UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended December 31, 2003

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act

     For the transition period from _____________ to _______________

     Commission File Number 0-24217

                                  YP.NET, INC.
        (Exact name of small business issuer as specified in its charter)

                NEVADA                                 85-0206668
    (State or other jurisdiction of          (IRS Employer Identification No.)
     incorporation or organization)

                         4840 EAST JASMINE ST. SUITE 105
                               MESA, ARIZONA 85205
                    (Address of principal executive offices)

                                 (480) 654-9646
                           (Issuer's telephone number)

     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
      ---         ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     The number of shares of the issuer's common equity outstanding as of
February 10, 2003 was 48,794,302 shares of common stock, par value $.001.

     Transitional Small Business Disclosure Format (check one):

Yes          No    X
      ---         ---


<PAGE>
YP.NET, INC.
                          INDEX TO FORM 10-QSB FILING
                    FOR THE QUARTER ENDED DECEMBER 31, 2003

                                TABLE OF CONTENTS

                                    PART I.
                              FINANCIAL INFORMATION

                                                                            PAGE
ITEM 1.   FINANCIAL STATEMENTS

          CONSOLIDATED BALANCE SHEET
               AS OF DECEMBER 31, 2003 . . . . . . . . . . . . .              3
          CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTH PERIODS
               ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002 . .              4
          CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTH PERIODS ENDED DECEMBER 31,
               2003 AND DECEMBER 31, 2002. . . . . . . . . . . .              5
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . .              7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . .              18

ITEM 3. CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . .              32


                                    PART II
                                OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . .              33


                                   SIGNATURES




<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
                               UNAUDITED CONSOLIDATED BALANCE SHEET
                                     AS OF DECEMBER 31, 2003


ASSETS:
<S>                                                                                   <C>

CURRENT ASSETS
   Cash and equivalents                                                               $ 1,156,158
   Accounts receivable, net of allowance for doubtful accounts of $3,652,604           10,187,602
   Prepaid expenses and other current assets                                              489,804
   Deferred tax asset                                                                   1,382,867
                                                                                      ------------
      Total current assets                                                             13,216,431

ACCOUNTS RECEIVABLE, long term portion, net of allowance
      for doubtful accounts of $320,064                                                   910,951

CUSTOMER ACQUISITION COSTS, net of accumulated amortization of $1,065,864               3,574,629

PROPERTY AND EQUIPMENT, net                                                               735,373

DEPOSITS AND OTHER ASSETS                                                                 113,310

INTELLECTUAL PROPERTY- URL, net of accumulated amortization of $1,979,009               3,402,226

ADVANCES TO AFFILIATES                                                                  4,197,460

                                                                                      ------------
    TOTAL ASSETS                                                                      $26,150,380
                                                                                      ============

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
   Accounts payable                                                                   $   374,142
   Accrued liabilities                                                                  1,207,798
   Notes payable- current portion                                                         115,868
   Income taxes payable                                                                 3,431,333
                                                                                      ------------
      Total current liabilities                                                         5,129,141

DEFERRED INCOME TAXES                                                                      36,748
                                                                                      ------------

      Total liabilities                                                                 5,165,889
                                                                                      ------------

STOCKHOLDERS' EQUITY:
   Series E convertible preferred stock, $.001 par value, 200,000 shares authorized,
        131,840 issued and outstanding, liquidation preference $39,552                     11,206
   Common stock, $.001 par value, 100,000,000 shares authorized,
        55,373,636 issued, 48,794,302 outstanding                                          48,794
   Paid in capital                                                                      9,464,166
   Deferred stock compensation                                                         (4,021,276)
   Treasury stock at cost                                                                (690,306)
   Retained earnings                                                                   16,171,907
                                                                                      ------------
      Total stockholders' equity                                                       20,984,491
                                                                                      ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $26,150,380
                                                                                      ============

              See the accompanying notes to these unaudited financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                  YP.NET, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
   FOR THE THREE MONTH PERIODS  ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002


                                                    2003              2002
                                              ----------------  ----------------
<S>                                           <C>               <C>

NET REVENUES                                  $    13,866,967   $     5,505,890
                                              ----------------  ----------------

OPERATING EXPENSES:
     Cost of services                               4,882,402         1,586,585
     General and administrative expenses            2,790,743         1,376,078
     Sales and marketing expenses                   1,290,180           632,435
     Depreciation and amortization                    196,193           138,932
                                              ----------------  ----------------
         Total operating expenses                   9,159,518         3,734,030
                                              ----------------  ----------------

OPERATING INCOME                                    4,707,449         1,771,860
                                              ----------------  ----------------

OTHER (INCOME) AND EXPENSES
     Interest (income) expense                        (71,153)             (720)
     Other (income) expense                          (274,758)          (48,906)
                                              ----------------  ----------------

     Total other (income)expense                     (345,911)          (49,626)
                                              ----------------  ----------------

INCOME BEFORE INCOME TAXES                          5,053,360         1,821,486

INCOME TAX  PROVISION (BENEFIT)                     1,768,675           728,594
                                              ----------------  ----------------

NET INCOME                                    $     3,284,685   $     1,092,892
                                              ================  ================

NET INCOME PER SHARE:
  Basic                                       $          0.07   $          0.02
                                              ================  ================

  Diluted                                     $          0.07   $          0.02
                                              ================  ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                            46,752,367        46,515,590
                                              ================  ================

  Diluted                                          46,862,804        46,515,590
                                              ================  ================



       See the accompanying notes to these unaudited financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                           YP.NET, INC.
                          UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE THREE MONTH PERIODS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

                                                                THREE MONTHS          THREE MONTHS
                                                             ENDED DECEMBER 31,    ENDED DECEMBER 31,
CASH FLOWS FROM OPERATING ACTIVITIES:                               2003                  2002
                                                            --------------------  --------------------
<S>                                                         <C>                   <C>
  Net income                                                $         3,284,685   $         1,092,892
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
  Depreciation and amortization                                         196,193               138,933
  Income recognized on forgiveness of debt                                    -               (45,362)
  Amortization of deferred stock compensation                           226,779                     -
  Deferred income taxes                                                 229,928                41,251
  Officers & consultants paid common stock                                    -               453,750
  Common stock surrendered                                                    -              (115,979)
  Changes in assets and liabilities:
    Trade and other accounts receivable                              (2,646,424)             (953,153)
    Customer acquisition costs                                         (331,388)             (500,756)
    Prepaid and other current assets                                   (335,528)              (35,611)
    Other assets                                                        (36,256)               62,094
    Accounts payable                                                    (54,281)              (23,982)
    Accrued liabilities                                                (205,447)             (101,317)
    Income taxes payable                                                538,747               687,344
                                                            --------------------  --------------------
          Net cash  provided by operating activities                    867,008               700,104
                                                            --------------------  --------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Advances made to affiliates and related parties                    (2,000,000)             (100,000)
  Purchases of  intellectual property                                         -                (6,761)
  Purchases of  equipment                                               (89,698)             (163,919)
                                                            --------------------  --------------------
          Net cash (used in)  investing activities                   (2,089,698)             (270,680)
                                                            --------------------  --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from debt                                                          -               147,000
  Principal repayments on notes payable                                       -              (454,000)
                                                            --------------------  --------------------
          Net cash (used)/provided by financing activities                    -              (307,000)
                                                            --------------------  --------------------

(DECREASE) INCREASE IN CASH                                          (1,222,690)              122,424

CASH, BEGINNING OF PERIOD                                             2,378,848               767,108
                                                            --------------------  --------------------

CASH, END OF PERIOD                                         $         1,156,158   $           889,532
                                                            ====================  ====================

                   See the accompanying notes to these unaudited financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                  YP.NET, INC.
                UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
   FOR THE THREE MONTH PERIODS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002,
continued

SUPPLEMENTAL CASH FLOW INFORMATION:

                                                      Three month         Three month
                                                      period ended        period ended
                                                   December 31, 2003   December 31, 2002
                                                   --------------------------------------
<S>                                                <C>                 <C>
Interest Paid                                      $                -  $            6,000
                                                   ==================  ==================



           See the accompanying notes to these unaudited financial statements
</TABLE>




<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS  ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

1.  Basis of Presentation

The accompanying unaudited financial statements represent the consolidated
financial position of YP.Net, Inc. ("the Company") for the three month periods
ended December 31, 2003, and December 31, 2002, which includes results of
operations of the Company and Telco Billing, Inc. ("Telco"), its wholly owned
subsidiary, and statement of cash flows for the three month periods ended
December 31, 2003 and December 31, 2002.  These statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information.  Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments to these
unaudited financial statements necessary for a fair presentation of the results
for the interim period presented have been made.

