UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~March 3031, ~~2009.~~2010

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION FROM _______ TO ________.

Commission file number: 000-51777

PACIFIC ALLIANCE CORPORATION

(Exact name of registrant as specified in its charter)

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

~~1661~~986 ~~Lakeview~~West ~~Circle~~2nd Street, Building 12-A, Bay 6, Ogden, UT ~~84403~~84404

(Address of principal executive offices)

~~Registrant's telephone no., including area code: (~~801~~) 399~~-~~3632~~621-5200

(Registrant's telephone no., including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)

Smaller reporting company ý

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

At ~~November~~May 127, ~~2009~~2010, 18,882,267 shares of common stock of the Company ~~had~~were 68outstanding,~~603~~ with an additional 1,~~698~~000,000 shares of Preferred A stock outstanding, convertible into 30,330,000 shares of common stock, ~~$.001~~and ~~par~~2,952,548 ~~value~~shares of Preferred B stock outstanding, convertible into 2,952,548 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	Page
	Balance Sheets	4
	Consolidated Balance Sheets	4
	Statements of Operations	5
	Consolidated Statements of Operations	5
	Statements of Cash Flows	6
	Consolidated Statements of Cash Flows	6
	Notes to Interim Unaudited Financial Statements	7- 11
	Notes to Interim Unaudited Consolidated Financial Statements	7-16

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1217
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1922
Item 4T.	Controls and Procedures	1923

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	2023
Item 1A.	Risk Factors	2023
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2023
Item 3.	Defaults Upon Senior Securities	2024
Item 4.	Submission of Matters to a Vote of Security Holders	2024
Item 5.	Other Information	2024
Item 6.	Exhibits	2024

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Our unaudited consolidated balance sheet at ~~September~~March 3031, ~~2009~~2010 and our audited balance sheet at December 31, ~~2008~~2009; the related unaudited consolidated statements of operations for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2009~~2010 and ~~2008 and from inception of the development stage (December 21, 1995 through September 30,~~ 2009); and the related unaudited ~~statement~~consolidated statements of cash flows for the ~~nine~~three month ~~periods~~period ended ~~September~~March 3031, ~~2009~~2010 and ~~2008 and from inception of~~ the ~~development~~year ~~stage~~ended (December 2131, ~~1995 through September 30,~~ 2009), are attached hereto.

PACIFIC ALLIANCE CORPORATION

(ACONSOLIDATED ~~DEVELOPMENT~~BALANCE ~~STAGE~~SHEETS ~~COMPANY)~~

BALANCE SHEETS


		As of		As of
		March 31,		December 31,
		2010		2009
ASSETS
Current Assets
Cash	$	240,801	$	610,088
Accounts receivable, net		3,277,349		909,020
Inventory		1,635,980		1,249,068
Prepaid expenses and other current assets		2,400,584		3,350
Total Current Assets		7,554,714		2,771,526

Property and equipment, net		12,807,198		180,053

TOTAL ASSETS	$	20,361,912	$	2,951,579

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	989,116	$	322,899
Accrued liabilities		4,843,451		71,979
Tax Liabilities		367,130		366,283
Notes Payable to Related Parties		-		167,600
Total Current Liabilities		6,199,697		928,761

Long-Term Debt		6,038,052		-

Total Liabilities		12,237,749		928,761

Stockholders' Equity
Common Stock, par value $0.001, authorized 250,000,000 shares;
18,882,267 and 3,882,267 issued and outstanding, respectively		18,882		3,882
Series A Preferred shares, par value $0.001, authorized 5,000,000 shares;
1,000,000 and 1,000,000 shares issued and outstanding, respectively		1,000		1,000
Series B Preferred shares, par value $0.001, authorized 3,300,000 shares;
2,952,548 and none issued and outstanding, respectively		2,608,649		-
Paid-in Capital		5,908,384		2,428,884
Preferred stock subscriptions		-		1,269,000
Superior members' capital		-		-
Superior's memberships subscriptions receivable		(250,000)		(1,135,761)
Accumulated Deficit		(162,752)		(544,187)
Total Stockholders' Equity		8,124,163		2,022,818

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	20,361,912	$	2,951,579

	As of
	September 30,	December 31,
	2009	2008
	(Unaudited)	(Audited)
ASSETS
Current Assets
Cash	$138,757	$143
Other Receivable	31,600	-
TOTAL ASSETS	$170,357	$143
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accrued Interest	$19,376	$77,921
Other Accrued Expenses	298,797	80,028
Notes Payable	-	137,100
Convertible Notes Payable	118,000	-
Advances from Officer	86,105	315,752
Tax Liabilities	362,639	351,707
Notes Payable to Related Parties	25,000	153,293
Derivative Liability	619,838	-
Total current liabilities	1,529,755	1,115,801
Stockholders' Deficit
Common Stock, par value $0.001, authorized 100,000,000 shares; and
53,904,606 and 37,250,450 shares issued and outstanding	53,905	37,250
Preferred shares, par value $0.001, authorized 5,000,000 shares;
none issued	-	-
Paid-in Capital	5,855,089	3,448,486
Accumulated deficit prior to the developmental stage	(2,632,447)	(2,632,447)
Accumulated deficit during the developmental stage	(4,635,945)	(1,968,947)
Total Stockholders Deficit	(1,359,398)	(1,115,658)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$170,357	$143

See Notes to Interim Unaudited Consolidated Financial Statements

See Notes to Interim Unaudited Financial Statements

PACIFIC ALLIANCE CORPORATION

(ACONSOLIDATED ~~DEVELOPMENT~~STATEMENTS ~~STAGE~~OF ~~COMPANY~~OPERATIONS (Unaudited)

STATEMENTS OF OPERATIONS (Unaudited)


		For the three months ended March 31, 2010		For the three months ended March 31, 2009
Sales:
Sales - products	$	5,967,974	$	391,551
Sales - services		-		-
Total Sales		5,967,974		391,551

Cost of Sales:
Cost of sales - products		4,883,152		331,915
Cost of sales - services		-		-
Total Cost of Sales		4,883,152		331,915

Gross profit		1,084,821		59,636

Operating Expenses:
Selling, general and administrative expenses		591,995		60,187
Total Operating Expenses		591,995		60,187

Operating income (loss)		492,826		(551)

Other income(expenses)
Interest and other expenses		111,394		-
Total other income (expenses)		111,394		-

Net loss before taxes

Provision for income taxes		0		0

Net income /(loss)	$	381,432	$	(551)

Net Income/(loss) per share - basic and diluted	$	0.02	$	0

Weighted average number of common shares		18,882,267		2,257,405

					From Inception of
					the Developmental
					Stage,
	For the three months ended		For the nine months ended		December 21, 1995
	September 30,		September 30,		Through
	2009	2008	2009	2008	September 30, 2009
Operating Expenses:
Selling, General and Administrative Expenses	$54,217	$39,414	$448,426	$110,191	$1,903,588
Tax Penalty and Interest Expense	3,644	3,644	10,932	10,932	174,165
Loss on Investment	-	-	-	-	6,844
Total Operating Expenses	57,861	43,058	459,358	121,123	2,084,597
Other Income (Expenses):
Interest Expense	(101,253)	(14,596)	(1,291,957)	(41,294)	(1,704,741)
Change in Derivative Liability	(465,782)	-	(915,682)	-	(915,682)
Total Other Income (Expenses)	(567,035)	(14,596)	(2,207,639)	(41,294)	(2,620,423)
Net Loss before Extraordinary Item	(624,896)	(57,654)	(2,666,997)	(162,417)	(4,705,020)
Extraordinary Item, Gain on Forgiveness of Tax debt	-	-	-	-	69,075
Net Loss	$(624,896)	$(57,654)	$(2,666,997)	$(162,417)	$(4,635,945)
Net Loss per share, Basic and Diluted	$(0.01)	NIL	$(0.07)	NIL
Weighted Average Number of Shares	43,354,667	37,020,250	39,404,322	36,872,583

See Notes to Interim Unaudited Consolidated Financial Statements

See Notes to Interim Unaudited Financial Statements

PACIFIC ALLIANCE CORPORATION

(ACONSOLIDATED ~~DEVELOPMENT~~STATEMENTS ~~STAGE~~OF ~~COMPANY~~CASH FLOWS (Unaudited)

STATEMENTS OF CASH FLOWS (Unaudited)


		For the three months ended March 31, 2010		For the year ended December 31, 2009
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss	$	381,434	$	(109,356)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation		399,896		68,140
Issuance of common stocks for interest expense		-		33,490
Issuance of stock warrants for note payable consideration		-		24,313
(Increase) Decrease in:
Accounts receivable		(384,790)		(671,323)
Inventory		(370,761)		(841,671)
Prepaid expense and other assets		(660,906)		(3,350)
Increase (Decrease) in:
Accounts payable and accrued expenses		49,769		109,578
Tax liabilities		847		3,644
Net cash used in operating activities		(584,512)		(1,386,535)

CASH FLOW FROM INVESTING ACTIVITIES:
Cash deficit assumed in connection with the Merger		30,560		(19,026)
Purchase of property and equipment		(378,396)		(79,503)
Increase to note receivable		(398,294)		-
Net cash used in investing activities		(746,130)		(98,529)

CASH FLOW FROM FINANCING ACTIVITIES:
Cash overdraft		120,539		-
Line of credit		(123,107)		-
Proceeds from notes payable		(553,294)		260,000
Proceeds from notes payable to related parties		-		417,600
Payments to notes payable to related parties		(150,545)		(250,000)
Payments to Capital Leases		(28,716)		-
Proceeds from preferred stocks subscriptions		1,353,149		1,269,000
Members distributions prior to the Merger		-		(132,000)
Subscription receivable		343,330		269,771
Members contributions		-		-
Net cash provided by financing activities		961,355		1,834,371

NET INCREASE IN CASH		(369,287)		349,307

CASH BALANCE AT BEGINNING OF PERIOD		610,088		30,652

CASH BALANCE AT END OF PERIOD	$	240,801	$	379,959

			From Inception of
			the Developmental
			Stage,
	For the nine months ended		December 21, 1995
	September 30,		Through
	2009	2008	September 30, 2009
Cash Flow from Operating Activities:
Net Loss	$(2,666,997)	$(162,417)	$(4,635,944)
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	98,240	43,275	749,045
Non-cash interest expense	1,265,173	-	1,265,173
Change in derivative liability	915,682	-	915,682
(Increase) Decrease in:
Accounts receivable	-	-	95,841
Increase (Decrease) in:
Accrued expenses	160,224	31,406	475,234
Tax liabilities	10,932	10,932	(13,198)
Net Cash Used in Operating Activities	(216,746)	(76,804)	(1,210,398)
Cash Flow from Investing Activities
Other receivables	(31,600)	-	(31,600)
Purchase of investments	-	-	(30,180)
Proceeds from sale of investments	-	-	23,336
Net Cash Used In Investing Activities	(31,600)	-	(38,444)
Cash Flow from Financing Activities:
Bank overdraft	-	-	(2,587)
Proceeds from notes payable	-	10,000	223,586
Payments to note payable	(137,100)	-	(188,377)
Proceeds from convertible notes	882,000	-	882,000
Proceeds from notes payable to related parties	-	1,000	128,084
Payments to notes payable to related parties	(128,293)	-	(128,293)
Advances from officer	119,100	88,700	1,163,256
Repayment of advance from officer	(348,747)	(25,880)	(974,919)
Proceeds from issuance of common stock	-	-	25,000
Proceeds from common stock subscription	-	-	259,849
Net Cash Flow Provided by Financing Activities	386,960	73,820	1,387,599
Net Increase in Cash	138,614	(2,984)	138,757
Cash Balance at Beginning of Period	143	29	-
Cash Balance at End of Period	$138,757	$(2,955)	$138,757
Supplemental Disclosures of Cash Flow Information
Interest paid	$63,861	$17,955
Non-cash Activities:
Conversion of convertible notes to common stock	$770,000
Conversion of derivative liability into additional paid in capital	$1,541,430

See Notes to Interim Unaudited Consolidated Financial Statements

See Notes to Interim Unaudited Financial Statements

~~NOTE~~PACIFIC 1ALLIANCE ~~– ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~CORPORATION

~~Organization~~STATEMENTS ~~and~~OF ~~Going~~CASH ~~Concern~~FLOWS ~~Pacific Alliance Corporation~~ (~~the “Company”~~Unaudited) ~~is a development stage Company and attempts to locate a new business~~ (~~operating company~~continued)~~, 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.~~

Pacific Alliance Corporation, 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.


