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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|--- | ----------------------------------------------------------------------------------------
|    | For the quarterly period ended June 30, 2000                                            
|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|    | For the transition period from  to                                                      

Commission File Number: 000-24985

PACIFICNET.COM, INC.

(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                    |  | 11-2854355(I.R.S. Employer
Identification No.)
|----------------------------------------------------------------------------------------- |  | ----------------------------------------------
|7808 Creekridge Circle, Suite 101
Bloomington, MN(Address of principal executive offices) |  | 55439(Zip Code)                               

Registrant's Telephone Number: 952-829-5888

Creative Master International, Inc.*, 18 Bedford Rd., Casey Ind. Bldg., 8th Floor,
Taikoktsui, Kowloon, Hong Kong(Former Name and Address)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
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 [ ]

Following
a one-for-three reverse stock split that was effective on July 27, 2000, there were 8,833,107 shares of the Company's Common Stock outstanding on
August 4, 2000.

*On
June 21, 2000, at the Annual Meeting of the shareholders of the Registrant, the shareholders adopted a proposal to change the Registrant's corporate name from Creative Master
International, Inc. to PacificNet.com, Inc. to coincide with the Registrant's acquisition of PacificNet.com LLC ("PacificNet"). Such acquisition of PacificNet was completed on
July 27, 2000.

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TABLE OF CONTENTS

|          |  |                       |  |                                                                                                                                            |  | PAGE
|--------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|PART 1   |  | FINANCIAL INFORMATION |  |                                                                                                                                           
|          |  | ITEM 1               |  | FINANCIAL STATEMENTS                                                                                                                       |  |     
|          |  |                       |  | Unaudited Consolidated Condensed Statements of Operations  for each of the three-month and six-month periods ended June 30, 2000 and 1999 |  | 3   
|          |  |                       |  | Consolidated Condensed Balance Sheets as of June 30,  2000 (unaudited) and December 31, 1999 (audited)                                    |  | 4   
|          |  |                       |  | Unaudited Consolidated Condensed Statements of Cash Flows  for each of the six-month periods ended June 30, 2000 and 1999                 |  | 5   
|          |  |                       |  | Notes to Unaudited Consolidated Condensed Financial Statements                                                                             |  | 6   
|          |  | ITEM 2               |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                      |  | 14  
|          |  | ITEM 3               |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                 |  | 17  
|PART II  |  | OTHER INFORMATION     |  | 17                                                                                                                                        
|          |  | ITEM 1               |  | LEGAL PROCEEDINGS                                                                                                                          |  | 17  
|          |  | ITEM 2               |  | CHANGES IN SECURITIES AND USE OF PROCEEDS                                                                                                  |  | 17  
|          |  | ITEM 3               |  | DEFAULTS UPON SENIOR SECURITIES                                                                                                            |  | 18  
|          |  | ITEM 4               |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                        |  | 18  
|          |  | ITEM 5               |  | OTHER INFORMATION                                                                                                                          |  | 19  
|          |  | ITEM 6               |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                           |  | 19  

2

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PACIFICNET.COM, INC. AND SUBSIDIARIES       Unaudited Consolidated Statements of Operations       (in thousands of United States dollars, except per
share amounts)

|                                                  |  | Three months ended
June 30, |   | Six months ended
June 30, |  
|------------------------------------------------- |  | --------------------------- | - | ------------------------- | -
|
|Net sales                                         |  | 10,774                      |   | 10,077                    |  
|Cost of goods sold                                |  | (8,201                      | ) | (7,246                    | )
|                                                  |  |                             |   |                           |  
|Gross profit                                      |  | 2,573                       |   | 2,831                     |  
|                                                  |  |                             |   |                           |  
|Selling, general and administrative expenses      |  | (1,962                      | ) | (1,452                    | )
|Interest income (expense), net                    |  | (48                         | ) | (6                        | )
|Other income and expense, net                     |  | 48                          |   | 51                        |  
|Gain on sale of long-term investment              |  | 0                           |   | 143                       |  
|Amortization of goodwill                          |  | (28                         | ) | (24                       | )
|                                                  |  |                             |   |                           |  
|Income before income taxes and minority interests |  | 583                         |   | 1,543                     |  
|                                                  |  |                             |   |                           |  
|Provision for income taxes                        |  | (62                         | ) | (130                      | )
|                                                  |  |                             |   |                           |  
|Income before minority interests                  |  | 521                         |   | 1,413                     |  
|                                                  |  |                             |   |                           |  
|Cumulative effect of Accounting Change            |  |                             |   |                           |  
|write-off of deferred expenditure, net of tax    |  | 0                           |   | 0                         |  
|Minority interests                                |  | (111                        | ) | (260                      | )
|                                                  |  |                             |   |                           |  
|Net income                                        |  | 410                         |   | 1,153                     |  
|                                                  |  |                             |   |                           |  
|Earnings per common share                         |  |                             |   |                           |  
|Basic                                            |  | 0.08                        |   | 0.23                      |  
|Diluted                                          |  | 0.08                        |   | 0.23                      |  
|Shares outstanding                                |  |                             |   |                           |  
|Basic                                            |  | 4,999                       |   | 4,999                     |  
|Diluted                                          |  | 4,999                       |   | 5,005                     |  

The
accompanying notes are an integral part of these financial statements.
These financial statements should be read in conjunction with the Company's Form 10-KSB
for the year ended December 31, 1999.

