U.S. SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549


                                     FORM 10-KSB


              [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended December 31, 1996

                                         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 

                                     (Zip Code)
                                        84403   
                      (Address of principal executive offices)

           Issuer's telephone number, including area code:  (801) 399-3632


     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/
 .

      Check if there is no disclosure  of delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.

      The Issuer's revenues for the fiscal year ended December 31, 1996 were 
-0-.

      As of December 22,  1998,  8,853,208  shares of the Issuer's  common stock
were issued and outstanding of which 2,595,394 were held by  non-affiliates.  As
of December 22, 1998, there was no active market in the Issuers securities.


                     DOCUMENTS INCORPORATED BY REFERENCE:  NONE




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                               TABLE OF CONTENTS

                                                                          Page
PART I
Item 1.    Description of Business..........................................3
Item 2.    Properties.......................................................11
Item 3.    Legal Proceedings................................................11
Item 4.    Submission of Matters to a Vote of Security Holders..............11


PART II
Item 5.    Market for the Registrant's Common Stock and Related Security Holder 
           Matters..........................................................12
Item 6.    Management's Discussion and Analysis of Financial Condition and
           Results of Operation.............................................15
Item 7.    Financial Statements.............................................18
Item 8.    Changes and Disagreements with Accountants on Accounting and
           Financial Disclosure.............................................26

PART III
Item 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act................26
Item 10.   Executive Compensation...........................................27
Item 11.   Security Ownership of Certain Beneficial Owners and Management...28
Item 12.   Certain Relationships and Related Party Transactions.............29
Item 13.   Exhibits, Financial Statements, Schedules & Reports on Form 8-K..30
           Index to Exhibits................................................30


                                    PART I

Disclosure Regarding Forward Looking Statements

      The  Private  Securities  Litigation  Reform Act of 1995  provides a "safe
harbor" for forward looking statements.  Certain information in this Form 10-KSB
include information that is forward looking, such as the Company's opportunities
to tax obligations,  its anticipated  liquidity and capital requirements and the
results  of legal  proceedings.  The  matters  referred  to in  forward  looking
statements  could be  affected  by the risks and  uncertainties  involved in the
Company's business.  These risks and uncertainties  include, but are not limited
to,  certain  other  risks  described  in Item 1 under  "and in Item 3 in "Legal
Proceedings" and in Item 7 in "Management's Discussion and Analysis of Financial
Condition  and  Results of  Operations."  Subsequent  written  and oral  forward
looking  statements  attributable to the Company or persons acting on its behalf
are expressly  qualified in their entirety by the cautionary  statements in this
paragraph and elsewhere in this Form 10-KSB.



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ITEM 1.  DESCRIPTION OF BUSINESS

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 June 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, 1998.  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.

      The Company  filed no Form  10-KSB's or Forms  10-QSB for the 1995,  1996,
1997 fiscal  years until  December  22, 1998 when it filed its December 31, 1997
Form 10-KSB. The information contained in this December 31, 1996 Form 10-KSB has
in certain matters,  including financial  statement matters,  been superceded by
the information contained in the December 31, 1997 Form 10-KSB heretofore filed.
Information  about  shares  outstanding  and the  Company's  managment  has been
brought current to the date of filing.

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,

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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.

      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.


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            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.

            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.

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      2.    The Company completed its audited financial statements for the years
            ended December 31, 1995, 1996 and 1997.

      3.    Tax  liabilities to the Internal  Revenue  Service of  approximately
            $269,093 had been reduced to $137,717 as September 30, 1998.

      4.    The  Company  effected  a  1-for-6  reverse  split of its  issued an
            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.

      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 this Form 10-KSB and a Form 10-KSB
            for the year ended December 31, 1997.

Business Plan

           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
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

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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.

      Probable  Lack of  Business  Diversification.  As a result of the  limited
resources of the Company, the Company, in all likelihood,  will have the ability
to effect only a single Business Combination. Accordingly, the prospects for the
Company's  success will be entirely  dependent upon the future  performance of a
single  business.  Unlike certain entities that have the resources to consummate
several Business  Combinations or entities  operating in multiple  industries or
multiple  segments of a single  industry,  it is highly  likely that the Company
will not have the  resources to  diversify  its  operations  or benefit from the
possible spreading of risks or offsetting of losses. The Company's probable lack
of diversification may subject the Company to numerous economic, competitive and
regulatory developments,  any or all of which may have a material adverse impact
upon the  particular  industry in which the Company  may operate  subsequent  to
consummation of a Business Combination.  The prospects for the Company's success
may become  dependent upon the  development or market  acceptance of a single or
limited number of products, processes or services. Accordingly,  notwithstanding
the possibility of capital investment in and management assistance to the Target
Business by the Company, there can be no assurance that the Target Business will
prove to be commercially viable.

      No Independent Appraisal of Potential Acquisition Candidates.  The Company
does not anticipate that it will obtain an independent appraisal or valuation of
a Target Business. Thus, stockholders of the Company will need to rely primarily
upon  management  to evaluate a prospective  Business  Combination.  However,  a
Business  Combination  will not be  consummated  unless  it is  approved  by the
stockholders of the Company

      Limited Ability to Evaluate  Management of a Target Business.  The role of
the present management of the Company, following a Business Combination,  cannot
be stated with any certainty. Although the Company intends to scrutinize closely
the  management  of  a  prospective  Target  Business  in  connection  with  its
evaluation of the  desirability  of effecting a Business  Combination  with such
Target Business, there can be no assurance that the Company's assessment of such
management  will prove to be correct.  While it is possible  that certain of the
Company's  directors or its executive  officers  will remain  associated in some
capacities with the Company following consummation of a Business Combination, it
is unlikely that any of them will devote a substantial  portion of their time to
the  affairs  of the  Company  subsequent  thereto.  Moreover,  there  can be no
assurance  that such  personnel  will have  significant  experience or knowledge
relating to the operations of the particular  Target Business.  The Company also
may seek to recruit additional  personnel to supplement the incumbent management
of the Target Business. There can be no assurance that the Company will have the
ability to recruit additional  personnel or that such additional  personnel will
have the requisite  skills,  knowledge or  experience  necessary or desirable to
enhance the incumbent  management.  In addition,  there can be no assurance that
the future

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management  of the Company will have the  necessary  skills,  qualifications  or
abilities  to manage a public  company  intending  to  embark  on a  program  of
business development.