		For the three months ended March 31, 2010		For the year ended December 31, 2009
Supplemental Disclosures of Cash Flow Information:
Taxes Paid	$	-	$	-
Interest paid	$	111,394	$	-

Schedule of Noncash Investing and Financing Activities:
Issuance of common stocks to acquire Star Leasing, Inc. Net tangible assets acquired	$	3,844,852	$	-
Property plant and equipment	$	12,648,644	$	-
Net liabilities assumed	$	(11,993,496)	$	-
Total Purchase Price	$	4,500,000

~~The~~See ~~Company~~Notes 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 aInterim ~~third~~Unaudited ~~party,~~Consolidated ~~Starcom. The~~Financial ~~purchaser assumed all post-petition liabilities and all obligations collateralized by the assets acquired.~~Statements

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. The IRS portion of tax liabilities was payable in cash by quarterly installments (see note 2). Repayment of other taxes is still being negotiated.

The accompanying financial statements have been prepared on a going concern basis, which contemplated the June 30, 2009 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 nine months ended September 30, 2009, the Company funded its disbursements using loans from an officer and other notes.

Presentation of Interim Information The financial information at September 30, 2009 and for the three and nine months ended September 30, 2009 and 2008 are unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information refer to the Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2008.

The balance sheet as of December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The results for the three and nine months ended September 30, 2009 may not be indicative of results for the year ending December 31, 2009 or any future periods.

Use of estimates The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates.

~~NOTE~~PACIFIC 1ALLIANCE ~~– ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~CORPORATION

~~Income~~NOTES ~~(Loss)~~TO ~~Per~~INTERIM ~~Common~~UNAUDITED ~~Share~~CONSOLIDATED ~~The~~FINANCIAL Company accounts for income (loss) per share in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share.” SFAS No. 128 requires that presentation of basic and diluted earnings per share for entities with complex capital structures. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Diluted net loss per common share does not differ from basic net loss per common share as the Company lacks of dilutive items. STATEMENTS

~~Convertible~~NOTE ~~Notes~~1 ~~Payable~~– ~~and~~HISTORY ~~Derivative~~OF Liabilities The Company accounts for convertible notes payable in accordance with Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard requires the conversion feature of convertible debt be separated from the host contract and presented as a derivative instrument if certain conditions are met. Emerging Issue Task Force (EITF) 00-19, "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock" and EITF 05-2, "The Meaning of "Conventional Convertible Debt Instrument" in Issue No. 00-19" were also analyzed to determine whether the debt instrument is to be considered a conventional convertible debt instrument and classified in stockholders' equity. The convertible notes payable were evaluated and determined not conventional convertible and, therefore, because of certain terms and provisions including liquidating damages under the associated registration rights agreement the embedded conversion option was bifurcated and has been accounted for as a derivative liability instrument. The accounting guidance also requires that the conversion feature be recorded at fair value for each reporting period with changes in fair value recorded in the statements of operations.OPERATIONS

APacific ~~Black-Scholes~~Alliance ~~valuation~~Corporation ~~calculation~~(“Pacific” ~~was~~or ~~applied to~~ the ~~conversion~~“Company”), ~~features~~whose atname ~~issuance~~was ~~dates~~changed ~~and~~from ~~report~~Pacific ~~dates~~Syndication, Inc. ~~The~~in ~~issuance~~1997, ~~date~~was ~~valuations~~originally ~~were~~incorporated ~~recorded~~in asDecember a1991 ~~interest~~under ~~expense~~the ~~reflected~~laws onof the ~~statements~~State of ~~operations~~Delaware. It ~~The~~also ~~reporting~~became ~~date~~a ~~valuations~~California ~~were~~corporation ~~used~~in to1991. Pacific ~~record~~Syndication, ~~the~~Inc. ~~fair~~was ~~value~~engaged ofin ~~these instruments at~~ the ~~end~~business of ~~the~~videotape ~~reporting~~duplication, ~~period~~standard ~~with~~conversion ~~any~~and ~~difference~~delivery ~~from~~of ~~prior~~television ~~period~~programming. In ~~calculations~~1994, ~~reflected~~Pacific inSyndication, ~~the~~Inc. ~~statement~~merged ofwith ~~operations.~~Kaiser Research, Inc.

~~New~~The ~~Accounting~~Company ~~Pronouncements:~~filed ~~Pacific~~a ~~Alliance~~petition ~~Corporation~~for ~~does~~Chapter ~~not~~11 ~~believe~~under ~~newly~~the ~~issued~~Bankruptcy ~~accounting~~Code ~~pronouncements~~in ~~will~~June ~~have~~1995. The ~~any~~debtor ~~material~~in ~~impact~~possession onkept ~~its~~operating ~~financial~~until ~~statements~~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.

~~NOTE~~In 21997, –a ~~TAX~~reorganization ~~LIABILITIES~~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. The warrants expired in June 2002, and none were exercised. The IRS portion of tax liabilities was payable in cash by quarterly installments. Repayment of other taxes is still being negotiated.

~~The~~On October 30, 2009, the Company ~~owes~~completed ~~back~~a ~~taxes~~"reverse toacquisition" transaction with Superior Filtration Products LLC ("Superior”), from which the ~~IRS~~Company acquired all of the outstanding membership interest of Superior from the Superior Members in exchange for 1,000,000 ~~California~~shares ~~Franchise~~of ~~Tax~~Pacific ~~Board~~Series A Convertible Preferred Stock (“Series A Preferred Stock”). Not earlier than December 1, ~~California~~2009, ~~State~~the ~~Board~~1,000,000 shares of ~~Equalization~~Series A Preferred Stock are convertible into 606,000,000 ~~and~~pre-split ~~County~~shares of ~~Los~~the ~~Angeles~~Company’s common stock. Assuming that the shares of Series A Preferred Stock had been converted into Pacific’s common stock on the closing date, ~~before~~the Superior Members would own approximately 88.04% of the ~~bankruptcy~~total shares of Pacific’s common stock then issued and outstanding following the Closing. The ~~Company~~reverse isacquisition ~~attempting~~was completed pursuant to ~~negotiate~~the ~~settlements~~Exchange ~~and~~Agreement (the ~~final~~“Exchange ~~amount~~Agreement”) ~~may~~dated ~~differ~~as ~~from~~of ~~the~~June ~~amount~~26, ~~recorded~~2009, amended on July 31, 2009. Subsequent to the ~~balance~~Merger, ~~sheets~~the Company continued as the surviving entity and ceased being a shell company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended ("Exchange Act").

~~The~~For ~~IRS~~accounting ~~portion~~purposes, ofSuperior ~~tax~~is ~~liabilities~~the ~~was~~acquirer ~~payable~~ in ~~quarterly~~the ~~installments~~reverse ofacquisition ~~$ 11~~transaction,~~602,~~ and consequently the ~~final~~assets ~~payment~~and ~~was~~liabilities ~~due~~and the historical operations reflected in ~~January~~the ~~2002~~financial statements are those of Superior and are recorded at the historical cost basis of Superior. ~~However,~~ noAll ~~payments~~shares and per share data prior to the acquisition have been ~~made~~restated ~~since~~to ~~April~~reflect ~~2000. As~~the stock issuance as a recapitalization of ~~September~~Superior. ~~30,~~Since ~~2009,~~the ~~and~~reverse ~~December~~acquisition ~~31,~~transaction ~~2008~~is in substance a recapitalization of the Company ~~owes~~and ~~$302,655~~is ~~and~~not ~~$293~~a business combination,~~448~~ topro ~~the~~forma ~~IRS,~~information ~~respectively~~is not presented. ~~The~~ ~~taxes~~Such ~~owed~~pro forma statements of operations would be substantially identical to the ~~IRS~~historical statements of operations of the Company, which are ~~delinquent~~presented ~~and~~in ~~accruing~~the ~~interest~~accompanying atconsolidated 9%statements ~~per~~of ~~annum~~operations.

AsSuperior was organized under the laws of ~~September~~the 30state of Florida on October 22, ~~2009~~2007 and ~~December~~is 31headquartered in Ogden, ~~2008~~Utah. Superior designs, ~~the~~manufactures ~~Company~~and ~~owes~~markets ~~$5,455~~a ~~and~~broad $5range of air filtration products,~~455~~ toincluding ~~California~~(i) ~~Franchise~~high-end ~~Tax~~High ~~Board~~Efficiency Particulate Air (HEPA) filters, ~~respectively. No~~with ~~payments~~at ~~have~~least ~~been~~99.97% ~~made~~efficiency rating, and Absolute Isolation Barriers for the ~~taxes~~creation ~~owed~~of synthesized atmospheres to ~~California~~control ~~Franchise~~manufacturing ~~Tax~~environments ~~Board~~and for the absolute control and containment of contaminants and toxic gases in certain manufacturing processes; (ii) mid-range filters for individual and commercial use, which fall under specifications which are ~~delinquent.~~categorized Noby ~~interest~~minimum isefficiency ~~being~~reporting ~~accrued~~values (MERV) ratings established by the American Society of Heating Refrigeration and Air Conditioning Engineers ("ASHRAE"); ~~however~~and (iii) standard-grade, alow ~~protection~~cost ~~lien~~filters iswith ~~being~~efficiency ~~filed.~~ratings at 35% or better for standard residential and commercial furnace and air conditioning applications.

AsSuperior ofmanagement ~~September~~believes ~~30,~~that ~~2009~~despite ~~and~~Superior’s ~~December~~relative ~~31,~~recent ~~2008~~formation, ~~the~~it ~~Company~~is ~~owes~~already ~~$46,489~~beginning ~~and~~to ~~$45,019~~be torecognized ~~California~~for ~~State~~quality ~~Board~~products, ofexpertise ~~Equalization~~in the filtration industry, ~~respectively~~and innovation in air filtration. NoAs ~~payments~~a ~~have~~manufacturer ~~been~~of ~~made~~commercial, industrial, and ~~the~~residential ~~taxes~~air ~~owed~~filters, toSuperior ~~California~~makes ~~State~~a ~~Board~~variety of ~~Equalization~~products ~~are~~for ~~delinquent~~removing and ~~accruing~~controlling anairborne ~~interest~~particulates atand 9%gaseous ~~per annum~~contaminants.

