning  set  forth  in  Section  l(g)  of  Schedule  3.01.

"System"  has  the  meaning  set  forth  in  Section  4(a)  of  Schedule  3.01.

"Taxes"  means any taxes, however designed or levied, based upon amounts payable
to ACI pursuant to this Agreement, including state, local and federal taxes, and
any  taxes  or  amounts in lieu thereof paid or payable by ACI in respect of the
foregoing, exclusive, however, of franchise taxes, taxes based on the net income
of  ACI  and  taxes  on  any  property  owned  or  leased  by  ACL

"Tax  Returns"  means  returns,  declarations,  reports,  claims for refund, and
informational  returns  or statements relating to Taxes, including any schedules
or  attachments  thereto.

"Terin'  'has  the  meaning  set  forth  in  Section  1.02(a).

"True-Up  Reconciliation"  has the meaning set forth in Section 2(f) of Schedule
3.01.

"True-Up  Reserve"  has  the meaning set forth in Section 2(c) of Schedule 3.01.


                         ARTICLE 111. ACI'S OBLIGATIONS

Section  3.01     Billing  Services

With  respect  to  the  Billable  Messages  Customer  delivers to ACI, ACI, as a
limited  agent  for  Customer,  agrees  to  provide  the  billing and collection
services  described  in  Schedule  3.01  (the  "Billing  Services")  to Customer
pursuant  to  this  Agreement. ACI may provide the billing inquiry and complaint
processing  services described in Schedule 3.02 (the "Billing-Related Services")
and  any  other  services  mutually  agreed  upon  in writing becoming a part of
Schedule 3.03 ("Additional Services"). Customer acknowledges and agrees that ACI
is  not  deemed  a  fiduciary,  trustee,  employee,  or  joint  venturer  in its
performance  of  this  Agreement.

Section  3.02     Safe2uarding  and  Retention  of  Customer  Data

ACI will maintain safeguards against the destruction, loss, or alteration of the
Customer  Data  in  the  possession  of  ACL


                                        6
<PAGE>
                           ARTICLE IV. PAYMENTS TO ACI

Section  4.01     Compensation  to  ACT

In  consideration  for  the  Services,  Customer  shall  pay  to ACI the Billing
Services  Charges described in Section I of Schedule 4.01 (the "Billing Services
Charges"),  charges  for  any  Billing-Related  Services provided to Customer as
described  in  Sections  2 and 3 of Schedule 4.01 (the "Billing-Related Services
Charges")  and  any charges for Additional Services as set forth in any Schedule
3.03,  as  may  be  amended  by ACI from time to time, (the "Additional Services
Charges"). Customer acknowledges and agrees that ACI may deduct Billing Services
Charges,  Billing-Related  Services Charges and Additional Services Charges from
the  Remittances  it  receives  from  the B&C Processors prior to forwarding the
Disbursements  to  Customer. Any amounts owing to ACI pursuant to this Agreement
that  are not paid when due and payable will thereafter bear interest until paid
at  the  Late  Payment  Rate.

Section  4.02     Other  Expenses

Customer  will  pay  all  fees  and  expenses  of  ACI  for  reruns or otherwise
necessitated:  (a)  by  incorrect,  incomplete,  or  omitted  data  or erroneous
instructions  supplied  to ACI by or through Customer; (b) for the correction of
programming,  operator,  and  other processing errors caused by Customer, or its
respective  employees  or  agents; and/or (c) by incorrect reports that were not
rejected  by  Customer  within  the applicable time periods set forth in Section
5.03.

Section  4.03     Cost  of  Living  Adeustment

If  the  Consumer  Price  Index  for  All  Urban  Consumers, All Cities Average,
1982-84=100, as published by the Bureau of Labor Statistics of the Department of
Labor  (the  "CPI"),  is  on January I of any year during the Term (the "Current
Index")  higher  than  the highest CPI on January 1 of any prior year during the
Term  (the  "Base  Index"),  then,  effective  as of such January 1, all amounts
payable  to  ACI  pursuant to this Agreement, as previously adjusted pursuant to
this  Section  4.03,  may  be  increased  thereafter  by the percentage that the
Current  Index  will  have  increased  from  the Base I~dex, and such amounts as
increased  pursuant  to this Section 4.03 will be deemed incorporated herein. If
the Bureau of Labor Statistics stops publishing the CPI or substantially changes
the  content  or  format  thereof,  the parties will substitute therefor another
comparable  measure published by a mutually agreeable source; provided, however,
that if such change is merely to redefine the base year for the CPI from 1982-84
to  some  other  year(s),  the parties will continue to use the CPI but will, if
necessary,  convert either the Base Index or the Current Index to the same basis
as  the  other  by  multiplying such Index by the appropriate conversion factor.

Section  4.04     Reimbursement  of  Expenses

Any  addition  to  any other payments specified in this Agreement, Customer will
pay,  or  reimburse  ACI  for,  all  actual  out-of-pocket  costs  and expenses,
including without limitation travel and travel-related expenses, incurred by ACI
in  connection  with  the  performance  of  its obligations under this Agreement
provided such expenses are approved in advance by Customer which approval cannot
be  unreasonably  withheld  or  delayed.


                                        7
<PAGE>
Section  4.05     Pass-Throu2h  of  Certain  Taxes

There  will  be added to any amounts due under this Agreement, and Customer will
pay directly (or if ACI has for any reason made payment, promptly reimburse ACI)
for any Taxes, however designated or levied by any Governmental Authority solely
by reason of the performance, sales, license or use of any Service (or Software)
or  any  other  items  pursuant to this Agreement. To the extent ACI receives or
becomes  entitled  to any refund, rebate or abatement with respect to Taxes paid
directly  (or  reimbursed)  by  Customer, ACI shall promptly pay to Customer the
entire  refund,  rebate  or  abatement.

Section  4.06     Invoice  and  Time  of  Payment.

Any  amount  due  ACI pursuant to this Agreement for which a time for payment is
not  otherwise  specified will be due and payable thirty (30) days after receipt
by  Customer  of  the  invoice  from ACI therefore, all invoiced amounts due ACI
pursuant  to, and not paid in accordance with, this Agreement may be deducted by
ACI from the Remittances it receives from the B&C Processors prior to forwarding
the  Disbursements  to  Customer.  Any  amount  owing  to  ACI  pursuant to this
Agreement  that  is  not paid when due and payable will thereafter bear interest
until  paid  at  the  Late  Payment  Rate.

                         ARTICLE V. CUSTOMER OBLIGATIONS

Section  5.01     Billing  Obli2ations

In  connection with the Services to be provided by ACI and in addition to any of
Customer's  obligations described in Schedule 3.01, Customer will timely perform
those  obligations  described  in  Schedule  5.01  and  Schedule  5.07.

Section  5.02     Validation  Obli2ations

During  the  Term,  Customer will at all times perform, or cause to be performed
where appropriate, call validation and Customer will only submit Messages to ACI
that  have  received  a  positive  validation  as  provided  below:

During  the  Term,  Customer  will  validate, or cause to be validated, using an
ACI-approved  method,  or  will cause to be validated by an ACI-approved vendor,
the  following:  (a)  All  telephone calls for which validation is mandated by a
Governmental  Authority;  (b)  All  telephone  calls  for  which  validation  is
specifically  required  by  a  B&C Processor pursuant to a B&C Contract; (c) All
operator  assisted third party calls (whether automated or assisted by telephone
operator),  collect calls, telephone calling card calls, person-to-person calls;
and  (d)  All  telephone  calls,  the collection for which is deemed to be below
industry  standards  or  not  in  accordance  with  industry  practice.


                                        8
<PAGE>
Section  5.03     Inspection  of  Reports  and  Remittances

Customer  will  inspect  and  review  all  reports  and  Remittance  information
submitted  by ACI to Customer for review, which includes, but is not limited to,
reports  generated  through  the  Licensed  Program,  and will notify ACI of its
rejection of any incorrect reports and Remittance information within thirty (30)
days  after  receipt  thereof  provided  that  any such incorrect information is
identifiable  within  the  report  and/or  Remittance information. Failure to so
reject  any  such  report  or  information  will  constitute acceptance thereof.

Section  5.04     Compliance  with  Law  and  B&C  Processor  Policies

Customer  will:  (a)  obtain  and maintain all licenses, franchises, privileges,
permits,  consents,  exemptions,  certificates  (including  without  limitation
certificates  of  public  convenience  and  necessity),  registrations,  orders,
approvals,  authorizations  and similar documents and instruments (collectively,
the  "Certifications")  that  are  required by any Governmental Authority having
jurisdiction  over  the business and operations of Customer; (b) comply with all
laws  and  all  applicable  rules,  regulations  and  other  requirements of any
Governmental  Authority  (collectively  "Laws"); and (c) B&C Processor Policies.
Customer  will, upon the execution of this Agreement, provide ACI with a copy of
each  such  Certification  or  other  written  evidence  of compliance with such
requirements  by  Customer.  Customer will promptly notify ACI in writing of any
expiration,  amendment, or renewal of any such Certification. In connection with
the  provision  of  services  to End Users, Customer will comply in all respects
with  the  Certifications  and  Laws  related  thereto.  ACI  may terminate this
Agreement  pursuant  to  Section  8.01  upon  the  failure  of

YP.Net,  Inc.     7     ouk-

YP.  Net  B&C  092001     initials
Draft  Date:  10/1/2001

Initials

Customer  to obtain or maintain in full force and effect, or to comply with, any
such  Certification  and/or  Laws.

Customer  understands  and agrees that any program, service, and/or product that
it  desires  to bill via any B&C Processor must be first approved by ACI and the
applicable  B&C  Processor.  Customer  agrees  to submit any and all information
relating  to  any  and  all such programs, services, and/or products of Customer
requested  by  ACI. Customer understands and agrees that ACI may provide all the
information  set  forth in the previous section to any B&C Processor, which such
provision  is  not  a  breach  of  Section  6.03  of  this  Agreement.

Section  5.05     Data  Transmission  Fees

Customer  is  responsible for all charges attributed to the transmission of data
between  ACI  and  the  Customer  and  ACI  and  the B&C Processor. In addition,
Customer  is  responsible  for  the  acquisition  and provision of any equipment
including, without limitation, terminals, printers and modems (but excluding any
data  telecommunication  lines or equipment at or between any ACI data centers),
that  are  necessary  or appropriate for Customer to access Customer data at any
ACI  data  center. Customer is solely responsible for entering into arrangements
with  data  telecominunication  network  carriers for the provision of access to
such  networks  and  pay  any usage costs or charges relating thereto, as may be
necessary  or  appropriate  for Customer to access Customer data at any ACI data
center.


                                        9
<PAGE>
Section  5.06     Customer  Representative

Upon the Effective Date, Customer will designate and furnish to ACI the name of,
and  will  at  all  times during the Term maintain, a representative of Customer
(the  "Customer  Representative") who will be an officer or employee of Customer
and  who  will  be  authorized to act as the primary point of contact for ACI in
dealing  with Customer with respect to the Services. Customer will notify ACI in
writing  of  any  change  in the person acting as the Customer Representative at
least  ten  (10)  days  prior  to the effectiveness of such change. The Customer
Representative  will  be responsible for directing, insofar as ACI is concerned,
all  activities  of Customer affecting the provision by ACI of the Services. ACI
will be entitled to rely upon any instructions or information provided to ACI by
the  Customer  Representative  or other representative of Customer, and ACI will
incur  no  liability  in  so  relying.  Customer hereby agrees and confirms that
Customer  is  fully  responsible financially and otherwise for all instructions,
data,  and/or  information  provided  to  ACI, whether or not such instructions,
data,  and/or  information  is  accurate,  complete,  truthful,  or  genuine.

Section  5.07     Representations  and  Warranties

Customer  hereby  represents  and  warrants  to  ACI  as  follows:

     (a)  Organization; Authority. Customer is duly organized, validly existing,
and  in  good  standing  under the laws of its state of organization and has the
power  and authority to enter into this Agreement and to perform its obligations
hereunder.

     (b)  Binding  Obligation.  This Agreement constitutes the legal, valid, and
binding  agreement  of Customer, enforceable against Customer in accordance with
its  terms,  except  as  the  same  may  be  limited  by bankruptcy, insolvency,
reorganization,  moratorium, or similar laws now or hereafter in effect relating
to  creditors'  rights  and  general  principles  of  equity.

     (c)     No  Conflicts. Neither the execution and delivery of this Agreement
by  Customer  nor  the performance by Customer of its obligations hereunder will
(i)  conflict  with  or  result  in  a  breach  of  any

provision  of  the organizational or other governing documents of Customer, (ii)
result  in  a  violation  of  or  default under any of the terms, conditions, or
provisions  of  any  material  license, agreement, lease, or other obligation to
which  Customer is a party or by which it is bound or (iii) violate any material
order,  writ,  injunction,  decree,  statute,  rule, or regulation applicable to
Customer  or  its  properties  or  assets.

     (d)  Governmental Consents. Customer has filed all tariffs and has obtained
all  governmental  and regulatory authorizations, approvals, and other consents,
all  of  which  are  in  full  force and effect, that are required by law or any
Governmental  Authority  for  the  provision  by  Customer of telecommunications
services  to  End  Users.

     (e)     Additional  Representations Warranties, Covenants and Agreements of
Customer.  Customer  represents,  warrants,  and  covenants as to those items in
Schedule  5.07.


                                       10
<PAGE>
     (f)     Continuing  Warranty.  Each  submission by Customer of a Message to
ACI  for  processing  is  a reaffirmation of each representation and warranty of
Customer  as  of  the  date  of  each  such  submission.

Section  5.08     Priorities  and  Cooperation.

     Customer  will  cooperate  with  ACI:  (a)  to establish the Services to be
provided to Customer; and (b) act in good faith in the performance of Customer's
activities  contemplated  by  this Agreement, Customer, among other things, will
make  available,  as  reasonably requested by ACI, such information, facilities,
management  decisions,  approvals,  authorizations and acceptances in order that
ACI's  provision  of  Services  under  this  Agreement  may be accomplished in a
proper,  timely  and  efficient  manner.



               ARTICLE VI. PROPRIETARY RIGHTS, SOFTWARE, AND DATA

Section  6.01     ACI  Software

The  ACI  Software, any developments, improvements, modifications, additions, or
enhancements  made  by  or  for  ACI  to  any  ACI Software and any new Software
developed  or  created by or for ACI pursuant to this Agreement will be and will
remain  solely  ACI's  property, as appropriate. Customer will have no ownership
rights  or  other  rights to any of such items, except as expressly set forth in
Attachment  2  of  Schedule  3.01  with  respect  to  the  License.

Section  6.02     Maintenance  and  Security  of  Customer  Data

Customer  will  establish  one year's backup of the Customer Data subn-fitted to
ACI  for  billing  and  will  keep backup data and data files in its possession;
provided,  however,  that  ACI will have such access to any such backup data and
data  files  as is reasonably required by ACI in connection with the performance
of the Services. ACI will require users of the Software operated by ACI to enter
a  valid password in order to gain access to certain applications, functions and
databases  that  contain  the  Customer  Data. ACI will secure the Customer Data
using  Software  that  restricts  access to the Customer Data and assists in the
administration  of the security of the Customer Data. ACI will have the right to
retain  copies  of any Customer Data that ACI deems necessary or appropriate for
the  purpose  of performing any services under this Agreement including, without
limitation,  with  respect  to  remittance  processing  services  performed  in
accordance  with  Section  2  of  Schedule  3.01  hereto.

