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                       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, 1998

                                         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, 1998 were
-0-.

      As of July 20, 1999,  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
July 20, 1999, 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............................................................11
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.....29
Item 12. Certain Relationships and Related Party Transactions...............30
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K..31
         Index to Exhibits..................................................31


                                    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, 1997.  Although the Company's Chapter 11 Plan of Reorganization
has been confirmed by the  Bankruptcy  Court,  the Company  continues to operate
under the jurisdiction of the Court.  The Company's  current business plan calls
for it to locate and acquire an operating company.

History

      The Company was organized on April 22, 1986 under the laws of the State of
Utah under the name of Kaiser  Research,  Inc. On December 2, 1994,  the Company
changed its domicile  from the State of Utah to the State of Delaware  through a
reincorporation  merger.  In order to effect  the  reincorporation  merger,  the
Company  formed a wholly-owned  subsidiary  under Delaware law under the name of
PACSYND,  Inc.  After the  change  of the  Company's  domicile,  it  acquired  a
privately  held  corporation  ("Private  PSI") in a merger  transaction,  and in
connection  therewith,  the Company's  name was changed to Pacific  Syndication,
Inc.

      After the  acquisition  of Private PSI in December  1994, and prior to its
filing of a Petition  under  Chapter 11, the Company was engaged in the business
of  transmitting  television  programming to television  stations and others via
satellite or land deliveries on behalf of production companies,  syndicators and
other distributors of television  programming.  Although the Private PSI was not
the survivor of the Merger, and did not exist after the Merger,  pursuant to the
accounting requirements of the Securities and Exchange Commission the Merger was
treated as a "reverse merger" and, solely for accounting  purposes,  Private PSI
was deemed to be the survivor.

      Private PSI was formed under the laws of the State of Delaware in November
1991. Private PSI was formed to engage in the business of providing a variety of
television industry related services to its clients. Such services included, but
were not limited to, video tape duplication,  standards  conversion and delivery
of television programming by way of conventional carriers (such as UPS, Airborne
and Federal Express) and by satellite or fiber optic transmission.

      Private  PSI  provided  its  clients  (primarily   television   producers,
programmers  and  syndicators)  with  several  related but  different  services,
including distribution of syndicated programming to television stations, program
mastering  and standards  conversion,  infomercial  customization  and delivery,
master tape and film storage, library distribution services and video

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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.

            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.

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            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.

      2.    The Company completed its audited financial statements for the years
            ended December 31, 1995, 1996, 1997 and 1998.

      3.    Tax  liabilities to the Internal  Revenue  Service of  approximately
            $269,093 had been reduced to $129,257 as of December 31, 1998.


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      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 which was effective through March 31, 1999.

      8.    The  Company  prepared  and filed a Form  10-KSB  for the year ended
            December 31, 1996, the year ended 1997 and with this Form 10-KSB for
            the year ended December 31, 1998.

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 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.

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      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   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

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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.

      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

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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.

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

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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  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.

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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 December 31, 1998, past due rent
claimed by the defendant was  approximately  $200,000.  The defendant also seeks
damages in the amount of $75,000  pursuant to a stock  purchase  agreement.  The
Company has  assigned  its  position  in this  matter to another  entity who has
assumed the Company's liabilities thereunder.  The trial court ruled in favor of
Mr.  Palmer and  against  the Company  and its  assignee.  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, 1998.

                                    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.


                                      11

<PAGE>



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.

      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",

                                      12

<PAGE>



"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

                  (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.


                                      13

<PAGE>



            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:

<TABLE>
<CAPTION>
                          Number of
       Issued To           Shares        Date              Consideration
     ------------        -----------    ------            ---------------
<S>                        <C>         <C>       <C>

Harold Spector             16,000      5/28/98   Consulting services valued at $80
Workout Specialists, Inc.  200,000     6/29/98   Consulting services valued at $1,000
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

</TABLE>

                                      14

<PAGE>



Holders

      As of April  20,  1999,  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

        As of December 31, 1998, the Company had total assets of $0.  Therefore,
the Company had no usable cash as of  December  31, 1998 and 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 December 31, 1998, the
Company  had  total   liabilities   of  $419,908  of  which  $266,092  were  tax
liabilities.

        The Company intends 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,  1998  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.

