<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   -----------

                                    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 March 31, 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

                       CREATIVE MASTER INTERNATIONAL, INC.
              (Exact name of small business issuer in its charter)


          DELAWARE                                     11-2854355
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

  CASEY INDUSTRIAL BUILDING, 8TH FLOOR                    N/A
      18 BEDFORD ROAD, TAIKOKTSUI                      (Zip Code)
          KOWLOON, HONG KONG
(Address of principal executive offices)

                REGISTRANT'S TELEPHONE NUMBER: 011-852-2396-0147

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 [ ]

There were 4,999,322 shares of the Company's common stock outstanding on May 5,
2000.

                                                                    Page 1
<PAGE>

<TABLE>
<CAPTION>

                               TABLE OF CONTENTS
                               -----------------

                                                                                       PAGE
                                                                                       ----
<S>                                                                                 <C>
PART 1 - FINANCIAL INFORMATION

   ITEM 1 - FINANCIAL STATEMENTS

            Unaudited Consolidated Condensed Statements of Operations -
            for each of the three-month periods ended March 31, 2000 and 1999            3

            Consolidated Condensed Balance Sheets - as of March 31, 2000
            (unaudited) and December 31, 1999 (audited)                                  4

            Unaudited Consolidated Condensed Statements of Cash Flows -
            for each of the three-month periods ended March 31, 2000 and 1999            5

            Notes to Consolidated Condensed Financial Statements                         6

   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS                                                    8

   ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  11

PART II - OTHER INFORMATION

   ITEM 1 - LEGAL PROCEEDINGS                                                           11

   ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS                                   11

   ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                             11

   ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                         11

   ITEM 5 - OTHER INFORMATION                                                           11

   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                            11

</TABLE>

                                                                    Page 2
<PAGE>

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

<TABLE>
<CAPTION>

                                                                          Three months ended March 31,
                                                                         2000                  1999
<S>                                                            <C>                      <C>
Net sales                                                                     7,328                9,838
Cost of goods sold                                                           (6,399)              (7,221)

                                                                 -------------------      ---------------
Gross profit                                                                    929                2,617
                                                                 -------------------      ---------------

Selling, general and administrative expenses                                 (1,621)              (1,411)
Interest expense net                                                            (16)                 (16)
Other income, net                                                                32                   25
Amortization of goodwill                                                        (28)                 (24)
                                                                 -------------------      ---------------
Income (loss) before income taxes and minority interests                       (704)               1,191
                                                                 -------------------      ---------------

Provision (benefit) for income taxes                                             61                 (107)

                                                                 -------------------      ---------------
Income (loss) before minority interests                                        (643)               1,084
                                                                 -------------------      ---------------

Cumulative effect of Accounting Change
  - write-off of deferred expenditures, net of tax                                0                (201)
Minority interests                                                             (161)                 (56)

                                                                 -------------------      ---------------
Net income (loss)                                                              (804)                 827
                                                                 ===================      ===============


Earnings (loss) per common share
 -Basic and diluted                                                          $(0.16)               $0.17

Weighted average common shares outstanding                                4,999,322            4,999,322
                                                                 -------------------      ---------------


</TABLE>


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.

                                                                    Page 3
<PAGE>

              CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                     (in thousands of United States dollars)

<TABLE>
<CAPTION>
                                                                        31-Mar-2000         31-Dec-1999
                                                                        (Unaudited)
<S>                                                                    <C>                <C>
ASSETS

Current assets:
Cash and bank deposits                                                         1,132               1,500
Accounts receivable, net                                                       2,878               4,718
Deposits and prepayments                                                       2,016               1,384
Tax recoverable                                                                  122                   0
Inventories, net                                                               4,986               4,691
                                                                        -------------      --------------
Total current assets                                                          11,134              12,293

Machinery, equipment and capital leases, net                                  10,257               9,316
Goodwill                                                                         761                 841
                                                                        -------------      --------------
Total assets                                                                  22,152              22,450
                                                                        =============      ==============

LIABILITIES, MINORITY INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings                                                     1,668               1,150
Capital lease obligations, current portion                                       375                 202
Accounts payable                                                               3,531               3,368
Deposits from customers                                                          289                 235
Accrued liabilities                                                            1,888               2,202
Loans from directors, current portion                                            207                 267
Taxation payable                                                                   0                 184
                                                                        -------------      --------------
Total current liabilities                                                      7,958               7,608

