UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Community Alliance, Inc.
(Exact name of registrant as specified
in its charter)
Nevada 42-1663174
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
number)
4980 Silver Pine Drive
Castle Rock, Co 80108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 730-7939
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small reporting
company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
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ITEM 1. BUSINESS
Community Alliance, Inc. was incorporated under the laws of the State of
Nevada on February 22, 2005. Community Alliance is a wholly owned
subsidiary of Fresh Ideas Media, Inc., a publicly traded Nevada
corporation. On March 26, 2008, Fresh Ideas assigned Community Alliance
all of the common stock of Our Best Wishes, Inc., also a wholly owned
subsidiary of Fresh Ideas. Our Best Wishes has had no business activity,
other than organizational activities, since its inception on August 30,
2005.
On September 9, 2008, the board of directors of Fresh Ideas authorized the
spin-off of Community Alliance to Fresh Ideas shareholders of record as of
September 9, 2008. The spin-off is being done in connection with a
proposed Share Exchange transaction between Fresh Ideas, Ever Auspicious
International Limited, a Hong Kong corporation and Ever Auspicious' sole
shareholder, Bright Praise Enterprises Limited, a British Virgin Islands
company. Under the terms of the spin-off, shares of Community Alliance's
common stock, par value $0.001 per share, will be distributed on a pro-
rata basis to each holder of Fresh Idea's common stock on the record date
without any consideration or action on the part of such holders, and the
holders of Fresh Ideas' common stock as of the record date will become
owners of 100 percent of our common stock. The spin-off will be
consummated only upon the consummation of the Share Exchange, and the
satisfactory resolution of all comments from the Securities and Exchange
Commission to this registration statement on Form 10 and this Form 10's
effectiveness. However, there is no assurance at this time that the Share
Exchange will be consummated, and therefore no assurance that the spin-off
will be consummated.
There is not expected to be any material change in Community Alliance's
operations as a result of the spin-off.
Community Alliance is engaged in selling sub-licenses for the custom take-
home school folder product and we also intend to sell sub-licenses for the
direct mail greeting card product through Our Best Wishes. Our primary
business to date has been the sale of sub-licenses to market the custom
school take-home folder product in three states.
License Agreement - 45 States
In March 2005, Fresh Ideas acquired the exclusive license in 45 states to
publish and market two advertising products, the Community Alliance Custom
School Take-Home Folder and Our Best Wishes Direct Mail Greeting Card.
The License Agreement was then assigned to Community Alliance.
The licensor excepted five states from the license agreement because the
licensor is aware of and/or has some relationship with other companies
engaged in business to supply elementary schools with custom school take-
home folders in those states. We divided the 45 states licensed into a
possible 52 territories that we believe are ideal in size for a sub-
licensee based upon population density and the estimated number of
elementary schools located within the area. We believe that we can build
a substantial advertising enterprise in the 52 identified territories
within the 45 states covered by the license agreement.
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Sub-License Agreement with Our Best Wishes
Community Alliance intends to transfer the business concept, intellectual
property, trademarks, copyrights and know-how relating to the direct mail
greeting card product in the 45 states of the United States covered by the
license agreement to our wholly-owned subsidiary, Our Best Wishes. Our
Best Wishes will sub-license the rights to the greeting card product to
sub-licensees in up to 52 sub-license territories in these 45 states.
The fee for a sub-license for a sub-license territory will be $15,000,
except for the first five sub-licenses, which we will grant free of charge
to existing sub-licensees of Community Alliance for the school take-home
folder product. After the first five sub-licenses, we will offer existing
sub-licensees for the school folder product the first right to purchase
sub-licenses to market the greeting card product. We will permit a sub-
licensee to make a deposit and pay the balance of the sub-license fee over
time in certain instances.
The sub-license agreement requires the sub-licensee to conduct a minimum
of 24 quarterly direct-mail campaigns per year after the initial five
years in order to maintain and renew the sub-license agreement. The sub-
licensee is required to use Our Best Wishes for production of the direct-
mail greeting card product. We have established a publication fee of
$4,200 per quarterly zip code mailing campaign. This fee covers the
purchase price of mailing lists and the graphic design, production,
printing and mailing of, and overhead and profit to Our Best Wishes on,
the direct-mail campaigns.
License Agreement - Colorado
On February 6, 2008, we entered into a license agreement which Venitech,
LLC for the rights to publish and market two advertising products, the
Community Alliance Custom School Take-Home Folder and Our Best Wishes
Direct Mail Greeting Card in the state of Colorado. We paid a total of
$20,000 for the license, with $10,000 being paid within 90 days of the
signing of the agreement and an additional $10,000 to be paid within 190
days of the signing of the agreement. In addition, Venitech, LLC will
receive twenty percent (20%) of the net profit of all sales in the Colorado
Territory.
Ruth Daily, the principal of Venitech, LLC and a major shareholder of Fresh
Ideas prior to the spin-off and who will be a major shareholder of
Community Alliance after the spin-off, has been operating the business in
Colorado for approximately five years and has over 36 schools under
contract with an annual revenue of between $60,000 and $110,000.
Ruth Daily will work for Community Alliance in the state of Colorado and
will receive commissions for sales made in the state.
The term of the license agreement with Venitech was a period of five years
through May 15, 2010, with the right to renew the agreement for an
additional three years through May 15, 2013 under certain circumstances.
Our right to renew the license agreement is contingent on the following:
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- We sell three sub-licenses in the first year of the license
agreement through March 14, 2006, which we did. There is no minimum
requirement for the years of 2007 and 2008 and thereafter we are
required to sell a minimum of two sub-licenses each year.
- We are not delinquent in the payment of any fees required to
be paid to Venitech under the terms of the license agreement.
- We are not otherwise in default under the license agreement.
- We give Venitech written notice of our intent to renew the
license agreement no later than February 15, 2010.
We sold three sub-licenses prior to March 14, 2006, as required under the
terms of the license agreement. We were not required to sell a minimum of
sub-licenses in 2006 and 2007 in order to maintain the right to renew the
agreement. We are required to sell a minimum of two sub-licenses each
year thereafter. Under mutual agreement, we have extended the License
Agreement through December 31, 2013.
Revenues
From inception, we have sold a total of four sub-licenses. Of the four
sub-licenses that have been sold, only one has paid the full sub-license
fee. One sub-license has been cancelled for non-payment and it is now
doubtful whether the other three sub-licensees will be able to meet the
required payments and make their respective territories productive.
From the date of our inception through May 31, 2008, we realized total
revenue from the sale of sub-licenses and publication fees for our take-
home school folder product of $47,266 and a net loss of $(62,077).
We have finalized the business concept and design of the Our Best Wishes
Greeting Card product. However, we have not yet sold any sub-licenses to
market the greeting card product. We believe that this product will be an
effective advertising tool for businesses to directly target their market
in the community.
Community Alliance Custom School Take-Home Folder Product
The Community Alliance Custom School Take-Home Folder product involves
supplying elementary schools free of charge with what are sometimes called
"take-home folders" that display advertising by community businesses. Each
school signs an agreement with a sub-licensee permitting Community Alliance
to provide the folders for two consecutive school years. Community Alliance
provides each school with a minimum of two folders per student. We believe
that the number of folders required to be printed per school will range
from 800 to 1,500 folders. The schools distribute the folders via the
teachers to the students at the beginning and at the middle of the school
year. The students take the folders home with important information and
communications from school. By publishing their advertisements on the take-
home folders, community businesses sponsor their local school and develop
name recognition in the community. Our customized school take-home folder
replaces generic communications folders currently being used in elementary
schools across the nation. Community Alliance produces and supplies these
custom take-home folders to elementary schools via sub-licensees at no cost
to the schools or the district. Based upon information available to us,
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most schools throughout the United States require the parents to purchase
the folders or, in some cases, the school may supply folders at its
expense.
The sub-licensees sell advertisements and sponsorship to community
businesses that display their advertising on the folders. There are eight
to ten advertising spots on each school folder. The advertisements are
priced at $350 to $550 for the year. Pricing for the advertisements is
determined by placement and size, as follows:
- 1/4 front cover - $550;
- Pocket flap - $550;
- 1/3 back cover - $500
- 1/6 back cover - $350.
Virtually every parent, teacher and child views the advertisements on the
folders every week for an entire school year. Students receive a high
quality folder specifically designed for their school. In addition to the
advertisements, the folders include school pride elements such as the
school logo, important telephone numbers, calendars and/or handbook
information. Local businesses that have an interest in their communities
are the target customers to sponsor the folders. We believe that the
program benefits all parties, as follows:
- our product is an attractive and useful replacement at no charge for
a generic product presently provided by many elementary schools at their
cost or the cost of the parents;
- the parents and students obtain useful information about the school
and its policies and procedures printed on the folders and community
businesses from advertisements displayed on the folders; and
- the community business sponsors benefit from exposure via a
"friendly" medium to their target market on a weekly basis.
