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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended November 30, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ________________ to _______________.
Commission File Number 0-15482
BESTNET COMMUNICATIONS CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 86-1006416
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5210 E. Williams Circle, Suite 200
Tucson, Arizona 85711
(Address of Principal Executive Offices)
(520) 750-9093
(Issuer's Telephone Number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of January 12, 2001, there were 8,337,685 shares of common stock, par value
$.001 per share, outstanding.
Transitional Small Business Disclosure Format (Check One): Yes[ ] No [X]
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<PAGE>
BESTNET COMMUNCIATIONS CORP.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets --
November 30, 2000 and August 31, 2000.............................. 3
Condensed Consolidated Statements of Operations for
the Three Month Periods Ended November 30, 2000 and
November 30, 1999.................................................. 4
Condensed Consolidated Statements of Cash Flows for
the Three Month Periods Ended November 30, 2000 and
November 30, 1999.................................................. 5
Notes to Condensed Consolidated Financial Statements --
November 30, 2000.................................................. 6
ITEM 2. Management's Discussion and Analysis or Plan of Operation....... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings............................................... 11
ITEM 2. Changes in Securities and Use of Proceeds....................... 11
ITEM 3. Defaults upon Senior Securities................................. 11
ITEM 4. Submission of Matters to a Vote of Security Holders............. 11
ITEM 5. Other Information............................................... 11
ITEM 6. Exhibits and Reports on Form 8-K................................ 11
SIGNATURES................................................................... 12
2
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BESTNET COMMUNCATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2000 AND AUGUST 31, 2000
<TABLE>
<CAPTION>
NOVEMBER 30 AUGUST 31
ASSETS 2000 2000
------------ ------------
(unaudited) (Note 1)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,865,672 $ 2,581,492
Certificate of deposit 20,231 0
Prepaid expenses and other assets 32,334 23,902
------------ ------------
Total current assets 1,918,237 2,605,394
Property and equipment, net accumulated depreciation
$1,130,986 and $1,032,886 1,157,456 1,208,025
License fee, net of amortization of $1,511,574, and $1,166,046 8,163,195 8,508,722
Note receivable from affiliate 1,384,000 1,384,000
Note receivable from shareholder /director 42,160 32,000
Deposits and other assets 529,056 124,726
------------ ------------
Total assets $ 13,194,104 $ 13,862,867
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 137,094 $ 208,949
Capital lease obligation 0 1,593
Dividends payable 21,255 0
------------ ------------
Total current liabilities 158,349 210,542
Stockholders' equity:
Series B preferred stock, 6% cumulative, par value $.001 per share;
10,000,000 shares authorized, 1,000 shares issued and outstanding 5 5
Common stock, par value $.001 per share; 50,000,000 shares
authorized, 8,223,589 and 3,403,713 shares issued and outstanding 8,224 3,404
Additional paid in capital 26,840,455 26,654,638
Accumulated deficit (13,812,929) (13,005,722)
------------ ------------
Total stockholders' equity 13,035,755 13,652,325
------------ ------------
Total liabilities and stockholders' equity $ 13,194,104 $ 13,862,867
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
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BESTNET COMMUNCATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Revenues $ 74,648 $ 0
Expenses:
Cost of sales (exclusive of depreciation and
amortization shown separately below) 61,224 800
General and administrative 326,504 270,058
Depreciation and amortization 443,628 165,641
----------- -----------
Total expenses 831,356 436,499
Net loss from operations (756,708) (436,499)
Other income (expense):
Interest income 27,009 6,472
Interest expense (36) (820)
Miscellaneous income 6 460
Rental income 0 9,000
Preferred stock conversion penalty 0 (36,000)
Exchange (loss) gain (10,827) 0
----------- -----------
Total other income (expense) 16,152 (20,888)
Net loss before preferred dividends (740,556) (457,387)
Cumulative preferred dividends declared and conversion dividends 66,651 8,393
----------- -----------
Net loss available to common shareholders $ (807,207) $ (465,780)
=========== ===========
Net loss per common share, basic and diluted $ (.17) $ (0.15)
=========== ===========
Weighted average number of shares outstanding, basic and diluted 4,622,827 3,055,912
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Operating activities:
