UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
Information
Statement Pursuant to Section 14 (c)
of
the Securities Exchange Act of 1934
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Check
the appropriate Box:
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Preliminary
Information Statement
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Confidential,
for use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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Definitive
Information Statement
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PACIFIC ALLIANCE
CORPORATION
(Name of
Registrant As Specified In Its Charter)
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Payment
of Filing Fee (Check the appropriate box):
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No
fee required
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-1:
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(1) Title
of each class of securities to which transaction applies:
NA
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(2) Aggregate
number of securities to which transaction applies: NA
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(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): NA
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(4) Proposed
maximum aggregate value of transaction: NA
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(5) Total
Fee Paid: NA
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Fee
paid previously with preliminary materials
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previously filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1) Amount
Previously Paid: $0
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(2) Form,
Schedule or Registration Statement No. NA
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(3) Filing
Party: NA
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(4) Date
Filed: NA
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Contact
Person: A. O. Headman, Jr., ESQ, Cohne Rappaport & Segal,
P.C.
257
East 200 South, Suite 700, Salt Lake City, UT 84111; Tel: 801-532-2666, Fax:
801-355-1813
PACIFIC
ALLIANCE CORPORATION
1661
Lakeview Circle
Ogden,
UT 84403
NOTICE OF
ACTION TO BE TAKEN WITHOUT A STOCKHOLDERS’ MEETING
Notice is hereby given that Pacific
Alliance Corporation plans to take certain corporate action pursuant to the
written consent of our Board of Directors and the holders of a majority of our
outstanding voting securities (“Majority Stockholders”). The action
we plan to take is to (i) amend our Certificate of Incorporation to increase the
number of shares of common stock that we are authorized to issue from
100,000,000 to 250,000,000 and the number of shares of preferred stock we are
authorized to issue from 5,000,000 to 20,000,000 (the “Increased Capital
Proposal”), and (ii) amend our Certificate of Incorporation to effect a
one-for-twenty reverse split of our issued and outstanding shares of common
stock (“Reverse Split Proposal”).
On
November 11, 2009, our Board of Directors unanimously approved the Increased
Capital Proposal and the Reverse Split Proposal and the Majority Stockholders
have consented in writing to each of such proposals.
Both the
Increased Capital Proposal and the Reverse Split Proposal will be affected
through amendments to our Certificate of Incorporation.
The Board
of Directors has fixed the close of business on November 11, 2009, as the Record
Date for determining the stockholders entitled to notice of the
foregoing.
WE
ARE NOT ASKING YOU FOR A PROXY AND WE REQUEST THAT YOU NOT SEND US A
PROXY.
The
accompanying Information Statement, which describes the above corporate actions
in more detail, is being furnished to our stockholders for informational
purposes only pursuant to Section 14(c) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the rules and regulations prescribed
thereunder. Pursuant to Rule 14c-2 under the Exchange Act, these corporate
actions will not be effective until twenty (20) calendar days after the mailing
of the Information Statement to our stockholders, at which time we may file with
the Delaware Secretary of State a Certificate of Amendment to our Certificate of
Incorporation to effectuate the increase of our authorized capital stock and the
Reverse Split. The Reverse Split will be effective at such time after the
expiration of the aforementioned twenty (20) day period as our board of
directors determines to be the appropriate effective time.
We
encourage you to read the enclosed Information Statement, which is being
provided to all of our stockholders. It describes the proposed corporate actions
in detail.
THIS IS
NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS’ MEETING WILL BE
HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN AND NO PROXY OR VOTE IS SOLICITED
BY THIS NOTICE.
November
__, 2009
By Order
of the Board of Directors
PACIFIC
ALLIANCE CORPORATION
1661
Lakeview Circle
Ogden,
UT 84403
INFORMATION
STATEMENT
November
__, 2009
This
Information Statement is being provided to you by the
Board
of Directors of Pacific Alliance Corporation
_____________________
This Information Statement and the
Notice of Action Taken Without a Stockholders’ Meeting (jointly, the
“Information Statement”) is furnished by the Board of Directors of Pacific
Alliance Corporation (the “Company,” “We,” “Us” or
“Pacific Alliance”), a Delaware corporation, to the holders of the Pacific
Alliance’s common stock as of November 11, 2009 (the “Record Date”) to provide
information with respect to action taken by the written consent of the Majority
Stockholders. The Majority Stockholders (identified below) approved by written
consent proposals to:
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amend
our Certificate of Incorporation to increase the number of shares of
common stock which we are authorized to issue from 100,000,000 to
250,000,000 and to increase the number of shares of preferred stock which
we are authorized to issue from 5,000,000 to 20,000,000 (the “Increased
Capital Proposal”); and
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amend
our Certificate of Incorporation to effect a one-for-twenty reverse split
of our common stock (“Reverse Split
Proposal”).