                                      15

<PAGE>




Results of Operations

        The  Company  has  not  commenced  any  active   operations   since  its
Confirmation  Date and generated no revenue for the year ended December 31, 1998
or the year ended  December 31, 1997. The Company had total expenses of $134,591
for the year ended  December 31, 1998. For the year ended December 31, 1997, the
Company had no revenue and expenses of $46,068,  of which $26,336 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.

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;

                                      16

<PAGE>



(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 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

                         Index to Financial Statements

Pacific Alliance Corporation  Financial Statements                        Page

      Report of Independent Accountants ....................................19

      Balance Sheet.........................................................20
        December 31, 1998

      Statements of Operations..............................................21
        Years ended December 31, 1998 and 1997

      Statements of Stockholders' Deficit...................................22
        Years ended December 31, 1998 and December 31, 1997

      Statements of Cash Flows..............................................23
         Years ended December 31, 1998 and 1997

      Notes to Financial Statements.........................................24



                                      18

<PAGE>



                         INDEPENDENT AUDITORS' REPORT

To the Stockholders of
Pacific Alliance Corporation

      We have  audited  the  accompanying  balance  sheet  of  Pacific  Alliance
Corporation (a Delaware corporation in the Development Stage) as of December 31,
1998, and the related statements of operations,  stockholders' deficit, and cash
flows  for the  years  ended  December  31,  1998 and 1997 and the  period  from
inception of the  development  stage  (December 21, 1995)  through  December 31,
1998. 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 Alliance Corporation
(a  Development  Stage  Company) as of December 31, 1998, and the results of its
operations and its cash flows for the years ended December 31, 1998 and 1997 and
the period from inception of the  development  stage (December 21, 1995) through
December 31, 1998, 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  does not  generate  revenue  and has a net
capital deficiency that raise 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
May 7, 1999




                                      19

<PAGE>



                             PACIFIC ALLIANCE CORPORATION
                             (A DEVELOPMENT STAGE COMPANY)
                                     BALANCE SHEET
                                   DECEMBER 31, 1998

                                        ASSETS

                                                                     1998
CURRENT ASSETS
   Cash                                                        $          -
                                                               ----------------

        TOTAL ASSETS                                           $          -
                                                               ================

                         LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
   Bank overdraft                                              $       12,529
   Accrued expenses                                                    20,941
   Advance from officer, note 7                                        55,763
   Management compensation liability, note 5                           34,583
   Current portion of tax liabilities, note 2                          35,816
   Notes payable, note 4                                               30,000
                                                               ---------------

      TOTAL CURRENT LIABILITIES                                       189,632
                                                               ---------------
LONG TERM LIABILITIES
   Tax liabilities, note 2                                            230,276
                                                                --------------

      TOTAL LIABILITIES                                               419,908
                                                               ---------------
COMMITMENTS & CONTINGENCIES, note 6

STOCKHOLDERS' DEFICIT
   Common stock, par value $.001,
    30,000,000 shares authorized,
    8,853,208 shares issued and outstanding, note 5                   422,254
   Additional paid in capital                                       2,028,909
   Accumulated deficit prior to the development stage              (2,632,447)
   Accumulated deficit during the development stage                  (238,624)
                                                                 ------------

      TOTAL STOCKHOLDERS' DEFICIT                                    (419,908)

        TOTAL LIABILITIES AND
           STOCKHOLDERS' DEFICIT                               $           -
                                                               ===============


          See independent auditors' report and notes to financial statements.



                                          20

<PAGE>



                             PACIFIC ALLIANCE CORPORATION
                             (A DEVELOPMENT STAGE COMPANY)
                               STATEMENTS OF OPERATIONS
                    FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                              From Inception
                                                              of the Development
                                                              Stage, December
                                                              21, 1995, Through
                                        1998            1997  December 31, 1998
                             --------------------------------------------------

SALES                           $        -0-     $      -0-     $         -0-

GROSS MARGIN                             -0-            -0-               -0-

OPERATING EXPENSES                       -0-            -0-               -0-

OTHER INCOME (EXPENSES)
   Professional fees                 (43,305)           -0-           (43,305)
   Management compensation, note 5   (34,583)           -0-           (34,583)
   Other expenses                     (3,381)           -0-            (3,381)
   Taxes                             (26,000)           -0-           (26,000)
   Interest expense                  (28,326)       (11,884)          (40,210)
   Gain (loss) on investments          1,004         (7,848)           (6,844)
                             --------------------------------------------------