Section  6.03     Confidentiality

Except  as  otherwise provided in this Agreement, each of the parties agree that
all  information  communicated to it by the other party, whether before or after
the  Effective  Date, will be designated confidential information ("Confidential
Information"),  and  will  be deemed to have been, received in strict confidence
and will be used only for the purposes of carrying out the obligations of, or as
otherwise  contemplated  by, this Agreement. Without obtaining the prior written
consent  of  the  other party, neither party will disclose any such Confidential
Information  received from the other party; provided, however, that this Section
6.03 will not prevent a party from disclosing any such information that: (a) was
already  in  the  possession  of  such  party  without  being  subject  to other
confidentiality obligations; (b) is or becomes generally available to the public
other  than  as  a  result,  directly  or  indirectly,  of  a disclosure of such
Confidential  Information  by  such party or by other persons to whom such party
disclosed  such  information;  (c)  is  or  becomes available to such party on a
nonconfidential  basis  from  a  source  other  than  the  other  party  or  its
representatives,  provided  that  such  source is not bound by a confidentiality
agreement  with  the  other  party; (d) is independently developed by such party
without  the  use of the other party's Confidential Information; (e) is required
to  be  disclosed  pursuant to an arbitration proceeding conducted in accordance
with  Article  VII, provided that such disclosure is made in accordance with the
approval and at the direction of the Arbitrator; (f) is required to be disclosed
pursuant to a requirement of any Governmental Authority or any statute, rule, or
regulation, provided that such party gives the other party prompt notice of such
requirement  prior  to any such disclosure; or (g) is reasonably necessary to be
disclosed  in  connection  with  a  billing  inquiry  by  an  End  User.


                                       11
<PAGE>
                    ARTICLE VII. CLAIM REVIEW AND ARBITRATION

Section  7.01     Claim  Review

In  the  event  of any dispute, controversy, or claim between the parties of any
kind  or  nature,  including  but  not  limited  to disputes arising under or in
connection with this Agreement (including disputes as to the creation, validity,
interpretation,  breach,  or termination of this Agreement) (the "Claim"), then,
upon  the  written  request  of either party, each of the parties will appoint a
senior manager designated to meet for the purpose of endeavoring to resolve such
Claim.  The  designated  representatives  will  meet  as  often  as  the parties
reasonably  deem  necessary  to  gather and furnish to the other all information
with  respect  to the matter in issue that the parties believe to be appropriate
and germane in connection with its resolution. Such representatives will discuss
the  Claim and negotiate in good faith in an effort to resolve the Claim. During
the course of such negotiation, all reasonable requests made by one party to the
other  party  for  information will be honored in order that each of the parties
may  be  fully  advised as to the facts and circumstances surrounding the Claim.
However,  the parties acknowledge and agree that it is costly and time consuming
to  retrieve  certain  historical  data.  Therefore, the parties acknowledge and
agree  that  only  data  routinely  provided  from one party to another during a
designated  Claim  period  shall  be  required.  The  specific  format  for such
discussions will be left to the discretion of the designated representatives but
may  include  the  preparation  of  agreed  upon  statements  of fact or written
statements  of  position furnished to the other party. No formal proceedings for
the resolution of such Claim may be commenced until the earlier to occur of: (a)
the  designated  representatives  conclude  in  good  faith  that  an  amicable
resolution  through continued negotiation of the matter in issue does not appear
likely;  or  (b)  the sixtieth (60'b) day after the initial request to negotiate
such  dispute,  controversy,  or claim. The Parties agree that no Claim(s) older
than  one (1) year from inception or discovery of such Claim(s) shall be pursued
in  any  manner.

Section  7.02     Arbitration

(a)  If  the  parties are unable to resolve any Claim in accordance with Section
7.01,  the parties agree to submit such Claim to binding arbitration by a single
arbitrator  pursuant  to  the  Commercial  Arbitration  rules  of  the  American
Arbitration  Association. A party may demand such arbitration in accordance with
the  procedures  set  out  in  those  rules.


                                       12
<PAGE>
(b) Discovery shall be controlled by the arbitrator and shall be governed by the
Federal  Rules  of  Civil  Procedure.  If  decided  by the Arbitrator, the party
seeking  discovery  shall  reimburse  the  responding  party for the cost of the
production  of  documents,  including  search  time  and reproduction costs. The
arbitration  shall  be  held  in  Los Angeles County, California. The arbitrator
shall  control  the  scheduling  so  as to process the matter expeditiously. The
parties  may  submit  written  briefs. The arbitrator shall rule on the Claim by
issuing  a  written  opinion within thirty (30) calendar days after the close of
the  hearings.  The  time  frames specified in this Section 7.02 may be extended
upon mutual agreement of the parties or by the arbitrator upon a showing of good
cause.

(c)  Except  as provided in (b) above, each party shall bear its own fees, costs
and  expenses  of  arbitration, including its own legal and expert witness fees.
The  parties shall equally split the fees of the arbitration and the arbitrator.
The  arbitrator  may  award reimbursement of costs and/or fees to the prevailing
party.

(d)  Any award rendered by the arbitrator will be final, conclusive, and binding
upon  the  parties,  and any judgment thereon may be entered and enforced in any
court  of  competent  jurisdiction.

Section  7.03     Exclusive  Remedy

Other  than  those matters involving injunctive relief as a remedy or any action
necessary  to  enforce  the  award of the Arbitrator, the parties agree that the
provisions  of  this  Article VII are a complete defense to any suit, action, or
other  proceeding  instituted in any court or before any administrative tribunal
with  respect  to  any  dispute,  controversy,  or  claim  arising  under  or in
connection  with  this Agreement or the provision of Services by ACI. Nothing in
this  Article  VII  will  prevent  the  parties  from exercising their rights to
tertninate  this  Agreement  in  accordance  with  Article  VIII.

Section  7.04     Tax  Disputes

Notwithstanding  the  provisions of this Article VII, if Customer disputes ACI's
determination  that any Taxes are payable by ACI on ACI's behalf or on behalf of
Customer,  disagrees with an assessment of any additional Taxes due by ACI or by
Customer as a result of ACI's performance of any obligation under this Agreement
or disagrees with a determination that any Taxes are applicable to ACI's billing
to  Customer  for  Services  under  this Agreement, Customer will, at Customer's
option  and expense (including without limitation payment for any Taxes prior to
final resolution of the issues), have the right to seek administrative relief, a
ruling,  judicial  review  (original  and appellate level), or other appropriate
review  as  to the applicability of any such Tax or to protest any such Tax, but
Customer  will  be liable for any Tax ultimately determined to be due. ACI will,
when  requested  by Customer and at Customer's expense, cooperate or participate
with  Customer  in  any  such  proceeding,  protest  or  legal challenge and may
participate,  at  ACI's  expense,  in  any  such  proceeding,  protest  or legal
challenge  if  Customer  does  not  so  request.


                                       13
<PAGE>
                            ARTICLE VIII. TERMINATION

Section  8.01     Termination  for  Cause

Subject  to  Section 10.01, if either party materially or repeatedly defaults in
the  performance of any of its duties or obligations under this Agreement, which
default  is  not  substantially  cured  within  twenty  (20) business days after
written notice is given to the defaulting party specifying the default, then the
nondefaulting  party  may,  by  giving  written notice thereof to the defaulting
party,  terminate  this  Agreement  as  of the date of receipt by the defaulting
party  of  such  notice  or  as  of  a  future  date specified in such notice of
termination.

Section  8.02     Special  Termination  Riehts

Without notice, ACI may stop processing all or some of the Messages of Customer,
or  terrifinate the Agreement (subject to Section 8.07 of the Agreement), if ACI
determines  in  its sole discretion that the processing of Messages on behalf of
Customer,  or  the  continuation  of  the processing of Messages, in whole or in
part,  has  or  shall:

(a)  Negatively  effect  the goodwill, reputation, profitability, or business of
ACI.

(b)Threaten  the  termination  of  or negatively impact any B&C Contract of ACI.

(c)  Negatively  impact  ACI's  relationship  with  any  B&C  Processor.

(d)  Result  in  or  has  already  resulted  in the scrutiny (informal or formal
investigation,  or  otherwise)  of  Customer,  ACI,  or  any  Person,  by  any
Governmental  Authority  (including  but  not limited to, the FCC, FTC, PUCs and
attorney  generals).

(e)  Has resulted in or may result in the violation of any rule, ordinance, Law,
order,  decision,  judgment,  or  policy  of  any  Government Authority, any B&C
Processor  and/or  ACI.

(f)  Has  resulted  in  or  may  result in a legal proceeding, including but not
limited  to  litigation,  arbitration or administrative proceeding involving ACI
either  as  a party or as a non-party (including, but not limited to, ACI having
to  provide  documents  and/or  deponents).

Section  8.03     Termination  for  Bankruptcy  and  Related  Events

If either party is declared bankrupt, is the subject of any proceedings relating
to  its liquidation, insolvency, or for the appointment of a receiver or similar
officer  for  such  party,  makes  an  assignment  for  the  benefit  of  all or
substantially  all  of  its  creditors,  or  enters  into  an  agreement for the
composition,  extension,  or  readjustment  of  all  or substantially all of its
obligations, the liquidator, trustee, receiver, conservator, new owner, manager,
or  other agent or representative of such party, subject to applicable law, will
have  sixty  (60) days from the date of any initial declaration, commencement of
proceedings,  or such assignment or agreement to notify the other party, subject
to  applicable  law,  that  it is terminating this Agreement as of a date within
such  sixty  (60)  day  period.  If  the  other  party  is not so notified, this
Agreement  will  not be terminated but will continue in full force and effect on
all  of  the  terms  and  conditions  stated  in  this  Agreement.

Section  8.04     Termination  for  Certain  Force  Maieure  Events

If  either  party  is  excused from performance under this Agreement pursuant to
Section  10.01  for any period exceeding thirty (30) consecutive days, the other
party  may, by giving written notice thereof to the party whose performance will
have  been excused within ten (10) days after the expiration of such thirty (30)
consecutive  day  period,  terminate this Agreement as of the date of receipt of
such  notice or as of a future date specified in such notice of termination. The
parties expressly acknowledge and agree that any such nonperformance will not be
considered  a  default  under  this Agreement or impose any liability whatsoever
upon  either  of  the  parties.


                                       14
<PAGE>
Section  8.05     Termination  for  Regulatory  Event  and/or  LEC  Policies

ACI  may  terminate  this  Agreement  if  any  statute,  rule,  regulation,
interpretation,  Law,  LEC  Policy  violation, judgment, order, or injunction is
enacted,  enforced,  promulgated,  amended, issued, or deemed applicable: (a) to
ACI  or  any  of  its  affiliates;  or  (b)  to this Agreement, the transactions
contemplated  by this Agreement, or the provision of the Services by ACI, by any
Governmental  Authority  that  (i)  renders  illegal  the  consummation  of  the
transactions  contemplated by this Agreement, (ii) renders illegal or materially
inhibits  the  provision  of  the Services by ACI, or (iii) would, in ACI's sole
discretion,  have  a  material  adverse  effect  on  the  business,  operations,
reputation,  affairs, condition (financial or otherwise), results of operations,
properties,  assets,  liabilities,  or  prospects  of  ACI.  To  terminate  this
Agreement  pursuant to this Section 8.05 ' ACI will give Customer written notice
thereof  at  least  thirty  (30)  days prior to the date on which ACI desires to
terminate this Agreement, unless statutes, regulations or B&C Processor Policies
require  immediate  termination.

Section  8.06     Rh!hts  Upon  Termination

Billable  Messages  received  by  ACI  on  or  before the Expiration Date or the
effective  date  of  termination  of this Agreement will be processed by ACI and
included  on the next Outclearing Tapes prepared in accordance with Section l(e)
of  Schedule  3.01,  and the Disbursements relating to the Remittances collected
from the B&C Processors will be disbursed to Customer, less amounts representing
the  Reserve.  Upon  expiration or termination of this Agreement for any reason,
Customer  will  (a)  promptly return the Licensed Program (including the related
documentation)  to  ACI  and  destroy  all  copies,  whether  authorized  or
unauthorized,  in  Customer's  possession,  and  (b)  pay  ACI  for all Services
provided  and expenses incurred through the effective date of such expiration or
termination,  as  well  as  for  all  Services  provided  and  expenses incurred
thereafter in connection with the processing of Billable Messages received on or
before  the  effective date of such expiration or termination. The provisions of
this Section 8.06, Section 6.03, Articles VII and IX, Schedule 3.01 and Schedule
3.02  will  survive  the  expiration  or  termination  of this Agreement for any
reason.

Section  8.07     Suspension  of  Service

Notwithstanding  anything  to  the  contrary  in  this  Agreement,  in  lieu  of
tennination of this Agreement by ACI, ACI in its sole discretion may suspend its
Services,  in  whole  or in part, without prejudice to its right to subsequently
terminate  this Agreement for the same reason or different reason that gave rise
to  the  suspension.

                      ARTICLE IX. INDEMNITIES AND LIABILITY

Section  9.01     Indemnities

Customer  will  indemnify,  and  defend  ACI and will hold ACI harmless from and
against  any  and  all  claims,  actions,  acts  of  third parties, liabilities,
litigations,  losses,  expenses  (including  but  not limited to attorney's fees
whether  in-house  or  outside),  all  damages  (including  but  not  limited to
consequential  and/or  punitive,  and/or  damages for loss of profits and/or for
loss  of  revenue),  costs and expenses (including without limitation reasonable
attorney  fees),  and  liability  for  any equitable remedies (including but not
limited  to injunctive relief and/or specific performance), due to, relating to,
or arising out of: (i) the Messages processed on behalf of Customer, and/or (ii)
any  acts  or  omissions  of Customer, and/or (iii) the occurrence of any of the
items  set forth in Section 8.02 of this Agreement, and/or (iv) any violation of
any  representation,  covenant  or  warranty  of  Customer  set  forth  in  this
Agreement,  or  any  other  Agreement  between  Customer and ACI, and/or (v) any
breach  by  Customer  of  any provision of this Agreement or any other agreement
between ACI and Customer, and/or (vi) the incorrectness or incompleteness of any
data  or  information  supplied  to ACI by Customer under this Agreement, and/or
(vii)  ACI's  use,  in  accordance  with  this Agreement, of, and reliance upon,
information  provided  by  Customer.


                                       15
<PAGE>
Section  9.02     Indemnity  Procedures

Any  party entitled to indemnification under this Article Ix will give the party
from which it is seeking indemnification prompt written notice of any matters in
respect  of  which  the  indemnity  may  apply  and  of which the party claiming
indemnification  has  knowledge;  provided,  however,  that  if a party claiming
indemnification  fails to give the other party prompt written notice, such other
party  will  only be relieved of its obligations under this Article IX if and to
the  extent  that  such  party is prejudiced thereby. if ACI is named by a third
party  in  a legal proceeding resulting from Customer's Billed Messages, acts or
omissions  pursuant  to this Agreement, ACI shall, due to ACI's expertise in the
billing  industry,  solely  control its own defense and Customer shall be liable
for all costs and expenses including attorneys' fees. ACI shall provide Customer
with invoices of actual costs and expenses incurred on a monthly basis, prior to
deducting  such costs and expenses. Should deductions be insufficient, ACI shall
invoice  Customer  for  sums  due and such invoice shall be due and payable upon
receipt.

