-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NyVdf0Kp2gngi80lrDVfJNMGYfD26b7TU19w810PmAVpvZw712FvkkW7zNMc/10o yuEw95U+VWUhE9Qvcz0XMg== 0001016193-99-000126.txt : 19991216 0001016193-99-000126.hdr.sgml : 19991216 ACCESSION NUMBER: 0001016193-99-000126 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC ALLIANCE CORP /UT/ CENTRAL INDEX KEY: 0000801904 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 870445849 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-08732-D FILM NUMBER: 99774788 BUSINESS ADDRESS: STREET 1: 1661 LAKEVIEW CIRCLE CITY: OGDEN STATE: UT ZIP: 84403 BUSINESS PHONE: 8013993632 MAIL ADDRESS: STREET 1: 1661 LAKEVIEW CIRCLE CITY: OGDEN STATE: UT ZIP: 84403 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC SYNDICATION INC DATE OF NAME CHANGE: 19941216 FORMER COMPANY: FORMER CONFORMED NAME: KAISER RESEARCH INC DATE OF NAME CHANGE: 19920703 10QSB 1 QUARTER =============================================================================== U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM 10-QSB ------------ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 33-78910-C ------------ PACIFIC ALLIANCE CORPORATION (Name of Small Business Issuer as specified in its charter) Delaware 87-044584-9 ------------------ --------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization identification No.) 1661 Lakeview Circle, Ogden, UT 84403 ---------------------------------------- (Address of principal executive offices) Registrant's telephone no., including area code: (801) 399-3632 ------------------------------------------------------------------ N/A ----- Former name, former address, and former fiscal year, if changed since last report. Securities registered pursuant to Section 12(b) of the Exchange Act: None Securities registered pursuant to Section 12(g) of the Exchange Act: None Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 No X. Common Stock outstanding at December 10, 1999 - 8,853,208 shares of $.001 par value Common Stock. DOCUMENTS INCORPORATED BY REFERENCE: NONE =============================================================================== FORM 10-QSB FINANCIAL STATEMENTS AND SCHEDULES PACIFIC ALLIANCE CORPORATION. For the Quarter ended September 30, 1999 The following financial statements and schedules of the registrant are submitted herewith: PART I - FINANCIAL INFORMATION Page of Form 10-QSB Item 1. Financial Statements: Balance Sheet--September 30, 1999 and December 31, 1998 3 Statements of Operations--for the three and nine months ended September 30, 1999 and September 30, 1998 4 Statements of Cash Flows--for the nine months ended September 30, 1999 and September 30, 1998 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II - OTHER INFORMATION Page Item 1. Legal Proceedings 16 Item 2. Changes in the Securities 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Results of Votes of Security Holders 16 Item 5. Other Information 16 Item 6(a). Exhibits 16 Item 6(b). Reports on Form 8-K 16 2 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS ASSETS
September 30, December 31, 1999 1998 ----------------------------------- CURRENT ASSETS Cash $ 1,747 $ - ------------------------------------- TOTAL ASSETS $ 1,747 $ - ===================================== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Bank overdraft $ -0- $ 12,529 Accrued expenses 42,442 20,941 Advance from officer, note 7 92,413 55,763 Management compensation liability, note 5 71,700 34,583 Current portion of tax liabilities, note 2 58,878 35,816 Notes payable, note 4 30,000 30,000 ---------------------------------- TOTAL CURRENT LIABILITIES 295,433 189,632 LONG TERM LIABILITIES Tax liabilities, note 2 201,212 230,276 --------------------------------- TOTAL LIABILITIES 496,645 419,908 --------------------------------- COMMITMENTS & CONTINGENCIES, note 6 STOCKHOLDERS' DEFICIT Common stock, par value $.001, 30,000,000 shares authorized, 8,853,208 shares issued and outstanding, note 5 422,254 422,254 Additional paid in capital 2,028,909 2,028,909 Accumulated deficit prior to the development stage (2,632,447) (2,632,447) Accumulated deficit during the development stage (313,614) (238,624) --------------------------------- TOTAL STOCKHOLDERS' DEFICIT (494,898) (419,908) --------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,747 $ -0- =================================
3 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