~~NOTE~~PACIFIC 2ALLIANCE ~~– TAX LIABILITIES (continued)~~CORPORATION

AsNOTES ofTO ~~September~~INTERIM ~~30,~~UNAUDITED ~~2009~~CONSOLIDATED ~~and~~FINANCIAL December 31, 2008, the Company owes $8,040 and $7,785 to the County of Los Angeles, respectively. 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. STATEMENTS

NOTE 31 – ~~SHORT~~HISTORY ~~TERM~~OF ~~NOTE~~OPERATIONS ~~PAYABLE~~ (CONTINUED)

~~The~~On ~~notes~~January ~~payable~~1, ~~bear~~2010, ~~interest~~the atCompany ~~10%~~completed ~~per~~the ~~annum~~acquisition ~~and~~of ~~are~~Star ~~due~~Leasing, onInc., ~~demand~~a North Carolina corporation (Star Leasing). AsThe Company acquired all of ~~September~~the ~~30,~~outstanding ~~2009~~stock ~~and~~of ~~December~~Star ~~31,~~Leasing ~~2008~~from Randall Menscer, the ~~balance~~sole shareholder of the Star Leasing for 15,000,000 million common shares of Pacific. The acquisition was ~~none~~completed pursuant to the Agreement and ~~$137~~Plan of Merger that was dated October 1,~~100,~~ ~~respectively~~2009. The audited financial statements of Star Leasing and proforma statements of operations are incorporated by reference in the Form 8-K filed contemporaneously with this Form 10-Q.

~~NOTE~~Star 4Leasing –Inc. ~~NOTES~~(“Star ~~PAYABLE~~Leasing”), TOheadquartered ~~RELATED~~in ~~PARTIES~~Fayetteville, North Carolina, is a full service trucking, logistical, warehousing and brokerage company. Star Leasing was founded in 1983 and currently has more than 100 employees. It has operations in 48 states, Canada and Mexico. Since its formation, Star Leasing has expanded its business to include full-circle logistical and brokerage services, warehousing, and distribution. Star Leasing provides local delivery for its warehousing and distribution services.

~~During~~NOTE ~~the~~2 ~~nine~~– ~~months~~SUMMARY ~~ended~~OF ~~September~~SIGNIFICANT ~~30,~~ACCOUNTING 2009, the Company paid $128,293 to minority shareholders. The balance for the notes payable to related parties was $25,000 and $153,293 as of September 30, 2009 and December 31, 2008, respectively. These notes bear interest at 10% to 12%, and are due on demand. POLICIES

~~NOTE~~Presentation 5of –Interim ~~CONVERTIBLE~~Information ~~NOTES~~The ~~PAYABLE~~financial information at March 31, 2010 and for the three months ended March 31, 2010 and 2009 are unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information refer to the Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

During the nine months ended September 30, 2009, the Company issued outstanding convertible notes bearing an annual interest rate of 8% and are convertible within six months from the date of each note. The ~~notes contain a convertible feature allowing the holder to convert all or a portion of the outstanding~~ balance ~~into~~sheet ~~the~~as ~~Company’s common stock. Due to the moving conversion price~~ of ~~the~~December ~~Company’s convertible debt~~31, it2009 has ~~bifurcated~~been ~~the~~derived ~~conversion feature~~ from the ~~host~~audited ~~debt~~financial ~~instrument~~statements inat ~~accordance~~that ~~with~~date ~~EITF~~but ~~00-19~~does ~~“Accounting~~not ~~for~~include ~~Derivative~~all Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” accounted for these conversion features as derivative instruments, and valued these conversion features using the Black-Scholes valuation model. Based on the calculations per the valuation model the Company incurred a charge to interest expenses of ~~$1,259,173 at~~ the ~~time~~information ofand ~~issuance,~~footnotes inrequired ~~the~~by ~~nine months ended September 30, 2009~~U. ~~The~~S. ~~Company~~GAAP ~~also recorded an expense of $915,682 as change in derivative liability~~ for ~~the~~complete ~~nine~~financial ~~months ended September 30, 2009 due to an increase in the Company’s stock price at the end of the quarter ended September 30, 2009~~statements.

~~During~~The results for the ~~quarter~~three months ended ~~September~~March 3031, ~~2009,~~2010 ~~the~~may ~~Company~~not ~~converted~~be ~~$764,000~~indicative ~~convertible~~of ~~notes~~results ~~payable~~for ~~into~~the 15year ending December 31,~~671,756~~ ~~shares~~2010 ofor ~~common~~any ~~stock~~future periods.

AsPrinciple of ~~September~~Consolidation ~~30,~~and ~~2009~~Reclassification: The accompanying consolidated financial statements include the ~~amount~~accounts of ~~the~~Pacific ~~convertible~~Alliance ~~notes~~Corporation ~~outstanding~~and ~~totaled~~its ~~$118,000,~~subsidiaries ~~all~~after elimination of ~~which~~all isintercompany ~~short-term~~accounts ~~convertible~~and ~~debt~~transactions. Certain reclassifications have been made to the 2009 financial statements to conform to the 2010 financial statements presentation. Such reclassification had no effect on net losses previously reported. The accompanying consolidated financial statements have been retroactively adjusted to reflect the one-for-twenty reverse stock split effective on December 23, 2009.

~~NOTE~~Use 6of –estimates: ~~STOCKHOLDERS’~~The ~~EQUITY~~preparation of the accompanying consolidated 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.

~~During~~Income ~~the~~Taxes: ~~nine~~Income ~~months~~tax ~~ended~~expense ~~September~~is ~~30,~~based ~~2009,~~on ~~the~~pretax ~~Company~~financial ~~issued~~accounting ~~982,400~~income. ~~shares~~Deferred oftax ~~common~~assets ~~stock~~and ~~for~~liabilities ~~management~~are ~~services,~~recognized ~~pursuant~~for to the ~~provisions~~expected oftax ~~the~~consequences ~~Modified Plan~~ of ~~Reorganization~~temporary ~~approved~~differences bybetween the ~~U.S.~~tax ~~Bankruptcy~~bases ~~Court~~of inassets ~~1997. The~~and ~~stocks~~liabilities ~~were~~and ~~valued~~their ~~$0.10~~reported ~~per share, or $98,240 of total~~amounts.

~~During~~Prior ~~the~~to ~~quarter~~merger, ~~ended~~Superior ~~September~~is ~~30,~~treated ~~2009,~~as ~~the~~a ~~Company~~partnership ~~filed,~~for ~~with~~federal ~~the~~and ~~State~~state ofincome ~~Delaware,~~tax ~~“Certificate~~purposes ofand ~~Designation~~does ofnot ~~Preferences~~incur income taxes. Instead, ~~Rights~~its earnings and ~~Limitations”~~losses ~~for~~are ~~its~~included ~~Series~~in Athe personal returns of the members and Bare ~~convertible~~taxed ~~preferred~~depending ~~stock. The~~on ~~Company~~their ~~has~~personal ~~designated~~tax ~~1,000,000~~situations. ~~and~~The ~~3,300,000~~financial ofstatements ~~its~~for ~~authorized~~the ~~preferred~~three ~~stock~~months ~~shares~~ended ~~into~~March ~~series~~31, A2009 ~~and~~do Bnot ~~Convertible~~reflect ~~Preferred~~a ~~Stock,~~provision ~~respectively~~for income taxes.

As a limited liability company, each member’s liability is limited to amounts reflected in their respective member accounts.

~~NOTE~~PACIFIC 7ALLIANCE ~~– NET LOSS PER SHARE~~CORPORATION

~~The~~NOTES ~~following~~TO ~~table~~INTERIM ~~sets~~UNAUDITED ~~forth~~CONSOLIDATED ~~the~~FINANCIAL ~~computation of basic and diluted net loss per share:~~STATEMENTS

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2009	2008	2009	2008
Numerator:
Net Loss	$(624,896)	$(57,654)	$(2,666,997)	$(162,417)
Denominator:
Weighted Average Number of Shares	43,354,667	37,020,250	39,404,322	36,872,583
Net loss per share-Basic and Diluted	$(0.01)	NIL	$(0.07)	NIL

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~NOTE~~Income 8(Loss) –Per ~~RELATED~~Common ~~PARTY~~Share: ~~TRANSACTIONS~~The Company accounts for income (loss) per share in accordance with ASC 260 (formerly SFAS No. 128), “Earnings Per Share.” ASC 260 requires that presentation of basic and diluted earnings per share for entities with complex capital structures. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares and excludes dilutive potential common shares outstanding, as their effective is anti-dilutive. Dilutive potential common shares consist primarily of stock warrants and shares issuable under convertible preferred stocks and convertible debt.

~~During~~Fair ~~the~~Value ~~nine~~Measurements: ~~months~~On ~~ended~~January ~~September 30~~1, ~~2009~~2008, athe ~~related~~Company ~~party~~adopted ~~purchased~~the ~~$10,000~~provision of ~~the~~ASC ~~Company’s~~820-10 ~~convertible~~(formerly ~~notes~~SFAS No. 157), ~~which~~"Fair ~~subsequently~~Value ~~was~~Measurements," ~~converted~~except ~~into~~as ~~common~~it ~~stock~~applies into those nonfinancial assets and nonfinancial liabilities for which the ~~third~~effective ~~quarter~~date ~~ended~~has ~~September~~been ~~30,~~delayed ~~2009~~by one year. The Company measures at fair value certain financial assets and liabilities, including its marketable securities trading

AnASC ~~officer~~820-10 ofestablishes ~~the~~a ~~Company~~fair ~~advanced~~value ~~$119,100~~hierarchy tothat prioritizes the ~~Company~~inputs ~~during~~to ~~the~~valuation ~~nine~~techniques ~~months~~used ~~ended~~to ~~September~~measure ~~30,~~fair ~~2009~~value. The ~~Company~~hierarchy ~~repaid~~gives the ~~officer~~highest ~~$348,747~~priority ~~during~~to ~~the~~unadjusted ~~nine~~quoted ~~months~~prices ~~ended~~in ~~September~~active ~~30,~~markets ~~2009. These~~for ~~advances~~identical ~~bear~~assets ~~interest~~or atliabilities ~~10%~~(Level 1 measurements) and ~~have~~the nolowest ~~maturity~~priority ~~date. The~~to ~~balance~~unobservable ofinputs ~~advances~~(Level ~~was~~3 ~~$86,105~~measurements). The ~~and~~three ~~$315,752~~levels atof ~~September~~the ~~30,~~fair ~~2009~~value ~~and~~hierarchy ~~December~~under ~~31,~~ASC ~~2008,~~820-10 ~~respectively.~~are described below:

During the quarter ended June 30, 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, $4,500 was recorded as expense during the nine months period ended September 30, 2009 and 2008.?

InLevel ~~accordance~~1 Unadjusted ~~with~~quoted ~~the~~prices ~~modified~~in ~~joint~~active ~~plan~~markets orthat ~~reorganization,~~are ~~management~~accessible ~~is compensated on an hourly basis~~ at athe ~~rate~~measurement ofdate ~~$75 per hour. Such compensation is made through issuance of common stock. Management compensation amounted to $98,240 and $43,275~~ for ~~the nine months ended September 30~~identical, ~~2009~~unrestricted ~~and~~assets ~~2008,~~or ~~respectively (see note 6).~~ liabilities;

~~NOTE 9 – OTHER ACCRUED EXPENSES~~?

~~Accrued~~Level ~~expenses~~2 Quoted ~~consist~~prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of: the asset or liability;

	September 30, 2009	December 31, 2008
Accrued Professional Fees	$75,585	$60,455
Accrued Expenses	23,212	19,573
Payables to Consultant	200,000	-
Total	$298,797	$80,028

OnLevel ~~June~~3 Prices ~~26, 2009, the Board of Directors approved to issue 2,000,000 shares of common stock, valued at $0.10 per share~~ or ~~$200,000,~~valuation totechniques anthat ~~outside~~require ~~consultant~~inputs inthat ~~consideration~~are ofboth ~~services~~significant ~~rendered~~ to the ~~Company. As~~fair ofvalue ~~September~~measurement ~~30,~~and ~~2009,~~unobservable ~~the~~(supported ~~transaction~~by ~~was~~little ~~recorded~~or asno amarket ~~liability since none of the shares were issued~~activity).


