Prospectus Supplement Filed Pursuant to Rule 424(b)(3)
(To Prospectus Dated January 3, 2003) Registration No. 333-101561
BESTNET COMMUNICATIONS CORP.
UP TO 1,662,050 SHARES OF OUR COMMON STOCK
You should read this prospectus supplement and the related prospectus dated
January 3, 2003 carefully before you invest. Both documents contain information
you should consider when making your investment decision.
Investing in our common stock involves a high degree of risk. See Risk
Factors beginning on page 8 of our prospectus dated January 3, 2003 and on page
16 of our Annual Report on Form 10-KSB for the fiscal year ended August 31,
2002, for a description of certain factors that should be considered by
prospective investors.
This prospectus supplement is part of a registration statement that we
filed with the SEC to register the resale of an aggregate of 1,662,050 shares of
our common stock issuable as follows: (i) 732,500 shares upon exercise of
certain of our outstanding warrants; (ii) 665,000 shares upon conversion of our
6% Convertible Promissory Notes, pursuant to a Note and Warrant Purchase
Agreement, dated September 26, 2002; and (iii) 264,550 shares pursuant to
registration rights under a Common Stock Purchase Agreement, dated August 30,
2002. The selling stockholders may sell the common stock from time to time in
the principal market on which the stock is traded at the prevailing market price
or in negotiated transactions. The selling stockholders may be deemed to be
underwriters of the shares of common stock that they are offering. Please see
the "Selling Stockholders" section beginning on page 22 of the prospectus for a
complete description of all of the selling stockholders.
The selling stockholders will receive all of the amounts received upon any
sale by them of the common stock, less any brokerage commissions or other
expenses incurred by them. We will not receive any proceeds from the sale of the
common stock by the selling stockholders. We will receive up to an aggregate of
$1,248,750 if all of the warrants are exercised.
This prospectus supplement updates the list of documents contained in our
prospectus under the heading "Incorporation of Documents by Reference." Since we
filed the last amendment to the registration statement, we have filed with the
SEC our Quarterly Report on Form 10-QSB for the quarterly period ended May 31,
2003, which is hereby incorporated by reference into the prospectus and this
prospectus supplement. You should read carefully this prospectus supplement, the
prospectus, and the information that we incorporate by reference into those
documents. In case there are any differences or inconsistencies between this
prospectus supplement, the prospectus, and the information incorporated by
reference into those documents, you should rely on the information contained in
the document with the latest date.
This prospectus supplement, the prospectus, our Annual Report on Form
10-KSB for the fiscal year ended August 31, 2002, and our Quarterly Report on
Form 10-QSB for the quarterly period ended May 31, 2003, are being delivered to
you in connection with your proposed investment in our common stock.
You should rely only on the information provided or incorporated by
reference in this prospectus supplement and the related prospectus. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus supplement is accurate as of any
date other than the date on the front of these documents.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus supplement is July 16, 2003.