Section  9.03     Limitation  of  Liability  and  Disclaimer  of  Warranties

If  ACI  is  at  any time liable to Customer as a result of any breach, dispute,
controversy,  or claim of any kind or nature arising under or in connection with
this  Agreement,  the  amount of damages recoverable against ACI for any and all
events, acts, or omissions will not exceed, in the aggregate, an amount equal to
the  total  Billing  Services  Charges paid to ACI during the three-month period
immediately  preceding  the  initial occurrence of the first such event, act, or
omission to occur. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT TO THE
CONTRARY, AND REGARDLESS OF THE FORM OF CLAIM, WHETHER IN CONTRACT OR IN TORT OR
WHETHER  FROM  BREACH  OF  THIS  AGREEMENT, IRRESPECTIVE OF WHETHER ACI HAS BEEN
ADVISED  OR SHOULD BE AWARE OF THE POSSIBILITY OF SUCH DAMAGES, IN NO EVENT WILL
THE  MEASURE  OF DAMAGES RECOVERABLE BY CUSTOMER AGAINST ACI INCLUDE ANY AMOUNTS
FOR  INDIRECT,  CONSEQUENTIAL,  OR PUNITIVE DAMAGES OF ANY PERSON OR FOR LOSS OF
ANTICIPATED  PROFITS  OR  OTHER  ECONOMIC LOSS OF ANY PERSON OR FOR DAMAGES THAT
COULD  HAVE  BEEN AVOIDED, USING REASONABLE DILIGENCE, BY CUSTOMER. In addition,
Customer  may  not assert any cause of action against ACI that accrued more than
one  year  prior  to  the  filing  of  a suit alleging such cause of action. The
limitation  set  forth in this Section 9.03 will not apply to the duty of ACI to
deliver,  in  accordance  with this Agreement, to Customer any Disbursements due
Customer  that  are  being  held  by  AC1.


                                       16
<PAGE>
EXCEPT  AS  OTHERWISE  EXPRESSLY  PROVIDED  IN  THIS  AGREEMENT,  ACI  MAKES  NO
REPRESENTATIONS  OR  WARRANTIES, EXPRESS OR IMPLIED, TO CUSTOMER OR TO ANY OTHER
PERSON,  INCLUDING  WITHOUT LIMITIATION ANY WARRANTIES REGARDING TITLE TO OR THE
MERCHANTABILITY,  SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR PURPOSE, OR
OTHERWISE (IRRESPECTIVE OF ANY PREVIOUS COURSE OF DEALING BETWEEN THE PARTIES OR
CUSTOM OR USAGE OF TRADE) OF ANY SOFTWARE, SERVICES, OR MATERIALS PROVIDED UNDER
THIS  AGREEMENT.

Section  9.04     Acknowledgment

Customer and ACI expressly acknowledge that the limitations contained in Section
9.03  represent  the  express  agreement  of  the  parties  with  respect to the
allocation  of  risks  between  the  parties,  including the level of risk to be
associated  with  the provision of the Services as related to the payments to be
made  to  ACI  for  such  Services,  and  each  party  irrevocably  accepts such
limitations.


                            ARTICLE X. MISCELLANEOUS

Section  10.01  Force  Maieure

Each party will be excused from performance under this Agreement for any period,
and  the  time  of  any  performance  will be extended, to the extent reasonably
necessary  under the circumstances, any act of God or any Governmental Authority
or  any  outbreak  or  escalation  of hostilities, war, civil disturbance, court
order,  labor  dispute, third party nonperformance (including without limitation
the  acts  or  ornissions  of  common  carriers,  interexchange  carriers or B&C
Processors,  but excluding any employees of the party seeking to be excused from
performance  hereunder)  or  any  other  cause  beyond  its  reasonable control,
including without limitation failures or fluctuations in electrical power, heat,
light,  air  conditioning  or  telecommunications  equipment  or  lines or other
equipment.  Such  nonperformance  on  the  part  of  either  party  will  not be
considered  a  default  under this Agreement or, except as otherwise provided in
Section  8.04,  a  ground  for  termination of this Agreement, provided that the
party  whose performance has been excused performs such obligation as soon as is
reasonably  practicable  after  the  termination  or  cessation of such event or
circumstance.

Section  10.02  Compliance  with  Laws

In  performing its obligations under this Agreement, ACI will not be required to
undertake  any  activity that would conflict with LEC Policies, the requirements
of  any applicable statute, rule, regulation, interpretation, judgment, order or
injunction  of  any  Governmental  Authority  or  Law.

Section  10.03  Media  Releases

All  press  and  media  releases, public announcements and public disclosures by
either  of  the  parties  relating  to  this  Agreement  or  its subject matter,
including  without  limitation  promotional  or  marketing  material  (but  not
including  any announcement intended solely for internal distribution by a party
to  its  directors, officers and employees or any disclosures required by legal,
accounting,  regulatory  or  stock  exchange  requirements beyond the reasonable
control  of  such  party)  will be coordinated with and approved by both parties
prior  to  the  release  thereof.


                                       17
<PAGE>
Section  10.04  Notices

Except as otherwise expressly provided in this Agreement, all notices, requests,
claims,  demands,  designations,  approvals,  consents,  acceptances  and  other
communications  under  this  Agreement  will be in writing and will be deemed to
have  been duly given if delivered personally, telecopied or mailed by certified
or registered mail, return-receipt requested, postage prepaid, or overnight mail
to  the parties at the addresses specified below and will be deemed given on the
third  Business Day after the day it is deposited in a regular depository of the
United  States  mail.  If  delivered  personally,  it  will be deemed given upon
delivery,  if  delivered by telecopy with a copy subsequently mailed, it will be
deemed given when the mailed copy is postmarked and if delivered by mail, in the
manner  described  above.  All  notices  and  other  communications  under  this
Agreement  are  addressed  as  provided  below.

If  to  ACI,  address  to:                  With  copies  to:
     ACI  Communications,  Inc.             ACI  Communications,  Inc.
     9255  Corbin  Avenue                   9255  Corbin  Avenue
     Northridge, California  91324          Northridge,  California  91324
     Attention: President                   Attention:  General  Counsel
     Telecopy:  (818) 709-1825              Telecopy:  (818)  709-1940

If  to  Customer,  address  to:

YP.Net,  Inc.
4840  E.  Jasmine  Street,  Suite  105
Mesa,  AZ  85205
Attention:  Angelo  Tullo,  CEO
Telecopy:  (480)  654-9727

Section  10.05  Rights  of  ACI  to  Provide  Services  to  Others.

Customer  acknowledges  and  agrees  that ACI may provide billing and collection
services  and  other  information  technology  services  to  other  Persons.

Section  10.06  Relationship  of  Parties.

In  furnishing the Services to, or on behalf of, Customer, ACI is acting only as
an independent contractor. ACI does not undertake by this Agreement or otherwise
to  perform any obligation of Customer, whether regulatory or contractual, or to
assume any responsibility for Customer's business or operations. ACI will not be
considered  or  be deemed to be an agent, employee, joint venturer or partner of
Customer,  and  no  other relationship is intended or created by and between ACI
and  Customer.  ACI  has  the sole right to supervise, manage, contract, direct,
procure  and  provide,  or  cause  to  be  provided, all Services to be provided
pursuant  to  this  Agreement.


                                       18
<PAGE>
Section  10.07  Authorization.

Customer  hereby  authorizes  ACI  to  include  Customer's  name, address, phone
number,  and  any  other information required by any B&C Processor or Government
Authority,  and billing information in each Outclearing Tape or bill; to collect
and  hold  for  Customer  the  Disbursements,  if  any,  payable to Customer; to
disburse  to  Customer the Disbursements, if any, as provided in this Agreement;
and  to  take


                                       19
<PAGE>
all  other  actions  that ACI deems reasonably necessary to discharge its duties
and  responsibilities  under  this  Agreement,  as fully as Customer could do if
personally  present,  and  Customer  hereby  ratifies  and confirms all that ACI
lawfully  does  or  causes  to be done by virtue of the rights contained in this
Section  10.07. The authority granted to ACI under this Section 10.07 is coupled
with  an interest and is irrevocable except by expiration or termination of this
Agreement  and  subject  to  Section  8.07.

Section  10.08  Severability

(a)  Subject  to  the  provisions  of Section 10.08(b), if any provision of this
Agreement, or the application of any such provision is declared judicially to be
invalid,  unenforceable  or  void,  such  decision  will  not have the effect of
invalidating or voiding the remainder of this Agreement, it being the intent and
agreement of the parties that this Agreement will be deemed amended by modifying
such provision to the extent necessary to render it valid, legal and enforceable
while  preserving  its  intent  or,  if  such  modification  is not possible, by
substituting;  therefore,  another  provision  that is legal and enforceable and
that achieves the same objective. In addition, if such invalid, unenforceable or
void  provision  does not materially affect the payments to be made to ACI under
this  Agreement,  and if the remainder of this Agreement will not be affected by
such  declaration and is capable of substantial performance, then each provision
not  so  affected  will  be  enforced  to  the  maximum extent permitted by law.

(b)  If  any provision referred to in Section 10.08(a) is declared judicially to
be  invalid,  unenforceable  or  void, and the fact thereof, or any amendment or
modification  thereto  as  set forth in Section 10.08(a), materially affects the
payments  to  be  made  to  ACI  under this Agreement, then ACI may, at its sole
discretion,  terminate  this  Agreement  in  its  entirety.

Section  10.09  Waivers

The  observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) by the party
entitled  to  enforce such term, but such waiver will be effective only if it is
in  a  writing  signed by the party against which such waiver is to be asserted.
Unless  otherwise  expressly provided in this Agreement, no delay or omission on
the  part of any party in exercising any right or privilege under this Agreement
will  operate  as a waiver thereof, nor will any waiver on the part of any party
of  any right or privilege under this Agreement operate as a waiver of any other
right  or privilege under this Agreement nor will any single or partial exercise
of  any right or privilege preclude any other or further exercise thereof or the
exercise  of  any  other  right  or  privilege  under  this  Agreement.

Section  10.10  Entire  Amement

This  Agreement (including the Schedules attached hereto) constitutes the entire
agreement  between  the  parties  with  respect to the subject matter hereof and
supersedes  all prior and contemporaneous agreements and understandings, whether
written  or oral, between the parties with respect to the subject matter of this
Agreement,  and  there  are  no  representations,  understandings  or agreements
relating  to  this Agreement that are not fully expressed herein. This Agreement
may  not be modified or amended except by a written instrument executed by or on
behalf  of each of the parties to this Agreement. All Schedules attached to this
Agreement are expressly made a part of, and incorporated by reference into, this
Agreement.


                                       20
<PAGE>
Section  10.11  Asshmment

No  party  may assign this Agreement without obtaining the prior written consent
of  the  other  party;  provided,  however,  that  such  consent  will  not  be
unreasonably  withheld  or  delayed;  and  provided


                                       21
<PAGE>
further, that a party will notify the other party regarding whether such consent
will  be  withheld  or delayed within thirty (30) days after the other party has
requested  such  consent.  Notwithstanding  the  foregoing,  ACI may assign this
Agreement,  and  its rights and obligations hereunder, to any of its affiliates.

Section  10.12  No  Third  Party  Beneficiary

This  Agreement  will be binding upon and inure to the benefit of the parties to
this  Agreement  and  their respective successors and assigns. This Agreement is
not intended, nor will it be construed, to create or convey any right in or upon
any person or entity not a party to this Agreement. ACI will not be responsible,
financially or otherwise, for the Services provided hereunder to any party other
than  Customer.

Section  10.13  Governing  LawNentiedurisdiction

This  Agreement  will  be  construed  in  accordance with, and the rights of the
parties  will  be  governed by, the substantive laws of the State of California,
without  giving  effect  to  any  choice-of-law  rules  that  may  require  the
application of the laws of another jurisdiction. Any permitted action brought in
connection  with  this  Agreement  shall  be  brought  in  Los  Angeles  County,
California,  and  the  parties  hereby  waive  any  objection  to  venue.

Section  10.14  Construction

The  Article  and  Section  headings  and  the  table  of  contents used in this
Agreement  are  for  convenience  of reference only and in no way define, limit,
extend  or  describe the scope or intent of any provisions of this Agreement. In
addition,  as  used  in this Agreement, unless otherwise expressly stated to the
contrary; (a) all references to days, months or years are references to calendar
days,  months  or  years;  and  (b)  any  reference  to  a "Section Article" or
"Schedule"  is  a  reference  to  a  Section  or  Article of this Agreement or a
Schedule  attached  to  this  Agreement.  The  provisions  of this Agreement are
qualified  in  their  entirety by reference to the information and the terms set
forth  in the Schedules. To the extent that the provisions of this Agreement and
the  Schedules  to  this  Agreement  are  inconsistent,  the  provisions  of the
Schedules  to  this  Agreement  will  govern  and  control.


                                       22
<PAGE>
Section  10.15  Counterparts

This  Agreement  may be executed in multiple counterparts, each of which will be
deemed  an  original  and  all  of  which  taken  together  will  constitute one
instrument.

     IN  WITNESS  WBEREOF,  the  parties  have  duly executed and delivered this
Agreement  as  of  the  date  first  set  forth  above.

ACI  COMMUNICATION  INC.                     YP  NET


By                                           By
Name:                                        Name:

Title:                                       Title
Date:                                        Date


                                  SCHEDULE2.01
                                       of
                     Billing and Related Services Agreement

ACCEPTABLE  CALL  TYPES

Schedule  2.01  Acceptable  Call  Types

The  following  EMI  billing  formats  are  acceptable  for immediate processing
according  to  the  terms  and  conditions  of  this  Agreement:

Record  ID   Description
01-01-01     North  American  Originated,  Terminated  and  Billable  Message
             Telephone Service  Charge

01-01-32     North  American  Originated,  Terminated  and  Billable  Directory
             Assistance Charge

01-02-01     North American Originated and Billable, Overseas Terminated Message
             Telephone  Service  Charge

01-05-01     Overseas  Originated  and  North  American  Terminated and Billable
             Message Telephone  Service

01-07-01     Overseas Originated and Terminated, North American Billable Message
             Telephone  Service

     The  following  EMI  billing  formats  are  available  for billing, but are
subject to the approval of ACI prior to processing. There also may be additional
ACI  and/or  LEC  charges associated with the processing of the following record
types:

01-01-18     North  American  Originated,  Terminated  and  Billable Specialized
             Service/Service  Provider  Charge


                                       23
<PAGE>
41-50-01     Customer  Credit  Line  Summary  Non  Detail  Credit

42-50-01     Miscellaneous  Charge  Record  Line  Summary  Non-Detail  Charge



                                  SCHEDULE3.01
                                       of
                     Billing and Related Services Agreement

BILLING  SERVICES

Schedule  3.01  Billina  Services

1.   Billin2  Services

     (a)  B&C  Contracts.  ACI will provide Billing Services relating to the B&C
Processors. Customer hereby acknowledges that ACI has provided it with a listing
of  the  current  B&C  Processors. ACI may amend or supplement from time to time
such  listing  and  will  provide  Customer  with  a  copy  of  the  amended  or
supplemented  listing  as  soon  as  reasonably  practicable.