Promotion and Advertising
We intend to initially rely upon referrals and advertising in newspapers
to locate potential sub-licensees.
Trademarks, Patents and Intellectual Property
Venitech, the licensor, granted to us the exclusive license to publish and
market two advertising products, the Community Alliance Custom School
Take-Home Folder and Our Best Wishes Greeting Card, including the right to
use the trademarks, "Community Alliance" and "Our Best Wishes," in 45
states of the United States. The licensor has applied for both trademarks
and is active in completing the process, but has not yet secured
registration for the trademarks, "Community Alliance" and "Our Best
Wishes," in the United States or any other country.
In any given market, a competitor may sell the same products and services
that we sell under any business name that they desire. We have no
exclusive right to the idea, but only to the business concept as developed
by Venitech. If a competitor is or commences marketing of school take-
home folders or a greeting card similar to the Our Best Wishes Greeting
Card, it could have a material adverse effect on our business. This
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competition could either limit the growth and sales by our sub-licensees
or keep them from conducting business altogether. If this were to happen
in a number of proposed territories, it could have a major adverse effect
on our business.
We know of no particular barriers that exist at this time that would keep
us from entering any market for which we have a license. We know of no
one producing school take-home folders such as we produce in the licensed
territory of the 45 states. At this time, we do not believe that we will
compete with a similar business. However, some schools may desire to
continue to provide take-home school folders to their students, or they
may continue to require the parents to provide the folders.
Despite the licensor's efforts to protect its proprietary rights,
unauthorized persons may attempt to copy aspects of the custom school
take-home folder and greeting card programs, product information and sales
mechanics or to obtain and use information that the licensor regards as
proprietary. We depend upon the licensor to adequately protect or enforce
the intellectual property rights in connection with these products. The
failure of the licensor to adequately protect its intellectual property
rights or any encroachment upon the proprietary information, the
unauthorized use of the trademarks, the use of a similar name by a
competing company or a lawsuit initiated against us for our infringement
upon another company's proprietary information or improper use of their
trademark, may affect our ability to create brand name recognition, cause
customer confusion and/or have a detrimental effect on our business.
Third parties may also claim infringement by us with respect to past,
current or future programs.
Government Regulation
Government approval is not necessary for our business. We anticipate that
government regulations will have little or no effect on our business
except insofar as their applicability to businesses generally.
Competition
The marketing and advertising markets in which we expect to compete are
intensely competitive and Community Alliance and/or the sub-licensees may
not be able to compete in the market(s) effectively. We expect
significant competition from the existing competitors in these markets,
including newspapers, television, radio, magazines, billboards, direct-
mail and numerous other businesses looking for ways to spend their
advertising dollars. Most of these companies are substantially larger and
have more substantial operating histories and records of successful
operations; greater financial resources, technical expertise, managerial
capabilities and other resources; more employees; and more extensive
facilities than we have or will have in the foreseeable future. Our sub-
licensees must compete with these established companies for their
advertising dollars.
Community Stars, LLC, a company operated by Ms. Daily's sister that
currently supplies, or intends to supply, elementary schools with take-
home folders in the five states excepted from our license agreement, may
in the future attempt to offer its products in the 45 states in which we
7
intend to operate. Further, it is possible that competitors exist of
which we are unaware and/or that might start the same or a similar
business in any given area within the 45 states covered by our license
agreement. If this occurs, it could adversely affect our sub-licensee in
that area; keep the sub-licensee from operating effectively; or keep us
from selling a sub-license in that area. We are aware of two other
companies selling direct-mail birthday pieces in their respective States
of Florida and Missouri. We have no recourse against anyone desiring to
conduct the same business as us in any of the 45 states in the licensed
territory.
Employees
We have no full-time employees. All activities since our organization
have been undertaken by our officers as needed. Our officers do not
currently spend all of their time on our business and estimate they devote
approximately 20% of their business time on the business of Community
Alliance. We anticipate that we will begin hiring employees as needed to
support our anticipated growth.
Subsidiaries
We have one wholly owned subsidiary, Our Best Wishes, Inc., a Nevada
corporation which has no business activity at this time.
ITEM 1A. RISK FACTORS
A. We have had very little operating history and it is difficult for you
to evaluate our business prospects.
We cannot predict whether we will succeed because there has been very
little operating history and, accordingly, you will have no basis upon
which to evaluate our ability to achieve our business objective. Community
Alliance is a development stage company. We have only begun revenue-
generating operations in a very limited way. To date, the only revenue-
generating activity has been the sale by Community Alliance of four sub-
licenses to publish and market the custom school take-home folder product,
resulting in the receipt of minimal sub-license and publication fees.
There can be no assurance that we will ever reach a level of
profitability. Our revenue and income potential is yet unproven, and the
lack of operating history makes it difficult to evaluate the future
prospects of our business. You should view our operations as being
subject to all of the risks inherent in the establishment of a new
business venture.
B. Operating results may fluctuate and we may fail to meet our
expectations.
Our operating results in one or more future periods could likely fluctuate
significantly and may fail to meet or exceed the expectations of
investors. As we continue our operations, we expect significant
fluctuations in future results of operation because of a variety of
factors, many of which are beyond our control, including, but not limited
to:
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- The ability of sub-licensees to contract with schools for the folder
program and to market the advertising that will be printed on the folders;
- Demand for and market acceptance of our products and consulting
services;
- Our ability to expand our market share;
Competitive factors that affect our pricing structure;
- The variety and mix of products we sell;
- The timing and magnitude of our capital expenditures, including
costs relating to the development, marketing and continued expansion of
operations;
- Conditions specific to the public grade schools and general
economic factors; and
- Changes in generally accepted accounting policies, especially those
related to our business.
C. We are a development stage company that may not be able to develop our
business plan.
Because we are a development stage company with limited funds, we may not
be able to develop our business into a significant revenue-generating
operation. Our ability to develop the business into an operation
generating significant revenue will depend on a number of factors, which
include the ability to:
- Provide advertising and consulting products and programs that are
reliable and cost-effective, and accommodate any significant increase in
the number of users;
- Select sub-licensees who have the capability to market and advertise
our products and programs effectively;
- Continue to grow our infrastructure to accommodate an increasing
number of sub-licensees and new developments in advertising sales;
- Establish and/or maintain relationships with printers for the
products that will allow us to sell products at a profit;
- Hire, retain and motivate qualified personnel; and
- Effectively respond to competition.
If we are unsuccessful in meeting these challenges and/or addressing the
risks and uncertainties associated with operating a business with limited
funds, we will not be successful, and any investment made in our common
stock would decline in value or be completely lost.
D. Our auditors have raised substantial doubt about our ability to
continue as a going concern.
The report of Ronald R. Chadwick, P.C., the independent registered public
accounting firm that audited our financial statements for the fiscal year
ended November 30, 2007, and Note 1 to the financial statements, raises
substantial doubt as to our ability to continue as a going concern because
we realized a net loss of $(9,734) during the year and we had a working
capital deficit as of November 30, 2007.
9
E. We may not be able to expand or become profitable.
We may not be able to obtain and expand a customer base of sub-licensees
satisfactorily and, therefore, we may never become profitable. The sale of
advertising to be displayed on school folders and direct-mail greeting
cards is a relatively new and emerging market. Even though the school
folder program has been successful in several states, there can be no
assurance that customers will adopt the products we plan to sell through
sub-licensees and, if so, in a quantity sufficient to enable the sub-
licensees and, therefore, Community Alliance, to succeed. Accordingly, we
cannot accurately predict the potential demand for our products. We
believe that the acceptance of our products will depend on the ability to:
- Select sub-licensees who market our advertising products
effectively;
- Attract and retain sub-licensees and provide high quality support to
sub-licensees such that they are able to develop repeat business from
schools and advertisers;
- Produce, distribute and price our products and programs in a manner
that is appealing to customers and users;
- Develop and maintain a favorable reputation among our sub-licensees,
sponsors for the advertising displayed on our products and potential sub-
licensees and sponsors; and
- Withstand downturns in general economic conditions or conditions
that would slow sales of our products.
Many of the factors that may affect the development and expansion of a
customer base of sub-licensees are beyond our control. If we are unable to
expand our customer base, it will negatively impact the ability to
generate revenues and, in turn, prevent us from becoming a profitable
business.
F. Revenue will be dependent upon success of each sub-licensee; sub-
licensees may not be successful.