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## 

PACIFICNET.COM, INC. AND SUBSIDIARIES       Consolidated Balance Sheets       (in thousands of United States dollars)

|                                                               |                              | 30-Jun-00                                   |  | 31-Dec-99
|-------------------------------------------------------------- | ---------------------------- | ------------------------------------------- |  | ---------
|
|ASSETS                                                        
|Current assets:                                                |                              |                                             |  |          
|Cash and bank deposits                                         |                              | 1,577                                       |  | 1,500    
|Accounts receivable, net                                       |                              | 5,158                                       |  | 4,718    
|Deposits and prepayments                                       |                              | 1,872                                       |  | 1,384    
|Tax recoverable                                                |                              | 64                                          |  | 0        
|Inventories, net                                               |                              | 5,359                                       |  | 4,691    
|                                                               |                              |                                             |  |          
|Total current assets                                           |                              | 14,030                                      |  | 12,293   
|Deferred merger costs and other assets                         |                              | 503                                         |  | 0        
|Machinery, equipment and capital leases, net                   |                              | 9,895                                       |  | 9,316    
|Goodwill                                                       |                              | 732                                         |  | 841      
|                                                               |                              |                                             |  |          
|Total assets                                                   |                              | 25,160                                      |  | 22,450   
|                                                               |                              |                                             |  |          
|LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY      
|Current liabilities:                                           |                              |                                             |  |          
|Short-term bank borrowings                                     |                              | 2,240                                       |  | 1,150    
|Capital lease obligations, current portion                     |                              | 392                                         |  | 202      
|Accounts payable                                               |                              | 4,180                                       |  | 3,368    
|Deposits from customers                                        |                              | 492                                         |  | 235      
|Accrued liabilities                                            |                              | 3,039                                       |  | 2,202    
|Loans from directors, current portion                          |                              | 207                                         |  | 267      
|Taxation payable                                               |                              | 0                                           |  | 184      
|                                                               |                              |                                             |  |          
|Total current liabilities                                      |                              | 10,550                                      |  | 7,608    
|Capital lease obligations, non-current portion                 |                              | 316                                         |  | 104      
|Loans from directors, non-current portion                      |                              | 120                                         |  | 240      
|Deferred taxation                                              |                              | 430                                         |  | 399      
|                                                               |                              |                                             |  |          
|Total liabilities                                              |                              | 11,416                                      |  | 8,351    
|                                                               |                              |                                             |  |          
|Minority interests                                             |                              | 1,279                                       |  | 1,240    
|                                                               |                              |                                             |  |          
|Stockholders' equity:                                          |                              |                                             |  |          
|Common stock, par value $0.0001:                               |                              |                                             |  |          
|                                                               | Authorized25,000,000 shares |                                             |  |          
|                                                               |                              | Outstanding and fully paid 4,999,322 shares |  | 1        
|Preferred stock, par value $0.0001:                            |                              |                                             |  |          
|                                                               |                              | Authorized5,000,000 shares                 |  |          
|                                                               |                              | Outstandingnil                             |  | 0        
|Additional paid-in capital                                     |                              | 5,784                                       |  | 5,784    
|Retained earnings                                              |                              | 6,680                                       |  | 7,074    
|                                                               |                              |                                             |  |          
|Total stockholders' equity                                     |                              | 12,465                                      |  | 12,859   
|                                                               |                              |                                             |  |          
|Total liabilities, minority interests and stockholders' equity |                              | 25,160                                      |  | 22,450   
|                                                               |                              |                                             |  |          

The accompanying notes are an integral part of these financial statements.
These financial statements should be read in conjunction with the Company's Form 10-KSB
for the year ended December 31, 1999.

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PACIFICNET.COM, INC. AND SUBSIDIARIES       Unaudited Consolidated Condensed Statements of Cash Flows       (in thousands of United States dollars)

|                                                           |  | Six months ended
June 30, |  
|---------------------------------------------------------- |  | ------------------------- | -
|
|Cash flows from operating activities:                      |  |                           |  
|Net (loss) income                                          |  | (394                      | )
|Depreciation of machinery and equipment                    |  | 1,230                     |  
|Loss on disposals of fixed assets                          |  | 246                       |  
|Amortization of goodwill                                   |  | 56                        |  
|Minority interests                                         |  | 272                       |  
|Deferred Expenses written off                              |  | 0                         |  
|Deferred income taxes                                      |  | 31                        |  
|Gain on sale of long-term investment                       |  | 0                         |  
|(Increase) decrease in operating assets-                   |  |                           |  
|Accounts receivable, net                                   |  | (440                      | )
|Tax recoverable                                            |  | (64                       | )
|Inventories, net                                           |  | (668                      | )
|Deposits and prepayments                                   |  | (488                      | )
|Increase (decrease) in operating liabilities-              |  |                           |  
|Accounts payable                                           |  | 812                       |  
|Deposits from customers                                    |  | 257                       |  
|Accrued liabilities                                        |  | 656                       |  
|Taxation payable                                           |  | (184                      | )
|                                                           |  |                           |  
|Net cash provided by operating activities                  |  | 1,322                     |  
|                                                           |  |                           |  
|Cash flows from investing activities:                      |  |                           |  
|Acquisition of machinery and equipment                     |  | (1,414                    | )
|Proceeds from sale of long -term investment                |  | 0                         |  
|                                                           |  |                           |  
|Net cash used in investing activities                      |  | (1,414                    | )
|                                                           |  |                           |  
|Cash flows from financing activities:                      |  |                           |  
|Increase (decrease) in short-term bank loans and overdraft |  | 0                         |  
|Increase (decrease) in import trust receipts bank loans    |  | 1,090                     |  
|Increase in deferred merger costs and other assets         |  | (503                      | )
|Repayment of capital element of capital lease obligations  |  | (238                      | )
|Decrease in due to directors                               |  | (180                      | )
|Dividend paid to minority interests of subsidiary          |  | 0                         |  
|                                                           |  |                           |  
|Net cash provided by (used in) financing activities        |  | 169                       |  
|                                                           |  |                           |  
|Effect of cumulative translation adjustments               |  | 0                         |  
|Net increase (decrease) in cash and bank deposits          |  | 77                        |  
|Cash and bank deposits, as of beginning of period          |  | 1,500                     |  
|                                                           |  |                           |  
|Cash and bank deposits, as of end of period                |  | 1,577                     |  
|                                                           |  |                           |  