     (b)  On-Net  File.  Customer  hereby  acknowledges  that  ACI  will provide
Customer  with  a  copy  of the On-Net File. ACI may revise the On-Net File from
time to time and will provide Customer with a copy of the revised On-Net File as
soon  as  reasonably  practicable.

     (c)  Approved Message Format. Upon receipt of a Message tape from Customer,
ACI will determine whether the Message data contained thereon is in the standard
exchange  message interface format or another format that has been chosen by ACI
(the  "Approved  Message  Format").  Customer  hereby  acknowledges that ACI has
provided  it with the current Approved Message Format. ACI may from time to time
revise  the  Approved  Message  Format  based  on  reasonable business needs (as
determined  in  good faith by ACI), the requirements of any B&C Contract, or the
requirements of any Governmental Authority and will provide Customer with a copy
of  the  revised  Approved  Message  Format.  Customer will comply with such new
format within ninety (90) days after receipt of a copy of the updated or revised
Approved Message Fon-nat; provided, however, that Customer will comply with such
new  format  within  thirty  (30) days after receipt of a copy of the updated or
revised  Approved  Message  Format if ACI notifies Customer that such new format
was  revised  to  comply  with  industrystandard  formats.

     (d)  Editin2,  Balancing, and Formatting. If Customer's Messages are in the
Approved  Message  Format,  ACI  will edit, balance, and format such Messages in
accordance  with  the  requirements of the appropriate B&C Processors. If any of
Customer's  Messages  are not in the Approved Message Format or if such Messages
are  rejected  by  ACI  or  ACI discovers other errors as the result of editing,
balancing,  or  reviewing the format (such Messages are referred to as "Rejected
Messages"),  ACI  will send such Rejected Messages (in standard machine readable
form)  to  the  Customer Representative within seven (7) Business Days after the
receipt  of  the  Messages from Customer. Customer shall use its best efforts to
reformat and resubmit such Rejected Messages to ACI following Customer's receipt
of  the  Messages  from  ACI.


                                       24
<PAGE>
     (e)  Data  Files.  After  editing,  balancing, and formatting, the Billable
Messages  shall  be  forwarded  to the appropriate B&C Processor within five (5)
business days of receipt (the "Data Files") for billing to, and collection from,
End  Users  in  accordance  with  the  applicable  B&C  Contract.

     (f)  Returned Messages. If any of Customer's Billable Messages are returned
as  unbillable  by  a  B&C Processor that is providing ACI with automated return
item  processing  in  the  appropriate format such Messages will be deemed to be
"Returned  Messages".  In  the event ACI is unable to provide for the billing of
any  Returned  Messages (after Customer has made changes to the Messages if such

changes are possible) ACI will return such Message data to Customer and Customer
may  direct  bill  such  Returned  Messages.

     (g)  Sub-Carrier  Identification  Codes.  A sub-carrier identification code
("Sub-CIC")  for  the  purpose  of  identifying  the  Customer's name on the B&C
Processors' bills and tracking Billable Messages arising from End Users shall be
assigned to Customer. At Customer's request, additional Sub-CICs may be assigned
for  Customer  for  reasonable  business  needs  and  shall  herein  constitute
Additional  Services  hereunder.

     (h)  Special  Service  Message Processing, ACI will provide Special Service
Message  ("SSM")  processing  in LEC jurisdictions that allow for such messages.
For  purposes hereof, SSM means charges for telecommunications related services,
other  than  telephone  calls,  which are to be billed to an End-User by the B&C
Processor  and  which  have been approved for such billing by the applicable B&C
Processor  and  ACI.  The implementation of any SSM processing is subject to the
written  approval of ACI and the respective LEC. Customer agrees to subrifit all
information  required  by  ACI and the respective LEC prior to initiation of the
approval  and  implementation process. Such information will include, but not be
limited  to,  the  intended  use  of  the  SSM  service, copies of all marketing
materials  with  respect  to such service, and any other information required by
either  ACI  or  the  LEC in order initiate the approval implementation process.

          Charges  for  SSM  processing  ("SSM  Fees")  will  appear  on the B&C
Processor's  End  User  bill.

          In  connection  with  the  Services  to  be provided by ACI hereunder,
Customer  agrees  to  fulfill  the  obligation  set  forth  below:

          Oblijization  To  Provide Code Assi2nment. The Approved Message Format
used  for  most common types of calls (i.e., collect, billed to third party, and
most  line  number  format  calling  card calls) is referred to as the "01-01-01
format".  This  record  will  also  be used as the base record for billing SSMs.
Customer  will  receive a five-digit code (3NNNN) for each approved phrase. This
code  will be placed in positions 123 - 134 and 135 - 146 of the EMI record. ACI
will  translate to the proposed Special Service Message code phrase and reformat
the  record  for  output  to  the  appropriate  B&C  Processor.

Customer  Testing.  Customer  testing  is required for the first set-up on SSMs.

2.     Remittance  Processing


                                       25
<PAGE>
     (a)  Remittance  by  B&C  Processor.  The B&C Processors shall remit to ACI
pursuant  to the B&C Contracts less fees, charges, adjustments and those amounts
held  as bad debt reserves. The actual net amount so remitted to ACI by each B&C
Processor  is  referred  to  as  the  "Remittances."

(b)     Disbursement  by  ACI.

          Calculation  of  Disbursement.  Upon  the  receipt  by  ACI  of  the
Remittances  from  the B&C Processors, ACI: (i) will deduct from the Remittances
the  Billing  Services Charges, the Billing-Related Services Charges, Additional
Services  Charges  and any other charges specified in or as necessitated by this
Agreement,  including  without  limitation any amounts due ACI from time to time
pursuant  to  Sections  4.04 and 4.05 and Article IX; (ii) will add to or deduct
from the Remittances any adjustment resulting from the reconciliation of the bad
debt  withholdings  effected  by B&C Processors (as described in Section 2(f) of
this  Schedule  3.01);  (iii)  will  deduct from the Remittances any adjustments
effected  by ACI in connection with the Inquiry Services; (iv) will deduct ACI's
charges  or  for  processing call records on behalf of Customer; (v) will deduct
any amount ACI, in its sole discretion, withholds as an allowance for bad debts;
(vi)  will  deduct  the  B&C  Processor-Calculated  Taxes  collected  by the B&C
Processors  that  will  be  paid  to the appropriate taxing authorities from the
Remittances;  (vii)  will  deduct the B&C Processor's fees and other charges, as
well as any adjustments that may be effected by a B&C processor or ACI, from the
amounts  collected  from  End Users for Billable Messages; and (viii) will, upon
completion  of the deductions or additions described in (i) through (vii) above,
disburse  the  remainder  of  the Remittances to Customer (such disbursements to
Customer,  are  referred  to  herein  as  the  "Disbursements"). If requested in
writing  by  Customer,  ACI  will  make  Disbursements  to  Customer  by wire or
electronic  funds transfer to the bank or other depository designated in writing
by  Customer.  Customer  shall  be responsible for all wire and related charges.

(c)     Reserve.

          W  Pursuant to notice, if ACI reasonably determines that the aggregate
amount  of Remittances due from B&C Processors in respect of Customer's Billable
Messages  at  any  time  during  the  Term  is less than the aggregate amount of
Deductions  effected  by,  or  anticipated  by  ACI  to be effected by, such B&C
Processors,  or  effected  by adjustments or credits to be provided to End Users
(each  of  the  events referred to as a "Reserve Event"), then ACI will have the
right to withhold amounts from any Disbursements that would otherwise be payable
to  Customer  on and after the occurrence for the purpose of reimbursing ACI for
the  anticipated amounts to be charged and withheld by any B&C Processor, or for
adjustments or credits (the "Reserve"). An example of such a Reserve Event would
be  Billable Messages by Customer dropping by seventy-five percent (75%), or the
termination  or  anticipated  termination  of  this  Agreement. In the event any
invoice,  as  provided for in this Agreement, is not timely paid by Customer and
the entire amount of such invoice cannot be paid out of Disbursements, then such
amount  shall  be  added  to  the  Reserve  as  set  forth  herein.

          (ii)  In addition, ACI shall establish a reserve for reconciliation of
bad  debt  charges  effected  by  such  B&C  Processors pertaining to Customer's
Billable  Messages (the "Frue-Up Reserve"). The initial True-Up Reserve, as soon
as  LEC  Billing  Services are commenced, shall be five percent (5%). ACI may at
any  time  increase  or  decrease  the  True-Up Reserve based on actual bad debt
withheld  by  the  B&C  Processors  and/or  based  upon  Customer's  actual  or
anticipated  bad  debt related to its Billable Messages to offset any shortfalls
that  may  be  incurred  by  ACI.


                                       26
<PAGE>
          (iii)  If  at  any  time  the  Reserves  and/or  True-Up  Reserve  are
insufficient,  ACI  will  invoice  Customer for the amount of the shortfall, and
Customer  shall  remit  full payment to ACI within ten (10) business days of the
date  of  the  invoice.  Any excess of Reserves and/or True-Up Reserves shall be
remitted to Customer by ACI upon ACI's reasonable determination that there is no
longer  a  need  for  a  Reserve  and/or  True-Up  Reserve.

     (d)  Reports. ACI will provide reports to Customer that reflect the amounts
due from the B&C Processors, the results of Rejected Messages, Returned Messages
and  other  adjustments, the amounts remitted by the B&C Processors, the amounts
withheld by the B&C Processors for bad debts, and the actual bad debts incurred.
ACI  will  transmit  Call  Acceptance Transmittal (CAT) reports within seven (7)
Business  Days  after  the  receipt of Message data from Customer, will transmit
Remittance reports at the time that ACI makes the Disbursements to Customer, and
will  transmit  bad  debt  true-up  reports  to  Customer in the month following
receipt  of  LEC  bad  debt  true-up  data  by  ACI.

     (e) Adjustments and Unbillables. Customer acknowledges that deductions from
amounts  remitted to ACI from B&C Processors in respect of Returned Messages and
adjustments  will  be charged to Customer through an allocation: (i) to Customer
to  the extent that such deduction can be solely attributed to Customer based on
data  provided  to  ACI  by the applicable B&C Processor; or (ii) pro rata among
Customer  and  other  customers of ACI if such deduction cannot be attributed to
specific  customers.  Pro  rata  allocations of any such deduction in accordance
with  the  foregoing  will  be  calculated  based  on  the  amount of Customer's
deductions  solely  attributed to Customer (as defined above) as a percentage of
all deductions solely attributed to all ACI Customers during the period to which
such  deduction  relates  or  such  other  method  as ACI determines in its sole
discretion  is  appropriate  based  on  empirical  data  available  to  ACI.

(f)     Bad  Debt  Reconciliation  and  Allocation.

          (i)  Reconciliation.  ACI  will,  as  provided  in  the B&C Contracts,
periodically  reconcile  the amount withheld by each B&C Processor for bad debts
with  the  actual amount of bad debts incurred by such B&C Processor (a "True-Up
Reconciliation"). The determination of whether a bill has become a bad debt will
be  made  by each B&C Processor. ACI will advise Customer of the results of such
Reconciliation.

          (ii)  Pro  Rata Allocations. If any Reconciliation results in a refund
to  ACI  of amounts previously deducted by such B&C Processor (a "Refund"), and,
based  on data provided to ACI by the applicable B&C Processor, ACI is unable to
detennine  the  amount  of such Reconciliation directly attributable to specific
customers,  then  the  Refund will be remitted pro rata among Customer and other
customers  of  ACI.  Customer's  share of any such Refund will be applied in the
following  order:  (i)  as an offset against any amounts owed by Customer to ACI
pursuant to this Agreement; and (ii) as a cash payment to Customer within thirty
(30)  days  after  the  receipt  of  the  Refund  by  ACI.

          Likewise,  if  any  Reconciliation  results  in  a  deduction  in  the
Remittance  paid  to  ACI in addition to amounts previously deducted by such B&C
Processor  (a "Deduction"), and, based on data provided to ACI by the applicable
B&C  Processor,  ACI  is  unable  to determine the amount of such Reconciliation
directly  attributable  to  specific customers, the amount of any such Deduction
will  be  charged  to  Customer through a pro rata allocation among Customer and
other  customers  of  ACI.


                                       27
<PAGE>
          Pro rata allocations of any Refund or Deduction in accordance with the
foregoing  will  be  calculated  based  on  either:  (x)  the  amount of revenue
represented  by  the  call records submitted by ACI on behalf of Customer to the
applicable  B&C  Processor  during  the period to which such Refund or Deduction
relates  compared to the total revenue represented by all call records submitted
by  ACI  on  behalf  of  all  of its customers to such B&C Processor during such
period;  or  (y)  such  other method as ACI determines in its sole discretion is
appropriate  based  on  empirical  data  available  to  ACI.

          Customer-Specific  Allocations.  Notwithstanding  the  foregoing,  if,
based  on  data  provided to ACI by the applicable B&C Processor, ACI is able to
directly  attribute  the amount of any such Reconciliation to its customers on a
customer-by-customer  basis,  then  ACI  will  charge  to Customer, or refund to
Customer,  the  applicable  amount  attributable to Customer as a result of such
Reconciliation.  The  amount of any such refund will be applied in the following
order:  (i) as an offset against any amounts owed by Customer to ACI pursuant to
this  Agreement  and  (ii) as a cash payment to Customer within thirty (30) days
after  the  receipt  of  such  refund  by  ACI.

3.     Taxes

     (a)  Federal,  State,  and  Local Taxes. ACI will use reasonable efforts to
cause the B&C Processors, to the extent that the following services with respect
to  the calculation of certain taxes are available from such B&C Processors, (i)
to calculate all taxes applicable to each Message (the "B&C Processor-Calculated
Taxes"),  (ii)  to  furnish  the  information  relating  to  such  B&C
Processor-Calculated  Taxes  to ACI, and (iii) to bill the End Users for all B&C
Processor-Calculated  Taxes and to the extent that such services with respect to
the  calculation  of  Foreign  Intrastate  Taxes  are  available  from  such B&C
Processor, Foreign Intrastate Taxes. ACI will calculate Foreign Intrastate Taxes
for  those  B&C  Processors that are capable of receiving Foreign Intrastate Tax
calculations  from ACI. Customer acknowledges and agrees that ACI is acting only
as  Customer's agent with respect to arranging for the billing and collection of
taxes.  To  the extent that any B&C Processor: (A) does not provide services, or
that  ACI does not provide such services, with respect to the calculation of the
B&C  Processor-Calculated  Taxes;  or  (B)  is  not capable of receiving Foreign
Intrastate  Tax  calculations  from  ACI,  Customer  will be responsible for the
calculation  of  such  taxes  hereunder.

     (b)  B&C Processor Responsibilities. ACI will have the authority, on behalf
of  Customer,  to  authorize  the  B&C  Processors:  (i)  to  calculate  the B&C
Processor-Calculated  Taxes  in  the same manner as the B&C Processors calculate
taxes  for their end users; (ii) to bill and collect Foreign Intrastate Taxes as
calculated and processed by ACI; and (iii) to establish the tax exempt status of
End  Users  in  the  same manner as the B&C Processors establish such status for
their  end  users.


