SecProbe.io

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                                 PACIFICNET INC.
                              860 BLUE GENTIAN ROAD
                                    SUITE 360
                                 EAGAN, MN 55121

                                                                 October 7, 2005

Mr. Larry Spirgel
Assistant Director
United States Securities and Exchange Commission
100 F Street, N.E., Mail stop 3561
Washington, D.C. 20549

       RE:  PACIFICNET INC.
            FORM 10-KSB FOR FISCAL YEAR ENDED DECEMBER 31, 2004
            FILED APRIL 19, 2005

            FORM 10-QSB FOR FISCAL QUARTER ENDED JUNE 30, 2005
            FILE NO. 000-24985

VIA EDGAR--CORRESP
------------------

Dear Mr. Spirgel:

We are submitting this correspondence via the EDGAR system in response to a
comment letter issued by the Securities and Exchange Commission ("SEC") on
September 9, 2005. In connection with that comment letter, the SEC had asked
that we amend certain filings. Per our telephone discussion, we believe most of
the comments do not warrant a revision to our filings, however we understand
that the purpose of your review process is to assist us in our compliance with
the applicable disclosure requirements and to enhance the overall disclosure in
our filings. We look forward to fully cooperating with you in these respects.
If, after reviewing our responses, you determine further amendments should be
made, we welcome any comments or guidance in areas where you think we should
revise our documents in response to these comments. As such, no filings have
been amended simultaneously with submitting this correspondence.

In addition, the comment letter sought certain declarations from the company. As
such, we hereby declare and acknowledge the following:

         o        the company is responsible for the adequacy and accuracy of
                  the disclosure in the filing;
         o        staff comments or changes to disclosure in response to staff
                  comments do not foreclose the SEC from taking any action with
                  respect to the filing; and
         o        the company may not assert staff comments as a defense in any
                  proceeding initiated by the SEC or any person under the
                  federal securities laws of the United States.

                                       1
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In our routing internal financial audit meetings and financial disclosure
meetings with the senior management and financial controllers of our
subsidiaries, we have been over-emphasizing the fact that all persons who are
responsible for the accuracy and adequacy of the disclosure in the filings to be
certain that the filings include all information required under the Securities
Exchange Act of 1934 and that all personnel have provided all information
investors require for an informed investment decision.

If you have any further questions, please feel free to contact me at my Global
Forwarding Mobile Number at 888-866-1758.

Sincerely,

/s/ Victor Tong
________________________
Victor Tong, President
PacificNet, Inc.

                                       2
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FORM 10-KSB FOR FISCAL YEAR ENDED DECEMBER 31, 2004
---------------------------------------------------
ITEM 1. DESCRIPTION OF BUSINESS, PAGE 1
---------------------------------------
CONSOLIDATION OF VARIABLE INTEREST ENTITIES, PAGE 5
---------------------------------------------------

1. We refer you to the 2nd to last paragraph on page 5 where you indicate that
   you consolidate the financial statements of Clickcom-WOFE and
   Guangzhou3G-WOFE based on the determination that you are the primary
   beneficiary of these companies. Please tell us whether you also consolidate
   Dianxun-DE and Sunroorn-DE and explain to us your GAAP basis for this
   accounting treatment.

RESPONSE - We do not consolidate Dianxun-DE and Sunroorn-DE because we do not
have a controlling financial interest, directly or indirectly, of over fifty per
cent of the outstanding voting shares of either company, which is the usual
condition pointing towards consolidation per SFAS 94. In fact, PacificNet does
not have any legal ownership in Dianxun-DE or Sunroorn-DE. Through certain
contractual agreements between the Wholly Owned Foreign Enterprises (`WOFEs')
and the PRC Domestic Enterprises (`DEs'), we are entitled to share in 51% net
income of DE's. Under the contractual agreements, PacificNet's WOFE
subsidiaries, Clickcom-WOFE and Guangzhou3G-WOFE, are entitled to receive
service fees equal to substantially all of the net income of the DE's.
Additionally, because the PRC laws and regulations restrict foreign ownership of
value-added telecommunications services and Internet content services providers
in China, we are restricted by PRC laws not to have any controlling interests in
the domestic telecom value-added services operating entities in China, i.e.
Dianxun-DE and Sunroom-DE, which hold the operating licenses.