Capital lease obligations, non-current portion                                   414                 104
Loans from directors, non-current portion                                        120                 240
Deferred taxation                                                                437                 399
                                                                        -------------      --------------
Total liabilities                                                              8,929               8,351
                                                                        -------------      --------------

Minority interests                                                             1,168               1,240
                                                                        -------------      --------------

Stockholders' equity:
Common stock, par value $0.0001:
  Authorized - 25,000,000 shares
   Outstanding and fully paid -  4,999,322 shares                                  1                   1
Preferred stock, par value $0.0001:
   Authorized - 5,000,000 shares
   Outstanding - nil                                                               0                   0
Additional paid-in capital                                                     5,784               5,784
Retained earnings                                                              6,270               7,074
                                                                        -------------      --------------
Total stockholders' equity                                                    12,055              12,859
                                                                        -------------      --------------

Total liabilities, minority interests and stockholders' equity                22,152              22,450
                                                                        =============      ==============
</TABLE>

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.

                                                                    Page 4
<PAGE>



              CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
            Unaudited Consolidated Condensed Statements of Cash Flows
                     (in thousands of United States dollars)

<TABLE>
<CAPTION>

                                                                             Three months ended March 31,
                                                                                2000              1999
<S>                                                                          <C>                <C>
Cash flows from operating activities:
Net (loss) income                                                                (804)             827
Depreciation of machinery and equipment                                           594              449
Loss on disposals of fixed assets                                                   7                0
Amortization of goodwill                                                           28               24
Minority interests                                                                161               56
Deferred Expenses written off                                                       0              221
Increase in deferred taxation                                                      38               60
(Increase) Decrease in operating assets-
Accounts receivable, net                                                        1,840             (630)
Deposits and prepayments                                                         (632)             115
Tax recoverable                                                                  (122)               0
Inventories, net                                                                 (295)             (26)
Increase (Decrease) in operating liabilities-
Accounts payable                                                                  163           (1,440)
Deposits from customers                                                            54              534
Accrued liabilities                                                              (495)            (459)
Taxation payable                                                                 (184)              (9)

                                                                          ------------    -------------
Net cash provided by  (used in) operating activities                           353                (278)
                                                                          ------------    -------------

Cash flows from investing activities:
Acquisition of machinery and equipment                                           (902)          (2,228)

                                                                          ------------    -------------
Net cash used in investing activities                                            (902)          (2,228)
                                                                          ------------    -------------

Cash flows from financing activities:
Increase in short-term bank loans and overdraft                                     0                9
Increase (decrease) in import trust receipts bank loans                           518             (178)
Decrease incapital element of capital lease obligations                          (157)             (23)
Decrease in loans from directors                                                 (180)            (119)
Dividend paid to minority interests of a subsidiary                                 0              (40)

                                                                          ------------    -------------
Net cash provided by (used in) financing activities                               181             (351)
                                                                          ------------    -------------

Net increase (decrease) in cash and bank deposits                                (368)          (2,857)
Cash and bank deposits, as of beginning of period                               1,500            5,055

                                                                          ------------    -------------
Cash and bank deposits, as of end of period                                     1,132            2,198
                                                                          ------------    -------------
</TABLE>

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.

                                                                    Page 5
<PAGE>



              CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
       Amounts expressed in United States dollars unless otherwise stated)

1.   BASIS OF PRESENTATION
     The accompanying unaudited financial statements of Creative Master
     International, Inc. ("Creative Master" or the "Company") 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 for the periods
     presented have been made. The results of operations for the three-month
     period ended March 31, 2000 are not necessarily indicative of the
     operating 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 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.   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."

3.   AGREEMENT TO ACQUIRE PACIFICNET.COM LLC
     On February 17, 2000, the Company entered into a Share Exchange
     Agreement to acquire all the outstanding ownership interests in
     PacificNet.com LLC ("PNC"), a limited liability company organized in
     the State of Minnesota. On April 29, 2000, the parties to the Share
     Exchange Agreement executed a Supplemental Agreement to document their
     understanding of certain details of the proposed acquisition. The Share
     Exchange Agreement and the Supplemental Agreement, when considered
     together, constitute a definitive agreement among the Company, PNC and
     the owners of PNC that has been approved by the Boards of both
     companies and the owners of PNC.