	Fair Value Measurements as of March 31, 2010
	Total	Level 1	Level 2	Level 3
Marketable securities
Available-for-sale	$46,204	$46,204

Recent Accounting Pronouncements: In June 2009, the Financial Accounting Standards Board (FASB) issued ASC Statement No. 105, the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (ASC 105). ASC 105 will become the single source authoritative nongovernmental U.S. generally accepted accounting principles (GAAP), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related accounting literature. ASC 105 reorganized the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant SEC guidance organized using the same topical structure in separate sections. The Company adopted ASC 105 on July 1, 2009. The adoption of ASC 105 did not have an impact on the Company’s financial position or results of operations.

In April, 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature: SFAS No. 164, "Not-for-Profit Entities: Mergers and Acquisitions") which governs the information that a not-for-profit entity should provide in its financial reports about a combination with one or more other not-for-profit entities, businesses or nonprofit activities and sets out the principles and requirements for how a not-for-profit entity should determine whether a combination is in fact a merger or an acquisition. This standard is effective for mergers occurring on or after Dec. 15, 2009 and for acquisitions where the acquisition date is on or after the beginning of the first annual reporting period, beginning on or after Dec. 15, 2009. This standard does not apply to the Company since the Company is considered a for-profit entity.

~~NOTE~~PACIFIC 10ALLIANCE ~~– PENDING MERGER~~CORPORATION

OnNOTES ~~June~~TO ~~26,~~INTERIM ~~2009,~~UNAUDITED ~~the~~CONSOLIDATED ~~Company~~FINANCIAL ~~entered into a share exchange agreement with Superior Filtration Products, LLC, a Florida company (“Superior”). The share exchange agreement was completed on October 30, 2009.~~ STATEMENTS

AsNOTE of2 ~~September~~– ~~30,~~SUMMARY ~~2009,~~OF ~~the~~SIGNIFICANT ~~Company~~ACCOUNTING ~~paid~~POLICIES ~~certain expenses on behalf of Superior. The total expenses of $31,600 were included in other receivables.~~(CONTINUED)

In June 2009, the FASB ASC 860-10 (Prior authoritative literature: issued SFAS No. 166, "Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140"), which eliminates the concept of a qualifying special-purpose entity ("QSPE"), clarifies and amends the de-recognition criteria for a transfer to be accounted for as a sale, amends and clarifies the unit of account eligible for sale accounting and requires that a transferor initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. This standard is effective for fiscal years beginning after November 15, 2009. The adoption of this codification did not have material impact on the Company’s financial position, results of operations and cash flows.

In June 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature: SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)") which amends the consolidation guidance applicable to a variable interest entity ("VIE"). This standard also amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is therefore required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. Previously, the standard required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. This standard is effective for fiscal years beginning after November 15, 2009, and for interim periods within those fiscal years. Early adoption is prohibited. The adoption of this codification did not have material impact on the Company’s financial position, results of operations and cash flows.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, which amends FASB ASC Topic 605, Revenue Recognition, and ASU 2009-14, Certain Arrangements That Include Software Elements, which amends FASB ASC Topic 985, Software. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-14 removes tangible products from the scope of software revenue guidance and provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. ASU 2009-13 and ASU 2009-14 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company does not expect the adoption of ASU 2009-13 or ASU 2009-14 to have a material impact on the Company's results of operations or financial position.

In December 2009, the FASB issued ASU 2009-17, Improvements to Financial Reporting Involved with Variable Interest Entities, which codifies SFAS No. 167, Amendments to FASB Interpretation No. 46(R) issued in June 2009. ASU 2009-17 requires a qualitative approach to identifying a controlling financial interest in a variable interest entity ("VIE"), and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. ASU 2009-17 is effective for annual reporting periods beginning after November 15, 2009. The adoption of this codification did not have material impact on the Company’s financial position, results of operations and cash flows. In January 2010, the FASB issued ASU 2010-06, Improving Disclosures About Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. ASU 2010-06 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The adoption of this codification did not have material impact on the Company’s financial position, results of operations and cash flows.

~~ITEM~~PACIFIC 2.ALLIANCE ~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~CORPORATION

~~Forward~~NOTES ~~Outlook~~TO ~~and~~INTERIM ~~Risks~~UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~This~~NOTE ~~periodic~~3 ~~report~~– ~~contains~~BUSINESS 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 periodic report, 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-Q. These forward-looking statements represent our judgment as of the date of this Form 10-Q. 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.ACQUISITIONS

~~Recent~~Merger ~~Developments~~with Superior Filtration Products, LLC

OnPursuant to terms of an Exchange Agreement dated June 26, 2009, weamended ~~entered~~on ~~into~~July an31, ~~Exchange~~2009, ~~Agreement (~~the ~~“Exchange~~Company ~~Agreement”)~~acquired ~~with~~all ~~Superior~~of ~~Filtration~~the ~~Products,~~outstanding ~~LC,~~membership ainterest ~~Florida~~of ~~limited~~Superior ~~liability~~from ~~Company~~the (“Superior~~”),~~ ~~and~~Members ~~the~~in ~~members~~exchange for 1,000,000 shares of ~~Superior~~Pacific Series A Convertible Preferred Stock (“~~Superior~~Series ~~Members~~A Preferred Stock”). ANot ~~copy~~earlier ofthan December 1, 2009, the ~~Exchange~~1,000,000 ~~Agreement~~shares ~~was~~of ~~filed~~Series asA anPreferred ~~exhibit~~Stock toare aconvertible ~~Form~~into 830,330,000 post-Ksplit ~~that~~(606,600,000 ~~was~~pre-split) ~~filed~~shares ~~with~~of the ~~Securities~~Company’s ~~and~~common ~~Exchange~~stock. Assuming ~~Commission~~that ~~(“SEC”)~~the onshares ~~June~~of ~~30,~~Series ~~2009. An~~A ~~amendment~~Preferred toStock ~~the~~had ~~Exchange~~been ~~Agreement~~converted ~~was~~into ~~effective~~Pacific’s common stock on ~~July~~the ~~31,~~closing ~~2009~~date, ~~and~~the aSuperior ~~copy~~Members ofwould ~~such~~own ~~amendment~~approximately ~~was~~88.04% ~~filed~~of ~~with~~ the ~~SEC~~total ~~under~~shares ~~cover~~ of aPacific’s ~~Form~~common ~~8-K~~stock ~~filed~~then onissued ~~August~~and 5,outstanding ~~2009~~following the Closing.

The ~~Exchange~~acquisition ~~Agreement~~is ~~and~~a ~~the~~reverse ~~acquisition~~takeover ~~agreed~~transaction towhereby ~~therein,~~Superior ~~was~~is ~~closed~~identified (as the ~~“Closing”~~acquirer (accounting parent) onof ~~October~~Pacific. ~~30,~~The ~~2009~~purchase ~~(the~~price ~~“Closing~~of ~~Date”). A~~Superior ~~Form~~is ~~8-K~~assumed ~~was~~to ~~filed~~be onequal ~~November~~to 5,its ~~2009~~book ~~reporting~~value and no goodwill is recorded on the ~~Closing~~transaction. ~~and~~The ~~including~~amount ~~business~~ascribed ~~and~~to ~~financial~~the ~~information~~shares ~~about~~issued to the Superior’s asmembers ~~well~~represents asthe ~~pro~~net ~~forma~~book ~~information~~value ~~about~~of ~~the~~Pacific ~~combined~~at ~~company~~date of closing October 30, 2009.

AtDetails ~~the Closing, we acquired all~~ of the ~~outstanding~~net ~~membership~~liabilities ~~interests~~assumed ~~of Superior (“Superior Member Interests”)~~ from ~~the Superior Members in exchange for 1,000,000 shares of~~ Pacific ~~Series~~at Abook ~~Convertible~~value ~~Preferred~~at ~~Stock (“Series A Preferred Stock”). Not earlier than December 1, 2009,~~ the ~~1,000,000~~closing ~~shares~~date ~~of Series A Preferred Stock~~ are ~~convertible~~as into 606,600,000 shares of our common stock. Assuming that the shares of Series A Preferred Stock had been converted into our common stock on the Closing Date, the Superior Members would own approximately 88.04% of the total shares of Pacific common stock then issued and outstanding immediately following the Closing. follows:

Simultaneously to the Closing, we completed the initial closing of a private cash offering (“Private Placement”) of shares of its Series B Preferred Stock in which a total of 665,000 Series B Preferred Shares have been sold to date raising gross proceeds of $665,000. The Series B Shares are convertible into 13,300,000 shares of the Company’s common stock. A registered broker-dealer and a member of the Financial Industry Regulatory Authority (“FINRA”) was retained as the exclusive placement agent for the Private Placement and received a commission of $66,500 (ten (10%) percent of the gross proceeds) and an expense allowance of $5,000. The placement agent was also issued two shares of our common stock for each one Series B Share sold in the Offering for a total of 1,330,000 shares of common stock issued to the placement agent as additional compensation. Offering proceeds will be used for, among other things, professional fees, payment of our outstanding liabilities including $25,000 to Hyacinth Resources, LLC. (Such $25,000 payment was a compromise of a $120,000 obligation by us to Hyacinth Resources, LLC.)



Current assets	$	-

Current liabilities:
Accounts Payable		18,213
Cash overdraft		19,026
Tax liabilities		362,639
		399,878

Net liabilities assumed	$	(399,878)

12Acquisition of Star Leasing, Inc.

InOn ~~connection~~January ~~with~~1, 2010, the Company completed the acquisition of ~~Superior,~~all ~~our~~issued ~~three~~and ~~existing~~outstanding ~~directors~~common ~~have~~stocks ~~remained~~of asStar ~~directors~~Leasing, ~~and~~Inc. ~~two~~(“Star ~~designees~~Leasing”) pursuant to the Agreement and Plan of ~~Superior~~Merger ~~were~~that ~~appointed~~was asdated ~~additional~~October ~~directors~~1, 2009. ~~Our~~ ~~pre-closing~~The ~~president,~~purchase ~~vice~~price ~~president~~for ~~and~~this ~~treasurer~~acquisition ~~resigned~~was as15,000,000 ~~officers~~shares ~~and~~of athe ~~new~~Company’s ~~CEO/President/Treasurer~~common ~~was~~stock, ~~appointed~~approximately valued at $0. ~~The~~30 ~~pre-closing~~per ~~secretary~~share, ~~remained~~which asis ~~secretary~~ the average price of ~~Pacific~~the Company’s common stock over the five trading days immediately preceding and two trading days immediately following October 1, 2009.

WeThe ~~intend~~acquisition towas ~~seek~~accounted ~~stockholder approval of a 1-~~for~~-20~~ ~~reverse~~as ~~stock~~purchase ~~split~~transaction ~~and~~under aSFAS ~~proposal to increase the number of shares of capital authorized as soon as practical~~No. ~~When~~ ~~that occurs~~141, weand ~~anticipate~~accordingly, ~~that all of~~ the ~~shares~~tangibles ofassets ~~Series~~acquired Awere ~~Preferred~~recorded ~~Stock~~at ~~and~~their ~~Series~~fair Bvalue ~~Preferred~~at ~~Stock~~the ~~will~~date ~~be converted into shares~~ of ~~common~~the ~~stock~~acquisition. We ~~anticipate~~The ~~that~~results ifof ~~the~~operations ~~1-for-20~~of ~~reverse~~Star ~~split~~Leasing, isInc. ~~completed~~have ~~and~~been ~~all~~included ~~shares~~in ofthe ~~preferred~~Company’s ~~stock~~consolidated ~~are~~financial ~~converted~~statements ~~into~~subsequent ~~common~~to ~~stock,~~the ~~there~~date ~~will be a total~~ of ~~34,450,185 shares of common stock issued and outstanding~~acquisition.