Net loss $ (740,556) $ (457,387)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 443,628 165,641
Preferred stock conversion penalty 121,742 36,000
Changes in assets and liabilities:
Accounts receivable 0 6,125
Accounts payable and accrued expenses (71,856) 20,727
Deposits (404,330) 0
Prepaid expenses and other expenses (8,664) 484
----------- -----------
Net cash used in operating activities (660,036) (228,410)
Investing activities:
Purchase of property and equipment (47,531) (183,317)
Issuance of notes receivable from affiliate 0 (84,000)
Issuance of notes receivable from related party (10,160) 0
Purchase of certificate of deposit (20,000) 0
----------- -----------
Net cash used in investing activities (77,691) (267,317)
Financing activities:
Increase (decrease) in notes payable 0 (13,000)
Principal payments on capital lease obligation (1,593) (12,358)
Exercise of stock options 23,500 0
----------- -----------
Net cash provided by (used in) financing activities 21,907 (25,358)
Net increase (decrease) in cash (715,820) (521,085)
Cash and cash equivalents, beginning of period $ 2,581,492 $ 889,620
----------- -----------
Cash and cash equivalents, end of period $ 1,865,672 $ 368,535
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
BESTNET COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 2000
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the three-month period
ended November 30, 2000, are not necessarily indicative of the results that may
be expected for the fiscal year ending August 31, 2001. The balance sheet at
August 31, 2000, has been derived from the audited financial statements at that
date but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. For
further information, refer to the Company's financial statements for the year
ended August 31, 2000, included in its Form 10-KSB for such fiscal period.
The consolidated financial statements include the accounts of BestNet
Communications Corp. ("the Company") and its wholly owned subsidiaries,
Interpretel, Inc. ("Interpretel"), Telplex International Communications, Inc.
("Telplex") and Bestnet Travel, Inc. All material intercompany balances and
transactions have been eliminated.
NOTE 2 -- PER SHARE DATA
Basic earnings (loss) per common share equals diluted earnings (loss) per
common share for all periods presented as the effect of all potentially dilutive
securities (preferred stock, stock options and warrants) is anti-dilutive
(decreases the loss per share amount). On December 18, 1998, the Company
effected a one-for-six reverse stock split; all share and per share information
have been restated retroactively to show the effect of this stock split.
NOTE 3 -- TRANSACTIONS WITH SOFTALK, INC.
On November 13, 1999, the Company, through its subsidiary Interpretel
(Canada) Inc. ("Interpretel (Canada)", entered into an agreement with Softalk,
Inc. ("Softalk") with respect to the purchase of certain Softalk assets
(products and accounts) in exchange for 4,329,004 shares of Class A non-voting
preferred stock of Interpretel (Canada) (the "Class A shares"). Under the terms
of the agreement, Softalk also granted Interpretel (Canada) a
right-of-first-refusal with respect to the sale of Softalk or any of its
intellectual property, software and patents. The Class A shares are exchangeable
on a one-for-one basis for shares of the Company's common stock at any time. The
issuance of the Class A shares was recorded at $10,000,000, the fair value of
the Company's Common Shares (into which the Class A shares can be converted), as
of the transaction date.
On November 10, 2000, Softalk exercised its exchange rights under the
purchase agreement, resulting in the issuance of 4,329,004 restricted shares of
BestNet common stock in exchange for a like number of shares of Class A
Non-voting preferred stock of Interpretel (Canada). At November 30, 2000,
Softalk held approximately 53% of the issued and outstanding shares of BestNet
common stock.
6
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On August 6, 1999, the Company established a loan facility in favor of
Softalk. Under this facility, the Company has agreed to loan Softalk up to $2
million, bearing an interest rate of prime (as announced by Citibank in New
York, New York) plus one percent (1%). As of January 11, 2001, the outstanding
principal balance on this credit facility was $1,384,000. Softalk may, at its
option and at any time, convert any amount of outstanding principal plus
interest accrued thereon into shares of Softalk capital stock in lieu of and in
full satisfaction of repayment of the principal and interest owed to the
Company. The number of shares of Softalk capital stock which may be issued to
the Company for repayment of the full $2 million would be equal to ten percent
(10%) of the value of Softalk at the time of repayment. If the outstanding
principal balance is less than $2 million, then the number of shares of Softalk
capital stock issued to the Company would be calculated on a pro-rated basis.
