BestNet Communications Corporation
5075 Cascade Road SE, Suite A
Grand Rapids, MI 49546
September 12, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Larry Spirgel
RE: BestNet Communications Corp. (the "Company")
Form 10-KSB for the year ended August 31, 2004
1. Refer to your Comment 1. Please disclose why you consider that your
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revenue recognition and carrying value of Softalk License Agreement accounting
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policies are critical accounting policies. Since you reduced the carrying value
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of the license to zero it would appear that your disclosure is not meaningful
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thereafter.
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We deem that the carrying value of the Softalk License Agreement was
material for this 10-KSB filing. We concluded that the value of the Softalk
License, which has historically been shown as an intangible asset on our balance
sheet, had been reduced to zero because of our history of losses doing business
with the licensed technology and the low probability of achieving positive cash
flow in that business within a reasonable period of time. This intangible asset
was significant to our estimates during the fiscal year ended August 31, 2004 as
well as material in our reporting of our Loss on Impairment. We will remove the
carrying value of the Softalk License Agreement as a critical accounting policy
with our next 10-KSB filing.
2. Refer to your Comment number 2. Please request your auditors to revise
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their report for the following: "to make reference to the Standards of the
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Public Company Accounting Oversight Board in Accordance with auditing standard
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no. 1 of the PCAOB."
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BestNet Communications Corp. will file an amended Form 10-KSB, as amended
for an updated auditors report containing a statement referencing the Standards
of the Public Company Accounting Oversight Board in Accordance with auditing
standard no. 1 of the PCAOB.
Furthermore, the Company acknowledges the following:
o The Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
o Staff comments or changes to disclosure in response to staff comments
in the filings reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing;
o The Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States; and
o We acknowledge that the Division of Enforcement has access to all
information you provide to the staff of the Division of Corporation
Finance in our review of our filing, or in response to your comments
on our filing.
Please direct any inquiries regarding this request to Michael A. Kramarz,
the Company's Chief Financial at (616)-977-9933.
Very truly yours,
By: /s/ Michael A. Kramarz
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Michael A. Kramarz
Chief Financial Officer