~~Mark~~The A.purchase ~~Scharmann~~price ~~and~~was ~~David~~approximately ~~Knudson, officers and directors of Pacific, are members and affiliates of Sycamore Ventures, LLC, Series 1, a Utah limited liability company (“Sycamore”)~~$4.5 Mrmillion. ~~Scharmann~~Direct istransaction ~~the~~costs ~~managing~~incurred ~~member~~in ofconnection ~~Sycamore. Sycamore has, and will, enter into various agreements~~ with ~~Superior which provide that Sycamore will attempt to assist Superior in~~ the ~~marketing~~acquisition of its filter and other products by referring potential customers to Superior. Such agreements have, and will, provide that Sycamore will be compensated by Superior with commissions for products actually purchased by customers who were ~~referred to Superior by Sycamore and its members~~immaterial. The ~~commissions~~allocation ~~that may be payable by Superior to Sycamore will range from 5% to 10%~~ of the ~~net~~purchase ~~income~~price ~~from products sold by Superior~~ to ~~the~~assets ~~customers~~acquired ~~referred by Sycamore~~ and ~~its~~liabilities ~~members.~~assumed ~~The~~is ~~payment~~presented ofin ~~such commissions will be solely for actual product sales and not attributed to~~ the ~~sale~~table ofthat ~~any securities. As members of Sycamore, Mr. Scharmann and Mr. Knudson will share in commissions actually paid to Sycamore by Superior.~~follows:

Sycamore intends to assist Superior in its marketing efforts going forward. The relationship between Sycamore and Superior relating to commissions for product sales, may result in a conflict of interest for Mr. Scharmann and Mr. Knudson.


Tangible assets acquired				$ 3,844,852
Property and equipment				12,648,644
Goodwill
Liabilities assumed				(11,993,496)
Total purchase price				$ 4,500,000

~~Other~~NOTE ~~than~~3 as– ~~disclosed~~BUSINESS ~~above,~~ACQUISITIONS ~~there were and are no material relationships between us, or our affiliates and Superior, other than as contemplated by the Exchange Agreement.~~(CONTINUED)

~~General~~The following summary, prepared on an unaudited pro forma basis, reflects the condensed consolidated results of operations for the three months ended March 31, 2009 assuming Star Leasing had been acquired at the beginning of the period presented:

Due to the Exchange Agreement and Closing described above, the following information, describing the financial condition and business plan of Pacific at September 30, 2009, prior to the completion of the acquisition of Superior, is historical in nature and may have little or no bearing on the operations of the company going forward. Reference is made to the Current Report on Form 8-K filed with the Commission on November 5, 2009, which includes business and financial information about Superior, and pro forma financial information about the post-Closing company and its future business plans.12

~~Pacific~~PACIFIC ~~Alliance~~ALLIANCE Corporation (the “Company”) is a Delaware corporation which was inactive at September 30, 2009 and through the completion of the acquisition described above. 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. On February 23, 2000, United States Bankruptcy Judge 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.CORPORATION

~~History~~NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


			2009
Net revenue			$4,618,203
Net income (loss)			$(310,888)
Basic and diluted earnings per share			$(0.14)

13NOTE 4 – BALANCE SHEET DETAILS

~~acquired~~The afollowing ~~privately~~tables ~~held~~provide ~~corporation~~details ~~(“Private~~of ~~PSI”)~~selected inbalance asheet ~~merger transaction, and in connection therewith, the Company’s name was changed to Pacific Syndication, Inc.~~items:

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.


		As of		As of
		mmmm d, yyyy		December 31, 2009
Accounts Receivable, Net
Accounts Receivable	$	909,020	$	237,697
Allowance for Bad Debt		-		-
Total Accounts Receivable, Net	$	909,020	$	237,697

Inventory
Raw Materials	$	783,032	$	100,675
Work-in Process		-		29
Packaging Supplies		15,161		27,410
Finished Goods		450,875		279,283
Total Inventory	$	1,249,068	$	407,397

Property and Equipment, Net
Automobile	$	42,125	$	6,800
Machinery and Equipment		199,740		179,300
Office Furniture and Equipment		7,218		-
Tools and Dies		53,420		36,900
		302,503		223,000
Accumulated Depreciation		(122,450)		(54,310)
Total Property and Equipment, Net	$	180,053	$	168,690

Accrued Liabilities
Accrued payroll and related taxes	$	70,776	$	29,700
Other accrued liabilities		1,203		-
Total Accrued Liabilities	$	71,979	$	29,700

~~Private~~NOTE ~~PSI~~5 ~~was~~– ~~formed~~NOTES under the laws of the State of Delaware in November 1991. Private PSI was formed to engage in the business of providing a variety of television industry related services to its clients. Such services included, but were not limited to, video tape duplication, standards conversion and delivery of television programming by way of conventional carriers (such as UPS, Airborne and Federal Express) and by satellite or fiber optic transmission.PAYABLE

~~Private~~During ~~PSI provided its clients (primarily television producers~~2009, ~~programmers~~the ~~and~~Company ~~syndicators)~~received ~~with several related but different services~~$260,000 ~~including~~from ~~distribution~~other ofnotes ~~syndicated~~payable. ~~programming~~The tonotes ~~television~~are ~~stations~~unsecured, ~~program~~due ~~mastering~~in ~~and~~one ~~standards~~year ~~conversion,~~from ~~infomercial~~the ~~customization~~date ~~and~~of ~~delivery,~~the ~~master~~note ~~tape~~agreement and ~~film~~bear ~~storage,~~interest ~~library~~at ~~distribution~~8% ~~services~~per ~~and~~annum. On ~~video~~November ~~integration~~17, ~~and~~2009, ~~delivery~~notes ~~services. Private~~payable ~~PSI~~to ~~developed~~others ~~its~~amounted ~~own~~to ~~tape~~$543,390, ~~tracking~~including ~~and~~accrued ~~vault~~interest ~~library~~of ~~management~~$33,490, ~~system~~was ~~and~~converted ainto ~~system~~shares ~~for~~of ~~infomercial~~the ~~customization~~Company’s ~~and~~common ~~voice-over integration~~stock.

~~From~~As ~~its~~of ~~inception~~December 31, ~~Private~~2008, ~~PSI was undercapitalized. It funded its initial operations through~~ the ~~factoring~~balance of ~~its~~the ~~accounts~~notes ~~receivable. The~~payable ~~Company was unable~~ to ~~commence~~others ~~operations~~was ~~in the television programming services business and ultimately~~$250,000, ~~substantially all of its assets were sold~~ and itclassified ~~discontinued~~as ~~its operations~~long-term.

~~Chapter~~NOTE 116 ~~Plan~~– ofSUBSCRIPTION ~~Reorganization~~RECEIVABLE

On ~~June~~November 231, ~~1995~~2007, ~~the~~Superior ~~Company~~agreed ~~filed~~to aissue ~~Petition~~1,250,000 ~~under~~membership ~~Chapter~~units 11 of ~~the~~Superior ~~U.S.~~(approximately ~~Bankruptcy~~4% ~~Code. As~~ of ~~December~~total ~~1995,~~membership ~~the~~units) ~~Company~~to ~~had~~a ~~sold~~service ~~most~~provider offor ~~its~~a ~~assets,~~subscription ~~reduced~~receivable ~~its~~of ~~debt and terminated its operations. By that date~~$1, ~~there was no trading market in the Company’s securities. In 1996~~250, ~~Troika Capital, Inc~~000. ~~(“Troika”),~~The aconsideration ~~Utah~~for ~~corporation,~~the ~~agreed~~units toshall ~~assist~~be ~~the~~payable ~~Company~~ in ~~developing~~kind aby ~~Plan~~and ofthrough ~~Reorganization which would provide~~ the ~~Company,~~freight ~~its~~services ~~shareholders~~provided ~~and~~by ~~creditors~~the ~~with~~provider. On atJanuary ~~least~~1, a2010, ~~possibility of recouping all or some of their investment in~~ the ~~Company~~service orprovider ~~the~~was ~~debts~~acquired ~~owed to them~~ by the Company. ~~Troika~~and isthe amembership ~~privately-owned~~units ~~Utah corporation which has been involved~~ in ~~various~~Superior ~~company~~was ~~formations,~~cancelled ~~mergers~~ and ~~financings~~returned.

~~Mark~~On A.December ~~Scharmann~~6, ~~the President of Troika~~2007, ~~and now~~ the ~~President of the~~ Company, ~~and~~agreed ~~his~~to ~~affiliates~~issue 1,100,000 ~~were~~membership ~~shareholders~~units of the Company ~~and~~(approximately ~~creditors of the Company at the time the Company commenced its bankruptcy proceeding~~3. ~~Mr.~~6% ~~Scharmann was a founder~~ of ~~the~~total ~~Company~~membership inunits) ~~1986~~for ~~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~~note ~~and~~receivable ~~later became a creditor~~ of ~~the Company~~$250,000. ~~Many of the investors in the Company are friends and acquaintances of Mr. Scharmann.~~ The ~~Company~~note ~~believed~~carries ~~that~~interest ifat it8% ~~were to liquidate, there would be a total loss to creditors~~ and ~~shareholders. Because~~due ofon ~~his~~December ~~own equity and debt investment in the Company~~5, ~~and his relationship with other shareholders and creditors of the Company, Mr~~2011. ~~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~~NOTE ~~Plan~~7 of– ~~Reorganization~~STOCKHOLDERS’ ~~developed for the Company by Troika was essentially as follows:~~EQUITY

	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.

In July 2009, the Company commenced the private placement sale of Series B preferred stock at $1.00 per share. The private placement was closed in March 2010. As of March 31, 2010, the Company sold and issued 2,952,548 shares of Series B preferred stock. Each Series B share had one voting right and is convertible into one share of the Company’s common stock.

14NOTE 8 – NET LOSS PER SHARE

3.The ~~File~~following ~~all~~table ~~required~~sets ~~Securities~~forth ~~and Exchange Commission reports which may be necessary to bring~~ the ~~Debtor~~computation ~~current in its filing requirements under Section 15(d)~~ of ~~the~~basic ~~1934 Act. File all SEC reports which become due in the future. 4. File any tax returns which are in arrears~~ and ~~file~~diluted ~~all~~net ~~required~~loss ~~tax~~per 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.share:

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.



	For the Three Months Ended
	March 31,
	2010	2009
Numerator:
Net gain (loss)	$381,432	$(551)
Denominator:
Weighted average of common shares	18,882,267	2,257,405

Net (gain) loss per share-basic and diluted	$0.02	$(0)

~~Post Confirmation Date Activities~~13

~~Since~~PACIFIC ~~the~~ALLIANCE ~~Confirmation of the Plan of Reorganization the following have occurred:~~CORPORATION

1.NOTES ~~Pre-Confirmation~~TO ~~Date~~INTERIM ~~non-tax~~UNAUDITED ~~debt~~CONSOLIDATED inFINANCIAL the amount of approximately $1,458,000 was converted into 1,458,005 shares of the Company common stock. 2. The Company has audited financial statements for the years ended December 31, 1995 through 2008. 3. Tax liabilities to the Internal Revenue Service are approximately $293,448 as of December 31, 2008. 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’s common stock is now quoted on the OTC Bulletin Board under the trading symbol PALC. 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.STATEMENTS

15NOTE 9 – CONCENTRATIONS OF CREDIT RISK

	8.	The Company has prepared and filed periodic reports through the period ending September 30, 2009.
	9.	Effective February 22, 2000 - the Bankruptcy Court entered an Order of Final Decree closing the Bankruptcy Case.

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of accounts receivable and cash deposits. The Company places its cash with high quality financial institutions and limits its credit exposure with any one financial institution. At times, the Company’s bank account balances may exceed federally insured limits.

