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) July 15, 2004
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BestNet Communications Corporation
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(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 third quarter revenue for
fiscal year 2004. BestNet Communications has seen continued revenue growth for
the past six fiscal quarters.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(a) BestNet Communications Corp. releases results of operations for the
third quarter of fiscal 2004.
Exhibits Title
99 Press release, issued by BestNet Communications Corporation
Dated July 15, 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/ Richard Bourke
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Richard Bourke
Interim Chief Executive
Officer
By: /s/ Michael A. Kramarz
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Michael A. Kramarz
Principal Accounting
Officer
Date: July 19, 2004
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
May 31, August 31,
ASSETS 2004 2003
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(UNAUDITED)
Current Assets:
Cash and cash equivalents $ 66,527 $ 226,559
Accounts receivable, less allowance of
$1,630 and $1,368 85,908 74,360
Prepaid expenses and other current assets 46,813 49,080
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Total current assets 199,248 349,999
Property and equipment, net of accumulated
depreciation of $3,622,578 and $3,142,251 484,945 909,713
License fee, net of accumulated amortization
of $6,348,950, and $5,312,368 3,325,818 4,362,400
Deposits and other assets 53,709 97,038
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Total assets $ 4,063,720 $ 5,719,150
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Capital lease obligations, current portion $ 4,550 $ 5,614
Convertible notes payable, net of discount of $117,407 and 158,814 589,752
$ 75,248
Note payable to related parties 160,000 --
Convertible note payable to related party, net of discount of 10,835 --
$15,164 and $0
Accounts payable and accrued expenses 264,897 290,535
Deferred revenue 11,013 15,734
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Total current liabilities 610,109 901,635
Long-Term Liabilities:
Capital lease obligations, long-term portion 4,343 7,331
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Total long-term liabilities 4,343 7,331
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Total liabilities 614,452 908,966
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Commitments and contingencies -- --
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001 per share; 10,000,000 shares
authorized;
3,763,593 and 3,563,593 shares issued and outstanding at May
31, 2004
and August 31, 2003, respectively 3,763 3,563
Common stock, par value $.001 per share; 100,000,000 shares
authorized;
32,577,415 issued and 30,677,415 outstanding at May 31, 2004;
and
29,948,104 shares issued and 28,048,104 shares outstanding
at August 31, 2003 32,577 29,948
Additional paid-in capital 35,742,175 34,273,690
Accumulated deficit (31,627,434) (28,585,017)
Common stock subscribed, underlying common shares of 2,101,865 210,187 --
and 0 ------------ ------------
4,361,268
5,722,184
Less treasury stock, 1,900,000 common shares, at cost (912,000) (912,000)
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Total stockholders' equity 3,449,268 4,810,184
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Total liabilities and stockholders' equity $ 4,063,720 $ 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 MAY 31, 2004 AND MAY 31, 2003
2004 2003
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(UNAUDITED) (UNAUDITED)
Revenues $ 557,322 $ 387,769
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Expenses:
Cost of revenues (exclusive of depreciation and
amortization shown separately below) 348,478 346,181
General and administrative expenses 259,703 371,855
Depreciation and amortization 506,058 556,562
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Total expenses 1,114,239 1,274,598
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Loss from operations (556,917) (886,829)
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Other income (expense):
Interest income 2 1,876
Interest and finance charges (213,266) (308,724)
Other income (expense) (3,292) (2,073)
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Total other expense (216,556) (308,921)
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Loss from operations $ (773,473) $ (1,195,750)
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Preferred stock dividends 15,245 265,006
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Loss available to common stockholders' $ (788,718) $ (1,460,756)
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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 30,937,984 26,103,580
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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 MAY 31, 2004 AND MAY 31, 2003
2004 2003
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(UNAUDITED) (UNAUDITED)
Operating activities:
Loss from operations $ (773,473) $(1,195,750)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 506,058 555,562
Non-cash transactions-interest expenses 189,254 298,002
Changes in assets and liabilities:
Accounts receivable (3,678) (13,274)
Prepaid expenses and other current assets 25,387 40,425
Deposits and other assets -- (18,733)
Accounts payable and accrued expenses (4,861) 35,672
Deferred revenue (4,916) 1,468
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Net cash used in operating activities (66,229) (296,628)
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Investing activities:
Purchase of property and equipment (18,841) (42,008)
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Net cash used in investing activities (18,841) (42,008)
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Financing activities:
Proceeds from issuance of notes payable 100,000 --
Repayment of notes payable (28,588) (21,425)
Increase in capital lease payable -- 15,704
Principal payments on capital lease obligation (1,135) (1,361)
Proceeds from sale of units 60,000 816,620
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Net cash provided by financing activities 130,277 809,538
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Net increase (decrease) in cash 45,207 470,902
Cash and cash equivalents, beginning of period 21,320 136,522
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Cash and cash equivalents, end of period $ 66,527 $ 607,424
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See accompanying notes to condensed consolidated financial statements.