| **U.S. SECURITIES AND EXCHANGECOMMISSION**     |
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| **Washington, D.C.20549**                      |
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| **FORM 10-QSB**                                |
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| [X]                                            | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934 |
| For the quarterly period ended June 30, 2002   |
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| [  ]                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 |
| For the transition period from  _____ to _____ |
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| **Commission File Number:  000-24985**         |

| **PACIFICNET INC.**                                 |
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| (Exact name of small business issuer in itscharter) |

| **Delaware**(State or otherjurisdiction ofincorporation ororganization)                              |  | **91-2118007**(I.R.S.EmployerIdentification No.)  |
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| **43/F China Online Centre, 333 Lockhart Road, Wanchai,Hong Kong**(Address of principal executiveoffices) |  | N/A(Zip Code)                                          |

| **Registrant’s Telephone Number:852-2876-2950**                                                     |
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| **PacificNet.com Inc., 7808 Creekridge Circle, Suite 101,Bloomington, MN 55439**(Former Name and Address) |
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Check whether the issuer (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepast 12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirements for thepast 90 days.   
  YES [X]  NO [ ]

There were 22,813,451 shares, par value $0.0001 per share, of the  PacificNet Inc..'s (the "Company") Common Stock outstanding on  August 9, 2002.**( 1)****TABLE OFCONTENTS****PAGE****PART I - FINANCIAL INFORMATION**ITEM 1 - FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets –  as of  June 30, 2002(unaudited) and December 31, 2001 (audited)3Unaudited Condensed Consolidated Statements of Operations - for each of thethree and six-month periods ended June 30, 2002 and 20014Unaudited Condensed Consolidated Statements of Cash Flows - for each of thesix-monthperiods ended June 30, 2002 and 20015Notes to Consolidated Condensed Financial Statements6ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS9**PART II - OTHER INFORMATION**13ITEM 1 - LEGAL PROCEEDINGS13ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS14ITEM 3 - DEFAULTS UPON SENIOR SECURITIES14ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS15ITEM 5 - OTHER INFORMATION15ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K18**( 2)****PART I - FINANCIAL INFORMATION**      In the opinion of management, the accompanyingunaudited financial statements included in this Form 10-QSB reflect alladjustments (consisting only of normal recurring accruals) necessary for a fairpresentation of the results of operations for the periods presented.  Theresults of operations for the periods presented are not necessarily indicativeof the results to be expected for the full year.**ITEM 1 - FINANCIALSTATEMENTS****PACIFICNET INC. AND SUBSIDIARIES Condensed ConsolidatedBalance Sheets**(In thousands of United States dollars,except par values and share numbers)**( 3)****PACIFICNETINC. AND SUBSIDIARIES ****Unaudited Condensed Consolidated Statements ofOperations**(In thousands of United States dollars, except shareamounts)****Seecondensed notes to financial statements.**( 4)****PACIFICNET INC.AND SUBSIDIARIES****Unaudited Consolidated Condensed Statements of CashFlows**(In thousands of United States dollars)See condensednotes to financial statements.**( 5)**
**PACIFICNET INC. AND SUBSIDIARIES**
**NOTES TO CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS**

**(Amountsexpressed in United States dollars unless otherwisestated)******
**1.  BASIS OF PRESENTATION***InterimFinancial Statements. *The interim financial statements are preparedpursuant to the requirements for reporting on Form 10-QSB.  In the opinionof management, the interim financial statements reflect all adjustments of anormal recurring nature necessary for a fair presentation of the results for theinterim periods presented.  The interim financial statements and notes theretoshould be read in conjunction with the financial statements and notes includedin the annual report of PacificNet Inc. (referred to herein as  "PACT" or the"Company") on Form 10-KSB for the fiscal year ended December 31, 2001.* *
*Investmentin a Subsidiary Company.*** **In January 2002, the Company had acquired 60% ofinterest in PacificNet Solutions Ltd (“PacSo”), a Hong Kongbased IT solution provider, which specializes in system integration, softwareapplication, and e-business solutions.  The scope of products and servicesinclude smart card solutions, web based front-end applications and web basedconnection to backend enterprise planning systems.  PacSo commenced itsoperations on November 13, 2001.*Investment in a JointVenture.*On July 31, 2001, the Company made a public announcement that ithad entered into an agreement dated July 28, 2001 for the sale and purchase ofan equity interest in a Joint Venture in the People's Republic of China byHolley Group Co., Ltd ("China Holley").  Subsequently, PacificNet and ChinaHolley formed a Sino-Foreign Equity Joint Venture company called “HangzhouHolley Pacific Software Co., Ltd.”.  In October 2001, PacificNet invested$255,000 to acquire 51% ownership of the joint venture.  According to the jointventure agreement, PacificNet has 3 out of 5 board seats, and appoints the legalrepresentative of the joint venture.  The joint venture has not commenced anybusiness operation.  Currently, Holley and PacificNet are discussing a mutuallyagreeable termination of the joint venture.***Investments inAffiliated Companies. *The Company’s investments in affiliatedcompanies for which its ownership exceeds 20% (PacificNet-NTSC.com Sdn.Bhdand  Xmedia Holdings Inc.), but are not majority-owned or controlled, areaccounted for using the equity method.  The Company’s investment inaffiliated company for which its ownership is less than 20% (ABCDEnet.comLimited), is accounted for using the cost method.  Under the equity method,the Company’s proportionate share of each affiliate’s net income orloss and amortization of the Company’s net excess investment over itsequity in each affiliate’s net assets is included in “equity inlosses of affiliated companies”.  The Company assesses the need torecord impairment losses on its investments when indicators of impairment arepresent.  Indicators of value generally include revenue growth, operatingresults, cash flows and other measures.  Management then determines whetherthere has been a permanent impairment of value based upon events andcircumstances that have occurred since  the acquisition of eachinvestment.  During the quarterly period ended June 30, 2002, a provisionfor impairment loss of $16,000 related to the Company's investment in XmediaHoldings Inc. has been made.*Discontinuation of Certain Operations.*Laptizen.com Limited - In September 2001, the Board of Directors of theCompany approved a plan not to make further investment related to itssubsidiary, Laptizen.com Limited (“Laptizen”).  Laptizen is a HongKong based B2B computer system, e-commerce portal and value added reseller andservice provider for computer systems.  As of March 31, 2002, all activitiesrelated to Laptizen had ceased operation and Laptizen is under liquidationprocess.*Operating Results for Future Periods. *These resultsare not necessarily indicative of the operating results that may be expected forthe entire year ending December 31, 2002 and future periods.  