      Selection of a Target Business and Structuring of a Business  Combination.
Management of the Company will have  substantial  flexibility in identifying and
selecting a prospective  Target  Business  within the specified  businesses.  In
evaluating a prospective Target Business,  management will consider, among other
factors,  the  following:  (i) costs  associated  with  effecting  the  Business
Combination;  (ii) equity  interest in and opportunity for control of the Target
Business;  (iii) growth  potential of the Target  Business;  (iv) experience and
skill of  management  and  availability  of  additional  personnel of the Target
Business;  (v) capital  requirements of the Target  Business;  (vi)  competitive
position  of the  Target  Business;  (vii)  stage of  development  of the Target
Business;  (viii) degree of current or potential market acceptance of the Target
Business; (ix) proprietary features and degree of intellectual property or other
protection of the Target  Business;  (x) the financial  statements of the Target
Business;  and (xi) the  regulatory  environment  in which the  Target  Business
operates.

      The  foregoing  criteria  are  not  intended  to  be  exhaustive  and  any
evaluation relating to the merits of a particular Target Business will be based,
to the extent  relevant,  on the above  factors as well as other  considerations
deemed   relevant  by  management  in  connection   with  effecting  a  Business
Combination  consistent with the Company's  business  objectives.  In connection
with its evaluation of a prospective  Target  Business,  management  anticipates
that it will conduct a due diligence  review which will  encompass,  among other
things, meeting with incumbent management and inspection of facilities,  as well
as a review  of  financial,  legal  and  other  information  which  will be made
available to the Company.

      The time and costs  required  to select  and  evaluate  a Target  Business
(including  conducting a due diligence  review) and to structure and  consummate
the  Business  Combination   (including   negotiating  relevant  agreements  and
preparing requisite documents for filing pursuant to applicable  securities laws
and state "blue sky" and corporation  laws) cannot presently be ascertained with
any degree of certainty.  The Company's current executive officers and directors
intend  to devote  only a small  portion  of their  time to the  affairs  of the
Company and,  accordingly,  consummation of a Business Combination may require a
greater period of time than if the Company's  management devoted their full time
to the Company's affairs. However, each officer and director of the Company will
devote such time as they deem reasonably necessary to carry out the business and
affairs of the Company,  including the evaluation of potential Target Businesses
and the negotiation of a Business  Combination  and, as a result,  the amount of
time devoted to the  business and affairs of the Company may vary  significantly
depending upon, among other things,  whether the Company has identified a Target
Business  or is engaged in active  negotiation  of a Business  Combination.  Any
costs  incurred  in  connection  with the  identification  and  evaluation  of a
prospective Target Business with which a Business  Combination is not ultimately
consummated  will  result in a loss to the  Company  and  reduce  the  amount of
capital  available  to  otherwise  complete  a Business  Combination  or for the
resulting entity to utilize.


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      The Company anticipates that various prospective Target Businesses will be
brought  to  its  attention  from  various  non-affiliated  sources,   including
securities  broker-dealers,  investment bankers,  venture capitalists,  bankers,
other members of the  financial  community and  affiliated  sources,  including,
possibly, the Company's executive officer, directors and their affiliates. While
the  Company has not yet  ascertained  how,  if at all,  it will  advertise  and
promote  itself,  it may elect to publish  advertisements  in financial or trade
publications seeking potential business acquisitions. While the Company does not
presently anticipate engaging the services of professional firms that specialize
in finding business acquisitions on any formal basis (other than the independent
investment  banker),  the Company may engage such firms in the future,  in which
event the Company may pay a finder's fee or other compensation.

       As a general  rule,  Federal  and state tax laws and  regulations  have a
significant  impact upon the structuring of business  combinations.  The Company
will  evaluate  the  possible  tax  consequences  of  any  prospective  Business
Combination  and will  endeavor  to  structure a Business  Combination  so as to
achieve the most favorable tax treatment to the Company, the Target Business and
their  respective  stockholders.  There can be no  assurance  that the  Internal
Revenue Service or relevant state tax authorities will ultimately  assent to the
Company's tax treatment of a particular consummated Business Combination. To the
extent the  Internal  Revenue  Service  or any  relevant  state tax  authorities
ultimately  prevail  in  recharacterizing   the  tax  treatment  of  a  Business
Combination,  there may be adverse tax  consequences to the Company,  the Target
Business and their respective stockholders.  Tax considerations as well as other
relevant  factors will be evaluated in  determining  the precise  structure of a
particular Business  Combination,  which could be effected through various forms
of a merger, consolidation or stock or asset acquisition.

      There  currently are no  limitations  on the  Company's  ability to borrow
funds to effect a Business Combination. However, the Company's limited resources
and lack of operating  history may make it difficult to borrow funds. The amount
and  nature  of  any   borrowings   by  the  Company  will  depend  on  numerous
considerations, including the Company's capital requirements, potential lenders'
evaluation of the Company's  ability to meet debt service on borrowings  and the
then prevailing conditions in the financial markets, as well as general economic
conditions.  The  Company  does  not  have  any  arrangements  with  any bank or
financial  institution  to  secure  additional  financing  and  there  can be no
assurance  that such  arrangements  if required or  otherwise  sought,  would be
available on terms commercially acceptable or otherwise in the best interests of
the Company.  The inability of the Company to borrow funds required to effect or
facilitate  a  Business  Combination,  or to  provide  funds  for an  additional
infusion of capital into a Target  Business,  may have a material adverse effect
on the Company's financial condition and future prospects, including the ability
to effect a Business  Combination.  To the extent that debt financing ultimately
proves to be available,  any borrowings may subject the Company to various risks
traditionally associated with indebtedness, including the risks of interest rate
fluctuations  and  insufficiency  of cash flow to pay  principal  and  interest.
Furthermore,  a Target  Business may have already  incurred debt  financing and,
therefore, all the risks inherent thereto.


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Competition

      The Company expects to encounter  intense  competition from other entities
having  business  objectives  similar  to that  of the  Company.  Many of  these
entities are well  established and have extensive  experience in connection with
identifying and effecting business  combinations directly or through affiliates.
Many of these competitors possess greater financial,  technical, human and other
resources  than the Company and there can be no assurance  that the Company will
have the ability to compete successfully. The Company's financial resources will
be limited in  comparison  to those of many of its  competitors.  Further,  such
competitors  will  generally not be required to seek the prior approval of their
own  stockholders,  which may enable them to close a Business  Combination  more
quickly than the Company.  This inherent  competitive  limitation may compel the
Company to select certain less attractive Business Combination prospects.  There
can be no assurance  that such  prospects will permit the Company to satisfy its
stated business objectives.