From Inception Three Months Nine Months Three Months Nine Months of the Development Ended Ended Ended Ended Stage, December September September September September 21, 1995, Through 30, 1999 30, 1999 30, 1998 30, 1998 September 30, 1999 ------------------------------------------------------------------------------------- SALES $ -0- $ -0- $ -0- $ -0- $ -0- GROSS MARGIN -0- -0- -0- -0- -0- OPERATING EXPENSES -0- -0- -0- -0- -0- OTHER INCOME (EXPENSES) Professional fees (4,395) (19,929) (13,975) (32,643) (63,234) Management compensation, note 5 (12,168) (37,117) -0- -0- (71,700) Other expenses (653) (1,004) (1,088) (1,918) (4,385) Taxes -0- -0- -0- (23,240) (26,000) Interest expense (5,700) (16,940) (7,195) -0- (57,150) Gain (loss) on investments -0- -0- -0- 1,004 (6,844) ------------------------------------------------------------------------------------- LOSS BEFORE REORGANIZATION ITEMS (22,916) (74,990) (22,258) (56,817) (229,313) REORGANIZATION ITEMS Administration and legal fees -0- -0- -0- -0- (84,301) ------------------------------------------------------------------------------------- NET LOSS $ (22,916) $ (74,990) $ (22,258) $ (56,817) $ (313,614) ===================================================================================== BASIC NET LOSS PER SHARE Loss before reorganization items $ (0.00) $ (0.01) $ (.00) $ (.01) Reorganization items (0.00) (0.00) (.00) (.00) ------------------------------------------------------- NET LOSS $ (0.00) $ (0.01) $ (.00) $ (.01) ======================================================= WEIGHTED AVERAGE NUMBER OF SHARES 8,853,208 8,853,208 8,853,208 8,660,306 =======================================================
4 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS
From Inception of the Development Nine months Nine months Stage, December Ended Ended 21, 1995, Through September 30, 1999 September 30, 1998 September 30, 1999 --------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (74,990) $ (56,817) $ (313,614) Adjustment to reconcile net loss to net cash used in operating activities: (Gain)/loss on investments -0- (1,004) 6,844 Change in assets and liabilities Decrease in accounts receivable -0- -0- 95,841 Increase in accrued expenses 21,501 10,254 43,522 Increase in management compensation liability 37,117 -0- 71,700 Decrease in tax liabilities (6,002) (28,729) (40,529) --------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (22,374) (76,296) (136,236) --------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments -0- -0- (30,180) Proceeds from sale of investments -0- 8,816 23,336 --------------------------------------------------------------------- NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES -0- 8,816 (6,844) --------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Bank overdraft (12,529) -0- (2,586) Proceeds from notes payable -0- 30,000 30,000 Advance from officer 36,650 37,963 92,413 Proceeds from issuance of common stock -0- -0- 25,000 --------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 24,121 67,963 144,827 --------------------------------------------------------------------- NET INCREASE IN CASH 1,747 483 1,747 CASH AT BEGINNING OF PERIOD -0- 180 -0- --------------------------------------------------------------------- CASH AT END OF PERIOD $ 1,747 $ 663 $ 1,747 ===================================================================== Supplementary disclosures: Interest paid in cash $ -0- $ 18,098 $ 35,433 =====================================================================
5 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Going Concern Pacific Alliance Corporation (the "Company"), whose name was changed from Pacific Syndication, Inc. in 1997, was originally incorporated in December 1991 under the laws of the State of Delaware. It also became a California corporation in 1991. Pacific Syndication, Inc. was engaged in the business of videotape duplication, standard conversion and delivery of television programming. In 1994, Pacific Syndication, Inc. merged with Kaiser Research, Inc. The Company filed a petition for Chapter 11 under the Bankruptcy Code in September 1995. The debtor in possession kept operating until December 21, 1995, when all the assets, except cash and accounts receivable, were sold to a third party, Starcom. The purchaser assumed all post-petition liabilities and all obligations collateralized by the assets acquired (see note 6). In 1997, a reorganization plan was approved by the Bankruptcy Court, and the remaining creditors of all liabilities subject to compromise, excluding tax claims, were issued 1,458,005 shares of the Company's common stock in March 1998, which corresponds to one share for every dollar of indebtedness. Each share of common stock issued was also accompanied by an A warrant and a B warrant (see note 5). The IRS portion of tax liabilities is payable in cash by quarterly installments of $11,602 (see note 2). Repayment of other taxes is still being negotiated. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the September 30, 1999 financial statements, the Company did not generate any revenue, and has a net capital deficiency. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. For the three months ended September 30, 1999, the Company funded its disbursements using loans from an officer and other shareholders. The financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is no longer operating, and will attempt to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering. Cash Flows For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. 