Pacific Net provides market update

As previously reported by PacificNet, Ziria Enterprises Limited did not deliver to PacificNet the share certificates of Emperor Holdings Limited, the legal owner of Octavian International Limited. As a result of Ziria’s failure to deliver the share certificates, which was a condition to closing the acquisition of Octavian, on May 21, the company, Ziria, PacificNet Games International Corporation, Octavian and Emperor Holdings Limited terminated the agreement to acquire Octavian.

Under the acquisition agreement, if the transaction had been consummated, PacificNet was obligated to issue, in the aggregate, 2,330,000 restricted shares of PACT representing approximately 19.5% of PacificNet’s outstanding shares and cash of up to us$ 18,900,000, which would have been paid upon the completion of certain net profit performance targets.

All parties involved have agreed not to complete the merger but will remain distribution partners of complimentary products in each others respective markets.

As a result of the failure of the Octavian acquisition to be consummated and the termination of the acquisition agreement, on May 21, Harmen Brenninkmeijer, CEO of Octavian, resigned as a member of the Board of Directors of PacificNet. It was a condition to the closing of the acquisition of Octavian that Brenninkmeijer is appointed to the Board of Directors. There was no disagreement between Brenninkmeijer and PacificNet on any matter relating to its operations, policies or practices.

Last May 21, the company received a letter from The NASDAQ Stock Market that it has not received the company’s Form 10-Q for the period ended March 31, 2008, as required by Marketplace Rule 4310. This serves as an additional basis for delisting the Company’s securities from The NASDAQ Stock Market and will be considered by the NASDAQ Listing Qualifications Panel in rendering a determination regarding the company’s continued listing on The NASDAQ Global Market.

NASDAQ Marketplace Rule 4310 (c)(14) requires the company to file all required reports with NASDAQ on or before the date they are required to be filed with the Securities and Exchange Commission.

The company may present its views with respect to this additional deficiency at its panel hearing scheduled for June 12, 2008. In the event the firm fails to address the deficiency reflected in the Deficiency Letter, the panel will consider the record as presented at the hearing and will make its determination with respect to continued listing of the company’s securities based upon that information. There can be no assurance that the panel will grant the company’s request for continued listing.