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, 2006
                                       OR
          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                        Commission file number 000-51777

                          PACIFIC ALLIANCE CORPORATION
           (Name of Small Business Issuer as specified in its charter)

           Delaware                                             87-044584-9
--------------------------------                           ---------------------
(State or other jurisdiction of                              (I.R.S. employer
incorporation or organization                                identification No.)

                              1661 Lakeview Circle
                                Ogden, UT 84403
                    ----------------------------------------
                    (Address of principal executive offices)

         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 :
                          $.001 Par Value Common Stock

     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 [X] No [ ]

         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.

        Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).   Yes [X] No [ ]

         The Issuer's  revenues for the fiscal year ended December 31, 2006 were
-0-.

         As of April 12, 2007,  36,147,050  shares of the Issuer's  common stock
were issued and outstanding of which 8,183,671 were held by  non-affiliates.  As
of April 12, 2007, there was no active market in the Issuers securities.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE


<PAGE>

<TABLE>
<CAPTION>


                                TABLE OF CONTENTS

                                                                                              Page
PART I
<S>              <C>                                                                          <C>
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
                                                                                                16
Item 7.          Financial Statements                                                           24
Item 8.          Changes and Disagreements with Accountants on Accounting
                   and Financial Disclosure
                                                                                                40
Item 8A.         Controls and Procedures                                                        41
Item 8B.         Other Information                                                              42

PART III
Item 9.          Directors, Executive Officers, Promoters and Control Persons;
                   Compliance with Section 16(a) of the Exchange Act                            42
Item 10.         Executive Compensation                                                         44
Item 11.         Security Ownership of Certain Beneficial Owners and Management                 46
Item 12.         Certain Relationships and Related Party Transactions                           47
Item 13.         Exhibits, Financial Statements, Schedules and Reports on Form 8 K              48
Item 14.         Principal Accounting Fees and Services                                         49
</TABLE>

                                     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 and in Item 7 of this  Form10-KSB.
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.


                                      -2-
<PAGE>



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.  The  Company's  current  business  plan calls for it to
locate and acquire an operating  company.  Currently,  we are a "shell"  company
conducting  virtually  no  business  operation,  other than our  efforts to seek
merger  partners or acquisition  candidates.  We have no full time employees and
own no real estate.

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
December  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.


                                      -3-
<PAGE>


         Private PSI  provided  its  clients  (primarily  television  producers,
programmers  and  syndicators)  with  several  related but  different  services,
including distribution of syndicated programming to television stations, program
mastering  and standards  conversion,  infomercial  customization  and delivery,
master  tape  and  film  storage,   library  distribution   services  and  video
integration and delivery  services.  Private PSI developed its own tape tracking
and vault library  management system and a system for infomercial  customization
and voice-over integration.

         From its  inception,  Private PSI was  undercapitalized.  It funded its
initial operations through the factoring of its accounts receivable. The Company
was  unable  to  commence  operations  in the  television  programming  services
business  and  ultimately,  substantially  all of its  assets  were  sold and it
discontinued its operations.

Chapter 11 Plan of Reorganization

         On June 23, 1995,  the Company filed a Petition under Chapter 11 of the
U.S.  Bankruptcy  Code.  As of December  1995,  the Company had sold most of its
assets, reduced its debt and terminated its operations.  By that date, there was
no trading market in the Company's  securities.  In 1996,  Troika Capital,  Inc.
("Troika"),  a Utah  corporation,  agreed to assist the Company in  developing a
Plan of  Reorganization  which would provide the Company,  its  shareholders and
creditors  with at  least  a  possibility  of  recouping  all or  some of  their
investment in the Company or the debts owed to them by the Company.  Troika is a
privately-owned  Utah  corporation  which has been  involved in various  company
formations, mergers and financings.

         Mark A.  Scharmann,  the President of Troika,  and now the President of
the Company, and his affiliates,  were shareholders of the Company and creditors
of the Company at the time the Company commenced its bankruptcy proceeding.  Mr.
Scharmann  was a founder of the Company in 1986 and was an original  shareholder
of the Company.  At the time the Company acquired Private PSI, he resigned as an
officer and director of the Company but remained a shareholder  and later became
a creditor of the Company.  Many of the investors in the Company are friends and
acquaintances  of Mr.  Scharmann.  The  Company  believed  that  if it  were  to
liquidate, there would be a total loss to creditors and shareholders. Because of
his own equity and debt  investment in the Company,  and his  relationship  with
other shareholders and creditors of the Company,  Mr. Scharmann agreed,  through
Troika,  to develop a business plan for the Company and to attempt to assist the
Company in carrying out such plan.

         The Plan of  Reorganization  developed  for the  Company  by Troika was
essentially as follows:

           1.        Eliminate all non-tax  liabilities  of the Company  through
                     the conversion of debt into equity.

           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.

                                      -4-
<PAGE>

           3.        File  all  required   Securities  and  Exchange  Commission
                     reports which may be necessary to bring the Debtor  current
                     in its filing  requirements under Section 15(d) of the 1934
                     Act. File all SEC reports which become due in the future.

           4.        File any tax  returns  which  are in  arrears  and file all
                     required  tax returns and reports  which  become due in the
                     future.

           5.        Use  existing  cash of the  Company  to pay  quarterly  tax
                     payments and for working capital.

           6.        Prepare and bring current,  the financial statements of the
                     Company

           7.        Attempt  to  raise  additional  cash  to be  used  to  fund
                     quarterly tax payments and for working capital.

           8.        Locate a  private-company  which  is  seeking  to  become a
                     public company by merging with the Company.

           9.        Assist  the  Company  in  completing  any  merger  which is
                     located and which the Board of Directors deems appropriate.

           10.       Assist the post-merged company with shareholder  relations,
                     financial public  relations and with attempts to interest a
                     broker-dealer  in   developing  a  public  market  for  the
                     Company's common stock so that the  Company's  shareholders
                     (including creditors whose debt was  converted into  shares
                     of the Company's  common stock)  may   ultimately   have  a
                     opportunity to liquidate  their  shares for value in market
                     or in privately negotiated transactions.

         The Plan and Disclosure Statement was confirmed by the Bankruptcy Court
on May 28, 1997. The Effective Date of the Plan was June 8, 1997.

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 through 2006.

           3.        Tax   liabilities  to  the  Internal   Revenue  Service  of
                     approximately  $269,093  had been reduced to $268,897 as of
                     December 31, 2006.

                                      -5-
<PAGE>

           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 Form 10-KSB's for the years
                     ended  December  31, 1996 - 2005 and with this Form 10-KSB,
                     for the year ended December 31, 2006.

           9.        Effective  February 22, 2000 - the Bankruptcy Court entered
                     an Order of Final Decree closing the Bankruptcy Case.

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.

                                      -6-
<PAGE>

         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
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)


                                      -7-
<PAGE>

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
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.

                                      -8-
<PAGE>

         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  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.

                                      -9-
<PAGE>

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.

Employees

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

                                      -10-
<PAGE>

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.

ITEM 3.  LEGAL PROCEEDINGS

         None.

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

         No matters were  presented  to the  Company's  Shareholders  for a vote
during the last quarter of 2006.

                                     PART II

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

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

Shares Issued in Unregistered Transactions in 2006

         We  issued  shares of our  common  stock in  unregistered  transactions
during 2006.  All of the following  shares of common stock issued were issued in
non registered transactions in reliance on Section 4(2) of the Securities Act of
1933, as amended (the "Securities  Act"). The shares of common stock issued were
as follows:
<TABLE>
<CAPTION>
------------------------------- ----------------- -------------- --------------------------------
                                    Number of
          Issued To                  Shares           Date                 Consideration
=============================== ================= ============== ================================
<S>                                       <C>        <C>         <C>
Mark A. Scharmann                         78,750     3/31/06     Compensation valued at $7,875
------------------------------- ----------------- -------------- --------------------------------
David Knudson                            144,450     3/31/06     Compensation valued at $14,445
------------------------------- ----------------- -------------- --------------------------------
Mark A. Scharmann                         54,000     6/30/06     Compensation valued at $5,400
------------------------------- ----------------- -------------- --------------------------------
Dan Price                                 22,500     6/30/06     Compensation valued at $2,250
------------------------------- ----------------- -------------- --------------------------------
David Knudson                            141,450     6/30/06     Compensation valued at $14,145
------------------------------- ----------------- -------------- --------------------------------
Mark A. Scharmann                         26,250     9/30/06     Compensation valued at $2,625
------------------------------- ----------------- -------------- --------------------------------
David Knudson                             49,050     9/30/06     Compensation valued at $4,905
------------------------------- ----------------- -------------- --------------------------------
Mark A. Scharmann                     20,000,000    12/19/06     $100,000 of outstanding notes
------------------------------- ----------------- -------------- --------------------------------
Mark A. Scharmann                         20,250    12/31/06     Compensation valued at $2,025
------------------------------- ----------------- -------------- --------------------------------
Dan Price                                  9,000    12/31/06     Compensation valued at $900
------------------------------- ----------------- -------------- --------------------------------
David Knudson                             57,150    12/31/06     Compensation valued at $5,715
=============================== ================= ============== ================================
Total:                                20,602,850
------------------------------- ----------------- -------------- --------------------------------
</TABLE>

                                      -11-
<PAGE>

Shares Issued in Unregistered Transactions Prior to 2005

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.  Class A Warrants  expired in 2000 and none were  exercised.  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",   "Accumulators",   "Distributors"  and  "Syndicators".
"Dealers" and the four types of underwriters are discussed below.