The revenue we generate from operations will be dependent upon the success
of the business of each sub-licensee and the results of each sub-licensee
may vary, thus causing our revenue to fluctuate. We have acquired the
exclusive license rights in 46 states to two advertising products,
including the Community Alliance Custom School Take-Home Folder and Our
Best Wishes Greeting Card products. Although the viability of the custom
school take-home folder product has been demonstrated in several states in
the United States, the concept of marketing the products through sub-
licensees has not been proven. We will receive a sub-license fee upon the
sale of each sub-license and publication fees for the production, printing
and delivery of products to the sub-licensees and the creation of
advertisements for the sponsors. Accordingly, our revenue and, therefore,
the success of our operations will be directly dependent upon the volume
of business generated by the sub-licensees. To the extent that the sub-
licensees fail to sell sufficient advertising in their respective
territories of operation in order to make the custom take-home school
folder and greeting card programs profitable, we may be unable to generate
sufficient revenue from publication fees in order to achieve profitable
operations or break even. As a result, we may not be able to continue in
business as a going concern and our common stock would lose some, if not
all, of its value. As of May 31, 2008, only two of our sub-licensees have
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sold advertising for the school folders in their respective territories.
It is doubtful as whether the other two sub-licensees will be able to make
a success in their respective territories.
G. Operating expense may increase and the increase may not be offset by
an increase in revenue and may result in significant losses.
In the future, we expect that our operating expenses will increase as we
grow and expand. The anticipated increase in our operating expenses will
depend entirely on the rate of our growth and the addition of new programs
and services. Because we are unable to predict our growth rate or the
timing of the addition of new programs and services, we are unable to
quantify the amount by which operating expenses may increase or the
timeframe for the increase(s). We anticipate that the increase in
operating expenses will also include general and administrative expenses
as well as professional fees and expenses, which will increase as a result
of our reporting obligations under the Securities Exchange Act of 1934.
Although we believe that revenue generated from our business operations
will meet our needs for growth of the company, it is possible that the
expenses may not be offset with revenue, thereby resulting in losses for
the company. If revenue falls below our expectations and we are unable to
reduce spending in response, our operations will be adversely affected,
which may result in significant losses from which we may be unable to
recover.
H. We may need additional funds that we may not be able to obtain and the
lack of necessary funds would adversely impact our growth.
Generating sufficient revenue from the sale of sub-licenses and/or raising
sufficient funds from additional equity and/or debt financing in order to
sustain the growth and expansion of the business could be necessary. Any
shortfall of capital, whether the inability to raise funds or generate
revenue, would adversely impact the progress and development of our
business, and negatively impact the potential to generate revenue and
reach a level of profitability in the future. Future equity or debt
financing may not be available to us on favorable terms or may not be
available at all. Borrowing instruments such as credit facilities and
lease agreements will likely have restrictions on lending money to a
development-stage company with little or no assets, such as ours. Our
inability to obtain additional capital on satisfactory terms may delay or
prevent the expansion of our business, which would cause the business and
prospects to suffer.
I. We are required to sell addition sub-licenses each year. If we fail
to do so, we may lose our rights under the license agreements.
We have sold four sub-licenses as of the date of this filing, as required
in order to maintain our right to renew the license agreement with
Venitech. By an Amendment to the License Agreement, we are not required
to sell a minimum of sub-licenses in 2006 and 2007, however we are
required to sell a minimum of two sub-licenses in 2008 and each year
thereafter. If we fail to sell an additional two sub-licenses in 2008 and
each year thereafter, we may lose all rights under the license agreement
to market and publish the two advertising products, including the
Community Alliance Custom School Take-Home Folder and Our Best Wishes
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Direct Mail Greeting Card products, which are the basis for our business
plan. If we were to lose these rights, we would go out of business and an
investor in our common stock would lose his entire investment.
J. The markets in which we will compete are intensely competitive and we
may not be able to compete successfully.
The marketing and advertising markets in which we expect to compete are
intensely competitive and Community Alliance and/or the sub-licensees may
not be able to compete in the market(s) effectively. We expect
significant competition from the existing competitors in these markets,
including newspapers, television, radio, magazines, billboards, direct-
mail and numerous other businesses looking for ways to spend their
advertising dollars. Most of these companies are substantially larger and
have more substantial operating histories and records of successful
operations; greater financial resources, technical expertise, managerial
capabilities and other resources; more employees; and more extensive
facilities than we have or will have in the foreseeable future. Our sub-
licensees must compete with these established companies for their
advertising dollars. Community Stars, LLC, a company operated by Ms.
Daily's sister that currently supplies, or intends to supply, elementary
schools with take-home folders in the five states excepted from our
license agreement, may in the future attempt to offer its products in the
45 states in which we intend to operate. Further, it is possible that
competitors exist of which we are unaware and/or that might start the same
or a similar business in any given area within the 45 states covered by
our license agreement. If this occurs, it could adversely affect our sub-
licensee in that area; keep the sub-licensee from operating effectively;
or keep us from selling a sub-license in that area. We are aware of two
other companies selling direct-mail birthday pieces in their respective
States of Florida and Missouri. We have no recourse against anyone
desiring to conduct the same business as us in any of the 45 states in the
licensed territory.
K. Registration for trademarks has not yet been secured and we may not be
able to defend our trademarks and we may be subject to infringement claims
from others.
We depend upon the licensor to adequately protect or enforce the
intellectual property rights in connection with the custom school take-
home folder and greeting card products, and the failure of the licensor to
do so may affect our ability to create brand name recognition, cause
customer confusion and/or have a detrimental effect on our business. We
hold the exclusive license from Venitech to publish and market two
advertising products, the Community Alliance Custom School Take-Home
Folder and Our Best Wishes Greeting Card, including the right to use the
trademarks, "Community Alliance" and "Our Best Wishes," in 45 states of
the United States. To our knowledge, the licensor has not yet secured
registration for the trademarks, "Community Alliance" and "Our Best
Wishes," in the United States or any other country. Despite the
licensor's efforts to protect its proprietary rights, unauthorized persons
may attempt to copy aspects of the Community Alliance Custom School Take-
Home Folder and Our Best Wishes Greeting Card programs, product
information and sales mechanics or to obtain and use information that the
licensor regards as proprietary. Any encroachment upon the proprietary
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information, the unauthorized use of the trademarks, the use of a similar
name by a competing company or a lawsuit initiated against us for our
infringement upon another company's proprietary information or improper
use of their trademark, may affect our ability to create brand name
recognition, cause customer confusion and/or have a detrimental effect on
our business. Third parties may also claim infringement by us with
respect to past, current or future programs. We expect that participants
in our markets will be increasingly subject to infringement claims as the
number of services and competitors in our industry segment grows. Any
claim, whether meritorious or not, could be time-consuming, result in
costly litigation or cause service upgrade delays.
L. Two principals control approximately 40% of our common stock and have
significant voting control over all matters pertaining to the company.
By reason of their percentage share ownership, Phil E. Ray, a director and
president of Community Alliance, and Ruth Daily, a director and officer of
Community Alliance, have significant control over all matters submitted
for shareholder approval. Mr. Ray and Ms. Daily each currently own
approximately 20%, or a total of approximately 40%, of our outstanding
common stock. As a result, they have significant control over the outcome
of all matters submitted to a vote of shareholders, which may include the
election of directors, amendments to the articles of incorporation and
approval of significant corporate transactions.
M. Officers may not be able to spend the necessary time to make the
company a success.
Each of Phil E. Ray, President and a director of Community Alliance, and
Alice Terry Ray, a director and Secretary of Community Alliance, expect to
contribute an average of 20 hours per week to company business initially.
Ruth Daily, an officer and director of Community All will be spending
whatever additional time is required to continue to operate the business
in the State of Colorado, as well as other activities for the Company.
Ms. Daily will continue to sell advertising for the school folders as well
as contract with schools for the distribution of the folders. She will be
receiving a commission on all advertising sold in the State of Colorado.
If, and as, we progress and our business expands, Mr. and Ms. Ray intend
to increase the time they spend on our business and affairs in order to
ensure implementation of our business plan. Further, as capital and/or
revenue become available, we intend to add additional personnel. Both Mr.
and Ms. Ray currently spend a substantial amount of their time with other
companies of which they are officers, directors and/or principals, and
this may create a conflict of interest insofar as where they devote their
time. Mr. Ray owns the majority interest in and manages VentureVest
Capital Corporation and American Business Services, Inc., two Denver,
Colorado-based business consulting companies, and Ms. Ray serves as the
Secretary of American Business Services and VentureVest Capital
Corporation. While both Mr. and Ms. Ray intend to spend the necessary
time to make the company a success, it may be possible that the amount of
time that they can spend may not be sufficient for the furtherance of our
business plan, thereby reducing the chances for our success. If either
individual is required to devote substantial amounts of time to
VentureVest Capital's and/or American Business Services' affairs in excess
13
of his or her current commitment level, it could materially limit his or
her ability to devote time to our affairs and could have a material
negative impact on us.
N. Our success will depend upon our present officers and the loss of
their services could have a very negative effect on us.
