UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE PRER 14C INFORMATION
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of the Securities Exchange Act of 1934
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[ ] Definitive Information Statement
BESTNET COMMUNICATIONS CORP.
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(Name of Registrant Specified in Charter)
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INFORMATION STATEMENT
BestNet Communications Corp.
2850 Thornhills Avenue, SE, Suite 104
Grand Rapids, Michigan 49546
Dear Stockholder:
This Information Statement is being distributed to notify the
shareholders of record of BestNet Communications Corp., a Nevada corporation
("we," "us," "our" or the "Company") that our Board of Directors has approved
and recommended to our shareholders, and shareholders holding a majority of the
aggregate voting power of our Common Stock, par value $.001 per share ("Common
Stock") has adopted (i) an Amendment to our Articles of Incorporation (the
"Amendment"); (ii) a Resolution increasing the number of shares of Common Stock
allocated to the 2000 Incentive Stock Plan from 5,000,000 to 7,500,000 (the
"Plan Resolution"); and (iii) a Resolution that authorizes our Board of
Directors, on or before September 5, 2007, to change our corporate name from
"BestNet Communications Corp" to anther name selected by them that in their
judgment would better reflect our entry into the medical device industry (the
"Name Resolution"). On October 25, 2006, shareholders representing approximately
53.82% of the voting power of our Common Stock delivered to us a written consent
in lieu of a special meeting of shareholders adopting the Amendment and both the
Plan and Name Resolutions.
When effective, the Amendment will increase the number of authorized
shares of Common Stock of the Company from 100,000,000 to 200,000,000
This Information Statement is being mailed on or about December __,
2006, to the holders of record of our Common Stock on October 24, 2006 (the
"Record Date"), the record date set by our Board of Directors for determining
the shareholders eligible to give consent to the Amendment and Plan and Name
Resolutions and receive this Information Statement. This Information Statement
is being distributed to you, our shareholders, in accordance with the
requirements of Section 14(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Information Statement described in further detail the
changes to our Articles of Incorporation and the Plan and Name Resolutions.
Pursuant to Rule 14c-2 promulgated by the Securities and Exchange
Commission (the "SEC) under the Exchange Act, the Amendment and Resolutions will
not become effective until twenty calendar days following the date on which this
Information Statement is sent to our shareholders.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
By Order of the Board of Directors
/s/ Michael A. Kramarz
- ----------------------------------
Michael Kramarz, Secretary
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ACTION BY OUR BOARD OF DIRECTORS AND CONSENTING SHAREHOLDERS
Description of Amendment
The Articles of Incorporation of the Company are amended to provide for
an increase in the authorized number of share of Common Stock from 100,000,000
to 200,000,000. The proposed Certificate of Amendment is attached hereto as
Exhibit A.
Background for Amendment
On July 26, 2006, we completed a merger pursuant to which we acquired
JDA Medical Technologies, Inc. ("JDA"), which prior to the merger was a
privately held company, and merged it into our wholly owned subsidiary,
Oncologix Corporation ("Oncologix"). In consideration of the merger we issued
43,000,000 shares of our Common Stock to the former owners of JDA. We also
entered into an obligation to fund the operations of Oncologix in the amount of
$4,000,000. See, in this connection, our Current Report on Form 8-K, filed on
July 28, 2006.