**( 6)****2.  BUSINESSCOMBINATIONS AND DISPOSITIONS***         Dispositionof Creative Master Business.  *In September 2000, the Company’sBoard of Directors approved a plan to dispose of its die-cast replicamanufacturing business (“the Creative Master business”).  OnOctober 2, 2000, the Company sold the Creative Master business to a managementgroup led by Mr. Carl Tong, former Chief Executive Officer of the Company. As consideration for this business, the management group i) returned 895,765shares of the Company’s Common Stock with a quoted market value ofapproximately $4.9 million, ii) assumed all indebtedness and obligations of theCompany related to the Creative Master business and iii) relinquished any claimwith respect to an intercompany balance of $1.5 million payable by theCompany.        The 895,765 shares of Common Stockreturned to the Company are held as treasury stock at September 30, 2001 andrepresented a 10.14% reduction in the total number of shares outstandingimmediately before the return.  The net liabilities and results ofoperations for the Creative Master business are reflected as discontinuedoperations in the accompanying financial statements.*        Private Placement Transaction with Sino MartManagement Limited.* As described in the Current Report on Form 8-Kfiled on March 28, 2002, at the March 25, 2002 special stockholder meeting, thestockholders of the Company approved an issuance of 12,000,000 shares of theCompany’s common stock and a warrant to purchase up to 3,000,000additional shares of the Company’s common stock (“Warrant”) ina private placement of the Company’s common stock with Sino MartManagement Ltd., a private investment and business development companyregistered in the British Virgin Islands (“Sino Mart”).  
        In accordance with the terms and provisions of theDecember 9, 2001 subscription agreement, as amended (“SubscriptionAgreement”), by and between the Company and Sino Mart, the Company agreedto offer, to sell and to issue to Sino Mart, in a private placement in relianceupon the exemption from registration under Section 4(2) and/or of Rule 506 ofRegulation D under the Securities Act of 1933, as amended, 12,000,000 commonstock shares in consideration for $3,480,000, (or $0.29 per share), representing56.9% of the number of shares of the Company’s common stock outstandingafter the private placement. However, upon the Company’s issuance of theWarrant, Sino Mart may be deemed the beneficial owner of 15,000,000 shares ofcommon stock of the company under the rules of attribution of beneficialownership provided in Rule 13d-3 under the Securities Exchange Act of 1934,as amended, or of approximately 62% of the number of the Company’s commonstock outstanding after the private placement, on a fully-diluted basis, makingSino Mart the largest shareholder of the Company and resulting in a change ofcontrol of the registrant.*       *Underthe terms of the Subscription Agreement, the Company agreed to prepare and tofile a registration statement covering the common stock shares issuable to SinoMart. The Company also agreed, as a condition to closing of the SubscriptionAgreement, upon closing, to pass a resolution to approve three (3) directorsnominated by Sino Mart. As of the date of this filing, Sino Mart has nominatedShaoJian Wang, Max Tong and Richard Lo as the directors in the board of theCompany. Sino Mart also reserved a right not to close its investment in theCompany in the event that at the time of closing the Company is not in fullcompliance with The Nasdaq National Market (“National Market”)continued listing criteria or has not filed with the Securities and ExchangeCommission (“SEC”) the registration statement. In accordance withthe January 29, 2002, Nasdaq Listing Qualifications Panel’s(“Panel”) exception to the continued listing criteria, issuedfollowing the December 13, 2001 hearing held before the Panel, the listing ofthe Company’s securities has been transferred from the National Market tothe Nasdaq SmallCap Market (“SmallCap Market”) effective as ofJanuary 30, 2002. Sino Mart agreed to revise certain existing terms of and toadd certain new terms to the Subscription Agreement in consideration for itswaiving the right not to close its investment in the Company. The revised terms,inter alia, required that (1) the Company maintain the listing of its securitieson the SmallCap Market, and (2) the entire subscription amount under theSubscription Agreement be due and payable within seven (7) days of the receiptof the stockholder approval, but be fully refunded to Sino Mart in the eventthat, on or before April 30, 2002, the Company is not in full compliance with(i) the terms and conditions of the Panel’s exception and (ii) with theSmallCap Market listing criteria.