Our success will substantially depend upon Phil E. Ray, Alice Terry Ray,
and Ruth Daily, our management, and the loss of their services could
materially adversely affect our ability to operate. We will be heavily
dependent upon the skills, talents and abilities of our executive officers
and sole director to implement our business plan. We may find, from time
to time, that the inability of Mr. or Ms. Ray or Ms. Daily to devote his
or her full time and attention to our business results in a delay in
progress toward implementing the business plan. Further, although both
Mr. and Ms. Ray and Ms. Daily have experience with development-stage
companies and Mr. Ray has extensive experience in advertising and
marketing and Ms. Daily has experience in the School Folder program,
neither individual has any experience in marketing sub-licenses for
advertising products. This lack of experience may result in management's
inability to develop and manage the business in a manner that is
beneficial to our shareholders and us. Nevertheless, we believe that our
success depends on the continued service of our management. We cannot
assure you that these individuals will remain with us for the immediate or
foreseeable future. We do not have an employment agreement with either of
our current executives and we do not expect to enter into an employment
agreement with either of them until business operations increase and a
more extensive time commitment is necessary. Further, if Mr. Ray, Ms. Ray
and/or Ms. Daily resigns, new management's actions and views may not
satisfy our former management, thus motivating Mr. Ray or Ms. Daily and/or
others, to sell their shares and thereby potentially depress the share
price.
O. Employment of additional personnel may be difficult.
We intend to employ additional management and sales and other personnel as
we implement our business plan. There can be no assurance that we will
attract and retain key technical and other employees in the future. If we
are unable to attract and retain the necessary management, sales and other
personnel, it would limit or prevent us from implementing our proposed
business and, possibly, from generating significant revenue.
P. Inability to manage growth would adversely affect Community Alliance.
Although we believe that we can manage the growth of Community Alliance as
projected, the planned expansion will require additional personnel as well
as the normal development of operation controls and systems required in a
growing company. As we have developed our business plan around the
projected growth, we cannot be certain that we will be able to attract the
needed personnel and/or develop the necessary operation controls and
systems required for future growth. However, we believe that the
experience of the present personnel in developing early stage companies,
and their experience in advertising, will be an asset in the growth of the
14
company. Growth of Community Alliance, and our ability to manage the
growth, if it occurs, will depend on several factors, including, but not
limited to:
- Development and maintenance of a system and method for obtaining
sub-licensees in the 45 states in the licensed territory;
- Development of the ability to properly train and support sub-
licensees in their territories of operation; and
- Significant expansion of our internal management and financial
controls in order to maintain operational control and provide adequate
staff support as our size and number of personnel increase.
If we are unable to achieve any of the above objectives, it would
negatively impact the potential to grow our business. As a result, the
value of the shares would depreciate significantly.
Q. Due to the lack of a public market for our common stock, and the risk
that one may never develop, investors may not be able to sell their
shares.
There is no public market for our common stock and no assurance that one
will develop. While we intend to attempt have our common stock quoted on
an exchange in the future, either the Pink Sheets or the OTCBB, there is
no assurance that this can happen. Any one purchasing shares in the
Company may be at risk of not being able to sell those shares on the open
market. Purchase of shares in the Company presents a high degree of risk.
R. Even if our stock becomes quoted on an exchange, it will be thinly
traded and highly volatile and may not increase in value to offer a return
to the investor.
Even if our common stock is eventually approved for quotation by a market
maker through the Over-the-Counter Bulletin Board, stocks traded over this
quotation system are usually thinly traded, highly volatile and not
followed by analysis. Any market that develops for purchases and sales of
our common stock is likely to be limited. Accordingly, we anticipate that
our common stock will be, if at all, very thinly traded and the sale of a
limited number of shares could cause the price to fall sharply. As a
result, it may be difficult to sell shares of our common stock without
significantly depressing the value of the shares. Unless we are
successful in developing continued investor interest in our common stock,
sales of our stock could continue to result in major fluctuations in the
price of the stock. We do not expect to be able to obtain security or
industry analyst coverage and our common stock may not have visibility in
the financial markets because of this. The lack of analysis could also
cause our stock price or trading volume to decline.
S. There is no assurance that a public market will develop for our stock,
but, if a market develops, the stock will likely be subject to the "penny
stock" rules.
We make no assurance that a public market will ever develop for our common
stock. However, if a trading market develops, it is likely that
transactions in our common stock will be subject to the Commission's
"penny stock" rules and, as a result, any trading activity in our common
15
stock may be materially adversely affected and broker-dealers may
experience difficulty in completing customer transactions. Because our
common stock will not be listed on a nationally approved exchange or the
NASDAQ, we will not meet certain minimum financing requirements and the
bid price, if any, for our common stock will be less than $5.00 per share,
it will likely be considered penny stock within the meaning of Rule 3a-51-
1 of the Securities Exchange Act of 1934. The Securities and Exchange
Commission regulates broker-dealer practices in connection with
transactions in penny stocks. Further, penny stocks often suffer wide
fluctuations in price and have certain disclosure requirements that make
resale in the secondary market difficult, if not impossible. This would
adversely affect your ability to sell the shares in any trading market
that may develop. Rules associated with transactions in penny stocks
include the following:
- The delivery of a standardized risk disclosure document;
- The provision of other information, such as current bid and offer
quotations, the compensation to be provided to broker-dealers and
salespersons and monthly accounting for penny stocks held in the
customer's account;
- Written determination that the penny stock is a suitable investment
for the purchaser; and
- Written agreement to the transaction by the purchaser.
Because our common stock will likely be subject to these rules in the
event that a trading market develops, broker-dealers may find it difficult
to effectuate customer transactions and trading activity in our shares may
be materially adversely affected. As a result, the market price of our
common stock may be materially depressed and you may find it more
difficult to sell the shares.
T. All of our present shareholders may be selling their shares and the
selling of these shares could have a very adverse effect on the price of
our stock.
If, a market eventually develops for our shares via the Pink Sheets or the
OTC Bulletin Board, the shareholders may offer and sell the shares from
time to time in each case at prices then prevailing in the public market
at the time of sale, at prices related to these prevailing market prices
or at negotiated prices, in open market transactions, in private or
negotiated transactions or in a combination of these methods of sale. As
a result, the price, if any, for the stock may fall. Because of the
provisions of Rule 144, all restricted stock is currently available for
sale in a public market, if one develops. The availability for sale of
substantial amounts of stock under Rule 144 could reduce prevailing prices
for our common stock. Because we have a limited number of shares of our
common stock issued and outstanding, sales of any significant number of
shares into the market would depress the share price and the price may not
appreciate thereafter.
U. Preferred stock may be issued that may have preferences over our
common stock and may cause additional dilution. Preferred stock can be
issued with a board of directors' resolution.
16
We are authorized to issue 5,000,000 shares of preferred stock, which, if
issued, may reduce the price of our common stock. Although no preferred
stock is currently issued or outstanding, our directors are authorized by
our articles of incorporation to issue preferred stock in series without
the consent of our shareholders. Our preferred stock, if and when issued,
may rank senior to our common stock with respect to payment of dividends
and amounts received by shareholders upon liquidation, dissolution or
winding up. The issuance of preferred stock in series and the preferences
given the preferred stock must be by a resolution of directors, but we do
not need the approval of our shareholders. The existence of rights, which
are senior to our common stock, may reduce the price of our common stock.
V. We have no audit, disclosure or compensation committee and our
shareholders must rely on the actions of our directors.
We do not have an audit, disclosure or compensation committee comprised of
independent directors. Accordingly, the board of directors as a whole
must perform the functions of audit, disclosure and compensation committee
members. Our board of directors is presently comprised of one member, who
is not independent. Thus, there is a potential conflict in that our
directors, who are also executive officers, will determine management
compensation and audit and disclosure issues that may affect management
decisions.
W. Community Alliance will be subject to reporting requirements of the
SEC that can be costly and time consuming.
With the filing of this Form 10, Community Alliance becomes a "Reporting
Company" and as such, we will be subject to the information and reporting
requirements of the Securities Exchange Act of 1934 and, accordingly, we
will be obligated to file a Form 10-K with audited financial statements
annually, a Form 10-Q with unaudited financial statements quarterly and
other reports with the Securities and Exchange Commission that are both
costly and time consuming. These filings will place additional burdens on
us, both financially and with regard to the demands on the time of our
executive officers. If we cease filing these reports, and in the event
that our stock ever becomes trading on the OTCBB, our common stock would
no longer be eligible for quotation on the Over-the-Counter Bulletin
Board, which could reduce the value and liquidity of your investment in
our shares. If we are not required under Section 12(g) or otherwise to be
a mandatory Exchange Act filer because of the fact that we have less than
500 shareholders, we intend to continue as a voluntary reporting company,
although we would not be subject to the proxy statement or other
information requirements of the Securities Exchange Act.
In the event that we are unable to establish a base of operations that
generates sufficient cash flow or we are unsuccessful in obtaining
additional equity or debt financing, the costs of maintaining our status
as a reporting entity may inhibit out ability to continue our operations.
If we subsequently decide to cease filing reports, our securities could no
longer be quoted on the Over-the-Counter Bulletin Board. This could
reduce the value and liquidity of your investment in our shares.