                                      -12-
<PAGE>
                  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.

                  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.

                                      -13-
<PAGE>

                  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  after-market
         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.  In addition to the following
transactions,  we issued shares to management  for services (See Item 12 of this
Form 10-KSB). 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.
---------------------------------- ------------------ -------------- -----------------------------------------------
Mark Scharmann                          300,000          2/29/00     Repayment of $15,000 loan from Mark Scharmann
---------------------------------- ------------------ -------------- -----------------------------------------------
William M. Hynes, II                    150,000          5/20/00     Consulting Services valued at $15,000
---------------------------------- ------------------ -------------- -----------------------------------------------
Michael Harrop                          187,500          8/7/02      Consulting Services valued at $18,750
---------------------------------- ------------------ -------------- -----------------------------------------------
PIL S.A.                               1,250,000         6/28/02     $249,871
---------------------------------- ------------------ -------------- -----------------------------------------------
Northcliffe Consulting                 1,000,000         2/24/04     Consulting Services value at $10,000
---------------------------------- ------------------ -------------- -----------------------------------------------
William M. Hynes, II                    250,000          2/24/04     Consulting Services valued at $2,500
---------------------------------- ------------------ -------------- -----------------------------------------------
PIL S.A.                                100,000          5/14/04     $19,978
---------------------------------- ------------------ -------------- -----------------------------------------------
Mark Scharmann                        20,000,000      12/19/06       Repayment of $100,000 of notes owed Mark
                                                                     Scharmann
================================== ================== ============== ===============================================
Total:                                23,533,578
---------------------------------- ------------------ -------------- -----------------------------------------------
</TABLE>

                                      -14-
<PAGE>

Shares Issued for Services from 1997 to December 31, 2006
---------------------------------------------------------

         Those  persons  who have been  serving as the  Company's  officers  and
directors  since  1996 have been  issued  shares  of common  stock for  services
rendered in lieu of cash compensation.  Total compensation shares issued to each
of the Company's officers and directors is as follows:

           Mark A. Scharmann                        1,785,026
                                               ---------------
           Dan Price                                   68,775
                                               ---------------
           David Knudson                            2,678,941
                                               ---------------

Holders

          As of April 12,  2007,  there were  36,147,050  shares of common stock
outstanding and approximately 148 stockholders of record of common stock.

Purchases  of Equity  Securities  by the Small  Business  Issuer and  Affiliated
Purchasers

         None

Limitation on Directors' Liability, Charter Provisions and Other Matters

         Delaware law authorizes corporations to limit or eliminate the personal
liability of  directors  to  corporations  and their  stockholders  for monetary
damages  for  breach  of  directors'  fiduciary  duty of care.  The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed  business  judgment  based on all  material  information  reasonably
available to them. Absent the limitations  authorized by Delaware law, directors
are accountable to corporations and their  stockholders for monetary damages for
conduct  constituting  gross  negligence  in the exercise of their duty of care.
Delaware  law  enables  corporations  to limit  available  relief  to  equitable
remedies such as injunction or  rescission.  Our  Certificate  of  Incorporation
limits the  liability of our  directors to us or to our  stockholders  (in their
capacity as  directors  but not in their  capacity as  officers)  to the fullest
extent permitted by Delaware law.

         The inclusion of this provision in the Certificate of Incorporation may
have the effect of reducing the  likelihood  of  derivative  litigation  against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against  directors for breach of their duty of care, even though such an
action,  if  successful,  might  otherwise  have  benefited  the Company and its
stockholders.

         Our Bylaws  provide  indemnification  to our officers and directors and
certain   other   persons   with   respect  to  certain   matters.   Insofar  as
indemnification  for liabilities  arising under the 1933 Act may be permitted to
our  directors  and  officers,  we have been  advised that in the opinion of the
Securities  and Exchange  Commission,  such  indemnification  is against  public
policy as expressed in the 1933 Act and is, therefore, unenforceable.

                                      -15-
<PAGE>

Transfer Agent and Registrar

         Our  transfer  agent is  Fidelity  Transfer  Company,  1800  South West
Temple, Suite 301, Salt Lake City, UT 84115; telephone (801) 484-7222.

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

Overview

         The Company is currently inactive.  Our current business plan calls for
us to locate  and  acquire an  operating  company.  Currently,  we are a "shell"
company conducting  virtually no business  operation,  other than our efforts to
seek merger partners or acquisition  candidates.  We have no full time employees
and own no real estate.

         We were previously  engaged in the business of distributing  television
programming.  On September  23, 1995,  the Company  filed for  protection  under
Chapter 11 of the United  States  Bankruptcy  Code (Case No. BK. No. SV 95-14737
KL). On May 28, 1997 (the  "Confirmation  Date"),  the United States  Bankruptcy
Court for the Central  District of California  Confirmed the Company's  Modified
Plan of Reorganization (the "Plan") and First Amended Disclosure  Statement (the
"Disclosure  Statement").  The  Effective  Date of the Plan was June 8, 1997. On
February 23, 2000,  United  States  Bankruptcy  Judge  Kathleen T. Lax entered a
"Final Decree Order Pursuant to Bankruptcy Code Section 350", and thereby issued
a final decree  closing the bankruptcy  case. The claim by the Internal  Revenue
Service was not discharged by the Final Decree Order.

         Our Plan of  Operation  is  further  described  in Item 1 of this  Form
10-KSB.

Liquidity and Capital Resources

         As of December 31, 2006, we had no assets.  Therefore, we are dependent
upon loans and advances from our  management and affiliates to fund our expenses
pending the completion of a merger or  acquisition.  As of December 31, 2006, we
had total liabilities of $808,592 of which $322,554 was for tax liabilities.  At
December 31, 2006, a total of $408,800 of our  liabilities  was for funds loaned
to us by management and other stockholders compared to $415,389 in such loans as
of December 31, 2005.  At December 31, 2006, a total of $-0- of our  liabilities
was for accrued compensation expenses for our officers and directors.

                                      -16-
<PAGE>

         In the last quarter of 2006, we issued  20,000,000 shares of our common
stock to our president  Mark  Scharmann as payment for $100,000 of notes we owed
Mr. Scharmann.

         In the  event  we are  able to  locate  an  acquisition  candidate,  we
anticipate  that some or all our debt to management and others will be converted
into additional shares of common stock. The conversion price, if a conversion of
debt was to occur, of which there can be no assurance, has not been established.

         We intend to pay for various filing fees and professional fees relating
to our reporting  obligations and to fund the costs which may arise from seeking
new business opportunities.

         It is likely that we will be required  to raise  additional  capital in
order to attract and potential acquisition partner but there can be no assurance
that we 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 our common
stock  which will  result in the  dilution of the  percentage  ownership  of the
current shareholders.

         The  auditors'  report on our  December 31, 2005  financial  statements
contains a going  concern  qualification,  which  provides  that our  ability to
continue as a going concern is dependent upon it raising additional  capital. We
will  continue to be an inactive  company  unless and until we raise  additional
capital and acquire an operating company.  There can be no assurance that either
will occur.

Results of Operations

         We have not conducted any active operations since our Confirmation Date
and generated no revenue for the year ended  December 31, 2006 or the year ended
December 31, 2005. We anticipate that we will not generate any revenues until we
acquire or merge with another company.

         Our total  expenses of $195,514  for the year ended  December  31, 2006
compared to $291,770 for the year ended  December  31,  2005.  Our total cost of
compensation  for the year ended  December  21,  2006 was  $60,285  compared  to
$67,830 for the year ended  December 31,  2005.  Our total  interest  costs were
$46,863 for the year ended  December 31, 2006 compared to $38,032 for year ended
December 31, 2005.

Critical Accounting Policies

         This  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations  discuss the Company's  Financial  Statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States.  We have  terminated our previous  operations and such operations
are treated as discontinued operations for financial statement purposes.

                                      -17-
<PAGE>

         We  anticipate  that in the future,  the  preparation  of our financial
statements will require  management to make estimates and assumptions  that will
affect  reported  amounts  of  assets  and  liabilities  and the  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period. On an
ongoing basis, management will evaluate its estimates and assumptions, including
those related to inventory,  income taxes, revenue recognition and restructuring
initiatives. We anticipate that management will base its estimates and judgments
on historical  experience of the  operations we may acquire and on various other
factors that are believed to be reasonable under the circumstances,  the results
of which form the basis for making  judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

         Management believes the following critical accounting  policies,  among
others,  will affect its more  significant  judgments and estimates  used in the
preparation of our Consolidated Financial Statements following the completion of
an acquisition:

         Inventory.  The Company  will be required to reduce the stated value of
its  inventory  for  obsolescence  or  impairment  in an  amount  equal  to  the
difference  between the cost of the inventory  and the  estimated  market value,
based upon  assumptions  about future  demand and market  conditions.  If actual
future demand or market  conditions are less  favorable than those  projected by
management, additional reductions in stated value may be required.