 **( 7)**        On March 27, 2002, the Company closed the Sino Martprivate placement transaction and confirmed receipt of the $3,480,000subscription amount from Sino Mart in cash. Subsequent to the closing of theSino Mart private placement transaction, the Company filed a Current Report onForm 8-K dated March 28, 2002, disclosing the change in control transaction withSino Mart. Also, in compliance with the terms and conditions of thePanel’s exception, the Company included, on a pro forma basis, theevidence of the Company’s compliance with the SmallCap Market nettangible/stockholders’ equity continued listing requirement. TheCompany’s pro forma balance sheet presentation reflecting the Sino Martprivate placement transaction did not include all disclosures required bygenerally accepted accounting principles and was provided solely to demonstratethe Company’s compliance with the second and last prong of thePanel’s exception.        The foregoing is a summary description of the termsof the Sino Mart private placement transaction and related documents there underand by its nature is incomplete. It is qualified in the entirety by the text ofthe Subscription Agreement and the Amendment to the Subscription Agreement,which were filed as exhibits to the Current Report on Form 8-K filed as of March28, 2002 and which are incorporated by reference.**3.  EARNINGS PERSHARE**Basic earnings (loss) per share are based on the weightedaverage number of common shares outstanding. Diluted earnings or loss per shareis based on the weighted average number of common shares outstanding anddilutive common stock equivalents.  All earnings per share amounts in thesefinancial statements are basic earnings (loss) per share as defined by SFAS No.128, "Earnings Per Share."  Diluted weighted average shares outstanding excludethe potential common shares from options and warrants because to do so would beantidilutive.The computation of basic earnings (loss) per share is asfollows:    		                  					**(In thousands of United States dollars, except shareamounts)**Three Months Ended 6/30/02Three Months Ended 6/30/01Six MonthsEnded6/30/02Six MonthsEnded6/30/01Numerator-net loss $          (376)   $       (1,582)$          (741)$       (2,663)Denominator-weighted average number of common shares outstanding
22,310,392
7,987,342
18,141,128
7,962,342Basic and diluted loss per share
$          (0.02)
$          (0.20)
$          (0.04)
$          (0.33)
 **( 8)****ITEM 2 - MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS****        The following discussion shouldbe read in conjunction with the information contained in the financialstatements of the Company and the notes thereto appearing elsewhere herein andin conjunction with the Management’s Discussion and Analysis set forth inthe Company’s Annual Report on Form 10-KSB for the year ended December 31,2001 and Quarterly Report on Form 10-QSB for the quarter ended March 31, 2002.****PRELIMINARY NOTE REGARDING FORWARD-LOOKINGSTATEMENTS****        Certain statements contained herein are notbased on historical facts, but are forward-looking statements that are basedupon numerous assumptions about future conditions that could prove not to beaccurate. actual events, transactions and results may materially differ from theanticipated events, transactions or results described in such statements. TheCompany's ability to consummate such transactions and achieve such events orresults is subject to certain risks and uncertainties. Such risks anduncertainties include, but are not limited to, the existence of demand for andacceptance of the Company's products and services, economic conditions, theimpact of competition and pricing, results of financing efforts and otherfactors affecting the Company's business that are beyond the company'scontrol.****   **     **The Company undertakes no obligation and doesnot intend to update, revise, or otherwise publicly release the results of anyrevisions to these forward-looking statements that may be made to reflect futureevents or circumstances.****CRITICAL ACCOUNTING POLICIES AND ESTIMATES**Our discussion and analysis or plan of operations are based upon ourconsolidated financial statements, which have been prepared in accordance withaccounting principles generally accepted in the United States.  The preparationof these financial statements requires us to make estimates and judgments thataffect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosure of contingent assets and liabilities.  On an on-going basis,we evaluate our estimates, including those related to inventory and accountsreceivable reserves, provisions for impairment losses of affiliated companiesand other intangible assets, income taxes and contingencies.  We base ourestimates on historical experience and on various other assumptions that arebelieved to be reasonable under the circumstances, the results of which form thebasis for making judgments about the carrying values of assets and liabilitiesthat are not readily apparent from other sources.  Actual results may differfrom these estimates under different assumptions or conditions. Currently, we consider our accounting policy for long-lived assets andprovisions for impairment losses of affiliated companies to be affected bymanagement judgments and/or uncertainties. The Company periodically evaluateswhether events and circumstances have occurred that may warrant revision of theestimated life of intangible and other long-lived assets, or whether theremaining balance of intangible and other long-lived assets should be evaluatedfor possible impairment. If and when such factors, events or circumstancesindicate that intangible or other long-lived assets should be evaluated forpossible impairment, the Company would make an estimate of undiscounted cashflows over the remaining lives of the respective assets in measuringrecoverability.  Judgment is required in assessing the realization of any futureeconomic benefits resulting from the carrying value of the assets.  Fluctuationsin the actual outcome of these future economic benefits could materially impactthe Company's financial position or its results of operations.  In the eventthat the Company did not generate any future economic benefit as a result of thecarrying value of the related assets, total assets would be overstated byapproximately $600,000.  Reducing the assets to zero would result in anadditional expense in the period in which it is determined that the asset cannotbe realized.  These assets represent approximately 9.8% of our total assets atJune 30, 2002.