6 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value of Financial Instruments The carrying amount of the Company's financial instruments approximate fair value. Statement of Financial Accounting Standards No. 128 The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128 for the calculation of earnings per share. This SFAS was issued in February 1997, and supersedes APB Opinion No. 15 previously applied by the Company. SFAS No. 128 dictates the calculation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company's diluted loss per share is the same as the basic loss per share for the quarter ended September 30, 1999. 2. TAX LIABILITIES The Company owes back taxes to the IRS, California EDD, California State Board of Equalization and other tax authorities. The IRS portion of tax liabilities, $123,257, bears interest at 9%, and is payable quarterly in payments of $11,602, maturing in January 2002. During the year ending December 31, 1998, the tax liabilities were reduced by $80,078 due to the transfer of a personal tax refund from a former officer of the Company (note 5). Other tax claim repayment schedules have not yet been set. Scheduled maturities of the IRS liability are as follows: Twelve Months Ended September 30: 2000 $ 58,878 2001 41,942 2002 22,437 ------------- $ 123,257 ============= 3. INCOME TAXES The Company has loss carryforwards available to offset future taxable income. The total loss carryforwards at September 30, 1999 are estimated at approximately $138,000 and expire on December 31, 2013 and 2014. Loss carryforwards are limited in accordance with the rules of change in ownership. No deferred tax benefit is recognized since future profits are indeterminable. 7 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 4. NOTES PAYABLE During the year ended December 31, 1998, the Company contracted notes payable with minority shareholders for a total of $30,000. These notes bear interest at 10% and matured between January through May 1999. Stock options were issued with respect to these notes payable (see note 5). These notes payable are being renegotiated. 5. COMMON STOCK AND WARRANTS On May 28, 1997, a reorganization plan was approved by the Bankruptcy Court. As a result, existing shares of the Company were reverse split 1-for-6 and pre-bankruptcy creditors were issued 1,458,005 shares of Company's common stock. On November 13, 1997, an additional 5,000,000 shares of common stock were issued (after reverse split) to an officer of the Company in return for proceeds of $25,000 ($.005 per share). In accordance with the reorganization plan, the pre-bankruptcy creditors were also issued 1,458,005 class "A" warrants and 1,458,005 class "B" warrants. A class "A" warrant allows the purchase of a share of common stock at an exercise price of $2.50 per share, and the warrant must be exercised before September 8, 2000. A class "B" warrant allows the purchase of a share of common stock at an exercise price of $5.00 per share, and the warrant must be exercised before September 8, 2002. In May and September 1998, the Company issued 16,000 and 200,000 shares of common stock, respectively, for professional services received from non-related individuals. These shares were valued at $0.005 per share. Options to purchase 30,000 shares of common stock of the Company at the price of $2.50 per share for a period of three years have been issued to bearers of promissory notes (note 4) as follows: Date of Issuance Number of Share Expiration Date ---------------------------------------------------------- January 27, 1998 10,000 January 27, 2001 January 30, 1998 5,000 January 30, 2001 May 1, 1998 10,000 May 1, 2001 May 5, 1998 5,00 May 1, 2001 In June 1998, the IRS applied a personal tax refund from a former officer of the Company against the Company's tax liability, reducing it by $80,078. In accordance with an agreement between the management and the former officer, 80,078 shares of common stock were issued to the former officer in exchange for the loss of his personal tax refund. 8 PACIFIC ALLIANCE CORPORATION (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 5. COMMON STOCK AND WARRANTS (Continued) Pursuant to the provisions of the modified joint plan of reorganization, PacificAlliance Corporation compensates its management on an hourly basis at $75 per hour for the time actually devoted to the business of the Company. Payment for services will be made through issuance of shares of common stock until such time as the Company's net worth reaches $350,000. According to the modified joint plan of reorganization, the stock issued for services shall be valued at $0.10 per share. At September 30, 1999, accrued management compensation liability was $71,700, as the shares of common stock have not yet been issued. 