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Voting
Securities; Board of Directors and Consenting Stockholders
As of the
Record Date, our authorized capitalization consisted of 100,000,000 shares of
common stock, par value $.001 per share and 5,000,000 shares of preferred stock
par value $.001 per share. As of the record date there were
68,603,698 shares of common stock issued.
We have
designated a Series A Convertible Preferred Stock that consists of 1,000,000
authorized shares of which 1,000,000 shares are issued. Each share of
Series A Convertible Preferred Stock is convertible into 606.6 shares of our
common stock and each share of Series A Convertible Preferred Stock is entitled
to 606.6 votes per share.
We have
designated a Series B Convertible Preferred Stock that consists of 3,300,000
authorized shares of which 665,000 shares are issued. Each share of
Series B Convertible Preferred Stock is convertible into 20 shares of our common
stock and each share of Series B Convertible Preferred Stock is entitled to 20
votes per share.
On November
11, 2009, our board of directors (the “Board”) unanimously adopted resolutions
approving the Increased Capital Proposal and the Reverse Split Proposal and a
corresponding amendment to our Certificate of Incorporation to effect both such
Proposals.
Section
228 of the Delaware General Corporation Law (the “DGLC”) provides that the
written consent of the holders of the issued and outstanding shares of voting
capital stock, having not less than the minimum number of votes which would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, may be substituted for a
meeting. In order to eliminate the costs and management time involved in
obtaining proxies and in order to effect the above actions as early as possible
to accomplish the purposes hereafter described, the Board elected to seek the
written consent of the holders of a majority of our issued and outstanding
shares of voting capital stock to reduce the costs and implement the Share
Increase and Reverse Split Proposal in a timely manner.
At the
record date we had (i) 68,603,698 shares of common stock issued and outstanding,
each share of which entitled the holder to one vote; (ii) 1,000,000 shares of
Series A Convertible Preferred Stock issued and outstanding, each share of which
entitled the holder to 606.6 votes; and (iii) 665,000 shares of Series B
Convertible Preferred Stock issued and outstanding, each share of which entitled
the holder to 20 votes. Accordingly, the total number of votes held
by all of our shareholders is 688,503,698.
On
November 11, 2009, the following consenting stockholders (the “Majority
Stockholders”) who collectively have 93.51% of our outstanding votes, consented
in writing to the Increased Capital Proposal and the Reverse Split
Proposal:
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Stockholder
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Votes
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Percentage
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Jan
Clark
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523,598,922
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76.05%
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Steven
Clark
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5,000,214
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5.08%
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Randall
Menscer
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25,000,412
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3.63%
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Mark
Scharmann
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30,378,496
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4.41%
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David
Knudson
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6,615,658
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0.96%
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Dan
Price
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237,025
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0.03%
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Kirk
Ferguson
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22,000,169
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3.20%
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Darrell
Cossey
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1,000,283
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0.15%
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Total
Votes of Majority Stockholders
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643,831,179
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93.51%
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Total
Votes Outstanding
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688,503,698
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100.00%
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Because
the Reverse Split will create for some stockholders a fractional amount because
their shareholdings before the reverse split are not evenly divisible by twenty,
those shareholders with fractional shares will be entitled, upon surrender to
the exchange agent of certificates representing such shares, to receive one
additional share in consideration for such fractional share. The
terms of the Reverse Split provide that each twenty (20) of the outstanding
shares of our common stock on the date of the Reverse Split will be
automatically converted into one (1) share of our common stock, thereby reducing
the number of shares of common stock issued and outstanding. The
Reverse Split does not change the $0.001 par value designation of our common
stock. The Reverse Split does not change the number of shares of our
common stock authorized for issuance; however, the Increased Capital Proposal
does increase the number of shares of our common stock authorized from
100,000,000 to 250,000,000.
The Board
of Directors decided to obtain written consent of the Majority Stockholders in
order to avoid the costs and management time required to hold a special meeting
of stockholders. All required corporate approvals of the Increased Capital
Proposal and the Reverse Split Proposal have been obtained, subject to
furnishing this notice and 20 days elapsing from the date of this
notice. This Information Statement is furnished solely for the
purpose of informing stockholders of this corporate action in the manner
required by Rule 14c-2(b) under the Securities Exchange Act of 1934, as
amended.
WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
THIS IS NOT A NOTICE OF A MEETING OF
STOCKHOLDERS AND NO STOCKHOLDERS’ MEETING WILL BE HELD TO CONSIDER ANY MATTER
DESCRIBED HEREIN.
We have asked brokers and other
custodians, nominees and fiduciaries to forward this Information Statement to
the beneficial owners of our common stock held of record by such persons and
will reimburse such persons for out-of-pocket expenses incurred in forwarding
such material.