On March 1, 2000, the Company loaned $32,000 to Rosnani Atan, a director,
officer and shareholder of Softalk, and a contract employee and member of the
Board of Directors of the Company. The loan was made pursuant to a promissory
note that is due and payable March 1, 2002 and bears interest at the rate of
7.75% per annum.
Effective June 14, 2000, the Company and Softalk entered into a product
development agreement. The agreement engages Softalk to customize the software
it develops for the Company, enhance the performance and features of the
Bestnetcall services and to provide installation and maintenance of certain
hardware and software. The term of the agreement is for a period of one year.
Total consideration given for the agreement is $500,000, which was paid in
advance in the form of a non-interest bearing retainer. In addition, if the work
performed under the agreement exceeds the retainer as calculated at the rate of
$70 per person per hour, the Company has agreed to compensate Softalk at the
rate of $85 per person per hour for the work performed beyond the amount covered
by the retainer. Additional services provided outside the scope of the agreement
will be compensated at the rate of $100 per person per hour. At November 30,
2000, the Company has advanced to Softalk $500,000 under the agreement. The
Company estimates project costs to approximately equal $1,260,000 upon
completion and delivery of the customized software.
NOTE 4 -- TRANSACTIONS WITH RELATED PARTIES
On September 1, 2000, the Company loaned $10,160 to Kelvin Wilbore, an
employee and director of the Company. The loan was made pursuant to a promissory
note that is due and payable September 1, 2003 and bears interest at the rate of
8.50% per annum.
NOTE 5 -- SERIES B PREFERRED STOCK ISSUANCE
On May 1, 2000, the Company completed a $5,000,000 private placement of
Series B Preferred Stock and common stock purchase warrants (the "Warrant") with
an accredited investor. The financing consisted of the issuance of 1,000 shares
of Series B Preferred Stock and a Warrant to purchase 160,000 shares of common
stock. The Series B Preferred Stock carries a dividend of 6% and a conversion
price equal to the lower of 80% of the average closing bid prices of the
Company's common stock for the three lowest trading days of the 10 consecutive
trading days immediately preceding the conversion date or 110% of the average
closing bid prices of the Company's common stock for the five trading days prior
to the date of issuance of the Series B Preferred Stock. The Warrant has a term
of three years and is exercisable at a price of $0.01 per share for all 160,000
shares of common stock. The Company also issued a warrant to purchase 43,371
shares of common stock to the placement agent in the private placement (the
"Agent Warrant"). The Agent Warrant has a term of three years and a per share
exercise price of $8.07.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS CERTAIN STATEMENTS WHICH ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SAFE HARBOR PROVISIONS OF
SECTION 27A OF THE SECURITIES ACT OF 1993, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE STATEMENTS RELATE TO FUTURE
EVENTS, INCLUDING THE FUTURE FINANCIAL PERFORMANCE OF BESTNET. IN SOME CASES,
YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY,"
"WILL," "SHOULD," "EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "ESTIMATES,"
"PREDICTS," "POTENTIAL," OR "CONTINUE" OR THE NEGATIVE OF SUCH TERMS AND OTHER
COMPARABLE TERMINOLOGY. THESE ONLY REFLECT MANAGEMENT'S EXPECTATIONS AND
ESTIMATES ON THE DATE OF THIS REPORT. ACTUAL EVENTS OR RESULTS MAY DIFFER
MATERIALLY FROM THESE EXPECTATIONS. IN EVALUATING THOSE STATEMENTS, YOU SHOULD
SPECIFICALLY CONSIDER VARIOUS FACTORS, INCLUDING THE RISKS INCLUDED IN THE
REPORTS FILED BY BESTNET WITH THE SEC. THESE FACTORS MAY CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM ANY FORWARD-LOOKING STATEMENTS. BESTNET IS NOT
UNDERTAKING ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS CONTAINED IN
THIS REPORT.
OPERATIONS OVERVIEW
During the three-month period ended November 30, 2000, the Company
continued to commercialize and enhance the services of bestnetcall.com. Work was
also started on building out Points-of Presence (POP) in New York and Los
Angeles. The Company entered into negotiations with a number of major
enterprises, which are expected to be concluded in the early New Year.
BUSINESS OF ISSUER AND SUBSIDIARIES
OVERVIEW
Founded on July 10, 1986, BestNet Communications Corp., a Nevada
corporation (formerly Wavetech International, Inc.) ("BestNet" or the
"Company"), develops, markets and sells Internet-based telecom technologies.