6. COMMITMENTS & CONTINGENCIES In1995, the Company filed a lawsuit against Donald Palmer alleging breach of contract and other claims. The case was filed in Los Angeles County, California. The Company sought damages in the approximate amount of $1,000,000. The defendant filed a counter claim against the Company for breach of contract and was seeking past due rent and other damages. On May 5, 1999, the Court ruled in favor of the defendant, Donald Palmer and against Pacific Syndication, Inc. Donald Palmer was awarded approximately $200,000 for past due rent of the equipment, plus costs and attorneys fees. Palmer was also found owner of the equipment sold by Pacific Syndication, Inc. to Starcom Television Services. In the opinion of counsel, because Starcom Television Services assumed that debt when it purchased the assets of Pacific Syndication, Inc., Starcom Television Services, and its successor in interest, are responsible for that judgement. Therefore, no liability has been accrued in the financial statements at September 30, 1999. 7. RELATED PARTY An officer of the Company advanced $5,500 to the Company during the three months ended September 30, 1999. These advances bear interest at 10% and have no maturity date. The balance of advances is $92,413 at September 30, 1999. 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Pacific Alliance Corporation (the "Company") is a Delaware corporation which is currently inactive. The Company was previously engaged in the business of distributing television programming. On September 23, 1995, the Company filed for protection under Chapter 11 of the United States Bankruptcy Code (Case No. BK. No. SV 95-14737 KL). On May 28, 1997 (the "Confirmation Date"), the United States Bankruptcy Court for the Central District of California Confirmed the Company's Modified Plan of Reorganization (the "Plan") and First Amended Disclosure Statement (the "Disclosure Statement"). The Effective Date of the Plan was June 8, 1997. Although the Company's Chapter 11 Plan of Reorganization has been confirmed by the Bankruptcy Court, the Company continues to operate under the jurisdiction of the Court. The Company's current business plan calls for it to locate and acquire an operating company. History The Company was organized on April 22, 1986 under the laws of the State of Utah under the name of Kaiser Research, Inc. On December 2, 1994, the Company changed its domicile from the State of Utah to the State of Delaware through a reincorporation merger. In order to effect the reincorporation merger, the Company formed a wholly-owned subsidiary under Delaware law under the name of PACSYND, Inc. After the change of the Company's domicile, it acquired a privately held corporation ("Private PSI") in a merger transaction, and in connection therewith, the Company's name was changed to Pacific Syndication, Inc. After the acquisition of Private PSI in December 1994, and prior to its filing of a Petition under Chapter 11, the Company was engaged in the business of transmitting television programming to television stations and others via satellite or land deliveries on behalf of production companies, syndicators and other distributors of television programming. Although the Private PSI was not the survivor of the Merger, and did not exist after the Merger, pursuant to the accounting requirements of the Securities and Exchange Commission the Merger was treated as a "reverse merger" and, solely for accounting purposes, Private PSI was deemed to be the survivor. Private PSI was formed under the laws of the State of Delaware in November 1991. Private PSI was formed to engage in the business of providing a variety of television industry related services to its clients. Such services included, but were not limited to, video tape duplication, standards conversion and delivery of television programming by way of conventional carriers (such as UPS, Airborne and Federal Express) and by satellite or fiber optic transmission. Private PSI provided its clients (primarily television producers, programmers and syndicators) with several related but different services, including distribution of syndicated programming to television stations, program mastering and standards conversion, infomercial customization and delivery, master tape and film storage, library distribution services and video integration and delivery services. Private PSI developed its own tape tracking and vault library management system and a system for infomercial customization and voice-over integration. 10 From its inception, Private PSI was undercapitalized. It funded its initial operations through the factoring of its accounts receivable. The Company was unable to commence operations in the television programming services business and ultimately, substantially all of its assets were sold and it discontinued its operations. Chapter 11 Plan of Reorganization On June 23, 1995, the Company filed a Petition under Chapter 11 of the U.S. Bankruptcy Code. As of December 1995, the Company had sold most of its assets, reduced its debt and terminated its operations. By that date, there was no trading market in the Company's securities. In 1996, Troika Capital, Inc. ("Troika"), a Utah corporation, agreed to assist the Company in developing a Plan of Reorganization which would provide the Company, its shareholders and creditors with at least a possibility of recouping all or some of their investment in the Company or the debts owed to them by the Company. Troika is a privately-owned Utah corporation which has been involved in various