The
accompanying notes are an integral part of these financial statements.
These financial statements should be read in conjunction with the Company's Form 10-KSB
for the year ended December 31, 1999.

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PACIFICNET.COM, INC. AND SUBSIDIARIES              NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS         (Amounts expressed in United
States dollars unless otherwise stated)

1.  ACQUISITION OF PACIFICNET.COM LLC AND BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

On July 27, 2000, in exchange for all the ownership interests in PacificNet.com LLC ("PacificNet"), Creative Master International, Inc., the
Registrant ("the Company"), issued 21,500,000 shares of its Common Stock to the former owners of PacificNet, which represented in excess of 80% of the total number of shares outstanding immediately
following the acquisition. These shares have not been registered for resale under the Securities Act of 1933.

In
connection with the acquisition of PacificNet, the Company's name was changed to "PacificNet.com, Inc." in order to reflect the primary business focus of the Company
following the acquisition. Headquartered in Minneapolis and Hong Kong, PacificNet develops, markets and supports full-service business-to-business ("B2B")
e-commerce solutions for Asian businesses and other companies that are involved in or seek to become more involved in trans-Pacific B2B trade. PacificNet's business strategy is to offer
Asian businesses complete e-commerce solutions, including front-end services such as web site design, hosting, product database development and management, and shopping cart
applications, and back-end services such as order processing and transaction payment processing. PacificNet has developed a cost-effective proprietary e-commerce
solution called eMerchant 2000 for small and medium sized Asian businesses. In addition, PacificNet has been engaged to develop B2B e-commerce solutions for certain strategic partners and
other major Asian companies. PacificNet's U.S. office is developing specific solutions as well as strategic partnerships to facilitate trans-Pacific B2B trade for its North American customers and
partners.

The
Company's existing business at the time of the PacificNet acquisition ("Creative Master") will operate as a wholly-owned subsidiary of the Company. Creative Master is a leading
manufacturer of collectible-quality die-cast replicas of cars, trucks, buses, marine products and other items. The Company has indicated an interest in disposing of the Creative Master
operations, and a management group led by Creative Master's Chief Executive Officer, Mr. Carl Tong, has indicated an interest in purchasing this manufacturing business. However, there are no
formal understandings or arrangements with respect to a disposition of the Creative Master business, and this matter will be reviewed by the Company's Board of Directors at its next meeting.

The
acquisition of PacificNet will be accounted for as a purchase and treated as a reverse acquisition since the former owners of PacificNet controlled over 80% of the total shares of
Common Stock of the Company outstanding immediately following the acquisition on July 27, 2000. However, because the acquisition of PacificNet occurred subsequent to June 30, 2000, the
financial statements provided herein as of and for the periods ended June 30, 2000, include only the business and operations of Creative Master. The Unaudited Pro Forma Condensed Combined
Financial Statements in Note 4 below present the combined results for PacificNet and Creative Master.

The
accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements. Certain information
and footnote disclosures required by generally accepted accounting principles for complete financial statements have been condensed or omitted.

In
the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash
flows of Creative Master for the periods presented have been made. The results of operations of Creative Master for the three-month and six-month periods ended June 30, 2000 are not
necessarily indicative of the operating

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results that may be expected for the entire year ending December 31, 2000. These financial statements should be read in conjunction with the Company's Form 10-KSB for the
fiscal year ended December 31, 1999.

The
preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

2.  ONE-FOR-THREE REVERSE STOCK SPLIT

On June 23, 2000, the Company's Board of Directors declared a one-for-three reverse stock split that became effective with the
closing of the acquisition of PacificNet on July 27, 2000. This split is not reflected in the financial statements as of June 30, 2000 contained in this Form 10-Q, but
is reflected in the Unaudited Pro Forma Condensed Combined Financial Statements presented in Note 4 below.

3.  RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Deferred expenditures reported at December 31, 1998 represented pre-operating costs incurred for new production facilities. These costs were
previously deferred and amortized on a straight-line basis over three years in accordance with generally accepted accounting principles.

Effective
from January 1, 1999, the Company adopted Statement of Position 98-5 (Reporting on the Costs of Start-Up Activities), issued by the Accounting
Standards Executive Committee of the American Institute of Certified Public Accountants, which requires that entities expense start-up costs as they are incurred. Accordingly, previously
capitalized expenses of $201,000, net of tax, were written off during the first quarter of 1999 as an "accumulative effect of accounting change."

