UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB





[xx]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005



Commission file Number:  0-50608



PACIFIC ALLIANCE VENTURES LTD.

(Exact name of small business issuer as specified in its charter)



Nevada

(State or other jurisdiction of incorporation or organization)



98-0414501

(I.R.S. Employer Identification Number)



Suite C102, 10000 North 31st Avenue

Phoenix, Arizona   85051   USA

(Address of principal executive offices)



(602)252-4477

(Issuer's telephone number)





State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:     
19,810,200 common shares as at March 31, 2005



Transitional Small Business Disclosure Format (check one):  Yes [  ]    No [ X ]







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PACIFIC ALLIANCE VENTURES LTD.





INDEX



PART 1.

FINANCIAL INFORMATION



Item 1.

Financial Statements



Balance Sheet as of March 31, 2005



Statement of Operations for the three months ended March 31, 2005 and 2004



Statements of Cash Flows for the three months ended March 31, 2005 and 2004



Notes to Financial Statements



Item 2

Plan of Operation



Item 3

Controls and Procedures



PART II.

OTHER INFORMATION



Item 1

Legal Proceedings



Item 2

Unregistered Sales of Equity Securities and Use of Proceeds



Item 3

Defaults Upon Senior Securities



Item 4

Submission of Matters to a Vote of Security Holders



Item 5

Other Information



Item 6

Exhibits and Reports on Form 8K





SIGNATURES









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PACIFIC ALLIANCE VENTURES LTD.

BALANCE SHEET

March 31, 2005

(Unaudited)

|                     |                                                        |                                                  |              | ASSETS                               |             
|-------------------- | ------------------------------------------------------ | ------------------------------------------------ | ------------ | ------------------------------------ | ------------
|Current Assets       |                                                       
|                     | Cash                                                   |                                                  | $    140,043
|                     | Income tax receivable                                  | 4,214                                           
|                     |                                                        |                                                  |              | Total current assets                 | $    144,257
|                     |                                                        |                                                  |              | LIABILITIES AND STOCKHOLDERS' EQUITY |             
|Current Liabilities  |                                                       
|                     | Accounts payable                                       | $        6,399                                  
|Stockholders' Equity |                                                       
|                     | Common stock, par value $.0005, authorized 100,000,000 |                                                 
|                     |                                                        | shares; issued and outstanding 19,810,200 shares | 9,905       
|                     | Additional paid-in capital                             | 124,486                                         
|                     | Retained earnings                                      | 3,467                                           
|                     |                                                        |                                                  |              |                                      | 137,858     
|                     |                                                        |                                                  |              |                                      | $    144,257
|                     |                                                        |                                                  |              |                                      |             





See Notes to Financial Statements



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PACIFIC ALLIANCE VENTURES LTD.

STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2005 and 2004

(Unaudited)





|                                                     |                                 |               |                 |                   | 2005           |  | 2004          
|---------------------------------------------------- | ------------------------------- | ------------- | --------------- | ----------------- | -------------- |  | --------------
|Revenues                                             |                                 |               |                
|                                                     | Marketing income, related party | $      26,000 |                 | $               -
|Expenses                                             |                                 |               |                
|                                                     | Copywriting                     | 24,700        |                 |                  
|                                                     | Professional services           | 6,922         |                 | 6,392            
|                                                     | Salaries                        | 3,000         |                 | 3,000            
|                                                     | Other                           |               | 1,212           |                   | 473           
|                                                     |                                 |               |                 |                   | 35,834         |  | 9,865         
|                                                     |                                 |               |                 | Net loss          | $      (9,834) |  | $      (9,865)
|Basic and diluted net loss per common share          | $        (0.00)                 |               | $        (0.00)
|Weighted average number of common shares outstanding | 19,810,200                      |               | 19,810,200     
|                                                     |                                 |               |                 |                   |                |  |               





See Notes to Financial Statements



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PACIFIC ALLIANCE VENTURES LTD.

STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2005 and 2004

(Unaudited)

|                                     |                                                   |                              |                |                                      | 2005    |  | 2004    
|------------------------------------ | ------------------------------------------------- | ---------------------------- | -------------- | ------------------------------------ | ------- |  | --------
|Cash Flows from Operating Activities |                                                   |                              |               
|                                     | Net loss                                          | $       (9,834)              |                | $       (9,865)                     
|                                     | Adjustment to reconcile net loss to net cash from |                              |                |                                     
|                                     |                                                   | operating activities         |                |                                      |        
|                                     |                                                   | Increase in accounts payable | 6,399          |                                      |        
|                                     |                                                   | Decrease in taxes payable    |                |                                      | (6,468)
|                                     |                                                   |                              |                | Cash flows from operating activities | (3,435) |  | (16,333)
|Cash Flows from Financing Activity   |                                                   |                              |               
|                                     | Cash received on common stock subscription        | 37,468                       |                | 4,664                               
|                                     |                                                   |                              |                | Net change in cash                   | 34,033  |  | (11,669)
|Cash at the beginning of the period  | 106,010                                           |                              | 130,393       
|Cash at the end of the period        | $    140,043                                      |                              | $    118,724  
|Cash paid for income taxes           | $              0                                  |                              | $        8,117
|                                     |                                                   |                              |                |                                      |         |  |         







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NOTES TO FINANCIAL STATEMENTS







Note 1.  Organization and Significant Accounting Policies



Organization



Pacific Alliance Ventures Ltd. ("the Company") was formed October 20, 2003 and is a marketing and advertising service provider.  The Company designs marketing and advertising campaigns for corporate clients wishing to increase awareness of their products, services, corporate image and general corporate branding.



The Company conducts its business through offices in Phoenix, Arizona, and Vancouver, British Columbia, and intends to gradually increase its availability to corporate clients across North America.  The Company works with a number of freelance designers, writers, and editors who enable the Company to react to customer demands without the need to incur large fixed overhead costs.



The Company's offices are currently provided on a rent free basis by the President and Chief Executive Officer of the Company.  Due to limited Company operations, any facilities expenses are not material and have not been recognized in these financial statements.



The Company designs marketing and branding campaigns in conjunction with its clients and relies on its ability to custom-design marketing solutions in response to client's needs to secure additional business.



Interim Period Financial Statements



The interim period financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC").  Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such SEC rules and regulations.  The interim period financial statements should be read together with the audited financial statements and accompanying notes included in the Company's audited financial statements for the year ended December 31, 2004.  In the opinion of the Company, the unaudited financial statements contained herein contain all adjustments (consisting of a normal recurring nature) necessary to present a fair statement of the results of the interim period presented.



Revenue Recognition



As marketing service agreements are relatively short-term in nature, revenue is recognized when agreements are complete.  Any costs incurred on agreements in process are deferred until the agreement is complete.  Also, any advance payments from customers are deferred until the agreement is complete.  Completion of marketing service agreements occurs when the customer has approved and accepted the advertising materials.



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All revenue in the quarter ended March 31, 2005, was from one customer, a company owned in part by an officer and director of the Company.



Earnings per Share



Basic loss per share is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding in the period.  On February 21, 2005, the Board of Directors approved a 2-for-1 split of the Company's stock.  The accompanying financial statements are presented on a post-split basis.  Earnings per share for all periods presented have been adjusted accordingly.  Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.  There were no potentially dilutive securities during the periods ended March 31, 2005 and 2004.



Comprehensive Income



There are no reconciling items between the net loss presented in the Statements of Operations and comprehensive loss as defined by Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income."



Stock-Based Compensation



The Company has no stock-based compensation arrangements.  Should it enter into these types of arrangements, the Company intends to follow the recognition and measurement principles of APB Opinion No. 25,"Accounting for Stock Issued to Employees," and related interpretations.  Compensation cost for stock options granted to non-employees will be measured using the Black-Scholes valuation model at the date of grant multiplied by the number of options granted, amortized over the estimated life of the option.  This compensation cost will be recognized ratably over the vesting period.  This accounting policy will change with the adoption of SFAS No. 123(R), which will be effective beginning with the first interim reporting period after 2005.







Note 2.  Subsequent Event



In April 2005, the Company accepted subscription agreements for the purchase of 254,935 shares of the Company's stock for cash consideration of $127,468, of which $37,468 was received in March 2005 and was recorded as additional paid-in capital.