      LOSS BEFORE
         REORGANIZATION ITEMS       (134,591)       (19,732)         (154,323)

REORGANIZATION ITEMS
   Administration and legal fees         -0-        (26,336)          (84,301)
                             --------------------------------------------------

        NET LOSS                 $  (134,591)    $  (46,068)   $     (238,624)
                             ==================================================


BASIC NET LOSS PER SHARE
   Loss before reorganization
     items                       $     (0.02)    $    (0.00)
   Reorganization items                (0.00)         (0.01)
                              --------------------------------
        NET LOSS                 $     (0.02)    $   ( 0.01)
                              ================================


WEIGHTED AVERAGE NUMBER
    OF SHARES                      8,709,191      3,661,139
                              ================================




          See independent auditors' report and notes to financial statements.


                                          21

<PAGE>



                             PACIFIC ALLIANCE CORPORATION
                             (A DEVELOPMENT STAGE COMPANY)
                          STATEMENTS OF STOCKHOLDERS' DEFICIT
                    FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                              Accumulated        Accumulated
                                   Shares of                  Additional      Deficit prior      Deficit after
                                   Common        Common       Paid-in         to December        December
                                   Stock         Stock        Capital         21, 1995           21, 1995        Total
                                 ---------------------------------------------------------------------------------------------
<S>                                <C>          <C>            <C>            <C>                 <C>            <C>

Balance at
 December 21, 1995                 12,594,422   $ 415,500      $471,500       $(2,632,447)       $      -       $(1,745,447)

Activity from December 21,
 1995 through December 31,
 1996                                   -             -           -                -                (57,965)       (57,965)
                                 ---------------------------------------------------------------------------------------------



Balance at
  December 31, 1996                12,594,422     415,500      471,500        (2,632,447)           (57,965)     (1,803,412)


Reverse split 1-for-6,
  note 5                          (10,495,297)       -            -              -                    -             -

Conversion of trade
  accounts payable, note           1,458,005        1,458    1,456,547           -                    -           1,458,005

Issuance of
  common stock, note 5             5,000,000        5,000     20,000             -                    -              25,000

Net loss                                                                         -                  (46,068)        (46,068)
                                 ---------------------------------------------------------------------------------------------

Balance at
  December 31, 1997                8,557,130      421,958    1,948,047       (2,632,447)           (104,033)       (366,475)

Issuance of common
  stock, note 5                      216,000          216          864            -                   -               1,080

Issuance of common
  stock for IRS claim
  reduction, note 5                   80,078           80       79,998            -                   -              80,078

Net loss                                 -              -          -              -                (134,591)       (134,591)

Balance at
  December 31, 1998                8,853,208    $ 422,254   $2,028,909     $ (2,632,447)         $  (238,624)    $ (419,908)
                                 =============================== ==============================================================

</TABLE>


            See independent auditors' report and notes to financial statements.


                                            22

<PAGE>



                               PACIFIC ALLIANCE CORPORATION
                              (A DEVELOPMENT STAGE COMPANY)
                                 STATEMENTS OF CASH FLOWS
                      FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
                                                                                                From Inception of
                                                                                                the Development
                                                                                                Stage, December
                                                                                                21, 1995, Through
                                                            1998               1997             Dec. 31, 1998
                                                     ------------------ ------------------ ----------------------
<S>                                                   <C>                 <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                           $     (134,591)     $    (46,068)        $    (238,624)
   Adjustment to reconcile net loss to net cash
      provided (used) in operating activities:
       (Gain) loss on investments                             (1,004)            7,848                 6,844
       Change in assets and liabilities
       Decrease in accounts receivable                           -0-            35,167                95,841
       Increase in accrued expenses                           10,411            11,610                22,021
       Increase in management compensation liability          34,583               -0-                34,583
       Decrease in tax liabilities                           (11,187)          (23,340)              (34,527)
                                                     ------------------ ------------------ ----------------------

      NET CASH USED IN OPERATING ACTIVITIES                 (101,788)          (14,783)             (113,862)
                                                     ------------------ ------------------ ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of investments                                       -0-           (30,180)              (30,180)
   Proceeds from sale of investments                           8,816            14,520                23,336
                                                     ------------------ ------------------ ----------------------