Uncertainty of Competitive Environment of Target Business

      In  the  event  that  the  Company   succeeds  in   effecting  a  Business
Combination,  the Company will,  in all  likelihood,  become  subject to intense
competition  from  competitors of the Target  Business.  In particular,  certain
industries  which  experience  rapid growth  frequently  attract an increasingly
large number of competitors  including  competitors  with  increasingly  greater
financial,  marketing,  technical,  human and other  resources  than the initial
competitors  in the  industry.  The  degree of  competition  characterizing  the
industry of any prospective  Target  Business  cannot  presently be ascertained.
There can be no  assurance  that,  subsequent  to a  Business  Combination,  the
Company will have the resources to compete effectively, especially to the extent
that the Target Business is in a high-growth industry.

Certain Securities Laws Considerations

      Under  the  Federal   securities  laws,   public  companies  must  furnish
stockholders   certain   information  about  significant   acquisitions,   which
information may require  audited  financial  statements for an acquired  company
with respect to one or more fiscal  years,  depending  upon the relative size of
the  acquisition.  Consequently,  the  Company  will  only be able to  effect  a
Business  Combination  with a  prospective  Target  Business  that has available
audited financial statements or has financial statements which can be audited.

Shareholder Approval

      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

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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.

Employees

      As of the date of this Prospectus, the Company has no full time employees.

ITEM 2.  PROPERTIES

      The  Company's  offices are located at 1661  Lakeview  Circle,  Ogden,  UT
84403.  The Company,  pursuant to an oral  agreement,  utilizes an office at the
residence of Mark A.  Scharmann,  a stockholder of the Company and the Company's
President.  Until the acquisition of a Target Business, the Company will pay Mr.
Scharmann $ 500 per month for rent, office and secretarial services.

ITEM 3.  LEGAL PROCEEDINGS

      Except for the continued  jurisdiction of the U.S.  Bankruptcy  Court, and
the matter  described below, the Company is not party to any legal actions as of
the date of this Form 10-KSB.

      In 1995, 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,
for past due rent and for other damages.  As of December31,  1996, past due rent
claimed by the defendant was  approximately  $150,000.  The defendant also seeks
damages in the amount of $75,000  pursuant to a stock  purchase  agreement.  The
Company is unable to predict  the  outcome of this  litigation.  The Company has
assigned  its  position in this matter to another  entity.  The Company does not
believe this litigation  will have any material impact on its future  operations
or financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to the Company's  shareholders for a vote during
the last quarter of the year ended December 31, 1996.



                                      11

<PAGE>



                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
        MATTERS

      There is no active  market for the Company's  common stock.  The Company's
common stock is sporadically  traded on a workout basis in the  over-the-counter
market.

Shares Issued in Unregistered Transactions

Shares Issued Prior to Confirmation Date

      Immediately   prior  to  the   confirmation   of  the  Company's  Plan  of
Reorganization  by the Bankruptcy  Court on May 28, 1997,  there were a total of
12,594,422 shares of the Company's common stock issued and outstanding. The Plan
of  Reorganization,  called  for a  1-for-6  reverse  split  of the  issued  and
outstanding shares which reduced the 12,594,422 shares to 2,099,125 shares.

Shares Issued to Troika

      Pursuant to the Plan of Reorganization,  5,000,000 shares of the Company's
common stock,  calculated  after the reverse stock split,  were issued to Troika
Capital Investment.  The shares issued to Troika were issued pursuant to Section
4(2) of the Securities Act of 1993, as amended (the "Securities Act").

Shares Issued to Creditors

       A total 1,458,005 shares of the Company's common stock  (calculated after
the 1-for-6  reverse stock split) were issued to creditors  pursuant to the Plan
of  Reorganization.  In exchange for every $1.00 of Allowed Unsecured Claims (as
defined in the Plan of Reorganization) a creditor was issued one share of common
stock,  one  Class A  Warrant  and One  Class B  Warrant.  Each  Class A Warrant
entitles the holder to purchase one share of the Company's common stock at $2.50
per share for a period of three years  commencing on the  Effective  Date of the
Plan.  Each Class B Warrant  entitles  the holder to  purchase  one share of the
Company's  common stock at 5.00 per share for a period of five years  commencing
on the Effective  Date of the Plan.  The Effective  Date of the Plan was June 8,
1997. The 1,458,005  shares and the Class A and Class B Warrants issued to claim
holders,  were issued under  Section 1145 of the United States  Bankruptcy  Code
(the  "Code").   Section  1145  provides   that  the   securities   registration
requirements of federal,  state and local laws do not apply to the offer or sale
of  securities  issued by a debtor (or its  successor)  if (i) the offer or sale
occurs under a plan of reorganization and (ii) the securities are transferred in
exchange (or  principally  in exchange)  for a claim  against or interest in the
debtor.  Accordingly,  under  Section  1145 of the Code,  the issuance of common
stock  in  exchange  for a  Claim  against  the  Company  was  exempt  from  the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "1933 Act") and from the registration  requirements of any state securities
laws.  Approximately  86  creditors  were issued  shares in exchange  for claims
against the Company.

                                      12

<PAGE>



      Resales  or  Transfers  of  Plan  Securities.  Any  person  who  is not an
"underwriter"  under  Section 1145 of the Code or a "dealer"  under the 1933 Act
and who transfers  shares received under the Plan ("Plan  Securities")  need not
comply  with the  registration  requirements  of the  1933  Act or of any  state
securities laws. The term "underwriter",  as used in Section 1145, includes four
categories  of persons,  which are referred to in this  Disclosure  Statement as
"Controlling  Persons",  "Accumulators",   "Distributors"  and  "  Syndicators".
"Dealers" and the four types of underwriters are discussed below.