17
ITEM 2. FINANCIAL INFORMATION
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Trends and Uncertainties
Demand for our products and services are dependent on, among other things,
general economic conditions which are cyclical in nature. Inasmuch as a
major portion of our activities are the receipt of revenues from the sale
of sub-licenses to market the custom school take-home folder product, our
business operations may be adversely affected by our competitors and
prolonged recessionary periods. There are no known trends, events or
uncertainties that have or are reasonably likely to have a material impact
on our short term or long term liquidity. Sources of liquidity both
internal and external will come from the sale of our products as well as
the private sale of our common stock. There are no material commitments
for capital expenditure at this time. There are no trends, events or
uncertainties that have had or are reasonably expected to have a material
impact on the net sales or revenues or income from continuing operations.
There are no significant elements of income or loss that arise from our
continuing operations. There are no known causes for any material changes
from period to period in one or more line items of the corporation's
financial statements.
Capital and Source of Liquidity
We have no material commitments for capital expenditures. We have no
plans for future capital expenditures at this time.
We believe there will be sufficient capital from revenues to conduct
operations for the next twelve months.
Presently, our revenue and cash comprises all of the total cash necessary
to conduct operations. Future revenues from the sale of sub-licenses will
determine the amount of additional financing necessary to continue
operations.
The board of directors has no immediate offering plans in place. The
board of directors shall determine the amount and type of financing as our
financial situation dictates.
For the six months ended May 31, 2008 and 2007, Community Alliance did not
pursue any investing activities.
For the six months ended May 31, 2008 and 2007, Community Alliance made
payments on notes payable of $3,500 and had amounts due to parent company
of $15,900. As a result, Community Alliance had net cash used in
financing activities of $12,400 for the six months ended May 31, 2008.
Comparatively, for the six months ended May 31, 2007, Community Alliance
borrowed $3,500 and had amounts due to parent company of $7,724. As a
result, Community Alliance had net cash used in financing activities of
$11,224 for the six months ended May 31, 2007.
18
On a long term basis, liquidity is dependent on continuation of operation
and receipt of revenues.
Results of Operations
Six Months Ended May 31, 2008 Compared to Six Months Ended May 31, 2007
Revenues were $4,491 for the six months ended May 31, 2007 compared to
$16,126 for the six months ended May 31, 2008. Costs of goods sold for
the six months ended May 31, 2007 were $0 compared to $13,000 for the six
months ended May 31, 2008.
Operating expenses increased from $3,455 for the six months ended May 31,
2007 to $24,789 for the six months ended May 31, 2008. The increase in
these expenses was due to increased operations.
Community Alliance had net income of $1,036 for the six months ended May
31, 2007 compared to $(24,789) for the six months ended May 31, 2008. The
decrease in net loss was primarily due to completion of the public
offering and subsequent decrease in offering costs.
If we are unable to increase our sales of sub-licenses to generate revenue
or raise additional capital from debt or equity financing, we may be
forced to curtail or cease our operations. Even if we are able to
continue our operations, the failure to obtain financing could have a
substantial adverse effect on our business and financial results. We have
no commitment from our officers and directors or any of our shareholders
to fund our operations or provide us with financing in the future.
In the future, we may be required to seek additional capital by selling
debt or equity securities, selling assets, or otherwise maintaining cash
flows in balance when they approach a condition of cash insufficiency.
The sale of additional equity securities, if accomplished, may result in
dilution to our shareholders. We cannot assure you that financing will be
available in amounts or on terms acceptable to us, or at all.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial
condition are based upon our financial statements, which have been
prepared in accordance with accounting principles generally accepted in
the United States of America. The preparation of these financial
statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We base our
estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions
or conditions.
We considered the quality and variability of information regarding the
financial condition and operating performance that may have changed in the
past and may change in the future that may have a material effect, and
have quantified them where possible. Specifically, we considered risk of
19
variability with changes in contract that may affect the recognition of
income and also the possibility of changes in the tax code that may affect
the long term rates of return.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Burden of SEC Reporting Requirements
We have chosen to become a "reporting company" and hereafter we will be
subject to the information and reporting requirements of the Securities
Exchange Act of 1934.
Accordingly, we will be obligated to file a Form 10-K with audited
financial statements annually, a Form 10-Q with unaudited financial
statements quarterly and other reports with the Securities and Exchange
Commission that are both costly and time consuming. These filings will
place additional burdens on us, both financially and with regard to the
demands on the time of our executive officers. If we cease filing these
reports, our common stock would no longer be eligible for quotation on the
Over-the-Counter Bulletin Board, which could reduce the value and
liquidity of your investment in our shares. If we are not required under
Section 12(g) or otherwise to be a mandatory Exchange Act filer because of
the fact that we have less than 500 shareholders, we intend to continue as
a voluntary reporting company, although we would not be subject to the
proxy statement or other information requirements of the Securities
Exchange Act. In the event that we are unable to establish a base of
operations that generates sufficient cash flow or we are unsuccessful in
obtaining additional equity or debt financing, the costs of maintaining
our status as a reporting entity may inhibit out ability to continue our
operations. If we subsequently decide to cease filing reports, our
securities could no longer be quoted on the Over-the-Counter Bulletin
Board. This could reduce the value and liquidity of your investment in
our shares.
Controls and Procedures
During the three months ended May 31, 2008, there were no changes in our
internal controls over financial reporting (as defined in Rule 13a- 15(f)
and 15d-15(f) under the Exchange Act) that have materially affected, or
are reasonably likely to materially affect, our internal control over
financial reporting.
Evaluation of Disclosure Controls and Procedures
Phillip E. Ray, the chief executive officer a director and A. Terry Ray, a
director and secretary of Community Alliance have made an evaluation of
the disclosure controls and procedures relating to the financial
statements for the three months ended May 31, 2008 and have concluded such
controls and procedures to be effective as of May 31, 2008 to ensure that
information required to be disclosed by the issuer in the reports that it
files or submits under the Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and
forms and to ensure that information required to be disclosed by an issuer
20
in the reports that it files or submits under the Act is accumulated and
communicated to the issuer's management, including its principal executive
and principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
ITEM 3. PROPERTIES.
Community Alliance is currently housed in the home of our president. We
do not pay our president for use of such space. We anticipate that we
will rent separate office facilities when needed to support the growth of
our business. We do not currently anticipate the need for warehouse space
for our business. We expect all warehouse and shipping of our products to
be conducted by the packing firms engaged to manufacture our products.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Our shares of common stock to be distributed to Fresh Ideas shareholders
of record as of September 9, 2008 are being held in escrow with Jody M.
Walker, Attorney At Law until this Form 10 is effective. The following
tabulates holdings of shares of Community Alliance by each person who,
adjusted for completion of the spin-off, will be holders of record or is
known by Management to own beneficially more than 5.0% of the common stock
and, in addition, by all directors and officers of Community Alliance
individually and as a group. Each named beneficial owner has sole voting
and investment power with respect to the shares set forth opposite his
name.
Shareholdings at September 9, 2008
Adjusted for completion of the spin-off(1)
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Stock
<s> <c> <c>
Phillip E. Ray 300,000 19.9 %
4980 Silver Pine Drive
Castle Rock, CO 80108
Ruth Daily 300,000 19.9 %
4980 Silver Pine Drive
Castle Rock, CO 80108
A. Terry Ray(2) 300,000(indirect) 19.9%
4980 Silver Pine Drive
Castle Rock, CO 80108
All directors and officers
as a group 3 persons) 600,000 39.8%
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
21
sole or shared investment power (including the power to dispose or direct
the disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power to
vote, or dispose or direct the disposition of all shares beneficially
owned, subject to applicable unity property laws.
(2)A. Terry Ray is deemed to beneficially own the 300,000 shares of common
stock held by her spouse, Phillip E. Ray, an officer and director of
Community Alliance.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Position Held Term of Office
<s> <c> <c>
Phillip E. Ray, age 70 President, CEO Inception to
Director present
A. Terry Ray, age 63 Secretary, Director June 2007 to
present
Ruth Daily, age 48 Director, Treasurer February 2008 to
present
Resumes
Phillip E. Ray
Mr. Ray has had experience in the management of public and non-public
companies, including developing national marketing programs, advertising
and publications, product development, investor relations, public
securities offerings, corporate development, business plan preparation,
financing strategies for developing companies and many other areas of
corporate development and management. Mr. Ray has served as the
President, a director and a major shareholder of two Denver, Colorado-
based companies, since he founded the businesses in 1997. VentureVest
Capital and American Business Services are engaged in business consulting
in the areas of advertising, marketing, mergers and acquisitions and
strategic planning, primarily, for companies preparing for an initial
public securities offering or a private securities placement.