Prior to that merger, we had approximately outstanding 56,240,972
shares of our Common Stock, including shares subject to outstanding warrants,
options and convertible debt ("Fully Diluted Shares"). Presently, a total number
of 100,000,000 shares of Common Stock are authorized by our Articles of
Incorporation. Upon the issuance of the 43,000,000 shares of Common Stock in the
merger, our total Common Stock amounted to approximately 99,530,972 Fully
Diluted Shares. It is the view of our Board of Directors that the remaining
469,028 shares of authorized but unissued Common Stock, together with the
unissued shares that are reserved for issuance upon the exercise of outstanding
rights to acquire the same, are not sufficient to enable us to raise the funds
necessary to fund the Oncologix operations and/or to issue for other purposes
such as incentive compensation for skilled employees and consultants or for
possible future transactions in which we might wish to issue Common Stock. The
Company is in the process of effecting a private placement of securities. As
presently planned, the securities to be offered are two-year, interest-bearing,
convertible promissory notes. The conversion price is to be $0.30 per share. The
documentation for the transaction is to provide that the right of conversion
into common stock is subject to the availability of sufficient authorized shares
of common stock (to become available upon the approval of the Amendment
permitting the issuance of additional shares of common stock) and the expiration
of one year after the date the notes are issued. There are to be no registration
rights for the notes or the underlying common stock. The proceeds from the
private placement are to be used to fund operations of the Company, including
those of its newly acquired subsidiary, Oncologix Corporation. The Amendment is
necessary to fulfill the Company's obligation to investors in that placement and
to provide shares for issuance in possible future transactions involving equity
financing, acquisitions, employee compensation, and the like.
Approval by Board of Directors
On September 6, 2006, our Board of Directors, having determined that
the number of authorized shares of Common Stock should be increased and
believing it to be in the best interests of the Company and its shareholders,
approved the Amendment increasing the authorized number of shares of Common
Stock to 200,000,000 and recommended adoption of the Amendment to our
shareholders.
Approval by Shareholders
Pursuant to Section 78.390 of the Nevada General Corporation Law, the
Amendment must be approved by the holders of a majority of the aggregate voting
power of the Common Stock. In order to obtain the required approval of the our
shareholders, we could have either convened a special meeting of the
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shareholders of the Common Stock for the specific purpose of voting on the
Amendment, or we could have sought the written consent from the holders of a
majority of the aggregate voting power of the Common Stock. In order to
eliminate the costs and management time involved in holding a special meeting,
we determined to utilize the written consent of the holders of a majority of the
aggregate voting power of the Common Stock. It is the position of the staff of
the SEC that prior to seeking written consents from shareholders, the Company
should have filed a proxy statement with the SEC and delivered a definitive
proxy statement to those shareholders, but we did not do so. The elimination of
the need for a special meeting of shareholders is made possible by Section
78.320 of the Nevada General Corporation Law, which provides that any action
required or permitted to be taken at a meeting of the shareholders may be taken
without a meeting provided that a consent, in writing, setting forth the action
so taken is signed by shareholders having at least the minimum number of votes
that would be necessary to authorize such action at a meeting. Under Nevada law,
a vote of the majority of our issued and outstanding shares was required to
approve the Amendment.
On October 25, 2006, the written consents of the holders of the
majority of our issued and outstanding shares were received by our corporate
Secretary, authorizing our Board of Directors and officers to take all actions
necessary to cause the certificate amendment to be filed with the Office of the
Secretary of State of the State of Nevada. A list of those shareholders who
provided written consents is attached hereto as Exhibit C. Nevada law requires
us to notify each stockholder who has not consented to the action in writing and
who, if the action had been taken at a meeting would have been entitled to vote
at the meeting, of the action taken by written consent.
Dissenters Rights of Appraisal
The right to judicial appraisal of your shares of Common Stock is not
applicable under Nevada law to the Amendment or the Name or Plan Resolutions.
Name Resolution
In view of the change in direction of our business represented by the
merger, our Board of Directors are of the further view that our present
corporate name no longer represents the true nature of our future business and
prospects. Accordingly, on September 6, 2006, our Board of Directors adopted a
resolution, to change our corporate name, on or before September 5, 2007, from
"BestNet Communications Corp" to another name to be selected by the Board of
Directors that in their judgment would better reflect our entry into the medical
device industry. The Board of Directors further recommended to the shareholders
that they adopt the Name Resolution, which would allow the Board of Directors to
determine a more appropriate corporate name in the near future.