            a. Controlling Persons. "Controlling Persons" are persons who, after
      the Effective Date, have the power, whether direct or indirect and whether
      formal  or  informal,  to  control  the  management  and  policies  of the
      reorganized debtor. Whether a person has such power depends on a number of
      factors,  including the person's equity in the reorganized debtor relative
      to other  equity  holders,  and  whether the  person,  acting  alone or in
      concert with others, has a contractual or other  relationship  giving that
      person power over management policies and decisions.  In order to transfer
      the Plan Securities  without  registration,  a Controlling Person would be
      required to comply with the  restrictions set forth in SEC Rule 144, other
      than  the  holding  period   requirement  set  forth  in  that  Rule.  The
      restrictions  of Rule 144 are  complicated.  In general,  in order for the
      resale of Plan Securities by a Controlling  Person to be permissible under
      Rule 144,  the  Controlling  Person must not sell  during any  three-month
      period,  more than one  percent of the  Company's  common  stock  (or,  if
      greater, the average weekly report volume of trading in such securities).

            b.  Accumulators and  Distributors.  "Accumulators"  are persons who
      purchase  a  Claim  against  or  Interest  in the  Company  with a view to
      distribution  of any Plan  Securities  to be  received  under  the Plan in
      exchange for such Claim or Interest.  "Distributors" are persons who offer
      to sell Plan Securities for the holders of those securities. In a 1986 SEC
      No- Action Letter (Manville  Corp.),  the SEC staff took the position that
      resales by Accumulators and Distributors of securities distributed under a
      plan are exempt from the registration requirements of the 1933 Act if made
      in "ordinary trading transactions". The SEC staff took the position that a
      transaction  is an  ordinary  trading  transaction  if it  is  made  on an
      exchange or in the over-the-counter  market at a time when the issuer is a
      reporting  company  under  the 1934 Act and  does not  involve  any of the
      following factors:

                  (i)  concerted  action by  recipients  of Plan  Securities  in
            connection  with the sale of such  securities,  concerted  action by
            distributors  on behalf of one or more such recipients in connection
            with such sales, or both;

                  (ii)  informational  documents  concerning the offering of the
            securities  prepared  or  used  to  assist  in the  resale  of  such
            securities other than this Disclosure  Statement and any supplements
            hereto and  documents  filed with the SEC by the issuer  pursuant to
            the 1934 Act; or


                                      13

<PAGE>



                  (iii)   special   compensation   to  brokers  and  dealers  in
            connection  with the sale of such  securities  designed as a special
            incentive to resell such securities,  other than  compensation  that
            would be paid pursuant to arm's length negotiations between a seller
            and a broker or dealer,  each acting  unilaterally,  and not greater
            than the compensation that would be paid for a routine similar-sized
            sale of a similar issue.

            c.  Syndicators.  "Syndicators"  are  persons  who offer to buy Plan
      Securities  from  the  holders  with  a view  to  distribution,  under  an
      agreement made in connection with the Plan, with  consummation of the Plan
      or with the offer or sale of securities under the Plan.

            d. Dealers.  "Dealers" are persons who engage either for all or part
      of their time, directly or indirectly,  as agent, broker, or principal, in
      the business of offering, buying, selling, or otherwise dealing or trading
      in securities.  Section 4(3) of the 1933 Act exempts  transactions  in the
      Plan  Securities  by  dealers  taking  place  more than 40 days  after the
      Effective  Date.  Within  the  40-day  period  after the  Effective  Date,
      transactions by dealers who are  stockbrokers are exempt from the 1933 Act
      pursuant to Section 1145 (a) (4) of the Code, as long as the  stockbrokers
      deliver a copy of this  Disclosure  Statement  (and  periodic  supplements
      hereto, if any, as ordered by the Court) at or before the time of delivery
      of Plan  Securities  to their  customers.  This  requirement  specifically
      applies to trading and other aftermarket  transactions in such securities.
      In this  regard,  however,  in the 1986  SEC  No-Action  Letter  (Manville
      Corp.), the staff of the SEC took the position that it would not recommend
      action  if  stockbrokers  did not  comply  with the  Disclosure  Statement
      delivery requirements of Section 1145 (a) (4) as long as the issuer of the
      securities  was a reporting  person under the 1934 Act and was current and
      timely in its reporting obligations.

Shares Issued Subsequent to Confirmation Date

      As part of the Plan, the Company issued 5,000,000 shares to Troika Capital
for  $25,000.  Subsequent  to the  Confirmation  Date,  the  Company  issued its
securities in non-registered  transactions pursuant to the exemption provided by
Section 4(2) of the Securities  Act. The Company did not pay a commission or any
finders fees in connection with such transactions. The securities issued in such
transactions were as follows:


                      Number of
Issued To              Shares     Date             Consideration
-------------------------------------------------------------------------------
Harold Spector          16,000   5/28/98  Consulting services valued at $80
Workout Specialists,   200,000   6/29/98  Consulting services valued at $1,000
 Inc.
William M. Hynes, II    80,078   9/30/98  These shares were issued to Mr.
                                          Hynes  as  payment  in full for
                                          $80,077.57  in IRS tax  credits
                                          transferred  to the  Company by
                                          Mr. Hynes.
Total:                 296,078



                                      14

<PAGE>

Holders

      As of November  30,  1998,  there were  8,853,208  shares of common  stock
outstanding and approximately 152 stockholders of record of common stock.

Dividends

      The  Company  has not  paid  any  cash  dividends  to date  and  does  not
anticipate or contemplate paying dividends in the foreseeable  future. It is the
present  intention  of  management  to  utilize  all  available  funds  for  the
development of the Company's business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

        The Company has had no  operations  during the last three years.  During
this period,  the Company has been involved in a Chapter 11 Proceeding under the
Unites States Bankruptcy Code. In May 1997, the Company's Plan or Reorganization
was confirmed by the U.S.  Bankruptcy  Court.  The Company intends to attempt to
commence  operations  in an active  business  by  acquiring  or merging  with an
operating  company.  No potential  merger target has been  identified as of this
date.

        The Plan of Operation  of the Company is further  described in Item 1 of
this Form 10-KSB.

Liquidity and Capital Resources

        Presently,  the Company's  assets  consist solely of a minimal amount of
cash. As of December 31, 1996, the Company had total assets of $35,290, of which
$35,167 was attributed to accounts receivable and $123 to cash.  Therefore,  the
Company had minimal usable cash as of December 31, 1996. Currently,  the Company
is dependent  upon loans and advances from its management and affiliates to fund
its  expenses  pending  the  completion  of  an  merger  or  acquisition.  As of
December31,  1996,  the Company had total  liabilities  of  $1,838,702  of which
$380,697 were tax liabilities.


                                      15

<PAGE>



        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.

        It is likely  that the  Company  will be  required  to raise  additional
capital in order to attract and 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.