         Income Taxes.  In  determining  the carrying value of the Company's net
deferred tax assets,  the Company will be required to assess the  likelihood  of
sufficient  future  taxable  income  in  certain  tax  jurisdictions,  based  on
estimates  and  assumptions,  to realize the benefit of these  assets.  If these
estimates  and  assumptions  change in the  future,  the  Company  may  record a
reduction in the valuation allowance,  resulting in an income tax benefit in the
Company's Statements of Operations.  Management will be required to evaluate the
realizability  of the deferred tax assets and assesses the  valuation  allowance
quarterly.

         Goodwill and Other Long-Lived Asset Valuations.  In June 2001, the FASB
issued SFAS 141,  "Business  Combinations",  and SFAS 142,  "Goodwill  and Other
Intangible Assets", effective for fiscal years beginning after December 15, 2001
with early adoption  permitted for companies with fiscal years  beginning  after
March 15, 2001. We currently have no intangible  assets. At such time as we have
intangible  assets,  we will adopt the new rules on accounting  for goodwill and
other intangible  assets,  Under the new rules,  goodwill and intangible  assets
deemed to have indefinite  lives will no longer be amortized but will be subject
to annual  impairment tests in accordance with the statements.  Other intangible
assets will continue to be amortized over their useful lives.

         Revenue Recognition.  At such time as we have revenues from operations,
we will adopt revenue recognitions policies consistent with generally acceptable
accounting standards.

                                      -18-
<PAGE>

         Stock-Based  Compensation.  In December 2002, the FASB issued SFAS 148,
"Accounting for Stock-Based  Compensation"  -- Transition and Disclosure,  which
amends SFAS 123.  SFAS 148  provides  alternative  methods of  transition  for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.  SFAS 148 also requires  prominent  disclosures  in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  As permitted  by SFAS 123, we have elected to account for  stock-based
compensation   using  the  intrinsic  value  method   prescribed  in  Accounting
Principles  Board  ("APB")  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees," and related interpretations including Financial Accounting Standards
Board  ("FASB")  Interpretation  No. 44,  "Accounting  for Certain  Transactions
Involving Stock  Compensation -- an  Interpretation  of APB Opinion No. 25," and
have  adopted  the  disclosure-only  provisions  of SFAS 123.  Accordingly,  for
financial  reporting  purposes,  compensation  cost for stock options granted to
employees is measured as the excess,  if any, of the estimated fair market value
of our stock at the date of the grant  over the amount an  employee  must pay to
acquire the stock.  Equity  instruments issued to nonemployees are accounted for
in accordance with FAS 123 and Emerging Issues Task Force ("EITF")  Abstract No.
96-18,  "Accounting  for  Equity  Instruments  That Are  Issued  to  Other  Than
Employees for Acquiring, or in Conjunction with Selling Goods or Services."

Interest Rate Risk

         We currently have debt and will  undoubtedly  incur debt to finance our
operations.  We anticipate that a substantial  amount of our future debt and the
associated  interest expense will be subject to changes in the level of interest
rates. Increases in interest rates would result in incremental interest expense.

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.

                                      -19-
<PAGE>

Off-Balance Sheet Arrangements

         We do not have any  off-balance  sheet  arrangements  that  have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial  condition,  revenues or expenses,  results of  operations,
liquidity,  capital  expenditures  or  capital  resources  that is  material  to
investors.

Contractual Obligations and Commitments

         Except  for the  payment of accrued  management  compensation,  accrued
taxes,  rent and other  payables,  all of which are  described in the  financial
statements attached hereto, we have no contractual commitments or obligations.

Inflation

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

Forward Outlook and Risks

         This  Form  10-KSB  contains  and  incorporates  by  reference  certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act  and  Section  21E of the  Exchange  Act  with  respect  to  results  of our
operations and businesses.  All statements,  other than statements of historical
facts,  included in this Form 10-KSB,  including those regarding  market trends,
our  financial  position,  business  strategy,  projected  costs,  and plans and
objectives of management for future operations, are forward-looking  statements.
In general,  such statements are identified by the use of forward- looking words
or phrases including,  but not limited to, "intended,"  "will," "should," "may,"
"expects," "expected,"  "anticipates," and "anticipated" or the negative thereof
or variations thereon or similar terminology.  These forward-looking  statements
are based on our current expectations. Although we believe that the expectations
reflected in such  forward-looking  statements are  reasonable,  there can be no
assurance   that  such   expectations   will  prove  to  be   correct.   Because
forward-looking  statements involve risks and uncertainties,  our actual results
could differ  materially.  Important  factors that could cause actual results to
differ materially from our expectations are disclosed hereunder and elsewhere in
this Form 10-KSB. These forward-looking  statements represent our judgment as of
the date of this Form 10-KSB.  All subsequent  written and oral  forward-looking
statements  attributable  to Pacific  Alliance are expressly  qualified in their
entirety by the  Cautionary  Statements.  we  disclaim,  however,  any intent or
obligation to update our forward-looking statements.

         Operating  History;  No Assets; No Present Source of Revenues.  We have
been inactive since 1995. We intend to attempt to commence active  operations in
the future by acquiring a Target Business.  Potential  investors should be aware
that there is only a limited  basis upon which to  evaluate  our  prospects  for
achieving our intended business objectives. We have no resources and have had no
revenues since 1995. In addition,  we will not generate any revenues (other than
investment  income)  until,  at the  earliest,  the  consummation  of a Business
Combination.  Moreover,  there can be no assurance that any Target Business will
derive any  material  revenues  from its  operations  or operate on a profitable
basis.

                                      -20-
<PAGE>

         Possibility of Total Loss of Investment.  An investment in the Company,
is an extremely high risk investment, and should not be made unless the investor
has no need for current  income from the invested  funds and unless the investor
can afford a total loss of his or her investment.

         Absence of  Substantive  Disclosure  Relating to  Prospective  Business
Combinations;  Investment in the Company Versus Investment in a Target Business.
We have not yet identified a prospective Target Business. Accordingly, investors
will have no substantive  information  concerning  consummation  of any specific
Business  Combination in considering a purchase of the Preferred  Shares in this
offering.

         Seeking to Achieve Public Trading Market through Business  Combination.
While a  prospective  Target  Business  may deem a  consummation  of a  Business
Combination  with  the  Company  desirable  for  various  reasons,   a  Business
Combination  may involve the  acquisition  of, merger or  consolidation  with, a
company which does not need substantial additional capital, but which desires to
establish a public  trading  market for its shares,  while  avoiding what it may
deem to be  adverse  consequences  of  undertaking  a  public  offering  itself,
including time delays,  significant expense, loss of voting control and the time
and expense  incurred to comply with various  Federal and state  securities laws
that regulate initial public offerings.  Nonetheless,  there can be no assurance
that  there  will be an  active  trading  market  for the  Company's  securities
following the completion of a Business Combination or, if a market does develop,
as to the market price for the Company's securities.

         Uncertain Structure of Business Combination.  The structure of a future
transaction  with a Target Business cannot be determined at the present time and
may take,  for example,  the form of a merger,  an exchange of stock or an asset
acquisition.  We may form one or more subsidiary entities to complete a Business
Combination and may, under certain  circumstances,  distribute the securities of
subsidiaries to our stockholders.  There can be no assurance that a market would
develop for the securities of any subsidiary  distributed to stockholders or, if
it did, any assurance as to the prices at which such securities might trade. The
structure  of a  Business  Combination  or the  distribution  of  securities  to
stockholders  may result in  taxation  of the  Company,  the Target  Business or
stockholders.

         Unspecified  Target  Business;   Unascertainable  Risks.  We  have  not
selected an  acquisition  or other  Business  Combination as of the date of this
Form  10-KSB.  Accordingly,  there  is no basis  for  prospective  investors  to
evaluate the possible  merits or risks of the Target  Business or the particular
sector of the technology industries in which the Company may ultimately operate.
To the  extent we effect 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 revenues  or income),  we will become
subject to numerous risks inherent in the business and operations of financially
unstable  and early  stage or  potential  emerging  growth  companies.  Although
management  will endeavor to evaluate the risks inherent in a particular  Target
Business or industry,  there can be no assurance that we will properly ascertain
or assess all such risks.

                                      -21-
<PAGE>

         Probable Lack of Business  Diversification.  As a result of our limited
resources, in all likelihood, we will have the ability to complete only a single
Business  Combination.  Accordingly,  our prospects for success will be entirely
dependent  upon the future  performance  of a single  business.  Unlike  certain
entities which 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 we will not  have  the  resources  to
diversify  our  operations  or benefit from the  possible  spreading of risks or
offsetting  of losses.  Our probable lack of  diversification  may subject us to
numerous economic,  competitive and regulatory developments, any or all of which
may have a material adverse impact upon the particular  industry in which we may
operate subsequent to a consummation of a Business Combination.  There can be no
assurance that the Target Business will prove to be commercially viable.

         Conflicts of Interest;  Absence of Independent  Directors.  None of the
Company's directors or executive officers are required to commit their full time
to the affairs of the Company and it is likely that such persons will not devote
a substantial amount of time to the affairs of the Company.  Such personnel will
have conflicts of interest in allocating  management time among various business
activities.  As a result, the 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.