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PLAN OF OPERATIONS



Our current working capital of approximately $137,858 is sufficient to fund the continuing operations and expansion of our business for the next 12 months.  It is also sufficient to pay the expenses associated with our reporting company obligations including increased accounting and legal fees.



We do not anticipate requirement for major capital expenditures during the next 12 months related to our ongoing business.  We do not conduct research and development and subcontract all actual production. Existing casual relationships with freelance designers and editors and their attendant costs are expected to remain relatively constant due to normal marketplace competition.  Costs for these services differ depending on the individual project with such variables as the number of pages, types of printing, number of colors, etc, all affecting the cost of any given project.  As a general guide, costs of US$1,000 per page for editors and US$500 per page for design are typical.  We have sufficient office space to accommodate existing and expanded operations for the next 12 months.



Contract employees are hired as needed.  There are no immediate plans to hire permanent employees.  We do not store goods in warehouses as this is a function performed by the commercial printers whom we engage to produce and distribute our advertising materials.



The following is a discussion of our general plan of operation for the next 12 months.  This plan of operation will be implemented by our C.E.O. and is based on her prior experience in the publishing and marketing industries.



Our primary target market is mid-sized companies trying to build brand, product and/or service recognition for their products, services, and companies.  These mid-sized companies are large enough to be able to fund significant marketing efforts, yet small enough to be aware that they need to differentiate themselves from their competitors in order to excel in their particular market sectors.  Because of our limited human resources we are not able to focus on any single industry and must accept clients from any industry.  There is a risk that our lack of industry focus could be construed by potential clients as a lack of expertise in their particular industry.



Because of the size and evolution of our clients, they usually do not have more than one person in their own companies devoted to marketing and promotions.  They are aware of their marketing needs, but not able to fulfill those needs internally.  This is different from larger companies that frequently are capable of designing and fulfilling their marketing and advertising requirements in-house; or smaller companies that are not sufficiently large to develop the budgets required for effective direct marketing campaigns.



Thus, our services fit a real need for marketing expertise.  Our attention to detail and custom-designed advertising programs are generally beyond the capabilities of any of our clients to perform in-house.



Our potential clients can exist in any business sector that relies on an appeal to individual retail customers or end-users of a product or service, or in any business that wishes to improve their public image or build their brand awareness in their particular marketplace.  For this reason, our clients could span virtually all business sectors.



Our cost of sales varies depending on the type of services or the exact type of work we are performing.  In general terms, if we propose work that specifies the provision of creative ideas, artwork and design, then we obtain non-binding price estimates from a number of potential sub-contractors to perform those functions, add a suitable and competitive administration fee and profit margin, before submitting the proposal to our potential client.  Our fees and profit margins are as aggressive at any given time as we feel the market will bear.  Those specific fees and margins might be stronger or weaker depending on many factors including but not limited to; general economic activity; advertising and marketing activity;





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number and quality of vendors offering marketing and advertising services; number and quality of subcontractors offering specified services; market prices of raw goods needed by subcontractors, such as trucking costs; paper and ink costs; US Postal rates; and other factors.



Growth



We are a young company although we have seasoned professionals as management.  We have a limited operating history and have relied on a small number of contracts.  Despite our limited operating history we have generated positive cash flow and net income.  Our present financial condition is stable and we expect to be able to operate profitably in the future.



In our next 12 months of operation, our primary focus will be to solidify our market share in the Southwest United States.  We would like to target the retail sales industry to be able to supply some of its marketing and advertising needs because of its pervasive scope.  We have not yet made meaningful progress penetrating this industry.  Our secondary focus will be to initiate our business presence in new geographic regions in other areas of North America, initially through an internet build-up, and eventually through the opening of additional sales offices.



Management expects to be able to maintain current creative control and head office functions in our existing Phoenix office.  Because our business model currently relies on strong and diverse relationships with various subcontractors and freelance professionals, we believe we can accommodate expected growth rates with little or no requirements for additional capital or infrastructure.



Our rate of expected growth cannot be determined because it relies in large part on the general strength of the overall economy and the advertising and marketing needs of divergent sectors within the broader economy.  Fundamentally, it is the rates of growth and sales of our clients that determines our potential growth rate.  Eventually our rate of growth could slow, based on the demands upon the time of our key personnel.  If our revenue and project growth exceeds the capacity of current management to properly execute future marketing projects, then we will need to determine whether to engage additional full time senior management at that time.