        The  auditors'  report on the  Company's  December  31,  1996  financial
statements  contains a going  concern  qualification,  which  provides  that the
Company's  ability to continue as a going  concern is dependent  upon it raising
additional  capital.  The Company will continue to be an inactive company unless
and until it raises additional capital and acquires an operating company.  There
can be no assurance that either will occur.

Results of Operations

        The  Company  has  not  commenced  any  active   operations   since  its
Confirmation  Date and generated no revenue from  continuing  operations for the
year ended  December 31, 1996 or the year ended  December 31, 1995.  The Company
had total  expenses of $57,965 for the year ended December 31, 1996 all of which
was related to Bankruptcy  administration and legal expenses. For the year ended
December 31, 1995, the Company had no revenue related to continuing  operations,
and  expenses  related to  continuing  operations  of $54,122,  all of which was
attributed to Bankruptcy  administration and legal fees. The Company anticipates
that it will not generate any revenues until, it acquires or merges with another
company.

Plan of Operation

     The  Company's  current plan of operation is to acquire  another  operating
company. (See

"Item 1 - Description of Business - Current Business Plan.")

        It is likely that any acquisition will be a "reverse merger" acquisition
whereby the Company acquires a larger company by issuing shares of the Company's
common stock to the  shareholders  of the larger  company.  Although the Company
would be the surviving or parent  company from a corporate law  standpoint,  the
shareholders of the larger company would be the controlling  shareholders of the
Company  and the  larger  company  would be treated  as the  survivor  or parent
company from an  accounting  point of view.  It can be expected that any company
which  may  desire  to be  acquired  by the  Company  will  do so as  method  of
potentially  becoming a public company more quickly and less expensively than if
such company  undertook its own public offering.  Even if the Company is able to
acquire  another  company,  there can be no assurance that the Company will ever
operate at a profit.


                                      16

<PAGE>



Inflation

      The Company does not believe that  inflation  will  negatively  impact its
business plans.

Impact of Year 2000 Issue

      An issue exists for all companies  that rely on computers as the year 2000
approaches.  The "Year 2000"  problem is the result of the past  practice in the
computer  industry  of  using  two  digits  rather  than  four to  identify  the
applicable  year. This practice will result in incorrect  results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999.  Currently,  the Company has no active  operations and will not
have active operations until and unless it acquires another company.  As part of
its consideration of the merits of acquiring  another company,  the Company will
consider  the  effects of the ear 2000  problem on such  other  company  and the
actions  taken by such other  company be ready for Year 2000.  In assessing  the
level of readiness any potential  acquisition target, the Company considered the
following to be the most important  factors:  (i) the level of compliance of the
such company's  central  computer  systems;  (ii) the level of compliance of the
software  used in such  company's  ongoing  operations;  and  (iii) the level of
readiness of such company's largest vendors.

      There can be no assurances that either any company acquired by the Company
or any  customers  and  suppliers of such  acquired  company,  will be Year 2000
compliant..  In the event that the any company or acquired by the Company or any
of such  company's  customers or  suppliers  do not install Year 2000  compliant
systems,  following such  acquisition the Company may need  additional  clerical
staff to perform  certain  tasks,  such as order entry and cash posting,  and to
provide the information  currently provided to customers  electronically.  There
can be no assurance that the Company will not have to bear additional  costs and
expenses in the future related to the Year 2000 problem.

Forward-looking Statements

      The  foregoing  discussion  in  "Management's  Discussion  and Analysis of
Financial  Condition  and  Results  of  Operations"   contains   forward-looking
statements,  within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act, which reflect  Management's  current
views with  respect to future  events and  financial  performance.  Such forward
looking  statements  may be deemed to include,  among other  things,  statements
relating to the Company's plan of operation.  These  forward-looking  statements
are subject to certain risks and uncertainties,  including,  but not limited to,
future  financial  performance  and  future  events,   competitive  pricing  for
services,  costs of obtaining  capital as well as  national,  regional and local
economic conditions. Actual results could differ materially from those addressed
in the forward looking statements.  Due to such uncertainties and risks, readers
are cautioned  not to place undue  reliance on such  forward-looking  statement,
which speak only as of the date whereof.


                                      17

<PAGE>



ITEM 7.  FINANCIAL STATEMENTS


                          PACIFIC SYNDICATION, INC.
                        (A DEVELOPMENT STAGE COMPANY)


                                   CONTENTS


                                                                      PAGE



REPORT OF INDEPENDENT AUDITORS                                         19


BALANCE SHEETS                                                         20


STATEMENTS OF OPERATIONS                                               21


STATEMENTS OF STOCKHOLDERS' DEFICIT                                    22


STATEMENTS OF CASH FLOWS                                               23


NOTES TO FINANCIAL STATEMENTS                                       24-25







                                      18

<PAGE>



                         INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Pacific Syndication, Inc.

      We have audited the  accompanying  balance sheets of Pacific  Syndication,
Inc. (a Delaware  corporation in the Development  Stage) as of December 31, 1996
and 1995, and the related statements of operations,  stockholders'  deficit, and
cash  flows for the  years  then  ended and the  period  from  inception  of the
development stage (December 21, 1995) through December 31, 1996. These financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

      We conducted  our audit in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pacific Syndication, Inc. (a
development  stage company) as of December 31, 1996 and 1995, and the results of
its  operations  and its cash flows for the years then ended and the period from
inception of the  development  stage  (December 21, 1995)  through  December 31,
1996, in conformity with generally accepted accounting principles.

      The accompanying financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the  Company  is a  development  stage  company  with no
operating  capital which raises  substantial doubt about its ability to continue
as a going  concern.  Management's  plans in  regard to these  matters  are also
described in Note 1. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.