2. Company Organization and Operations

YP.Net, Inc., a Nevada corporation (the "Company," "we," "us," or "our"), is in
the business of providing Internet-based yellow page advertising space on or
through www.Yellow-Page.Net, www.YP.Net  and www.YP.com.
        -------------------  ----------

The Company's  "yellow page" database lists approximately 18 million businesses
throughout the United States.  Our website enables internet users to search
through these "yellow page" listings and is used by businesses and consumers
attempting to locate a business and/or service provider in response to a user's
specific search criteria.

As our primary source of revenue, we offer a Mini-Webpage(TM) to businesses for
a monthly fee.  The Mini-Webpage(TM) provides a business with a priority
placement listing over non-paying listings and is displayed in a bigger and
bolder font at the beginning of, or in the first section of the user's search
results - thus featuring our paying customers more prominently to user's of our
website. In addition, our paying customers get a Mini-Webpage(TM) which includes
a 40-word description of their business, their hours of operation and other
useful information, a direct link to the paying customers website, (if they have
one and it is provided by the advertiser), map, driving directions to the paying
customers location and more. We market for advertisers for this Internet
Advertising Package ("IAP"), under the name "Yellow-Page.Net, exclusively to
businesses through a direct mail solicitation program.  The solicitation
includes a promotional incentive (i.e. generally  a $3.50 check) which, if
cashed by the business, automatically signs the business up for the IAP service
for an initial twelve month period with automatic renewals thereafter. This easy
subscription process provides a written confirmation (i.e., the check) of the
subscription by the newly subscribing business, which is verified by an
independent third party (i.e., the paying customers depositing bank). To
additionally insure the intention of sign-up, the Company then mails a written
confirmation card to the newly subscribing business generally within 30 days
from activation. The Company also provides a 120-day cancellation period whereby
the subscribing business may cancel and receive a full refund of any amounts
paid to the Company.

Each paying customer is billed monthly for that month's service, the vast
majority of such monthly billings appear on the subscribing business's local
phone bill.  Management believes this ability to bill the paying customer
through the paying customers phone bill is a significant competitive advantage
for the Company as few independent (not owned by a telephone company) yellow
page companies are authorized


<PAGE>
to bill directly on the phone bill for services rendered.

We were originally incorporated as a New Mexico company in 1969 and the Company
was re-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 March 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.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents:  This 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 December 31, 2003, cash deposits exceeded those
insured limits by $899,000.

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:  These 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 eighteen months, the estimated average period of
retention for new customers.  The Company capitalized costs of $1,285,000 and
$983,000 during the three months ended December 31, 2003 December 31, 2002,
respectively.  The Company amortized $1,066,000 and $483,000 of total
capitalized costs during the three months ended December 31, 2003 and December
31, 2002, 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 $224,316 and $149,381 for the three
months ended December 31, 2003 and December 31, 2002, 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.


<PAGE>
Revenue for billings to certain customers whom are billed directly by the
Company and not through the LEC's, is recognized based on estimated future
collections. The Company continuously reviews this estimate for reasonableness
based on its collection experience.

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, advances to affiliates,  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:  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.

Significant  estimates  made  in  connection  with  the  accompanying  financial
statements  include  the  estimate  of  dilution  and  fees  associated with LEC
billings  and  the  estimated  reserve  for  doubtful  accounts  receivable.

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."

Reclassifications:  Certain reclassifications have been made to the income
------------------
statement presented for the three months ended December 31, 2002 to conform to
the presentation of the income statement presented for the three months ended
December 31, 2003.

Impairment of Long-lived Assets: The Company assesses long-lived assets for
--------------------------------
impairment in accordance with the provisions of SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
SFAS 121 requires that the Company assess the value of a long-lived asset
whenever there is an indication that its carrying amount may not be recoverable.
Recoverability of the asset is determined by comparing the forecasted
undiscounted cash flows generated by said asset to its carrying value.  The
amount of impairment loss, if any, is measured as the difference between the net
book value of the asset and its estimated fair value.


<PAGE>
Recently Issued Accounting Pronouncements:  In July 2002, the FASB issued SFAS
-----------------------------------------
No. 146, "Accounting for Costs Associated With Exit or Disposal Activities".
This Standard requires costs associated with exit or disposal activities to be
recognized when they are incurred.  The Company estimates the impact of adopting
these new rules will not be material.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 is effective October 1, 2002. The adoption
of SFAS No. 147 did not have a material effect on the Company's financial
statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," effective for contracts entered
into or modified after June 30, 2003. This amendment clarifies when a contract
meets the characteristics of a derivative, clarifies when a derivate contains a
financing component and amends certain other existing pronouncements. The
Company believes the adoption of SFAS No. 149 will not have a material effect on
the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
is effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS No. 150 requires the classification as a
liability of any financial instruments with a mandatory redemption feature, an
obligation to repurchase equity shares, or a conditional obligation based on the
issuance of a variable number of its equity shares. The Company does not have
any financial instruments with a mandatory redemption feature. The Company
believes the adoption of SFAS No. 150 will not have a material effect on the
Company's financial statements.

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45).  FIN 45 clarifies the
requirements for a guarantor's accounting for and disclosure of certain
guarantees issued and outstanding. The initial recognition and initial
measurement provisions of FIN 45 are applicable to guarantees issued or modified
after December 31, 2002.  The disclosure requirements of FIN 45 are effective
for financial statements for periods ending after December 15, 2002. The
adoption of FIN 45 did not have a significant impact on the Company's financial
statements.  See Note 10.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities" (FIN 46). FIN No. 46 states that companies that have exposure to the
economic risks and potential rewards from another entity's assets and activities
have a controlling financial interest in a variable interest entity and should
consolidate the entity, despite the absence of clear control through a voting
equity interest. The consolidation requirements apply to all variable interest
entities created after January 31, 2003. For variable interest entities that
existed prior to February 1, 2003, the consolidation requirements are effective
for annual or interim periods beginning after June 15, 2003. Disclosure of
significant variable interest entities is required in all financial statements
issued after January 31, 2003, regardless of when the variable interest was
created. The Company is presently reviewing arrangements to determine if any
variable interest entities exist but does not anticipate the adoption of FIN 46
will have a significant impact on the Company's financial statements.

4.   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.



<PAGE>
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 to 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 on historical experience and subsequent
information received from the billing companies. The Company also estimates
uncollectible account balances and provides an allowance for such estimates.
The billing companies retain certain holdbacks that may not be collected by the
Company for a period extending beyond one year. These balances have been
classified as long-term assets in the accompanying balance sheet.

The Company experiences significant dilution of its gross billings by the
billing companies. The Company negotiates collections with the billing companies
on the basis of the contracted terms and historical experience. Holdbacks, fees,
and other matters, which are determined by the LEC's and the billing companies,
may affect the Company's cash flow. The Company processes its billings through
two primary billing companies.

eBillit, Inc. ("EBI") provides the majority of the Company's billings,
collections, and related services. The net receivable due from eBillit at
December 31, 2003 was $8,501,002, net of an allowance for doubtful accounts of
$2,986,421. The net receivable from EBI at December 31, 2003, represents
approximately 77% of the Company's total net accounts receivable at December 31,
2003.

Subscription receivables that are directly billed by the Company are valued and
reported at the estimated future collection amount.  Determining the expected
collections requires an estimation of both uncollectible accounts and refunds.
The net subscriptions receivable at December 31, 2003 was $216,026.
Accounts receivable at December 31, 2003 is summarized as follows:

                                      -----------  ----------  -----------
                                        Current    Long-Term      Total
                                      -----------  ----------  -----------

     Gross accounts receivable        $13,840,206  $1,231,015  $15,071,221

          Allowance for doubtful        3,652,604     320,064    3,972,668
          accounts
                                      ------------------------------------
                                      $10,187,602  $  910,951  $11,098,553

                                      ====================================


Certain receivables have been classified as long-term because the Company's
collection experience with those receivables has historically extended beyond
one year.

5.   INTELLECTUAL PROPERTY

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


<PAGE>
and cash flow generated through use of Yellow-page.net supports the carrying of
                                       ---------------
the asset. The Company periodically analyzes the carrying value of this asset to
determine if impairment has occurred. No such impairments were identified during
the year ended September 30, 2003 or the three months ended December 31, 2003.
The URL is amortized on an accelerated basis over the twenty-year term of the
licensing agreement. Amortization expense on the URL was $109,926 and $93,031
for the three months ended December 31, 2003 and December 31, 2002,
respectively.