INTEREST
OF CERTAIN PERSONS IN FAVOR OF OR OPPOSITION
TO
MATTERS ACTED UPON
We are
not aware of any interest that would be substantially affected through the
adoption of the Increased Capital Proposal or Reverse Split Proposal whether
adversely or otherwise.
RECENT
TRANSACTION
On June
26, 2009, we entered into an Exchange Agreement (the “Exchange Agreement”) with
Superior Filtration Products, LC, a Florida limited liability Company
(“Superior”), and the members of Superior (“Superior
Members”). A copy of the Exchange Agreement was filed as an exhibit
to a Form 8-K that was filed on June 30, 2009. An amendment to the
Exchange Agreement was effective on July 31, 2009, and a copy of such amendment
was filed with the Securities and Exchange Commission under cover of a Form 8-K
filed on August 5, 2009.
The
Exchange Agreement and the acquisition agreed to therein, was closed (the
“Closing”) on October 30, 2009 (the “Closing Date”). At the Closing,
Pacific acquired all of the outstanding membership interests of Superior
(“Superior Member Interests”) from the Superior Members in exchange for
1,000,000 shares of Pacific Series A Convertible Preferred Stock (“Series A
Preferred Stock”). Not earlier than December 1, 2009, the 1,000,000
shares of Series A Preferred Stock are convertible into 606,600,000 shares of
the 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, the Superior Members would own approximately 88.04% of the total shares of
Pacific common stock then issued and outstanding immediately following the
Closing. A Form 8-K was filed on November 5, 2009 regarding
the closing of such acquisition.
Simultaneously to the Closing, Pacific
completed the initial closing of a private cash offering 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.
INCREASE
IN AUTHORIZED CAPITAL STOCK PROPOSAL
General
Our Board of Directors has unanimously
approved a proposal to amend our Certificate of Incorporation to increase the
number of shares of common stock which we are authorized to issue from
100,000,000 to 250,000,000 and the number of shares of our preferred stock which
we are authorized to issue from 5,000,000 to 20,000,000. Our Board
has recommended to our Majority Stockholders that they vote in favor of the
Increased Capital Proposal and our Majority Stockholders have voted in favor of
the Increased Capital Proposal. The votes of our Majority
Stockholders were obtained by written consent. The terms of the additional
shares of Common Stock and Preferred Stock will be identical to those of the
currently authorized shares of Common Stock and Preferred Stock. This
amendment and the creation of additional shares of authorized Common Stock and
Preferred Stock will not alter the current number of issued shares. The relative
rights and limitations of the shares of Common Stock and Preferred Stock will
remain unchanged under this amendment. However, when we effect the
Reverse Split Proposal, the number of shares of Common Stock will be reduced and
the number of shares of common stock which will be issued upon the conversion of
the Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock will be reduced accordingly.
Consent
Required
Approval of the Increased Capital
Proposal, through an amendment to our Certificate of Incorporation, required the
consent of the holders of a majority of the outstanding voting
shares. As of the Record Date, Majority Stockholders owned total
voting rights of 643,831,179 representing approximately 93.51% of the votes that
could be cast by the holders of our outstanding voting shares as of the Record
Date. The Majority Stockholders have given their written consent to
this Increased Capital Proposal and accordingly, the requisite stockholder
approval of this Proposal was obtained by the execution of the Majority
Stockholders’ written consent in favor of the Proposal.
Amendment
Our Board of Directors and the Majority
Stockholders have voted to amend Article IV of our Certificate of Incorporation
to read as is set forth on Exhibit A attached hereto.
Reasons
for Increase in Capital
We have recently issued shares of our
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
all of which are convertible into shares of our common stock. We believe that in
order to develop an orderly market we need to effect a reverse stock
split. Assuming the Reverse Split Proposal is effected we
will have a sufficient number of shares of common stock authorized to effect the
conversion of Series A and Series B Convertible Preferred
Stock. However, we anticipate that we will, in the future adopt
employee option plans and attempt to raise additional capital from the sale of
our shares of common stock. These actions, if they were to occur, of
which there can be no assurance, will require the issuance of additional shares
of our common stock. We believe that now is an appropriate time to
increase our authorized shares of capital stock so that we will have flexibility
in structuring future transactions.
The
disadvantages of increasing our authorized common stock include:
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The
issuance of authorized but unissued stock could be used to deter a
potential takeover of the Company that may otherwise be beneficial to
stockholders by diluting the shares held by a potential suitor or issuing
shares to a shareholder that will vote in accordance with our Board of
Directors’ desires. A takeover may be beneficial to independent
stockholders because, among other reasons, a potential suitor may offer
such stockholders a premium for their shares of stock compared to the
then-existing market price. The Company does not have any other provisions
in its Certificate of Incorporation, by-laws, employment agreements,
credit agreements or any other documents that have material anti-takeover
consequences. Additionally, the Company has no plans or proposals to adopt
other provisions or enter into other arrangements, except as disclosed
below, that may have material anti-takeover consequences. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented with the
intent that it be utilized as a type of anti-takeover
device.