                              ROSE, SNYDER & JACOBS
                              A Corporation of Certified Public Accountants

Encino, California
March 11, 1998



                                      19

<PAGE>






                          PACIFIC SYNDICATION, INC.
                        (A DEVELOPMENT STAGE COMPANY)
                                BALANCE SHEETS
                          DECEMBER 31, 1996 AND 1995

                                    ASSETS


<TABLE>
<CAPTION>
                                                              1996           1995    
                                                        ------------   ------------
<S>                                                    <C>             <C>

CURRENT AS SETS
   Cash                                                 $        123   $        -
   Accounts receivable, net of allowance
    for doubtful accounts of $0 at
    December 31, 1996 and 1995                                35,167   $     95,841
                                                        ------------   ------------


          TOTAL ASSETS                                  $     35,290   $     95,841
                                                        ============   ============


                          LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES SUBJECT TO COMPROMISE
   Bank overdraft                                       $          -   $      2,586
   Accounts payable trade
    and accrued expenses, note 6                           1,458,005      1,458,005
   Tax liabilities, note 6                                   380,697        380,697
                                                        ------------   ------------

     TOTAL CURRENT LIABILITIES                             1,838,702      1,841,288
                                                        ------------   ------------

COMMITMENTS & CONTINGENCIES, note 5

STOCKHOLDERS' DEFICIT
   Common stock par value $.001,
    30,000,000 shares authorized,
    2,099,070 shares issued and outstandiNG                  415,500        415,500
   Additional paid in capital                                471,500        471,500
   Accumulated deficit prior to the
    Development Stage.                                    (2,632,447)    (2,632,447)
  Accumulated deficit during the
   Development Stage.                                        (57,965)           -          
                                                        ------------   -------------

TOTAL STOCKHOLDERS' DEFICIT                               (1,803,412)    (1,745,447)
                                                        ------------   -------------

          TOTAL LIABILITIES AND
           STOCKHOLDERS' DEFICIT                        $     35,290   $     95,841
                                                        ============   ============

</TABLE>


        See independent  auditors' report and notes to financial statements.




                                          20

<PAGE>




                                PACIFIC SYNDICATION, INC.
                             (A DEVELOPMENT STAGE COMPANY)
                                STATEMENTS OF OPERATIONS
                     FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>
                                                                                    From Inception
                                                                                of the Development Stage
                                                                                 December 21, 1995,
                                                                                       through
                                                1996               1995           December 31, 1996
                                          ----------------   ----------------   ---------------------
<S>                                          <C>                <C>                <C>

SALES                                        $     -             $    -             $    -                           

GROSS MARGIN                                       -                  -                  -

OPERATING EXPENSES                                 -                  -                  -
                                          -----------------  -----------------  ---------------------

EARNINGS BEFORE REORGANIZATION ITEMS               -                  -                  -

REORGANIZATION ITEMS
   Bankruptcy administration and
    legal fees                                     57,965             54,122               57,965
                                          -----------------  -----------------  ----------------------

LOSS BEFORE DISCONTINUED OPERATIONS               (57,965)           (54,122)             (57,965)

DISCONTINUED OPERATIONS
   Loss from operations of
    discontinued business                                -          (725,322)                  -
   Loss on disposal of business,
    including operating loss during
    phase-out period                                     -        (1,097,003)                  -
                                          ------------------  ----------------- ----------------------

     NET LOSS FROM DISCONTINUED
      OPERATIONS                                         -        (1,822,325)                       -
                                          ------------------  ----------------- ----------------------
       NET LOSS                              $     (57,965)    $  (1,876,447)       $        (57,965)
                                          =================-  ================= ======================

LOSS PER COMMON SHARE
   Continuing operations                  $         (0.03)             (0.03)
   Discontinued operations                $          0.00      $       (0.90)
                                          ----------------     --------------
LOSS PER COMMON SHARE                     $         (0.03)     $       (0.93)
                                          ================     ==============

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES                            $      2,099,070     $    2,019,858
                                          =================    ===============

</TABLE>


                              See independent auditors' report and
                                 notes to financial statements.

                                               21

<PAGE>



                                   PACIFIC SYNDICATION, INC.
                                 (A DEVELOPMENT STAGE COMPANY)
                              STATEMENTS OF STOCKHOLDERS' DEFICIT
                         FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>
                                                        Accumulated        Accumulated
                                       Additional     Deficit Prior to    Deficit After
                         Common          Paid-In        December 21,        December
                          Stock          Capital            1995            21, 1995           TOTAL
                      -------------   -------------   ----------------   ---------------   --------------
<S>                     <C>             <C>             <C>                <C>               <C>

Balance at
 January 1, 1995        $   415,500     $   471,500      $   (756,000)     $      -        $    131,000

Net loss
 during Pe                    -               -            (1,876,447)            -          (1,876,447)
                        -----------     -----------      -------------     -------------     ------------

Balance at
 December 21, 1995          415,500         471,500        (2,632,447)            -          (1,745,447)

Activity during
 Period                       -               -                  -                 -                -
                        -----------     -----------      -------------     -------------     ------------

Balance at
 December 31, 1995          415,500         471,500        (2,632,447)             -         (1,745,447)

Net Loss
 during Year                  -               -                  -            (57,965)          (57,965)
                        -----------     -----------      -------------     -------------     ------------

Balance at
 December 31, 1996      $   415,500     $   471,500      $ (2,632,447)     $  (57,965)      $(1,803,412)
                        ===========     ===========      =============     =============     ============

</TABLE>



    See independent   auditors'  report  and  notes  to financial statements.



                                               22

<PAGE>



                                   PACIFIC SYNDICATION, INC.
                                 (A DEVELOPMENT STAGE COMPANY)
                                    STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>
                                                                                       From Inception
                                                                                    of the Development
                                                                                    Stage, December 21,
                                                                                   1995, through December
                                                                                         31, 1996
                                                     1996              1995
                                               ----------------   ---------------   -------------------
<S>                                            <C>               <C>               <C>

CASH FLOWS FROM OPERATION ACTIVITIES:
  Net loss                                     $     (57,965)     $  (1,876,447)    $     (57,965)
  Adjustments to reconcile net loss to
  Net cash provided by operating activities
      Depreciation and amortization                      -              320,456               -
      Loss on disposal of business                       -            1,097,003               -
      Change in net assets - (increase)
         decrease:
      Accounts receivable                             60,674            553,626            60,674
      Inventory                                          -             (112,525)              -
      Prepaid expenses                                   -               55,700               -
      Deposits                                           -              (35,224)              -
      Other assets                                       -               (4,721)              -
      Accounts payable & accrued expenses                -              447,720               -
                                               ----------------     -------------      ---------------

   NET CASH PROVIDED BY OPERATING
    ACTIVITIES                                         2,709            445,588             2,709
                                               ----------------     -------------      ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Bank overdraft                                      (2,586)         (100,614)            (2,586)
  Payments of line of credit, net                        -            (197,467)               -
  Payments of long term debt                             -            (208,507)               -
                                               ----------------     -------------      ---------------

    NET CASH USED BY FINANCING ACTIVITIES             (2,586)         (506,588)            (2,586)
                                               ----------------     -------------      ---------------

      NET INCREASE (DECREASE) IN CASH                     123          (61,000)              123

CASH AT BEGINNING OF YEAR                                -              61,000                -
                                               ----------------    --------------      ---------------
CASH AT END OF YEAR                            $          123      $       -           $        123
                                               ================    ==============      ===============

Supplementary disclosure:
 Interest paid                                 $         -         $       -           $         -
                                               ================    ==============      ===============
 Income taxes paid                             $         -         $       -           $         -
                                               ================    ==============      ===============

</TABLE>



    See independent auditors' report and notes to financial statements.