6.   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.

Income  taxes  for  three  months  ended  December  31 is summarized as follows:

                                                2003        2002
                                            -----------  ---------

   Current Provision                        $ 1,538,747  $ 687,344
   Deferred (Benefit) Provision                 229,928     41,250
                                            ----------------------

   Net income tax provision                 $ 1,768,675  $ 728,594
                                            ======================

During the year ended September 30, 2003, the Company expanded certain
operations and revenue generating assets in Nevada where there are no corporate
income taxes thereby reducing the statutory rate used for state income taxes.

At December 31, 2003, deferred income tax assets related to differences in book
and tax bases of accounts receivable, direct marketing costs and intangible
assets.

At December 31, 2003 deferred tax liabilities were comprised of differences in
book and tax bases of customer acquisition costs and property and equipment
respectively.

7.   NET INCOME PER SHARE

Net income per share is calculated using the weighted average number of shares
of common stock outstanding during the three months ended December 31, 2003 and
December 31, 2002, respectively.  Preferred stock dividends are subtracted from
the net income to determine the amount available to common shareholders.  There
were $494 and $395 in preferred stock dividends in the three months ended
December 31, 2003 and December 31, 2002, respectively.  Warrants to purchase
500,000 shares of common stock were excluded from the calculation for the three
months ended December 31, 2002.  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.  Also excluded from the calculation for the three
months ended December 31, 2003 were 131,840 shares of Series E Convertible
Preferred Stock issued during the year ended September 30, 2002, which are
considered anti-dilutive due to the cash payment required by the holders of the
securities at the time of conversion.  The dilutive effect of unvested
restricted awards and certain warrants are included in the calculation of
diluted earnings per share for the three month period ended December 31, 2003.
Excluded from the calculation of diluted earnings per share for the three month
period ended December 31, 2003 are warrants to purchase 375,000 shares of common
stock and


<PAGE>
unvested restricted stock awards totaling 1,873,572 shares. The securities are
excluded from the calculation because their inclusion would be anti-dilutive.

The following presents the computation of basic and diluted loss per share from
continuing operations for the three months ended December 31:

<TABLE>
<CAPTION>
                                  Three
                                 Months                          Three Months
                                  Ended                             Ended
                                December                           December
                                31, 2003                           31, 2002
                                                         Per                                 Per
                                 Income       Shares    Share       Income        Shares    share
<S>                            <C>          <C>         <C>     <C>             <C>         <C>

Net  Income                    $3,284,685                       $   1,092,892
Preferred stock dividends            (494)                               (395)
                               -----------                      --------------

Income available to common
 Stockholders                  $3,284,191                       $   1,092,497
                               ===========                      ==============
BASIC EARNINGS PER SHARE:

Income available to common
stockholders                   $3,284,191   46,752,367  $ 0.07  $   1,092,497   46,515,590  $ 0.02
                               ===========              ======  ==============              ======

Effect of dilutive securities                  110,437

DILUTED EARNINGS PER SHARE     $3,284,191   46,862,804  $ 0.07  $   1,092,497   46,515,590  $ 0.02
                               ===========              ======  ==============              ======
</TABLE>

8.   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.

The "Put" feature has been renegotiated and retired. As part of the renegotiated
settlement, the Company provided a credit facility of up to $20,000,000 to the
former Telco shareholders, collateralized by the stock held by these
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 without allowing at least 30 days operating cash reserves or if the
Company is in an uncured default with any of its lenders.  At December 31, 2003,
the Company had advanced $4,197,460 under this agreement.   The former Telco
shareholders have been making interest payments on the advances but, as allowed
under the agreement, have not made any principal repayments.

In the three month period ended December 31, 2003, the Company and the former
Telco shareholders agreed to amend the arrangement whereby the Company will be
required to advance only an additional $1,300,000 through April 2004 and the
ability to draw on that facility will cease at that time.  However,


<PAGE>
the Company made a commitment in connection with that amendment to begin paying
dividends to all of its common stockholders in the fiscal year ended September
30, 2004.

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

The Company has entered into a customer billing service agreement with eBillit,
Inc. (EBI) also known as PaymentOne.  EBI 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, 2005, unless either party gives notice of
termination 90 days prior to that renewal date. Under the agreement, EBI bills,
collects and remits the proceeds to Telco net of reserves for bad debts, billing
adjustments, telephone company fees and EBI fees.  If either the Company's
transaction volume decreases by 25% from the preceding month, or less than 75%
of the traffic is billable to major telephone companies, EBI may at its own
discretion increase the reserves and holdbacks under this agreement.    EBI
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 EBI.  EBI may at its
own discretion increase the reserves and holdbacks under this agreement.

The Company has also entered into an agreement with ACI Communications, Inc.
ACI provides billing and collection and related services associated to the
telecommunications industry.

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.

Other
-----

The Company's Board of Directors has committed the Company to pay for the costs
of defending a civil action filed against its CEO and Chairman.  The action
involved a business that the CEO was formerly involved in. The Company and at
least one officer had received subpoenas in connection with this matter and the
Board believes that it is important to help resolve this matter as soon as
possible. The Board action included the payment of legal and other fees for any
other officers and directors that may have become involved in this civil action.
During the three months ended December 31, 2003, the Company paid costs of
approximately $54,000 on behalf of its CEO relative to this matter.  The amounts
expensed in the current period are presented as compensation expense within
general and administrative expenses in the accompanying statement of operations
for the three months ended December 31, 2003.  The Company believes that all
civil actions against the CEO related to this matter have been dismissed or are
being dismissed.  However, additional legal costs will be incurred to address
all matters in finalizing this issue and, at this time, the Company cannot
estimate what additional costs may be incurred to continue covering the costs
related to this matter, but all such costs shall be deemed to be additional
compensation to the CEO.

The Company has entered into "Executive Consulting Agreements" with four
entities controlled by four of the Company's officers individually.  These
agreements call for fees to be paid for the services provided by these
individuals as officers of the Company as well as their respective staffs.
These agreements are not personal service contracts of these officers
individually.  The agreements extend through 2007 and require annual performance
bonuses that aggregate up to approximately $320,000 depending upon available
cash and meeting of certain performance criteria.


<PAGE>
9.   RELATED PARTY TRANSACTIONS

During the three months periods ended December 31, 2003 and 2002, the Company
entered into the related party transactions with Board members, officers and
affiliated entities as described below:

Directors & Officers
--------------------

Board of Director fees for the three month periods ended December 31, 2003 and
2002 were $20,000 and $40,000 respectively.  These amounts are in included in
the amounts discussed below.

The CEO, a Subsidiary Officer, a Subsidiary Officer and Corporate Secretary as
well as the CFO are paid for their services and those of their respective staffs
through separate entities controlled by these individuals who pre-date their
association with the Company.  The following describes the compensation paid to
these entities.

Sunbelt Financial Concepts, Inc.
--------------------------------


Sunbelt Financial Concepts, Inc. ("Sunbelt") provides the services of the
Chairman and CEO and his staff to the Company.

Sunbelt provides the strategic and overall planning as well as the operations
management to the Company.  Sunbelt's team is experienced in all areas of
management and administration.

During the three month period ended December 31, 2003, the Company paid a total
of approximately $156,000 to Sunbelt. Included in that amount is $105,600 in
fees for services rendered by Sunbelt. In addition, the Company paid
approximately $54,000 on behalf of the CEO to attorneys for legal fees incurred
by  Sunbelt  related to the personal legal matters discussed in Note 8.
Approximately $532,000 of total amounts due Sunbelt remain accrued at December
31, 2003.

Advertising Management & Consulting Services, Inc.
--------------------------------------------------

Advertising Management & Consulting Services, Inc. ("AMCS") provides the
services of a Subsidiary Officer, a Director of the Company, and his staff to
the Company. AMCS is a marketing and advertising company experienced in
designing Direct Marketing Pieces, insuring compliance with regulatory
authorities for those pieces and designing new products that can be mass
marketed through the mail.  AMCS' president is a director of the Company.

The Company outsources the design and testing of its many direct mail pieces to
AMCS for a fee. AMCS is also responsible for new products that have been added
to the Company's website and is working on new mass-market products to offer the
Company's customers.