                                       28
<PAGE>
     (c)  Payment  of Taxes. Based solely upon the information received from the
B&C  Processors  with  respect  to the B&C Processor-Calculated Taxes billed and
collected  by  the  B&C  Processors,  ACI  will, on behalf of Customer and other
subscribers  of  ACI,  prepare  and  file in a timely manner with the applicable
taxing  authorities  all returns covering the B&C Processor-Calculated Taxes and
ACIcalculated Foreign Intrastate Taxes and will, on behalf of Customer and other
subscribers of ACI, pay promptly and in full all of the B&C Processor-Calculated
Taxes  and  ACI-calculated  Foreign  Intrastate  Taxes  collected  by  the  B&C
Processors  from  End  Users  to  the  appropriate  taxing  authorities.

     (d)  Liability.  Customer  acknowledges  and  agrees  that ACI will have no
liability  whatsoever  to Customer if. (i) the B&C Processors fail to calculate,
or  incorrectly  calculate,  the  B&C  Processor-Calculated  Taxes; (ii) the B&C
Processors  fail  to  furnish  the  information  relating  to  the  B&C
Processor-Calculated  Taxes  to  ACI;  (iii) the B&C Processors fail to bill, or
incorrectly  bill,  the End Users, (iv) the B&C Processors fail to establish the
tax  exempt  status  of  End  Users  in  the  same  manner as the B&C Processors
calculate  taxes  or establish the tax exempt status for their End Users; or (v)
ACI  miscalculates any End User's Taxes whether resulting from the use by ACI of
inaccurate  or  incomplete  tax  or  End  User information supplied to ACI by or
through  Customer, or a third party or otherwise, including, but not limited to,
the  tax  status  of  an  End  User  or  the applicable tax rates. Customer will
indemnify and defend ACI and will hold ACI harmless from and against any and all
claims,  actions,  damages,  liabilities,  costs and expenses, including without
limitation reasonable attorneys' fees and expenses, that are asserted against or
incurred by ACI as a result of or in connection with any of the matters referred
to  above.

4.     Bulletin  Board

     (a)  Bulletin Board Syste . In connection with the provision of services by
ACI  pursuant to this Agreement, ACI shall provide Customer with access to ACI's
proprietary  Bulletin  Board  System  (the  "Systern")  for  the  purpose  of
electronically  transmitting  certain  data  to  ACI and otherwise communicating
electronically  with  ACI, and Customer is required to use such System. ACI will
provide  Customer  with  access to the System, and Customer will comply with the
terms  and  conditions  relating to such access, as described in Attachment 1 to
this Schedule 3.01 and in accordance with the other terms and provisions of this
Agreement.

     (b)  Confidential  Information.  Customer  agrees and acknowledges that, as
between Customer and ACI, information available through use of the System, other
than  Customer Data, constitutes confidential and proprietary information of ACI
subject  to  the restrictions on disclosure thereof set forth in Section 6.03 of
this  Agreement.  In  addition  to such obligations, Customer agrees to hold any
user  identification codes and/or passwords provided to Customer for the purpose
of utilizing the System in strict confidence and Customer will not disclose such
codes and/or passwords to any other Person except employees of Customer who have
a  need to know such codes and/or passwords. Customer hereby agrees to indemnify
and  hold  harmless  ACI, its employees, agents, representatives, directors, and
officers  from  any and all losses, liabilities, costs, and expenses (including,
without  limitation,  reasonable  attorneys' fees and expenses) arising from, or
relating  to,  Customer's  failure to comply with the provisions of this Section
4(b)  of  Schedule  3.01.


                                       29
<PAGE>
                          ATTACHMENT 1 to SCHEDULE 3.01
                                       of
                     Billing and Related Services Agreement

BULLETIN  BOARD  SYSTEM:  TERMS  AND  CONDITIONS

Attachment  1  to  Schedule  3.01  Bulletin  Board  System: Terms and Conditions

1.  General.  In  general,  the  System  will  permit  Customer  to  either: (a)
electronically  transmit  data  to  or  from ACI; or (b) electronically transmit
E-Mail  messages  to or from ACI or other designated customers of ACI by dialing
into  the  ACI  network  from  remote  stations.

2.  Customer  Use of System; Data. Customer will be solely responsible for being
proficient  in  the  use  of  the System and following such procedures as may be
required  by  ACI  from  time  to  time  for use of the System. Customer will be
responsible  for  its  data  and  material  while  such data and material are in
transit  to  or  from ACL ACI may refuse to process, and may return to Customer,
any  materials  or  data  that  in  Affs  opinion:  (a)  are not of a quality or
condition  suitable  for  processing;  (b)  do  not  comply with Affs applicable
standards  and  procedures;  or  (c) are otherwise not in machine-readable form.
Customer  will  be  responsible  for correcting rejected data and submitting the
same  for  reentry.

3.  Dial-Up  Lines;  User  Identification  and  Password. ACI will establish and
maintain  telephone  number(s) to be utilized by Customer in connection with use
of  the  System.  ACI will also provide to Customer a unique user identification
code  and  password  to  be  used  by  Customer  when  accessing  the  System.

4.  Equipment.  Customer  will  be  solely  responsible  for the acquisition and
maintenance  of  any  hardware,  software,  or  other  materials  (collectively,
"Equipment")  required  by Customer for the purpose of utilizing the System. Set
forth  below  is a list of hardware and software recommended by ACI for use with
the  System:

- -  IBM  or  EBM  Compatible  233  MHz  Pentiume  (minimum)

- -  32MB  of  RAM  or  higher

- -  Hard  disk  drive  with  a  minimum  of  I  GB  of  spare  storage  space

- -  VGA  or  Super  VGA  color  monitor

- -  Mouse

- -  Modem  with  at  least  28.8Kb  speed  (33.6  recommended)

- -  LaserJeta  Printer  or  equivalent

- -  DOS  Version  5.0  or  above

- -  Microsoft  Windowse  Version  3.1  or  above,  Windows  950  or  Windows  NTO

- -  ProComin  Pluse  (Windows  version  recommended)

- -  Infornakere,  Version  6.5  (Required  for  optional  custom  reports)


                                       30
<PAGE>
     Customer represents and warrants to ACI that any Equipment used by Customer
in  connection  with the System will not impair the System or interfere with the
performance  thereof.  Upon  notice from ACI that any Equipment is causing or is
likely to cause such interference, Customer will promptly remove or replace such
Equipment  so  that  such interference will not occur. ACI reserves the right to
require  that  all Equipment be approved in writing by ACI prior to use with the
System.

5.  Availability  of  System. The System may be accessed by Customer during such
time  periods as ACI may designate from time to time. Customer acknowledges that
the  System  may  not  be available for access on occasion due to performance of
maintenance  on  the  System.

6.  Functionality  of  System. Customer acknowledges that the performance of the
System is subject to the functionality of the System from time to time and that,
while ACI may in its sole discretion determine to upgrade or enhance the System,
ACI  is  under  no  obligation  to  do  so.


                          ATTACHMENT 2 to SCHEDULE 3.01
                                       of
                     Billing and Related Services Agreement

LICENSED  PROGRAM:  CONDITIONS  AND  RESTRICTIONS

Attachment  2  to  Schedule  3.01  Licensed Pro2ram: Conditions and Restrictions

1.     Grant  of  License  to  ProAct

     (a)  Licensed  Projzra . During the Term, ACI hereby grants to Customer and
Customer  hereby  accepts from ACI, a non-exclusive, non-transferable license to
use  one  copy, in object code form, of the management reporting system software
known  as  ProAct  and  related  user  documentation  (the  "Licensed Program").
Customer  agrees to comply with the obligations and restrictions relating to the
Licensed Program as described herein, and in accordance with the other terms and
conditions  of  this  Agreement.

     (b)  Ownership  of  Licensed  Progra  .  The  Licensed  Program consists of
valuable  trade  secrets of ACI and is and will remain ACI's exclusive property.
Customer  agrees  to  notify  ACI  promptly  of  any  unauthorized  disclosure,
possession  or use of the Licensed Program. If the Licensed Program, in whole or
in  part,  comes into the possession of any unauthorized third party as a result
of  a  breach  by  Customer of any provision of this Agreement, Customer will be
responsible  for  retrieving  the Licensed Program at Customer's own expense and
will  reimburse  ACI  for whatever reasonable expenses ACI incurs if ACI assists
Customer  in  such  efforts.

2.     Restrictions.

     A license to the Licensed Program is granted to Customer only in accordance
with  the  terms  and  conditions contained in this Agreement and subject to the
following  restrictions:

     (a)     Customer will be permitted to copy the Licensed Program for its use
in  accordance  with  this  Agreement  and  for  backup  purposes.


                                       31
<PAGE>
     (b)  Customer acknowledges and agrees that the Licensed Program constitutes
confidential  and proprietary information of ACI, and Customer will maintain the
Licensed Program in strictest confidence and will provide access to the Licensed
Program  solely  to  its employees requiring such access. Customer will instruct
those  employees  that  the  Licensed  Program,  and all components thereof, are
proprietary to, and the trade secrets of, ACI and are subject to Section 6.03 of
this  Agreement.

     (c) Customer will not, and will not permit its employees or agents to sell,
assign,  lease,  license,  sublicense,  or  otherwise  transfer  or  provide the
Licensed  Program,  or any component thereof, rights therein, or access thereto,
to  any  other  party  for  any  purpose.

     (d)     Customer  will not remove, alter, or deface any copyright notice or
proprietary  marking  contained  on  or  in  the  Licensed  Program or any copy.

     (e) Customer will not modify the Licensed Program or combine it or merge it
into  any  other  program.  All  modifications  and  derivative  versions of the
Licensed  Program,  even  though unauthorized, will be the exclusive property of
ACI.
      (f)     Customer  will not de-compile, disassemble or reverse engineer the
Licensed Program or create, recreate or attempt to create or recreate the source
code  or  other  aspects  of  the  Licensed  Program.

3.     Customer's  Responsibilities  Related  to  the  Licensed  Program.

     Customer  will be solely responsible for the acquisition and maintenance of
all  hardware,  software  or  other  materials  required to utilize the Licensed
Program.  Customer accepts responsibility for: (i) the selection of the Licensed
Program;  (ii)  the  installation  of the Licensed Program; (iii) the use of the
Licensed  Program;  and (iv) the results obtained from the Licensed Program. ACI
does  not  warrant  that  the  operation  of  the  Licensed  Program  will  be
uninterrupted  or effor-free. Customer acknowledges and agrees that the Licensed
Program  is  provided  by  ACI  hereunder  "as  is"  and  without  warranty.

4.     Licensed  Program  Support.

     During  the Term, ACI will provide the following support in connection with
the  Licensed  Program:

     (a)  Telephone  Sgpport. ACI will provide telephone support to Customer for
requesting operational assistance as it relates specifically to installation and
operation  of the Licensed Program application (excluding any hardware or system
environment  problems  or  operation  problems  related  to  Customer's business
processes)  during regular business hours (8:00 a.m. to 5:00 p.m. Pacific Time),
Monday  through  Friday  (excluding  Affs  holidays).

     (b)  Routine  Maintenance. ACI will provide to Customer maintenance support
which will consist of the repair or replacement of the Licensed Program so as to
correct  any  replicable  defect  or  error  in its functioning which causes the
Licensed  Program  to  fail  to conform in all material respects to the Licensed
Program  documentation.  Any other modifications to the Licensed Program will be
provided  by  ACI  as  an  Additional  Service  pursuant  to  Section 3.03. As a
condition  to  ACI's  maintenance  obligation,  Customer  must notify ACI of the
defect  or  error in sufficient detail to permit the identification, replication
and  correction  thereof.


                                       32
<PAGE>
     From  time  to  time,  ACI  may,  in  its  sole  discretion,  make updates,
improvements  or  changes to the Licensed Program which may be made available to
Customer  in  separate  releases to the Licensed Programs; provided however, ACI
has  no  obligation  to  make  any  such  updates,  improvements  or  changes.


                                  SCHEDULE 3.02
                                       of
                     Billing and Related Services Agreement

BILLING  RELATED  SERVICES

Schedule  3.02  Billing  Related  Services

1.     Inquiry  Services.

     (a)  During the Term, ACI may determine, in its sole discretion and in lieu
of  inquiry  services  provided  by  one or more B&C Processor, to (a) establish
toll-free  telephone  numbers  to be used by End Users for the purpose of making
inquiries  regarding  charges for Billable Messages reflected on bills issued by
such  B&C Processors and (b) provide operators to assist End Users in connection
with  such  inquiries  (collectively,  the "Primary Inquiry Services"). Customer
acknowledges  that  ACI's  election  to provide Primary Inquiry Services will be
made  on  a  B&C  Processor-by-B&C Processor basis and will include all Billable
Messages  sent  to that B&C Processor by or through Customer and other customers
of  ACI.  To  the  extent  that  ACI  determines to provide such Primary Inquiry
Services,  ACI  will make available such quantity of toll-free telephone numbers
as  ACI  deems  necessary  for  use  by  End  Users in connection with inquiries
regarding charges for services that were rendered by Customer and transmitted by
ACI  to  a  B&C  Processor  and  will  instruct  each B&C Processor to refer all
inquiries  from  End  Users  to  such  toll-free  telephone  numbers.

          In  connection with any Primary Inquiry Services that ACI may provide,
ACI  will  establish and maintain written guidelines that describe the manner in
which  ACI  will respond to End User inquiries, including without limitation the
manner  in  which  credits or other appropriate adjustments are to be made, with
such  supplements and amendments as may be necessary from time to time. ACI will
provide  Customer  with a copy of such written guidelines and any supplements or
amendments  thereto  upon  Customer's  request.  ACI  will  be  responsible  for
responding  to  all End User questions and problems related to Billable Messages
and will provide appropriate credits and adjustments, all in accordance with the
procedures that it establishes. ACI will promptly notify Customer of all credits
and  adjustments  issued by ACI on behalf of Customer. Customer will designate a
service  representative  who  will  cooperate  with  ACI  to  the fullest extent
possible  in  resolving  any  questions  or  problems.

     (b)  Upon  the  written  request of Customer in connection with any Primary
Inquiry  Services  that  ACI  provides,  ACI,  in  its  sole  discretion,  may
automatically transfer End User inquiries to Customer's call center for handling
by  Customer,  provided Customer complies with the following with respect to the
handling  of  all  such  End  User  inquiries:


                                       33
<PAGE>
          G)  Customer  must  maintain  a  toll-free  customer service telephone
number  to  handle all End User inquiries which are automatically transferred to
Customer's  call  center;

          (ii) All End User inquiries must be handled only by live operators and
not  by  message  machine  or  other  devices,  at a service level that meets or
exceeds  parameters  set  from  time  to  time  by  ACI;

          (iii)  ACI  has the right at any time and from time to time to monitor
calls  to  verify  that  End  User  inquiries are being handled appropriately by
Customer's  call  center;

          (iv)  ACI  will  handle  all End User credits or other adjustments and
Customer  will,  within  three Business Days of the End User inquiry, provide to
ACI  all  information  necessary  for  ACI  to  provide such End User credits or
adjustments  in  accordance with its established procedures. All such credit and
adjustment  information  will  be  provided  to ACI in a format approved by ACI.
Customer  agrees  that  it will not issue End User credits or adjustments of any
type  in a manner other than stated above in this Schedule 3.02, Section(b)(iv);

          (v)  Customer  will  be  responsible  for  providing  to  ACI  updated
subscriber  account  information (name, address, service type, etc.) in a format
approved  by  ACI, on a regular basis as determined by ACI; but in no event less
than  monthly;  and

          (vi)  Customer  acknowledges that the determination of ACI to transfer
End  User  inquiries  to  customer  will  be  made  on a customer identification
number-by-custorner  identification  number basis and will include all inquiries
related  to  any  such  customer  identification  number.

