-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IXSZ2c6I4W9/v8+ABanb9C8uywGUTTQuXfzI/ISKGTbbdbMZswrsoMvBznT5dchf uoaSWifKULb75l3I4b1Dug== 0000950129-01-503894.txt : 20020410 0000950129-01-503894.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950129-01-503894 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20011109 GROUP MEMBERS: ADVANTAGE [BERMUDA] FUND LTD GROUP MEMBERS: CANADIAN ADVANTAGE LIMITED PARTNERSHIP GROUP MEMBERS: CEDAR AVENUE LLC GROUP MEMBERS: MARK E VALENTINE GROUP MEMBERS: THOMSON KERNAGHAN & CO LIMITED GROUP MEMBERS: VMH INTERNATIONAL LTD GROUP MEMBERS: VMH MANAGEMENT LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BESTNET COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000799694 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 860916826 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-54287 FILM NUMBER: 1780047 BUSINESS ADDRESS: STREET 1: 5210 E WILLIAMS CIRCLE STREET 2: STE 200 CITY: TUCSON STATE: AR ZIP: 85711 BUSINESS PHONE: 5207509093 MAIL ADDRESS: STREET 1: 5210 E WILLIAMS CIRCLE CITY: TUCSON STATE: AZ ZIP: 85711 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INTERNATIONAL INC DATE OF NAME CHANGE: 19980225 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CEDAR AVENUE LLC CENTRAL INDEX KEY: 0001140473 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O CITCO TRUSTEES CAYMAN LTD STREET 2: P O BOX 31106 SMB GRAND CAYMANS CITY: CAYMAN ISLANDS BVT BUSINESS PHONE: 4168608344 MAIL ADDRESS: STREET 1: C/O CITCO TRUSTEES CAYMAN LTD STREET 2: P O BOX 31106 SMB GRAND CAYMANS CITY: CAYMAN ISLAND BVT SC 13D 1 h92032sc13d.txt CEDAR AVENUE LLC FOR BESTNET COMMUNICATIONS CORP SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------ SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. __) BESTNET COMMUNICATIONS, CORP. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, $.001 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 08659K107 - -------------------------------------------------------------------------------- (CUSIP Number) JOHN M. MANN, C/O MAYER, BROWN & PLATT 700 LOUISIANA, SUITE 3600, HOUSTON, TX. 77002 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 11, 2001 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |X|. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) - ---------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) THOMSON KERNAGHAN & CO LIMITED("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Ontario, Canada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 3 BELOW, (NOTE 1) Reporting Entity: -0- -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY ' -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW (NOTE 1) WITH Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 3 BELOW Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SEE ITEM 5 BELOW Reporting Entity: 23.87% - -------------------------------------------------------------------------------- Page 2 14 TYPE OF REPORTING PERSON Reporting Entity: CO 1 NAMES OF REPORTING PERSONS CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CANADIAN ADVANTAGE LIMITED PARTNERSHIP ("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS None - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Ontario, Canada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER Reporting Entity: -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW WITH Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5 BELOW Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* Reporting Entity: CO Page 3 CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) VMH MANAGEMENT LTD ("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS None - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Ontario, Canada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER Reporting Entity: -0- -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW (NOTE 2) WITH Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5 BELOW Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON Reporting Entity: CO Page 4 - -------------------------------------------------------------------------------- CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) ADVANTAGE [BERMUDA] FUND, LTD. ("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS None - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Bermuda - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 2 BELOW Reporting Entity: -0- -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW (NOTE 2) Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5 BELOW Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON Reporting Entity: OO Page 5 CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) VMH INTERNATIONAL LTD ("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) | | - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS None - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Bahamas - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER SEE ITEM 2 BELOW Reporting Entity: -0- -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW (NOTE 2) WITH Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5 BELOW Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON Reporting Entity: OO Page 6 CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CEDAR AVENUE LLC("Reporting Entity") EIN No. Not Applicable - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Cayman Islands - ------------------------------------------------------------------ 7 SOLE VOTING POWER SEE ITEM 3 BELOW (NOTE 2) Reporting Entity: 3,567,223 -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 3 BELOW (NOTE 2) WITH 3,567,223 Reporting Entity: - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON Reporting Entity: CO Page 7 CUSIP No. 08659K107 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) MARK E. VALENTINE("Reporting Entity") EIN No. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS None - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Reporting Entity: Ontario, Canada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER Reporting Entity: -0- -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON SEE ITEM 2 BELOW WITH Reporting Entity: -0- - -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Reporting Entity: 3,567,223 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Reporting Entity: 23.87% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON Reporting Entity: IN Page 8 ITEM 1. Security and Issuer This report pertains to the common stock ("Common Stock"), par $0.001 per share of Bestnet Communications Corp. (the "Issuer"). The Issuer's principal executive offices are located at 5210 E. Williams Circle, Tucson, Arizona 85711. ITEM 2: IDENTITY AND BACKGROUND Thomson Kernaghan & Co., Limited, is an Ontario (Canada) corporation. Its principal business is a registered investment broker and dealer. Its principal offices are located at 120 Adelaide Street West, 16th Floor, Toronto, Ontario M5H 1Y1, Canada. Canadian Advantage Limited Partnership ("CALP") is an Ontario (Canada) limited partnership. Its principal business is a private investment fund. Its principal offices are located at 120 Adelaide Street West, 16th Floor, Toronto, Ontario M5H 1Y1, Canada. CALP is the beneficial owner of 73% of Cedar Avenue LLC. Advantage [Bermuda] Fund Ltd. ("ABFL") is a Bermuda company. Its principal business is a private investment fund. Its principal offices are located at Washington Mall 1, 3rd Floor, 22 Church Street, Hamilton, Bermuda 11. ABFL is the beneficial owner of 27% of Cedar Avenue LLC. VMH Management Ltd. ("VMH Management) is a is a Ontario, Canada company. It principal business is serving as the general partner of CALP and the investment advisor to ABFL. Its principal offices are located at 120 Adelaide Street West, 16th Floor, Toronto, Ontario M5H 1Y1, Canada. VMH Management is the general partner of CALP. VMH International LTD. ("VMH International") is a Bahamas company. It principal business is serving as the investment manager of CALP. Its principal offices are located at c/o Ansbacher House [Bahamas] Ltd. P.O. Box N-7768, Bank Lane, Nassau, Bahamas. VMH International is the investment manager of ABFL. Mark E. Valentine ("Valentine") is a natural person and a citizen of Canada. His business address is 120 Adelaide Street West, 16th Floor, Toronto, Ontario M5H 1Y1, Canada. His principal occupation is Chairman of Thomson Kernaghan. Valentine is also the President of VMH Management. Cedar Avenue LLC ("Cedar Avenue") is a Cayman Islands (British Virgin Islands) company. Its principal business is a private investment fund. Its principal offices are located at Coroprate Center, Westbay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, BVI. CALP is the beneficial owner of 73% of Cedar Avenue, and ABFL is the beneficial owner of 27% of Cedar Avenue. Because Valentine is an executive officer of Thomson Kernaghan, and because Valentine, as the President of VMH Management, has the indirect power to control the voting or disposition of Common Stock owned by Cedar Avenue. Valentine, Thomson Kernaghan, CALP, ABFL, VMH Management and VMH International are therefore deemed to be the beneficial owners of Common Stock beneficially owned by Cedar Avenue. During the last five years, none of Thomson Kernaghan, Valentine, CALP, AFBL, VMH Management, VMH International, or Cedar Avenue (i) has been convicted in a criminal proceeding, or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding, been or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3: SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION NOTE 1 THOMSON KERNAGHAN On May 1, 2000, the Issuer issued Thomson Kernaghan a warrant (the "TK Warrant") to purchase 43,371 shares of Common Stock, at the exercise price of $8.07 per shares, as compensation for services rendered to the Issuer. Thomson Kernaghan has not exercised any of the TK Warrant. Page 9 NOTE 2 CEDAR AVENUE On May 1, 2000, Cedar Avenue purchased 1,000 shares of the Issuer's Series B Preferred Shares in a private placement, for $50,000 per share, for an aggregate purchase price of $5,000,000, and, in consideration of this purchase, the Issuer issued Cedar Avenue a warrant (the "Cedar Avenue Warrant") to purchase 160,000 shares of Common Stock for $.01 per share. There are 96,000 shares of Common Stock that are subject to the Cedar Avenue Warrant. The source of the funds was Cedar Avenue's investment capital, all of which was contributed by its shareholders, and none of which was borrowed. On October 11, 2001 Cedar Avenue held 532.29 shares of Series B Preferred, which the Issuer redeemed in exchange for 2,938,927 shares of Common Stock on that date. ITEM 4: PURPOSE OF TRANSACTION Thomson Kernaghan acquired the TK Warrant as compensation for services and as a passive investment. Ceadar Avenue acquired the securities of the Issuer that it beneficially owns for passive investment purposes. None of Thomson Kernaghan, Valentine, CALP, ABFL, VMH Management, VMH International, or Cedar Avenue has any plans or proposals that relate to or would result in any of the events listed in (a) through (j) of Item 4. ITEM 5. Interest in Securities of Issuer All of the information given below is as of October 31, 2001. Percentage of beneficial ownership is based on 14,942,907 shares of common stock outstanding as of October 24, 2001. Collectively, the Reporting Persons beneficially own and have sole voting and dispositive power over 3,567,223 shares of common stock and shared voting power over 23.87% shares of common stock. The Reporting Persons have effected transactions in the Issuer securities during the last 60 days. ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. None ITEM 7. Material to be filed as Exhibits 1.1 Securities Purchase Agreement dated May 1, 2000 between BestNet Communications Corp. and Cedar Avenue LLC filed as Exhibit 10.4 on the Issuer's Current Form 8-K filed 5/16/2000. 1.2 Memorandum of Understanding dated May 1, 2000 between BestNet Communications Corp. and Cedar Avenue LLC filed herewith. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 8, 2001 THOMSON KERNAGHAN & CO. LTD - ----------------------- [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: Chairman ------------------------------------- November 8, 2001 CANADIAN ADVANTAGE LIMITED PARTNERSHIP Page 10 [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: President - General Partner ------------------------------------- November , 2001 ADVANTAGE [BERMUDA] FUND, LTD [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: President - Investment Advisor ------------------------------------- November , 2001 CEDAR AVENUE LLC [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: Agent ------------------------------------- November , 2001 MARK VALENTINE [Date] /s/ MARK VALENTINE ---------------------------------------- November , 2001 VMH MANAGEMENT LTD [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: President ------------------------------------- November , 2001 VMH INTERNATIONAL LTD [Date] By: /s/ MARK VALENTINE ---------------------------------------- Title: Agent ------------------------------------- Page 11 The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of the filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. Page 12 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 1.2 Memorandum of Understanding dated May 1, 2000 between BestNet Communications Corp. and Cedar Avenue LLC filed herewith. Page 13 EX-99.1.2 3 h92032ex99-1_2.txt MEMORANDUM OF UNDERSTANDING EXHIBIT 1.2 [LETTERHEAD] [OF BESTNET] September 28, 2001 Cedar Avenue LLC C/O Mark Valentine Chairman Thompson Kernaghan & Co. Ltd. 120 Adelaide Street West, 16th Floor Toronto, Ontario RE: Memorandum of Understanding (the "MOU") - Between BestNet Communications Inc. ("BestNet") and Cedar Avenue LLC ("Cedar Ave") The following numbered paragraphs of this MOU reflect certain mutual binding understandings of the matters described in them. Each party acknowledges that these provisions are intended to create or constitute legally binding obligations between BestNet and Cedar Avenue LLC. 1. Basic Transaction: BestNet agrees to redeem effective on September 28, 2001 all of the outstanding BestNet Series B Preferred Shares currently held by Cedar Ave. The redemption will consist of BestNet issuing to Cedar Avenue LLC 144 restricted BestNet common stock for the Series B Preferred shares and any accrued interest on the Preferred shares up to September 29, 2001. The BestNet common stock will be issued to Cedar Avenue LLC on the following basis: Series B Preferred Shares Outstanding 532.39 Per Share Value of Preferred shares US $5,000/share Value of Outstanding Preferred shares US $2,661,950 Redemption Premium (25% - $665,487) US $ 665,487 Total US $3,327,437 Accrued Interest on Preferred (Sept. 28/01 - 28 days US $ 12,253 @ $437.58/day) Total Redemption Price US $3,339,690 Calculation of Common Shares for Redemption Total Common Shares Issued @ $1.1363637 2,938,927
2. Warrants: Cedar Avenue LLC will also receive the following 3 year warrants: 225,000 Warrants with an exercise price of US $3 per share; and 225,000 Warrants with an exercise price of US $4 per share. 3. Expenses: BestNet and Cedar Avenue LLC shall each separately bear its own expenses for legal, accounting and other professional fees incurred in connection with the issuance of both the common shares and warrants. 4. Public Disclosure: Upon the completion of this transaction BestNet and Cedar Avenue shall issue a mutually agreeable news release. 5. Waiver and Release: Each of the parties will sign a full waiver and release in favour of the other parties in a form to be determined and approved by all acting reasonably. 6. Other Documentation: Additionally, whatever documentation the parties respective counsel deem necessary and appropriate to this transaction will be signed acting reasonably. Page 14 If the foregoing is acceptable, please indicate your approval of the terms and conditions set forth herein by signing and dating the enclosed copy of this MOU and returning it to my attention. BESTNET COMMUNICATIONS, INC. CEDAR AVENUE, L.L.C. --------------------------- -------------------- /s/ Gerard B. Quinn /s/ Mark Valentine, as agent Chairman Sept. 28/01 Sept. 28/01 - ------------------ ------------ Date Date Page 15 -----END PRIVACY-ENHANCED MESSAGE-----