Substantially all of our development activities are performed by a third party.
Although founded in 1986, we did not commence operations until 1995. From 1995
until June 1999, we developed software for customized calling card services and
created an infrastructure to market and distribute our product and services.
During this period, BestNet's efforts were primarily focused on hiring
management and other key personnel, raising capital, procuring governmental
authorizations and space in central offices, acquiring equipment and facilities,
developing, acquiring and integrating billing and database systems. We marketed
these systems to the business traveler and to large organizations or companies
with a membership base. In the late 1990's, due to the wide scale deployment of
cellular telephones with messaging capability, the market for business related
calling card services greatly diminished. In June 1999, we discontinued our
calling card services. Since then, we have focused substantially all of our
efforts and resources on developing our Bestnetcall web-enabled long distance
service. On September 27, 2000, we changed our name to BestNet Communications
Corp.
On April 23, 1999, we entered into a licensing agreement with Softalk,
Inc., a technology company based in Ontario, Canada ("Softalk"). Softalk
develops Internet-based telecommunication technologies that enable users to
initiate long distance calls from anywhere in the world by accessing a specific
Internet website. This technology enables users to, among other things, make
International telephone calls at substantially reduced rates from those offered
by traditional long distance carriers. This licensing agreement granted BestNet
certain marketing and customer service rights. The licensing agreement was later
amended and restated on October 25, 1999, to grant us exclusive rights to:
* distribute
* market
* service
* sell, and
* sublicense
8
<PAGE>
Softalk's services and products to commercial accounts as well a worldwide
non-exclusive license for individual accounts. We also have the exclusive right
to provide billing and customer support services for all customer accounts. In
consideration for such licensing rights, the Company has paid Softalk an
aggregate of two hundred thousand dollars (US$200,000).
The brand name for our web-enabled long distance service is Bestnetcall,
which was first made available to the public on April 17, 2000. We are presently
focusing our resources on marketing Bestnetcall to selected companies with
international locations and/or clients.
On November 10, 2000, Softalk exercised its exchange rights under the
purchase agreement, resulting in the issuance of 4,329,004 restricted shares of
BestNet common stock in exchange for a like number of shares of Class A
Non-voting preferred stock of Interpretel (Canada). At November 30, 2000,
Softalk held approximately 53% of the issued and outstanding shares of BestNet
common stock.
FEATURES AND CAPABILITIES OF THE COMPANY'S SERVICE
Bestnetcall allows companies and individuals to initiate long distance
telephone calls utilizing the Company's website, www.bestnetcall.com, from
anywhere in the world and to complete such telephone calls at substantially
reduced rates. Users of the Bestnetcall service are able to enroll, place calls,
pay for service and access customer service real-time on the Internet by
accessing the Company's website. Bestnetcall does not require the purchase of
special hardware or software by the customer and uses their existing telephone
equipment. Users only need access to the Internet.
Bestnetcall also offers real-time billing to all users and accepts various
payment methods, including pre-paid or post-paid credit card payments and
invoicing options. Following completion of a telephone call, the total cost for
that call may be viewed on the caller's online account. Bestnetcall also offers
convenient speed dialing, personalized directories, client billing codes,
world-time country and city code lookups and real time talk with customer
service via the website. Account administrators may add or delete users, view
users calling activity and create reports detailing call activity.
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 2000, COMPARED TO THREE MONTHS ENDED NOVEMBER
30,1999
REVENUES. The Company had revenues of $74,648 for the three-month period
ended November 30, 2000, as compared to no revenue for the comparable period in
fiscal 1999. Current period revenues were derived from customer usage of the
Bestnetcall services.
COST OF SALES. Cost of sales increased to $61,224 for the three-month
period ended November 30, 2000, from $800 for the three months ended November
30, 1999. Current period costs consisted of long distance costs from carriers
for the Bestnetcall service.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $326,504 for the three months ended November 30, 2000, from
$270,058 for the comparable period in fiscal 1999. Consulting fees increased to
$10,550 for the three months ended November 30, 2000, from $1,363 for the
comparable fiscal period in 1999. This increase is attributable to the hiring of
consultants for the Bestnetcall product. Travel expenses decreased $7,717 to
$6,990 in fiscal 2000 from $14,707 in fiscal 1999, the travel in the prior
fiscal year was necessary to complete the Company's agreements with Softalk.