4.  UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Combined Financial Statements give effect to the acquisition of PacificNet using the purchase method of accounting,
including the pro forma adjustments described in the accompanying notes. The transaction has been treated as a reverse acquisition, since the former owners of PacificNet controlled over 80% of the
total shares of Common Stock of the Company outstanding immediately after the closing, as a result of the exchange of 21,500,000 shares of the Company's Common Stock for all of their ownership
interests in PacificNet. Therefore, for purposes of the Unaudited Pro Forma Condensed Combined Financial Statements, the 4,999,322 shares of Company Common Stock outstanding throughout the first six
months of 2000 are treated as an addition to stockholders' equity as of the assumed effective date of the PacificNet acquisition, as discussed in the following paragraph.

The
Unaudited Pro Forma Condensed Combined Statements of Operations combine the operations of Creative Master and PacificNet for the three-month and six-month periods
ended June 30, 2000, after giving effect to the acquisition of PacificNet under the purchase method of accounting and the assumptions and adjustments described in the accompanying notes, as
though the acquisition had occurred on January 1, 2000. The Unaudited Pro Forma Condensed Combined Balance Sheet combines the balance sheets of Creative Master and PacificNet as of
June 30, 2000, and is presented to give effect to the acquisition as if it occurred on that date.

The
pro forma financial information does not purport to be indicative of the results that would have been reported if the operations and management of Creative Master and PacificNet
had been

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combined for the periods presented, nor is it indicative of future results. Subsequent to the acquisition of PacificNet on July 27, 2000, the Company's primary business focus has become the
business-to-business electronic commerce services and solutions of PacificNet, instead of the manufacturing of die-cast replicas. The Company has previously
indicated an interest in disposing of Creative Master's manufacturing business, and it is likely that these assets and operations will be classified in the future as a Discontinued Operation for
accounting purposes. However, since there are no formal understandings or arrangements with respect to a disposition of the Creative Master business and the Company's newly installed Board of
Directors has not yet met to decide whether to dispose of this business and, if so, under what terms, for purposes of preparing the following Unaudited Pro Forma Condensed Combined Financial
Statements, no effect has been given to the fact that the current business of Creative Master may be held for sale in the near future.

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)

|                                                               |  | Creative
Master |        | PacificNet
E-Commerce |   | Notes |  | Proforma
Adjustments |     | Company
|-------------------------------------------------------------- |  | --------------- | ------ | --------------------- | - | ----- |  | -------------------- | --- | -------
|ASSETS:                                                        |  |                 |        |                       |   |       |  |                      |     |        
|Cash and bank deposits                                         |  | $               | 1,577  |                       | $ | 4,564 |  | (a                   | )   | $      
|Accounts receivable, net                                       |  |                 | 5,158  |                       |   | 1,074 |  |                      |     |        
|Inventories, net                                               |  |                 | 5,359  |                       |   |      |  |                      |     |        
|Deposits and prepayments                                       |  |                 | 1,936  |                       |   | 199   |  |                      |     |        
|Total current assets                                           |  |                 | 14,030 |                       |   | 5,837 |  |                      |     |        
|Long-term investments                                          |  |                 |       |                       |   | 206   |  | (a                   | )   |        
|Machinery, equipment and capital leases, net                   |  |                 | 9,895  |                       |   | 376   |  |                      |     |        
|Deferred merger costs and other assets                         |  |                 | 503    |                       |   | 484   |  |                      |     |        
|Goodwill and purchased intangibles, net                        |  |                 | 732    |                       |   | 400   |  | (c
(c                | ))  |        
|Total Assets                                                   |  | $               | 25,160 |                       | $ | 7,303 |  |                      |     | $      
|LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY       |  |                 |        |                       |   |       |  |                      |     |        
|Short-term borrowings                                          |  | $               | 2,240  |                       | $ | 200   |  |                      |     | $      
|Capital lease obligations, current portion                     |  |                 | 392    |                       |   |      |  |                      |     |        
|Accounts payable                                               |  |                 | 4,180  |                       |   | 151   |  |                      |     |        
|Other accrued expenses                                         |  |                 | 3,738  |                       |   | 120   |  | (c                   | )   |        
|Total current liabilities                                      |  |                 | 10,550 |                       |   | 471   |  |                      |     |        
|Capital lease obligations, non-current                         |  |                 | 316    |                       |   |      |  |                      |     |        
|Loans from directors                                           |  |                 | 120    |                       |   |      |  |                      |     |        
|Deferred taxes                                                 |  |                 | 430    |                       |   |      |  |                      |     |        
|Minority Interests                                             |  |                 | 1,279  |                       |   |      |  |                      |     |        
|Stockholders' Equity                                           |  |                 | 12,465 |                       |   | 6,832 |  | (b
(b
(a             | ))) |        
|Total Liabilities, Minority Interests and Stockholders' Equity |  | $               | 25,160 |                       | $ | 7,303 |  |                      |     | $      

See
accompanying notes to Creative Master and PacificNet unaudited pro forma condensed combined consolidated financial statements.