 **( 9)**
**RECENT ACCOUNTING PRONOUNCEMENTS**
In June 2002, the Financial Accounting Standards Board (“FASB”)issued Statement of Financial Accounting Standards (“SFAS”) No. 146,“Accounting for Costs Associated with Exit or Disposal Activities,”effective for exit or disposal activities initiated after December 31, 2002.The standard addresses financial accounting and reporting for costs associatedwith exit or disposal activities and nullifies Emerging Issues Task Force(“EITF”) No. 94-3, “Liability Recognition for Certain EmployeeTermination Benefits and Other Costs to Exit an Activity.”  SFAS 146essentially requires a liability to be recognized and measured initially at itsfair value in the period in which the liability is incurred for a costassociated with an exit or disposal activity.  The Company has not had a chanceto review what impact this standard may have on its financialstatements.
**NATURE OF THE OPERATIONS OF THECOMPANY***    Nature of Business.*PacificNet Inc., aDelaware corporation (the “Company”), is a leading provider ofsystem integration, network communications, and Information Technology(“IT”) solutions in Asia.  The Company also engages intelecommunication, performs voice and data network communications andvalue-added telecommunication products and services. The Company’sbusiness strategy is to take a leading role into rapidly expanding businesssector, namely the IT solution provision and network communication businesses,in the Asian and Greater China Region. The business of the Company can beclassified into three main operating units:**-   **  PacificNetLimited (”PacificNet”) -  In conjunction withthe Company’s business of providing telecommunication services,PacificNet also engages in the distribution of the telecommunication products,which includes resale of PABX telephone systems, basic switches and routerequipment and mobile phone accessories targeting for retailcustomers.**-     **PacificNetCommunications Limited (“PacComm”) - PacComm is a wholly ownedsubsidiary of the Company that provides voice and data network communication andvalue added telecommunications services. The company executes its businessstrategy through engaging in a wide variety of telecommunication solutionsincluding international simple resale, retail IDD services, mobile virtualnetwork operations, valued added mobile communication services, voice overinternet protocol (VOIP), unified messaging service (UMS), short messagingservice (SMS) and telecommunication relatedsoftware.-     PacificNetSolutions Limited (“PacSo”) -  PacSo is a subsidiary of theCompany that specializes in system integration, software application ande-business solution services in Hong Kong and Greater China Region.  Thescope of products and services includes smart card solutions, web basedfront-end applications and web based connection to backend enterprise planningsystems.    In June 2001, the Company's management,with the Board of Directors' approval, decided to expand its business in theGreater China Region. To that end, in February, 2002, the Company established arepresentative office in Shenzhen, the People’s Republic of China, toexpand its Research and Development, marketing and distribution in thePeople’s Republic of China.    In September2001, the Board of Directors of the Company approved a plan not to make furtherinvestments in its subsidiary Laptizen.com Limited (‘Laptizen”).Laptizen is a Hong Kong based B2B computer system, e-commerce portal and valueadded reseller and service provider for computer systems.  As of March 31, 2002,all activities related to Laptizen had ceased operation and Laptizen is underliquidation process.
 **( 10)** **THREE MONTHS ENDED JUNE 30, 2002 COMPARED TOTHREE MONTHS ENDED JUNE 30, 2001***Revenues.*Revenues for the three months period ended June 30, 2002were $723,000, a decrease of $1,117,000 from $1,840,000 for the three monthsperiod ended June 30, 2001. This decrease in the Company's revenues is primarilyattributable to discontinuation of Laptizen. For the three months period endedJune 30, 2002, revenues consisted of $218,000 derived from IT system solutionsservices rendered and $332,000 from the sale of products through PacSo, $141,000from the sale of telecommunication products through PacComm and $32,000 fromweb-site development services rendered by PacificNet Inc and PacificNet Limited.During the three months period ended June 30, 2002, the Company'sservices revenue were generated from customers in Asia and the sales oftelecommunication products to customers in Europe and United States.*Cost of Revenues.*Cost of revenues for the three months periodended June 30, 2002 was $467,000, a decrease of $1,333,000 from $1,800,000 forthe three months period ended June 30, 2001.  This decrease was due to acorresponding decrease in revenues.  Cost of revenues, as a percentage ofrevenues, was 7% for services rendered and 93% for both  sale of products and ITsystem solutions services through PacSo and sale of telecommunication productsthrough PacComm for the three months period ended June 30, 2002.**Gross margin for the three months period ended June 30, 2002 was$256,000, an increase of  $216,000 from $40,000 for the three months periodended June 30, 2001. Gross margins for the three months period ended June 30,2002, were 93% for services rendered and 7% for sale of telecommunication and ITproducts.*Operating Expenses.*Operating expenses totaled $596,000for the three months period ended June 30, 2002, a decrease of $367,000 from$963,000 for the three months period ended June 30, 2001. The decrease inoperating expenses is primarily related to the following cost controlmeasures:-     Termination of 26 Hong Kong basedemployees in November 2001.-     Termination of 2employees and the lease agreement in the office in Minneapolis, Minnesota,          USA,in April 2002.-     Sublease of certain areas within theHong Kong operations facility-     Discontinuation ofsubstantially all cash based marketing and advertising programsAs ofJune 30, 2002, the Company's estimated monthly cash requirement for operatingexpenses was approximately $91,000; a decrease of approximately $31,000 from theactual monthly cash requirement rate for the three months period ended March 31,2002.*Share of Losses of Affiliated Companies.*There is no shareof losses of affiliated companies for the three months ended June 30, 2002, ascompared to $(13,000) for the three months period ended June 30,2001.*Interest Income.*Interest income was $21,000 for the threemonths ended June 30, 2002, as compared to $39,000 for the three months endedJune 30, 2001. The decrease is due to lower interest rate in 2002 compare to2001.*Income Taxes.*No tax provision has been recorded for thethree months period ended June 30, 2002 as a result of the cumulative operatingloss generated by the Company.  Interim income tax provisions are based uponmanagement's estimate of taxable income and the resulting consolidated effectiveincome tax rate for the full year.  As a result, such interim estimates aresubject to change as the year progresses and more information becomesavailable.*Minority Interests.*Minority interests for the threemonths period ended June 30, 2002 totaled ($49,000), compared to $50,000 for thesame period in the prior year and consisted of minority interest in the earningsof the PacSo and minority interest in the losses of Laptizen that commencedoperations in December, 2001 and July, 2000 respectively.