         Limited  Ability to Evaluate Target  Business  Management;  Possibility
That  Management  Will  Change.  The  role  of  the  present  management  in the
operations of a Target Business of the Company following a Business  Combination
cannot be stated with  certainty.  Although we intend to scrutinize  closely the
management of a prospective Target Business in connection with our evaluation of
the desirability of effecting a Business  Combination with such Target Business,
there can be no assurance that our assessment of such  management  will prove to
be correct,  especially  in light of the  possible  inexperience  of current key
personnel of the Company in evaluating certain types of businesses.  While it is
possible  that  certain of our  directors  or  executive  officers  will  remain
associated in some  capacities  with the Company  following a 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 Target  Business
acquired by the  Company.  We may also seek to recruit  additional  personnel to
supplement  the  incumbent  management of the Target  Business.  There can be no
assurance that we will  successfully  recruit  additional  personnel or that the
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 our future  management will have the necessary  skills,
qualifications or abilities to manage a public company embarking on a program of
business development.

                                      -22-
<PAGE>

         Competition.  We expect to  encounter  intense  competition  from other
entities having business objectives similar to our business objectives.  Many of
these entities,  including venture capital partnerships and corporations,  shell
companies,   large  industrial  and  financial   institutions,   small  business
investment  companies and wealthy  individuals,  are  well-established  and have
extensive  experience  in connection  with  identifying  and effecting  Business
Combinations  directly or through affiliates.  Many of these competitors possess
greater  financial,  technical,  human and other  resources than the Company and
there can be no  assurance  that the  Company  will have the  ability to compete
successfully. The Company's financial resources will be limited in comparison to
those of many of its competitors.  Further,  such competitors will generally not
be required  to seek the prior  approval  of their own  stockholders,  which may
enable  them to close a Business  Combination  more  quickly  than we can.  This
inherent competitive  limitation may compel us to select certain less attractive
Business  Combination  prospects.  There can be no assurance that such prospects
will permit us to achieve our business objectives.

         Uncertainty of Competitive Environment of Target Business. In the event
that we succeed in effecting a Business Combination, we 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 larger number of competitors, including competitors with
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  consummation  of a Business
Combination, we will have the resources to compete in the industry of the Target
Business effectively,  especially to the extent that the Target Business is in a
high-growth industry.

         Additional  Financing  Requirements.  We will not generate any revenues
until, at the earliest,  the consummation of a Business  Combination.  We cannot
ascertain the capital  requirements for any particular  Business  Combination we
may consider. We will likely be required to seek additional financing. There can
be no assurance that such financing will be available on acceptable terms, or at
all. To the extent  that  additional  financing  proves to be  unavailable  when
needed to  consummate  a  particular  Business  Combination,  we  would,  in all
likelihood,  be  compelled  to  restructure  the  transaction  or  abandon  that
particular  Business   Combination  and  seek  an  alternative  Target  Business
candidate,  if possible.  In  addition,  in the event of the  consummation  of a
Business Combination, we may require additional financing to fund the operations
or growth of the Target  Business.  Our failure to secure  additional  financing
could have a material  adverse effect on the continued  development or growth of
the Target Business.  We do not have any arrangements with any bank or financial
institution  to secure  additional  financing and there can be no assurance that
any such  arrangement,  if required or otherwise  sought,  would be available on
terms deemed to be commercially acceptable and in our best interests.

         No Appraisal of Potential  Business  Combination.  We do not anticipate
that we will obtain an independent  appraisal or valuation of a Target Business.
Accordingly,  our  stockholders  will need to rely primarily upon  management to
evaluate a prospective Business Combination.

                                      -23-
<PAGE>

         No Public Market for Securities.  Currently,  there is no public market
for our common  stock and no assurance  can be given that an active  market will
develop or if  developed,  that it will be  sustained.  It is unlikely  that any
market will develop prior to the consummation of a Business Combination. Even if
a Business  Consummation is completed,  there can be no assurance that a trading
market for our securities will ever develop.

         Risk of Application  of Penny Stock Rules.  Our common stock is subject
to the penny stock rules as adopted by the  Securities  and Exchange  Commission
(the  "Commission").  The penny stock rules require a broker-dealer,  prior to a
transaction in a penny stock not otherwise  exempt from the rules,  to deliver a
standardized  risk disclosure  document prepared by the Commission that provides
information  about  penny  stocks and the nature and level of risks in the penny
stock market.  The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the  broker-dealer
and its salesperson in the transaction  and monthly account  statements  showing
the  market  value  of each  penny  stock  held in the  customer's  account.  In
addition,  the penny stock rules require that prior to a transaction  in a penny
stock not  otherwise  exempt  from such  rules,  the  broker-dealer  must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
These  disclosure  requirements  may have the  effect of  reducing  the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. If our common stock remains subject to the penny stock rules,
investors in the Offering may find it more difficult to sell their shares.

ITEM 7. FINANCIAL STATEMENTS

                          Index to Financial Statements

Pacific Alliance Corporation Financial Statements                         Page
--------------------------------------------------------------------------------

   Report of Independent Registered Public Accounting Firms                25

   Balance Sheet                                                           26

   Statements of Operations                                                27

   Statements of Changes in Stockholders' Deficit                          28

   Statements of Cash Flows                                                29

   Notes to Financial Statements                                           30

                                      -24-
<PAGE>

Microsoft Word 11.0.6568;


1

                                 SPECTOR & WONG, LLP
HAROLD Y. SPECTOR, CPA      Certified Public Accountants    80 SOUTH LAKE AVENUE
CAROL S. WONG, CPA                 (888) 584-5577                     SUITE  723
                                FAX  (626) 584-6447           PASADENA, CA 91101




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and
Stockholders of Pacific Alliance Corporation

We have audited the accompanying  balance sheet of Pacific Alliance  Corporation
(a  development  stage  company)  as of  December  31,  2006,  and  the  related
statements of operations,  stockholders'  deficit,  and cash flows for the years
ended  December 31, 2006,  and 2005,  and from the inception of the  development
stage on December 21, 1995 to December 31, 2006. These financial  statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on out audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  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,  2006,  and the results of its
operations  and its cash flows for the years ended  December  31, 2006 and 2005,
and for the periods from inception of the development stage on December 21, 1995
to December 31, 2006 in conformity with accounting principles generally accepted
in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 3 to the
financial statements, the Company did not generate revenue and has a net capital
deficiency and minimal working capital. Those conditions raise substantial doubt
about its ability to continue as going  concern.  Management's  plans  regarding
those  matters are also  described in Note 3. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.


/s/ Spector & Wong, LLP

Pasadena, California

April 10, 2007

                                      -25-
<PAGE>
<TABLE>
<CAPTION>

PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET
--------------------------------------------------------------------------------

                                                                         As of
                                                                      December 31,
                                                                          2006
                                                                   -------------------

                                         ASSETS
<S>                                                                    <C>
Current Assets
   Cash                                                                $      --
                                                                       -----------
    TOTAL ASSETS                                                       $      --
                                                                       ===========

                         LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
  Overdraft                                                            $         6
  Accrued Interest                                                          29,247
  Other Accrued Expenses                                                    47,985
  Notes payable                                                            120,000
  Advances from Officer                                                    144,507
  Tax Liabilities                                                          322,554
  Notes payable to Related Parties                                         144,293
                                                                       -----------
    Total current liabilities                                              808,592
                                                                       -----------


Stockholders' Deficit
  Common Stock, par value $0.001, authorized 100,000,000 shares; and
     36,083,450 shares issued and outstanding                               36,083
  Paid-in Capital                                                        3,332,953
  Accumulated deficit prior to the developmental stage                  (2,632,447)
  Accumulated deficit during the developmental stage                    (1,545,181)
                                                                       -----------
    Total Stockholders Deficit                                            (808,592)
                                                                       -----------

    TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT                       $      --
                                                                       ===========
</TABLE>






See notes to financial statements

                                      -26-
<PAGE>
<TABLE>
<CAPTION>


PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
--------------------------------------------------------------------------------

STATEMENTS OF OPERATIONS



                                                                                                   From Inception of
                                                                                                   the Developmental
                                                                                                         Stage,
                                                                     For the years ended            December 21, 1995
                                                                December 31,                            Through
                                                                    2006              2005         December 31, 2006
                                                              ----------------------------------------------------------
<S>                                                                   <C>              <C>                  <C>
Operating Expenses:
   Selling, General and Administrative Expenses                       $ 128,620        $ 139,687            $ 1,163,559
   Tax Penalty and Interest Expense                                      20,031          114,051                134,081
   Loss on Investment                                                         -                -                  6,844
   Interest Expense                                                      46,863           38,032                309,772
                                                              ----------------------------------------------------------

Net Loss before Extraordinary Item                                     (195,514)        (291,770)            (1,614,256)

Extraordinary Item, Gain on Forgiveness of Tax debt                        --               --                   69,075
                                                              ----------------------------------------------------------

Net Loss                                                             $ (195,514)      $ (291,770)          $ (1,545,181)
                                                              ==========================================================

Net Loss per share, Basic and Diluted                                   $ (0.01)         $ (0.02)
                                                              ===================================

Weighted Average Number of Shares                                    17,492,704       15,067,600
                                                              ===================================
</TABLE>