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Stockholders
do not have any preemptive or similar rights to subscribe for or purchase
any additional shares of common stock that may be issued in the future,
and therefore, future issuances of common stock may, depending on the
circumstances, have a dilutive effect on the earnings per share, voting
power and other interests of the existing
stockholders.
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The increase in the number of
authorized but unissued shares of common stock would enable Pacific Alliance,
without further stockholder approval, to issue shares from time to time as may
be required for proper business purposes, such as raising additional capital for
ongoing operations, business and asset acquisitions, stock splits and dividends,
present and future employee benefit programs and other corporate
purposes.
AMENDMENT
TO CERRTIFICATE OF INCORPORATION
TO
EFFECT A REVERSE STOCK SPLIT OF COMMON STOCK
General
Our Board of Directors has unanimously
approved a proposal to amend our Certificate of Incorporation to effect a
reverse stock split, pursuant to which every twenty (20) shares (the "Old
Shares") of our outstanding common stock would be exchanged for one new share
(the "New Shares") of common stock.
The number of Old Shares for which each
New Share is to be exchanged is referred to as the "Exchange Number." The
Reverse Stock Split will be effected simultaneously for all shares of common
stock and the Exchange Number will be the same for all shares of common stock.
Upon the effectiveness of the Reverse Stock Split, each option or warrant right
for common stock would entitle the holder to acquire a number of shares equal to
the number of shares which the holder was entitled to acquire prior to the
reverse stock split divided by the Exchange Number at the exercise price in
effect immediately prior to the Reverse Stock Split, multiplied by the Exchange
Number.
Our Board has recommended to our
Majority Stockholders that they vote in favor of the Reverse Split Proposal and
our Majority Stockholders have voted in favor of the Reverse Stock Split
Proposal. The votes of our Majority Stockholders were obtained by
written consent.
The Board will have the authority to
determine the exact timing of the Effective Date (as defined below) of the
reverse stock split, without further stockholder approval. Such timing will be
determined in the judgment of the Board.
Consent
Required
Approval of the Reverse Split Proposal,
through an amendment to our Certificate of Incorporation, requires the consent
of the holders of a majority of the outstanding voting shares. The
Majority Stockholders have 643,831,179 votes representing approximately 93.51%
of the votes that could be cast by the holders of our outstanding voting shares
as of the Record Date. The Majority Stockholders have given their
written consent to this Reverse Split Proposal and accordingly, the requisite
stockholder approval of this Proposal was obtained by the execution of the
Majority Stockholders’ written consent in favor of the Proposal.
Amendment
Our Board of Directors and the Majority
Stockholders have voted to further amend Article IV of our Certificate of
Incorporation to add the language regarding the Reverse Split set forth on
Exhibit A attached hereto:
Board
Discretion
The Board also reserves the right,
notwithstanding stockholder approval and without further action by the
stockholders, not to proceed with the Reverse Stock Split, if, at any time prior
to filing the amendment to the Certificate of Incorporation with the Secretary
of State of the State of Delaware, the Board, in its sole discretion, determines
that the Reverse Stock Split is no longer in Pacific Alliance’s best interests
or the best interests of our stockholders. The Board may consider a variety of
factors in determining whether or not to implement the reverse stock split
including, but not limited to:
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overall
trends in the stock market;
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recent
changes and anticipated trends in the per share market price of the common
stock, business and transactional developments;
and
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our
actual and projected financial
performance.
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Reasons
for the Reverse Stock Split
We have recently issued 1,000,000
shares of Series A Convertible Preferred Stock and 665,000 shares of Series B
Convertible Preferred Stock. Our Board believes that if all such
convertible preferred shares were converted into common stock, the number of
shares of common stock then issued and outstanding would be such a number that
(i) it would have an adverse affect on our trading price, (ii) it would have an
adverse affect on future attempts to interest additional broker-dealers in
trading our stock, (iii) it would have an adverse affect on attempts to interest
investment bankers in attempts to raise additional capital, and (iv) it would
have an adverse affect on our attempts to attract potential acquisition
candidates.
As a result of the Reverse Split, the
conversion ratio of our Series A Convertible Preferred Stock will be reduced
from 606.6 to 1 to approximately 30.33 to 1 and, the conversion ratio of our
Series B Convertible Preferred Stock will be reduced from 20 to 1 to 1 for
1.
Certain
Effects of the Reverse Stock Split
The Reverse Stock Split will not affect
the par value of the common stock. As a result, on the Effective Date (as
defined below) of the Reverse Stock Split, the stated capital on the Company's
balance sheet attributable to the common stock will be reduced in proportion to
the exchange ratio of one to twenty, and the additional paid-in capital account
shall be credited with the amount by which the stated capital is
reduced. The per-share net income or loss and net book value of our
common stock will be increased because there will be fewer shares of our common
stock outstanding.