 **( 11)****SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIXMONTHS ENDED JUNE 30, 2001***Revenues.*Revenues for the six months period ended June 30, 2002were $2,119,000, a decrease of $1,682,000 from $3,801,000 for the six monthsperiod ended June 30, 2001. This decrease in the Company's revenues is primarilyattributable to discontinuation of Laptizen. For the six months period endedJune 30, 2002, revenues consisted of $537,000 derived from IT system solutionsservices rendered and $803,000 from the sale of products through PacSo, $703,000from the sale of telecommunication products through PacComm and $76,000 fromweb-site development services rendered by PacificNet Inc and PacificNetLimited.During the six months period ended June 30, 2002, the Company'sservices revenue were generated from customers in Asia and the sales oftelecommunication products and IT products to customers in Asia, Europe andUnited States. *Cost of Revenues.*Cost of revenues for the sixmonths period ended June 30, 2002 was $1,565,000, a decrease of $2,087,000 from$3,652,000 for the six months period ended June 30, 2001.  This decrease was dueto a corresponding decrease in revenues.  Cost of revenues, as a percentage ofrevenues, was 22% for services rendered and 95% for both sale oftelecommunication products through PacComm and sale of products and IT systemsolutions services through PacSo for the six months period ended June 30, 2002.Gross margin for the six months period ended June 30, 2002 was $554,000,an increase of  $405,000 from $149,000 for the six months period ended June 30,2001. Gross margins for the six months period ended June 30, 2002, were 78% forservices rendered and 5% for sale of telecommunication and ITproducts.*Operating Expenses.*Operating expenses totaled$1,189,000 for the six months period ended June 30, 2002, a decrease of$1,041,000 from $2,230,000 for the six months period ended June 30, 2001. Thedecrease in operating expenses is primarily related to the following costcontrol measures:-     Termination of 26 Hong Kongbased employees in November 2001.-     Termination of 2employees and the lease agreement in the office in Minneapolis, USA, in April2002.-     Sublease of certain areas within the HongKong operations facility-     Discontinuation ofsubstantially all cash based marketing and advertising programs-    Discontinuation of Laptizen’s businessAsof June 30, 2002, the Company's estimated monthly cash requirement for operatingexpenses was approximately $106,000; a decrease of approximately $338,000 fromthe actual monthly cash requirement rate for the six months period ended June30, 2001.*Share of Losses of Affiliated Companies.*There is noshare of losses of affiliated companies for the six months ended June 30, 2002,as compared to $(25,000) for the six months period ended June 30,2001.*Interest Income.*Interest income was $43,000 for the sixmonths ended June 30, 2002, as compared to $116,000 for the six months endedJune 30, 2001. The decrease is due to lower net cash balances before fundsraised through the private placement and lower interest rate in 2002 compared to2001.*Income Taxes.*No tax provision has been recorded for the sixmonths period ended June 30, 2002 as a result of the cumulative operating lossgenerated by the Company.  Interim income tax provisions are based uponmanagement's estimate of taxable income and the resulting consolidated effectiveincome tax rate for the full year.  As a result, such interim estimates aresubject to change as the year progresses and more information becomesavailable.*Minority Interests.*Minorityinterests for the six months period ended June 30, 2002 totaled ($133,000),compared to $62,000 for the same period in the prior year and consisted ofminority interest in the earnings of the PacSo and minority interest in thelosses of Laptizen that commenced operations in December, 2001 and July, 2000respectively.