Management considers its current ability to provide exceptional customer service with creative intellectual capital to be our strongest asset.  As long as we continue to deliver these attributes to clients, we believe our business can grow successfully.



Sales and Payment



All significant marketing projects commence when a sizable deposit has been made by the client.  We do not incur significant external expenses, nor do we contractually expose ourselves to significant external expenses with subcontractors, until such time as performance payments from our clients are received.  We expect each contract to approximate the following schedule: a progress payment of 10% received at signing of contract; another progress payment of 30% received when the intellectual advertising material has been created and accepted by the client; another progress payment of 30% received before printing and production; and a final progress payment of 30% received before delivery to the U.S. Post Office.  Accordingly, we generally are not exposed to significant cash flow risks.



As marketing service agreements are relatively short-term in nature, revenue is recognized when agreements are complete.  Expenses such as printing and postage are not incurred until our client has submitted progress payments to cover such expenses.  Revenue received is not refundable to the client and we do not make performance claims that could expose us to future liabilities.







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Because we do not actually print or produce hard goods, we have no significant capital equipment costs. Instead, our costs are mostly associated with the contracting out of services and production after we have already received payment from a client.  We have already achieved our first major milestone which was completion of a large advertising contract and are currently working on two smaller contracts.  This includes receiving progress payments; working with subcontractors including editor; designer; printer; and shipper; and, receiving final payment.  Our first large contract was successfully performed from start to finish in less than 90 days, which we expect to be typical of potential new contracts in the future.  In the future, we expect to be able to secure additional similar contracts, the exact completion time for which would be determined at the time of contract negotiations.  We would expect future completion periods to be approximately 90 days.



Since we generally offer a fixed price to our clients, there is a risk that we could underestimate our costs to perform such work and thus complete any given project at a loss. If we were to be exposed to sudden cost volatility and our costs to complete printing, design and editing were to rise sharply, there is no assurance we could obtain additional project funds from our clients. We generally do not require extended periods of time to execute our contracts and believe cost volatility is an acceptable business risk.



Inventory and Shipping



We do not warehouse any kind of inventory because we provide mainly intellectual services, with actual finished goods provided by subcontractors.  Delivery of advertising medium is generally achieved via U.S. Post.



Item 3 - Controls and Procedures



As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, being March 31, 2005, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our management, including our president and chief executive officer.  Based upon that evaluation, our president and chief executive officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.  There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.



PART II

OTHER INFORMATION



Item 1.

LEGAL PROCEEDINGS



We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or





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beneficial shareholder, is an adverse party or has a material interest adverse to our interest.



Item 2

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS



None



Item 3

DEFAULTS UPON SENIOR SECURITIES



None



Item 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



In lieu of a meeting of shareholders, by consent resolutions dated March 31, 2005 of shareholders representing 55.53% of the issued and outstanding common shares of the Issuer, the shareholders increased the Issuers board of directors to three members and Gerald R. Tuskey, Velda King and Nicholas W. Baxter were appointed directors of the Issuer until the next annual general meeting of the Issuers shareholders.  The shareholders also re-appointed the firm of Peterson Sullivan, P.L.L.C. of Seattle, Washington, as its independent accountants for the fiscal year 2005/2006 and also approved the Issuers audited financial statements for the year ending December 31, 2004.



Item 5

OTHER INFORMATION



By directors consent resolutions dated February 8, 2005, the Issuer forward split its 9,905,100 issued and outstanding common shares on a one for two basis, resulting in the Issuer having 19,810,200 issued and outstanding common shares which went effective on February 21, 2005.



Item 6

EXHIBITS AND REPORTS ON FORM 8-K



(a)

Exhibits



31.1

Section 302 Certification of Chief Executive Officer

31.2

Section 302 Certification of Chief Financial Officer

32

Section 906 Certification



(b)

Reports on Form 8-K



No reports on Form 8-K were filed during the quarter ending March 31, 2005.





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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



PACIFIC ALLIANCE VENTURES LTD.





Dated:  May 10, 2005

Per:

/s/Gerald R. Tuskey



Gerald R. Tuskey,

C.F.O., Secretary, Treasurer and Director