Upon the effectiveness of the Reverse
Stock Split, the number of authorized shares of common stock that are not issued
or outstanding will increase.
As of the effective time of the Reverse
Stock Split, each issued and outstanding share of the Company’s common stock
would immediately and automatically be reclassified and reduced into
one-twentieth of a share of the Company’s common stock.
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affect
any shareholder’s percentage ownership interest in the
Company;
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affect
any shareholder’s proportionate voting
power;
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substantially
affect the voting rights or other privileges of any
shareholder; or
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alter
the relative rights of common shareholders, option holders, warrant
holders or holders of equity compensation plan
awards.
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the
number of shares of common stock issued and outstanding will be reduced by
a factor of 20; and
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the
per-share exercise price will be increased by a factor of 20, and the
number of shares issuable upon exercise shall be decreased by the same
factor, for all outstanding options, restricted stock awards, restricted
stock units, performance share units, warrants and other convertible or
exercisable equity instruments entitling the holders to purchase shares of
the Company common stock.
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Stockholders should also recognize that
if the Reverse Stock Split is effected they will own a fewer number of shares
than they presently own, equal to the number of shares owned immediately prior
to the filing of the amendment divided by the Exchange Number.
While we expect that the Reverse Stock Split will result in an increase in the
market price of the common stock, there can be no assurance that the reverse
stock split will increase the market price of the common stock by a multiple
equal to the Exchange Number or result in the permanent increase in the market
price, which is dependent upon many factors, including our performance and
prospects. Also, should the market price of the common stock decline, the
percentage decline as an absolute number and as a percentage of our overall
market capitalization may be greater than would pertain in the absence of a
Reverse Stock Split. Furthermore, the possibility exists that liquidity in the
market price of the common stock could be adversely affected by the reduced
number of shares that would be outstanding after the Reverse Stock Split. In
addition, the Reverse Stock Split will increase the number of our stockholders
who own odd lots, that is, less than 100 shares. Stockholders who hold odd lots
typically will experience an increase in the cost of selling their shares, as
well as possible greater difficulty in effecting such sales. Consequently, there
can be no assurance that the Reverse Stock Split will achieve the desired
results that have been outlined above.
Procedure
for Effecting the Reverse Stock Split and Exchange of Stock
Certificates
If the Board still believes that the
Reverse Stock Split is in the best interests of the Company and its
stockholders, we will file the Certificate of Amendment with the Secretary of
State of the State of Delaware at such time as the Board has determined the
appropriate effective time for such split, but in no event earlier than twenty
(20) calendar days following the mailing of this Information Statement to the
stockholders of the Company. The reverse stock split will become effective on
the date of filing the amendment (the "Effective Date"). Beginning on the
Effective Date, each certificate representing Old Shares will be deemed for all
corporate purposes to evidence ownership of New Shares.
As soon as practicable after the
Effective Date, stockholders will be notified that the Reverse Stock Split has
been affected. Our transfer agent will act as exchange agent for the Reverse
Stock Split for purposes of implementing the exchange of stock certificates.
Holders of Old Shares will be asked to surrender to the exchange agent
certificates representing Old Shares in exchange for certificates representing
New Shares in accordance with the procedures to be set forth in a letter of
transmittal to be sent by the Company. No new certificates will be issued to a
stockholder until such stockholder has surrendered such stockholder's
outstanding certificate(s) evidencing the Old Shares, together with the properly
completed and executed letter of transmittal to the exchange agent. Stockholders
should not destroy any stock certificates and should not submit any certificates
until requested to do so.
No
Fractional Shares
No
fractional shares of post-split Common Stock will be issued to any stockholder
in connection with the Reverse Split. Stockholders of record who would otherwise
be entitled to receive a fractional share upon the effective date of the Reverse
Split, will, upon surrender of their certificates representing shares of
pre-split Common Stock, receive one additional share of common stock in
consideration for such fractional share.
Federal
Income Tax Consequences of the Reverse Stock Split
The following is a summary of certain
material federal income tax consequences of the Reverse Stock Split, and does
not purport to be complete. It does not discuss any state, local, foreign or
minimum income or other U.S. federal tax consequences. Also, it does not address
the tax consequences to holders that are subject to special tax rules, such as
banks, insurance companies, regulated investment companies, personal holding
companies, foreign entities, nonresident alien individuals, broker-dealers and
tax-exempt entities. The discussion is based on the provisions of the United
States federal income tax law as of the date hereof, which is subject to change
retroactively as well as prospectively. This summary also assumes that the Old
Shares were, and the New Shares will be, held as a "capital asset," as defined
in the Internal Revenue Code of 1986, as amended (the "Code"), generally,
property held for investment. The tax treatment of a stockholder may vary
depending upon the particular facts and circumstances of such stockholder. EACH
STOCKHOLDER SHOULD CONSULT WITH SUCH STOCKHOLDER'S OWN TAX ADVISOR WITH RESPECT
TO THE CONSEQUENCES OF THE REVERSE STOCK SPLIT.