See notes to financial statements




                                      -27-
<PAGE>
<TABLE>
<CAPTION>

PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT



                                           Common Stock        Additional       Accumulated         Accumulated
                                     -------------------------   Paid-in     Deficit Prior to      Deficit After
                                        Shares       Amount      Capital     December 21,1995    December 21,1995       Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>          <C>         <C>            <C>               <C>              <C>
Balance at December 21, 1995             2,099,125    $ 2,099     $ 884,901      $ (2,632,447)               --     $ (1,745,447)
Conversion of Trade Accounts Payable     1,458,005      1,458     1,456,547              --                            1,458,005
Issuance of Common Stock                                                                                     --
  for Cash                               5,000,000      5,000        20,000              --                               25,000
Issuance of Common Stock                                                                                     --
  for Services                             216,000        216           864              --                  --            1,080
Conversion of Debt                         300,000        300        14,700              --                               15,000
Issuance of Common Stock for IRS                                                                             --
  Claim Reduction                           80,078         80        79,998              --                  --           80,078
Issuance of Common Stock                 1,250,000      1,250       248,621              --                              249,871
Conversion of Management                                                                                     --
  Compensation Liability                 1,854,292      1,854       183,575              --                              185,429
Issuance of Common Stock for                                                                                 --
  Consulting Services                      337,500        338        33,412              --                               33,750
Activity from December 21, 1995                                                                              --
  Through December 31, 2002                   --         --            --                --              (675,396)    (675,396)
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002            12,595,000     12,595     2,922,618        (2,632,447)           (675,396)      (372,630)
---------------------------------------------------------------------------------------------------------------------------------
Net Loss for the Year Ended
  December 31, 2003                           --         --            --                --              (144,588)      (144,588)
---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003            12,595,000     12,595     2,922,618        (2,632,447)           (819,984)      (517,218)
---------------------------------------------------------------------------------------------------------------------------------
Issuance of Common Stock for
  Consulting Services                    1,250,000      1,250        98,750              --                  --          100,000
Issuance of Common Stock
  for Stock Subscription                   100,000        100        19,878              --                  --           19,978
Issuance of Common Stock for
  Management Compensation Expense          857,300        857        84,873              --                  --           85,730
Net Loss for the Year Ended
  December 31, 2004                           --         --            --                --              (237,913)      (237,913)
----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2004            14,802,300     14,802     3,126,119        (2,632,447)         (1,057,897)      (549,423)
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common Stock for
  Management Compensation                  678,300        679        67,152              --                  --           67,831
Net Loss for the Year Ended
  December 31, 2005                           --         --            --                --              (291,770)      (291,770)
----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2005            15,480,600     15,481     3,193,271        (2,632,447)         (1,349,667)      (773,362)
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common Stock for
  Management Compensation                  602,850        602        59,682              --                  --           60,284
Conversion of related party debt to
  common stock                          20,000,000     20,000        80,000              --                  --          100,000
Net Loss for the Year Ended
  December 31, 2006                           --         --            --                --              (195,514)      (195,514)
----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2006            36,083,450   $ 36,083   $ 3,332,953      $ (2,632,447)       $ (1,545,181)    $ (808,592)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



See notes to financial statements

                                      -28-
<PAGE>

<TABLE>
<CAPTION>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

                                                                                                                   From Inception of
                                                                                                                   the Developmental
                                                                                                                        Stage,
                                                                                     For the years ended           December 21, 1995
                                                                                        December 31,                   Through
                                                                                    2006             2005         December 31, 2006
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>              <C>              <C>
Cash Flow from Operating Activities:
  Net Loss                                                                          $ (195,514)      $ (291,770)      $ (1,545,181)
  Adjustments to Reconcile Net Loss to Net Cash Used in Operations:
      Loss on investments                                                                 --               --                6,844
      Gain on forgiveness on tax debt                                                     --               --              (69,075)
      Stock issued for services                                                         60,284           67,831            534,105
  (Increase) Decrease in:
      Accounts receivable                                                                 --               --               95,841
  Increase (Decrease) in:
      Accrued expenses                                                                  25,141          133,815            234,293
      Tax liabilities                                                                   20,031            6,211            (53,283)
                                                                               ----------------------------------------------------
  Net Cash Used in Operating Activities                                                (90,058)         (83,913)          (796,456)
                                                                               ----------------------------------------------------

Cash Flow from Investing Activities
      Purchase of investments                                                             --               --              (30,180)
      Proceeds from sale of investments                                                   --               --               23,336
                                                                               ----------------------------------------------------
  Net Cash Used In Investing Activities                                                   --               --               (6,844)
                                                                               ----------------------------------------------------

Cash Flow from Financing Activities:
      Bank overdraft                                                                    (3,354)           3,347             (2,581)
      Proceeds from notes payable                                                        1,500           35,000            206,486
      Payments of note payable                                                          (1,277)            --              (51,277)
      Net Proceeds from notes payable to related parties                                65,000           54,084            119,084
      Advance from officer                                                             184,100           90,961            787,746
      Repayment of advance from officer                                               (155,911)         (99,479)          (541,007)
      Proceeds from issuance of common stock                                              --               --               25,000
      Proceeds from common stock subscription                                             --               --              259,849
                                                                               ----------------------------------------------------
  Net Cash Flow Provided by Financing Activities                                        90,058           83,913            803,300
                                                                               ----------------------------------------------------

    Net Increase in Cash                                                                  --               --                 --

Cash Balance at Beginning of Period                                                       --               --                 --
                                                                               ----------------------------------------------------

Cash Balance at End of Period                                                   $         --    $          --    $            --
                                                                               ====================================================

Supplemental Disclosures of Cash Flow Information
      Interest paid                                                             $       23,538  $        28,819
Noncash Investing and Financiang:
      Conversion of debt to common stock                                        $      100,000  $          --

</TABLE>







See notes to financial statements



                                      -29-
<PAGE>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 1 - NATURE OF BUSINESS

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
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.

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 9). The IRS portion of tax  liabilities was payable in cash by
quarterly  installments  (see note 5).  Repayment  of other taxes is still being
negotiated.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with accounting principles generally accepted in the United States of
America (GAAP).

Reclassification: Certain reclassifications have been made to the 2005 financial
statements  to conform with the 2006  financial  statements  presentation.  Such
reclassification had no effect on net losses previously reported.

Use of estimates The  preparation of the  accompanying  financial  statements in
conformity with accounting  principles  generally  accepted in the United States
requires  management  to make certain  estimates and  assumptions  that directly
affect the results of  reported  assets,  liabilities,  revenue,  and  expenses.
Actual results may differ from these estimates.

Revenue  Recognition  The Company  currently has no source of revenues.  Revenue
recognition policies will be determined when principal operations begin.

Cash  Equivalents  For  purposes of the  statements  of cash flows,  the Company
considers all highly liquid debt instruments with an original  maturity of three
months or less to be cash equivalents.

Property and Equipment As of December 31, 2006,  the Company did not maintain or
control any fixed assets.

Income Taxes Income tax expense is based on pretax financial  accounting income.
Deferred  tax  assets  and  liabilities  are  recognized  for the  expected  tax
consequences  of  temporary  differences  between  the tax bases of  assets  and
liabilities and their reported amounts.

Net Loss Per  Share Net Loss Per Share  Basic  net loss per  share  includes  no
dilution and is computed by dividing net loss  available to common  stockholders
by the  weighted  average  number of common  stock  outstanding  for the period.
Diluted  net loss per share does not differ from basic net loss per share as the
Company did not have dilutive items during the audit period.

                                      -30-
<PAGE>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Non-employees  Equity  Transactions The Company accounts for equity  instruments
issued to  non-employees  in  accordance  with the  provisions  of  Statement of
Financial Accounting Standards (SFAS) No. 123 and the Emerging Issues Task Force
(EITF) Issue No. 00-18,  Accounting  for Equity  Instruments  That Are Issued to
Other Than Employees for Acquiring,  or in  Conjunction  with Selling,  Goods or
Services.  SFAS No.  123  states  that  equity  instruments  that are  issued in
exchange  for the  receipt of goods or  services  should be measured at the fair
value of the consideration  received or the fair value of the equity instruments
issued,  whichever  is more  reliably  measurable.  Under the  guidance in Issue
00-18,  the measurement date occurs as of the earlier of (a) the date at which a
performance  commitment is reached or (b) absent a performance  commitment,  the
date at which  the  performance  necessary  to earn the  equity  instruments  is
complete (that is, the vesting date).

New Accounting  Pronouncements In June 2006, the Financial  Accounting Standards
Board ("FASB")  issued  Interpretation  No. 48,  Accounting  for  Uncertainty in
Income Taxes,  ("FIN 48").  This  Interpretation  clarifies the  accounting  for
uncertainty in income taxes recognized in an enterprise's  financial  statements
in accordance  with FASB Statement No. 109,  Accounting  for Income Taxes.  This
Interpretation  prescribes a recognition threshold and measurement attribute for
the financial  statement  recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides guidance
on derecognition,  classification, interest and penalties, accounting in interim
periods,  disclosure,  and  transition.  FIN 48 is  effective  for fiscal  years
beginning  after  December 15, 2006. The Company does not expect the adoption of
FIN 48 to have a material impact on its financial statements.