Our above determination for not consolidating the DEs shall be reconsidered if
the circumstances change in the future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, PAGE 22
--------------------------------------------------------------------------
RESULTS OF OPERATIONS, PAGE 24
------------------------------
INTEREST EXPENSES / INCOME, PAGE 25
-----------------------------------

2. It is not clear to us why you did not record any INTEREST EXPENSE for 2003
   and 2004 given that you had $1,396 thousand and $1,782 thousand of
   outstanding bank loans at December 31, 2004 and December 31, 2003
   respectively. Please revise your bank loans note on page 45 to explain in
   more detail the nature of your bank loans that caused you not to incur any
   interest expense during each of the previous two years.

RESPONSE - Interest expense for the year ended December 31, 2004 (US$185K) was
included in SG&A. Substantially all of the interest expense was attributed to
the bank loan taken by our EPRO subsidiary, which the Company acquired in
December 2003. For comparative purposes, interest expense for 2003 was
insignificant because it only represented interest expense for the one month of
December (operations since date of acquisition) and was netted against interest
income even though the respective bank loan outstanding was large as reported on
the consolidated balance sheet. In future filings, interest expense will be
reported either as a separate line item on the Consolidated Statements of
Operations and / or as a disclosure in the notes to our financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, PAGE 28
----------------------------------------------------------------

3. We note that your audit report was signed by an audit firm based in Arizona.
   After asking your auditor, please tell us where the majority of the audit
   work was conducted and how they concluded that it is appropriate to have an
   audit report issued by an auditor licensed in Arizona in view that almost all
   of your operations in China and Hang Kong. In addition, please have your
   auditor tell you whether a foreign audit firm played a substantial role in
   the preparation or furnishing of the audit report, and if so, whether the
   foreign audit firm is REGISTERED WITH THE PCAOB.

RESPONSE - As disclosed under Item 14. Principal Accountant Fees and Services,
the audit was performed by our principal auditor, Clancy and Co., P.L.L.C.
("Clancy") and its Hong Kong affiliate HLB Hodgson Impey Cheng ("HLB"), a Hong
Kong based CPA firm and also a registered member of the PCAOB. Clancy has
informed us that HLB performed a majority of the auditing procedures under
Clancy's guidance and control and provided Clancy with detailed working papers
to support the underlying financial statement assertions being reported on so
that Clancy could express an opinion on the financial statements as a whole, in
all material respects, under the auditing standards of the PCAOB. The extent of
the procedures to be performed and specific instructions on those procedures
were determined by Clancy and communicated in writing by Clancy to HLB. We were
fully aware of the arrangement between the firms, that being that HLB would
perform auditing procedures under Clancy's guidance and control and provide
Clancy with detailed working papers to support the underlying financial
statement assertions being reported on so that Clancy could express an opinion
on the financial statements as a whole, in all material respects, under the
auditing standards of the PCAOB.

Clancy also informed us that Clancy obtained copies of and reviewed the working
papers of HLB, including documentation to support its understanding of internal
control and the assessment of control risk. Additionally, Clancy performed or
obtained other audit documentation such as an engagement letter, a management
letter of representation, independent legal letter, independent confirmation of
securities outstanding with the transfer agent and bank confirmations for the US
parent company, and completed all checklists and practice aids as required by
their Firm's Quality Control Document, including those related to ensuring GAAP
and PCAOB auditing standards compliance, and concurring partner review. All of
the HLB work papers were tested for clerical accuracy and cross-referenced to
the financial statements or the supporting working papers. Clancy further
applied procedures to satisfy itself as to HLB's knowledge of the professional
standards and competency of that firm. Clancy obtained a representation letter
from HLB as to their independence under the requirements of the AICPA and the
SEC with respect to the Company and its subsidiaries, HLB's familiarity with
GAAP, HLB's knowledge of the relevant financial reporting requirements for
statements to be filed with the SEC, and confirmation from HLB that their firm
was in good standing within the jurisdiction (Hong Kong) HLB is licensed to
practice as certified public accountants.

According to Clancy, the two firms were retained separately purely for billing
purposes only and the arrangement was for convenience sake as our operations
were mainly located in China and Hong Kong. Clancy did not consider the need to
visit China or Hong Kong personally because HLB acted as its "agent", HLB
visited the Company's operations personally, and HLB performed the procedures
Clancy would have performed, under Clancy's guidance and control. Where
applicable, Clancy interacted with PacificNet management in the ordinary course
of the audit requesting them to produce additional documentation to support
auditing procedures under PCAOB standards or to clarify certain representations
made to HLB.