      NET CASH PROVIDED  (USED) BY
        INVESTING ACTIVITIES                                   8,816           (15,660)               (6,844)
                                                     ------------------ ------------------ ----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Bank overdraft                                             12,529               -0-                 9,943
   Proceeds from notes payable                                30,000               -0-                30,000
   Advance from officer                                       50,263             5,500                55,763
   Proceeds from issuance of common stock                        -0-            25,000                25,000
                                                     ------------------ ------------------ ----------------------

      NET CASH PROVIDED BY FINANCING ACTIVITIES               92,792            28,000               120,706
                                                     ------------------ ------------------ ----------------------


       NET INCREASE (DECREASE) IN CASH                          (180)               57                   -0-


CASH AT BEGINNING OF PERIOD                                      180               123                   -0-
                                                     ------------------ ------------------ ----------------------

CASH AT END OF PERIOD                                $           -0-        $      180         $         -0-
                                                     ================== ================== ======================


Supplementary disclosures:
 Interest paid in cash                               $        23,549        $   11,884      $         35,433
                                                     ================== ================== ======================

            See independent auditors' report and notes to financial statements.

</TABLE>


                                            23

<PAGE>



                         PACIFIC ALLIANCE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Going Concern

     Pacific  Alliance  Corporation  (the  "Company"),  whose name was  changed
     from Pacific Syndication,  Inc. in 1997, was originally incorporated in
     December 1991 under the laws of the State of  Delaware.  It also became a
     California corporation in 1991. Pacific Syndication,  Inc. was engaged in
     the business of videotape  duplication,  standard  conversion and delivery
     of television programming.  In  1994,  Pacific  Syndication,   Inc. merged
     with Kaiser Research, Inc.

     The Company filed a petition for Chapter 11 under the  Bankruptcy  Code in
     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).

     In 1997, a  reorganization  plan was approved by the Bankruptcy  Court, and
     the remaining creditors of all liabilities subject to compromise, excluding
     tax claims,  were issued  1,458,005 shares of the Company's common stock in
     March  1998,   which   corresponds   to  one  share  for  every  dollar  of
     indebtedness.  Each share of common stock issued was also accompanied by an
     A warrant and a B warrant (see note 5). The IRS portion of tax  liabilities
     is  payable in cash by  quarterly  installments  of  $11,602  (see note 2).
     Repayment of other taxes is still being negotiated.

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business.  As shown in the December 31,
     1998 financial  statements,  the Company did not generate any revenue,  and
     has a net capital deficiency.  These factors among others may indicate that
     the Company will be unable to continue as a going  concern for a reasonable
     period of time.  For the year ended  December 31, 1998,  the Company funded
     its disbursements using loans from an officer and other shareholders.

     The  financial  statements do not include any  adjustments  relating to the
     recoverability  of assets and  classification  of liabilities that might be
     necessary should the Company be unable to continue as a going concern.

     The  Company  is no  longer  operating,  and will  attempt  to locate a new
     business  (operating  company),  and offer itself as a merger vehicle for a
     company that may desire to go public  through a merger  rather than through
     its own public stock offering.

                       See independent auditors' report.

                                      24

<PAGE>



                         PACIFIC ALLIANCE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1998

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
     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.

     Fair Value of Financial Instruments
     The carrying amount of the Company's financial instruments approximate fair
     value.

     Statement of Financial Accounting Standards No. 128
     The Company adopted Statement of Financial  Accounting  Standards  ("SFAS")
     No. 128 for the calculation of earnings per share.  This SFAS was issued in
     February 1997, and supersedes APB Opinion No. 15 previously  applied by the
     Company. SFAS No. 128 dictates the calculation of basic earnings (loss) per
     share and diluted earnings (loss) per share. The Company's diluted loss per
     share is the same as the basic loss per share for the years ended  December
     31, 1998 and 1997.

2.   TAX LIABILITIES

     The Company owes back taxes to the IRS,  California EDD,  California  State
     Board of  Equalization  and other tax  authorities.  The IRS portion of tax
     liabilities,  $129,257,  bears interest at 9%, and is payable  quarterly in
     payments  of  $11,602,  maturing  in January  2002.  During the year ending
     December 31, 1998, the tax  liabilities  were reduced by $80,078 due to the
     transfer  of a personal  tax refund  from a former  officer of the  Company
     (note 5). Other tax claim repayment schedules have not yet been set.