Total amount paid to this director and AMCS during the three month period ended
December 31, 2003 was approximately $187,000.  At December 31, 2003, the total
amount accrued to AMCS is $92,300.


Advanced Internet Marketing, Inc.
---------------------------------

Advanced Internet Marketing, Inc. ("AIM") provides the services of a Subsidiary
Officer, Corporate Secretary and a Director of the Company, and his staff to the
Company.


<PAGE>
The Company outsources the design and marketing of it's website on the World
Wide Web to AIM.  AIM's team of designers is experienced in all areas of web
design and has created all of the Company's logos and images for branding.

The total amount paid to AIM during the three month period ended December 31,
2003 was approximately $97,000.  At December 31, 2003, the total amount accrued
to AIM is approximately $81,000.

MAR & Associates
----------------

The services of the Company's Chief Financial Officer and his staff are paid to
MAR & Associates ("MAR").  The total amount paid to MAR during the three month
period ended December 31, 2003 was $81,400.  At December 31, 2003, the total
amount accrued to MAR is approximately $61,000.

Other
-----

The Company made additional advances to former Telco shareholders of $2,000,000
during the three month period ended December 31, 2003.  Interest earned on these
advances was $71,256 for the three months ended December 31, 2003.

Advances to affiliates are summarized as follows at December 31, 2003:

          Morris & Miller     $2,877,399

          Mathew & Markson     1,320,061

                              ----------
                              $4,197,460
                              ==========

On December 22, 2003, the Company entered into an agreement with the former
Telco shareholders that terminates the line of credit agreement effective April
9, 2004.

Simple.Net, Inc. ("SN")
-----------------------

The Company had contracted with Simple.Net, Inc. ("SN"), an internet service
provider owned by a director of the Company, to provide internet dial-up and
other services to its customers.   SN had sold said services to the Company at
below market rate prices from time to time. During the three month periods ended
December 31, 2003 and 2002, the Company paid SN approximately $315,058 and
$34,390, respectively for said services.  At December 31, 2003, $73,000 due SN
was accrued in accounts payable.

In addition, SN paid a monthly fee to the Company for technical support and
customer service provided to SN's customers by the Company's employees. The
Company charged SN for these services according to a per customer pricing
formula:

Customer Service & Management Agreement fees are calculated by number of
customer records of SN multiplied by a base cost of $1.02.

Technical Support fees are calculated by number of customer records of SN
multiplied by a base cost of 60 cents.


<PAGE>
For the three month periods ended December 31, 2003 and 2002, the Company
recorded other income of $274,758 and $113,277, respectively, from SN for these
services.

On December 29, 2003, we entered into a separation agreement with Simple.Net
which becomes effective January 31, 2004. Under this agreement, Simple.Net will
no longer provide any services to us. Although the Separation Agreement provides
for a 30-day extension until March 2, 2004.

10.  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 December 31,
2003, the Company had bank balances exceeding those insured limits of $899,000.

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 primarily by two third party billing
companies.  The Company is dependent upon these billing companies for collection
of its accounts receivable.  As discussed in Note 4, the net receivable due from
a single billing services provider at December 31, 2003 was $8,501,002, net of
an allowance for doubtful accounts of $2,986,421.  The net receivable from that
billing services provider at December 31, 2003, represents approximately 77% of
the Company's total net accounts receivable at December 31, 2003.

                              *   *   *   *   *   *


<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS

     For a description of our significant accounting policies and an
understanding of the significant factors that influenced our performance during
the three months ended December 31, 2003, this "Management's Discussion and
Analysis" should be read in conjunction with the Consolidated Financial
Statements, including the related notes, appearing in Item 1 of this Annual
Report.

Forward-Looking  Statements

     This portion of this Quarterly Report on Form 10-QSB, includes statements
that constitute "forward-looking statements."  These forward-looking statements
are often characterized by the terms "may," "believes," "projects," "expects,"
or "anticipates," and do not reflect historical facts.  Specific forward-looking
statements contained in this portion of the Annual Report include, but are not
limited to:  (i) our belief that dilution is not expected to increase at the
same rate in the foreseeable future; (ii) our belief that capital expenditures
are not expected to increase at the same rate for the foreseeable future (iii)
our intention to increase the monthly price to our current customers after such
customers have completed six months of  advertising at their current monthly
price and (iv) our expectation to begin paying a $0.01 per share quarterly
dividend.

     Forward-looking statements involve risks, uncertainties and other factors,
which may cause our actual results, performance or achievements to be materially
different from those expressed  or implied by such forward-looking statements.
Factors and risks that could affect our results and achievements and cause them
to materially differ from those contained in the forward-looking statements
include those identified in the section below titled "Certain Risk Factors
Affecting Our Business," as well as other factors that we are currently unable
to identify or quantify, but may exist in the future.

     In addition, the foregoing factors may affect generally our business,
results of operations and financial position.  Forward-looking statements speak
only as of the date the statement was made.  We do not undertake and
specifically decline any obligation to update any forward-looking statements.

Overview

     YP.Net, Inc., a Nevada corporation (the Company, "we, "us," or "our") is a
national Internet Yellow Page publisher.  Through our wholly-owned subsidiary,
Telco Billing, Inc. ("Telco"), we only publish our Yellow Pages online at or
through the following URL's: www.Yellow-Page.Net, www.YP.Net and www.YP.Com.
                             -------------------  ----------     ----------
Any information contained on the foregoing websites or any other websites
referenced in this Quarterly Report are not a part of this Quarterly Report.

     We use a business model similar to print Yellow Page publishers.  We
publish basic directory listings ("Basic Listings"), free of charge.  Like
Yellow Page publishers, we generate revenues from those advertisers
("Advertisers") that desire increased exposure for their businesses.  Our Basic
Listings contain the business name, address and phone number for almost


                                                                              18
<PAGE>
18 million U.S. businesses. We strive to maintain a listing for almost every
business in America in this format.

     As described below, Advertisers pay us monthly fees in the same manner that
advertisers pay additional fees to traditional print Yellow Page providers for
enhanced advertisement font, location or display.  The users ("Users") of our
website(s) are prospective customers for our Advertisers.

     We offer several different upgrades to our advertising customers:

     Internet Advertising Package(TM) ("IAP").  Under this package, the
Advertiser pays for additional exposure by purchasing a Mini-WebPage(TM).  This
Mini-WebPage contains, among other useful information, a 40-word description of
the business, hours of operation and detailed contact information.  This product
is easily searched by Users on their personal computers, as well as cellular
phones and other hand-held devices.  In order to provide search traffic to the
Advertiser's Mini-WebPage, we elevate the Advertiser to a preferred listing
("Preferred Listing") status, at no additional charge.  As such, the preferred
Advertiser enjoys the benefit of having its advertisement displayed in a primary
position before all Basic Listings in that particular category when Users
perform searches on our site(s).  The Mini-WebPage is easily accessed and
modified by Advertisers.  We also provide our Internet Advertising customers
with enhanced presentation and additional unique products:

     -    larger font;
     -    bolded business name;
     -    map directions;
     -    a Click2Call feature, whereby a User can place a telephone call to the
          Internet Advertising customer by clicking the icon that is displayed
          on the Mini-WebPage. This call is free of charge to both the User and
          the Internet Advertising customer;
     -    a link to the Internet Advertiser's own webpage; and
     -    additional distribution network for Preferred Listings. This feature
          gives additional exposure to our Internet Advertising customers by
          placing their Preferred Listing on several online directory systems.
          This service is currently free of charge to our Advertisers.

     The Internet Advertising Package currently costs the Advertiser $24.95 per
month ($21.95 for new Advertisers).  As of December 31, 2003, we had signed up
approximately 283,064 Internet Advertising Packages and we have gathered
Mini-WebPage information on 231,071 IAP's.  Currently, this product accounts for
over 95% of our revenue.

     Online QuickSite Package(TM) ("QuickSite(TM)").  For those IAP Advertisers
that do not have their own website and that desire to provide more information
than is offered through the IAP Mini-WebPage, we will design and create an eight
page, template-driven, website for the Advertiser, a QuickSite.  We charge the
Advertiser a set-up fee of $200.00 and an additional $39.95 per month for
hosting services for their QuickSite.  Once set up, the Advertiser can access
their new QuickSite online and make modifications at their discretion.  This
essentially serves the same function as do display advertisements in the print
Yellow Page books, except that it can be changed more often to meet Advertisers'
needs.  Users can access these QuickSites


                                                                              19
<PAGE>
on the World Wide Web or from the Advertisers Preferred Listing or Mini-WebPage.
As of December 31, 2003, we had created and currently host approximately 272
QuickSites.

