pacificnet_8k-011508.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported) January 22, 2008
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PACIFICNET
INC.
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(Exact
name of registrant as specified in
charter)
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Delaware
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000-24985
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91-2118007
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(State
or Other Jurisdiction
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(Commission
File
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(IRS
Employer
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of
Incorporation)
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Number)
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Identification
No.)
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c/o
PacificNet Inc.
23/F,
Tower A, TimeCourt, No.6 Shuguang Xili,
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Chaoyang
District, Beijing, China
100028
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(Address
of Principal Executive Offices) (Zip Code)
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011-852-2876-2900
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(Registrant’s
telephone number, including area
code)
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(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation
of
the registrant under any of the following provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
January 22, 2008, PacificNet Inc. (NASDAQ:
PACT) (the
“Company” or “PacificNet”), completed the acquisition
of Octavian
International Limited (“Octavian”), a worldwide supplier of gaming technology,
solutions and systems. The Company had previously reported on a Form
8-K filed with the Securities and Exchange Commission on December 13, 2007,
the execution of definitive agreements, including that certain Agreement among,
PacificNet Games International Corporation, Octavian, Emperor Holdings Limited,
Ziria Enterprises Limited and the Company on December 7, 2007, for the
acquisition of 100% of Octavian (the “Agreement”). PacificNet, through its
wholly-owned
subsidiary, Pacificnet Games International Corporation, acquired from Ziria Enterprises
Limited, a company incorporated in Cyprus (the “Seller”), 100% of the issued and outstanding
shares
(the “Shares”) of
Emperor
Holdings Limited, a
company incorporated in Cyprus (the “Holding Company”), which is the parent company
of
Octavian.
The
purchase price for the Shares
consisted of (i) 2,330,000 shares of PacificNet, representing approximately
19.5% of PacificNet’s outstanding shares of Common Stock (the “Escrow Shares”),
and (ii) cash of up to $18,900,000 to be paid upon the completion of certain
net
profit performance targets (the “Earn-Out Amount”).
1,230,000
of the Escrow Shares shall be
released from escrow no later than 20 days after the closing. Upon
receipt by PacificNet of certification from its auditor that such auditor’s
review of the Holdings Company, Octavian and its businesses is acceptable and
can be consolidated in PACT’s audited accounts, balance sheet and financial
statements, in accordance with US GAAP for the fiscal year ended December 31
2008 (the “FYE 2008”), the remaining 1,100,000 Escrow Shares may be released
from escrow to the Seller based on the net profit achieved by Octavian for
the
FYE 2008. If Octavian achieves net profits of not less than
$4,000,000 for the FYE 2008, all of the remaining Escrow Shares shall be
released. In the event net profits are less than $4,000,000 for FYE
2008, the number of Escrow Shares to be released shall be reduced such
that (i) 900,000 Escrow Shares shall be released if Octavian achieves
net profits of not less than $3,000,000; (ii) 600,000 Escrow Shares shall be
released if Octavian achieves net profits of not less than $2,000,000; and
(iii)
300,000 Escrow Shares shall be released if Octavian achieves net profits of
not
less than $1,000,000. Any Escrow Shares not released shall remain in
escrow and roll over for each successive year if not earned in the previous
year
up to fiscal year 2012 based on growth in net profit of 20% based on the net
profit of the previous year.
The
Earn-Out Amount shall be payable commencing in 2009 through 2012
in
installments of up to (a)$3,150,000 in 2009, (b) $4,200,000 in 2010,
(c)$5,250,000 in 2011 and (d) $6,300,000 in 2012,which Earn-Out Amounts are
subject to being reduced, in the event that (i) the net profit performance
targets for the respective year is not achieved, and (ii) there are claims
against the Seller by the PacificNEt arising out of or in respect of the
Agreement, as provided for in the Agreement. The net profit performance targets
are (a)$3,150,000 in 2009, (b) $4,200,000 in 2010, (c)$5,250,000 in 2011 and
(d)
$6,300,000 in 2012.
The
Agreement provides for the acceleration of the Earn-Out Amount, such that such
amount is immediately due and payable to the Seller, in the event that a sale
of
the majority of the shares or the business of Octavian or the group of companies
and business units created by combining PacificNet Games Limited, Take 1
Technologies, Guangdong Poly Blue Express Communications Co. Ltd, Octavian
and
any other PacificNet companies that are directly involved in the gaming sector
(the “Gaming Segmentation Group”), or a listing of Octavian or any company
within the Gaming Segmentation Group on a recognized exchange occurs at any
time
before the end of 2012.
There
is
no material relationship between the Seller and PacificNet , or any of the
Seller’s affiliates, or any director or officer of PacificNet, or any associate
of any such director or officer, other than in respect of the
acquisition.
Safe
Harbor Statement
This
Company's announcement contains forward-looking statements. Statements that
are
not historical facts, including statements about our beliefs and expectations,
are forward-looking statements. Forward-looking statements involve inherent
risks and uncertainties. Potential risks and uncertainties include, but are
not
limited to, PacificNet's historical and possible future losses, limited
operating history, uncertain regulatory landscape in China, fluctuations in
quarterly operating results and PacificNet’s ability to maintain its continued
listing on Nasdaq. Further information regarding these and other risks is
included in PacificNet's Form 10-Q and 10-K and other filings with the
SEC.
Item
9.01. Financial Statements and Exhibits.
(a)
Financial
statements
of businesses acquired.
Financial statements of Emperor Holdings Limited and Octavian
International, including pro forma financial information shall be provided
in an
Amendment to this Form 8-K to be filed no later than 71 calendar days after
the
filing of this report.
(b)
Pro
forma financial
information. Pro forma financial information shall be provided
in an Amendment to this Form 8-K to be filed no later than 71 calendar days
after the filing of this report.
(d)
Exhibits. The
following exhibit is furnished
herewith:
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Exhibit
No.
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Document
Name
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10.1
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Agreement
among, PacificNet Games
International Corporation, Octavian, Emperor Holdings Limited, Ziria
Enterprises Limited and the Company on December 7, 2007, for
the acquisition of 100% of Emperor Holdings
Limited.
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SIGNATURES
Pursuant
to the requirements of the
Securities Exchange Act of 1934, the registrant
has duly caused this report
to be signed on its behalf by the undersigned
hereunto duly
authorized.
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PACIFICNET
INC.
By:
/s/
Victor
Tong
Name:
Victor
Tong
Title:
President
Dated:
January 28,
2008
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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10.1
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Agreement
among, PacificNet Games
International Corporation, Octavian, Emperor Holdings Limited, Ziria
Enterprises Limited and the Company on December 7, 2007, for the
acquisition of 100% of Emperor Holdings
Limited.
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