     In exchange for the ownership interests in PNC, the Company has agreed
     to issue 21,500,000 shares of its Common Stock to the owners of PNC,
     which would represent in excess of 80% of the total number of shares
     expected to be outstanding immediately following the acquisition. The
     shares to be issued will not be registered for resale under the
     Securities Act of 1933. The consummation of the proposed transaction is
     subject to approval of the Company's shareholders, receipt of an
     updated fairness opinion from the Company's fairness advisor as of the
     closing date and other customary conditions.

     Headquartered in Minneapolis and Hong Kong, PNC is a privately-held
     company founded in July 1999 that 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. PNC'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. PNC

                                                                    Page 6
<PAGE>

     has developed a cost-effective proprietary e-commerce solution called
     eMerchant 2000 for small and medium sized Asian businesses. In
     addition, PNC has been engaged to develop B2B e-commerce solutions for
     certain strategic partners and other major Asian companies. PNC'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.

                                                                    Page 7
<PAGE>


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.

The Company has agreed to acquire PNC in a transaction which, if completed,
would result in PNC becoming a wholly-owned subsidiary of the Company and the
owners of PNC acquiring in excess of 80% of the total number of shares of Common
Stock expected to be outstanding immediately following the acquisition. The PNC
acquisition is subject to certain conditions, and it may not be completed.

If the acquisition of PNC is completed, the Company's primary business focus
will be business-to-business electronic commerce services instead of its current
focus on manufacturing collectible-quality, die-cast replicas of cars, trucks,
buses, marine products and other items. PNC has indicated its interest in
disposing of the Company's current business following completion of the
acquisition. In light of this, a management group led by the Company's Chief
Executive Officer, Mr. Carl Ka Wing Tong, has indicated an interest in
negotiating a purchase of the current business. However, neither the Company nor
PNC have entered into any formal understanding or arrangement with respect to a
disposition of the current business, and such disposition is not a condition to
the acquisition of PNC.

OVERVIEW:

The Company is a leading independent manufacturer of collectible-quality,
die-cast replicas of cars, trucks, buses and other items. Die-cast collectibles
are distinguishable from die-cast toys by their authentic design, exacting
engineering and attention to detail, including abundant use of identifiable
brand names, logos and other licensed marks. The die-cast products the Company
manufactures are 1/6th to 1/160th scale and include as many as 450 parts,
including numerous moveable parts. They are marketed and distributed by the
Company's customers primarily to collectors, hobbyists and enthusiasts at retail
prices ranging from $20 to $200 or more. The Company's customers are primarily
U.S. and European marketers and distributors of vehicle replicas and other
collectibles, including Danbury Mint (MBI), Paul's Model Art, Mattel, Action
Performance, First Gear, Corgi Classics, Road Champs and Hallmark Cards.

With the acquisition of the Sinar Industrial Limited group of companies
("Sinar")in July 1999, the Company expanded its range of products to computer
and interactive video game peripherals ("CGPs"). Sinar designs and markets a
variety of game controllers for various game platforms such as Nintendo, Sony
PlayStation & PC. The range of products includes a wide variety of ergonomically
designed joysticks, joypads, steering wheels, light guns, cable products and
multimedia peripherals. Sinar's products are distributed and sold primarily in
the United States, Europe, and Asia. The new products compliment the Company's
die-cast collectibles by broadening the product lines of some of the existing
customers. These products also appeal to an end customer with similar
demographics to our collectors. In the past, Sinar has designed and marketed its
products, but outsourced all manufacturing to third-party vendors. Beginning in
the first quarter of 2000, some of the CGPs are being manufactured in the
Company's Dongguan facilities. The Company provides its experience in
manufacturing and production control to ensure product quality and enhance
margins.

The Company's mission is to provide the highest level of product quality and
customer service among independent manufacturers of die-cast collectibles and
computer and video game peripherals. The Company offers its customers turnkey
product development and manufacturing capabilities that are customized to meet
their specific needs. The

                                                                    Page 8
<PAGE>

Company's vertically integrated process affords complete sourcing of raw
materials, engineering, assembly, quality control and final packaging of
products in commercial quantities. Depending on the customer's needs, the
Company provides a self-contained production area within one of its factories
with tooling and other production functions dedicated to manufacturing the
customer's products according to its particular design, engineering and quality
requirements. This approach permits customers to closely supervise and control
all aspects of the production process and to protect the confidentiality of
their product design and engineering. The Company's turnkey process enables its
customers to shorten the lead time from conceptual design to product delivery
and to minimize production costs while maintaining high quality and reliability.