In September 2006, the FASB issued Financial  Accounting  Standards  ("FAS") No.
157,  Fair Value  Measurements.  FAS No. 157 defines fair value,  establishes  a
framework for measuring fair value in generally accepted accounting  principles,
and expands disclosures about fair value measurements.  This statement addresses
how to  calculate  fair value  measurements  required or  permitted  under other
accounting pronouncements.  Accordingly, this statement does not require any new
fair value  measurements.  However,  for some entities,  the  application of the
statement will change current practice. FAS No. 157 is effective for the Company
beginning  January 1, 2008.  The Company is currently  evaluating  the impact of
this standard.

In September 2006, the Securities and Exchange  Commission  ("SEC") staff issued
Staff Accounting Bulletin No. 108 ("SAB 108"),  Considering the Effects of Prior
Year  Misstatements  when  Quantifying  Misstatements  in Current Year Financial
Statements.  The stated purpose of SAB 108 is to provide consistency between how
registrants quantify financial statement misstatements.

Prior to the issuance of SAB 108, there have been two widely-used methods, known
as the  "roll-over"  and "iron curtain"  methods,  of quantifying the effects of
financial statement misstatements. The roll-over method quantifies the amount by
which the current  year income  statement  is  misstated  while the iron curtain
method  quantifies the error as the cumulative  amount by which the current year
balance  sheet is misstated.  Neither of these  methods  considers the impact of
misstatements on the financial statements as a whole.

SAB 108  established  an approach  that  requires  quantification  of  financial
statement  misstatements based on the effects of the misstatement on each of the
Company's financial statements and the related financial statement  disclosures.
This   approach  is  referred  to  as  the  "dual   approach"   as  it  requires
quantification of errors under both the roll-over and iron curtain methods.

SAB 108  allows  registrants  to  initially  apply the dual  approach  by either
retroactively  adjusting prior financial  statements as if the dual approach had
always been used, or by recording the  cumulative  effect of initially  applying
the  dual  approach  as  adjustments  to  the  carrying  values  of  assets  and
liabilities as of January 1, 2006 with an offsetting  adjustment recorded to the
opening balance of retained earnings.

                                      -31-
<PAGE>

PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company will initially apply SAB 108 using the cumulative  effect transition
method in connection with the preparation of the annual financial statements for
the year ending  December 31, 2006. The Company does not believe the adoption of
SAB 108 will have a significant effect on its financial statements.


The FASB has also  issued  FAS 155,  Accounting  for  Certain  Hybrid  Financial
Instruments-an amendment of FASB Statements No. 133 and 140, FAS 156, Accounting
for Servicing of Financial  Assets-an  amendment of FASB  Statement No. 140, and
FAS  158,   Employers'   Accounting  for  Defined   Benefit  Pension  and  Other
Postretirement  Plans, but they will not be applicable to the current operations
of the  Company.  Therefore  a  description  and  the  impact  on the  Company's
operations and financial position for each of the pronouncements  above have not
been disclosed.


NOTE 3 - GOING CONCERN

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplated  the  realizations of assets and the satisfaction of
liabilities in the normal course of business.  As shown in the December 31, 2006
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, 2006 the Company funded its disbursements using
loans from an officer and other related parties.

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 is attempting 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.


NOTE 4- OTHER ACCRUED EXPENSES

Other accrued expenses at December 31, 2006 consist of:

              Accrued Professional Fees                $ 33,952
              Other Accrued Expenses                     14,033
                                               -----------------
                       Total                           $ 47,985
                                               =================




                                      -32-
<PAGE>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 5- TAX LIABILITIES

The  Company  owes  back  taxes  to the IRS,  California  Franchise  Tax  Board,
California  State Board of Equalization,  and County of Los Angeles,  before the
bankruptcy.  The Company is  attempting to negotiate  settlements  and the final
amount may differ from the amount recorded on the balance sheets.

The IRS portion of tax  liabilities  was payable in quarterly  installments of $
11,602, and the final payment was due in January 2002. However, no payments have
been made since April 2000.  As of December 31, 2006,  the Company owes $268,897
to the IRS. The taxes owed to IRS are delinquent and accruing interest at 9% per
annum.

As of December 31, 2006,  the Company owes $5,454 to  California  Franchise  Tax
Board. No payments have been made and the taxes owed to California Franchise Tax
Board are delinquent.  No interest is being accrued;  however, a protection lien
is being filed.

As of December 31, 2006,  the Company owes $41,096 to California  State Board of
Equalization.  No payments have been made and the taxes owed to California State
Board of Equalization are delinquent and accruing an interest at 9% per annum.

 As of December 31, 2006,  the Company owes $7,107 to the County of Los Angeles.
No  payments  have been made and the taxes owed to the County of Los Angeles are
delinquent and accruing an interest at 9% per annum.


NOTE 6 - SHORT TERM NOTE PAYABLE

During 2006,  the Company  obtained  additional  notes payable of $65,000,  from
third  parties.  The notes payable bear interest at 10% per annum and are due on
demand. As of December 31, 2006, the balance was $120,000.


NOTE 7 - NOTES PAYABLE TO RELATED PARTIES

Notes  payable to minority  shareholders  amounted  to $144,293 at December  31,
2006. These notes bear interest at 10% to 12%, and are due on demand.


NOTE 8 - INCOME TAXES

The Company has loss  carryforwards  available to offset future taxable  income.
The total loss carryforwards at December 31, 2006 are estimated at approximately
$1,590,000 and expire between 2015 and 2026. Loss  carryforwards  are limited in
accordance  with the rules of change in  ownership.  A  valuation  allowance  is
recorded for the full amount of deferred tax assets of  approximately  $540,000,
which   relates  to  these  loss   carryforwards,   since  future   profits  are
indeterminable.  The valuation  allowance  increased by $47,000  during the year
ended  December 31, 2006. As of the audit report date,  the Company did not file
its corporate income tax returns for the year ended December 31, 2006.

                                      -33-
<PAGE>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 9 - 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.  The
class  "A"  warrants  allowed  the  purchase  of a share of  common  stock at an
exercise  price of $2.50 per share.  The "A"  warrants  expired in June 2000 and
none were exercised.  The class "B" warrants  allowed the purchase of a share of
common stock at an exercise price of $5.00 per share,  and the warrants  expired
in June 2002, and none were exercised.

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.

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.

In February  2000, the Company issued 300,000 shares to an officer for repayment
of $15,000 in advances the officer loaned to the Company and accrued interest.

In May 2000,  the Company  issued  150,000  shares for  repayment of  consulting
services rendered to the Company from a former officer. These shares were valued
at $0.10 per share.

Pursuant to the provisions of the modified joint plan of reorganization, Pacific
Alliance  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 is 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.  During the year ended December 31, 2000,  the Company  issued  1,666,801
shares of common stock for accrued  compensation,  and in June 2002, the company
issued an additional 187, 491 shares of common stock.

In October  2001,  the Company  entered into an  agreement  under which PIL S.A.
would make a capital  infusion  and bring in new  majority  shareholders.  Total
capital to be brought to the Company was to be $500,000 by October 31, 2001, and
an additional  $500,000 by December 31, 2001, at a rate of $0.20 per share.  The
right to cancel any subscription  under the agreement and have the consideration
refunded  would have  required  a breach of the  agreement,  termination  of the
agreement by mutual  consent,  or termination of the agreement by its own terms.
At December 31, 2002,  1,250,000 shares of stock were issued to PIL S.A. for the
$249,871  that  had  been  received  from  PIL  S.A.  in  previous  quarters  as
subscription  of shares of common  stock.  In May  2004,  50,000  shares  for an
additional  subscription  of $9,978  received in 2002 were issued to PIL S.A. In
June  2002,  PIL S.A.  elected to  convert a loan with  balance of $10,000  into
50,000 shares of common  stock.  At June 30, 2004 the 50,000 shares were issued.
Both the $10,000 and $9,978 were classified as common stock subscription deposit
as of December 31, 2002. The agreement with PIL S.A. has been terminated.

In September  2002,  the Company  issued  187,500 shares of its common stock for
consulting  services  received  from a non-related  individual.  The shares were
valued at $0.10 per share.
                                      -34-
<PAGE>

PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 9 - COMMON STOCK AND WARRANTS (continued)

In 2004,  the  Company  issued  857,300  shares of common  stock for  management
services of $85,730,  of which  $50,000 was accrued at December  31,  2003.  The
shares were valued at $0.10 per share  pursuant  to the  Modified  Joint Plan of
Reorganization approved by U.S. Bankruptcy Court.

The Company also issued  1,250,000 shares of common stock in 2004 for consulting
fees of $ 100,000, of which $12,500 was accrued at December 31, 2003. The shares
were valued at $0.08,  the  closing  market  price on the Board's  authorization
date.

In 2005,  the  Company  issued  678,300  shares of common  stock for  management
services  of  $67,830,  pursuant  to the  provisions  of the  Modified  Plan  of
Reorganization  approved by the U.S. Bankruptcy Court.  Pursuant to the Modified
Joint Plan of Reorganization,  the stock issued for services was valued at $0.10
per share.

