GRAND RAPIDS, Mich., April 14 /PRNewswire-FirstCall/ -- BestNet
Communications Corporation (OTC Bulletin Board: BESC), a provider of patented
Internet-based communication solutions, today announces results for the second
quarter ending February 28, 2003. In addition, the company is also pleased to
announce it has raised over $1,000,000 in capital to fund continued growth.
Revenues for the second quarter ending February 28, 2003 increased 35% as
compared with the same period last year. In addition, fiscal year to date
revenue is up 47% as compared to last year. Cost of Goods Sold continued to
trend lower as a percent of revenue reflecting close management of carrier and
network costs. A positive 11.4% gross margin was generated during the second
quarter as compared to negative contribution during the same period last year.
Upward pressure was seen on General and Administrative costs however numerous
steps have been taken to reduce these expenses. Steps include switching web-
hosting providers, restructuring sales and marketing and close management of
professional service fees. The results of these cost cutting measures will
begin to be realized in the third quarter as a direct result of their
implementation. Robert A. Blanchard, President and CEO of BestNet commented,
"We are pleased with the higher demand for our services along with our ability
to raise needed capital to fund our growth. This is a reflection of our
continued commitment to the quality of our proprietary technology network,
sound fiscal management, solid staff team work and meeting the needs of our
global customers."
BestNet is also pleased to report the completion of over $1,000,000 in
private placement financing through both a Senior Secured Note and Unit
offering. Further details of these financings are contained in the companies
10-QSB that will be released today. "We are very pleased with this recent
infusion of working capital," said Paul H. Jachim, COO & CFO of BestNet.
"Given current market conditions for companies of our size, this financing
represents a significant accomplishment and gives us the resource we need to
continue substantial growth of our business." Jachim went on to say, "I am
also pleased with our recent cost improvement efforts. Those who have recently
been to our web sites and used our applications have noticed an increase in
speed and performance. This is directly related to a new web hosting
relationship and new network equipment we put in place March 1, 2003. In
addition to increased performance, our contract will provide us considerable
cost savings during its three-year life. Additionally recent upgrades to our
data base equipment has also improved service to our customers worldwide."
About BestNet
BestNet Communications is an Internet-based provider of long distance,
conference calling and e-commerce communication services. BestNet's services
are accessed via the internet and delivered using standard phone lines. This
results in a cost effective high quality service for both businesses and
consumers.
Under the brand name Bestnetcall ( http://www.bestnetcall.com ), the patented
service offers subscribers premium quality calls, at significantly lower
rates. 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.
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.
FINANCIAL INFORMATION
BESTNET COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, AUGUST 31,
ASSETS 2003 2002
(UNAUDITED)
Current Assets:
Cash and cash equivalents $136,522 $351,784
Certificate of deposit -- 22,773
Accounts receivable, less allowance
of $11,478 and $7,826 50,601 72,844
Prepaid expenses and other current assets 93,638 71,801
Total current assets 280,761 519,202
Property and equipment, net of accumulated
depreciation of $2,546,660 and $2,335,732 1,249,067 1,625,348
License fee, net of accumulated amortization
of $4,621,313, and $3,930,258 5,053,455 5,744,510
Note receivable from Softalk 1,549,020 1,508,043
Deposits and other assets 81,504 103,297
Total assets $8,213,807 9,500,400
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $785,480 $700,270
Notes payable, net of discount of
$502,766 and $96,875 333,659 203,125
Deferred interest income 170,300 129,323
Deferred revenue 11,159 13,407
Total current liabilities 1,300,598 1,046,125
Common stock, par value $.001
per share; 50,000,000 shares authorized;
19,199,625 and 16,530,005 shares
issued and outstanding 19,200 16,530
Additional paid-in capital 33,033,993 31,041,961
Accumulated deficit (26,161,984) (23,488,980)
Common stock subscribed, underlying
common shares of 50,000 and 1,866,842 22,000 884,764
Total stockholders' equity 6,913,209 8,454,275
Total liabilities and stockholders' equity $8,213,807 $9,500,400
See accompanying notes to condensed consolidated financial statements.
BESTNET COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2003 AND 2002
2003 2002
(UNAUDITED) (UNAUDITED)
Revenues: $316,628 $233,417
Expenses:
Cost of revenues (exclusive of
depreciation and amortization
shown separately below) 280,031 300,353
General and administrative expenses 484,763 408,528
Depreciation and amortization 557,763 572,787
Total expenses 1,322,557 1,281,668
Loss from operations (1,005,929) (1,048,251)
Other income (expense):
Interest income 700 182
Interest expense (211,737) --
Preferred stock conversion penalty -- --
Foreign asset tax expense -- (30,000)
Gain on sale of assets -- --
Other (expense) income 2,593 (3,893)
Total other expense (208,444) (33,711)
Loss from continuing operations (1,214,373) (1,081,962)
Discontinued Operations
Operating income from discontinued
operations -- 667
Loss on sale of discontinued operations -- --
Income from discontinued operations -- 667
Loss from operations (1,214,373) (1,081,295)
Preferred stock dividends -- 7,125
Loss available to common shareholders $(1,214,373) $(1,088,420)
Loss per common share, basic and diluted
Continuing operations $(.06) $(.07)
Discontinued operations -- .00
$(.06) $(.07)
Weighted average number of shares
outstanding, basic and diluted 19,200,663 15,078,284
See accompanying notes to condensed consolidated financial statements.
SOURCE BestNet Communications Corporation
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