Mr. Ray was Assistant Manager of Howlett Distributing in Las Vegas,
Nevada, prior to founding his own advertising business in 1958. From 1958
until 1971, he served as owner and President of Advertising Productions of
Nevada, Inc., an advertising service, and Phil E. Ray & Associates, a
full-service advertising agency. Mr. Ray relocated to Colorado in 1971.
In 1972, he founded and served as President and Chairman of the Board of
Director of Electromedics, Inc., a Colorado corporation specializing in
medical products. Electromedics became a public company in 1974 through an
initial public securities offering. Electromedics developed into a company
with diversified medical, industrial and consumer products. Mr. Ray
acquired the consumer products division of Electromedics in 1981,
22
organized a new company and eventually merged that company with a public
company to spend full time in business consulting and other ventures,
including VentureVest Capital and American Business Services.
Alice Terry Ray
Ms. Ray has served as the corporate secretary of a number of public and
private corporations and the administrative assistant or secretary to
presidents of several companies for many years. Since 1993, she has
served as the Secretary of American Business Services, one of the business
consulting companies owned by Mr. Ray. From 1995 to January 2004, she was
employed as a senior administrator for Denver Reserve, Inc., a company in
Littleton, Colorado, engaged in pre-tax benefit plans. Ms. Ray currently
serves as President of a literary guild and she has served in various
administrative positions in her community for many years. Ms. Ray
attended the University of Nevada-Las Vegas, majoring in business
administration, from 1963 to 1965.
Ruth Daily
Ms. Daily manages Venitech, LLC, a Denver, Colorado-based advertising and
business consulting firm that she founded in 1999. Through Ms. Daily's
efforts, Venitech developed the Community Alliance Custom Take-Home Folder
program under the trade name of Community Alliance of Colorado in October
of 2002. Community alliance of Colorado has signed up 37 schools in
Colorado and is generating between $80,000 and $110,000 in revenue. In
February of 2008, Venitech entered into a Licensing Agreement with
Community Alliance, Inc., the wholly owned subsidiary of Fresh Ideas
Media, Inc, and for a fee, granting a license to Community Alliance, Inc.
for the State of Colorado, and in so doing assigned over to Community
Alliance, Inc. all of the schools that was under contract in Colorado, and
the revenue generated from the sales of advertising from the school
folders.
Ms. Daily has agreed to continue to contract with schools and to sell
advertising for the school folders in Colorado and to do so on a
commission only basis.
Director Independence
Community Alliance presently has three directors. Mr. Ray is the
President and CEO of Community Alliance, A. Terry Ray is the Secretary of
Community Alliance and Ruth Daily is the Treasurer of Community Alliance
and none of the three are therefore considered to be independent.
Audit Committee
Our board of directors has been responsible for the Audit Committee
function. As such, under the definition of "independence" as set forth in
NASDAQ Marketplace Rule 4350, we do not have a fully independent audit
committee. As our common stock is not publicly traded nor listed on or
with a national securities exchange or national securities association, we
are not required to have a fully independent audit committee. In
addition, we do not have a designated audit committee financial expert.
23
Our board of Directors have not designated a separate compensation or
nominating committee.
Term of Office
Our officers are elected annually by the board of directors and may be
replaced or removed by the board at any time. Our directors are elected
by our shareholders annually and serve until the election and
qualification of their successors or their earlier resignation or removal.
Code of Ethics
We have adopted a Code of Ethics for our Senior Financial Officers. We
shall, without charge, provide to any person, upon request, a copy of our
Code of Ethics for our Senior Financial Officers. All such requests
should be mailed to: Community Alliance, Inc., 4980 Silver Pine Drive,
Castle Rock, CO 80108.
ITEM 6. EXECUTIVE COMPENSATION
Executive Employment Contracts. Our named executive officers serve "at
will" with no written employment agreements. They do not currently receive
any compensation for such services.
Equity Compensation Plan Information. We currently do not have any equity
compensation plans outstanding.
Director Compensation
Members of the board of directors may receive an amount yet to be
determined annually for their participation and will be required to attend
a minimum of four meetings per fiscal year. To date, Community Alliance
has paid $0.00 in directors' expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Spin-off from Predecessor
On September 9, 2008, the Board of Directors of Fresh Ideas approved the
spin-off of Community Alliance to its shareholders. The spin-off is being
done in connection the Share Exchange. Under the terms of the spin-off,
shares our common stock will be distributed on a pro-rata basis to each
holder of Fresh Ideas' common stock on the record date without any
consideration or action on the part of such holders, and the holders of
Fresh Ideas' common stock as of the record date will become owners of 100
percent of our common stock. The spin-off will be consummated only upon
(a) the consummation of the Share Exchange, and (b) the satisfactory
resolution of all comments from the SEC to this Form 10 and this Form 10's
effectiveness. The shares of our common stock to be distributed to the
former shareholders of Fresh Ideas as of the record date are being held in
escrow with Jody M. Walker, Attorney At Law. Fresh Ideas is the
24
predecessor of Community Alliance. However, there is no assurance at this
time that the Share Exchange will be consummated, and therefore no
assurance that the spin-off will be consummated.
Phillip E. Ray, Alice Terry Ray and Ruth Daily were officers, directors
and principal shareholders of Fresh Ideas through the closing date of the
Share Exchange.
There will be no other agreements between Ever Auspicious or its sole
shareholder, Bright Praise and Community Alliance after the spin-off.
Neither Fresh Ideas, Bright Praise, nor Ever Auspicious will retain any
liability relating to Community Alliance or Our Best Wishes after the
spin-off. In connection with the spin-off and the Share Exchange,
Community Alliance will assume all of the indebtedness of Fresh Ideas
prior to the closing date of the Share Exchange.
Alice T. Ray is the wife of Phillip E. Ray, an officer and director of the
Company.
Since the inception of the Community Alliance, and at various times, other
companies owned by Mr. Ray have loaned money to Community Alliance on an
as needed basis. For some of the money loaned, promissory notes were
issued and interest paid. Other loans were short term and no Promissory
notes were generated. As of May 31, 2008, all loans had been repaid.
ITEM 8. LEGAL PROCEEDINGS
Community Alliance is not a party to any legal proceedings nor is
Community Alliance aware of any disputes that may result in legal
proceedings.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is not included in the pink sheets nor in the OTC
Bulletin Board maintained by the NASD.
There is no public trading market for our common stock and there is no
guarantee any trading market will develop.
Holders
The sole shareholder of record of our common stock is Fresh Ideas Media,
Inc. These shares are being held in escrow until completion of the spin-
off. As a result of the spin-off, the approximate number of record
holders of Community Alliance will be 52.
25
Dividends
Holders of our common stock are entitled to receive such dividends as may
be declared by its board of directors after the spin-off has been
completed. Community Alliance does not anticipate that it will declare
any dividends. All profit will be used for continuing operations.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On March 24, 2005, 100 shares of our common stock were issued to Fresh
Ideas Media, Inc., the parent company for $.001 per common share. These
shares of common stock were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1934 to a
sophisticated investor. On August 13, 2008, Community Alliance
effectuated a forward stock split increasing our issued and outstanding
common stock from 100 to 1,507,000 shares.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The following statements constitute brief summaries of Community
Alliance's Certificate of Incorporation and Bylaws, as amended.
Common Stock
Our articles of incorporation authorize us to issue up to 95,000,000
shares of common stock, $.001 par value per share. As of the completion
of the spin-off, there will 1,507,000 shares of common stock issued and
outstanding.
Community Alliance is authorized to issue up to 5,000,000 preferred
shares. As of the completion of the spin-off there will be no preferred
shares issued and outstanding.
Liquidation Rights
Upon liquidation or dissolution, each outstanding common share will be
entitled to share equally in the assets of Community Alliance legally
available for distribution to shareholders after the payment of all debts
and other liabilities.
Dividend Rights
There are no limitations or restrictions upon the rights of the board of
directors to declare dividends out of any funds legally available
therefore. Community Alliance has not paid dividends to date and it is not
anticipated that any dividends will be paid in the foreseeable future.
The board of directors initially may follow a policy of retaining
earnings, if any, to finance the future growth of Community Alliance.
Accordingly, future dividends, if any, will depend upon, among other
considerations, Community Alliance's need for working capital and its
financial conditions at the time.
26
Voting Rights
Holders of our common stock are entitled to voting rights of one hundred
percent. Holders may cast one vote for each share held at all
shareholders meetings for all purposes.
Other Rights
Shares of our common stock are not redeemable, have no conversion rights
and carry no preemptive or other rights to subscribe to or purchase
additional shares of our common stock in the event of a subsequent
offering.
Our bylaws allow action to be taken by written consent rather than at a
meeting of stockholders with the consent of the holders of a majority of
shares entitled to vote.