                                               23

                                          

<PAGE>



1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES

      Organization and Going Concern.
      Pacific Syndication, Inc. 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
      June 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).

      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.

      The Company's  financial  statements are prepared using generally accepted
      accounting principles applicable to a going concern which contemplates the
      realization of assets and  liquidation of liabilities in the normal course
      of business.  The Company has not established  revenue sufficient to cover
      its  operating  costs  and to allow  it to  continue  as a going  concern.
      Management intends to seek a merger with a existing operating company,  in
      the interim it has  committed to meeting the Company's  minimal  operating
      expenses.

      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.


                      See Independent Auditor's Report

                                     24

<PAGE>



2.    INCOME TAXES

      The Company's loss carryforwards available to offset future taxable income
      are estimated at $0 due to limitations in accordance  with rules in change
      of ownership.

3.    STOCK OPTIONS

      In 1994,  the Company  issued stock options to an individual in connection
      with a covenant not to compete.  At December 31, 1996,  there were options
      to purchase 70,550 shares of the Company at $.01 per share.  These options
      expire on May 31, 1998.

4.    COMMON STOCK

      During 1995,  950,550  shares of common stock were issued in settlement of
      various  matters.   Issuance  of  shares  did  not  impact  the  financial
      statements  of the Company,  as the matters  could not be valued,  and the
      value of the shares was not material.

      On May 28,  1997,  the existing  shares of the Company were reverse  split
      1-for-6 as part of the  reorganization  plan  approved  by the  Bankruptcy
      Court. The reverse split was considered  retroactively  for the disclosure
      of  outstanding  shares on the balance sheet,  and for the  calculation of
      weighted  average number of common shares which is used for  determination
      of loss per common share.

5.    COMMITMENTS & CONTINGENCIES

      In 1995, 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 is seeking past due rent and other  damages.  As of
      December  31,  1996,   past  due  rent  claimed  by  the   defendant   was
      approximately  $150,000. The defendant also seeks damages in the amount of
      $75,000 pursuant to a stock purchase  agreement.  The Company is unable to
      predict the outcome of this  litigation.  The  Company  has  assigned  its
      position in this matter to another  entity.  The Company  does not believe
      this litigation will have any material impact on its future  operations or
      financial position.

6.    SUBSEQUENT EVENTS

      In May 1997, a reorganization  plan was approved by the Bankruptcy  Court,
      and  the  remaining  creditors  composed  of all  liabilities  subject  to
      compromise,  excluding  tax claims,  were issued  1,458,005  shares of the
      Company,  which was one share for every  dollar of  indebtedness.  IRS tax
      liabilities  are  payable  in cash by  quarterly  installments  of $17,612
      starting in 1997.

      In  November  1997,  the  Company  changed  its name to  Pacific  Alliance
Corporation.

                      See independent auditors' report.
                                     25



<PAGE>



ITEM 8.     CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE

       Until the completion of the audited financial statements for inclusion in
this filing,  the Company  last audit was for the year ended  December 31, 1993.
During the period from the time the petition for bankruptcy protection was filed
and the date of the  Confirmation  of the Plan,  no firm acted as the  Company's
certifying  accountant.  On August 31,  1997,  the new Board of Directors of the
Company appointed Rose, Snyder & Jacobs as the Company's certifying  accountant.
To the best  knowledge of the new Board,  there was no dispute as to  accounting
principles or any other matter between the Company and its previous accountants.

                                  PART III

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
            PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
            ACT.

      A.  Identification  of  Directors  and  Executive  Officers.  The  current
directors  and  officers  of the  Company,  who will serve until the next annual
meeting of shareholders  or until their  successors are elected or appointed and
qualified, are set forth below:

      Name                          Age           Position

Mark Scharmann                      40            President/Director
Dan Price                           44            Vice President/Director
David Knudson                       39            Secretary/Treasurer/Director

     Mark  Scharmann.  Mr.  Scharmann  has been a private  investor and business
consultant since 1981. Mr. Scharmann became involved in the consulting  business
following his compilation and editing in 1980 of a publication  called Digest of
Stocks  Listed on the  Intermountain  Stock  Exchange.  In 1981 he compiled  and
edited an 800 page publication  called the OTC Penny Stock Digest. Mr. Scharmann
has  rendered  consulting  services  to public and private  companies  regarding
reverse  acquisition  transactions  and other  matters.  Mr.  Scharmann was vice
president of OTC Communications, Inc. from March 1984 to January 1987. From 1982
to 1996, he was the president of Royal Oak Resources Corporation. In 1996, Royal
Oak Resources completed and acquisition and in connection  therewith changed its
name to Hitcom  Corporation.  Mr. Scharmann was the President of Norvex,  Inc.,a
blank check company which completed an acquisition and in connection  therewith,
changed its name to Capital Title.  Mr.  Scharmann is a promoter of Nightingale,
Inc.,  a  publicly-held  corporation  blank check  company.  He has also been an
officer and director of several other blind pool companies.

     Dan O. Price. Mr. Price has worked for five (5) years as  Vice-President of
Corporate  Development for Troika Capital  Investment.  Prior to that, Mr. Price
worked for seven (7) years

                                     26

<PAGE>



as the National  Sales  Director for a business  providing  electronic  bankcard
processing  and  other  merchant  services.  For four (4)  years he worked as an
Organizational Manager involved in direct sales of educational material, with 50
sales people in the western  states under his  management.  Mr Price has been in
sales and  marketing  for twenty (20) years and sales  management  and  business
management for fifteen (15) years.  Mr. Price received his B.A. from Weber State
College  in 1983.  He has  served as an officer  and  director  on two (2) small
publicly traded companies.