In 2006,  the  Company  issued  602,850  shares of common  stock for  management
services  of  $60,284,  pursuant  to the  provisions  of the  Modified  Plan  of
Reorganization  approved by the U.S. Bankruptcy Court.  Pursuant to the Modified
Joint Plan of Reorganization,  the stock issued for services was valued at $0.10
per share.

In 2006, the Company issued  20,000,000 shares of restricted common stock to Mr.
Scharmann,  the CEO of the  Company,  as payment of $100,000 of debt owed by the
Company to him as advances from officer.


NOTE 10 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per
share:

                                           --------------------------------
                                            For the years ended December 31,
                                           --------------------------------
                                               2006               2005
                                           ---------------------------------
Numerator:
  Net Loss                                 $ (195,514)          $  (291,770)
                                           ----------            ----------
Denominator:
  Weighted Average Number of Shares        17,492,704            15,067,600
                                           ----------            ----------
Net Loss per share-Basic and Diluted          $ (0.01)              $ (0.02)
                                           ==========            ==========


NOTE 11 - RELATED PARTY TRANSACTIONS

An  officer  of the  Company,  the CEO,  advanced  $184,100  for the year  ended
December 31, 2006. The Company  repaid  $155,911 for the year ended December 31,
2006. These advances bear interest at 10% and have no maturity date. The balance
of advances was $144,507 at December 31, 2006.

During the quarter ended March 31, 2002,  the Company passed a resolution to pay
rent, office and secretarial  services to a stockholder of the Company at a rate
of $500 per month.  These charges were  retroactive to July 1997,  subsequent to
the date of approval of the  reorganization  plan by the  Bankruptcy  court.  As
such,  $6,000 was recorded as expense  during the years ended  December 31, 2006
and 2005.

                                      -35-
<PAGE>
PACIFIC ALLIANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12 - EXTRAORDINARY ITEM

On December 19, 2000, the Employment  Development  Department  (EDD) accepted an
"Offer  in  Compromise"  in the  amount  of  $7,600  to  satisfy  in  full,  all
outstanding   liabilities  of  $76,675  due  to  the  EDD  by  Pacific  Alliance
Corporation.   The   settlement   amount  was  paid  in  January  2001,  and  an
extraordinary gain of $69,075 was recognized.



                                      -36-
<PAGE>


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

         On August 2, 2005,  Pacific  Alliance  Corporation  (the  "Registrant")
dismissed HJ & Associates,  LLC ("HJ") as its principal  accountant to audit its
financial statements.  HJ audited the Registrant's  financial statements for the
year ended  December  31,  2004,  but did not audit the  Registrant's  financial
statements for any other period. HJ's report on the financial  statements of the
Registrant for the past year did not contain an adverse  opinion or a disclaimer
of opinion, and was not qualified or modified as to uncertainty,  audit scope or
accounting  principles.  The opinion of HJ on the Auditor's  financial statement
did contain a going concern qualification.

         During the most  recent  fiscal  year ended  December  31, 2006 and the
subsequent  period  to  and  including  April  12,  2007,  there  have  been  no
disagreements  between  HJ and  the  Registrant  on  any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure which, if not resolved to the satisfaction of HJ, would have caused it
to make a reference  to the  subject  matter of any such  disagreement  with its
report.

         On  July  27,  2005,  the  Registrant   engaged  Spector  &  Wong,  LLP
("Spector")  as its  principal  accountant to audit the  Registrant's  financial
statements.  Prior to the engagement of Spector,  Harold Spector sold his 16,000
shares of common stock,  his whole holdings in the Company.  During the two most
recent  fiscal years ended  December 31, 2006 and the  subsequent  period to and
including  April  12,  2007,  the  Registrant  has not  consulted  with  Spector
regarding any of the following:  (1) the application of accounting principles to
a specified  transaction,  either  completed or proposed;  (2) the type of audit
opinion  that  might  be  rendered  on  the  Registrant's  respective  financial
statements,  and neither a written  report nor oral  advice was  provided to the
Registrant  that Spector  concluded  was an important  factor  considered by the
Registrant  in reaching a decision as to the  accounting,  auditing or financial
reporting issue, or (3) any other matter.

         On March 2, 2005  Rose,  Snyder & Jacobs  resigned  as our  Independent
Accountant  effective  March 2,  2005.  On April 13,  2005,  we  appointed  HJ &
Associates,  LLC as our independent accountants for the year ending December 31,
2004. Prior to appointing HJ & Associates,  LLC as our independent accountant we
have  not  consulted  with  HJ &  Associates,  LLC  regarding:  (i)  either  the
application  of  accounting  principles  to  a  specified  transaction,   either
completed  or proposed;  or the type of audit  opinion that might be rendered on
the  Company's  financial  statements;  or (ii) any  matter  that was either the
subject of a disagreement  (as defined in Item  304(a)(1)(iv) of Regulation S-B)
or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-B).

                                      -37-
<PAGE>



         The reports of Rose,  Snyder & Jacobs on our financial  statements  for
the fiscal  years  ended  December  31, 2003 and 2002 did not contain an adverse
opinion or  disclaimer  of opinion  and were not  qualified  or  modified  as to
uncertainty,  audit scope or accounting  principles,  except for Rose,  Snyder &
Jacobs  issuance of going concern  opinions on the financial  statements for the
fiscal years ending  December 31, 2003 and 2002.  During the period it served as
our independent  accountant,  there were no  disagreements  between us and Rose,
Snyder & Jacobs on any matter of accounting  principles or practices,  financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the  satisfaction  of Rose,  Snyder & Jacobs would have caused it to
make a reference to the subject matter of the  disagreement  in connection  with
its audit report.

ITEM 8A.   CONTROLS AND PROCEDURES

         Under the  supervision  and with the  participation  of our management,
including our President/Principal Executive Officer and Chief Financial Officer,
we evaluated the  effectiveness  of the design and  operations of our disclosure
controls  and  procedures,  as defined  in  Rule13a-15(e)  under the  Securities
Exchange Act of 1934.  Based on this  evaluation,  our Princial Chief  Executive
Officer and Chief Financial  Officer concluded that, as of the end of the period
covered by this report,  our  disclosure  controls and procedures are adequately
designed to ensure that  information  required  to be  disclosed  in the reports
submitted under the Securities and Exchange Act of 1934 is recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange Commission ("SEC") rules and forms.

         The  Sarbanes-Oxley  Act of 2002 (the "Act") imposed many  requirements
regarding corporate  governance and financial  reporting.  One requirement under
section  404 of the Act,  beginning  with our  annual  report for the year ended
December  31,  2007,  is for  management  to  report on the  Company's  internal
controls over  financial  reporting and for our  independent  registered  public
accountants to attest to this report for the year ended December 31, 2008.

ITEM 8B. OTHER INFORMATION

         We must  disclose  under  this  item  any  information  required  to be
disclosed in a report on Form 8-K during the fourth  quarter of the year covered
by this Form 10-KSB, but not reported, whether or not otherwise required by this
Form 10-KSB.  If disclosure of such information is made under this item, it need
not be repeated in a report on Form 8-K which would  otherwise be required to be
filed with respect to such information or in a subsequent report on Form 10-KSB.
No additional disclosure is required under this item.

                                    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:

                                      -38-
<PAGE>


Name                              Age             Position
--------------------------------- --------------- ------------------------------

Mark Scharmann                    48              President/Director
Dan Price                         52              Vice President/Director
David Knudson                     47              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.  Since  February  2001,  Mr. Price has been working as an
Enrollment  Counselor for the University of Phoenix.  From 1998 to October 2000,
Mr. Price worked as an evaluator  at Learning  Technics,  Kirkland,  WA and Salt
Lake  City,  UT.  From  1993 to 1998,  Mr.  Price  served 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  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

                                      -39-
<PAGE>

         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). No disclosure is required here.

Code of Ethics

         We have not yet adopted a code of ethics that applies to all  executive
officers,  directors and employees of the Company. We intend to do so within the
next fiscal year.

Audit Committee Financial Expert

         We have not  established an audit committee or designated any person as
our  financial  expert.  We  anticipate  that we will  not  establish  an  audit
committee  or  designate  a financial  expert  until such time as we complete an
acquisition.

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:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
  SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------

Annual Compensation
---------------------------------------------------------------------------------------------------------------------
                                                     Commissions                           Restricted
                                                         and            Other Annual         Stock        Options/
 Name and Principal Position                           Bonuses          Compensation         Awards         SAR's
                                 Year    Salary          ($)                ($)               ($)            (#)
------------------------------- ------- --------- ------------------ ------------------- --------------- ------------
<S>            <C>               <C>       <C>            <C>                <C>            <C>               <C>
Mark Scharmann (1)               2006     -0-            -0-                -0-             $ 17,925         -0-
President                        2005     -0-            -0-                -0-             $ 17,775         -0-
                                 2004     -0-            -0-                -0-             $ 13,425         -0-
------------------------------- ------- --------- ------------------ ------------------- --------------- ------------
</TABLE>

         (1) Mr. Scharmann's  compensation is paid in shares of Restricted Stock
priced at $.10 per share.