company formations, mergers and financings. Mark A. Scharmann, the President of Troika, and now the President of the Company, and his affiliates, were shareholders of the Company and creditors of the Company at the time the Company commenced its bankruptcy proceeding. Mr. Scharmann was a founder of the Company in 1986 and was an original shareholder of the Company. At the time the Company acquired Private PSI, he resigned as an officer and director of the Company but remained a shareholder and later became a creditor of the Company. Many of the investors in the Company are friends and acquaintances of Mr. Scharmann. The Company believed that if it were to liquidate, there would be a total loss to creditors and shareholders. Because of his own equity and debt investment in the Company, and his relationship with other shareholders and creditors of the Company, Mr. Scharmann agreed, through Troika, to develop a business plan for the Company and to attempt to assist the Company in carrying out such plan. The Plan of Reorganization developed for the Company by Troika was essentially as follows: 1. Eliminate all non-tax liabilities of the Company through the conversion of debt into equity. 2. Replace the current officers and directors of the Company with new management. The new management includes the following: Mark Scharmann, Dan Price and David Knudson. 3. File all required Securities and Exchange Commission reports which may be necessary to bring the Debtor current in its filing requirements under Section 15(d) of the 1934 Act. File all SEC reports which become due in the future. 4. File any tax returns which are in arrears and file all required tax returns and reports which become due in the future. 11 5. Use existing cash of the Company to pay quarterly tax payments and for working capital. 6. Prepare and bring current, the financial statements of the Company 7. Attempt to raise additional cash to be used to fund quarterly tax payments and for working capital. 8. Locate a private-company which is seeking to become a public company by merging with the Company. 9. Assist the Company in completing any merger which is located and which the Board of Directors deems appropriate. 10. Assist the post-merged company with shareholder relations, financial public relations and with attempts to interest a broker-dealer in developing a public market for the Company's common stock so that the Company's shareholders (including creditors whose debt was converted into shares of the Company's common stock) may ultimately have a opportunity to liquidate their shares for value in market or in privately negotiated transactions. The Plan and Disclosure Statement was confirmed by the Bankruptcy Court on May 28, 1997. The Effective Date of the Plan was June 8, 1997. The Company continues to file monthly "Debtor in Possession Interim Statements" and "Debtor in Possession Operating Reports" with the the Office of the United States Trustee. Post Confirmation Date Activities Since the Confirmation of the Plan of Reorganization the following have occurred: 1. Pre-Confirmation Date non-tax debt in the amount of approximately $1,458,000 was converted into 1,458,005 shares of the Company common stock 2. The Company completed its audited financial statements for the years ended December 31, 1996, 1997 and 1998. 3. Tax liabilities to the Internal Revenue Service of approximately $269,093 had been reduced to $123,257 as of December 10, 1999. 4. The Company effected a 1-for-6 reverse split of its issued and outstanding common stock in order to establish a more desirable capital structure for potential merger partners. 5. The Company changed its name to Pacific Alliance Corporation. 12 6. The Company obtained the preliminary agreement of a registered-broker to make a market in the Company's common stock. 7. The Company filed an application for approval of secondary trading in its common stock with the Division of Securities of the State of Utah. An Order Granting such application was issued by the Utah Division of Securities. 8. The Company prepared and filed a Form 10-KSB for the years ended December 31, 1997 and 1998 and all required Forms 10-QSB for 1999 calendar year. Financial Condition Total assets at September 30, 1999 were $1,747, all of which was cash. The Company intends to use such cash to pay for various filing fees and professional fees relating to its reporting obligations and to fund the costs which may arise from seeking new business opportunities. The Company's total liabilities as of September 30, 1999 were $496,645 It is likely that the Company will be required to raise additional capital in order to attract any potential acquisition partner but there can be no assurance that the Company will be able to raise any additional capital. It is also likely that any future acquisition will be made through the issuance of shares of the Company's common stock which will result in the dilution of the percentage ownership of the current shareholders. Results of Operations The Company has generated no revenues since the Confirmation