 
 **( 12)****LIQUIDITY AND CAPITAL RESOURCES***Cash.*The Company's cash balance has increased by $2,243,000,from $1,344,000 to $3,587,000 at June 30, 2002, as compared to $1,300,000 atDecember 31, 2001. This increase is primarily due to the Sino Mart cash infusioncompleted as of March 27, 2002. Operating activities used ($638,000) of cash forcontinuing operations.*Working Capital.*The Company's workingcapital increased by $4,342,000 at June 30, 2002, as compared to $1,012,000 atDecember 31, 2001.  When compared to balances at December 31, 2001, the increasein working capital at June 30, 2002 reflects higher levels of cash $2,243,000,net account receivables $935,000, increase in other current assets $157,000together with higher levels of current liabilities $5,000. The Companyanticipates that as revenue and operating activity levels increase, workingcapital financing requirements will also increase.*Property andEquipment Additions.*The Company does not anticipate material expendituresfor additions to property and equipment during the year 2002.*Investment in a Joint Venture.*On July 31, 2001, the Company madea public announcement that it had entered into an agreement dated July 28, 2001for the sale and purchase of an equity interest in a Joint Venture in thePeople's Republic of China by Holley Group Co., Ltd ("China Holley").Subsequently, PacificNet and China Holley formed a Sino-Foreign Equity JointVenture company called “Hangzhou Holley Pacific Software Co., Ltd.”In October 2001, PacificNet invested $255,000 to acquire 51% ownership of thejoint venture.  According to the joint venture agreement, PacificNet has 3 outof 5 board seats, and appoints the legal representative of the joint venture.The joint venture has not commenced any business operation as of the date ofthis quarterly report.  Currently, Holley and PacificNet are discussing amutually agreeable termination of the joint venture.*Investments inAffiliated & Subsidiary Companies.*As of June 30, 2002, investments inaffiliated and subsidiary companies aggregated $79,000 as compared to $95,000 asof December 31, 2001.  The decrease of $16,000 comprised of a provision forimpairment loss of affiliated companies of Xmedia Holdings Inc.***Other Investment.*The Company owns 1,000,000 shares of PrismCommunications International Limited (“Prism”), which the Companypurchased at a cost of $32,000 and accounted for as Other Investment.   Inaddition, the company and Prism will jointly explore the network infrastructureand network communications business.  Prism will assist the Company to establishand implement telecommunication business strategies in Hong Kong and thePeople’s Republic of China.*Goodwill.*The Company’sgoodwill increased by $20,000 due to the purchase of a subsidiary company(“PacSo”) in January 2002.***Commitments forAdditional Funding of Representative Office.*The Company believes thatrepresentative office in the People’s Republic of China will generateincremental service revenues and product sales for the Company in fiscal year2002. Furthermore, the Company anticipates that it may enter into additionaljoint venture arrangements and other investment structures in the future tofurther promote the sale and marketing of the Company's products andservices.*Cash Needs for the ForeseeableFuture.*As of June 30, 2002, the Company had approximately $3.6 million ofcash. The Company expects that its cash needs for the foreseeable future willarise primarily from working capital requirements, technology developments andcapital expenditures.  The Company expects that the principal sources of cashwill be cash on hand and from future private placement activities of theCompany’s new shares.  In the event that additional credit facilities arerequired, the Company believes that these additional credit facilities can benegotiated at market rates currently in effect. The Company believes that thesesources will be adequate to meet anticipated cash requirements for the remainderof fiscal 2002.*Inflation.*Inflation does not have a materialimpact on the Company's business in recent years.*Currency ExchangeFluctuations.*All of the Company's revenues are denominated either in UnitedStates dollars or Hong Kong dollars, while its expenses are denominatedprimarily in Hong Kong dollars and Renminbi, the official currency of the PRC("RMB"). There is no assurance that the RMB-to-U.S. dollar rate will remainstable. Although a devaluation of the Hong Kong dollar or RMB relative to theU.S. dollar will reduce Company's expenses (as expressed in U.S. dollars), anymaterial increase in the value of the Hong Kong dollar or RMB relative to theU.S. dollar will increase Company's expenses, and could have a material adverseeffect on Company's business, financial condition and results of operations. TheCompany has never engaged in currency hedging operations and has no intention todo so in the foreseeable future.*Seasonality and QuarterlyFluctuations.*The Company has not experienced fluctuations in quarterlyrevenues from its e-commerce solutions business since inception. The Companybelieves that its business is not subject to seasonal and quarterlyfluctuations; however, since the Company has only been in existence since July1999, it does not have sufficient operating history to determine whetherseasonal and quarterly fluctuations exist within its businesslines. **( 13)****PART II - OTHER INFORMATION****ITEM 1.    LEGAL PROCEEDINGS****    ****NONE.****ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.***Recent Sales of Unregistered Securities*During the fiscal quarter ended June 30, 2002, the Company issued unregisteredshares of its common stock in the following amounts:         (1) On June 20,2002, the Company issued 295,288 shares of common stock to the Vendors foracquisition of equipment, valued at the fair market value on the date ofissuance. The closing price for the Company’s stock on the date of thisissuance was $0.14 per share. This issuance was made in reliance upon theexemption from registration under Section 4(2) of the Securities Act of 1933, asamended (the “Securities Act”).  
        (2) On June 26, 2002, the  Company issued 80,000 shares of common stock to the Directors for services  rendered, valued at the fair market value on the date of issuance. The closing  price for the Company's stock on the date of this issuance was $0.16 per  share. This issuance was made in reliance upon the exemption from registration  under Section 4(2) of the Securities Act.         (3) On June 26, 2002,the Company issued 130,000 shares of common stock to the Advisors for servicesrendered, valued at the fair market value on the date of issuance.  The closingprice for the Company’s stock on the date of this issuance was $0.16 pershare. This issuance was made in reliance upon the exemption from registrationunder Section 4(2) of the Securities Act.         (4) On June 26, 2002, theCompany issued 49,300 shares of common stock to the Employees for servicesrendered, valued at the fair market value on the date of issuance.  The closingprice for the Company’s stock on the date of this issuance was $0.16 pershare. This issuance was made in reliance upon the exemption from registrationunder Section 4(2) of the Securities Act.         (5) On June 26, 2002, theCompany issued 200,000 shares of common stock to Nils Ollquist, Chief ExecutiveOfficer of Oriental Financial Services Limited, for services rendered as itsfinancial advisor.  The shares were valued at their fair market value on thedate of issuance.  The closing price for the Company’s stock on the dateof this issuance was $0.16 per share. The issuance was made in reliance upon theexemption from registration under Section 4(2) of the Securities Act.        The Company did not use underwriters in any of the foregoingissuances.**ITEM 3.    DEFAULTS UPON SENIORSECURITIES****    	NONE.****ITEM4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS****    **         Nomatters have been submitted to a vote of the Company’s security holdersduring the period covered by this report.