~~Forward~~During ~~Outlook~~the year ended December 31, 2009, sales from two customers amounted to $1,779,534 and ~~Risks~~comprised approximately 75% of total product sales. The loss of any of these customers could have a material adverse effect on the

This periodic report 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 businessesCompany. ~~All~~ ~~statements,~~The ~~other~~total ~~than~~amount ~~statements~~due offrom ~~historical~~these ~~facts,~~customers ~~included~~was ~~in this periodic report~~$535, ~~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~~785. InManagement ~~general,~~believes 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~~accounts ~~expectations~~receivable 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~~these ~~expectations~~customers are ~~disclosed~~fully ~~hereunder and elsewhere in this Form 10-Q~~collectible. These forward-looking statements represent our judgment as of the date of this Form 10-Q. 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.

~~Plan~~During the year ended December 31, 2008, sales from three customers amounted to $557,759 and comprised approximately 82% of ~~Operation~~total product sales. The loss of any of these customers could have a material adverse effect on the Company. The total amount due from these customers was $235,138. Management believes that accounts receivable from these customers are fully collectible.

~~Our~~NOTE ~~current~~10 ~~plan~~– ofRELATED ~~operation~~PARTY is to acquire another operating company. It is likely that any acquisition will be a “reverse merger” acquisition whereby we acquire a larger company by issuing shares of our common stock to the shareholders of the larger company. Although we would be the surviving or parent company from a corporate law standpoint, the shareholders of the larger company would be our controlling shareholders 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 us 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 we are able to acquire another company, there can be no assurance that we will ever operate at a profit. TRANSACTIONS

~~Results~~The Company purchases materials from a supplier, which is owned and controlled by the Company’s president. Services and products purchased from this supplier were approximately $254,304 and $181,700 in 2009 and 2008, respectively there were no purchases made during the first three months of ~~Operations~~2010.

WeAs ~~have~~of ~~not~~December ~~conducted~~31, ~~any~~2009, ~~active~~the ~~operations~~Company ~~since~~had ~~our~~a ~~Confirmation~~note ~~Date~~payable ~~and~~of ~~generated~~$167,600 noto ~~revenue during~~ the ~~reporting~~spouse ~~period~~of ~~ended~~the ~~September~~Company’s ~~30, 2009~~CEO. WeThe ~~anticipate~~note ~~that~~bears weinterest ~~will~~at ~~not~~8% ~~generate~~per ~~any~~annum ~~revenues~~and ~~until~~due weon ~~complete~~demand. ~~the~~The ~~transaction~~note ~~contemplated~~was bypaid ~~the~~in ~~Exchange~~full ~~Agreement~~during ~~described~~the ~~above~~first orquarter ~~acquire~~of ~~or merge with another company~~2010.

WeDuring ~~had total expenses of $2~~2009,~~666,997~~ ~~for~~ the ~~nine~~Company ~~month~~received ~~period ended September 30, 2009 compared to~~ $~~162~~250,~~417~~000 ~~for~~from ~~the~~issuing ~~nine~~a ~~month~~note ~~period~~payable ~~ended~~to ~~September 30, 2008,~~ an ~~increase~~affiliate of ~~$2,504,580,~~Pacific’s aformer ~~substantial~~president ~~increase~~and ~~due~~current ~~primarily~~secretary. toThe ~~the~~note ~~recording~~is ofunsecured, adue ~~large increase~~ in ~~interest~~three ~~expense~~months ~~related~~from to the ~~valuation~~date of the ~~conversion features of the convertible notes payable as a derivative instrument~~note, ~~the~~and ~~recording~~bears ofinterest ~~changes~~at in8% ~~the~~per ~~valuation~~annum. ofThe ~~the~~note ~~derivative~~was ~~liability,~~repaid ~~plus increases~~ in ~~compensation~~October ~~expense and professional fees~~2009. In ~~accordance~~consideration ~~with~~of the ~~modified~~note ~~joint plan or reorganization~~payable, ~~management~~the isCompany ~~compensated~~also onissued ~~an hourly basis at~~ a ~~rate~~warrant ofto ~~$75~~purchase ~~per hour. Accordingly~~25,000 ~~our~~post-split ~~total compensation expense~~ (~~stock~~500,000 ~~issued for services~~pre-split) ~~for~~shares ~~the~~of ~~nine month period ended September 30, 2009 was $98,240 compared to $43,275 for~~ the ~~nine~~Company’s ~~month~~common ~~period~~stock. ~~ended~~The ~~September~~warrant ~~30,~~is ~~2008,~~exercisable anat ~~increase of~~ $~~54,965~~1.00 ~~Such~~post-split ~~compensation is paid through the issuance of common stock valued at~~ ($0.1005 pre-split) per share ~~based~~and expires on ~~the~~June ~~reorganization~~30, ~~plan approved by the Bankruptcy court~~2014.

~~Our~~NOTE ~~total~~11 ~~interest~~– ~~expense~~SEGMENT ~~was $1,291,957 for the nine month period ended September 30, 2009 compared to~~ REPORTING

16The Company’s segments are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision maker to determine resource allocation and assess performance. Each reportable segment is managed by its own management team and reports to executive management. The Company has two reportable segments: (i) air filtration sales and (ii) logistic services.

~~$41,294~~The ~~forthe~~Company ~~nine~~reviews ~~month period ended September 30, 2008. During~~ the ~~nine~~operating ~~months~~segments’ ~~ended~~income ~~September~~to ~~30,~~evaluate ~~2009,~~performance ~~we issued convertible notes bearing an annual interest rate of 8%~~ and ~~which~~to ~~are~~allocate ~~convertible within six months from the date of each note~~resources. ~~The~~ ~~notes~~Operating ~~contain~~companies' aincome ~~convertible~~for ~~feature allowing~~ the ~~holder~~reportable tosegments ~~convert~~excludes ~~all~~income ortaxes. aProvision ~~portion~~for ofincome ~~the~~taxes ~~outstanding balance into our common stock. The accounting treatment~~ is ~~explained~~centrally inmanaged ~~Note~~at ~~5 to~~ the ~~attached~~corporate ~~financial~~level ~~statements. Based on the restated calculations~~and, ~~we have recorded charges to interest expenses of $1~~accordingly,~~259,173~~ atsuch ~~the~~items ~~time~~are ofnot ~~issuance,~~presented inby ~~the nine months ended September 30, 2009~~segment. WeThe ~~also~~segments' ~~recorded~~accounting ~~other~~policies ~~expenses~~are ofthe ~~$915,682~~same as ~~change~~those indescribed ~~derivative liability for the nine months ended September 30, 2009 due to an increase~~ in the ~~Company’s~~summary ~~stock price at the end~~ of ~~the~~significant ~~quarter~~accounting ~~ended September 30, 2009~~policies. ~~As of September 30, 2009 the amount of the convertible notes outstanding totaled $118,000, all of which is short-term convertible debt.~~

~~Relating~~Intersegment totransactions ~~total~~are ~~expenses,~~recorded ~~during the quarter ended June 30, 2002, we passed a resolution to pay rent, office and secretarial services to one of our stockholders~~ at ~~a rate of $500 per month~~cost.

~~Liquidity~~Summarized ~~and~~financial ~~Capital~~information ~~Resources~~of the Company’s results by operating segment is as follows:

As of September 30, 2009, our total assets consisted of $170,357 in cash and receivables. We have limited cash and we are dependent upon loans and advances from our management and others to fund our operating expenses pending the completion of a merger or acquisition. As of September 30, 2009, we had total liabilities of $1,529,755 of which $362,639 related to tax liabilities incurred prior to the Chapter 11 Plan of Reorganization. At September 30, 2009, a total of $229,105 of our liabilities related to funds borrowed by us from our management and others (not taking into account the derivative liability related to the convertible notes payable). This number represents a decrease of $377,040 since December 31, 2008. One of our officers advanced $119,100 to us during the nine months ended September 30, 2009. We repaid the officer $348,747 during the nine months ended September 30, 2009. These advances bear interest at 10% and have no maturity date. The balance of advances was $86,105 and $315,752 at September 30, 2009 and December 31, 2008, respectively.14

WePACIFIC ~~have~~ALLIANCE located an acquisition candidate and we anticipate that some or all our debt to management and others will be converted into additional shares of common stock. Until the acquisition is completed, we intend to continue paying 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 by borrowing funds from our management and others.CORPORATION

WeNOTES ~~have~~TO ~~taken~~INTERIM ~~steps~~UNAUDITED toCONSOLIDATED ~~minimize~~FINANCIAL our operational expenses. We have no source of revenue and it is likely that we will be required to raise additional capital in order to attract a potential acquisition partner. We do not know how much additional capital will be required and if our capital requirements will exceed the financial resources of our management or others that have advanced funds for our operations. We may seek alternatives sources for financing. In either case, we can give no assurance that we will be able to raise sufficient additional capital to continue as a shell company. 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.STATEMENTS

~~The~~NOTE ~~auditors’~~11 ~~report~~– ~~included~~SEGMENT ~~with~~REPORTING our Annual Report on Form 10-K for the year ended December 31, 2008 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 complete the Exchange Agreement with Superior as described above(CONTINUED)


	Three Months ended
	March 31,
	2010	2009⁽¹⁾
Net Revenue:
Air Filtration Sales	$ 1,053,181	$ 393,119
Logistic Services	5,217,696	-
Less: Intersegment sales	304,743	-
Net Revenue by Reportable Segment	$ 5,966,134	$ 393,119
All Other Operating Revenue	1,839	-
Consolidated Net Revenue	$ 5,967,973	$ 393,119
Operating Income (Loss):
Air Filtration Sales	$ 285,215	$ 22,912
Logistic Services	205,947	-
Operating Income (Loss) by Reportable Segment	$ 491,162	$ 22,912
All Other Operating Loss	1,839	-
Consolidated Operating Income (Loss)	$ 493,001	$ 22,912
Net Income (Loss):
Air Filtration Sales	$ 285,215	$ 12,912
Logistic Services	94,378	-
Net Income (Loss) by Reportable Segments	$ 379,593	$ 12,912
All Other Net Loss	-	-
Consolidated Net Income (Loss)	$ 381,432	$ 12,912

Critical Accounting Policies


	March 31,
Total Assets:		2010	2009⁽¹⁾
Air Filtration Sales		$ 3,437,140	$ 1,297,084
Logistic Services		16,924,771	-
		20,361,911	1,297,084
All other segments			-
Consolidated assets		$ 20,361,911	$ 1,297,084

~~This~~(1) ~~Management’s~~For ~~Discussion~~periods ~~and~~ended ~~Analysis~~March of2009, ~~Financial Condition and Results of Operations discuss~~ the Company’s ~~financial~~had ~~statements,~~only ~~which~~one ~~have~~segment ~~been~~since ~~prepared in accordance with accounting principles generally accepted in~~ the ~~United~~merger ~~States. We~~of ~~have~~Superior ~~terminated~~Filtration ~~our~~and ~~previous~~Pacific ~~operations~~Alliance, and ~~such~~the ~~operations~~acquisition ~~are~~of ~~treated~~Star asleasing ~~discontinued~~took ~~operations~~place ~~for~~after ~~financial statement purposes~~then.

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 15

17ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~contingent~~Forward ~~assets~~Outlook 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. Risks

~~Management~~This ~~believes~~periodic report contains and incorporates by reference certain “forward-looking statements” within the ~~following~~meaning ~~critical~~of ~~accounting~~Section ~~policies~~27A of the Securities Act and Section 21E of the Exchange Act with respect to results of our operations and businesses. All statements, ~~among~~other ~~others~~than statements of historical facts, ~~will~~included ~~affect~~in ~~its~~this ~~more~~periodic ~~significant~~report, ~~judgments~~including those regarding market trends, our financial position, business strategy, projected costs, and ~~estimates~~plans ~~used~~and inobjectives of management for future operations, are forward-looking statements. In general, such statements are identified by the ~~preparation~~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 ~~Consolidated~~current ~~Financial~~expectations. ~~Statements~~Although ~~following~~we believe that the ~~completion~~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-Q. These forward-looking statements represent our judgment as of anthe ~~acquisition:~~date of this Form 10-Q. 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.