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)

|                                                                              |  | Creative Master |        | PacificNet E-Commerce |   | Notes  |   | Proforma Adjustments |  | Company |        
|----------------------------------------------------------------------------- |  | --------------- | ------ | --------------------- | - | ------ | - | -------------------- |  | ------- | -------
|Net sales                                                                     |  | $               | 10,774 |                       | $ | 1,140  |   |                      |  | $       |       
|Cost of goods sold                                                            |  |                 | (8,201 | )                     |   | (234   | ) |                      |  |         |       
|Gross profit                                                                  |  |                 | 2,573  |                       |   | 906    |   |                      |  |         |       
|Selling, general and administrative
expenses                                  |  |                 | (1,962 | )                     |   | (989   | ) |                      |  |         |       
|Amortization of goodwill                                                      |  |                 | (28    | )                     |   |       |   | (c)                  |  |         | (217   
|                                                                              |  |                 |        |                       |   |        |   |                      |  |         | 28     
|Income (loss) from operations                                                 |  |                 | 583    |                       |   | (83    | ) |                      |  |         | (189   
|Interest and other income, net                                                |  |                 |       |                       |   | 46     |   |                      |  |         |       
|Income (loss) before income taxes and minority interests                      |  |                 | 583    |                       |   | (37    | ) |                      |  |         | (189   
|Provision for income taxes                                                    |  |                 | (62    | )                     |   |       |   |                      |  |         |       
|Minority interests                                                            |  |                 | (111   | )                     |   |       |   |                      |  |         |       
|Net income (loss)                                                             |  | $               | 410    |                       | $ | (37    | ) |                      |  | $       | (189   
|Basic and diluted income per
common share                                     |  |                 |       |                       |   |       |   |                      |  |         |        
|Average number of shares outstanding for basic and diluted earnings per share |  |                 | 4,999  |                       |   | 21,500 |   | (e)                  |  |         | (17,666

See
accompanying notes to Creative Master and PacificNet unaudited pro forma condensed combined consolidated financial statements.

10

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)

|                                                                              |  | Creative
Master |         | PacificNet
E-Commerce |   | Notes  |   | Proforma
Adjustments |  | Company |        
|----------------------------------------------------------------------------- |  | --------------- | ------- | --------------------- | - | ------ | - | -------------------- |  | ------- | -------
|Net sales                                                                     |  | $               | 18,102  |                       | $ | 1,318  |   |                      |  | $       |       
|Cost of goods sold                                                            |  |                 | (14,600 | )                     |   | (284   | ) |                      |  |         |       
|Gross profit                                                                  |  |                 | 3,502   |                       |   | 1,034  |   |                      |  |         |       
|Selling, general and administrative
expenses                                  |  |                 | (3,583  | )                     |   | (1,727 | ) |                      |  |         |       
|Amortization of goodwill                                                      |  |                 | (56     | )                     |   |       |   | (c)                  |  |         | (433   
|                                                                              |  |                 |         |                       |   |        |   |                      |  |         | 56     
|Loss from operations                                                          |  |                 | (137    | )                     |   | (693   | ) |                      |  |         | (377   
|Interest and other income, net                                                |  |                 | 16      |                       |   | 110    |   |                      |  |         |       
|Loss before income taxes and minority interests                               |  |                 | (121    | )                     |   | (583   | ) |                      |  |         | (377   
|Provision for income taxes                                                    |  |                 | (1      | )                     |   |       |   |                      |  |         |       
|Minority interests                                                            |  |                 | (272    | )                     |   |       |   |                      |  |         |       
|Net loss                                                                      |  | $               | (394    | )                     | $ | (583   | ) |                      |  | $       | (377   
|Basic and diluted loss per common share                                       |  |                 |        |                       |   |       |   |                      |  |         |        
|Average number of shares outstanding for basic and diluted earnings per share |  |                 | 4,999   |                       |   | 21,500 |   | (e)                  |  |         | (17,666

See
accompanying notes to Creative Master and PacificNet unaudited pro forma condensed combined consolidated financial statements.

11

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

BASIS OF PRO FORMA PRESENTATION

On July 27, 2000, in exchange for all the ownership interests in PacificNet.com LLC ("PacificNet"), Creative Master International, Inc., the
Registrant ("the Company"), issued 21,500,000 shares of its Common Stock to the former owners of PacificNet. The acquisition of PacificNet will be accounted for as a purchase and treated as a reverse
acquisition since the former owners of PacificNet controlled over 80% of the total shares of Common Stock of the Company outstanding immediately following the acquisition.

The
purchase price allocation, which is preliminary and therefore subject to change based on further appraisals and analysis of Creative Master's net tangible assets, is as follows as
of June 30, 2000 (in thousands):

|Description                               |                                                            | Amount |        | Annual
Amortization |   | Useful Life
|----------------------------------------- | ---------------------------------------------------------- | ------ | ------ | ------------------- | - | -----------
|Purchase Price Allocation                 |                                                            |        |        |                     |   |            
|                                          | Tangible net assets of Creative Master as of June 30, 2000 |        | $      | 11,733              |   |           
|                                          | Less: Estimated merger costs                               |        |        | (1,200              | ) |           
|                                          | Goodwill                                                   |        | $      | 8,661               |   | 866        
|Total estimated purchase price allocation |                                                            | $      | 19,194 |                     |  |            

Goodwill,
which represents the excess of the purchase price of an investment in an acquired business over the fair value of the underlying net identifiable assets, is amortized on a
straight-line basis over its estimated remaining useful life of 10 years. The Company entered into a definitive agreement to acquire PacificNet on April 29, 2000. In applying
the purchase method of accounting, the total estimated purchase price of $19.2 million was calculated based on the average closing price of the Company's Common Stock as quoted on the NASDAQ
National Market for the period from April 25, 2000 through May 4, 2000 ($3.84), multiplied by the number of shares outstanding (4,999,322).

PRO FORMA ADJUSTMENTS

A description of each pro forma adjustment follows.