     Internet Dial-Up Package(TM) ("IDP").  We offer our Internet Advertising
customers a cost-effective and efficient Internet dial-up package to take
advantage of the benefits offered by on-line access.  This allows our
Advertisers who do not have Internet access to take full advantage of the IAP
and QuickSite packages that we offer.  In certain geographical areas, we have
offered a bundled product whereby the IAP Advertiser can either pay for the
advertising or the IDP, in which case they will receive the other service free.
As of December 31, 2003, approximately 47,940 Internet Advertising customers
utilize the service without charge.  However, we intend to expand and market
this package to new Advertisers in the next fiscal year at a cost of $34.95 per
month for a bundled product.  Those Advertisers that already have the free
service will retain their current bundled pricing.

     Marketing.  Unlike most print Yellow Page companies that sell advertising
space by visiting or calling potential advertisers in their area, we solicit
advertisers for our Internet Advertising Package exclusively by direct mail.  We
believe this enables us to offer our products and services at more affordable
rates than our competitors.  Moreover, we believe direct mail is a less
expensive form of marketing than visiting or calling potential customers.
Currently, our direct mail marketing program includes a promotional incentive,
generally in the form of a $3.50 activation check that a solicited business
simply deposits to activate the service and become an Internet Advertising
customer on a month-by-month basis.  As a method of third-party verification,
the depositing bank verifies that the depositing party is in fact the solicited
business.  Upon notice of activation by a depositing bank, we immediately
contact the business to confirm the order and obtain the information necessary
to build their Mini-WebPage.  Within 30 days of activation, we also send a
confirmation card to the business.  To ensure our goal of 100% customer
satisfaction, we offer a cancellation period of 120 days and a full refund.  Our
direct mail marketing program complies with and, in many instances, exceeds the
United States Federal Trade Commission ("FTC") requirements as established by
agreement signed between the Company and the FTC in September 2001.

     Billing.  Similar to the local Regional Bell Operating Companies, we are
approved to bill our products and services directly on most of our Advertisers'
local phone bill.  We believe that this is a significant competitive advantage
as few independent Yellow Page companies are authorized to do business in this
fashion.

     Benefits to Advertisers.  For advertisers, we believe that online Yellow
Pages provide significant competitive advantages over existing print
directories.  For example, the ability of online advertisers to access and
modify their displays and advertisements often results in more current
information.  Additionally, online advertisers can more readily advertise
temporary or targeted specials or discounts.  We provide added value to our
Advertisers who have purchased our Internet Advertising Packages through
promotion and branding of our website to bring customers to our Advertisers.  We
believe that the large number of Internet Advertising Packages, that includes
the Mini-WebPages, provides Users with more information, which is more readily
available on our sites, compared to our competitors.  We believe that we provide
Users with what they are looking for, more quickly and more efficiently.  We
believe the attraction of such Users will, over the long-term, result in more
sales for our Internet Advertisers.


                                                                              20
<PAGE>
     Moreover, we provide additional value through our relationships.  We
provide the vast majority of the Preferred Listings on a number of competitors'
websites, including www.switchboard.com, www.myareaguide.com, as well as on
                    -------------------  -------------------
www.go2.com.  The go2 site has exclusive contracts with providers like Verizon
-----------
Wireless, AT&T Wireless, ALLTEL, Nextel and Sprint to also provide this
information to their cellular phone and hand-held device subscribers.

     From a User's Standpoint.  A national, online Yellow Pages allows the User
to access information nationally rather than relying exclusively on local
listings like those provided in print Yellow Page directories.  In addition, our
product offerings allow Users to find and take advantage of advertisers' current
special offerings and discounts.  We also provide easy access to such
information through desktop or laptop computers, cellular phones or hand-held
devices, such as personal digital assistants.  We believe our offering of a
national online Yellow Pages service meets the growing demand for immediate
access and the increasing need and trend of Users who are more frequently
traveling to areas outside the areas serviced by their local print directories.

     Directory Service and Search Engine.  We also believe that our products
offer many competitive advantages over standard search engines.  Our directory
service and search engine format allows the User to search by location using
either a business name or business category.  Unlike popular commercial search
engines, our search engine does not search the Internet to provide results.
Instead, it searches our defined database, resulting in a more focused, refined
and, oftentimes, quicker and more accurate search.

Recent Developments

Las Vegas Office

     In October 2003, our wholly owned subsidiary, Telco, signed a three-year
lease on a facility in Las Vegas, Nevada consisting of annual lease payments of
approximately $201,000. This facility is approximately 3,500 square feet and is
the primary operating facility of Telco. The lease is an operating lease for
accounting purposes. This location will shortly replace Telco's facility in
Boulder City, Nevada. This space was necessary to accommodate Telco's expanding
sales and accounting staff.

Termination of Credit Agreement with Former Telco Shareholders

     On December 22, 2003, the Company entered into an agreement with the former
Telco shareholders that terminates the line of credit agreement effective April
9, 2004.

Separation Agreement with Simple.Net

     On December 29, 2003, we entered into a separation agreement with
Simple.Net, which becomes effective January 31, 2004. Under this agreement,
Simple.Net will no longer provide any services to us. Although the Separation
Agreement provides for a 30-day extension until March 2, 2004.


                                                                              21
<PAGE>
Amendment to 2003 Stock Plan

     On  December  31, 2003, The Board of Directors voted to approve an increase
in the 2003 Plan from 3,000,000 to 5,000,000 shares.  Our stockholders are being
asked  to  approve  the  increase  at  the  Company's  2004  Annual  Meeting  of
Stockholders.

Future Outlook

     We intend to pursue the following growth strategies and initiatives in
fiscal 2004:

     Internet Advertising Package.  We currently derive almost all of our
revenue from selling IAPs.  During fiscal 2003, we continued our direct mail
marketing program to acquire additional Internet advertising customers.  We
regularly solicit potential advertisers from a database of approximately 18
million U.S. businesses.  This database is continually updated to account for
new or closed businesses, as well as updated contact information.  As a result
of this program, we have increased our IAP customer count from 168,980 at
December 31, 2002 to 283,064 at December 31, 2003.  This total represents less
than 2% of the total available market of approximately 18 million U.S.
businesses according to Acxiom USA.  During fiscal 2004 and beyond, we plan to
continue aggressively marketing additional IAPs using our direct mail marketing
program.

     Branding.  We plan to further embark upon a substantial campaign to brand
our YP.Com name and our products.  We seek to become the "internet yellow pages
of choice" to advertisers and Users performing searches.  We plan to use various
forms of media, which may include print, television, radio, billboard and
movie-theater advertising in select markets or nationally.  We believe such
branding will help to attract Users to our websites, as well as advertisers to
sign-up for our IAP and/or other service offerings.  The goal of our branding is
to obtain instant customer recognition of our offerings that, over time, may
enhance the response rate of our direct mail marketing program.  However, we
expect to incur significant costs relating to our branding prior to such
benefits being realized which we expect to fund from our internal cash flow.

     Expansion of Service Offerings to Other Countries.  We are currently
exploring our ability to offer our services in other English-speaking countries,
which we believe we could accomplish without hiring a significant number of
additional people or incurring additional training costs.

     Marketing of QuickSite.  Until recently, we have not focused our marketing
efforts on the QuickSite service offering.  As a part of a test market, we
maintained three full time sales people and experimented with less traditional
lines of selling, such as through third party agents like EZsitemaster, Inc.
Through these efforts, we acquired an immaterial number of  QuickSite customers
during fiscal 2003.  In fiscal 2004, we will continue these efforts, as well as
test marketing the use of our direct mail marketing program tailored for this
product.  We believe that this marketing effort may produce additional revenues.

     Internet Dial-up Package.    We will begin to charge new Advertisers for
our bundled product, consisting of the IAP and IDP, in certain geographical
areas.  Initially, this bundled product will cost the new Advertiser $34.95 per
month, or at least $5 more per month than the IAP alone.  This pricing will save
the Advertiser approximately 40% over the individual stand


                                                                              22
<PAGE>
alone prices. We believe this offering will enhance revenue by raising the price
to the Advertiser for each ISP/IDP sold at very little additional cost to us.

     National Accounts Marketing.  Currently, we have limited our marketing
efforts to individual business units, rather than national accounts, such as
hotel chains, automobile dealers, etc.  We believe a significant opportunity
exists to offer our IAP and other service offerings to such national accounts on
a bulk basis, which, if successful, may result in additional revenues.  We plan
to hire or contract with a dedicated sales force, as well as customer account
set-up/maintenance personnel.

