SECURITIES AND EXHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 13, 2004
----------------------
BestNet Communications Corporation
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
001-15482
----------------------
(Commission File Number)
Nevada 86-1006416
------------------------------ --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5075 Cascade Rd. SE, Suite A. Grand Rapids, MI 49546
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (616) 977-9933
-----------------
ITEM 5. OTHER EVENTS.
BestNet Communications Corp. continues growth in fiscal 2004
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
November 30, August 31,
ASSETS 2003 2003
---- ----
(UNAUDITED)
Current Assets:
Cash and cash equivalents $ 124,419 $ 226,559
Accounts receivable, less allowance of
$1,635 and $1,386 80,123 74,360
Prepaid expenses and other current assets 84,641 49,080
------------ ------------
Total current assets 289,183 349,999
Property and equipment, net of accumulated
depreciation of $3,301,103 and $3,142,251 768,862 909,713
License fee, net of accumulated amortization
of $5,657,895, and $5,312,368 4,016,873 4,362,400
Deposits and other assets 53,782 97,038
------------ ------------
Total assets $ 5,128,700 5,719,150
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Capital lease obligations, current portion $ 4,640 $ 5,614
Accounts payable and accrued expenses 334,765 290,535
Notes payable, net of discount of $383,904 and $75,248 112,400 589,752
Deferred revenue 15,969 15,734
------------ ------------
Total current liabilities 467,774 901,635
Long-Term Liabilities:
Capital lease obligations, long-term portion 6,866 7,331
------------ ------------
Total long-term liabilities 6,866 7,331
------------ ------------
Total liabilities 474,640 908,966
------------ ------------
STOCKHOLDERS EQUITY
Preferred stock, par value $.001 per share; 10,000,000 shares
authorized;
3,563,593 and 3,563,593 shares issued and outstanding at
November 30, 2003
and August 31, 2003 3,563 3,563
Common stock, par value $.001 per share; 100,000,000 shares
authorized;
31,432,415 issued and 29,532,415 outstanding at November 30,
2003; and
29,948,104 shares issued and 28,048,104 shares outstanding
at August 31, 2003 31,432 29,948
Additional paid-in capital 35,481,035 34,273,690
Accumulated deficit (29,949,970) (28,585,017)
------------ ------------
5,566,060 5,722,184
Less treasury stock, 1,900,000 common shares, at cost (912,000) (912,000)
------------ ------------
Total stockholders' equity 4,654,060 4,810,184
------------ ------------
Total liabilities and stockholders' equity $ 5,128,700 $ 5,719,150
============ ============
See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2003 AND 2002
2003 2002
---- ----
(UNAUDITED) (UNAUDITED)
Revenues $ 545,027 $ 300,208
------------ ------------
Expenses:
Cost of revenues (exclusive of depreciation and
amortization shown separately below) 377,697 287,764
General and administrative expenses 341,494 707,365
Depreciation and amortization 504,379 556,455
------------ ------------
Total expenses 1,223,570 1,551,584
------------ ------------
Loss from operations (678,543) (1,251,376)
------------ ------------
Other income (expense):
Interest income 330 910
Interest and finance charges (146,772) (188,188)
Preferred stock conversion penalty -- (17,847)
Conversion expense (See Note 5) (541,182) --
Other income (expense) 1,214 (2,130)
------------ ------------
Total other expense (686,410) (207,255)
------------ ------------
Loss available to common shareholders $ (1,364,953) (1,458,631)
============ ------------
Loss per common share, basic and diluted $ (.05) $ (.08)
------------ ------------
Weighted average number of shares outstanding,
basic and diluted 28,408,756 18,399,469
============ ============
See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2003 AND 2002
2003 2002
---- ----
(UNAUDITED) (UNAUDITED)
Operating activities:
Loss from operations $(1,364,953) $(1,458,631)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 504,379 556,455
Non-cash transactions 677,526 235,148
Changes in assets and liabilities:
Accounts receivable (5,763) 10,649
Prepaid expenses and other current assets 32,439 (68,022)
Deposits and other assets 43,256 (21,800)
Accounts payable and accrued expenses 46,877 (7,379)
Deferred revenue 235 (1,011)
----------- -----------
Net cash used in operating activities (66,004) (754,591)
----------- -----------
Investing activities:
Purchase of property and equipment (18,001) (23,527)
Cash received for certificate of deposit -- 22,773
----------- -----------
Net cash used in investing activities (18,001) (754)
----------- -----------
Financing activities:
Proceeds from issuance of notes payable -- 721,250
Repayment of notes payable (16,696) (13,800)
Principal payments on capital lease obligation (1,439) --
Proceeds from exercise of stock options -- 28,251
Proceeds from the sale of common stock -- --
----------- -----------
Net cash provided by (used in) financing activities (18,135) 735,701
----------- -----------
Net decrease in cash (102,140) (19,644)
Cash and cash equivalents, beginning of period 226,559 351,784
----------- -----------
Cash and cash equivalents, end of period $ 124,419 $ 332,140
=========== ===========
See accompanying notes to condensed consolidated financial statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(CONTINUED)
(c) Exhibits:
Exhibits Title
99 Press release, issued by BestNet Communications Corporation
Dated January 13, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BestNet Communications Corporation
By: /s/ Robert A. Blanchard
--------------------------------
Robert A. Blanchard
Chief Executive Officer
By: /s/ Michael A. Kramarz
--------------------------------
Michael A. Kramarz
Principal Accounting
Officer
Date: January 16, 2004