12

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|Party                                |                       | Terms                                                                                                                                           |  | Proceeds
|------------------------------------ | --------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|Existing governors of PacificNet LLC |                       | Exercise of options to subscribe to Membership Interests at $2.50 per unit; 390,000 Membership Interests exercised subsequent to June 30, 2000  |  | $       
|B2B Limited                          |                       | Exercise of option to subscribe to 1,000,000 Membership Interests at $2.50 per unit; exercised subsequent to June 30, 2000                      |  |         
|APP China                            |                       | Sale of 500,000 Membership Interests at $5.00 per unit; proceeds to be received as restricted securities with an assigned value of $2.5 million |  |         
|Total proceeds                       |                       |                                                                                                                                                 |  | $       
|Composition of Proceeds:             |                       |                                                                                                                                                 |  |         
|                                     | Cash                  |                                                                                                                                                 |  |         
|                                     | Long-term investments |                                                                                                                                                 |  |         
|                                     |                       |                                                                                                                                                 |  |         

13

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## 

ITEM 2MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Form 10-Q that are not purely historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about the Company's expectations,
beliefs, intentions or strategies for the future, which are indicated by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "the Company believes," "management believes" and
similar words or phrases. The forward-looking statements are based on the Company's current expectations and are subject to certain risks, uncertainties and assumptions. The Company's actual results
could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based on information available to the Company on the
date hereof, and the Company assumes no obligation to update any such forward-looking statements.

BASIS OF PRESENTATION

As of June 30, 2000, the Company's operations consisted of the manufacturing business of Creative Master. Accordingly, the financial statements included
in this Form 10-Q and the discussion that follows relate to the business and operating results of Creative Master. Subsequent to June 30, 2000, the Company acquired
PacificNet and changed its business focus as discussed above in Notes 1 and 4 to the Consolidated Condensed Financial Statements.

Three Months Ended June 30, 2000 Compared To Three Months Ended June 30, 1999

Net Sales. Net sales for the three months ended June 30, 2000 were $10,774,000, an increase of $697,000,
or 7%, from $10,077,000 for the three months ended June 30, 1999. This increase was due to approximately $1.9 million in sales of computer game peripherals of the Sinar group, acquired
by Creative Master in July 1999. Sales of die-cast products in the current quarter were less than the
comparable period last year due to a reduction in tooling revenue recognized on new products and reduced sales from a substantial customer that was acquired by a competitor of Creative Master.

During
the three months ended June 30, 2000, Creative Master sold substantially all of its products to customers in the U.S. and Europe. In the three months ended
June 30, 2000, approximately 33% of Creative Master's total net sales were attributable to sales to European customers, compared with approximately 32% for the year ended December 31,
1999.

Cost of Goods Sold.  Cost of goods sold for the three months ended June 30, 2000 was $8,201,000, an increase of
$955,000, or 13%, from $7,246,000 for the three months ended June 30, 1999. This increase was due to higher sales volume. Cost of goods sold, as a percentage of net sales, increased to 76% of
net sales for the quarter ended June 30, 2000, compared with 72% for the quarter ended June 30, 1999. The resulting decrease in gross profit margins was a result of higher fixed overhead
and lower margins on Sinar's sales due to the start up of manufacturing activities for certain of Sinar's products.

Selling, General And Administrative Expenses. Selling, general and administrative expenses totaled $1,962,000 for the three months
ended June 30, 2000, an increase of $510,000, or 35%, from $1,452,000 for the three months ended June 30, 1999. Selling, general and administrative expenses constituted 18% of net sales
for the three months ended June 30, 2000 and 14% of net sales for the three months ended June 30, 1999. Selling, general and administrative expenses increased due to an increase in
administrative personnel costs related to employees added during 1999 and the write off of in 2000 of certain tooling costs that had been capitalized in prior periods.

14

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Interest Income. Interest income was $15,000 for the three months ended June 30, 2000, as compared to $46,000 for the three
months ended June 30, 1999. The higher interest income in the prior period is attributable to proceeds of the public offering in December 1998, which had not yet been fully utilized as
of June 30, 1999.

Interest Expense. Interest expense was $63,000 for the three months ended June 30, 2000 as compared to $52,000 for the three
months ended June 30, 1999.

Provision For Income Taxes. Creative Master's provision for income taxes was $62,000 for the three months ended June 30, 2000,
compared with $130,000 for the three months ended June 30, 1999, reflecting an effective income tax rate of approximately 11% in the current quarter, a slightly higher rate than the prior year.
Interim income tax provisions are based upon management's estimate of taxable income and the resulting consolidated effective income tax rate for the full year. As a result, such interim estimates are
subject to change as the year progresses and more information becomes available.

Minority Interests. Creative Master includes in net income before minority interests all net income of its wholly-owned and
majority-owned subsidiaries. The portion of such net income attributable to minority interests in the subsidiaries held by others is then eliminated. Minority interests for the three months ended
June 30, 2000 totaled $111,000, compared with $260,000 for the same period in the prior year. The decrease was due to the lower profitability of these subsidiaries in the three months ended
June 30, 2000 compared to the same period in 1999, and the acquisition of additional shares in majority-owned subsidiaries by the Company in January 2000.

Six Months Ended June 30, 2000 Compared To Six Months Ended June 30, 1999

Net Sales. Net sales for the six months ended June 30, 2000 were $18,102,000, a decrease of $1,813,000,
or 9%, from $19,915,000 for the six months ended June 30, 1999. This decrease was due to a substantial reduction in sales of die-cast products to two customers, Mattel and Corgi, when compared
to the same period last year. Offsetting this decrease in die-cast sales during the first half of 2000 was approximately $2.7 million in sales of computer game peripherals of the
Sinar group, acquired by Creative Master in July 1999.