Payroll expense increased by $22,137 to $90,686 from $68,549 in the previous
year due to the hiring of additional staff. Bad debt expense increased to
$13,151 for the three months from zero due to the use of stolen credit cards on
the Bestnetcall web site. Investor relations expense increase to $11,685 for the
three months from zero due to Annual Meeting, which was held on September 27,
2000.
9
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DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses increased to $443,628 for the three months ended November 30, 2000,
from $165,641 for the three months ended November 30, 1999. This increase was
due to amortization on the higher level of license fees and depreciation for the
additional purchases of equipment, software and computer hardware.
INTEREST INCOME. Interest income increased to $27,009 for the three months
ended November 30, 2000, from $6,472 for the three months ended November 30,
1999. All of the Company's interest income during the quarter was from its money
market fund. The increase was attributable to a higher average balance in this
account.
INTEREST EXPENSE. Interest expense decreased to $36 for the three months
ended November 30, 2000, from $820 for the three months ended November 30, 1999.
The decrease in interest expense was due to the declining principal balances of
the capital leases.
RENTAL INCOME. Effective May 13, 1998, the Company began subletting
approximately 2,000 square feet of its office space for $3,000 per month on a
month-to-month basis. This sublease agreement ended on May 15, 2000.
PREFERRED STOCK CONVERSION PENALTY. The Company incurred monthly liquidated
damages to the holder of its Series A Convertible Preferred Stock ("the Series A
Preferred Stock") equal to 2% of the purchase price of the Preferred Stock for
each month in the quarter ended May 31, 2000. On May 11, 2000, the remaining
shares of Series A Preferred Stock were converted into common stock. All shares
due for accrued penalties payable were issued on May 15, 2000.
PREFERRED DECLARED AND DEEMED DIVIDENDS. Preferred dividends increased to
$66,651 for the three months ended November 30, 2000, from $8,393 for the three
months ended November 30, 1999. An increase of $58,258 was due to dividends
payable on the 5,000 outstanding shares of Series B Preferred Stock. Dividends
accumulate, with respect to the outstanding shares of the Series B Preferred
Stock, at a rate of six percent (6%) per annum, and may be paid in cash or in
shares of common stock of the Company, at the Company's option. Dividends for
the Series A Preferred Stock were $21,234 for the three months ended May 31,
2000. Dividends accumulate, with respect to the Series A Preferred Stock, at a
rate of six percent (6%) per annum, are payable quarterly and may be paid in
cash or in shares of 6% Preferred Stock valued at $1,000 per share, at the
Company's option. The Company has elected to pay the dividends in stock. All
remaining shares of Series A Preferred Stock were converted into common stock on
May 11, 2000. All shares for accrued dividends payable for the Series A
Preferred Stock were issued on May 15, 2000. On May 1, 2000, the Company
completed a $5,000,000 private placement of Series B Preferred Stock and common
stock purchase warrants with an accredited investor. Assuming the conversion of
the Series B Preferred Stock on November 30, 2000, such shares would have been
convertible into an aggregate of 5,385,500 shares of common stock based on the
conversion ratio.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 2000, the Company had cash of $1,865,672. The Company does
not generate income sufficient to offset the costs of its operations. As a
result, it has historically relied upon issuance of debt or equity in order to
raise capital. The Company anticipates it will have to raise additional equity
capital over the next twelve months to fund operations.
10
<PAGE>
Pursuant to a Letter Agreement by and between BestNet and Softalk dated
August 6, 1999, the Company agreed to loan Softalk up to an aggregate of US
$2,000,000 (the "Principal Amount"), from time to time, but no later than August
6, 2000. Softalk must repay the Principal Amount outstanding and the accrued
interest thereon on the anniversary of each payment date. At its election,
Softalk may repay the amount due in either cash or by converting the amount due
into shares of Softalk capital stock. The terms of the loan were extended for an
additional year to August 6, 2001.
INFLATION
Although the Company's operations are influenced by general economic trends
and technology advances in the telecommunications industry, the Company does not
believe that inflation has had a material effect on its operations.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
a) Exhibits.
None.
b) Reports on Form 8-K
None.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: January 16, 2000 BestNet Communications Corp.
By: /s/ Gerald I. Quinn
----------------------------------------
Gerald I. Quinn
President and Chief Executive Officer
Principal Executive Officer and
Principal Accounting Officer
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