No gain or loss should be recognized by
a stockholder of the Company upon such stockholder's exchange of Old Shares for
New Shares pursuant to the Reverse Stock Split. The aggregate tax basis of the
New Shares received in the Reverse stock split, including any fraction of a New
Share deemed to have been received, will be the same as the stockholder's
aggregate tax basis in the Old Shares exchanged therefore. The stockholder's
holding period for the New Shares will include the period during which the
stockholder held the Old Shares surrendered in the reverse stock
split.
DISSENTERS’
RIGHTS
There are no dissenters’ rights
applicable to the amendment of our Certificate of Incorporation relating to
Increased Capital Proposal and the Reverse Split Proposal.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND
MANAGEMENT
The
following table sets forth information regarding shares of our common stock
beneficially owned as of November 15, 2009 by: (1) each of our officers and
directors; (ii) all officers and directors as a group; and (iii) each person
known by us to beneficially own five percent or more of the outstanding shares
of its common stock.
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Stockholders
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Pre-Split Shares (1)
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Pre-Split
Percentage
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Post-Split Shares (2)
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Post-Split
Percentage
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|
|
|
|
|
Steven
Clark (3)(4)
|
558,599,136
|
81.13%
|
27,929,958
|
81.13%
|
|
Randall
Menscer (3)(5)
|
25,000,412
|
3.63%
|
1,250,021
|
3.63%
|
|
Mark
Scharmann (3)(6)
|
30,538,496
|
4.43%
|
1,526,925
|
4.43%
|
|
David
Knudson (3)(7)
|
6,640,658
|
0.96%
|
332,033
|
0.96%
|
|
Dan
Price (3)
|
237,025
|
0.03%
|
11,852
|
0.03%
|
|
Jan
Clark (8)
|
558,599,136
|
81.13%
|
27,929,958
|
81.13%
|
|
All
Officers and Directors as a Group
|
621,015,727
|
90.17%
|
31,050,789
|
90.17%
|
|
|
|
|
|
|
|
TOTAL
|
688,503,698
|
100%
|
34,425,185
|
100%
|
(1) Assumes
all shares of Series A Convertible Preferred Stock and all shares of Series B
Convertible Preferred Stock are converted into common stock.
(2) Assumes
all shares of Series A Convertible Preferred Stock and all shares of Series B
Convertible Preferred Stock are converted into common stock and the
one-for-twenty reverse split is effected.
(3) These
individuals are the officers and directors of the Company.
(4) Mr.
Clark owns 57,699 shares of Series A Convertible Preferred stock in his
name. These shares are convertible into 35,000,214 shares of the
Company’s common stock. The shares indicated as owned by Mr. Clark include
863,170 shares of Series A Convertible Preferred Stock owned by his wife, Jan
Clark, that are convertible into 523,598,922 shares of the Company’s common
stock.
(5) Mr.
Menscer owns 41,214 shares of Series A Convertible Preferred stock in his
name. These shares are convertible into 25,000,412 shares of the
Company’s common stock
(6) The
shares designated as owned by Mr. Scharmann include (i) shares of common stock
currently owned of record in his own name; (ii) shares currently owned of record
by his affiliate, Troika Investment, LLC; and (iv) approximately 160,000 shares
issuable upon the exercise of a Warrant owned by Sycamore Ventures, LLC, Series
1 (“Sycamore”) attributed to Mr. Scharmann’s 32% ownership of
Sycamore.
(7) The
shares designated as owned by Mr. Knudson include (i) shares of common stock
currently owned of record in his own name; and (ii) approximately
25,000 shares issuable upon the exercise of a Warrant owned by Sycamore
attributed to Mr. Knudson’s 5% ownership of Sycamore.
(8) Mrs.
Clark owns 863,170 shares of Series A Convertible Preferred stock in her
name. These shares are convertible into 523,598,922 shares of the
Company’s common stock. The shares indicated as owned by Mrs. Clark include
57,699 shares of Series A Convertible Preferred Stock owned by her husband,
Steven Clark, that are convertible into 35,000,214 shares of the Company’s
common stock.
STOCKHOLDERS
SHARING AN ADDRESS
In
accordance with notices to many stockholders who hold their shares through a
bank, broker or other holder of record (a “street-name stockholder”) and share a
single address, only one Information Statement is being delivered to that
address unless contrary instructions from any stockholder at that address were
received.