     Notwithstanding anything above in this section to the contrary, ACI may, in
its  sole  discretion  and at any time, discontinue the transferring of End User
inquiries  to  Customer's call center if Customer fails to satisfactorily handle
any  End  User  inquiry. The transfer of End User inquiries to Customer does not
abridge  Affs  right to issue End User adjustments or credits in accordance with
its  established  procedures.

2.     Complaint  Processing  Services.

     ACI will process regulatory and legislative complaints relating to Customer
(the "Complaint Processing Services") as described in this Section 2 of Schedule
3.02.  The  Complaint  Processing  Services  consist  of  the  following:

     (a)     Logging  and  tracking  complaints  by  type  for  the  purpose  of
identifying  and  alerting  customers  regarding existing or potential problems;

(b)     Retrieving  call  details  and  adjustment  histories  for  carrier
identification;

     (c)     Generating  letters  to  consumers  or  inquiring  federal or state
agencies  acknowledging  receipt  of  complaints  and identifying carriers, with
copies  to  all  relevant  parties;  and

(d)     Providing carriers with all of the foregoing information for resolution.

     (e) Upon complaint resolution by carriers, generating letters acknowledging
responses  from  carriers to consumers and/or inquiring agencies, commissions or
legislative  bodies,  with  copies  to  all  relevant  parties.


                                       34
<PAGE>
                                  SCHEDULE 3.03
                                       of
                     Billing and Related Services Agreement

ADDITIONAL  SERVICES

Schedule  3.03  Additional  Services

Service     Charge
LOCATION  LOOKUP  FEATURE                        No  Charge
ACCOUNT  LOOKUP  FEATURE                         No  Charge
SUB-CARRIER  IDENTIFICATION  CODE  (Sub-CIC)     $3,500  Each
Set
     UP
CUSTOMER  IDENTIFICATION  NUMBER                 $  100  Each  Set Up
ON-SITE  CUSTOMER  TRAINING                      Actual  travel and
                                                 actual  out-of-pocket expenses.

PROFESSIONAL  SERVICES  [I  Hour  Minimum]     $  1501Ho


                                  SCHEDULE 3.04
                                       of
                     Billing and Related Services Agreement

SAFEGUARDING  AND  RETENTION  OF  CUSTOMER  DATA

Schedule  3.04  Safe2uarding  and  Retention  of  Customer  Data

1.     Retention  Schedule.

     ACI  will  store  any  Customer  Data  that  is  sent off-site for disaster
recovery  purposes  in  a  protected  vault  for  up  to  one  year.

2.     Off-Site  Data  Storage.

     The  off-site  storage  facility  will  employ  security  and environmental
protection  systems  that guard against theft and fire and that control humidity
and  temperature.


                                       35
<PAGE>
3.     Facility  Security.

     ACI  will  perform the Billing Services at locations that employ controlled
access systems and alarm systems that guard against theft, fire, heat and water.

4.     Contin2ency  Plan.

     ACI  will  maintain  an up-to-date contingency plan to facilitate continued
processing  of Billable Messages in the event of a catastrophe or other event of
natural  force majeure or in the event of single processor failure within an ACI
data  center  or  the  failure  of  the  entire  ACI  data  center.


                                       36
<PAGE>
                                  SCHEDULE 4.01
                                       of
                     Billing and Related Services Agreement

TERM  AND  COMPENSATION  TO  ACI

Schedule  4.01  Term  and  Compensation  to  ACI

1.     Billine  Services  Charges.

     (a)     Svecial  Service Message Fee. The Special Service Message (SSM) fee
will  apply  to  all  billable  SSMs.  This  fee will be calculated based on the
average  revenue  per  transaction  of  all

SSMs  processed  within  a  calendar  month.

     Average End-User Charge Per Message              Per  Message  Fee
     $00.01  -  10.00                                       1.5%
     $10.01  -  20.00                                       1.7%
     $20.01  -  30.00                                       2.0%
     $30.01  -  40.00                                       2.4%
     $40.01  -  50.00                                       2.8%
     $50.01-                                  Fee to be established by ACI on an
                                              individual case basis



Special  Service  Message  Approval  Process  and          $1,000
Irnplementation.  (First  Charge  Phrase).
Implementation  fee  for  each  charge  phrase               $500

By way of example, and for informational purposes only, if the average amount of

',,rocess  "and




each  charge  to  the End-User is $10.00, the charge as calculated in accordance
with  the  above  table  would  be  as  follows:

SSM  Processing  Fee/message:                 $00.15
Billing  and  Collection  Fee:                  IQQM

Total  Billing  Services  Charge/message:     $00.15

     (b)  Minimum  Message  Reguirement.  Notwithstanding  Section  l(a) of this
Schedule  4.0  1,  Customer will submit to ACI for processing hereunder not less
than  the  amount  reflected in the table below for the applicable period of the
Term  (the  "Minimum  Requirement"):

YP.Net,  Inc.                                     34

Period  Following  Services  Commencement  Date     Minimum  Requirement

Months  I  -  36                                   $1,000     Per  Month

Each  Month  Thereafter                            $1,000     Per  Month

     (c)  Excess  Rejected  Messages.  The  service  charges reflected above are
applicable  only to Billable Messages; if, however, more than two percent of the
Messages  submitted  by  Customer  and  its Clients to ACI during any particular
month  are  Rejected Messages, and such Rejected Messages are deemed as such due
to errors or ornissions of Customer and/or its Clients, Customer will pay to ACI
for  each  such  Rejected  Message  an amount equal to the charge for a Billable
Message  set  forth  in  Section  1  (a)  of  this  Schedule  4.0  1.

2.     Inouiry  Services  Charges.

     Customer  will  pay  ACI  $4.25  (plus  any  applicable  charge  of the B&C
Processor)  for  each  inquiry  handled  by  ACI  in  respect of Special Service
Messages.  Such  charges are subject to adjustment from time to time by ACI upon
60  days'prior  notice  to  Customer.

     With  respect  to each End User inquiry that ACI automatically transfers to
Customer's  call  center  for  handling by Customer pursuant to Section I (b) of
Schedule 3.02, Customer will pay ACI a fee of $50. With respect to each End User
Inquiry  that  ACI  manually transfers to Customer's call center for handling by
Customer,  Customer  will  pay ACI a fee of $1.50. With respect to each End User
inquiry  that  ACI refers (by giving the End-User Customer's toll-free telephone
number)  to  Customer's  call center for handling by Customer, Customer will pay
ACI  a fee of $ 1.00. In addition, Customer will pay ACI a fee of $0.35 for each
credit  or  adjustment  request submitted to ACI by Customer in ACI's prescribed
electronic format. A one-time set-up fee of $200 will be charged upon initiation
of  service  and  again  anytime  a  change  or  addition  is  requested.


                                       37
<PAGE>
3.     Complaint  Processina  Charges.

     With  respect  to  each  legislative  or regulatory complaint for which ACI
provides  Complaint  Processing  Services,  Customer  will pay ACI the amount of
fifty  dollars  ($50.00)  plus  any  out-ofpocket  expenses  incurred  by ACI in
connection with providing the Complaint Processing Services. Charges due ACI for
Complaint Processing Services are subject to adjustment from time to time by ACI
upon  sixty  (60)  days'  prior  notice  to  Customer.

4.     Calculation  of  B&C  Processor  Fees.

     Special  Service  Messaaes. During the Term of the Agreement, provided that
the  number  of  Customer's Billable SSMs per month is equal to or more than 1.5
per LEC per End User telephone bill, each B&C Processor's charges for processing
Billable  SSMs  will  be  calculated  to reflect the Customer's actual number of
Billable  SSMs  per  bill  per  B&C  Processor.

     By way of example, if the Ameritech number of Billable Messages per bill is
1.4,  then  the  B&C  Processor  charge  will  be  calculated  as  follows:

@  1.4  Billable  Messages  per  bill     =  $0.400  Render  fee
1.4  Messages  x  .  10  Processing  Fee  =  $0.140  Message  Processing  Fee

                                          =  $0.540  Total  Fee  therefore;

B&C  Processor  Fee                       =  $0.3857  per  Message
Data  Transmission  Fee                   =  $0.0045  ver  Messaae
                                          =  $0.3902  Total  Fee  per  Message

     If  the actual number of Billable SSMs per bill is less than 1.5, or if the
B&C  Processor  does  not provide a discount calculated in the foregoing manner,
each  B&C  Processor's  charges  passed through to Customer will be equal to the
average  charge  for  all  similar  customers  processing  0+ Billable Messages.

     Notwithstanding  anything  in  this  Section 4 to the contrary, in no event
will the B&C Processor's charges passed through to Customer be less than the fee
paid  by  ACI  to  such  B&C  Processors.




                                       38
<PAGE>
                                  SCHEDULE5.01
                                       of
                     Billing and Related Services Agreement

CUSTOMER  BILLING  OBLIGATIONS

Schedule  5.01  Customer  Billing  Obligations

1.     Billing  Obligations.

     (a)  Preliminary Processing and Delivery of Messages. Customer will acquire
Message data and will perform all of the preliminary processing of the Messages,
which  will include ensuring that the charge for each Message has been computed,
arranging  Message  data  in  the  Approved  Message  Format  and  providing the
applicable  batch control totals, including the total number of Messages and the
total  dollar  amount  of  the  charges  per  submission. After such preliminary
processing  has been completed, Customer will, at Customer's expense, deliver to
ACI  the  Message  data  in a form or manner that is determined by ACI Software.
Customer  acknowledges that ACI will have no obligation to accept for processing
any  Message  data  that  does  not  conform  to  the  Approved  Message Format.

(b)     Singular  Billing.  With  respect  to  the  Message  data  submitted  by
Customer,  ACI  will  be  the  sole, exclusive billing service provider for such
Message  data,  and  no  Message data submitte will be for-wa+ded to, billed by,
Qistempr-  Ar-  any  other  billing  agent  or  clearinghouse.

     (c) Tariff Information and Rate Tables. Upon request, Customer will provide
ACI  with  copies:  (i)  of  all  effective  tariffs  filed  by  Customer  with
Governmental Authorities; and (ii) of its current rate tables, in each case with
such  supplements  and  amendments  as  may  be  necessary  from  time  to time.

     (d)  Charges and Assessments. Customer will be responsible for, and will be
obligated  to  pay:  (i)  any  charges  or assessments by any B&C Processor as a
result  of uncollectible charges for Messages billed, including any amounts owed
if  the  amount  of  uncollectible  charges  exceeds  the amount of the bad debt
withholding;  (ii)  any  charges  or  assessments  by  any  taxing  authority or
Governmental Authority as a result of the nonpayment of Taxes by Customer; (iii)
all costs and expenses related to each item that is to be provided by or through
Customer  pursuant  to this Agreement and for which the financial responsibility
has  not  been  expressly  assigned  to  ACI;  and  (iv)  any  other  charges or
assessments owing by ACI for which Customer has agreed to indemnify ACI pursuant
to  this  Agreement.

2.     Taxes.

     (a)  Customer  Calculated  Taxes.  Customer  will be solely responsible for
calculating,  and advising ACI with respect to any Taxes that are not calculated
by  ACI  as  described  herein  ("CustomerCalculated  Taxes").

     (b)  Tax  Returns.  Customer  will  be solely responsible for preparing and
filing  in  a  timely  manner  with  the  applicable  taxing  authorities  and
Governmental  Authorities all returns covering Customer-Calculated Taxes and for
promptly  paying  in  full  and  remitting  to  such  taxing  authorities  and
Governmental  Authorities  all Customer-Calculated Taxes owed. At the request of
ACI  from time to time, Customer will provide ACI with copies of any and all tax
returns  that  Customer  has prepared and filed and other applicable information
relating  to  the  payment  of  the  Customer-Calculated  Taxes;  provided,


                                       39
<PAGE>
YP.Net  B&C  092001     1  ,
lals
Draft  Date:  10/1/2001


Initials

however,  that Customer will not be required to provide ACI with any information
regarding  Customer's  federal, state or local income taxes. Notwithstanding the
foregoing,  Customer  will not be deemed to be in breach of this Section 2(b) if
it  is  contesting in good faith the imposition of any unpaid CustomerCalculated
Taxes  in  appropriate  administrative  or  judicial  proceedings.



                                  SCHEDULE 5.07
                                       of
                     Billing and Related Services Agreement

REPRESENTATIONS  AND  WARRANTIES

Schedule  5.07  Representations  and  Warranties

Customer  represents  warrants,  covenants  and  agrees:

1.     Customer  does  not  and will not engage in unfair and/or deceptive trade
practices.

     2.     Customer  does  not  and  will  not  make  false  or  misleading
representations  about  its  products  and/or  services.

     3.  Customer will submit to ACI for billing only those products or services
that  directly pertain to a properly consenting End User's own telephone line or
number.  Without  limiting  the  foregoing,  Customer will not submit to ACI for
billing  any  services  or  products  relating  to  each  of  the  following, or
combination  thereof:

a)     Box,  sweepstakes  or  contest-type  entry  forms.

b)     Negative  option  sales  offers,  including  negative option "free trial"
periods.

C)     800  number  pay  per  call.

d)     Collect  call  back.

e)     Phantom  billing  -  or  billing  for  calls  or services never provided.

          f)  Club  or  membership  fees (including, but not limited to psychic,
sports,  prescription  and/or  travel  card  clubs).

     4.  For each new End User after the Effective date, prior to submitting for
billing  any  records  in compliance with the above, each order or request for a
program,  product  or  service so billed will be authorized by the End User, and
confirmed,  by  one  of  the  following  methods,  subject  to  applicable  law:


                                       40
<PAGE>
     a)  hidependent  Third  Party Verification provided by an entity completely
separate  and  not  affiliated  with Customer or any of its owners, officers, or
employees;  compensation  to  the  independent  entity  will not be based on the
number  of  positive  authorizations  or  sales.

b)     Letter  of  Authorization  or  sales  order.

C)     Voice  recording  of  telephone  sales  authorization.

5.     Any  authorization  and  confirmation noted in Section 4 above will, at a
minimum,  contain

the  following:

a)     The  date.

b)     The  name,  address  and  telephone  number  of  the  End  User.

C)     Assurance  that  the  End  User  is  qualified  to  authorize  billing.

d)     A  description  of  the  product  or  service.

e)     A  description  of  the  applicable  charges.

          f)  An  explicit  End  User  acknowledgement  that the charges for the
product  or  services  will  appear  on  their  next  telephone  bill.

g)     The  acceptance  by  the  End  User  of  the  offer.

6.     In  addition,  authorization  verified by an independent third party must
include:

          a)  An  initial  statement that the purpose of the verifications is to
confirm  the  consumer's  intention  to  accept  the  sales  offer.

          b) A statement that the service provider is not affiliated with a LEC,
where  there  is  no  affiliation.

C)     A  unique  consumer  identifier.

d)     A  review  by  third party personnel of the entire verification where the
verification

is  automated.

e)     An  independent  third  party  verifier must meet the following criteria:

(i)     It  must  be  completely  independent  of  the  service provider and the

telemarketer.

(ii)     It  must  not  be owned, managed, controlled or directed by the service
provider  or  the  telemarketer.


                                       41
<PAGE>
(iii)     It  must  not  have  any  financial incentive in the completion of the
sale.