     Scheduled maturities of the IRS liability are as follows:

                     Twelve Months
                        Ending
                     December 31:
                    ---------------
                         1999                 $     35,816
                         2000                       39,198
                         2001                       42,900
                         2002                       11,343
                                             --------------
                                              $    129,257
                                             ==============

     Interest paid during the year ended  December 31, 1998 on the IRS liability
totaled $21,240.

                       See independent auditors' report.

                                      25

<PAGE>



                         PACIFIC ALLIANCE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

3.   INCOME TAXES

     The Company  has loss  carryforwards  available  to offset  future  taxable
     income.  The total loss carryforwards at December 31, 1998 are estimated at
     approximately  $100,000 and expire on December 31, 2013. Loss carryforwards
     are  limited  in  accordance  with the  rules of change  in  ownership.  No
     deferred tax benefit is recognized since future profits are indeterminable.

4.   NOTES PAYABLE

     During the year ended  December  31,  1998,  the Company  contracted  notes
     payable with minority shareholders for a total of $30,000. These notes bear
     interest at 10% and matured between January through May 1999. Stock options
     were issued with  respect to these notes  payable (see note 5). These notes
     payable are being renegotiated.

5.   COMMON STOCK AND WARRANTS

     On May 28,  1997,  a  reorganization  plan was  approved by the  Bankruptcy
     Court.  As a result,  existing  shares of the Company  were  reverse  split
     1-for-6  and  pre-bankruptcy  creditors  were  issued  1,458,005  shares of
     Company's  common  stock.  On November 13, 1997,  an  additional  5,000,000
     shares of common stock were issued (after  reverse  split) to an officer of
     the Company in return for proceeds of $25,000 ($.005 per share).

     In accordance with the reorganization  plan, the  pre-bankruptcy  creditors
     were also issued  1,458,005  class "A"  warrants  and  1,458,005  class "B"
     warrants.  A class "A"  warrant  allows the  purchase  of a share of common
     stock at an  exercise  price of $2.50 per share,  and the  warrant  must be
     exercised before June 8, 2000. A class "B" warrant allows the purchase of a
     share of common  stock at an  exercise  price of $5.00 per  share,  and the
     warrant must be exercised before June 8, 2002.

     In May and June 1998,  the  Company  issued  16,000 and  200,000  shares of
     common  stock,  respectively,   for  professional  services  received  from
     non-related individuals. These shares were valued at $0.005 per share.

     Options to  purchase  30,000  shares of common  stock of the Company at the
     price of $2.50 per share for a period of three  years  have been  issued to
     bearers of promissory notes (note 4) as follows:

                       See independent auditors' report.

                                      26

<PAGE>



                         PACIFIC ALLIANCE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

5.   COMMON STOCK AND WARRANTS (Continued)

               Date of Issuance    Number of Share      Expiration Date
             -------------------   ---------------      ---------------
               January 27, 1998         10,000         January 27, 2001
               January 30, 1998          5,000         January 30, 2001
                    May 1, 1998         10,000              May 1, 2001
                    May 5, 1998          5,000              May 1, 2001

     In June 1998,  the IRS applied a personal tax refund from a former  officer
     of the Company against the Company's tax liability, reducing it by $80,078.
     In  accordance  with an  agreement  between the  management  and the former
     officer, 80,078 shares of common stock were issued to the former officer in
     exchange for the loss of his personal tax refund.

     Pursuant to the  provisions of the modified  joint plan of  reorganization,
     PacificAlliance  Corporation  compensates its management on an hourly basis
     at $75 per  hour for the  time  actually  devoted  to the  business  of the
     Company.  Payment for services  will be made through  issuance of shares of
     common stock until such time as the Company's  net worth reaches  $350,000.
     According to the modified  joint plan of  reorganization,  the stock issued
     for services shall be valued at $0.10 per share.  At December 31, 1998, the
     Company accrued management compensation liability in the amount of $34,583,
     as the shares of common stock have not yet been issued.

6.   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 was seeking past due rent and other damages.  On May
     5,  1999,  the Court  ruled in favor of the  defendant,  Donald  Palmer and
     against Pacific Syndication,  Inc. Donald Palmer was awarded  approximately
     $200,000 for past due rent of the equipment, plus costs and attorneys fees.
     Palmer was also found owner of the equipment  sold by Pacific  Syndication,
     Inc. to Starcom  Television  Services.  In the opinion of counsel,  because
     Starcom Television  Services assumed that debt when it purchased the assets
     of  Pacific  Syndication,   Inc.,  Starcom  Television  Services,  and  its
     successor in interest,  are responsible for that judgement.  Therefore,  no
     liability  has been  accrued in the  financial  statements  at December 31,
     1998.