Results  Of  Operations

     Net revenue for the three month period ended December 31, 2003, was
$13,866,967 compared to $5,505,890 for the three month period ended December 31,
2002, an increase of approximately 152%. This increase in net revenue is
primarily the result of two factors: an increase in the number of our IAP
Advertisers and an increase in our monthly pricing.  These two factors are
discussed further below.

     Our IAP Advertiser count increased to 283,064 at December 31, 2003 compared
to 168,980 at December 31, 2002, an increase of approximately 68%.  Relating to
our price increase, we  charged $21.95 monthly versus $17.95 previously for new
IAP Advertisers.  In addition, the monthly charge to existing IAP Advertisers
was increased to $24.95 per month upon the first anniversary of their listing.
This price increase was instituted on March 20, 2003. As of January 1, 2004, we
increased our monthly price for new IAP Advertisers to $29.95. For current
customers, we intend to increase their monthly price to $29.95 from their
current pricing after such customers have completed six months of advertising
at their current monthly price.

     We recently revised the method by which we count our customers.  We believe
that the new methodology is more accurate and can be more consistently applied
to each period.  We believe that the disclosure of customer counts including
total Activated customers and paying customers provides the most insight into
our business.

     Activated customers include those Advertisers that are currently paying for
the IAP service, as well as those Advertisers that have signed-up for the IAP
service but have not necessarily been billed and begun their payment for the
service.  Based upon these revisions, we had 283,064 Activated IAP customers at
December 31, 2003, 255,376 Activated IAP customers at September 30, 2003,
235,162 Activated IAP customers at June 30, 2003, 222,092, Activated IAP
customers at March 31, 2003 and 168,980 Activated IAP customers at December 31,
2002.

     Regarding Paying customers, the Company had 252,915 Paying customers at
December 31, 2003, 221,537 Paying customers at September 30, 2003, 167,000
Paying customers at June 30, 2003, 151,173 Paying customers at March 31, 2003
and 137,346 Paying customers at December 31, 2002.  The amount and frequency of
collections on invoice- billed customers is significantly less than for
customers billed on their monthly telephone bill.  Therefore, revenue can be
negatively impacted if the billing method used to bill a preferred listing
customer converts from monthly telephone bill invoicing to direct invoicing.
Also, revenue can be negatively impacted by customer requests for refunds and/or
cancellations.


                                                                              23
<PAGE>
     Cost of services for the three month periods ended December 31, 2003 and
December 31, 2002 were $4,882,402 and $1,586,585 respectively, an increase of
approximately 208%.  Cost of services is comprised of billing aggregator
dilution expenses, certain direct mailer marketing costs and the amortization of
such costs, allowances for bad debt and our billing costs including billing fees
charged by our billing aggregators.  Dilution expenses include customer credits
and any other receivable write-downs.  The primary reason our cost of services
has continued to increase is due primarily to the previously mentioned increase
in IAP customers as well as increased dilution and billing fees resulting from
our direct solicitation mailing efforts.  Cost of services as a percent of net
revenue was approximately 35% for the three months ended December 31, 2003
compared to approximately 29% for the same period in the prior fiscal year.

     These increased costs resulted from the previously mentioned increased
customer counts, as well as increased dilution costs resulting from the
conversion of direct invoice billed customers to monthly telephone billing. We
do not expect such dilution costs to increase at this same rate in the future.
Amortization of direct marketing costs included in cost of sales is $1,065,864
for the three months ended December 31, 2003 and $932,816 for the prior year
period.

     Gross profits increased to $8,984,565 for the three months ended December
31, 2003 from $3,919,305 for the prior year period.  Gross margins decreased to
approximately 65% in the three months ended December 31, 2003 compared to
approximately 71% in the prior year period.

     General and administrative expense for the three month periods ended
December 31, 2003 and December 31, 2002 were $2,790,743 and $1,376,078,
respectively, an increase of approximately 102%. General and administrative
expenses increased due to an increase in costs and employees relating to our
growth in IAP customers, our Quality Assurance and Outbound marketing
initiatives as well as an increase in certain officers' compensation relating to
employment contracts with such officers. As a percent of net revenue, general
and administrative expenses were approximately 20% for the three months ended
December 31, 2003 compared to 25% for the comparable period in 2002.  The
reduction in general and administrative expenses as a percent of net revenue is
the result of the leveraging our fixed cost infrastructure over a larger
customer base.

     Sales and marketing expenses are primarily the costs associated with our
marketing relating to our direct mail solicitations.  Sales and marketing
expenses for the three month periods ended December 31, 2003 and December 31,
2002 were $1,290,180 and 632,435, respectively, an increase of approximately 104
%.  The primary reason for the increase in sales and marketing is due to the
Company fully re-instituting its marketing solicitation program and the
implementation of new market strategies and modification of direct mail
marketing pieces.  Such marketing has resulted in the increase in IAP customers
cited previously.  As discussed in cost of services above, we capitalize certain
direct marketing expenses and amortize those costs over an 18 month period based
on the customer attrition rates analyzed by the Company.  As a percent of net
revenues, sales and marketing expenses were approximately 9% and approximately
11% for the three month periods ended December 31, 2003 and 2002, respectively.


                                                                              24
<PAGE>
     Depreciation and amortization primarily relates to the amortization of the
Company's intellectual property and depreciation of equipment. Amortization
relating to the capitalization of our direct mail marketing costs is included in
cost of sales as discussed previously.

     Depreciation and amortization expense was $196,193 in the three months
ended December 31, 2003 compared to $138,932 for the three months ended December
31, 2002. Depreciation and amortization for the three ended December 31, 2003
increased slightly compared to the comparable period in 2002 due to additional
purchases of equipment relating to our upgrade in infrastructure in the
information technology department, hardware purchased relating to our Quality
Assurance and Outbound Marketing initiatives as well as a result of our
agreement with OnRamp Access, Inc. to license the YP.Com Uniform Resource
Locator ("URL"). Regarding the Company's other intellectual property, the cost
of our Yellow-Page.Net URL license was capitalized at $5,000,000. The URL is
amortized on an accelerated basis over the twenty-year term of the agreement.
Amortization expense on the URL was $82,013 and $91,125 for the three month
periods ended December 31, 2003 and December 31, 2002, respectively. Annual
amortization expense in future years related to the URL is anticipated to be
approximately $250,000-$350,000 As a result of the significant equipment
purchases relating to the Company's previously-mentioned infrastructure
additions, depreciation expense is expected to be greater in the current year
periods compared to the prior year periods. However, we do not anticipate
capital expenditures to grow at the same rate in the current fiscal year
compared to the prior fiscal year.

     Operating income for the three month period ended December 31, 2003 was
$4,707,449 compared to $1,771,860 in the prior year period, an increase of
approximately 166%. Operating margins increased to approximately 34% from
approximately 32% in the prior year period. The increase in operating income is
the result of the increased revenue discussed above and the leveraging of
certain fixed expenses over a larger customer base.

     Interest income , net of interest expense for the three month periods ended
December 31, 2003 was $71,153. This compares to interest income, net of interest
expense, of  $720 for the three months ended December 31, 2002.  The increase in
the interest income, net of interest expense,  primarily results from the
Company's increased average cash position resulting from the Company's increased
profitability as well as increased interest income resulting from the increase
in advances to affiliates.  We recorded other income of $ $274,758 and $48,906,
respectively, for the three month periods ended December 31, 2003 and December
31, 2002.

     The primary components of other income in the current year period is
revenue of $221,778 received from Simple.Net, a related party (See Footnote 9 to
the Financial Statements) for customer and technical services provided by the
Company to Simple.Net.  The primary component of other income in the prior year
period was $48,906  recorded as a gain on the previously disclosed Van Sickle
settlement.  Net income before taxes for the three month periods ended December
31, 2003 and December 31, 2002 were $5,053,360 and $1,821,486, respectively, an
increase of over 177%.  Pre-tax margins increased to approximately 36% in the
current period compared to approximately 33% in the prior year period.  The
increase in pre-tax income is a result of those factors that resulted in the
increase in operating income in addition to the increased interest income and
other income discussed above.


                                                                              25
<PAGE>
     The income tax provision was $1,768,675 in the three months ended December
31, 2003 compared to 728,594 in the prior year period.  The increase in the
income tax provision is the result of our increased profitability in current
year period compared to the previous year period.