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. General

~~Income~~On ~~Taxes. In~~June ~~determining~~26, ~~the~~2009, ~~carrying~~Pacific ~~value~~Alliance ofCorporation, a Delaware corporation “Pacific” or the “Company’s”), ~~net~~entered ~~deferred~~into ~~tax~~an ~~assets,~~Exchange Agreement (the ~~Company~~“Exchange ~~will~~Agreement”) bewith ~~required~~Superior toFiltration ~~assess~~Products, LC, a Florida limited liability Company (“Superior”), and the ~~likelihood~~members of ~~sufficient~~Superior (“Superior ~~future~~Members”). ~~taxable~~The ~~income~~Exchange inAgreement ~~certain~~and ~~tax~~the ~~jurisdictions~~acquisition agreed to therein, ~~based~~was onclosed ~~estimates~~(the ~~and~~“Closing”) ~~assumptions~~on October 30, to2009 ~~realize~~(the “Closing Date”). In connection with the ~~benefit~~acquisition of ~~these~~Superior, ~~assets.~~the Ifthree ~~these~~existing ~~estimates~~directors of Pacific remained as directors and ~~assumptions~~two ~~change~~designees inof ~~the~~Superior ~~future~~were appointed as additional directors. The pre-closing president, ~~the~~vice ~~Company~~president ~~may~~and ~~record~~treasurer aof ~~reduction~~Pacific inresigned ~~the~~as ~~valuation~~officers ~~allowance~~of Pacific and a new CEO/President/Treasurer, ~~resulting~~Steven inClark, anwas ~~income~~appointed. The ~~tax~~pre-closing ~~benefit~~secretary inof ~~the~~Pacific, ~~Company’s~~David ~~Statements~~Knudson, remained as secretary of ~~Operations~~Pacific. ~~Management~~Effective ~~will~~on bethe ~~required~~Closing toDate, ~~evaluate~~pursuant to the ~~realizability~~Exchange ofAgreement, ~~the~~Superior ~~deferred~~became ~~tax~~a ~~assets~~wholly-owned subsidiary of Pacific, and ~~assesses~~the business of Superior became the ~~valuation~~business ~~allowance~~of ~~quarterly~~Pacific.

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.Overview

~~Revenue~~Superior ~~Recognition~~was formed in October 2007 and occupied its lease space in Ogden, Utah on December 6, 2007. At ~~such~~From ~~time~~January asto weSeptember ~~have~~2008, ~~revenues~~the ~~from~~plant and equipment were placed in service but Superior did not commence operations until October of 2008. Superior designs, manufactures and markets a broad range of air filtration products, air filters holding frames and air filter housings. As a manufacturer of commercial, industrial, and residential air filters, housing and frames, we ~~will~~make ~~adopt~~a ~~revenue~~wide ~~recognitions~~variety ~~policies~~of ~~consistent~~products ~~with~~for ~~generally~~removing ~~acceptable~~and ~~accounting~~controlling ~~standards~~airborne particulates and gaseous contaminants. We also design and manufacture some of our own production equipment

~~Stock-Based~~Our ~~Compensation. Equity~~air ~~securities~~filtration ~~issued~~products ~~for~~are ~~services~~utilized ~~rendered~~by ~~have~~many ~~been accounted for at the fair market value of the securities on the date of authorization. On January 1~~industries, ~~2006,~~including wethose ~~adopted~~associated ~~SFAS~~with ~~No.~~commercial ~~123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement~~ and ~~recognition~~residential ofheating ~~compensation expense based on estimated fair values for all share-based payments to employees~~ and ~~Directors,~~ventilation ~~including employee stock options~~ and ~~stock~~air ~~purchases~~conditioning ~~related~~systems ~~to our employee stock option and award plans. SFAS 123~~(R)"HVAC" ~~supersedes our previous accounting under Accounting Principles Board (“APB”~~systems) ~~Opinion No. 25~~, ~~“Accounting~~semiconductor ~~for Stock Issued to Employees” (“APB 25”) for periods beginning in the fiscal year ended December 31~~manufacturing, ~~2006. In~~ultra-pure ~~March 2005~~materials, ~~the~~food SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to SFAS 123(R). We have applied the provisions of SAB 107 in our adoption of SFAS 123(R). We adopted SFAS 123(R) using the modified prospective transition methodprocessing, ~~which requires the application of the accounting standard as of January 1~~biotechnology, ~~2006~~pharmaceuticals, ~~the~~oil ~~first~~and ~~day of our fiscal year ended December 31~~gas, 2006. SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our Statement of Operations. Under SFAS 123(R)synthetics, ~~stock-based~~nuclear ~~compensation~~power ~~expense~~and ~~recognized~~nuclear ~~during~~materials ~~the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period~~processing. At September 30, 2009, we have no such outstanding options or warrants, nor were there any such options or warrants granted during the nine month period then ended. Therefore we did not recognize any stock-based compensation expense under SFAS 123(R) for the reporting period.

18Currently, our revenues primarily are derived from the sale of after-market replacement filters, since air filters are typically placed in equipment designed to last much longer than the filters. Our primary focus has been on high-technology companies in the semiconductor, hospitality, good processing, pharmaceutical and nuclear industries. The filtration systems are the key element in a semiconductor fabrication facility, and most of the advances in air filtration technology in recent years have been driven by the demand from semiconductor manufacturers to have increasingly efficient and dependable filters for their manufacturing facilities.

~~Interest Rate Risk~~16

We ~~currently~~ have ~~debt~~also concentrated on general commercial-grade products, including pre-filters, housings, and ~~will~~replacement ~~undoubtedly~~filters ~~incur~~for ~~debt~~standard tocommercial ~~finance~~and ~~our~~industrial ~~operations~~HVAC systems. WeSince ~~anticipate~~we ~~that~~commenced aoperations, ~~substantial~~we ~~amount~~have ofexperienced ~~our~~positive ~~future~~acceptance ~~debt~~from the commercial and ~~the~~industrial ~~associated~~air ~~interest~~filter ~~expense~~markets. We ~~will~~believe beour ~~subject~~design toand ~~changes~~packaging inadvantages ~~the~~create ~~level~~significant ofsavings ~~interest~~to ~~rates~~the distributors. We ~~Increases~~anticipate inthat ~~interest~~demand ~~rates~~for ~~would~~our ~~result~~products inwill ~~incremental~~increase ~~interest~~as ~~expense~~we pursue new markets.

~~Off-Balance~~Recent ~~Sheet Arrangements~~Developments

We dohave ~~not~~closed ~~have~~the ~~any~~acquisition ~~off-balance~~of ~~sheet~~all ~~arrangements~~issued ~~that~~and ~~have~~outstanding orcommon ~~are~~stocks ~~reasonably~~of ~~likely~~Star toLeasing, ~~have~~Inc. a(“Star ~~current~~Leasing”) orpursuant ~~future~~to ~~effect~~the onAgreement ~~our~~and ~~financial~~Plan ~~condition,~~of ~~changes~~Merger indated ~~financial~~October ~~condition~~1, ~~revenues~~2009. orThe ~~expenses~~purchase price for this acquisition was 15,000,000 ~~results~~shares of ~~operations,~~the ~~liquidity~~Company’s common stock, ~~capital~~approximately ~~expenditures~~valued orat ~~capital~~$0.30 ~~resources~~per ~~that~~share, which is ~~material~~the toaverage ~~investors~~price of the Company’s common stock over the five trading days immediately preceding and two trading days immediately following October 1, 2009.

~~Contractual~~We ~~Obligations~~have ~~and~~advanced ~~Commitments~~approximately $1,000,000 to Star Leasing since November, 2009and we finalized the purchase as effective on January 1, 2010. Star Leasing has been operating as our subsidiary since January 1, 2010.

~~Except~~Star ~~for~~Leasing is in the ~~payment~~trucking ofindustry ~~accrued~~and ~~management~~is ~~compensation,~~a ~~accrued~~general ~~taxes~~commodity carrier. Star Leasing was founded in 1983 and currently has more than 100 employees. It has operations in 48 states, ~~rent~~Canada and Mexico. Since ~~other~~its ~~payables~~formation, ~~all~~Star ofLeasing ~~which~~has ~~are~~expanded ~~described~~its inbusiness ~~the~~to ~~financial~~include ~~statements~~full-circle ~~attached~~logistical ~~hereto~~and brokerage services, wewarehousing, ~~have~~and nodistribution. ~~contractual~~Star ~~commitments~~Leasing orprovides ~~obligations~~local delivery for its warehousing and distribution services.

~~Inflation~~Pacific expects to own and operate Star Leasing as a wholly-owned subsidiary. Pacific will continue to own and operate its wholly-owned subsidiary, Superior Filtration Products, LLC (“Superior”). Pacific believes that the acquisition of Star Leasing will result in a synergistic relationship between Superior and Star Leasing.

~~The~~Factors ~~Company~~Affecting ~~does~~Results ~~not~~of ~~believe that inflation will negatively impact its business plans.~~ Operations

~~Other~~During ~~Matters~~the periods included in this report, our operating expenses consisted primarily of the following:

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 an Information Statement which contains information about the proposed acquisition transaction. ·

Cost of sales, which consists primarily of raw materials, components and production of our products, including applied labor costs and benefits expenses, maintenance, facilities and other operating costs associated with the production of our products;

Selling, general and administrative expenses, which consist primarily of salaries, commissions and related benefits paid to our employees and related selling and administrative costs including professional fees;

Research and development expenses, which consist primarily of equipment and materials used in the development of our technologies;

Depreciation and amortization expenses which result from the depreciation of our property and equipment, including amortization of our intangible assets; and

Results of Operations

Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our revenues and cash flows. These key performance indicators include:

Sales revenue, net of returns and trade discounts, which is an indicator of our overall business growth and the success of our sales and marketing efforts;

Gross profit, which is an indicator of both competitive pricing pressures and the cost of sales of our products;

Growth in our customer base, which is an indicator of the success of our sales efforts; and

Distribution of revenue across our products offered.

The following summary table presents a comparison of our results of operations for the three months ended March 31, 2010 and 2009 with respect to certain key financial measures. The comparisons illustrated in the table are discussed in greater detail below.


		Three Months Ended March 31, 2010		Three Months Ended March 31, 2009
Net revenues	$	5,967,974	$	391,551
Cost of revenues		4,483,156		317,997
Gross profit (loss)		1,484,818		73,554
Selling, general, and administrative expenses		591,995		60,187
Research and development expenses		-0-		75,000
Depreciation and amortization expenses		399,996		13,918
Other income (expense)		111,394		-0-
Net loss	$	381,432	$	(551)

Three Months Ended March 31, 2010 Compared to March 31, 2009

Net Revenues. Sales for the three months ended March 31, 2010 were $5,967,974 compared to sales of $391,551 for the three months ended March 31, 2009. Sales increased 1,424 % in 2010 over the prior year period as more filter lines were placed in operation.

Cost of Revenues. Cost of revenue for the three months ended March 31, 2010 were $4,483,156 compared to cost of revenue of $317,997 for three months ended March 31, 2009. Costs increased 1,310% in 2010 over the prior year period due to increase in revenues.

Gross Margins. Gross margin for the three months ended March 31, 2010 increased to 24.88% compared to 18.79% from the prior year period. However, gross margins are negatively impacted as new filter lines are placed in service. We are continuing to add new lines which will have a negative impact.

Gross Profit. Gross profit was $1,484,818 for the three months ended March 31, 2010 compared to a gross profit of $73,554 for the prior year period. Gross profit is negatively impacted as new filter lines are placed in service. We expect gross margins to continue to improve as we gain experience on each of the filter lines.