This
practice, known as “householding,” is intended to reduce our printing and
postage costs. However, any such street-name stockholder residing at the same
address who wishes to receive a separate copy of this Information Statement, may
request a copy by contacting the bank, broker or other holder of record, or our
offices by telephone at (801) 399-3632, or by mail to: David Knudson, Secretary,
Pacific Alliance Corporation, 1661 Lakeview Circle, Ogden, UT 84403. In
addition, any such street-name stockholders residing at the same address who
have received multiple copies of this Information Statement and wish to receive
a single copy of our annual reports, information statements and proxy materials
in the future may contact the bank, broker or other holder of record, or our
offices at the contact information above.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We file
annual, quarterly and current reports, proxy statements and other information
with the U.S. Securities and Exchange Commission (“SEC”). You may obtain such
SEC filings from the SEC’s website at http://www.sec.gov. You can also
read and copy these materials at the SEC’s public reference room at
100 F Street, N.E., Washington, D.C. 20549. You can obtain
information about the operation of the SEC’s public reference room by calling
the SEC at 1-800-SEC-0330.
FORWARD-LOOKING
STATEMENTS
This
Information Statement may contain certain "forward-looking" statements (as that
term is defined in the Private Securities Litigation Reform Act of 1995 or by
the SEC in its rules, regulations and releases) representing our expectations or
beliefs regarding our company. These forward-looking statements include, but are
not limited to, statements concerning our operations, economic performance,
financial condition, and prospects and opportunities. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the generality of the
foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"intend," "could," "estimate," "might," or "continue" or the negative or other
variations thereof or comparable terminology are intended to identify
forward-looking statements. These statements, by their nature, involve
substantial risks and uncertainties, certain of which are beyond our control,
and actual results may differ materially depending on a variety of important
factors, including factors discussed in this and other of our filings with the
SEC.
COMPANY
CONTACT INFORMATION
All inquiries regarding the Company
should be addressed to our principal executive offices:
Pacific
Alliance Corporation
1661
Lakeview Circle
Ogden, UT
84403
(801)
399-3632
|
|
By
order of the Board of Directors:
/s/ Steven Clark
Chief Executive
Officer/President
|
EXHIBIT
A
ARTICLE
IV
Capital
Stock
The total number of shares of all
classes of capital stock which the Corporation has the authority to issue is
270,000,000 shares which are divided into two classes as follows:
|
|
20,000,000
shares of Preferred Stock (Preferred Stock) $.001 par value per share,
and
|
|
|
250,000,000
shares of Common Stock (Common Stock) $.001 par value per
share.
|
The designations, voting powers,
preferences and relative, participating, optional or other special rights, and
qualification, limitations or restrictions of the above classes of stock are as
follows:
1. Issuance in
Series. Shares of Preferred Stock may be issued in one or more
series at such time or times, and for such consideration or considerations as
the Board of Directors may determine. All shares of any one series of
Preferred Stock will be identical with each other in all respects, except that
shares of one series issued at different times may differ as to dates from which
dividends thereon may be cumulative. All series will rank equally and
be identical in all respects, except as permitted by the following provisions of
paragraph 2.
2. Authority of the Board with
Respect to Series. The Board of Directors is authorized, at any time and
from time to time, to provide for the issuance of shares of Preferred Stock in
one or more series with such designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof as are stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
and as are not stated and expressed in this Certificate of Incorporation or any
amendment thereto including, but not limited to, determination of any of the
following:
(a) the
distinctive serial designation and the number of shares constituting a
series;
(b) the
dividend rate or rates, whether dividends are cumulative and, if so, from which
date, the payment date or dates for dividends, and the participating or other
special rights, if any, with respect to dividends;
(c) the
voting powers, full or limited, if any, of the shares of the
series;
(d) whether
the shares are redeemable and, if so, the price or prices at which, and the
terms and conditions on which, the shares may be redeemed;
(e) the
amount or amounts payable upon the shares in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation prior to
any payment or distribution of the assets of the Corporation to any class or
classes of stock of the Corporation ranking junior to the Preferred
Stock;
(f) whether
the shares are entitled to the benefit of a sinking or retirement fund to be
applied to the purchase or redemption of shares of a series and, if so entitled,
the amount of the fund and the manner of its application, including the price or
prices at which the shares may be redeemed or purchased through the application
of the fund;
(g) whether
the shares are convertible into, or exchangeable for, shares of any other class
or classes of stock of the Corporation and, if so convertible or exchangeable,
the conversion price or prices, or the rates of exchange, and the adjustments
thereof, if any, at which the conversion or exchange may be made, and any other
terms and conditions of the conversion or exchange; and
(h) any
other preferences, privileges and powers, and relating participating, optional
or other special rights, and qualifications, limitations or restrictions of a
series, as the Board of Directors may deem advisable and as are not inconsistent
with the provisions of this Certificate of Incorporation.
