SECURITIES AND EXHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) April 14, 2004
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BestNet Communications Corporation
(Exact Name of Registrant as Specified in its Charter)
Nevada 001-15482 86-1006416
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
5075 Cascade Rd. SE, Suite A. Grand Rapids, MI 49546
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (616) 977-9933
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ITEM 5. OTHER EVENTS.
BestNet Communications Corp. announces record second quarter revenue for
fiscal year 2004. BestNet Communications has seen continued revenue growth for
the past five fiscal quarters.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(a) BestNet Communications Corp. releases results of operations for the
second quarter of fiscal 2004.
Exhibits Title
99 Press release, issued by BestNet Communications Corporation
Dated April 14, 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
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Robert A. Blanchard
Chief Executive Officer
By: /s/ Michael A. Kramarz
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Michael A. Kramarz
Principal Accounting Officer
Date: April 19, 2004
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
February 29, August 31,
ASSETS 2004 2003
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(UNAUDITED)
Current Assets:
Cash and cash equivalents $ 21,320 $ 226,559
Accounts receivable, less allowance of
$3,300 and $1,386 82,230 74,360
Prepaid expenses and other current assets 72,200 49,080
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Total current assets 175,750 349,999
Property and equipment, net of accumulated
depreciation of $3,462,048 and $3,142,251 626,635 909,713
License fee, net of accumulated amortization
of $6,003,423, and $5,312,368 3,671,345 4,362,400
Deposits and other assets 53,709 97,038
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Total assets $ 4,527,439 $ 5,719,150
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LIABILITIES AND STOCKHOLDER'S EQUITY
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LIABILITIES
Current Liabilities:
Capital lease obligations, current portion $ 4,416 $ 5,614
Notes payable, net of discount of $301,554 and $75,248 204,469 589,752
Note payable to related party 60,000 --
Convertible note payable to related party, net of discount of 3,908 --
$21,448 and $0
Accounts payable and accrued expenses 270,946 290,535
Accounts payable to related parties 9,000 --
Deferred revenue 15,929 15,734
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Total current liabilities 568,668 901,635
Long-Term Liabilities:
Capital lease obligations, long-term portion 5,612 7,331
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Total long-term liabilities 5,612 7,331
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Total liabilities 574,280 908,966
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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
February 29, 2004 and August 31, 2003 3,563 3,563
Common stock, par value $.001 per share; 100,000,000 shares
authorized;
31,952,415 issued and 30,052,415 outstanding at February 29,
2004; and
29,948,104 shares issued and 28,048,104 shares outstanding
at August 31, 2003 31,952 29,948
Additional paid-in capital 35,668,360 34,273,690
Accumulated deficit (30,838,716) (28,585,017)
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4,865,159
5,722,184
Less treasury stock, 1,900,000 common shares, at cost (912,000) (912,000)
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Total stockholders' equity 3,953,159 4,810,184
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Total liabilities and stockholders' equity $ 4,527,439 $ 5,719,150
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See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2004 AND FEBRUARY 28, 2003
2004 2003
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(UNAUDITED) (UNAUDITED)
Revenues $ 552,477 $ 316,628
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Expenses:
Cost of revenues (exclusive of depreciation and
amortization shown separately below) 363,394 280,031
General and administrative expenses 410,931 484,763
Depreciation and amortization 506,473 557,763
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Total expenses 1,280,798 1,322,557
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Loss from operations (728,321) (1,005,929)
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Other income (expense):
Interest income 55 700
Interest and finance charges (159,016) (211,737)
Other income (expense) (1,465) 2,593
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Total other expense (160,426) (208,444)
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Loss available to common shareholders $ (888,747) $ (1,214,373)
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Loss per common share, basic and diluted $ (.03) $ (.06)
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Weighted average number of shares outstanding,
basic and diluted 29,622,415 19,200,663
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See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2004 AND FEBRUARY 28, 2003
2004 2003
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(UNAUDITED) (UNAUDITED)
Operating activities:
Loss from operations $ (888,747) $(1,214,373)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 506,473 557,763
Non-cash transactions 227,818 239,024
Changes in assets and liabilities:
Accounts receivable (2,107) 11,594
Prepaid expenses and other current assets 20,633 (30,191)
Deposits and other assets 73 43,593
Accounts payable and accrued expenses (54,819) 92,589
Deferred revenue (40) (1,237)
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Net cash used in operating activities (190,716) (301,238)
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Investing activities:
Purchase of property and equipment (18,718) (23,355)
Cash received for certificate of deposit -- --
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Net cash used in investing activities (18,718) (23,355)
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Financing activities:
Proceeds from issuance of notes payable 135,000 150,000
Repayment of notes payable (27,186) (21,025)
Principal payments on capital lease obligation (1,479) --
Proceeds from the sale of common stock -- --
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Net cash provided by (used in) financing activities 106,335 128,975
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Net decrease in cash (103,099) (195,618)
Cash and cash equivalents, beginning of period 124,419 332,140
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Cash and cash equivalents, end of period $ 21,320 $ 136,522
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See accompanying notes to condensed consolidated financial statements.