Plan Resolution
Furthermore, recognizing that it will be necessary to the future
success of our business to offer incentive compensation to skilled employees and
consultants, our Board of Directors adopted a resolution, and recommended the
adoption of the Plan Resolution to our shareholders, to increase in the number
of shares of Common Stock allocated to our 2000 Incentive Stock Plan ("Plan")
from 5,000,000 shares to 7,500,000 shares. Shareholder approval of the increase
in shares of Common Stock under the Plan is necessary to preserve the tax
advantages afforded by the Plan for incentive stock options granted under the
Plan.
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The Company is currently authorized to issue up to 5,000,000 shares
of Common Stock under its 2000 Stock Incentive Plan. Shares may be issued as
incentive stock options, non-statutory stock options, deferred shares or
restricted shares to officers, employees, non-employee directors and independent
consultants. The Plan is administered by the Board of Directors and all grants
of options or shares under the Plan are determined by the Board of Directors.
Options are granted at the fair market value of the Common Stock on the date of
the grant and have terms of up to ten years. Under the Plan, the Company has
only 553,614 shares of Common Stock available for future issuance. The Plan
Resolution would increase the number of shares subject to the Plan by 2,500,000
shares of Common Stock.
The Plan Resolution merely increases the number of shares subject to
the Plan and does not specifically grant or award any additional stock options
or shares. It is noted, however, that the officers and non-employee directors of
the Company are among the eligible participants under the Plan, and as such, the
officers and non-employee directors of the Company will indirectly benefit from
the Plan Resolution as there will be more shares available under the Plan that
could, subject to the Board of Directors' determination and approval, be issued
or granted to officers or non-employee directors. The Name and Plan Resolutions
are attached hereto Exhibit B.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as noted above with respect to the Plan Resolution, no director,
executive officer, nominee for election as a director, associate of any
director, executive officer or nominee or any other person has any substantial
interest, direct or indirect, by security holdings or otherwise, in the Name
Resolution or the Amendment to our Articles of Incorporation which is not shared
by all our other shareholders. The present directors and officers who were among
the shareholders representing a majority of the aggregate voting power of the
Common Stock who voted for the Amendment, the Name Resolution and the Plan
Resolution were Stanley L. Schloz, our President and a director, Anthony
Silverman, a director, Andrew S. Kennedy, an officer of Oncologix and a
director, Andrew Green, an officer of Oncologix and a director and Adam Lowe, an
officer of Oncologix.
SHARES HELD BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of December 6, 2006 with respect
to the beneficial ownership of shares of our Common Stock by:
o each of our directors and named executive officers;
o all of our named executive officers and directors as a group; and
o each person we know to be the beneficial owner of 5% or more of the
outstanding shares of Common Stock.
Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and generally includes voting or
investment power over securities. Under this rule, a person is deemed to be the
beneficial owner of securities that can be acquired by such person within 60
days of December 6, 2006 upon the exercise of options. Each beneficial owner's
percentage ownership is determined by assuming that all options held by such
person that are exercisable within 60 days of October 16, 2006 have been
exercised. Except in cases where community property laws apply or as indicated
in the footnotes to this table, we believe that each stockholder identified in
the table possesses sole voting and investment power over all shares of Common
Stock shown as beneficially owned by the stockholder.
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The information included within the table includes beneficial ownership after
giving effect to the Merger.
Name, address and Identity of Amount of Shares and Percent
Beneficial Owner (1) Nature of Ownership (2)(3) of Class*
- ----------------------------- -------------------------- ---------
Directors and Executive Officers:
Michael Kramarz 155,000(4) *
Stanley L. Schloz 839,992(5) *
Barry Griffith 89,000(6) *
Anthony Silverman 6,533,484(7) 7.12
Andrew S. Kennedy 13,956,404(8) 15.49
Andrew Green 3,768,456(9) 4.18
Adam Lowe 3,761,790(10) 4.17
All directors and executive officers 29,105,926 31.61
as a group (7 persons)
Greater than 5% Shareholders:
Jeff Franco 13,949,738(11) 15.48
*Indicates less than 1%. All amounts and percentages are based on 90,102,953
shares of Common Stock outstanding.