During
the six months ended June 30, 2000, Creative Master sold substantially all of its products to customers in the U.S. and Europe. In the six months ended June 30,
2000, approximately 33% of Creative Master's total net sales were attributable to sales to European customers compared with approximately 32% for the year ended December 31, 1999.

Cost of Goods Sold. Cost of goods sold for the six months ended June 30, 2000 was $14,600,000, an increase of $233,000, or 1%,
from $14,467,000 for the six months ended June 30, 1999. This increase was due to higher fixed overheads associated with additional facilities brought into operation during 1999 and in the
first quarter of 2000. Cost of goods sold, as a percentage of net sales, increased to 81% of net sales for the six months ended June 30, 2000, compared with 73% for the six months ended
June 30, 1999. The resulting decrease in gross profit margins was a result of higher fixed manufacturing overhead associated with factory expansions over the past year and lower margins on
Sinar's sales due
to the nature of the business as well as the start up of manufacturing activities for certain of Sinar's products.

Selling, General And Administrative Expenses. Selling, general and administrative expenses totaled $3,583,000 for the six months ended
June 30, 2000, an increase of $720,000, or 25%, from $2,863,000 for the six months ended June 30, 1999. Selling, general and administrative expenses constituted 20% of net sales for the
six months ended June 30, 2000 and 14% of net sales for the six months ended June 30, 1999. Selling, general and administrative expenses increased due to an increase in

15

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administrative personnel costs related to employees added during 1999, including the staff of Sinar, and the write off of certain tooling costs that had been capitalized in prior periods.

Interest Income.Interest income was $31,000 for the six months ended June 30, 2000, as compared to $69,000 for the six months
ended June 30, 1999. The higher interest income in the prior period is attributable to proceeds of the public offering in December 1998, which had not yet been fully utilized by
June 30, 1999.

Interest Expense.Interest expense was $95,000 for the six months ended June 30, 2000 as compared to $91,000 for the six months
ended June 30, 1999.

Provision For Income Taxes. Creative Master's net provision for income taxes was $1,000 on a net loss before income taxes for the six
months ended June 30, 2000, compared with $237,000 for the six months ended June 30, 1999, reflecting an effective income tax rate of approximately 9% in the prior period. A tax benefit
was not provided in the current period since Creative Master incurs certain administrative costs in the U.S. for which there is no tax benefit. Interim income tax provisions are based upon
management's estimate of taxable income and the resulting consolidated effective income tax rate for the full year. As a result, such interim estimates are subject to change as the year progresses and
more information becomes available.

Minority Interests. Creative Master includes in net income before minority interests all net income of its wholly-owned and
majority-owned subsidiaries. The portion of such net income attributable to minority interests in the subsidiaries held by others is then eliminated. Minority interests for the six months ended
June 30, 2000 totaled $272,000, compared with $316,000 for the same period in the prior year. The decrease was due to the lower profitability of these subsidiaries in the six months ended
June 30,
2000 compared to the same period in 1999, and the acquisition of additional shares in majority-owned subsidiaries by Creative Master in January 2000.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 2000, Creative Master's operations provided cash of $1,322,000. Creative Master's cash balance increased by $77,000 to
$1,577,000 at June 30, 2000, as compared to $1,500,000 at December 31, 1999.

Creative
Master's working capital decreased to $3,480,000 at June 30, 2000, as compared to $4,685,000 at December 31, 1999. Net accounts receivable increased by
$440,000, or 9%, to $5,158,000 at June 30, 2000, as compared to $4,718,000 at December 31, 1999. Consistent with practices in the die-cast collectibles industry, Creative
Master offers accounts receivable terms to its customers. This practice has created working capital requirements that Creative Master generally has financed with a combination of internally generated
cash flows and credit facilities provided by affiliates and third parties. Creative Master has not experienced any significant problems with collection of its accounts receivable. The computer game
peripheral business tends to have a slightly longer collection period.

Creative
Master's accounts payable and accrued liabilities increased by $1,649,000, or 30%, to $7,219,000at June 30, 2000, as compared to $5,570,000 at December 31,
1999. The increase in accounts payable and accrued liabilities was primarily related to extension of payment terms from suppliers to finance short-term cash requirements.

Creative
Master's inventories increased by $668,000, or 14%, to $5,359,000 at June 30, 2000, as compared to $4,691,000 at December 31, 1999, as a result of lower than
expected sales and a build up of raw materials in the die cast business and ramping up of internal manufacturing for the computer game peripheral manufacturing business.

For
the six months ended June 30, 2000, additions to property, plant and equipment aggregated $2,054,000 as compared to $5,235,000 for the year ended December 31, 1999.
During the first quarter

16

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of 2000, Creative Master completed conversion of certain of its manufacturing facilities to be able to produce computer game peripherals. There were no large capital projects undertaken during the
second quarter of 2000. For the second half of 2000, management of Creative Master anticipates that additional expenditures in connection with general refurbishment of plant and equipment and the
leasehold improvements related to the move to new office premises in August 2000, will be approximately $1,000,000, a portion of which is expected to be funded by capital lease financing.

On
a pro forma basis, the Company had approximately $9.6 million of cash as of June 30, 2000 (Refer to the Unaudited Combined Condensed Balance Sheet included in
Note 4). The Company expects that its cash needs for the foreseeable future will arise primarily from working capital requirements, technology development, capital expenditures and debt service
requirements. The Company expects that the principal sources of cash will be cash on hand, operating cash flow, bank lines of credit and other external credit sources. The Company believes that these
sources will be adequate to meet anticipated cash requirements for 2000.