All of the Company's manufacturing operations are conducted through Creative
Master Limited ("CML"), the Company's wholly-owned Hong Kong subsidiary, and
CML's subsidiaries. CML was co-founded in 1986 by Carl Ka-Wing Tong and Leo
Sheck-Pui Kwok. The Company's manufacturing facilities are located in the
Dongguan region of Guangdong Province, the People's Republic of China ("PRC"),
approximately 60 miles northwest of Hong Kong. The Dongguan facilities contain
over 550,000 square feet of manufacturing space plus housing and related
facilities for approximately 6,000 workers.

The Company's principal executive offices are located at Casey Industrial
Building, 8th Floor, 18 Bedford Road, Taikoktsui, Kowloon, Hong Kong.

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

   NET SALES. Net sales for the three months ended March 31, 2000 were
$7,328,000, a decrease of $2,510,000, or 25.5%, from $9,838,000 for the three
months ended March 31, 1999. This decrease was due primarily to a substantial
decrease in sales to two significant customers, Mattel and Corgi, when compared
to the same period last year.

   The Company sells substantially all of its products to customers in the U.S.
and Europe. In the first three months of 2000 and 1999, approximately 26% and
32% of the Company's total net sales were attributable to sales to European
customers. The U.S. and European governments may, from time to time, impose new
quotas, duties, tariffs, or other charges or restrictions, or adjust presently
prevailing quota, duty or tariff levels, which could adversely affect the
Company's ability to continue to export products to the U.S. and Europe at
current or increased levels.

   COST OF GOODS SOLD. Cost of goods sold for the three months ended March 31,
2000 was $6,399,000, a decrease of $822,000, or 11.4%, from $7,221,000 for the
three months ended March 31, 1999. This decrease was due to lower sales volume.
Cost of goods sold, as a percentage of net sales, increased to 87.3% of net
sales for the quarter ended March 31, 2000, compared with 73.4% for the quarter
ended March 31, 1999. The resulting decrease in gross profit margins was a
result of higher fixed overheads and additional overhead related to setting up
the production lines for CGP's during the first quarter of 2000.

   SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $1,621,000 for the three months ended March 31,
2000, an increase of $210,000, or 14.9%, from $1,411,000 for the three months
ended March 31, 1999. Selling, general and administrative expenses constituted
22.1% of net sales for the three months ended March 31, 2000 and 14.3% of net
sales for the three months ended March 31, 1999. Selling, general and
administrative expenses increased due to an increase in administrative personnel
costs related to employees added during 1999.

   INTEREST INCOME. Interest income was $16,000 for the three months ended March
31, 2000, as compared to $23,000 in the three months ended March 31, 1999.

   INTEREST EXPENSE. Interest expense was $32,000 for the three months ended
March 31, 2000 as compared to $39,000 for the three months ended March 31, 1999.

   CUMULATIVE EFFECT OF ACCOUNTING CHANGE. Pre-operating costs incurred for new
production facilities were previously deferred and amortized on a straight-line
basis over three years. Previously capitalized expenses of $201,000, net of tax,
were written off during the first quarter of 1999 as a "cumulative effect of
accounting change."

                                                                    Page 9

<PAGE>

   PROVISION FOR INCOME TAXES. The Company's recorded a net tax recoverable of
$61,000 for the three months ended March 31, 2000. The Company's provision for
income taxes was $107,000 for the three months ended March 31, 1999, reflecting
an effective income tax rate of 9%. 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. The Company 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 March 31, 2000 totaled approximately $161,000, compared with
$56,000 for the same period in the prior year. The increase was due to the
additional profitability of those subsidiaries with minority interests,
including Sinar, acquired in July 1999. During the first quarter of 2000, the
Company acquired an additional 10% of the equity of Mastercraft Engineering
Limited for approximately $168,000. Also during the first quarter of 2000, the
Company also acquired the remaining 40% minority interest in Sinar's subsidiary,
Titan Industrial Ltd., for a cash consideration of $1.