3. Dividends. Before any
dividends on any class or classes of stock of the Corporation ranking junior to
the Preferred Stock (other than dividends payable in shares of any class or
classes of stock of the corporation ranking junior to the Preferred Stock) may
be declared or paid or set apart for payment, the holders of shares of Preferred
Stock of each series are entitled to such cash dividends, but only when and as
declared by the Board of Directors out of funds legally available therefore, as
they may be adopted by the Board of Directors providing for the issue of the
series, payable on such dates in each year as may be fixed in the resolution or
resolutions. The term "class or classes of stock of the Corporation
ranking junior to the Preferred Stock" means the Common Stock and any other
class or classes of stock of the Corporation hereafter authorized which rank
junior to the Preferred Stock as to dividends or upon liquidation.
4. Reacquired Shares.
Shares of Preferred Stock which have been issued and reacquired in any manner by
the Corporation (excluding, until the corporation elects to retire them, shares
which are held as treasury shares but including shares redeemed, shares
purchased and retired and shares which have been converted into shares of Common
Stock) will have the status of authorized and unissued shares of Preferred Stock
and may be reissued.
5. Voting
Rights. Unless and except to the extent otherwise required by
law or provided in the resolution or resolutions of the Board of Directors
creating any series of Preferred Stock the holders of the Preferred Stock shall
have no voting power with respect to any matter whatsoever.
Common
Stock
1. Dividends. Subject to
the preferential rights of the Preferred Stock, the holders of the Common Stock
are entitled to receive, to the extent permitted by law, such dividends as may
be declared from time to time by the Board of Directors.
2. Liquidation. In
the event of the voluntary or involuntary liquidation, dissolution, distribution
of assets or winding up of the Corporation, after distribution in full of the
preferential amounts, if any, to be distributed to the holders of shares of
Preferred Stock, holders of Common Stock shall be entitled to receive all of the
remaining assets of the Corporation of whatever kind available for distribution
to Stockholders ratably in proportion to the number of shares of Common Stock
held by them respectively. The Board of Directors may distribute in
kind to the holders of Common Stock such remaining assets of the Corporation or
may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust or other entity and receive payment
therefore in cash, stock or obligations of such other corporation, trust or
other entity, or any combination thereof, and may sell all of any part of the
consideration so received and distribute any balance thereof in kind to holders
of Common Stock.
The
merger or consolidation of the Corporation into or with any other corporation,
or the merger or any other corporation into it, or any purchase or redemption of
shares of stock of the Corporation of any class, shall not be deemed to be a
dissolution, liquidation or winding up of the Corporation for the purposes of
this paragraph.
3. Voting
Rights. Except as may be otherwise required by law or this
Certificate of Incorporation, each holder of Common Stock has one vote in
respect of each share of stock held by him or record on the books of the
corporation on all matters voted upon by the Stockholders.
1. Pre-emptive
Rights. No Stockholder shall have any pre-emptive right to
subscribe to an additional issue of stock of any class or series or to any
securities of the Corporation convertible into such stock.
2. Changes in Authorized
Capital Stock. Subject to the protective conditions and
restrictions of any outstanding Preferred Stock, any amendment to this
Certificate of Incorporation which increases or decreases the authorized capital
stock of any class or classes may be adopted by the affirmative vote of the
holders of a majority of the outstanding shares of the voting stock of the
Corporation.
Reverse Stock
Split.
At the effective time of the filing
of the Certificate of Amendment to the Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware pursuant to the
General Corporation Law of the State of Delaware (the "Effective Time"), each
share of the Corporation's Common Stock, par value $0.001 per share (the "Old
Common Stock"), issued and outstanding immediately prior to the Effective Time,
will be automatically reclassified as and converted into one-twentieth (1/20th)
of a share of Common Stock, par value $0.001 per share (the "New Common Stock"),
of the Corporation. Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from and after
the Effective Time, automatically and without the necessity of presenting the
same for exchange, represent the number of shares of the New Common Stock as
equals the product obtained by multiplying the number of shares of Old Common
Stock represented by such certificate immediately prior to the Effective Time by
one-twentieth (1/20). No fractional shares of New Common Stock of the
Corporation shall be issued. Each holder of Old Common Stock at the
Effective Time who would otherwise be entitled to a fraction of a share shall,
in lieu thereof, receive, upon surrender to the exchange agent of certificates
representing such shares, one additional whole share. As a
result of such Reverse Stock Split, each share of Series A Convertible Preferred
Stock shall be convertible into 30.33 shares of the Corporation’s common stock
and shall have 30.33 votes per Series A share. As a result of such
Reverse Stock Split, each share of Series B Convertible Preferred Stock shall be
convertible into one share of common stock and shall have one vote per Series B
share.