SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended May 31, 2009 - -OR- [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities And Exchange Act of 1934 for the transaction period from _________ to________ Commission File Number 0-53406 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 Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] 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] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x] The number of outstanding shares of the registrant's common stock, May 31, 2009: Common Stock - 1,507,000 2 COMMUNITY ALLIANCE, INC. FORM 10-Q For the quarterly period ended May 31, 2009 INDEX Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosure About Market Risk 12 Item 4T. Controls and Procedures 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 14 Item 1A. Risk Factors 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 3. Defaults upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits 14 SIGNATURES 3 PART I Item I - FINANCIAL STATEMENTS COMMUNITY ALLIANCE, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEETS May 31, Nov. 30 2009 2008 (Unaudited) --------- ----------- <s> <c> <c> ASSETS Current assets Cash $ 21,776 $ 4,750 Sub-license accounts receivable - current - - Deferred license expense - current 16,000 8,000 -------- -------- Total current assets 37,776 12,750 -------- -------- Deferred license expense 2,654 2,654 -------- -------- 2,654 2,654 -------- -------- Total Assets $ 40,430 $ 15,404 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ - $ - License account payable-related party 35,050 35,050 Due to parent company 5,775 5,775 Unearned revenue - current 2,000 1,000 -------- -------- 42,825 41,825 Total current liabilities -------- -------- Notes payable - related party 37,250 47,250 Accrued interest payable - 287 Unearned revenue 1,841 1,841 -------- -------- 39,091 49,378 -------- -------- Total Liabilities 81,916 91.203 -------- -------- 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; 1,507,000 shares issued and outstanding 1,507 1,507 Additional paid in capital 28,493 28,493 4 Deficit accumulated during the development stage (71,486) (105,799) -------- -------- Total Stockholders' Equity (41,486) (75,799) -------- -------- Total Liabilities and Stockholders' Equity $ 40,430 $ 15,404 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. <PAGE5 COMMUNITY ALLIANCE, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Six Months Ended Ended May 31, May 31, 2008 2009 2008 2009 ---------- ---------- ---------- ---------- <s> <c> <c> <c> <c> Sales $ 1,000 $ 500 $ 16,126 $ 1,000 Cost of sales and services - - 13,000 - ---------- ---------- ---------- ---------- Gross profit 1,000 500 3,126 1,000 ---------- ---------- ---------- ---------- Operating expenses Amortized license 4,000 4,000 8,000 8,000 General and administrative 13,097 14,085 16,789 27,026 ---------- ---------- ---------- ---------- 17,097 18,085 24,789 35,026 ---------- ---------- ---------- ---------- Gain(loss) from operations (16,097) (17,585) (21,663) (34,026) ---------- ---------- ---------- ---------- Other income and (expense): Interest expense - (82) - (287) ---------- ---------- ---------- ---------- - (82) - (287) ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes (16,097) (17,667) (21,663) (34,313) ---------- ---------- ---------- ---------- Net income (loss) $ (16,097) $ (17,667) $ (21,663) $ (34,313) ========== ========== ========== ========== Net income(loss) per share Basic and fully diluted $ (0.01) $ (0.01) $ (0.01) $ (0.02) ========== ========== ========== ========== Weighted average shares 0utstanding 1,507,000 1,507,000 1,507,000 1,507,000 ========== ========== ========== ========== 6 COMMUNITY ALLIANCE (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Feb. 22, 2005 Six Months Six Months (Inception) Ended Ended Through May 31, 2008 May 31, 2009 May 31, 2009 ------------- ------------- ------------- <s> <c> <c> <c> Cash Flows From Operating Activities: Net income (loss) during the development stage $ (21,663) $ (34,313) $ (105,799) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Compensatory stock issuances - - 30,000 Accounts receivable 8,000 8,000 8,000 Deferred expenses (12,000) - (18,654) Loan payable - related party 33,050 - 35,050 Accrued interest payable - 287 287 Deferred revenues (9,845) (1,000) 2,841 Customer deposits 2,596 - - Accounts payable - - - --------- --------- --------- Net cash provided by (used for) operating activities 138 (27,026) (48,275) --------- --------- --------- Cash Flows From Investing Activities: - - - Net cash provided by (used for) investing activities - - - Cash Flows From Financing Activities: Notes payable - borrowings - 10,000 42,550 Notes payable - payments - - (3,500) Due from/to parent company (1,000) 10,000 13,975 -------- -------- -------- Net cash provided by (used for) financing activities (1,000) - 43,025 -------- -------- -------- Net Increase (Decrease) In Cash (862) (17,026) 4,750 Cash At The Beginning Of The Period 1,118 21,776 - -------- -------- -------- Cash At The End Of The Period $ 256 $ 4,750 $ 4,750 ======== ======== ======== 7 Schedule Of Non-Cash Investing And Financing Activities - ------------------------------------------------------- In 2005, the Company issued its parent company 1,507,000 common shares for a license recorded at $30,000. Three Months Three Months Ended Ended May 31, 2008 May 31, 2009 ------------- ------------- Supplemental Disclosure Cash paid for interest $ 2,237 $ 287 Cash paid for income taxes $ - $ - The accompanying notes are an integral part of the consolidated financial statements 8 Community Alliance, Inc. Notes to Consolidated Financial Statements (Unaudited) NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Community Alliance, Inc. (the "Company"), was incorporated in the State of Nevada on February 22, 2005. 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. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Principles of consolidation The accompanying consolidated financial statements include the accounts of Community Alliance, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. Accounts receivable The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Property and equipment Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life. Revenue recognition Revenue is recognized on an accrual basis after services have been performed under contract terms, the event price to the client is fixed or determinable, and collectibility is reasonably assured. 