Selling, General, and Administrative Expenses. SG&A was $591,995 for the three months ended March 31, 2010 compared with SG&A of $60,187 for the three months ended March 31, 2009. SG&A increased due to the

opening of two direct sales offices in New Mexico and Colorado and the acquisition of Star Leasing. As we add new sales offices and expand operations, we expect that SG&A expenses will continue to increase.

Research and Development Expenses. Research and development expenses were $-0- for the three months ended March 31, 2010 compared to $-75,000.00- for the prior year period. Research and Development costs are incurred as new filter concepts and products are brought to market. We have developed various new products over the last two years and intend to continue this effort into the future.

Depreciation and Amortization Expenses. Depreciation was $399,996 for the three months ended March 31, 2010 compared to $13,918 for the three months ended March 31, 2009. Depreciation expense has a direct correlation to the amount of equipment that is being placed in service and the acquisition of Star Leasing. As new filter making lines are placed in service depreciation expense will continue to increase.

Net Gain/Loss. The net gain for the three months ended March 31, 2010 was $381,432 compared to a net loss of $551 for the three months ended March 31, 2009. Both Star Leasing and Superior Filtration generated income for the quarter. Operations were negatively impacted due to start up costs incurred as new filter making lines were placed in service. The profitability from the older filter making lines will be offset by the new lines as they are added until the company reaches its normal operating capacity, which management anticipates will be some time in 2011.

Liquidity and Capital Resources

Our principal sources of liquidity consist of cash and cash equivalents and payments received from our customers. We do not have any significant credit arrangements. From time to time, we have obtained additional liquidity to fund our operations through the sale of shares of our equity securities. In assessing our liquidity, our management reviews and analyzes our current cash balances on-hand, short-term investments, accounts receivable, accounts payable, capital expenditure commitments and other obligations. For the company to grow at its current pace we will need to fund our growth through the sale of shares of our equity securities.

Cash Flows

The following table sets forth our consolidated cash flows for the three months ended March 31, 2010 and 2009.


March 31,		2010		2009
Net cash (used by) operating activities	$	584,512	$	1,386,535
Net cash (used by) investing activities	$	746,130	$	98,529
Net cash provided by financing activities	$	961,355	$	1,834,371
Net increase in cash and cash equivalents during period	$	(369,287)	$	349,307

Net Cash Used By Operating Activities. Cash used by operating activities was $584,512 for the three months ended March 31, 2010 compared to $1,386,535 for the three months ended March 31, 2009. The primary use of cash in operations relates to an increase in accounts receivables and inventory. As the company continues to expanded the will require additional cash to expand its operations.

Net Cash Used In Investing Activities. Cash used in investing activities was $746,130 for the three months ended March 31, 2010 compared with $98,529 for the three months ended March 31, 2009. The primary use of cash from investing activities was to acquire additional filter making equipment and tractors. The company intends to expand its operations over the next two years which will require additional cash to facilitate this growth.

Net Cash Provided by Financing Activities. Cash from financing activities was $961,355 for the three months ended March 31, 2010 compared to $1,834,371 for the three months ended March 31, 2009. As the operations continue to expand we will acquire additional capital to expand our operations.

Cash Position, Outstanding Indebtedness, and Future Capital Requirements

Superior has not compensated certain members of its management. Accordingly, our financial statements do not reflect compensation expenses for such persons. If we had compensated such management on a reasonable basis, our total operating expenses would have been greater, which would have adversely affected the amount of income for the three months ended March 31, 2010, and the size of our loss for the three months ended March 31, 2009.

It is difficult to anticipate future levels of income and loss while the company expands its operation. During the second quarter of 2009, Superior opened two direct offices in Albuquerque, NM and Denver, CO. which reduced earnings from operations by approximately $76,000. On September 9^th, 2009 Superior signed a ten year exclusive distribution and resale agreement with Petersen Incorporated and Energy Solutions, LLC related to its nuclear filtration line of products. We expect that this agreement will positively impact operations in fiscal 2010.

We anticipate that the execution of our business plan will result in a rapid expansion of our operations, which may place a significant strain on our management, financial and other resources. Our ability to manage the problems associated with the expansion of our business operations will depend, among other things, on our ability to monitor operations, control costs, maintain effective quality control, secure necessary marketing arrangements, expand internal management, technical information and accounting systems and attract, assimilate and retain qualified management and other personnel. If we fail to effectively manage these issues, we may not be profitable in the near future, or ever.

The difficulties in managing these various business issues will be compounded by a number of unique attributes of our anticipated business operations and business strategy. For example, we intend to introduce a new retail air filter product line that relies on various new concepts, a new radial pleat, and a stackable concept which reduces freight costs and places twice the amount of product shelf as the standard product currently being used in the industry. We are using new filtration media that provides a higher level of filtration with a lower pressure drop which should generate energy savings. Many of these concepts are new to the industry and have only been test marketed in limited environments. Should these and other concepts not perform as expected, our financial condition and the results of our operations could be materially and adversely affected.

We believe we will have the ability to moderate our capital spending as we execute our business plan by the speed at which we expand the operations of the business hiring practices and promotional activities. If we elect to slow the speed, or narrow the focus of our business plan, we will be able to reduce our capital expenditures. Our actual ability to effectuate our proposed business plan will depend on a number of factors, however, including the speed of our expansion, the acceptance of products in the market, our ability to protect our intellectual property, as well as factors over which we may have little or no control, such as regulatory changes, changes in technology or our ability to meet the demand for our product. In addition, actual costs and revenues can vary from the amounts that Superior expects or budgets in its business plan, possibly materially, and those variations are likely to affect our ability to generate a profit or our need for additional financing.

If we need additional funding, and acquire that funding through the issuance of our equity securities, our stockholders may experience dilution in the value per share of their equity securities. The acquisition of funding through the issuance of debt could result in a substantial portion of our cash flow from operations being dedicated to the payment of principal and interest on that indebtedness, and could render us more vulnerable to competitive pressures and economic downturns.

Critical Accounting Policies.

We have adopted a number of critical accounting policies relating to our operation of the manufacture and distribution of air filtration products. These accounting policies require significant judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies, the underlying judgments and uncertainties regarding our application of those policies to our assets and operations and

the likelihood that materially different amounts would be reported under different conditions or using different assumptions, are as follows:

Inventories are stated at the lower of cost or market. “Cost” is determined on a first-in, first-out basis, and “market” is based on realizable value.

Specific costs related to obtaining patents and trademarks have been capitalized. Patents are amortized over their legal life of 20 years from the date of filing. Costs of trademarks are not amortized, since their lives are indefinite.

Depreciation is computed on the straight-line method using estimated useful lives (depending on the type of asset) ranging from 3 to 5 years.

Advertising costs are charged to operations when they are incurred.

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 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.

Recent Accounting Pronouncements

In June 2009, we adopted a new accounting standard for subsequent events, as codified in Accounting Standards Codification (“ASC”) 855-10 (formerly SFAS No. 165, Subsequent Events), which establishes general accounting standards and disclosure for events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This new standard is effective for interim and annual financial periods ending after June 15, 2009 and requires prospective application. The adoption of this new standard had no impact on our consolidated financial statements.

Effective July 1, 2009, we adopted the “FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles” (ASC 105), (formerly, SFAS No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles. This new standard establishes the “FASB Accounting Standards Codification™” (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Rules and interpretive releases of the Securities and Exchange Commission (SEC) are also sources of authoritative GAAP for SEC registrants. The Codification now supersedes all previous-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification has now become non-authoritative. Now that the Codification is in effect, all of its content carries the same level of authority. We believe that the adoption of this standard will not have a material impact on our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a “Smaller Reporting Company” as defined under §229.10(f)(1) of Regulation S-K and is not required to provide the information required by this Item.

ITEM 4T4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), an evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.

19There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

~~There~~PART ~~has~~II ~~been~~– noOTHER change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.INFORMATION

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

WeFor ~~are~~information aregarding ~~smaller~~risk ~~reporting~~factors, ~~company~~see ~~and~~“Part ~~not~~I. ~~required~~Item to1A. ~~provide~~Risk Factors,” in our Annual Report on Form 10-K for the ~~information~~year ~~required~~ended byDecember ~~this~~31, ~~item~~2009.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the ~~nine~~three month period ended ~~September~~March 3031, ~~2009~~2010 we issued ~~982,400~~ shares of our restricted common stock to ~~our~~the ~~officers for management services as follows~~following:

Recipient	Number of Shares	Attributed Value ~~(1)~~
Mark A. Scharmann	409,850	$40,985
Private Placement Participants	Series B Preferred 2,952,548	$2,952.549
Dan Price	48,000	$4,800
Randal Menscer	Common Shares 15,000,000	$4,500,000
David Knudson	524,550	$52,455

(1)The $.10 per share price for these services was established in the Bankruptcy Plan of Reorganization referred to in Part I, Item 2 of this report on Form 10-Q.

All of the foregoing shares of common stock issued were issued in reliance on the exemption from registration available under Section 4(2) of the Securities Act.

~~Subsequent~~In toconnection ~~September~~with ~~30,~~the ~~2009~~issuance, ~~on October 30, 2009,~~ we ~~completed~~relied upon the ~~initial~~exemption ~~closing~~from ofsecurities aregistration ~~private~~afforded ~~cash~~by ~~offering~~Rule ~~(“Private~~506 ~~Placement”)~~ of ~~shares~~Regulation ofD ~~its~~as ~~Series~~promulgated Bby ~~Preferred~~the ~~Stock~~SEC inunder ~~which~~the aSecurities ~~total~~Act of ~~665~~1933,~~000~~ ~~Series~~as Bamended ~~Preferred Shares have been sold to date raising gross proceeds of $665,000. The Series B Shares are convertible into 13,300,000 shares of~~ (the ~~Company’s common stock. A registered broker-dealer and a member of the Financial Industry Regulatory Authority (~~“~~FINRA~~Securities Act”) ~~was retained as the exclusive placement agent for the Private Placement~~ and/or ~~received~~Section ~~a commission of $66,500~~ 4(~~ten (10%~~2) ~~percent~~ of the ~~gross~~Securities ~~proceeds)~~Act. ~~and~~No anadvertising ~~expense~~or ~~allowance~~general ofsolicitation ~~$5,000. The placement agent~~ was ~~also~~employed ~~issued two shares of our common stock for each one Series B Share sold~~ in ~~the~~offering ~~Offering for a total of 1,330,000 shares of common stock issued to~~ the placement agent as additional compensation. Offering proceeds will be used for, among other things, professional fees, payment of our outstanding liabilities including $25,000 to Hyacinth Resources, LLC. (Such $25,000 payment was a compromise of a $120,000 obligation by us to Hyacinth Resources, LLC.)

In connection with the Private Placement, we relied upon the exemption from securities registration afforded by Rule 506 of Regulation D as promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”) and/or Section 4(2) of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were “accredited investors,” or other suitable investors. Transfer was restricted in accordance with the requirements of the Securities Act.22

securities. The offerings and sales were made to a limited number of persons, all of whom were “accredited investors,” or other suitable investors. Transfer was restricted in accordance with the requirements of the Securities Act.

ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES

None

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS



Exhibit 31	Certification of Chief Executive and Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
Exhibit 32	Certification of Chief Executive and Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

SIGNATURE

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

Dated: November 19, 2009	PACIFIC ALLIANCE CORPORATION
	By /s/ Steven Clark
	President/Principal Executive and Financial Officer

Dated: June 18, 2010

21PACIFIC ALLIANCE CORPORATION

By/s/ Steven Clark

President/Principal Executive and Financial Officer

Filing Compare · PACIFIC ALLIANCE CORP