 **( 14)****ITEM 5.     OTHERINFORMATION***   *     *Compliance with Nasdaq Smallcap Market ContinuedListing Requirements.*            The Company'scommon stock is listed on the Nasdaq SmallCap Market under the symbol "PACT". OnAugust 13, 2001, the Company received a notice from Nasdaq ListingQualifications Staff ("Staff") that the Company's common stock had failed tomaintain the Nasdaq National Market (the “National Market”) minimum$4,000,000 net tangible assets/minimum $10,000,000 stockholders' equitycontinued listing requirement and that this failure had continued beyond theninety (90) day probationary period allowed under the NASD Rules. The letterspecified that, as a result of the Company's failure to maintain the continuedlisting requirement, the Company's common stock would be de-listed from theNational Market at the close of business on November 13, 2001.         The Company determined toappeal the Staff’s decision before a Nasdaq Listing Qualifications Panel(the “Panel). In its December 13, 2001 Hearing Memorandum, the Stafffurther noted that, in addition to the net tangible assets/stockholders' equitycontinued listing criterion, the Company also failed to comply with the minimumbid price and market value of public float listing requirements. The Staff notedthat notwithstanding the Company's failure to comply with these listingrequirements, the Company was required to rectify the net tangibleassets/stockholders' equity deficiency only. This was so because on September27, 2001, Nasdaq implemented an emergency moratorium on the enforcement ofcertain continued listing requirements in response to extraordinary marketconditions following the tragedy of September 11, 2001. Under the terms of themoratorium, enforcement of the minimum bid price and market value of publicfloat listing requirements was suspended until January 2, 2002, at which timethe respective thirty (30) and ninety (90) day probationary periods provided byNASD Marketplace Rules would start anew. On December 12, 2001, Nasdaq alsoreinstated its net tangible assets/stockholders' equity continued listingrequirements. The listing criteria reinstatement took effect without adjustment.At the December 13, 2001 oral hearing before the Panel, the Company's executivemanagement presented the Company's plan to regain compliance with the NationalMarket continued listing criterion, and requested that the Panel grant theCompany adequate time to implement the compliance plan.          In accordancewith the terms and conditions of the Exception, (i) the listing of the Company'ssecurities was transferred from the National Market to the SmallCap Marketeffective as of January 30, 2002; and (ii) the Company was required to, on orbefore April 1, 2002, make a public filing with the SEC and the Staff evidencingnet tangible assets of at least $5,000,000 and/or shareholders' equity of atleast $5,500,000.         On March 28, 2002, inaccordance with the terms and conditions of the Exception, the Company made apublic filing evidencing net tangible assets of at least $5,000,000 andshareholders' equity of at least $5,500,000. The Company also submittedadditional material to the Panel including confirmation of the $3,480,000deposit of Subscription Agreement proceeds from Sino Mart, a copy of theCertificate of Action evidencing receipt of stockholder approval of theproposals at the March 25, 2002 special stockholder meeting and a copy of theCurrent Report on Form 8-K containing balance sheet information with pro formaadjustments evidencing net tangible assets of at least $5,000,000 andshareholders' equity of at least $5,500,000. On April 3, 2002, the Companyreceived a letter from the Staff confirming the Company's compliance with theexception granted by the Panel for continued listing on the SmallCap Market.        The closing bid price per share of the Company’s common stock onAugust 9, 2002 was $0.13 per share. As of the date of this quarterly report, theCompany is not in compliance with the SmallCap Market continued listingrequirement for minimum bid price of $1.00 per share. The Company is within the180-day grace period allowed by the NASD Marketplace Rules which grace periodexpires on August 22, 2002. On or before that date, the Company must demonstratea closing bid price of at least $1.00 per share for at least 10 consecutivetrading days in order to continue to have its securities listed on the SmallCapMarket. In the event the Company does not comply with the SmallCap Marketminimum bid price requirement, the Company's securities will be de-listed fromthe SmallCap Market without a prior notice. Should the Company’ssecurities be de-listed from the SmallCap, they may be eligible to be quoted onthe OTC Bulletin Board.   