     David Knudson.  Mr. Knudson has worked as a business consultant since 1985.
He earned his B.S. Degree in Finance from Weber State College in 1984 and a B.S.
Degree in  Information  Systems and  Technologies  at Weber State  University in
1996.  He has been an  officer  and  director  of  several  small  publicly-held
"blind-pool"  companies.  Mr. Knudson was also employed as an adjunct  professor
and from 1992 to 1996 was employed as a computer  information systems consultant
at  Weber  State  University.   Mr.  Knudson  is  an  officer  and  director  of
Nightingale, Inc., an inactive publicly-held corporation.

     B. Significant Employees. None

     C.  Family  Relationships.  There  are no  family  relationships  among the
Company's officers and directors.

     D. Other  Involvement  in  Certain  Legal  Proceedings.  There have been no
events under any  bankruptcy  act, no criminal  proceedings  and no judgments or
injunctions  material to the  evaluation  of the ability  and  integrity  of any
director or executive officer during the last five years.

     E.  Compliance With Section 16(a).  The Company is not a reporting  company
under either  Section 12(b) or Section 12(g) of the  Securities  Exchange Act of
1934 and accordingly, is not subject to Section 16(a) of such Act.

ITEM 10.    EXECUTIVE COMPENSATION

     No  officer  or  director  of the  Company  was paid a salary  and bonus of
$100,000 or more in 1996, 1995, or 1994.  During 1995, and 1996, the Company was
in a Bankruptcy Reorganization. In May, 1997, the current officers and directors
were appointed as the Company's officers and directors. The current officers and
directors were not compensated by the Company in 1995, 1996, 1997 or 1998.

     The current  officers and directors  have not been issued  options or other
rights to  purchase  shares of the  Company's  common  stock.  Accordingly,  the
Summary  Compensation  Table, the Option Grants Table and the Option Value Table
normally  included  in Item 10 of Form  10-KSB  have  not been  included  herein
inasmuch as no compensation was paid.


                                     27

<PAGE>



Compensation of Directors

      The Company  does not  currently  compensate  its  directors  for director
services to the Company.

Employment Agreements

      The Company is currently not a party to any employment agreement. The Plan
of  Reorganization  provides that the Company's  officers will be compensated at
the rate of $75.00 per hour for  services  rendered to the  Company.  Until such
time as the  Company's  shareholder's  equity  reaches  $350,000,  the Company's
officers shall be issued shares of its common stock for services rendered.  Such
shares shall be valued at $.10 per share. At such time as the Company effects an
acquisition or merger,  the Board of Directors,  as then constituted,  shall set
the compensation of officers, directors and employees.

      The  Company's  Plan  of  Reorganization   also  provides  that  upon  the
completion of an acquisition or merger,  the Company's  management group will be
issued  shares of the  Company's  common  stock which  amount to 1% of the total
shares issued in connection with such acquisition or merger.

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

      The  following  table  sets  forth  information  regarding  shares  of the
Company's common stock  beneficially  owned as of December 22, 1998 by: (i) each
officer and  director of the Company;  (including  and (ii) each person known by
the Company to beneficially  own 5 percent or more of the outstanding  shares of
the Company's common stock.



                                     28

<PAGE>




Name                                              Amount and
and Address                                       Nature of        Percent of
of Beneficial                                     Beneficial        Class(1)
Owner                                             Ownership         Ownership
--------------------------------------------- ------------------ ---------------
Mark Scharmann(1)                                 5,134,037          57.99%
1661 Lakeview Circle
Ogden, UT 84403
Dan Price(1)                                          1,000            .01%
1661 Lakeview Circle
Ogden, UT 84403
David Knudson(1)                                      3,667            .04%
1661 Lakeview Circle
Ogden, UT 84403
William M. Hynes, II                              1,119,115          12.64%
11112 Ventura Boulevard
Studio City, CA   91602
All Officers and Directors                        5,138,699          58.04%
as a Group (3 Persons)
--------------------------------------------- ------------------ ---------------

      (1)These individuals are the officers and directors of the Company.

      Unless  otherwise  indicated in the footnotes  below, the Company has been
advised that each person  above has sole voting power over the shares  indicated
above.  All of the  individuals  listed above are officers and  directors of the
Company.

Security Ownership of Management

      See Item 4(a) above.

Changes in Control

      No changes in control of the Company are currently  contemplated until and
unless the Company acquires or mergers with an operating company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

      As part of its Plan of Reorganization, the Company issued 5,000,000 shares
of its common stock to Troika Capital in  consideration  of $25,000 and Troika's
agreement to provide an additional  $75,000 in equity or debt funding to pay the
Company's tax obligations.

                                     29

<PAGE>



Parents of Company

      The only parents of the Company,  as defined in Rule 12b-2 of the Exchange
Act, are the officers and directors of the Company.  For  information  regarding
the share holdings of the Company's officers and directors, see Item 11.


ITEM 13.    EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
            ON FORM 8-K

       A.   The  Exhibits  which  are  filed  with  this  Report  or  which  are
            incorporated herein by reference are set forth in the Exhibits Index
            which appears on page 36.

       B. The Company filed no Form 8-K during the fiscal year ended December31,
1996.

Exhibits to Form 10-KSB
                                                                 Sequentially
       Exhibit                                                     Numbered
       Number     Exhibit                                           Page     


        3.1       Amended and Restated Articles of Incorporation     (1)

        3.2       Bylaws                                             (1)

       21.1       Subsidiaries of Registrant                         None

       (1)        Previously Filed






                                     30

<PAGE>


                                 SIGNATURES

       In accordance with Section 13 or 15(d) of the Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.


                                       Pacific Alliance Corporation



Date: January 31, 1999                 By /s/ Mark A. Scharmann           
                                     -----------------------------------------
                                         Mark A. Scharmann
                                         President/Principal Executive Officer


Date: January 31, 1999                 By/s/ David Knudson                
                                     ----------------------------------------
                                         David Knudson
                                         Secretary/Treasurer
                                         Principal Financial Officer


      In  accordance  with the  Securities  Exchange  Act,  this report has been
signed  below by the  following  persons  on  behalf of the  Company  and in the
capacities and on the dates indicated.


Signature                        Capacity                 Date

/s/ Mark A. Scharmann            President/Director       January 31, 1999
------------------------------
Mark A. Scharmann


/s/ Dan Price                    Vice President/Director  January 31, 1999
------------------------------
Dan Price


/s/ David Knudson                Secretary/Treasurer      January 31, 1999
------------------------------   Director
 David Knudson                   











                                    -31-