(1) Unless otherwise noted, the address of each person named in the table is
2850 Thornhills Avenue, SE, Suite 104, Grand Rapids, Michigan 49546.
(2) A person is deemed a beneficial owner of securities that can be acquired
within sixty days of December 6, 2006 by the exercise of any option, warrant or
other right. Shares subject to such rights that are currently outstanding or
exercisable within sixty days are deemed outstanding for determining the
percentage ownership of the holder of such rights but are not deemed outstanding
in determining the percentage ownership of any other person.
(3) The amounts and percentages in the table are based upon 90,102,953 shares of
Common Stock outstanding as of December 6, 2006.
(4) Represents 155,000 shares subject to vested options.
(5) Represents 105,000 shares subject to vested options and direct ownership of
734,992 shares, but does not include any shares held Katsinam Partners, LP, of
which Mr. Schloz has no power to vote such shares, although he is the holder of
a 7.8% limited partnership interest in Katsinam Partners, LP.
(6) Represents 80,000 shares subject to vested options, and 9,000 shares
underlying units of securities.
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(7) Represents 90,000 shares subject to vested options, direct ownership of
2,918,400 shares, direct ownership of warrants to purchase 150,000 shares,
direct ownership of 1,337,084 shares issuable upon conversion of two promissory
notes and 1,998,000 shares and 40,000 warrants to purchase shares owned by
Katsinam Partners, LP, of which Mr. Silverman is the holder of a 17.64% limited
partnership interest and is the General Partner with sole power to vote such
shares.
(8) Represents 6,666 shares subject to vested options and direct ownership of
13,956,404 shares. Shares equal to 80% of the total owned are subject to an
escrow agreement.
(9) Represents 6,666 shares subject to vested options and direct ownership of
3,761,790 shares. Shares equal to 80% of the total owned are subject to an
escrow agreement.
(10) Represents direct ownership of 3,761,790 shares, all of which are subject
to an escrow agreement.
(11) Represents direct ownership of 13,956,404 shares. Shares equal to 80% of
the total owned are subject to an escrow agreement.
FORWARD-LOOKING STATEMENTS
This Information Statement contains forward-looking (including, but not limited
to, statements concerning industry performance and our results, operations,
performance, financial condition, plans growth and strategies which include
without limitation statements preceded or followed by or that include the words
"may", "will", "expect", "anticipate", "intend", "could", "estimate", or
"continue" or the negative or other variations thereof or comparable
terminology.
Any statements contained in this Information Statement that are not statements
of historical fact may be deemed to be forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, some of
which are beyond our control, and actual results may differ materially depending
on a variety of important factors. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this information
statement. We do not undertake any obligation to update or release any revisions
to these forward-looking statements to reflect events or circumstances after the
date of this information statement or to reflect the occurrence of unanticipated
events, except to the extent such updates and/or revisions are required to
prevent these forward-looking statements from being materially false or
misleading.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, pursuant to which the Company files reports and other
information with the SEC. These reports and other information may be inspected
and copied at public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's
Regional Office at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies may be obtained at prescribed rates from the
Public Reference Section of the SEC at its principal office in Washington, D.C.
The SEC also maintains an internet web site that contains periodic and other
reports, proxy and information statements and other information regarding
registrants, including BestNet Communications Corp, that file electronically
with the SEC. The address of the SEC's web site is http://www.sec.gov.
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No person is authorized to make any representation with respect to the matters
described in this Information Statement other than those contained in this
Information Statement and if given or made must not be relied upon as having
been authorized by BestNet Communications Corp or any other person.
BestNet Communications Corp has not authorized anyone to give any information or
make any representation about our company that is different from, or in addition
to, that contained in this Information Statement. Therefore, if anyone gives you
such information, you should not rely on it. This information Statement is dated
December __, 2006. You should not assume that the information contained in this
document is accurate as of any other date unless the information specifically
indicates that another date applies.
December __, 2006
By Order of the Board of Directors
/s/ Michael Kramarz
- ----------------------------------
Michael Kramarz, Secretary
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CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
BESTNET COMMUNICATIONS CORP.