9 COMMUNITY ALLIANCE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income tax The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net income (loss) per share The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share. Financial Instruments The carrying value of the Company's financial instruments, including cash and cash equivalents and accrued payables, as reported in the accompanying balance sheet, approximates fair value. 10 ITEM 2. 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. Also, due to the fact that we have sold only four sub-licenses as of May 31, 2009, and that only one of these sublicenses has been successful in signing up schools, there now may be a question as to how successful Community Alliance will be in generating revenues, both from the sale of sub-licenses and the production of the products. There are no material commitments for capital expenditure at this time. 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 now have the license for the major part of the State of Colorado, which is a going business and generating revenues. As a result, we believe there will be sufficient capital from revenues to conduct operations for the next twelve months. The Colorado operation has been generating from between $70,000 to $100,000 in annual revenues. Community Alliance presently has very little expenses, except for legal and accounting which are associated with being a public company. Community Alliance pays no salaries and only pays commissions on sales. Community Alliance does not pay rent or other expenses for offices at this time. We are planning on commencing the sale of sub-licenses in the third quarter on 2009. We cannot guarantee that short term cash needs will be met through operations. If additional capital is needed, the president of Community Alliance is prepared to supply additional capital on a loan basis. Future revenues from the sale of sub-licenses and from the Colorado operations, 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. 11 For the six months ended May 31, 2009 and 2008, Community Alliance did not pursue any investing activities. For the six months ended May 31, 2009, Community Alliance had notes payable-borrowings of $10,000 resulting in net cash provided by financing activities of $10,000. Comparatively, for the six months ended May 31, 2008, Community Alliance repaid $1,000 to Fresh Ideas, our parent company. As a result, Community Alliance had net cash used for financing activities of $1,000 for the six months ended May 31, 2008. On a long term basis, liquidity is dependent on continuation of operation and receipt of revenues. Results of Operations Three Months Ended May 31, 2009 Compared to Three Months Ended May 31, 2008 Revenues were $500 for the three months ended May 31, 2009 compared to $1,000 for the three months ended May 31, 2008. Costs of goods sold for the three months ended May 31, 2009 were $0 compared to $0 for the three months ended May 31, 2008. We have not sold any new sub-license agreements since early 2006. Operating expenses increased slightly from $17,097 for the three months ended May 31, 2008 to $18,085 for the three months ended May 31, 2009. The increase in these expenses was due to a slight increase in general and administrative expenses from $13,097 for the three months ended May 31, 2008 to $18,085 mainly due to legal and accounting fees relating to the filing of a registration statement. Community Alliance had net loss of $(16,097) for the three months ended May 31, 2008 compared to $(17,585) for the three months ended May 31, 2009. The increase in net loss was primarily due to legal and accounting fees as described above. Six Months Ended May 31, 2009 Compared to Six Months Ended May 31, 2008 Revenues were $1,000 for the six months ended May 31, 2009 compared to $16,126 for the six months ended May 31, 2008. Costs of goods sold for the six months ended May 31, 2009 were $0 compared to $13,000 for the six months ended May 31, 2008. We have not sold any new sub-license agreements since early 2006. Operating expenses increased from $24,789 for the six months ended May 31, 2008 to $35,026 for the six months ended May 31, 2009. The increase in these expenses was due to an increase in general and administrative expenses from $16,789 for the six months ended May 31, 2008 to $27,026 mainly due to legal and accounting fees relating to the SEC required filings. 12 Community Alliance had net loss of $(21,663) for the six months ended May 31, 2008 compared to $(34,313) for the six months ended May 31, 2009. The increase in net loss was primarily due to legal and accounting fees as described above. We cannot guarantee that short term cash needs will be met through operations. If additional capital is needed, the president of Community Alliance is prepared to supply additional capital on a loan basis. 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 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk We do not consider the effects of interest rate movements to be a material risk to our financial condition. We do not hold any derivative instruments and do not engage in any hedging activities. 13 Item 4T. Controls and Procedures. During the three months ended May 31, 2009, 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 Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of May 31, 2009. Based on this evaluation, our chief executive officer and chief principal financial officers have concluded such controls and procedures to be effective as of May 31, 2009 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 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. 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings. not applicable. Item 1A. Risk Factors. not applicable Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. not applicable. Item 3. Defaults Upon Senior Securities. not applicable. Item 4. Submission of Matters to a Vote of Security Holders. not applicable. Item 5. Other Information. not applicable. Item 6. Exhibits Exhibit 31 - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32 - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: July 14, 2009 COMMUNITY ALLIANCE, INC. By: /s/Phillip E. Ray - --------------------------- Phillip E. Ray, Principal Executive Officer