Inflation. Inflation has not had a material impact on Creative Master's business in recent years.

Currency Exchange Fluctuations.All of Creative Master's sales are denominated either in U.S. dollars or Hong Kong dollars, while its
expenses are denominated primarily in Hong Kong dollars and Renminbi, the currency of the PRC ("RMB"). There can be no assurance that the RMB-to-U.S. dollar rate will remain
stable. Although a devaluation of the Hong Kong dollar or RMB relative to the U.S. dollar would be likely to reduce Creative Master's expenses, any material increase in the value of the Hong Kong
dollar or RMB relative to the U.S. dollar would increase Creative Master's expenses, and could have a material adverse effect on Creative Master's business, financial condition and results of
operations. Creative Master has never engaged in currency hedging operations and has no present intention to do so.

Seasonality and Quarterly Fluctuations. Each year, Creative Master ceases production for a two-week period due to the
Chinese New Year holiday, which occurs during late January or early February. This holiday shutdown has typically resulted in lower revenues during the first quarter of each year than during the other
three quarters. Certain fixed costs, however, continue despite Creative Master's closing. This reduction in revenues, without a corresponding reduction in costs, diminishes liquidity during the first
quarter.

Creative
Master experiences fluctuations in quarterly sales due to the timing of receipt of orders from customers and product shipments. Creative Master also incurs substantial
tooling and other costs of manufacturing new products from three to nine months in advance of obtaining the first customer
orders for the new product. This long lead time may contribute to fluctuations in Creative Master's quarterly results of operations.

ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes that its exposure to market risk associated with activities in derivative financial instruments, other financial instruments and
derivative commodity instruments is immaterial.

PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

NONE

ITEM 2CHANGES IN SECURITIES AND USE OF PROCEEDS

NONE

17

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ITEM 3DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



| |  | FOR       |  | AGAINST |  | ABSTAIN
| |  | --------- |  | ------- |  | -------
| |  | 3,371,649 |  | 1,248   |  | 136    



|                   |  | FOR       |  | AGAINST |  | ABSTAIN
|------------------ |  | --------- |  | ------- |  | -------
|CARL KA WING TONG  |  | 3,369,050 |  | 261     |  | 3,722  
|LEO SHECK PUI KWOK |  | 3,369,050 |  | 261     |  | 3,722  
|STEVE GORDON       |  | 3,369,050 |  | 261     |  | 3,722  
|CLAYTON K. TRIER   |  | 3,369,050 |  | 261     |  | 3,722  



| |  | FOR       |  | AGAINST |  | ABSTAIN
| |  | --------- |  | ------- |  | -------
| |  | 3,369,405 |  | 3,454   |  | 174    



| |  | FOR       |  | AGAINST |  | ABSTAIN
| |  | --------- |  | ------- |  | -------
| |  | 3,334,260 |  | 38,490  |  | 283    



| |  | FOR       |  | AGAINST |  | ABSTAIN
| |  | --------- |  | ------- |  | -------
| |  | 3,360,659 |  | 12,246  |  | 128    



| |  | FOR       |  | AGAINST |  | ABSTAIN
| |  | --------- |  | ------- |  | -------
| |  | 3,372,185 |  | 692     |  | 156    

18

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ITEM 5OTHER INFORMATION

NONE

ITEM 6EXHIBITS AND REPORTS ON FORM 8-K

|Exhibit 2.1 |  | Share Exchange Agreement dated February 17, 2000, between Registrant and holders of membership interests in PacificNet.com LLC, incorporated by reference to Registrant's 8-K report filed on August 11, 2000           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.2 |  | Supplement to Share Exchange Agreement dated April 29, 2000, between Registrant and holders of membership interests in PacificNet.com LLC, incorporated by reference to Registrant's 8-K report filed on August 11, 2000
|Exhibit 3.1 |  | Certificate of Incorporation, as amended, incorporated by reference to Registrant's 8-K report filed on August 11, 2000.                                                                                                
|Exhibit 27  |  | Financial Data Schedule                                                                                                                                                                                                 
|Exhibit 99  |  | Cautionary Statement, incorporated by reference to Registrant's 8-K report filed on August 11, 2000.                                                                                                                    

NONE

19

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                     |  | PACIFICNET.COM, INC.
|-------------------- |  | --------------------
|Date:August 14, 2000 |  | By:                 
|Date:August 14, 2000 |  | By:                 

20

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INDEX TO EXHIBITS

|Exhibit 2.1 |  | Share Exchange Agreement dated February 17, 2000, between Registrant and holders of membership interests in PacificNet.com LLC, incorporated by reference to Registrant's 8-K report filed on August 11, 2000           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.2 |  | Supplement to Share Exchange Agreement dated April 29, 2000, between Registrant and holders of membership interests in PacificNet.com LLC, incorporated by reference to Registrant's 8-K report filed on August 11, 2000
|Exhibit 3.1 |  | Certificate of Incorporation, as amended, incorporated by reference to Registrant's 8-K report filed on August 11, 2000                                                                                                 
|Exhibit 27  |  | Financial Data Schedule                                                                                                                                                                                                 
|Exhibit 99  |  | Cautionary Statement, incorporated by reference to Registrant's 8-K report filed on August 11, 2000                                                                                                                     
|            |  |                                                                                                                                                                                                                         

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