     Net income for the three month periods ended December 31, 2003 and December
31, 2002 were $3,284,685, or $0.07 per diluted share, and $1,092,892, or $0.02
per diluted share, respectively, an increase in net income of over 200%.  In the
three month period ended December 31, 2003 compared to the comparable period in
2002, net income increased primarily due to the increase in IAP customers cited
above with a less than corresponding increase in the expenses to service such
customers due to nature of certain fixed infrastructure expenses which do not
necessarily increase as revenues increase offset by costs incurred relating to
the previously cited infrastructure additions.  Net income as a percent of net
revenues for the three months ended December 31, 2003 was approximately 24%
compared to approximately 20% for the comparable prior year period.  The
increase in the net margin is the result of the leveraging of certain fixed
expenses over a larger customer base in the current year period.

Liquidity And Capital Resources

     Net cash provided by operating activities for the three-month period ended
December 31, 2003, was $867,008 compared to $700,104 for the three-month period
ended December 31, 2002.  The increase in cash generated from operations is
primarily due to a significant increase in net income and  corresponding income
tax payable resulting from an increase in IAP customers offset by an increase in
the accounts receivable balance from such growth and funds expended for mailings
related to the Company's marketing efforts.

     We had working capital of $8,087,290 as of December 31, 2003 compared to
$3,964,798 as of December 30, 2002.  The increase is due primarily to increases
in cash of $266,626, accounts receivable of $5,657,656 and deferred taxes of
$1,382,867  offset by increases in accrued liabilities of $1,125,822 and income
taxes payable of $2,257,746. Cash used in investing activities was $2,089,698
for the three-month period ended December 31, 2003.  The primary component of
cash used was advances to affiliates of $2,000,000.  As previously disclosed
and discussed below, advances to affiliates are expected to cease in Fiscal
2004.  We intend to institute a quarterly $0.01 per share dividend on our common
stock at that time. This compares to the three-month period ended December 31,
2002, where cash used of $270,680 consisted primarily of purchases of equipment
of $163,919 and lower advances to affiliates of $100,000. There was no cash used
or provided by financing activities for the three-month period ended December
31, 2003, compared to cash used in financing activities of $307,000 for the
three-month period ended December 31, 2002. The cash used represents total
payments of $454,000 to reduce the principal balances of our outstanding debt
reduced by financing of $147,000 under the Company's trade acceptance draft
program with AcTrade Financial Technologies, Ltd. ("AcTrade"). In the past, the
Company has borrowed from two credit facilities. These credit facilities are
maintained primarily for safety and security back-up purposes as our cash flow
is generally more than sufficient to maintain and grow the business. In Fiscal
2003, we established a Trade Acceptance Draft program with AcTrade, which
enables us to borrow up to $150,000. A trade acceptance draft ("TAD") is a draft
signed by us and made payable to the order of a vendor providing us services.
AcTrade provides payment to the vendor and collects from us the amount advanced
to the vendor (plus interest) under extended payment terms, generally 30, 60 or
90


                                                                              26
<PAGE>
days. When used, we pay a rate of one percent per month of the amount of the
TAD. There is no term to the agreement with AcTrade and either party may
terminate the agreement at any time.

     We understand that AcTrade is currently in Chapter 11 bankruptcy.
Therefore, the availability of this facility is uncertain.  During Fiscal 2003,
we signed an unsecured credit facility of $250,000 with Bank of the Southwest.
The facility is for one year and interest on borrowings, if any, will be an
interest rate of 0.5% above the Prime Rate, as defined.  During recent
discussions with the Bank of the Southwest, it was indicated to us that this
credit facility will not be renewed as a result of their desire to focus on
relationships with private rather than public companies.  In Fiscal 2004, we
expect to pursue other credit facilities to replace the aforementioned credit
facilities.

     We incurred debt in the acquisition of the license right to the
Yellow-Page.Net URL.  A total of $5,000,000 was borrowed, $2,000,000 from Joseph
and Helen Van Sickle, $1,000,000 from our shareholders and $2,000,000 as a Note
from Mathew & Markson Ltd.  We had dedicated payments in the amount of $100,000
per month for the payment of the Van Sickle note, which was paid in full in
early Fiscal 2003.  The original note has been paid in full while a balance of
$115,866 remains on another note to Mathew & Markson.

     As previously described, collections on accounts receivables are received
primarily through the billing service aggregators under contract to administer
this billing and collection process.  The billing service aggregators 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.  In
August 2002, we entered into a new agreement with its primary billing service
provider, PaymentOne, whereby cash is remitted to us on a sixty day timetable
beginning November 2002.

     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 eighteen months.  The amortization lives are based on
estimated attrition rates.  During the three months ended December 31, 2003, we
paid $ 1,284,770 in advertising and marketing compared to $983,810 in the prior
year period.  We anticipate the outlays for direct-response advertising to
remain consistent over the next year.

     We have an agreement with two of our largest shareholders, Morris & Miller,
Ltd. and Mathew and Markson, Ltd., which is memorialized in a third Amendment to
the original Stock Purchase Agreement.  This agreement cancels the prior
revolving lines of credit with these parties effective April 9, 2004 upon the
payment of the following final specific advances to each of them:

     Morris & Miller, Ltd.

     $275,000 on January 30, 2004
     $300,000 on February 27, 2004
     $500,000 on March 31, 2004


                                                                              27
<PAGE>
     Sufficient funds to pay 3 years interest on April 9, 2004

     Mathew and Markson, Ltd.

     $50,000 on January 30, 2004
     $100,000 on February 27, 2004
     $75,000 on March 31, 2004
     Sufficient funds to pay 3 years interest on April 9, 2004

     The Company expects to begin paying a $0.01 per share dividend each quarter
after the above-described advances have been fully paid.

     Prior to December 31, 2003, we created YP Charities, an Internal Revenue
Code 501(c)(3) corporation, established to make charitable contributions to
worthy causes on our behalf and to encourage other companies that are good
corporate citizens to do the same.  As of this filing, we have not remitted any
amounts to YP Charities but plan to contribute $100,000 during fiscal 2004.  At
this time, the Board of  Directors of YP Charities is identical to the Board of
Directors of the Company.

Certain Risk Factors Affecting Our Business

     Our business is subject to numerous risks, including those discussed below.
If any of the events described in these risks occurs, our business, financial
condition and results of operations could be seriously harmed.

     OUR 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.

     WE ARE DEPENDANT UPON 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.


                                                                              28
<PAGE>
     OUR OPERATING RESULTS ARE DIFFICULT TO PREDICT.  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 a lower response rate, changes to our direct marketing  pieces
or regulatory matters discussed below.  As a consequence, operating results for
a particular quarter are extremely difficult to predict.  Our ability to meet
financial expectations could also be hampered if we are unable to correct the
billing/dilution through the billing aggregators and CLEC markets seen recently
or if direct mailing solicitations are not completed on a timely basis each
month or if the timing whereby monthly billings are submitted to billing
aggregators varies from month to month.

     WE ARE SUBJECT TO A STRICT 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.

     OUR QUARTERLY RESULTS OF OPERATIONS COULD FLUCTUATE DUE TO FACTORS OUTSIDE
OF OUR CONTROL, WHICH MAY CAUSE FLUCTUATIONS AND A CORRESPONDING DECREASE TO THE
PRICE OF OUR SECURITIES.  Our quarterly operating results may fluctuate for
reasons that are not within our control, including:

     -    demand for our services, which may depend on a number of factors
          including economic conditions, customer response rates to our direct
          marketing, customer refunds/cancellations and our ability to continue
          to bill customers on their monthly telephone bills, ACH or credit card
          rather than through direct invoicing;

     -    timing of new service or product introductions and market acceptance
          of new or enhanced versions of our services or products;

     -    our ability to develop and implement new services and technologies in
          a timely fashion to meet market demand as well as our ability to
          execute the mailing of our monthly direct mail solicitations;

     -    the actions of our competitors;

     -    the timing of billing and receipt of amounts from LEC's may vary, such
          that billing and revenues may fall into the subsequent fiscal quarter;

     -    the ability of our check processing service-providers to continue to
          process and provide billing information regarding our solicitation
          checks.