LIQUIDITY AND CAPITAL RESOURCES

   For the three months ended March 31, 2000, the Company's operations provided
cash of $534,000. The Company's cash balance decreased by $368,000 to $1,132,000
at March 31, 2000, as compared to $1,500,000 at December 31, 1999.

   The Company's working capital decreased to $3,176,000 at March 31, 2000, as
compared to $4,685,000 at December 31, 1999. Net accounts receivable decreased
by $1,840,000, or 39%, to $2,878,000 at March 31, 2000, as compared to
$4,718,000 at December 31, 1999 as result of sales volume decreases. Consistent
with practices in the die-cast collectibles industry, the Company offers
accounts receivable terms to its customers. This practice has created working
capital requirements that the Company generally has financed with a combination
of internally generated cash flows and credit facilities provided by affiliates
and third parties. The Company has not experienced any significant problems with
collection of its accounts receivable.

   The Company's accounts payable and accrued liabilities decreased by $151,000,
or 3%, to $5,419,000 at March 31, 2000, as compared to $5,570,000 at December
31, 1999. The decrease in accounts payable and accrued liabilities was primarily
related to the decrease in business activity for the period.

   The Company's inventories increased by $295,000, or 6%, to $4,986,000 at
March 31, 2000, as compared to $4,691,000 at December 31, 1999, as a result of
lower than expected sales and requests by certain customers to hold shipment
until April.

   For the three months ended March 31, 2000, additions to property, plant and
equipment aggregated $1,535,000 as compared to $2,470,000 for the year ended
December 31, 1999. The principal capital project undertaken during the first
quarter of 2000 was the conversion of one of the Company's manufacturing
facilities to be able to produce CGPs. The Company anticipates that additional
expenditures in connection with the continuing upgrading and improvement of
production facilities at the Dongguan facility during the remainder of 2000 will
be approximately $2,000,000, a portion of which is expected to be funded by
capital lease financing.

   The Company expects that its cash needs for the foreseeable future will arise
primarily from working capital requirements, capital expenditures and debt
service requirements. The Company expects that its principal sources of cash
will be operating cash flow, cash on hand, 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, provided the Company
returns to profitability for the remainder of the year, as expected by
management. The agreements with PNC require, among other things, that the
management of Creative Master continue to operate its business in the present
manner and prohibit the Company from issuing additional equity securities prior
to closing, other than for the exercise of employee stock options or warrants.

                                                                   Page 10
<PAGE>

   INFLATION.  Inflation has not had a material impact on it's the Company's
 business in recent years.

   CURRENCY EXCHANGE FLUCTUATIONS. All of the Company'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 the Company's expenses, any material increase
in the value of the Hong Kong dollar or RMB relative to the U.S. dollar would
increase the Company's expenses, and could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
has never engaged in currency hedging operations and has no present intention to
do so.

   SEASONALITY. Each year, the Company 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 the Company's closing. This reduction in
revenues, without a corresponding reduction in costs, diminishes liquidity
during the first quarter.

   The Company experiences fluctuations in quarterly sales due to the timing of
receipt of orders from customers and product shipments. The Company 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 the Company'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

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

         NONE

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

          NONE

ITEM 5 - OTHER INFORMATION

         NONE

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     a. The exhibits listed in the accompanying Index to Exhibits are filed as
part of this report on Form 10-Q.

                                                                   Page 11
<PAGE>



b.   Reports on Form 8-K:

     The Company filed a Current Report on Form 8-K on March 8, 2000 to
     report the execution of the Share Exchange Agreement between the
     Company, PacificNet.com LLC and the owners of PacificNet.com LLC.


                                                                   Page 12
<PAGE>



                                   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.


                                CREATIVE MASTER INTERNATIONAL, INC.


Date:  May 12, 2000    By:     /s/ CARL KA WING TONG
                            -------------------------------------------
                                Carl Ka Wing Tong,
                                President and Chief Executive Officer

Date:  May 12, 2000    By:     /s/ JOHN REMPEL
                            -------------------------------------------
                                 John Rempel
                                Chief Financial Officer

Date:  May 12, 2000    By:     /s/ SHING KAM MING
                            -------------------------------------------
                                Shing Kam Ming
                                Principal Accounting Officer

                                                                   Page 13

<PAGE>

                                INDEX TO EXHIBITS


EXHIBIT
NUMBER       DESCRIPTION
-------      -----------
27           Financial Data Schedule



                                                                   Page 14