Pursuant to Section 78.385 and 78.390 of the Nevada Revised Statutes,
the undersigned corporation, BestNet Communications Corp., a Nevada corporation,
submits the following Certificate of Amendment for filing:
1. The name of the corporation is BestNet Communications Corp
2. The first paragraph of Article 4 of the Articles of Incorporation of the
corporation shall be amended so as to read as follows:
4. "The authorized capital stock of this corporation shall be two
hundred million (200,000,000) shares of common stock, $.001 par value, and ten
million (10,000,000) shares of preferred stock, $.001 par value. Such shares may
be issued from time to time for such consideration as may be fixed by the Board
of Directors."
The second paragraph of Article 4 shall be unchanged.
3. The vote by which the shareholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the Articles of
Incorporation have voted in favor of the amendment is: 53.94%
IN WITNESS WHEREOF, BestNet Communications Corp., a Nevada corporation,
has caused this Certificate of Amendment to be signed in its name and on its
behalf, on this ____ day of January, 2007.
BESTNET COMMUNICATIONS CORP.,
a Nevada corporation
/s/
------------------------------------
Stanley L. Schloz, President
Exhibit A
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RESOLUTIONS OF THE SHAREHOLDERS
OF
BESTNET COMMUNICATIONS CORP.
IN LIEU OF SPECIAL MEETING OF SHAREHOLDERS
RESOLVED: That the Board of Directors of this corporation be and they hereby
authorized, in their discretion, to amend the Articles of Incorporation of this
corporation so as to change the name of the corporation from BestNet
Communications Corp. to such other name as the Board of Directors may deem
appropriate and in the best interests of the shareholders of this corporation;
provided that the authority conferred by this Resolution shall terminate on
September 5, 2007.
RESOLVED: That the number of shares of Common Stock, $.001 par value, of this
corporation allocated to the 2000 Incentive Stock Plan of this corporation be
and is hereby increased from 5,000,000 shares to 7,500,000 shares.
RESOLVED FURTHER: That the officers of this corporation are authorized to
prepare and file with the cognizant agencies and publish such forms of
resolutions, certificates and other instruments as may be necessary or advisable
to cause the foregoing Resolutions to become effective.
Exhibit B
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CONSENTING SHAREHOLDERS
Number of Shares Percent of
Shareholder of Common Stock Class
- ----------- --------------- -----
Andrew S. Kennedy, MD 13,949,738 15.48%
Jeff Franco 13,949,738 15.48%
Andrew Green 3,761,790 4.18%
Adam Lowe 3,761,790 4.18%
Stanley L. Schloz 734,992 0.82%
Anthony Silverman(1) 4,916,400 5.46%
Kay Silverman(2) 579,998 0.64%
Molly Silverman(3) 125,900 0.14%
Andrea Silverman(4) 617,067 0.68%
Jeffrey Silverman (5) 373,460 0.41%
Fred Burstein 3,077,335 3.41%
Anne Nguyen 562,500 0.62%
Thomas and Virginia Miller 538,436 0.60%
Gary Boster(6) 605,000 0.67%
Donald Schreifels 352,000 0.39%
Ernesto Zaragosa 340,661 0.38%
Chris Walton 150,000 0.17%
Martin Frizond 102,500 0.11%
Each of the above-named shareholders has possesses the sole voting and
investment power with the respect to the shares listed unless otherwise noted
herein.
- -------------------------
(1) Includes 1,998,000 shares owned by Katsinam Limited Partnership, of which he
is the General Partner with sole power to vote the shares.
(2) Includes 484,998 shares held in a trust account of which she is the primary
beneficiary, which her son, Jeffrey Silverman has the power to vote.
(3) The shares are held in a trust account of which she is the primary
beneficiary, which her brother, Jeffrey Silverman has the power to vote.
(4) Includes 137,067 shares held in a trust account of which she is the primary
beneficiary, which her brother, Jeffrey Silverman has the power to vote.
(5) The shares are held in trust and custodian accounts for his two minor
daughters.
(6) Includes 120,000 shares held in an individual retirement account.
EXHIBIT C
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