 
 **( 15)**
        At the March 25, 2002 special stockholdermeeting, the stockholders of the Company approved a reverse stock split of theCompany's common stock, to be implemented in the discretion of the Company'sBoard of Directors, if and to the extent that the Board of Directors deemsappropriate to maintain compliance with the minimum bid price requirement of theSmallCap Market in order to maintain the listing of the Company's common stockon the SmallCap Market. The reverse stock split proposal approved by theCompany’s stockholders specified the maximum ratio for a reverse stocksplit not to exceed five-for-one in order for the Company to remain incompliance with other SmallCap continued listing requirements. Given the currentper share price for the Company’s stock, the reverse stock split will notcure the Company’s minimum bid price of $1.00 per share continued listingrequirement.        On February 4, 2002, theSecurities and Exchange Commission (the “SEC”) has approved anamendment to the NASD Marketplace Rule 4310 by adopting a new grace period of upto one year for a security quoted on the SmallCap Market to comply with theminimum $1.00 per share bid price maintenance requirement in a pilot programthat will expire on December 31, 2003. The amendment was immediately effective.The SEC approval order was issued in time to be available for Nasdaq's issuanceof mid-February grace period warning letters to those Nasdaq National Market andSmallCap companies that have failed to meet the $1 minimum bid price requirementfor the thirty consecutive trading days since January 2, 2002 (the end ofNasdaq's temporary bid price moratorium). In its pertinent part, the amendmentincreases the 90-day grace period to 180 days. Further, following this initialgrace period, SmallCap issuers that demonstrate compliance with the initiallisting standards of the SmallCap Market, i.e. any of the following: $5 millionin stockholder's equity, $50 million in market capitalization, or $750,000 innet income in the most recently completed fiscal year or in two of the lastthree most recently completed fiscal years, will be afforded an additional180-day grace period within which to regain compliance. The eligibilitydetermination is based upon the issuer's most recent publicly filed financialinformation, e.g. a quarterly report on Form 10-Q. Therefore, under theamendment, an eligible SmallCap issuer may be afforded as much as one full yearto regain compliance with the bid price requirement.         The Company reported$5,089,000 in stockholders’ equity for the quarterly period ended June 30,2002. As a result, the Company’s management intends to seek additional 180days to regain compliance with the minimum $1.00 per share bid price maintenancerequirement based on the stockholder's equity figure. There is no assurance thatthe Company’s request for additional grace period, when filed with theNasdaq staff, will be granted. There is further no assurance that even if theCompany is granted additional 180 days to regain its compliance with the minimumbid price continued listing requirement, the Company’s securities willtrade at a closing bid price of at least $1.00 per share for at least 10consecutive trading days in order to continue to be listed on the SmallCapMarket. If the Company is unable to successfully maintain its listing on theSmallCap Market, the Company's ability to attract additional capital in supportof its business strategies could be adversely affected. Should theCompany’s securities be de-listed from the SmallCap, they may be eligibleto be quoted on the OTC Bulletin Board. There is no assurance that the Companywill be successful in obtaining the listing of its securities on theOTC-Bulletin Board. 
 **( 16)**
**ITEM6.    EXHIBITS AND REPORTS ON FORM 8-K****    (a)        Exhibits**    The following exhibits are filed aspart of this report:ExhibitNumber       Description  ------------------------------------------------------------------------------------------------------------2.1Share Exchange Agreement by and among Davin Enterprises, Inc., Carl Tong,Leo Kwok and Acma Strategic Holdings Limited dated December 15, 1997.(1)2.2Share Exchange Agreement dated February 17, 2000, between Registrantand holders of membership interests in PacificNet.comLLC. (3)2.3Supplement to Share Exchange Agreement dated April 29, 2000, betweenRegistrant and holders of membership interests in PacificNet.comLLC. (3)2.4Agreement dated September 30, 2000, among the Company and the  “Purchasers” named therein. (4)2.5Supplemental Agreement dated October 3, 2000, among the Company and the“Purchasers” named therein. (4)2.6Deed of Waiver, dated October 3, 2000, by Creative Master Limited in favorof the Company. (4)3.1Certificate of Incorporation, as amended. 3.2By Laws of the Company. (5)3.3Amendment to By Laws of the Company. (2)4Specimen Stock Certificate of the Company. (6)10.1Form of Indemnification Agreement with officers and directors.(1)10.2Amendment to 1998 Stock Option Plan. (6)10.3Form of Notice of Stock Option Grant and Stock Option Agreement under the1998 Stock Option Plan. (3)10.4Sub-Lease Agreement LDA-2 dated September 22, 2000. (6)10.5Sub-Lease Agreement LDA-3 dated May 8, 2000. (6)99.1Subscription Agreement by and between the Company and Sino Mart ManagementLtd., dated as of December 9, 2001. (7)99.2Amendment dated January 31, 2002 to the Subscription Agreement by andbetween the Company and Sino Mart Management Ltd., dated as of December 9, 2001.(7)99.319.9% Private Placement Agreement and Amendments between Ho Shu-Jen andPacificNet.com, Inc. (7)99.4Agreement for the sale and purchase of an equity interest in a JointVenture to be formed in the People's Republic of China by Holley Group Co., Ltd.(8)99.5Subscription Agreement for shares in PacificNet Solutions Limited(8)99.6Biographical information of all of the current members of the Board ofDirectors of the Company - filed herewith. (9)99.7Certification of Principal Executive Officer Pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (18 U.S.C. 1350).99.8Certification of Principal Financial Officer Pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (18 U.S.C. 1350).(1)Incorporated by reference to the Company's Form SB-2 filed on October 21,1998.(2)Incorporated by reference to the Company's Form 10-KSB filed on March 30,1999.(3)Incorporated by reference to the Company's Form 8-K filed on August 11,2000.(4)Incorporated by reference to the Company's Form 8-K filed on October 17,2000.(5)Incorporated by reference to the exhibits of the Company's registrationstatement (file no. 33-14521-NY)(6)Incorporated by reference to the Company's Form 10-KSB filed on March 30,2001.(7)Incorporated by reference to the Company's Form 8-K filed on March 28,2002.(8)Incorporated by reference to the Company's Form 10-QSB filed on August10, 2001.(9)Incorporated by reference to the Company's Form 10-QSB filed on May 20,2002 **( 17)****SIGNATURES**       In accordance with the requirements of the Securities  Exchange Act of 1934, as amended, the Registrant has duly caused this report  to be signed on its behalf by the undersigned, thereunto duly authorized.          PACIFICNET INC.          Date: August 10, 2002                  By: /s/ TONY I. TONG                             Tong I. Tony                  Chairman, Chief Executive Officer, President                                     Date: August 10, 2002                  By: /s/ CLARENCE CHAN                             Clarence Chan                  Chief Financial Officer        **( 18 )**