Date of its Bankruptcy Reorganization. The Company will not generate any revenues, if ever, until and unless it merges with an operating company or raises additional capital for its own operations. There can be no assurance that either of such events will happen. The Company had a net loss of $22,916 for the three months ended September 30, 1999. The Company had a net loss of $74,990 for the nine months ended September 30, 1999. This compares to a net loss of $22,258 for the three months ended September 30, 1998 and a net loss of $56,817 for the nine months ended September 30, 1999. Plan of Operation The Company's current business plan is to serve as a vehicle for the acquisition of, or the merger or consolidation with another company (a "Target Business"). The Company intends to utilize its limited current assets, equity securities, debt securities, borrowings or a combination thereof in effecting a Business Combination with a Target Business which the Company believes has significant growth potential. The Company's efforts in identifying a prospective Target Business are expected to emphasize businesses primarily located in the United States; however, the Company reserves the right to acquire a Target Business located primarily elsewhere. While the Company may, under certain circumstances, seek to effect Business Combinations with more than one Target 13 Business, as a result of its limited resources the Company will, in all likelihood, have the ability to effect only a single Business Combination. The Company may effect a Business Combination with a Target Business which may be financially unstable or in its early stages of development or growth. To the extent the Company effects a Business Combination with a financially unstable company or an entity in its early stage of development or growth (including entities without established records of revenue or income), the Company will become subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that the Company effects a Business Combination with an entity in an industry characterized by a high level of risk, the Company will become subject to the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries which experience rapid growth. Although management will endeavor to evaluate the risks inherent in a particular industry or Target Business, there can be no assurance that the Company will properly ascertain or assess all risks. The Company will not effect any merger unless it first obtains approval from its shareholders. In connection with obtaining shareholder approval of a proposed merger, the Company will distribute a Proxy, Notice of Meeting of Stockholders and Proxy Statement which contains information about the proposed acquisition transaction. Such information will likely include audited financial statements and other financial information about the acquisition target which meets the requirements of Form 8-K as promulgated under the Securities Exchange of 1934, as amended, resumes of potential new management, description of potential risk factors which shareholders should consider in connection with their voting on the proposed acquisition and a description of the business operations of the acquisition target. Troika and its affiliate will vote all of their shares of the Company's common stock for or against any merger proposal in the same ratio which the shares owned by other shareholders are voted. This will permit other shareholders to be able to effectively determine whether the Company acquires any particular Operating Company. The merger will be effected only if a majority of the other shareholders attending the meeting of shareholders in person and/or by proxy, vote in favor of such proposed merger. The shares of Troika and its affiliates will be included for purposes of determining whether a quorum of shareholders is present at the meeting. 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings. Item 2. Changes in the Rights of the Company's Security Holders. None. Item 3. Defaults by the Company on its Senior Securities. None. Item 4. Submission of Matters to Vote of Security Holders. No matter was submitted to a vote of the Company's security holders for the quarter ended September 30, 1999. Item 5. Other Information. Item 6(a). Exhibits. None Item 6(b). Reports on Form 8-K. None filed. 15 SIGNATURE In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: December 13, 1999 PACIFIC ALLIANCE CORPORATION . By: /s/ Mark A. Scharmann __________________________________ Mark A. Scharmann President/Principal Executive Officer By /s/ David Knudson __________________________________ David Knudson Principal Financial Office 16 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTS FROM PACIFIC ALLIANCE CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIRIFED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 1,747 3-MOS DEC-31-1999 JUL-01-1999 SEP-30-1999 1 1,747 0 0 0 0 1,747 0 0 1,747 295,433 0 0 0 422,254 (917,152) 1,747 0 0 0 0 17,216 0 5,700 (22,916) 0 (22,916) 0 0 0 (22,916) 0 0
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