10-Q 1 communityalliance10q2q10.txt FORM 10-Q FOR THE QUARTER ENDED MAY 31, 2010 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, 2010 -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, July 15, 2010: Common Stock - 3,507,000 2 COMMUNITY ALLIANCE, INC. FORM 10-Q For the quarterly period ended May 31, 2010 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 9 Item 3. Quantitative and Qualitative Disclosure About Market Risk 11 Item 4T. Controls and Procedures 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 1A. Risk Factors 13 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13 Item 3. Defaults upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits 13 SIGNATURES 3 PART I Item I - FINANCIAL STATEMENTS COMMUNITY ALLIANCE, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEETS May 31, Nov. 30 2010 2009 (Unaudited) --------- ----------- ASSETS Current assets Cash $ 573 $ - -------- -------- Total current assets 573 - -------- -------- Total Assets $ 573 $ - ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Account payable $ - $ - Due to parent company - - -------- -------- Total current liabilities - - -------- -------- Notes payable - related party 29,050 29,050 Accrued interest payable - - -------- -------- 29,050 29,050 -------- -------- Total Liabilities 29,050 29,050 -------- -------- 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; 3,507,000 shares issued and outstanding 3,507 3,507 Additional paid in capital 85,969 85,969 Deficit accumulated during the development stage (117,953) (118,526) -------- -------- Total Stockholders' Equity (28,477) (29,050) -------- -------- Total Liabilities and Stockholders' Equity $ 573 $ 4,750 ======== ========

The accompanying notes are an integral part of the consolidated financial statements. 4 COMMUNITY ALLIANCE, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

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, 2009 May 31, 2010 May 31, 2010 ------------- ------------- ------------- Cash Flows From Operating Activities: Net income (loss) during the development stage $ (44,967) $ (573) $ (118,526) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Compensatory stock issuances - - 30,000 Accounts receivable - - - Deferred expenses 18,654 - - Loan payable - related party - - 35,050 Accrued interest payable 287 - 451 Deferred revenues (1,000) - - Customer deposits - - - Accounts payable - - - --------- --------- --------- Net cash provided by (used for) operating activities (27,026) (573) (53,025) --------- --------- --------- 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 - - 13,975 -------- -------- -------- Net cash provided by (used for) financing activities 10,000 - 53,025 -------- -------- -------- Net Increase (Decrease) In Cash (17,026) (573) - Cash At The Beginning Of The Period 21,776 573 - -------- -------- -------- Cash At The End Of The Period $ 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. 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 $ - $ - 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. 9 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. Also due to the seasonality of our Custom Take-Home School Folder Business, we have not had any sales in the last 60 days. We are currently working to line up sales for the 2010 school year which would occur in the third quarter On May 19, 2010, we appointed James Rowan to the board of directors. Mr. Rowan is experienced in the alternative energy markets and is assisting us in the exploration of options to expand our current business model to include intellectual properties in the growing green energy sector. We hope this potential diversification will help us in offsetting the seasonality of our School Folder business and provide us additional revenue streams. 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. 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 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 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, 2010 and 2009, Community Alliance did not pursue any investing activities. For the six months ended May 31, 2010, Community Alliance did not pursue any financing activities. 10 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. On a long term basis, liquidity is dependent on continuation of operation and receipt of revenues. Results of Operations Three Months Ended May 31, 2010 Compared to Three Months Ended May 31, 2009 Revenues were $11,200 for the three months ended May 31, 2010 compared to $500 for the three months ended May 31, 2009. Costs of goods sold were $0 for both periods. We have not sold any new sub-license agreements since early 2006. Operating expenses decreased from $27,595 for the three months ended May 31, 2009 to $11,299 for the three months ended May 31, 2010. The decrease in these expenses was mainly due to the substantial decrease in general and administrative expenses from $26,262 for the three months ended May 31, 2009 to $11,299 due to reduced legal and accounting fees. Community Alliance had net loss of $(27,095) for the three months ended May 31, 2009 compared to $(99) for the three months ended May 31, 2010. The decrease in net loss was primarily due to decreased legal and accounting fees as described above. Six Months Ended May 31, 2010 Compared to Six Months Ended May 31, 2009 Revenues were $15,508 for the six months ended May 31, 2010 compared to $1,000 for the six months ended May 31, 2009. Costs of goods sold were $0 for both periods. We have not sold any new sub-license agreements since early 2006. Operating expenses decreased from $45,680 for the six months ended May 31, 2009 to $16,081 for the six months ended May 31, 2010. The decrease in these expenses was mainly due to the substantial decrease in general and administrative expenses from $40,347 for the six months ended May 31, 2009 to $16,081 due to reduced legal and accounting fees. Community Alliance had net loss of $(44,967) for the six months ended May 31, 2009 compared to $(573) for the six months ended May 31, 2010. The decrease in net loss was primarily due to decreased 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 11 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. Item 4T. Controls and Procedures. During the three months ended May 31, 2010, 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 12 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, 2010. 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, 2010 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. 13 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 20, 2010 COMMUNITY ALLIANCE, INC. By: /s/Phillip E. Ray --------------------------- Phillip E. Ray, Principal Executive Officer

Community Alliance, Inc. 10-Q