Clancy has informed us that in their professional judgment, since the audit was
conducted under their guidance and control and our operations were observed via
HLB and included inquiries of management, they obtained sufficient competent
evidential matter to support their audit report and reliance on other auditors
or reference in their report thereto was not necessary.

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CONSOLIDATED BALANCE SHEETS, PAGE 29
------------------------------------

4. Refer to page 2 of your 10-QSB's for the quarters ended March 31, 2005 and
   June 30, 2005 and explain to us management's consideration of SFAS 5 in
   determining that it was appropriate not to have an ALLOWANCE FOR DOUBTFUL
   ACCOUNTS recorded as of December 31, 2004 March 31, 2005 and June 30, 2005.
   To the extent possible, PROVIDE US WITH SUPPORT THAT SHOWS IT IS PROBABLE
   THAT ALL RECEIVABLES WILL BE COLLECTED, in full as of each balance sheet date
   and explain why this is true given that the receivable balance has been
   increasing each fiscal period.

RESPONSE - Please refer to page 23 of the 10K under the caption "Allowance for
Doubtful Accounts" in the MD&A section of the 10K for a discussion on
management's consideration of the collectibility of its receivables, which is
based on a combination of factors. In connection with our reporting requirements
for the periods listed above, management considered the requirements of
providing an allowance for doubtful accounts provision and determined that a
provision was not necessary because there was not any indication that the
collectibility of the receivables was impaired based on information available
prior to the issuance of the financial statements. The Company frequently
monitors its customers' financial condition and credit worthiness and only sells
products, licenses or services to customers where, at the time of the sale,
collection is reasonably assured.

Per SFAS 5, a loss contingency (collectibility of a receivable) exists and an
accrual should be made when both of the following conditions exist: (i) the
likelihood of a future event or events confirms the loss or impairment of an
asset and (ii) the amount of loss can be reasonably estimated. We understand
that under generally accepted accounting principles, the conditions under which
receivables exist usually involve some degree of uncertainty about their
collectibility, in which case a contingency exists. However, losses from
uncollectible receivables shall be accrued when both conditions to satisfy a
loss contingency exist. We review our customer accounts in detail and account
for those losses only when the confirming event or events have occurred because
historically our subsidiaries receivables have resulted in minimal bad debt
write-offs.

Specifically, we feel collectibility of our subsidiaries' accounts receivable is
probable for each of our revenue-producing subsidiaries based on the following
rationale:

      (i) EPRO's accounting policy for doubtful accounts is to record provision
      for customer accounts overdue more than 270 days. A substantial portion of
      EPRO's business is in the provision of outsourcing services. The average
      AR days outstanding for outsourcing services is less than 90 days which is
      much shorter than the average AR days from product sales which usually
      takes around 120 days to 180 days to collect. The customers for
      outsourcing services are billed monthly for services provided while
      receivables from products sales or other software, usually need to have
      further modifications or customizations to ensure stability and
      reliability acceptable to customers. As a result, software sales usually
      take a longer time to collect. Overall, EPRO's customers are mostly
      reputable telecom operators, financial institutions and MNCs
      (Multinational Corporations) that have good credit standing, such as China
      Telecom (NYSE: CHA), China Unicom (NYSE: CHU), PCCW (NYSE:PCW), CSL,
      SmarTone Telecom, Sunday Communications (Nasdaq: SDAY), Hutchison Whampoa
      Limited (HKSE:0013.HK), Swire Coca-Cola, Samsung, Dun & Bradstreet,
      DBS,Dao Heng Insurance, Shenzhen Development Bank, Hong Kong Government
      Housing Authority and Hongkong Post. In EPRO's operating history over the
      past 10 years, there have been minimal bad debt write-offs, if any, for
      its outsourcing services customers.

                                       5
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      (ii) Approximately 90% of Linkhead's turnover is from product sales with
      the remaining from software sales and system integration projects. Product
      sales mainly involve IVR hardware that is from mature and stable products
      of multi-national vendors such as NMS and Telcobridges. Historically,
      there have been minimal disputes and returns, if any, or any bad debt
      write-offs since Linkhead's customers are mostly reputable carriers and
      service providers in the telecom industry in China.

      (iii) YueShen's business is conducted on a cash basis and there is no
      resulting