(iv)     It  must  operate  in  a  location physically separate from the service

provider  and  the  telemarketer.

7.     If  requested,  Customer  shall  supply  to  ACI:

a)     Names  of  officers  and  principals  of  Customer.

b)     Proof  of  corporate  or  partnership  status  of  Customer.

C)     Copies  of  certifications  as  required.

d)     Foreign  corporation  filings  as  required.

          e) Any information regarding whether Customer or its affiliates and/or
its  officers  or  principals have been subject to prior conviction for fraud or
have  had  billing  services  terminated.

          f)  That  any  tariffs  of  Customer  be  made  available  on request.

          g)  The names, addresses, officers and principals of any telemarketing
companies  to  be  used  by  the  service  provider.

          h)  The  names,  addresses, officers and principals of any third party
verification  companies  to  be  used  by  the  service  provider.

     8.     If requested Customer shall provide to ACI for each of its products,
and/or  services  or  programs  for  which  services  are  billed:

a)     Marketing  materials.

b)     Advertisements  (print  or  other  media).

     C)     Applicable  fulfillment  package  (which  must  include cancellation
information if not included elsewhere and a toll free customer service telephone
number).

d)     Scripts  for  both  sales  and  verification.

e)     Honest,  clear,  and  understandable  text  phrase  for  telephone  bill.

f)     Prior  notification  of  any  material  change  in the above information.

9.     Messages  submitted  to  ACI  for  billing:


                                       42
<PAGE>
     a)  Strictly  meet and/or adhere to the requirements of all federal, state,
and  local  laws,  rules  regulations,  ordinances,  orders,  and/or  judgments,
including but not limited to those of the Federal Communications Commission, the
Federal  Trade  Commission,  and  any state Public Service[Utility Commission or
attorney  general;

          b)  Strictly meet and adhere to the requirements of any policy of ACI,
B&C  Processor  or  Laws;

          C)  Is  the valid, legally enforceable and unconditional obligation of
the  Person  who  is indicated by Customer to be obligated on such a Message for
products  and/or  services  previously  rendered;

          d)  Is  genuine and in all respects what it purports to be, and is not
evidenced  by  a  judgment;

          e) Arises out of the completed delivery of telecommunications services
in  the  ordinary course of Customer's business and in accordance with the terms
and  conditions  of  any  contracts  or  other  documents  related  thereto;

          f)  Is  for  a  specific  amount due and owing so reflected and is not
evidenced  by  a  chattel  paper,  promissory  note  or  other  instrument;

          g) Is not subject to any offset, deduction, or agreement for offset or
deduction, or any defense, dispute, counterclaim, or any other claim, defense or
adverse condition, and is absolutely owing to Customer, and is not contingent in
any respect or for any reason except for matters for which discounts, credits or
allowances are granted by Customer in the ordinary course of business consistent
with  past  practices  which have been reflected on the information submitted to
ACI  for  processing;

          h)  There  are  no facts, events or occurrences that in any way impair
the  validity  or  enforceability  thereof, or tend to reduce the amount payable
reflected  in  a  Message;

          i)  Without  limiting  any  other provisions of the Agreement, the End
User:  (i)  had  the  capacity  to  enter into at the time any contract or other
document  relating  to  such  Message;  and  (ii)  such  End  User  is  solvent;

          j) There is no fact or circumstance which would impair the validity or
collectability  of,  or  the  charges  on,  the  Message, by Customer and/or its
permitted  assignee  or  designee, and there are no proceedings or actions which
are  threatened  or  pending  against  or  on behalf of the End User which might
result  in any material adverse change in the collectability of the charges on a
Message;

          k)  All  supporting documents and other evidence of Messages delivered
to  ACI  are  complete  and correct and valid and enforceable in accordance with
their  terms,  and  all  signatures  and  endorsements  that  appear thereon are
genuine;

          1)  Customer  has the full and unqualified right to submit Messages to
ACI  for  processing;

          in)  Each  message: (i) has not been previously billed or submitted to
any Person other than ACI for billing and collection; (ii) is not subject to any
Liens  or factoring arrangements, except exclusively through ACI; and (iii) does
not  relate  to  services performed more than ninety (90) days prior to the date
said  message  was  received  by  ACI  for  processing;  and


                                       43
<PAGE>
          n)  Such  message  does  not  arise out of services performed for: (i)
Customer;  (ii)  any  subsidiary  or  Affiliate  of Customer; (iii) any End User
located  outside  the  United  States  of  America;  or  (iv)  any  Governmental
Authority,  domestic  or  foreign.

     10.  Customer  nor  its  affiliates,  parents,  subsidiaries,  officers,
directors,  members,  owners,  partners, shareholders (excluding non-controlling
shareholders  for  public  companies), employees, agents, representatives, joint
venturers,  successors  and  permitted  assigns have been convicted of fraud, or
have  had  billing  services  terminated.


                                       44
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>4
<FILENAME>doc3.txt
<TEXT>
The Wholesale Dial-Up Customer's Buying Guide
- --------------------------------------------------------------------------------
Important Questions To Ask Providers When Purchasing Dial-Up Services

     Overview

     A 2001 Bandwidth Buyers Survey conducted by Morgan Stanley Dean Witter
     revealed that quality of service outranks price sensitivity when potential
     customers consider products and services from network providers.

     In this guide, you will find important questions that architects and
     engineers believe you should ask providers when making buying decisions for
     dial-up services. The answer to each question also explains why the
     question should be asked. Then we include a response from Level 3. We hope
     this guide will become a staple reference for you when researching and
     evaluating network service providers.

     Contents

          1.   Network Architecture Questions

          2.   Product Architecture

          3.   Scalability - Capacity

          4.   Coverage

          5.   Installation

          6.   Pricing

          7.   Performance

          8.   Operations


                                                                          Page 1
<PAGE>
GENERAL NETWORK AND INTERNET ARCHITECTURE

Question 1
     -    On  what  platform  is  your  network  built?
     -    Is your network constructed through acquisitions or via exchanges with
          other  providers?


Complete network ownership allows providers to have control over potential
problems. Unified platforms, constructed with consistent technologies, means
technicians have fewer variables when troubleshooting network components. This
directly translates into operations efficiency and minimizes the potential for
component failure.

LEVEL  3  HAS BUILT AND SOLELY OPERATES OUR ENTIRE GLOBAL NETWORK. OUR OPTRONICS
AND OPTICAL FIBER ARE COMPLETELY UBIQUITOUS AND CONSISTENT THROUGHOUT OUR ENTIRE
NETWORK.   OUR  COMPLETED  NETWORK  DOES  NOT HAVE ANY ACQUIRED PORTIONS, AND WE
MAINTAIN  COMPLETE  OPERATIONS AND MANAGEMENT CONTROL THROUGHOUT OUR NETWORK. WE
USE  CORNING  LEAF(R)  FIBER  THROUGHOUT  EUROPE  AND NORTH AMERICA FOR THE LONG
DISTANCE NETWORK, AND CORNING SMF-28 FIBER FOR THE METRO LOOPS. OF COURSE, THERE
IS  SPECIALIZED FIBER FOR THE UNDERSEA CABLES FROM ASIA TO THE U.S. AND THE U.S.
TO  EUROPE.  WE  ALSO USE SOME SMF-28E AND METROCOR IN SPECIFIC LOCATIONS IN OUR
METRO  NETWORK.

PRODUCT ARCHITECTURE

Question 1
     -    Do  you  use  a  circuit  switch  or  a  Softswitch?
     -    Is  your  traffic  carried  across  primary  rate interfaces (PRIs) or
          co-carrier  trunks?
     -    Is  the network architecture consistent throughout the global network?

How your platform connects to the Local Exchange Carrier network is important.
Most carriers lease PRI circuits from Local Exchange Carriers or operate class 5
switches themselves - and still connect using PRIs. Expensive PRI leases add
extra cost to the completion of each call. Extra class 5 switches add additional
points of failure and delays in answering calls. Softswitch-based solutions
allow connection via SS7 directly to the exchanges from which end-users call.
Using co-carrier trunks and a Softswitch reduces call set-up time and improves
reliability.

LEVEL 3 OPERATES ONE OF THE LARGEST SOFTSWITCH-BASED NETWORKS IN THE WORLD -
SUPPORTING THE TOP NINE (9) ISPS IN NORTH AMERICA, AND WE ARE ONE OF THE LARGEST
CLECS (LICENSED IN ALL 50 STATES).  SINCE WE OWN OUR OWN CLEC INTERCONNECTION
WITH THE LOCAL EXCHANGE CARRIER IN 56 MARKETS, WE CAN ACHIEVE THE LOWEST
POSSIBLE PRICE POSITION FOR YOU.

WE CONNECT TO THE LECS USING SS7 CO-CARRIER FACILITIES, WHICH MEANS THERE ARE
FEWER SWITCHING POINTS BETWEEN LEVEL 3 AND YOUR CUSTOMERS. YOU GET ALL THE
BENEFITS OF A SHARED ENVIRONMENT, INCLUDING IMPROVED COST EFFICIENCIES AND
REDUNDANCY, AS WELL AS THE ABILITY TO MANAGE AND CONTROL YOUR VIRTUAL PORTION OF
OUR NETWORK. WE CAN EXPAND OUR NETWORK MORE QUICKLY THAN COMPANIES OPERATING
WITH CIRCUIT SWITCHES AND ADD MORE CAPACITY IN A COST EFFECTIVE MANNER.

SCALABILITY - CAPACITY

Question 1
     -    Do  you  have  an  automated  system  that  uses  statistical  models?

Automated systems provide increased scalability while minimizing error-prone
manual data inputs and calculations. Statistical analysis provides objective
data, which allows you to make business decisions with a range of statistical
confidence levels.


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LEVEL 3 HAS GATHERED DATA AND DEVELOPED STATISTICAL MODELS TO SIMULATE AND
FORECAST PORT UTILIZATION BY CUSTOMER AND MARKET. THIS ALLOWS US TO PLAN FOR
FUTURE GROWTH AND SEASONAL CHANGES.

Question 2
     -    Are  you  able to produce available capacity reports for all customers
          and  markets  on  a  daily  basis?
     -    Do  you  have  an  optimization  process  to  minimize  under-utilized
          capacity?

Automated capacity tools are important to optimize resources and to monitor
available capacity on a daily basis. Optimization models and processes also
allow you to cost effectively allocate resources.

LEVEL 3'S MANAGED MODEM AUTOMATED CAPACITY TOOL (MMACT) ALLOW US TO OPTIMIZE THE
NETWORK, BUILD THE NETWORK ACCORDING TO HISTORICAL GROWTH AND INCREMENTAL SALES,
AND ASSESS AND COMMUNICATE OPTIMIZATION RISKS TO SALES AND MARKETING ON A DAILY
BASIS. THESE STATISTICAL MODELS, COMBINED WITH OUR AUTOMATED CAPACITY TOOL,
PROVIDE LEVEL 3 WITH THE ABILITY TO BE PROACTIVE INSTEAD OF REACTIVE TO OUR
CUSTOMER NEEDS.

COVERAGE

Question 1
     -    What  is  your  rate  center  coverage?
     -    What  tools  do  you  offer  to  determine  if  your rate centers meet
          customer  coverage  needs?

When reviewing coverage from a provider, be sure to request a list of all the
rate centers that provide local coverage. Providers may advertise coverage of a
state, but they may only offer coverage of one or two cities in the state. This
forces end users to pay toll charges when they don't dial up in those specified
areas.

LEVEL 3 TRACKS RATE CENTER COVERAGE AND ROLLS UP THE DATA TO THE APPROPRIATE
LEVEL. FOR INSTANCE, LEVEL 3 CURRENTLY SERVES 65 PERCENT OF THE U.S. POPULATION
AND IS EXPECTED TO GROW TO COVERAGE OF 80 PERCENT BY THE END OF 2002.
ADDITIONALLY, WE SERVE 47 MARKETS THAT COVER 54 MAJOR METROPOLITAN CITIES. BY
THE END OF FIRST QUARTER 2002, LEVEL 3 WILL ADD ANOTHER 17 MARKETS TO OUR
FOOTPRINT. LEVEL 3 HAS 480 PHONE NUMBERS, WHICH ENABLE 2,730 RATE CENTERS TO
CALL THE LEVEL 3 NUMBERS LOCALLY. WE CONFIRM, THROUGH TARIFF RESEARCH, THAT ALL
PUBLISHED RATE CENTERS CAN CALL LEVEL 3 USING THE BASIC ("NON-ENHANCED") LOCAL
PHONE SERVICE. SINCE ADAPTING THIS METHODOLOGY, WE HAVE NOT HAD A SINGLE
INSTANCE OF AN END USER BEING CHARGED FOR LONG DISTANCE/TOLL WHEN USING LEVEL 3
NUMBERS APPROPRIATELY. THROUGH COMPETITIVE ANALYSIS, WE HAVE FOUND THAT OUR
COVERAGE IN MAJOR MARKETS IS SUBSTANTIALLY "DEEPER" OR MORE WIDESPREAD THAN
COMPETITORS IN THOSE SAME MARKETS. LEVEL 3 IS CONTINUALLY EXTENDING OUR COVERAGE
BASED ON CUSTOMER NEEDS, AND WE EVALUATE REQUESTS FOR SPECIFIC RATE CENTERS ON
AN ONGOING BASIS. IN ADDITION, LEVEL 3 OFFERS A TOLL-FREE DIAL-UP SERVICE FOR
CUSTOMERS WHO HAVE END USERS OUTSIDE THE LEVEL 3 REACH.

Question 2
     -    Can  you  give  direct  access  to  a  rate  center  or  End  Office?

You should verify how coverage is constructed. By directly connecting to End
Offices, the provider reduces the congestion experienced by end users.

LEVEL 3 COMMUNICATION'S OFFERS DIRECT END OFFICE TRUNKING IF THERE IS MORE THAN
A T-1 WORTH OF TRAFFIC (MORE THAN 24 SIMULTANEOUS CALLS), AND WE USE TANDEM
TRUNKING IN MANY OF THE SMALLER MARKETS WHERE DEMAND HAS NOT DICTATED TRUNKING
TO END OFFICES.  LEVEL 3 MONITORS TRUNK USAGE AND AUGMENTS THEM AT THE FIRST
SIGNS OF CONGESTION. WE'RE CONTINUALLY EXTENDING OUR COVERAGE TO ADDITIONAL
MARKETS BASED ON CUSTOMER NEED.

INSTALLATION


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Question 1
     -    What  kind  of  commitment  do  I  have  to  make?
     -    How  quickly  can  you  provision  my  services?

Carefully consider whether your provider's minimum requirement for orders is too
large. Sometimes large commitment thresholds demand high additional costs and
can hinder a customer's ability to enter a new market. Also, being able to
quickly add the right amount of capacity, in the right place, will help you
manage the costs of your business and ensure that you're not under provisioned.

LEVEL 3 ONLY REQUIRES CUSTOMERS TO PURCHASE A MINIMUM OF 23 PORTS PER GATEWAY
SITE. IF YOU CHOOSE HOURLY PRICING, HOWEVER, THERE IS NO COMMITMENT - YOU ONLY
PAY FOR WHAT YOU USE.  INSTALLATION FOR SERVICES IS FIVE BUSINESS DAYS. THE ONLY
REQUIREMENT FROM LEVEL 3 IS THAT YOU MANAGE AND MAINTAIN YOUR OWN RADIUS FOR
AUTHENTICATION. LEVEL 3 WILL PROVIDE YOU WITH ALL THE LOCAL PHONE NUMBERS,
NETWORK, AND CAPACITY MANAGEMENT.

