GRAND RAPIDS, Mich., Jan. 13 /PRNewswire-FirstCall/ -- BestNet
Communications Corporation (OTC Bulletin Board: BESC), a provider of patented
and proprietary global communication solutions, today announces results for
the first quarter of fiscal 2004.
BestNet achieved record revenue for the first quarter totaling $545,000,
an increase of 82% compared to the first quarter 2003. First quarter 2004
revenue also increased by 18% as compared to the fourth quarter of fiscal
2003. Gross margins improved substantially to 31% as compared to 4% for the
first quarter of fiscal 2003 and 19% for the fourth quarter of fiscal 2003.
BestNet believes it can maintain gross margins of 31% to 35% while
concentrating on revenue growth. Enrollments for the first quarter also
increased by 15% as compared to enrollments in the fourth quarter of 2003 as
well as 51% growth over first quarter of fiscal year 2003.
Robert A. Blanchard, President and CEO of BestNet Communications
commented, "As we review the fiscal 2003 performance, overall revenue growth
for fiscal 2003 was up 38% over fiscal 2002, while gross margin percent
increased by approximately 44% during that same time. We have taken the
momentum from last fiscal year and continued it in the first quarter of 2004.
We are pleased with our revenue growth in the first quarter and very pleased
with the improvement in our gross margins. We continue to take aggressive
steps to surpass the break even mark. Continued growth of new customers is
another strong indicator that the value brought by BestNet around the globe is
being adopted at an ever increasing rate."
Blanchard added, "We have also made significant progress towards our
corporate goals and have worked together with our new board of directors to
remove barriers to further growth and achievement of profitability. The
settlement of the arbitration with Softalk, Inc., increased revenue, improved
gross margins, growth in new accounts and a recent letter of intent for
additional financing all point towards a formula for larger success for
BestNet and its shareholders."
About BestNet
BestNet Communications is a global solutions provider of long distance;
conference calling, ClicktoPhone and custom application-based communication
services. BestNet's services are accessed worldwide via the Internet and
wireless devices and are delivered using standard phone lines and equipment.
This results in a cost effective high quality service for both businesses and
consumers.
Under the brand name Bestnetcall(TM) ( http://www.bestnetcall.com ) the patented
services offer subscribers premium quality calls and conference calling, at
significantly lower rates. Calls and conference calls can also be launched
via a desktop application or handheld devices including Palm(TM), Pocket PC(R)
and Blackberry(TM) and used with any standard or wireless phone. In addition
the company's new ClicktoPhone(TM) service ( http://www.ClicktoPhone.com ) enables
clients to add secure and anonymous voice communication connectivity anywhere
in the world to web sites, web banners, pictures, electronic documents, and
customized e-mail calling buttons.
Contact BestNet at: investors@bestnetcom.com
This release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the "safe harbor" created thereby. These statements
include the plans and objectives of management for future operations,
including plans and objectives. The forward-looking statements herein are
based on current expectations that involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond control of the company. Although the
company believes that the assumptions underlying the forward-looking
statements are reasonable, any one of the assumptions could be inaccurate and,
therefore, can be no assurance that the forward-looking statements included in
this release will prove to be accurate.
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS November 30, August 31,
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.
SOURCE BestNet Communications Corporation
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