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 August 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,
August 31, 2009:
Common Stock - 3,507,000
2
COMMUNITY ALLIANCE, INC.
FORM 10-Q
For the quarterly period ended August 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
August 31,
Nov. 30 2009
2008 (Unaudited)
--------- -----------
<s> <c> <c>
ASSETS
Current assets
Cash $ 21,776 $ 7,128
Sub-license accounts receivable - current - -
Deferred license expense - current 16,000 -
-------- --------
Total current assets 37,776 7,128
-------- --------
Deferred license expense 2,654 -
-------- --------
2,654 -
-------- --------
Total Assets $ 40,430 $ 7,128
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
License account payable-related party $ 35,050 $ -
Due to parent company 5,775 5,775
Notes payable - related party - current - 18,200
Unearned revenue - current 2,000 1,000
-------- --------
42,825 24,975
Total current liabilities -------- --------
Notes payable - related party 37,250 19,050
Accrued interest payable - 328
Unearned revenue 1,841 1,841
-------- --------
39,091 21,219
-------- --------
Total Liabilities 81,916 45,694
-------- --------
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 and 3,507,000 shares
issued and outstanding, respectively 1,507 3,507
Additional paid in capital 28,493 71,543
4
Deficit accumulated during the
development stage (71,486) (113,616)
-------- --------
Total Stockholders' Equity (41,486) (38,566)
-------- --------
Total Liabilities and Stockholders' Equity $ 40,430 $ 7,128
======== ========
The accompanying notes are an integral part
of the consolidated financial statements.
5
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended
August 31, August 31,
2008 2009 2008 2009
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Sales $ 1,500 $ 29,563 $ 21,314 $ 31,063
Cost of sales and services 8,200 13,127 13,810 -
---------- ---------- ---------- ----------
Gross profit (6,700) 16,436 7,504 31,063
---------- ---------- ---------- ----------
Operating expenses
Amortized license 1,500 - 12,000 5,333
General and administrative 5,235 13,558 19,367 67,532
---------- ---------- ---------- ----------
6,735 13,558 31,367 72,865
---------- ---------- ---------- ----------
Gain(loss) from operations (13,435) 2,878 (23,863) (41,802)
---------- ---------- ---------- ----------
Other income and (expense):
Interest expense - (41) - (328)
---------- ---------- ---------- ----------
- (41) - (328)
---------- ---------- ---------- ----------
Income (loss) before provision
for income taxes (13,435) 2,837 (23,863) (42,130)
---------- ---------- ---------- ----------
Net income (loss) $ (13,435) $ 2,837 $ (23,863) $ (42,130)
========== ========== ========== ==========
Net income(loss) per share
(Basic and fully diluted) $ (0.01) $ 0.00 $ (0.02) $ (0.02)
========== ========== ========== ==========
Weighted average shares
0utstanding 1,507,000 3,507,000 1,507,000 2,618,111
========== ========== ========== ==========
The accompanying notes are an integral part
of the consolidated financial statements.
6
COMMUNITY ALLIANCE
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Feb. 22, 2005
Nine Months Nine Months (Inception)
Ended Ended Through
Aug. 31, 2008 Aug. 31, 2009 Aug. 31, 2009
------------- ------------- -------------
<s> <c> <c> <c>
Cash Flows From Operating Activities:
Net income (loss) during the
development stage $ (23,863) $ (42,130) $ (113,616)
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Compensatory stock issuances - - 30,000
Accounts receivable 8,000 - -
Deferred expenses (8,000) 18,654 -
Loan payable - related party 43,000 - 35,050
Accrued interest payable - 328 328
Deferred revenues (10,345) (1,500) 2,341
--------- --------- ---------
Net cash provided by (used for)
operating activities 8,792 (24,648) (45,897)
--------- --------- ---------
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 (9,200) - 13,975
-------- -------- --------
Net cash provided by (used for)
financing activities (9,200) 10,000 53,025
-------- -------- --------
Net Increase (Decrease) In Cash (408) (14,648) 7,128
Cash At The Beginning Of The Period 1,118 21,776 -
-------- -------- --------
Cash At The End Of The Period $ 710 $ 7,128 $ 7,128
======== ======== ========
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.
In 2009, the Company issued 2,000,000 common shares to related parties
for debt relief of $45,050.
Supplemental Disclosure
Cash paid for interest $ 2,227 $ -
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-Q 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 August
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.
On April 1, 2009, Community Alliance entered into a new License
Agreement that replaced all other license agreements. All debts and
obligations that Community Alliance owed to Ruth Daily and Venitech in
exchange for 1,000,000 common shares. Pursuant to the current license
agreement, Venitech only receives 10% when Community Alliance sells a
sublicense.
Additionally, on April 1, 2009, American Business Services, an
affiliate, converted debt of $10,000 in50 1,000,000 common shares of
Community Alliance.
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 fourth
quarter on 2009.
11
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.
For the nine months ended August 31, 2009 and 2008, Community Alliance
did not pursue any investing activities.
For the nine months ended August 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 nine months ended August 31, 2008, Community
Alliance repaid $9,200 to Fresh Ideas, our parent company. As a
result, Community Alliance had net cash used for financing activities
of $9,200 for the nine months ended August 31, 2008.
On a long term basis, liquidity is dependent on continuation of
operation and receipt of revenues.
Results of Operations
Three Months Ended August 31, 2009 Compared to Three Months Ended
August 31, 2008
Revenues were $29,563 for the three months ended August 31, 2009
compared to $1,500 for the three months ended August 31, 2008. Costs
of goods sold for the three months ended August 31, 2009 were $13,127
compared to $8,200 for the three months ended August 31, 2008. We have
not sold any new sub-license agreements since early 2006.
Operating expenses increased from $6,735 for the three months ended
August 31, 2008 to $13,558 for the three months ended August 31, 2009.
The increase in these expenses was mainly due to the substantial
increase in general and administrative expenses from $5,235 for the
three months ended August 31, 2008 to $13,558 due to legal and
accounting fees relating to the required SEC filings.
Community Alliance had net loss of $(13,435) for the three months ended
August 31, 2008 compared to net income of $2,837 for the three months
ended August 31, 2009. Net income was primarily due to increased
revenue even though operating expenses increased as described above.
Nine Months Ended August 31, 2009 Compared to Nine Months Ended August
31, 2008
Revenues were $31,063 for the nine months ended August 31, 2009
compared to $21,314 for the nine months ended August 31, 2008. Costs
of goods sold for the nine months ended August 31, 2009 were $0
12
compared to $13,810 for the nine months ended August 31, 2008. We have
not sold any new sub-license agreements since early 2006.
Operating expenses increased from $31,367 for the nine months ended
August 31, 2008 to $72,865 for the nine months ended August 31, 2009.
The increase in these expenses was due to an increase in general and
administrative expenses from $19,367 for the nine months ended August
31, 2008 to $67,532 mainly due to legal and accounting fees relating to
the SEC required filings.
Community Alliance had net loss of $(23,863) for the nine months ended
August 31, 2008 compared to $(41,802) for the nine months ended August
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.
13
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.
Item 4T. Controls and Procedures.
During the three months ended August 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 August 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 August 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: September 21, 2009
COMMUNITY ALLIANCE, INC.
By: /s/Phillip E. Ray
- ---------------------------
Phillip E. Ray, Principal Executive Officer