PRICING

Question 1
     -    What  is  your pricing philosophy, and how do you price your services?
     -    What  are  your  billing  and/or  pricing  options?

Flexible pricing allows you to control costs and show your investors your cost
per user. Since many buyers of wholesale dial-up service have more than one
provider, they find value in being able to control pricing.

LEVEL 3 OFFERS THREE TYPES OF PRICING: PER-PORT, METERED BILLING, AND NATIONWIDE
ACCESS. A PER PORT PRICE IS IDEAL FOR CUSTOMERS WHO HAVE A LARGE, STEADY STREAM
OF TRAFFIC AND WANT TO OPTIMIZE THE NUMBER OF USERS ACCESSING A SINGLE PORT.
CUSTOMERS WHO HAVE LOW TRAFFIC USAGE IN A PARTICULAR AREA OR TRAFFIC THAT SPIKES
AT PARTICULAR TIMES MAY WANT TO CHOOSE METERED BILLING AND PAY FOR USAGE ON AT
AN HOURLY RATE TO REDUCE COSTS.  CUSTOMERS WHO HAVE BOTH TYPES OF TRAFFIC MAY
CHOOSE PORT PRICING IN SOME LOCATIONS AND METERED PRICING IN OTHERS.

LEVEL 3 OFFERS NATIONWIDE ACCESS PRICING FOR END USERS NOT COVERED BY EXISTING
RATE CENTERS. THE PRICE PER MINUTE INCLUDES ALL TOLL CALL CHARGES ASSOCIATED
WITH THE 800 NUMBERS AND THE TIME SPENT ON THE MODEM. THIS OPTION IS PERFECT FOR
CUSTOMERS WANTING TO PROVIDE A TOLL-FREE NUMBER FOR ACCOUNT REGISTRATION OR
ACCESS TO BUSINESS TRAVELERS IN REMOTE AREAS. THE BOTTOM LINE ON OUR PRICING
SCHEMES: IT IS THE CUSTOMER'S CHOICE.

PERFORMANCE

Question 1
     -    What  is  your  call  success  rate?
     -    Do  you  measure  end-user  success  rate?  Or  only  use war dialers?

High- quality performance is critical to retaining your customers and revenue
stream. With the large number of ISP choices, end users can demand a reliable,
high-quality service. You can't rely on war dialers to measure the quality of
your end users' experience.

LEVEL 3 MONITORS BOTH CALL SUCCESS RATE AND END-USER SUCCESS RATE. MANY
PROVIDERS ADVERTISE CALL SUCCESS RATES AT 90 PERCENT AND SOME AS HIGH AS 97
PERCENT BASED ON STATIC DIALER MEASUREMENTS. LEVEL 3 MEETS AND EXCEEDS THE
INDUSTRY STANDARD, BUT WE BELIEVE THE TRUE MEASUREMENT IS FOUND IN THE END-USER
EXPERIENCE, NOT IN THE MEASUREMENTS OF STATIC DIALERS THAT DIAL IN AT PRESCRIBED
TIMES. LEVEL 3'S SERVICE LEVEL AGREEMENT GUARANTEES 90 PERCENT CALL SUCCESS RATE
- - AND WE CURRENTLY EXCEED IT WITH NUMBERS AS HIGH AS 93 PERCENT.


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WE LEAD THE INDUSTRY, AND OUR CUSTOMERS - THE TOP NINE (9) ISPS - AGREE THAT
THIS KIND OF QUALITY IS KEY TO RETAINING THEIR CUSTOMERS AND REVENUE.

OPERATIONS AND NETWORK MAINTENANCE QUESTIONS

Question 1
     -    Are  you  a  single  operator  of  your  entire  network?
     -    How do you monitor your network? How many people and what surveillance
          tools  to  you  have?
     -    What  are  your  procedures  to  minimize  operations  and maintenance
          errors/outages?

Networks that have been created by acquiring capacity from multiple sources are
more susceptible to human error. They're built with a variety of equipment, and
multiple management systems increase the complexity of operations. They also
require a higher level of training for the staff. Lack of a single point for
maintenance planning will increase the frequency of failure. For example, if two
independent maintenance events occur on different parts of a ring supplied by
two carriers, it is possible that disruptions will affect the customer's
traffic. Networks monitored by multiple carriers can delay fault isolation, as
there is not a cohesive team or network to monitor and troubleshoot for fault
isolation. Coordination of network testing becomes more complicated when
multiple network monitoring staffs need to work together for these functions.

LEVEL 3 HAS A UNIFIED AND HIGHLY ADVANCED NETWORK OPERATIONS CENTER (NOC) USING
NORTEL'S NEW PRESIDE NMS. THE PRESIDE SYSTEM INTEGRATES NETWORK ELEMENT
MANAGERS, ALARM AGGREGATION, AND NETWORK MANAGERS INTO ONE UBIQUITOUS PLATFORM
FOR GREATER NETWORK OPERATIONS EFFICIENCY. IN THE U.S., LEVEL 3 HAS A DEDICATED
100MBPS MANAGEMENT COMMUNICATIONS NETWORK RUNNING ON ITS OWN FIBER PAIR. IT
PROVIDES A HIGH-CAPACITY COMMUNICATIONS SYSTEM COMPLETELY INDEPENDENT OF THE
TRANSMISSION EQUIPMENT. IT SUPPORTS REMOTE VIDEO MONITORING, ACCESS SECURITY,
AND ENVIRONMENTAL MONITORING (FOR EXAMPLE, TEMPERATURE AND FIRE ALARMS). IT CAN
ALSO PROVIDE CONNECTIVITY SERVICES FOR CUSTOMER EQUIPMENT IN REMOTE SITES. WE
ARE THE SINGLE OPERATOR FOR OUR ENTIRE NETWORK FROM METRO POP TO METRO POP. BY
HAVING A HOMOGENEOUS NETWORK WITH IDENTICAL FIBER AND A SINGLE MANAGEMENT
SYSTEM, WE PROVIDE THE HIGHEST LEVEL OF OPERATIONS EXCELLENCE.

Question 2
     -    What  are  your  processes  and  procedures  for interacting with your
          customers  from  your  NOC?
     -    Escalation  procedures? For customers and/or internally? What are your
          network  maintenance  procedures  and  processes?
     -    How  do  you  introduce  new  technologies  into  your  network?

How a vendor interacts with their customers is critical in receiving a timely
resolution of issues. Vendors who use non-technical customer support personnel
can make the resolution of a 1-hour issue turn into a multiple-day nightmare. In
addition, vendors without mature change-control processes do not provide their
customers with timely notifications of what and when planned network
maintenances occur.

LEVEL 3 USES TECHNICAL CUSTOMER ACCOUNT MANAGERS (TCAMS). OUR TCAMS HAVE
COMPLETED TECHNICAL CERTIFICATIONS FOR THE PRODUCTS AND SERVICE THAT THEY
SUPPORT. THEY CAN FIX PROBLEMS THEMSELVES OR MAKE A CALL AND GET A TECHNICAL
SPECIALIST TO FIX THE PROBLEM. TCAMS USE THEIR DISCRETION TO ESCALATE MATTERS TO
THE HIGHEST LEVELS OF THE COMPANY TO ENSURE THE CUSTOMER PROBLEM IS FIXED AS
QUICKLY AS POSSIBLE. THIS ALLOWS LEVEL 3 TO MAINTAIN MEAN TIME TO REPAIR OF LESS
THAN TWO HOURS, AND IT SIGNIFICANTLY INCREASES CUSTOMER SATISFACTION. ALSO,
LEVEL 3 HAS A VERY MATURE NETWORK CHANGE CONTROL PROCESS. ALL CHANGES TO THE
NETWORK GO THROUGH REVIEW AND APPROVAL PROCESSES THAT ENSURE CUSTOMERS ARE
NOTIFIED FIVE DAYS PRIOR TO A MAINTENANCE PERIOD.

BUSINESS OPERATIONS QUESTIONS


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Question 1
     -    Who  are  your  customers?
     -    Where  are  you  focusing  your  sales  efforts  at  this  time?

A list of current customers and future sales targets are indicators of whether
providers can support your business as it grows. Also, the last thing you want
is a provider who is a potential competitor.

LEVEL 3 SUPPORTS THE TOP NINE (9) ISPS IN THE UNITED STATES AND CONCENTRATES ON
PROVIDING THE INFRASTRUCTURE AND MANAGEMENT OF THE DIAL-UP BUSINESS SO OUR
CUSTOMERS CAN DO WHAT THEY DO BEST - MARKET TO THEIR END USERS.

LEVEL 3 IS FOCUSED ON BEING A WHOLESALE PROVIDER. OUR SALES EFFORTS FOCUS ON A
SPECIFIC NUMBER OF CARRIERS, CONTENT PROVIDERS, AND TOP ISPS.

Question 2
     -    Can  you describe your entire suite of services and the solutions that
          you  provide?

As your business continues to grow, you may be required to provide your
customers with additional services. By partnering with a network provider that
can provide you with the platform to develop your current service offerings, you
are preparing for your business future, today. It is important to work with a
provider that has the network and the products to support your services and
enable you to create new revenue streams.

LEVEL 3 PROVIDES A COMPREHENSIVE GROUP OF COMMUNICATIONS SERVICES DESIGNED TO
PROVIDE THE PLATFORM FOR ADVANCED COMMUNICATIONS SERVICES. IN ADDITION TO OUR
(3)CONNECT MODEM SERVICE, LEVEL 3 ALSO PROVIDES VOICE SERVICES, DEDICATED IP
PRODUCTS, AND A SUITE OF TRANSPORT PRODUCTS INCLUDING: DARK FIBER, PRIVATE LINE
AND UNPROTECTED PRIVATE LINE, WAVELENGTHS, AND COLOCATION FACILITIES. YOUR LEVEL
3 ACCOUNT TEAM MEMBERS WILL PROVIDE YOU WITH DETAILED DESCRIPTIONS OF OUR ENTIRE
PRODUCT SUITE.

Question 3
     -    Are you in a strong financial position?

Choosing a provider that doesn't have a sound financial position puts your
bottom line at risk. In today's market your customers' end users are asking
tough questions about the financial viability of their backbone technology
providers.

BASED ON ITS CURRENT BUSINESS PLAN, LEVEL 3 IS A FULLY FUNDED COMPANY.  AS OF
THE END OF 3RD QUARTER AND PRO FORMA FOR ITS RECENTLY COMPLETED DEBT BUYBACK,
THE COMPANY HAD APPROXIMATELY $2.5 BILLION OF AVAILABLE LIQUIDITY, CONSISTING OF
$1.9 BILLION IN CASH AND A $650 MILLION UNDRAWN CREDIT FACILITY.  ADDITIONALLY,
LEVEL 3 HAS SIGNIFICANT INVESTMENTS IN SEVERAL NON-CORE ASSETS (INCLUDING EQUITY
POSITIONS IN RCN CORPORATION AND COMMONWEALTH TELEPHONE AND VARIOUS REAL ESTATE
ASSETS) THAT PROVIDE INCREMENTAL CUSHION TO THE EXISTING FUNDING POSITION.  WE
ARE PRODUCING STEADY GROWTH IN BOTH OUR CASH AND GAAP REVENUE STREAM. BEING IN
THIS POSITION IS A TESTAMENT TO THE LEADERSHIP OF LEVEL 3.

Question 4
     -    What is the history of your company and its Senior Executives?

You can learn a lot about the management style of a company through its history.
Where did top management in this company come from, and how well did they
perform historically? Look for business models that have worked in the past, as
well as a vision that can guide the company into its future without a dramatic
change of focus. An important point to consider is whether a company's senior
management is interested in - and has a history of - providing advances in


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technology for the betterment of the telecommunications marketplace. What is the
company's mission statement? This is usually a good measure of their experience
and longevity.

LEVEL 3'S HISTORY AND EXECUTIVE LEADERSHIP EXPERIENCE IS BASED ON PROVIDING
ADVANCED TELECOMMUNICATIONS NETWORK SOLUTIONS TO ENABLE THE CONTINUED
ADVANCEMENT OF TELECOMMUNICATIONS APPLICATIONS. OUR SENIOR MANAGEMENT FOUNDED
METROPOLITAN FIBER SERVICES (MFS). WITH THE ADVENT OF THE INTERNET ECONOMY, THEY
HAVE A VISION OF PROVIDING AND LEVERAGING THE WORLD'S MOST ADVANCED
TELECOMMUNICATIONS INFRASTRUCTURE AND ITS COST EFFICIENCIES FOR THE PROVIDERS OF
ADVANCED TELECOMMUNICATIONS SERVICES.

THE LEVEL 3 VISION IS TO "PROVIDE EXTRAORDINARY VALUE TO OUR INVESTORS, OUR
EMPLOYEE OWNERS, OUR CUSTOMERS AND OUR BUSINESS PARTNERS BY HELPING PEOPLE
COMMUNICATE AT A DISTANCE WITH THE FULL POWER AND RICHNESS OF HUMAN SENSES."

OUR MISSION IS TO "BUILD A TEAM OF PEOPLE, DEVELOP A SET OF PROCESSES, AND
CREATE A COMMUNICATIONS NETWORK THAT ENABLES US TO CONTINUOUSLY LOWER THE COST
OF BANDWIDTH-BASED SERVICES AT THE OPTIMUM RATE."

CONCLUSION

Level 3 encourages you to use the information in this review as criteria for
evaluating potential network service providers. In performing an objective and
detailed comparison, we are convinced that our people, advanced services,
systems, and Network will be best-positioned to provide you with the
mission-critical products and services you require to support your business.

Please use the checklist on the following page to compare your prospective
suppliers to Level 3. This checklist is designed as an evaluative aid to use
with the questions provided in this document.

<TABLE>
<CAPTION>
QUESTIONNAIRE CHECK LIST

NETWORK & ARCHITECTURE QUESTIONS                                               LEVEL 3         OTHER
                                                                               RESPONSE        PROVIDER
- -----------------------------------------------------------------------------  --------------  --------
<S>                                                                            <C>             <C>
Is your network constructed through acquisitions or via exchanges with other   NO
providers?

Do you use a circuit switch or a Softswitch?                                   SOFTSWITCH

Is your traffic carried across PRIs or Co-Carrier trunks?                      CO-CARRIER

SCALABILITY

Do you have an automated system that utilizes statistical models?              YES

Are you able to produce available capacity for all customers and markets on a  YES
daily basis?

Do you have an optimization process to minimize under-utilized capacity?       YES
Coverage

Can you provide direct access to a rate center or End Office?                  YES

Do you offer toll free services?                                               YES

INSTALLATION

How quickly can you provision your services?                                   5 DAYS OR LESS
Pricing


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What are your billing and/or pricing options?                                  PER PORT
                                                                               OR METERED
                                                                               BILLING
PERFORMANCE
Do you measure call success rate or the end user call success rate?            BOTH
BUSINESS QUESTIONS
Are you focusing your sales efforts on the same market segments as your
customers?                                                                     NO
Are you in a strong financial position?                                        YES
Does your executive leadership have a proven record of success?                YES
</TABLE>


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</TEXT>
</DOCUMENT>
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