     The fluctuation of our quarterly operating results, as well as other
factors, could cause the market price of our securities to fluctuate and
decrease. Some of these factors include:


                                                                              29
<PAGE>
     -    the announcement of new customers or strategic alliances or the loss
          of significant customers or strategic alliances;

     -    announcements by our competitors;

     -    sales or purchases of Company securities by officers, directors and
          insiders;

     -    government regulation;

     -    announcements regarding restructuring, borrowing arrangements,
          technological innovations, departures of key officers, directors or
          employees, or the introduction of new products; and

     -    general market conditions and other factors, including factors
          unrelated to our operating performance or that of our competitors.

Investors in our securities should be willing to incur the risk of such price
fluctuations.

     OUR ABILITY TO EFFICIENTLY PROCESS ADVERTISER SIGN-UP'S AND BILL OUR
ADVERTISERS MONTHLY IS DEPENDENT UPON OUR CHECK PROCESSING SERVICE PROVIDERS AND
BILLING AGGREGATORS, RESPECTIVELY.  The Company currently uses three check
processing companies to provide us with Advertiser information at the point of
sign-up for our IAP.  One of these processors has indicated that it will be
outsourcing this function in the future.  Our ability to gather information to
bill our Advertisers at the point of sign-up could be adversely affected if one
or more of these providers experienced a disruption in their operations or
ceased to do business with us.

     We also are dependent upon our billing aggregators to efficiently bill and
collect monies from the LEC's relating to the LEC's billing and collection of
our monthly charges from Advertisers.  We currently have agreements with two
billing aggregators and are currently in the process of negotiating an agreement
with an additional billing aggregator.  Any disruption in our billing
aggregators' ability to perform these functions could adversely affect our
financial condition and results of operations

     WE FACE INTENSE COMPETITION, INCLUDING FROM COMPANIES WITH GREATER
RESOURCES.  THIS COMPETITIVE PRESSURE COULD LEAD TO CONTINUED DECREASES IN OUR
REVENUES, WHICH WOULD ADVERSELY AFFECT OUR OPERATING RESULTS.  Several companies
currently market yellow-page services that directly compete with our services
and products, including Yahoo and Microsoft.  For several reasons, we may not
compete effectively with existing and potential competitors.  These reasons may
include:

     -    Some competitors have greater financial resources and are in better
          financial condition than us;

     -    Some competitors have more extensive marketing and customer service
          and support capabilities;


                                                                              30
<PAGE>
     -    Some competitors may supply a broader range of services, enabling them
          to serve more or all of their customers' needs. This could limit sales
          for us and strengthen existing relationships that competitors have
          with customers, including our current and potential customers;

     -    Some competitors may be able to better adapt to changing market
          conditions and customer demand; and

     -    Other competitors not currently involved in the Internet-based
          yellow-page advertising business may enter the market or develop
          technology that reduces the need for our services.

     Increased competitive pressure could lead to lower prices and reduced
margins for our services.  If we experience reductions in our revenue for any
reason, our margins may continue to be reduced, which would adversely affect our
results of operations.  We cannot assure you that we will be able to compete
successfully in the future.

     STOCK PRICES OF TECHNOLOGY COMPANIES HAVE DECLINED PRECIPITOUSLY OVER THE
LAST SEVERAL YEARS AND THE TRADING PRICE OF OUR COMMON STOCK IS LIKELY TO BE
VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES TO INVESTORS.  The trading
price of our common stock has risen significantly over the past six months and
could continue to be volatile in response to factors including the following,
some of which are beyond our control:

     -    decreased demand in the Internet-services sector;

     -    variations in our operating results;

     -    announcements of technological innovations or new services by us or
          our competitors;

     -    changes in expectations of our future financial performance, including
          financial estimates by securities analysts and investors;

     -    changes in operating and stock price performance of other technology
          companies similar to us;

     -    conditions or trends in the technology industry;

     -    additions or departures of key personnel; and

     -    future sales of our common stock.

     Domestic and international stock markets often experience significant price
and volume fluctuations.  These fluctuations, as well as general economic and
political conditions unrelated to our performance, may adversely affect the
price of our common stock.

     TERRORIST ATTACKS AND THREATS OR ACTUAL WAR MAY NEGATIVELY IMPACT ALL
ASPECTS OF OUR OPERATIONS, REVENUES, COSTS AND STOCK PRICE.  Recent terrorist
attacks in the United


                                                                              31
<PAGE>
States, as well as future events occurring in response or connection to them,
including, without limitation, future terrorist attacks against United States
targets, rumors or threats of war, actual conflicts involving the United States
or its allies or military or trade disruptions impacting our domestic or foreign
suppliers of parts, components and subassemblies, may impact our operations,
including, among other things, causing delays or losses in the delivery of
supplies to us and decreased sales of our products. More generally, any of these
events could cause consumer confidence and spending to decrease or result in
increased volatility in the United States and worldwide financial markets and
economy. They also could result in economic recession in the United States or
abroad. Any of these occurrences could have a significant impact on our
operating results, revenues and costs.

ITEM 3   CONTROLS AND PROCEDURES

     Disclosure controls and procedures are designed with an objective of
ensuring that information required to be disclosed in our periodic reports filed
with the Securities and Exchange Commission, such as this Quarterly Report on
Form 10-QSB, is recorded, processed, summarized and reported within the time
periods specified by the Securities and Exchange Commission.  Disclosure
controls are also designed with an objective of ensuring that such information
is accumulated and communicated to our management, including our chief executive
officer and chief financial officer, in order to allow timely consideration
regarding required disclosures.

     The evaluation of our disclosure controls by our principal executive
officer and principal financial officer included a review of the controls'
objectives and design, the operation of the controls, and the effect of the
controls on the information presented in this Quarterly Report.  Our management,
including our chief executive officer and chief financial officer, does not
expect that disclosure controls can or will prevent or detect all errors and all
fraud, if any.  A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met.  Also, projections of any evaluation of the disclosure
controls and procedures to future periods are subject to the risk that the
disclosure controls and procedures may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

     Based on their review and evaluation as of a date within 45 days of the
filing of this Form 10-QSB, and subject to the inherent limitations all as
described above, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective
as of the end of the period covered by this report.  They are not aware of any
significant changes in our disclosure controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

                          PART II - OTHER INFORMATION

Items 1-5 are not applicable and have been omitted.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K UPDATE


                                                                              32
<PAGE>
(a) The following exhibits are either attached hereto or incorporated herein by
reference as indicated:


Exhibit
-------
Number                 Description
-------                -----------

     10    Amended and Restated YP.Net, Inc.
           2003 Stock Plan

     31    Certification pursuant to SEC Release
           No. 33-8238, as adopted pursuant to
           Section 302 of the Sarbanes-Oxley Act
           of 2002

     32    Certification pursuant to 18 U.S.C.
           Section 1350, as adopted pursuant to
           Section 906 of the Sarbanes-Oxley Act
           of 2002


(b) The Registrant filed the following Current Reports on Form 8-K during the
three-month period covered by this Quarterly Report:

     -    On October 14, 2003, the Company filed a Current Report on Form 8-K to
          disclose an Investor Fact Sheet under Regulation FD.

     -    On October 24, 2003, the Company filed a Current Report on Form 8-K to
          report the execution of an agreement with Integrated Payment Systems
          Inc. for additional third-party verification services and the
          execution of another agreement with UDS Directory Corp, d/b/a go2
          Directory Systems to allow for the prominent display of certain
          customers' advertisements on wireless and hand-held devices provided
          by leading manufacturers.

     -    On December 31, 2003, the Company filed a Current Report on Form 8-K
          attaching a press release concerning the Company's earnings and
          results of operations for the Company's fiscal year ended September
          30, 2003.


                                   SIGNATURES

     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:  February 11, 2004          /s/  Angelo Tullo
                                   -----------------


                                                                              33
<PAGE>
                                   Angelo Tullo, Chairman of the Board and
                                   Chief Executive Officer (Principal
                                   Executive Officer)


Dated:  February 11, 2004          /s/  David Iannini
                                   ------------------
                                   David Iannini, Chief Financial Officer
                                   (Principal Accounting Officer)




                                                                              34
<PAGE>
                                  EXHIBIT INDEX


Exhibit
-------
Number                 Description
-------                -----------

     10    Amended and Restated YP.Net, Inc.
           2003 Stock Plan

     31    Certification pursuant to SEC Release
           No. 33-8238, as adopted pursuant to
           Section 302 of the Sarbanes-Oxley Act
           of 2002

     32    Certification pursuant to 18 U.S.C.
           Section 1350, as adopted pursuant to
           Section 906 of the Sarbanes-Oxley Act
           of 2002





                                                                              35
<PAGE>