Transfer Agent
Mountain Share Transfer acts as Community Alliance's transfer agent.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Community Alliance shall indemnify to the fullest extent permitted by, and
in the manner permissible under the laws of the State of Nevada, any
person made, or threatened to be made, a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the
fact that he is or was a director or officer of Community Alliance, or
served any other enterprise as director, officer or employee at the
request of Community Alliance. The board of directors, in its discretion,
shall have the power on behalf of Community Alliance to indemnify any
person, other than a director or officer, made a party to any action, suit
or proceeding by reason of the fact that he/she is or was an employee of
Community Alliance.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of Community
Alliance, Community Alliance has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Community Alliance of expenses incurred or paid
by a director, officer or controlling person of Community Alliance in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer, or controlling person in connection with any securities
being registered, Community Alliance will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.
27
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements for the fiscal years ended November
30, 2007 and 2006 have been examined to the extent indicated in their
report by Ronald R. Chadwick, P.C., independent certified public
accountants. The financial statements have been prepared in accordance
with generally accepted accounting principles, pursuant to Regulation S-X
as promulgated by the SEC, and are included herein in response to Item 13
of this Form 10. The unaudited financial statements for the six month
period ended May 31, 2008 have been prepared by Community Alliance.
ITEM 14. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Since inception, there has been no changes in or disagreements with
Community Alliance's principal independent accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following financial statements required by Item 310 of Regulation
S-K are furnished below:
Report of Ronald R. Chadwick, P.C.
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
28
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
Board of Directors
Community Alliance, Inc.
Castle Rock, Colorado
I have audited the accompanying balance sheets of Community Alliance,
Inc. (a development stage company) as of November 30, 2006 and 2007, and
the related statements of operations, stockholders' equity, and cash flows
for the years then ended, and for the period from inception of the
development stage (February 22, 2005) through November 30, 2007. These
financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements
based on my audit.
I conducted my audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that I plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Community Alliance,
Inc. at November 30, 2006 and 2007, and the results of its operations and
its cash flows for the years then ended, and for the period from inception
of the development stage (February 22, 2005) through November 30, 2007 in
conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations and has had a working capital deficit and stockholders'
deficit. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/Ronald R. Chadwick, P.C.
- ----------------------------
Ronald R. Chadwick, P.C.
Aurora, Colorado
August 6, 2008
29
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
BALANCE SHEETS
May 31,
Nov. 30, Nov. 30, 2008
2006 2007 (Unaudited)
-------- -------- ---------
<s> <c> <c> <c>
ASSETS
Current assets
Cash $ 534 $ 1,118 $ 256
Sub-license accounts receivable - current 1,000 2,000 -
Deferred license expense - current 6,000 6,000 8,000
-------- -------- --------
Total current assets 7,534 9,118 8,256
-------- -------- --------
Sub-license accounts receivable 12,000 6,000 -
Due from parent company 925 - -
Deferred license expense 14,654 8,654 18,654
-------- -------- --------
27,579 14,654 18,654
-------- -------- --------
Total Assets $ 35,113 $ 23,772 $ 26,910
======== ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,525 $ 2,525 $ 2,525
License account payable-related party 6,500 2,000 35,050
Customer deposits - - 2,596
Notes payable-related party 3,500 - -
Accrued interest payable 102 - -
Due to parent company - 14,975 13,975
Unearned revenue - current 6,000 4,000 3,000
-------- -------- --------
18,627 23,500 57,146
Total current liabilities -------- -------- --------
Unearned revenue 17,166 10,686 1,841
-------- -------- --------
Total Liabilities 35,793 34,186 58,987
-------- -------- --------
Stockholders' Equity
Preferred stock, $.001 par value;
5,000,000 shares authorized;
none issued and outstanding - - -
Common stock, $.001 par value;
95,000,000 shares authorized;
100 shares issued and outstanding 1 1 -
Additional paid in capital 29,999 29,999 29,999
Deficit accumulated during the
development stage (30,680) (40,414) (62,077)
-------- -------- --------
30
Total Stockholders' Equity (680) (10,414) (32,077)
-------- -------- --------
Total Liabilities and Stockholders' Equity $ 35,113 $ 23,772 $ 26,910
======== ======== ========
The accompanying notes are an integral part
of the financial statements.
31
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Six Months
Ended
Year Ended Year Ended May 31, 2007
Nov. 30, 2006 Nov. 30, 2007 (Unaudited)
------------- ------------- -------------
<s> <c> <c> <c>
Sales $ 16,100 $ 6,006 $ 4,491
Cost of goods sold 10,000 8,200 -
--------- --------- ---------
Gross profit 6,100 (2,194) 4,491
--------- --------- ---------
Operating expenses:
Amortized license 6,000 6,000 3,000
General and administrative 9,250 1,540 455
--------- --------- ---------
15,250 7,540 3,455
--------- --------- ---------
Gain (loss) from operations (9,150) (9,734) 1,036
--------- --------- ---------
Other income (expense):
Interest expense (102) - -
--------- --------- ---------
(102) - -
--------- --------- ---------
Income (loss) before provision
for income taxes (9,252) (9,734) 1,036
Provision for income tax - - -
--------- --------- ---------
Net income (loss) $ (9,252) $ (9,734) $ 1,036
========= ========= =========
Net income (loss) per share
(Basic and fully diluted) $ (92.52) $ (97.34) $ 10.36
========= ========= =========
Weighted average number of
common shares outstanding 100 100 100
========= ========== =========
(Continued On Following Page)
The accompanying notes are an integral part
of the financial statements
32
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Continued From Previous Page)
Period From
Six Months Feb. 22, 2005 (Inception)
Ended (Inception) Through
May 31, 2008 Through May 31, 2008
(Unaudited) Nov. 30, 2007 (Unaudited)
------------ -------------- ------------
<s> <c> <c> <c>
Sales $ 16,126 $ 31,240 $ 47,266
Cost of goods sold 13,000 18,200 31,200
-------- -------- --------
Gross profit 3,126 12,940 16,066
-------- -------- --------
Operating expenses:
Amortized license 8,000 15,571 23,571
General and administrative 16,789 37,681 54,470
-------- -------- --------
24,789 53,252 78,041
-------- -------- --------
Gain (loss) from operations (21,663) (40,312) (61,975)
-------- -------- --------
Other income (expense)
Interest expense - (102) (102)
-------- -------- --------
- (102) (102)
-------- -------- --------
Income (loss) before provision
for income taxes (21,663) (40,414) (62,077)
Provision for income tax - - -
-------- -------- --------
Net income (loss) $(21,663) $(40,414) $(62,077)
======== ======== ========
Net income (loss) per share
(Basic and fully diluted) $(216.63)
========
Weighted average number of
common shares outstanding 100
========
The accompanying notes are an integral part
of the financial statements
33
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accum.
Common Stock During the Stock-
Amount Paid In Development holders'
Shares ($.001 Par) Capital Stage Equity
------------------ ------- ----------- --------
<s> <c> <c> <c> <c> <c>
Balances at February
22, 2005 - $ - $ - $ - $ -
Stock issuance to parent
company for licensing 100 1 29,999 - 30,000
Net income (loss) for
the period - - - (21,428) (21,428)
--------- ------ ------- -------- --------
Balances at November
30, 2005 100 $ 1 $29,999 $(21,428) $ (8,572)
Net income (loss)
for the period - - - (9,252) (9,252)
--------- ------ ------- -------- --------
Balances at November
30, 2006 100 $ 1 $29,999 $(30,680) $ (680)
Net income (loss)
for the period - - - (9,734) (9,734)
--------- ------ ------- -------- --------
Balances at November
30, 2007 100 $ 1 $29,999 $(40,414) $(10,414)
========= ====== ======= ======== ========
Net income (loss)
for the period - - - (21,663) (21,663)
--------- ------ ------- -------- --------
Balances at May 31, 2008
- unaudited 100 $ 1 $29,999 $(62,077) $(32,077)
========= ====== ======= ======== ========
The accompanying notes are an integral part
of the financial statements.
34
COMMUNITY ALLIANCE
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months
Ended
Year Ended Year Ended May 31, 2007
Nov. 30, 2006 Nov. 30, 2007 (Unaudited)
------------- ------------- -------------
<s> <c> <c> <c>
Cash Flows From Operating Activities:
Net income (loss) during the
development stage $ (9,252) $ (9,734) $ 1,036
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Compensatory stock issuances - - -
Accounts receivable 2,500 5,000 (2,000)
Deferred expenses 5,775 6,000 3,000
Loan payable - related party (9,000) (4,500) -
Accrued interest payable 102 (102) (102)
Deferred revenues (6,000) (8,480) (491)
Customer deposits - - -
Accounts payable 2,525 - -
--------- --------- ---------
Net cash provided by (used for)
operating activities (13,350) (11,816) 1,443
--------- --------- ---------
Cash Flows From Investing Activities:
- - -
Net cash provided by (used for)
investing activities - - -
(Continued On Following Page)
35
COMMUNITY ALLIANCE
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Continued From Previous Page)
Feb. 18, 2005
(Inception)
Year Ended Year Ended Through
Nov. 30, 2006 Nov. 30, 2007 Nov. 30, 2007
------------- ------------- -------------
<s> <c> <c> <c>
Cash Flows From Financing Activities:
Notes payable - borrowings 3,500 - 3,500
Notes payable - payments - (3,500) (3,500)
Due from/to parent company 7,724 15,900 14,975
-------- -------- --------
Net cash provided by (used for)
financing activities 11,224 12,400 14,975
-------- -------- --------
Net Increase (Decrease) In Cash (2,126) 584 1,118
Cash At The Beginning Of The Period 2,660 534 -
-------- -------- --------
Cash At The End Of The Period $ 534 $ 1,118 $ 1,118
======== ======== ========
Schedule Of Non-Cash Investing And Financing Activities
- -------------------------------------------------------
In 2005, the Company issued its parent company 100 common shares for a
license recorded at $30,000.