7.   RELATED PARTY

     An officer of the Company  advanced  $50,263 to the Company during the year
     ended  December 31, 1998.  These  advances bear interest at 10% and have no
     maturity date. The balance of advances is $55,763 at December 31, 1998.


                       See independent auditors' report.


                                      27

<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                   41            President/Director
   Dan Price                        45            Vice President/Director
   David Knudson                    40            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 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

                                      28

<PAGE>



     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

      The  following  table sets forth the  aggregate  compensation  paid by the
Company for services rendered during the last three years to the Company's Chief
Executive  Officer  and to  the  Company's  most  highly  compensated  executive
officers other than the CEO, whose annual salary and bonus exceeded $100,000:

                                      29

<PAGE>

                             SUMMARY COMPENSATION TABLE

                                 Annual Compensation

<TABLE>
<CAPTION>
                                                       Commissions                   Restrict
                                                           and       Other Annual     Stock     Options/
                                                         Bonuses     Compensation     Awards      SAR's
Name and Principal Positition    Year       Salary         ($)            ($)          ($)         (#)
-----------------------------   -------   ----------   -----------    ----------    ----------  ---------
<S>                              <C>         <C>          <C>            <C>           <C>        <C>
Mark Scharmann (1)               1998        -0-          -0-            -0-         $14,025      -0-
President                        1997        -0-          -0-            -0-           -0-        -0-
</TABLE>

      (1)   Mr. Scharmann was appointed  President of the Company on the date of
            the Conformation of the Plan, June 8, 1997.


Stock Options

      The  following  table  sets forth  certain  information  concerning  stock
options granted during fiscal 1997 to the named executive officers.


              Options Grants in the Year Ended December 31, 1998


<TABLE>
<CAPTION>

              Options Grants in the Year Ended December 31, 1997

                                            Percentage
                        Number of            of Total          Exercise or
                        Securities       Options Granted to     Base Price
                        Underlying          Employees in        Per Share    Expiration
Name                  Options Granted (#)   Fiscal Year            ($)          Date
                    --------------------------------------------------------------------
<S>                       <C>                  <C>                <C>          <C>


Mark Scharmann            -0-                  -0-                N/A          N/A
</TABLE>



      The following table sets forth information concerning the number and value
of options held at December 31, 1998 by each of the named executive officers. No
options held by such executive officers were exercised during 1997.

                      Option Values at December 31, 1998

                      Number of Unexercised           Value of Unexercised
                            Options at                In-the-Money Options
                        December 31, 1998(#)         At(December 31, 1998($)
                    --------------------------      -------------------------
Name                Exercisable    Unexercisable    Exercisable  Unexercisable

Mark Scharmann          -0-             -0-             N/A           N/A




                                      30

<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.

      For the year ended December 31, 1998 the Company  compensated its officers
as follows:

      Name                    Compensation            Shares to be Issued

      Mark Scharmann                -0-                     140,250
      Dan Price                     -0-                      32,250
      David Knudson                 -0-                     173,325

      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 July 20,  1999 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.




                                      31

<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           0.01%
1661 Lakeview Circle
Ogden, UT 84403

David Knudson(1)                                      3,667           0.04%
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                        5,138,704          58.04%
as a Group (3 Persons)
--------------------------------------------- ------------------ ---------------
Total Shares Issued                               8,853,208            100%
--------------------------------------------- ------------------ ---------------

      (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.



                                      32

<PAGE>


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.

       During 1997,  Troika Capital  loaned $5,500 to the Company.  Such loan is
due on demand and bears interest at the rats of 10% per annum.

Merger

       During 1998,  Troika Capital loaned $50,263 to the Company.  Such loan is
due on demand and bears interest at the rate of 10% per annum.

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  December
31, 1998.

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






                                      33

<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: August 12, 1999            By:  /s/ Mark A. Scharmann
                                 ----------------------------------
                                      Mark A. Scharmann
                                      President/Principal Executive Officer


Date: August 12, 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         August 12, 1999
----------------------
Mark A. Scharmann

/s/ Dan Price                  Vice President/Director    August 12, 1999
----------------------
Dan Price

/s/ David Knudson              Secretary/Treasurer        August 12, 1999
----------------------         Director
David Knudson