                                      -40-
<PAGE>

Stock Options
-------------

         The following  table sets forth certain  information  concerning  stock
options granted during fiscal 2006 to the named executive officers.
<TABLE>
<CAPTION>

               Options Grants in the Year Ended December 31, 2006
======================================================================================================================
                                                                    Percentage
                                                                     of Total
                                          Number of             Options Granted to     Exercise or
                                          Securities               Employees in         Base Price
                                          Underlying               Fiscal Year          Per Share       Expiration
Name                                 Options Granted (#)                                   ($)             Date
----------------------------------------------------------------------------------------------------------------------
<S>                                           <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,  2005 by each of the  named  executive
officers. No options held by such executive officers were exercised during 2005.

                       Option Values at December 31, 2006
<TABLE>
<CAPTION>
================================ ========================================= ===========================================
                                          Number of Unexercised                       Value of Unexercised
                                                Options at                            In-the-Money Options
                                          December 31, 2006 (#)                     At December 31, 2006($)
-------------------------------- ----------------------------------------- -------------------------------------------
Name                                 Exercisable         Unexercisable         Exercisable           Unexercisable
-------------------------------- ------------------- --------------------- --------------------- ---------------------
<S>                                      <C>                  <C>
Mark Scharmann                          -0-                  -0-                   N/A                   N/A
================================ =================== ===================== ===================== =====================
</TABLE>

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.

                                      -41-
<PAGE>

         For the year  ended  December  31,  2006 the  Company  compensated  its
officers as follows:

Name                   Compensation      Shares Issued
---------------------- --------------- ------------------------
Mark Scharmann         $ 17,925             179,250
Dan Price              $ 3,150               31,500
David Knudson          $ 39,210             392,100

         The Company's Bankruptcy 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.

Equity Compensation Plan

         We are not a party to any equity compensation plan.

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 April 12,  2007 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.



<PAGE>
------------------------------ ------------------------- ----------------------
Name                             Amount and Nature of
and Address                      Beneficial Ownership     Percent of Class(1)
of Beneficial                                                  Ownership
Owner
------------------------------ ------------------------- ----------------------

Mark Scharmann(1)                     25,439,896                 70.4%
1661 Lakeview Circle
Ogden, UT 84403

Dan Price(1)                            69,775                   0.2%
1661 Lakeview Circle
Ogden, UT 84403

David Knudson(1)                      2,453,708                  6.8%
1661 Lakeview Circle
Ogden, UT 84403

All Officers and Directors            27,963,379                 77.4%
as a Group (3 Persons)
------------------------------ ------------------------- ----------------------

Total Shares Issued                   36,147,050                 100%
------------------------------ ------------------------- ----------------------

                                      -42-
<PAGE>

         (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

         We currently  have no proposed  change of control  transaction.  We are
continuing to discuss business combinations with Target Businesses. If, and when
we  complete  a  Business  Combination,  it will  likely  result  in a change of
control.

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 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.

          During 1999, Troika Capital loaned $56,250 to the Company. The Company
repaid $2,000 during 1999.  Such loan is due on demand and bears interest at the
rate of 10% per annum.

          During  2000,  Troika  Capital  loaned  $154,030 to the  Company.  The
Company  repaid  $90,335  during  2000.  Such  loan is due on  demand  and bears
interest at the rate of 10% per annum.

          During 2001, Troika Capital loaned $89,250 to the Company. The Company
repaid  $127,971.  Such loan is due on demand and bears  interest at the rate of
10% per annum

          During 2002, Troika Capital loaned $28,215 to the Company. The Company
repaid  $57,890 in 2002.  Such loan is due on demand and bears  interest  at the
rate of 10% per annum.

                                      -43-
<PAGE>


          During 2003,  Troika Capital loaned $85,550 to the Company.  Such loan
is due on demand and bears interest at 10% per annum.

          During 2004,  Troika Capital loaned $36,206 to the Company.  Such loan
is due on demand and bears interest at 10% per annum.

          During 2005, The Company repaid $8,517 to Troika Capital. Such loan is
due on demand and bears interest at 10% per annum.

          During 2006,  Troika Capital loaned $27,923 to the Company.  Such loan
is due on demand and bears interest at 10% per annum.

          During 2006, the Company issued  20,000,000 shares of its common stock
to Mark Scharmann, the Company's president as payment of $100,000 of outstanding
notes.


                                      -44-
<PAGE>


          The  Company's  officers  and  directors  were  issued  shares  of the
Company's common stock for services  rendered during the last three years in the
following amounts:

                                   Shares Issued
Year            Officer              or Accrued               Value of Services
----            -------            --------------             -----------------

2006            Mark Scharmann             179,250             $         17,925
2006            Dan Price                   31,500             $          3,150
2006            David Knudson              392,100             $         39,210
2005            Mark Scharmann             177,750             $         17,775
2005            Dan Price                      -0-             $            -0-
2005            David Knudson              500,550             $         50,055
2004            Mark Scharmann             134,250             $      13,425.00
2004            Dan Price                      -0-             $            -0-
2004            David Knudson              223,050             $      22,305.00
2003            Mark Scharmann              84,460             $       8,446.00
2003            Dan Price                      -0-             $            -0-
2003            David Knudson              266,815             $      26,681.50

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

              Exhibit
              Number       Exhibit
              ------------ -----------------------------------------------------
                  3.1      Amended and Restated Articles of Incorporation (1)
                  3.2      Bylaws (1)
                 21.1      Subsidiaries of Registrant (None)
                 31.1      Certification   of   Chief   Executive   Officer   in
                           accordance with 18 U.S.C. Section 1350, as adopted by
                           Section 302 of the Sarbanes-Oxley Act of 2002
                 31.2      Certification  of  Principal   Financial  Officer  in
                           accordance with 18 U.S.C. Section 1350, as adopted by
                           Section 302 of the Sarbanes-Oxley Act of 2002
                 32.1      Certification   of   Chief   Executive   Officer   in
                           accordance with 18 U.S.C. Section 1350, as adopted by
                           Section 906 of the Sarbanes-Oxley Act of 2002
                 32.2      Certification   of   Chief   Financial   Officer   in
                           accordance with 18 U.S.C. Section 1350, as adopted by
                           Section 906 of the Sarbanes-Oxley Act of 2002

                                      -45-
<PAGE>


                      (1)  Previously Filed

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

2006

Independent Auditors

         On July 27,  2005,  we  appointed  Spector  & Wong,  LLP to  audit  the
consolidated  financial  statements of the Company for the year ending  December
31,  2005 and to report the  results of their  audit to our Board of  Directors.
Spector & Wong,  LLP was also  appointed as the  Company's  auditor for the year
ended December 31, 2006. As an inactive Company our Board of Directors serves as
our audit committee.

Fees billed to the Company by Spector & Wong, LLP

                                              2006                 2005
                                         ---------------      -------------
          (1)    Audit Fees              $     18,500         $    14,500
          (2)    Tax Fees                $        -0-         $       -0-
          (3)    Other Fees              $        -0-         $       -0-

         (1)      Audit fees billed to the  Company by Spector & Wong,  LLP were
                  for all professional services performed in connection with the
                  audit of the Company's annual financial  statements and review
                  of  those  financial  statements,  reviews  of  our  quarterly
                  reports on Form 10-QSB.  Audit fees during 2006 and 20055 also
                  included audit services related to our compliance with Section
                  404 of the  Sarbanes-Oxley Act regarding our internal controls
                  over financial reporting.

         (2)      Tax services  generally  include  fees for services  performed
                  related to tax compliance, consulting services.

         (3)      Spector  & Wong,  LLP did  not  bill  the  Company  for  other
                  services during 2006 or 2005.

         All audit and non-audit services and fees are pre-approved by the Audit
Committee  or by the  Chairman  of the Audit  Committee  pursuant  to  delegated
authority.

         Effective May 6, 2003, the Securities and Exchange  Commission  adopted
rules that require that before  Spector & Wong,  LLP was engaged by us to render
any auditing or permitted non-audit related service, the engagement be:

     o   approved by our Audit Committee; or

     o   entered  into  pursuant  to   pre-approval   policies  and   procedures
         established  by  the  Audit   Committee,   provided  the  policies  and
         procedures  are  detailed  as to  the  particular  service,  the  Audit


                                      -46-
<PAGE>


         Committee is informed of each service, and such policies and procedures
         do not include delegation of the Audit Committee's  responsibilities to
         management.

         All of the above  services  and fees were  reviewed and approved by our
entire Board of Directors  either before or after the  respective  services were
rendered.  Our Board of Directors has  considered  the nature and amount of fees
billed by Spector & Wong,  LLP and believes  that the  provision of services for
activities unrelated to the audit is compatible with maintaining Spector & Wong,
LLP independence.





                                      -47-
<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: April 12, 2007            By:      /s/ Mark A. Scharmann
                                         ---------------------------------------
                                         President/Principal Executive Officer

Date: April 12, 2007            By:      /s/ 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.
<TABLE>
<CAPTION>
Signature                    Capacity                                                  Date
---------------------------- ------------------------------------------------- ----------------------
<S>                          <C>                                               <C>
/s/ Mark A. Scharmann        President/Principal Executive Officer/Director    April 12, 2007

/s/ Dan Price                Vice President/Director                           April 12, 2007

/s/ David Knudson            Secretary/Treasurer/Principal Accounting          April 12, 2007
                             Officer/Director
</TABLE>

                                      -48-