Supplemental Disclosure
Cash paid for interest $ - $ 102 $ 102
Cash paid for income taxes $ - $ - $ -
The accompanying notes are an integral part
of the financial statements
36
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Continued)
Period From
Six Months Feb. 22, 2005 (Inception)
Ended (Inception) Through
May 31, 2008 Through May 31, 2008
(Unaudited) Nov. 30, 2007 (Unaudited)
------------ -------------- ------------
<s> <c> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) during the
development stage $(21,663) $(40,414) $(62,077)
-------- -------- --------
Adjustments to reconcile net loss to
Net cash provided by (used for)
operating activities:
Compensatory stock issuances - 30,000 30,000
Accounts receivable 8,000 (8,000) -
Deferred expenses (12,000) (14,654) (26,654)
Loan payable -related party 33,050 2,000 35,050
Accrued interest payable - - -
Deferred revenues (9,845) 14,686 4,841
Customer deposits 2,596 - 2,596
Accounts payable - 2,525 2,525
-------- -------- --------
Net cash provided by (used for)
operating activities 138 (13,857) (13,719)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used for)
investing activities - - -
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable - borrowings - 3,500 3,500
Notes payable - payments - (3,500) (3,500)
Due from/to parent company (1,000) 14,975 13,975
-------- -------- --------
Net cash provided by (used for)
Financing activities (1,000) 14,975 13,975
-------- -------- --------
Net Increase (Decrease) In Cash (862) 1,118 256
Cash At The Beginning Of The Period 1,118 - -
-------- -------- --------
Cash At The End Of The Period $ 256 $ 1,118 $ 256
======== ======== ========
(Continued On Following Page)
37
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Continued From Previous Page)
Period From
Six Months Feb. 22, 2005 (Inception)
Ended (Inception) Through
May 31, 2008 Through May 31, 2008
(Unaudited) Nov. 30, 2007 (Unaudited)
------------ -------------- ------------
<s> <c> <c> <c>
Schedule of Non-Cash Investing And Financing Activities
- -------------------------------------------------------
In 2005, the company issued its parent company 100
common shares for a license recorded at $30,000
Supplemental Disclosure
- -----------------------
Cash paid for interest $ 2,227 $ 102 $ 102
Cash paid for income taxes $ - $ - $ -
The accompanying notes are an integral part
of the financial statements
38
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Financial Statements
November 30, 2006 and 2007, and May 31, 2008 (Unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Community Alliance, Inc. (the "Company") was incorporated on February 22,
2005 in the State of Nevada. The Company is in the development stage and
its intent is to conduct business as an advertising and consulting
company. Community Alliance, Inc. currently markets sub-licenses for take-
home school folders.
The Company has chosen November 30 as a year end.
Basis of Presentation
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern.
The Company incurred losses and has a working capital deficit. These
conditions raise substantial doubt as to the Company's ability to continue
as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty. These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
Use of estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements. The Company bases its estimates on historical
experience, management expectations for future performance, and other
assumptions as appropriate. Key areas affected by estimates include the
assessment of the recoverability of long-lived assets, which is based on
such factors as estimated future cash flows. The Company re-evaluates its
estimates on an ongoing basis. Actual results may vary from those
estimates.
Cash and cash equivalents
All cash and short-term investments with original maturities of three
months or less are considered cash and cash equivalents, since they are
readily convertible to cash. These short-term investments are stated at
cost, which approximates fair value.
Concentration of Credit Risk
The Company sells licenses to companies or individuals. In some cases the
licensee will pay cash for the full amount of the license fee and in other
cases the licensee will pay an amount down and pay the balance over a
period of time. The Company extends credit to the licensee based on an
39
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Financial Statements - (Continued)
November 30, 2006 and 2007, and May 31, 2008 (Unaudited)
evaluation of the customer's financial condition, generally without
collateral, other than the possibility of revoking the license if the
licensee does not make the payments on time. Exposure to losses on
receivables is principally dependent on each licensee's financial
condition. The Company will monitor its exposure for credit losses and
will maintain allowances for anticipated losses, as required. Since the
Company is in its early stage, it is too early to tell what the percentage
of payment of all licensees will be.
Property and equipment
The company has no property or equipment at this time.
Revenue Recognition
Revenues are recognized only when realized / realizable and earned, in
accordance with GAAP. Advertising revenues are recognized when the
underlying advertisements are published, defined as the issuer's on-sale
date.
The Company follows the guidance of the Securities and Exchange
Commission's Staff Accounting Bulletin 104 ("SAB 104") for revenue
recognition. SAB 104 provides guidance on applying accounting principles
generally accepted in the United States of America to revenue recognition
in financial statements and applies provisions therein to the Company's
sublicensing income and licensing expense whereby the income and expense
amounts are recognized as time passes in accordance with the applicable
contracts. The Company requires the sub-licensees to pay a publication
fee of $1,900 for each school project that includes the creation of
advertisements for the sponsors and the production, printing, and delivery
of the completed folders and recognizes income when delivered and
collections of amounts due can be reasonably expected. In instances of
small schools, the publication fee may be reduced.
Advertising expenses
Advertising costs are expensed when incurred. No advertising was conducted
during the twelve months ended November 30, 2006 or 2007, or during the
six months ended May 31, 2008.
Income taxes
Income taxes are accounted for in accordance with SFAS 109, Accounting for
Income Taxes, using the asset and liability method. Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases
and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
37
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Financial Statements - (Continued)
November 30, 2006 and 2007, and May 31, 2008 (Unaudited)
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. The Company is currently filing its income
tax returns on the cash basis.
Earnings (loss) per share
Basic earnings per share are computed using the weighted average number of
actual common shares outstanding during the period. Diluted earnings per
share reflects the potential dilution that would occur from the exercise
of the conversion options of the debentures.
Note 2 - Development Stage Company
Based upon the Company's business plan, it is a development stage
enterprise. The Company is currently devoting most of its efforts toward
raising capital, developing business and marketing strategies, and seeking
territorial sub-licenses.
Accordingly, the Company presents its financial statements in conformity
with the accounting principles generally accepted in the United States of
America that apply in establishing operating enterprises. As a
development stage enterprise, the Company discloses the income accumulated
during the development stage and the cumulative statements of operations
and cash flows from inception to the current balance sheet date.
Note 3 - Related Party Transactions
At November 30, 2006 the Company had notes payable to a corporation
controlled by an officer of $3,500. The notes bore interest at 5% per
annum. Interest expense under the notes in fiscal year 2006 was $102. The
notes were retired in full in fiscal year 2007.
Note 4 - Commitments
Currently the Company's office space is provided by the President at no
charge. In the future the Company intends to lease office space as
needed.
Note 5 - Segment Information
Community Alliance, Inc. has determined that it has one reportable
segment, the sale of licenses for the Community Alliance business model.
41
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Financial Statements - (Continued)
November 30, 2006 and 2007, and May 31, 2008 (Unaudited)
Note 6 - Income Taxes
Deferred income taxes arise from the temporary differences between
financial statement and income tax recognition of net operating losses.
These loss carryovers are limited under the Internal Revenue Code should a
significant change in ownership occur.
At November 30, 2006 and 2007 the Company had net operating loss
carryforwards of approximately $30,000 and $40,000 which begin to expire
in 2025. The deferred tax asset of $6,000 and $8,000 created by the net
operating losses has been offset by a 100% valuation allowance. The change
in the valuation allowance in fiscal year 2006 and 2007 was approximately
$6,000 and $2,000.
42
(b) Exhibits
(3.1) Articles of Incorporation
(3.2) Bylaws
(4) Form of Common Stock Certificate
(10.1) License Agreement dated February 2008 with Venitech, LLC
(10.2) License Agreement dated March 2005 with Venitech, LLC
(10.3) Assignment and Assumption Agreement dated March 26, 2008
(10.4) Code of Ethics
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Community Alliance, Inc.
Date: September 10, 2008 /s/ Phillip E. Ray
---------------------
By: Phillip E. Ray
President, Chief Executive Officer