Exhibit 99
Press Release dated April 14, 2003
BESTNET COMMUNICATIONS CORPORATION ANNOUNCES SECOND QUARTER RESULTS
AND THE RAISING OF OVER $1,000,000 IN WORKING CAPITAL.
GRAND RAPIDS, Mich.--(PR Newswire)--April 14, 2003--BestNet Communications
Corporation (OTCBB: BESC - News), a provider of patented Internet-based
communication solutions, today announces results for the second quarter ending
February 28, 2003. In addition, the company is also pleased to announce it has
raised over $1,000,000 in capital to fund continued growth.
Revenues for the second quarter ending February 28, 2003 increased 35% as
compared with the same period last year. In addition, fiscal year to date
revenue is up 47% as compared to last year. Cost of Goods Sold continued to
trend lower as a percent of revenue reflecting close management of carrier and
network costs. A positive 11.4% gross margin was generated during the second
quarter as compared to negative contribution during the same period last year.
Upward pressure was seen on General and Administrative costs however numerous
steps have been taken to reduce these expenses. Steps include switching
web-hosting providers, restructuring sales and marketing and close management of
professional service fees. The results of these cost cutting measures will begin
to be realized in the third quarter as a direct result of their implementation.
Robert A. Blanchard, President and CEO of BestNet commented, "We are pleased
with the higher demand for our services along with our ability to raise needed
capital to fund our growth. This is a reflection of our continued commitment to
the quality of our proprietary technology network, sound fiscal management,
solid staff team work and meeting the needs of our global customers."
BestNet is also pleased to report the completion of over $1,000,000 in
private placement financing through both a Senior Secured Note and Unit
offering. Further details of these financings are contained in the companies
10-QSB that will be released today. "We are very pleased with this recent
infusion of working capital," said Paul H. Jachim, COO & CFO of BestNet. "Given
current market conditions for companies of our size, this financing represents a
significant accomplishment and gives us the resource we need to continue
substantial growth of our business." Jachim went on to say, "I am also pleased
with our recent cost improvement efforts. Those who have recently been to our
web sites and used our applications have noticed an increase in speed and
performance. This is directly related to a new web hosting relationship and new
network equipment we put in place March 1, 2003. In addition to increased
performance, our contract will provide us considerable cost savings during its
three-year life. Additionally recent upgrades to our data base equipment has
also improved service to our customers worldwide."
ABOUT BESTNET
BestNet Communications is an Internet-based provider of long distance,
conference calling and e-commerce communication services. BestNet's services are
accessed via the internet and delivered using standard phone lines. This results
in a cost effective high quality service for both businesses and consumers.
Under the brand name Bestnetcall (www.bestnetcall.com), the patented
service offers subscribers premium quality calls, at significantly lower rates.
Calls can also be launched via a desktop application or handheld devices
including Palm(TM), Pocket PC(R) and Blackberry(TM) and used with any standard
or wireless phone.
Contact BestNet at: investors@bestnetcom.com
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH ARE INTENDED TO BE
COVERED BY THE "SAFE HARBOR" CREATED THEREBY. THESE STATEMENTS INCLUDE THE PLANS
AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND
OBJECTIVES. THE FORWARD-LOOKING STATEMENTS HEREIN ARE BASED ON CURRENT
EXPECTATIONS THAT INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS AND FUTURE BUSINESS DECISIONS, ALL
OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, ANY ONE OF
THE ASSUMPTIONS COULD BE INACCURATE AND, THEREFORE, CAN BE NO ASSURANCE THAT THE
FORWARD-LOOKING STATEMENTS INCLUDED IN THIS RELEASE WILL PROVE TO BE ACCURATE.
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FINANCIAL INFORMATION
BESTNET COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, AUGUST 31,
2003 2002
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(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 136,522 $ 351,784
Certificate of deposit -- 22,773
Accounts receivable, less allowance of
$11,478 and $7,826 50,601 72,844
Prepaid expenses and other current assets 93,638 71,801
------------ ------------
Total current assets 280,761 519,202
Property and equipment, net of accumulated
depreciation of $2,546,660 and $2,335,732 1,249,067 1,625,348
License fee, net of accumulated amortization
of $4,621,313, and $3,930,258 5,053,455 5,744,510
Note receivable from Softalk 1,549,020 1,508,043
Deposits and other assets 81,504 103,297
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Total assets $ 8,213,807 $ 9,500,400
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 785,480 $ 700,270
Notes payable, net of discount of $502,766 and $96,875 333,659 203,125
Deferred interest income 170,300 129,323
Deferred revenue 11,159 13,407
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Total current liabilities 1,300,598 1,046,125
Common stock, par value $.001 per share; 50,000,000 shares
authorized; 19,199,825 and 16,530,005 shares issued and
outstanding 19,200 16,530
Additional paid-in capital 33,033,993 31,041,961
Accumulated deficit (26,161,984) (23,488,980)
Common stock subscribed, underlying common shares of
50,000 and 1,866,842 22,000 884,764
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Total stockholders' equity 6,913,209 8,454,275
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Total liabilities and stockholders' equity $ 8,213,807 $ 9,500,400
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See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2003 AND 2002
2003 2002
------------ ------------
(UNAUDITED) (UNAUDITED)
Revenues: $ 316,628 $ 233,417
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Expenses:
Cost of revenues (exclusive of depreciation and
amortization shown separately below) 280,031 300,353
General and administrative expenses 484,763 408,528
Depreciation and amortization 557,763 572,787
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Total expenses 1,322,557 1,281,668
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Loss from operations (1,005,929) (1,048,251)
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Other income (expense):
Interest income 700 182
Interest expense (211,737) --
Preferred stock conversion penalty -- --
Foreign asset tax expense -- (30,000)
Gain on sale of assets -- --
Other (expense) income 2,593 (3,893)
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Total other expense (208,444) (33,711)
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Loss from continuing operations (1,214,373) (1,081,962)
Discontinued Operations
Operating income from discontinued operations -- 667
Loss on sale of discontinued operations -- --
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Income from discontinued operations -- 667
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Loss from operations (1,214,373) (1,081,295)
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Preferred stock dividends -- 7,125
------------ ------------
Loss available to common shareholders $ (1,214,373) $ (1,088,420)
============ ============
Loss per common share, basic and diluted
Continuing operations $ (.06) $ (.07)
Discontinued operations -- .00
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$ (.06) $ (.07)
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Weighted average number of shares outstanding,
basic and diluted 19,200,663 15,078,284
============ ============
See accompanying notes to condensed consolidated financial statements.