Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] 15, ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: November 30, 2009
[ ] 15, TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-53406
COMMUNITY ALLIANCE, INC.
(Exact name of registrant in its charter)
Nevada 42-1663174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
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 registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange act
Yes [ ] No [x]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act during the preceding 12 months (or such shorter period that Dale the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for at least the part 90 days.
Yes [x] No[ ]
Indicate by check mark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained hereof, and will not be
contained, to will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of "large accelerated filer,"
"accelerated file" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-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]
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter. The market
value of the registrant's voting $.001 par value common stock held by
non-affiliates of the registrant was approximately $0.00.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The number
of shares outstanding of the registrant's only class of common stock, as
of January 31, 2010 was 3,507,000 shares of its $.0001 par value common
stock.
No documents are incorporated into the text by reference.
3
Community Alliance, Inc.
Form 10-K
For the Fiscal Year Ended November 30, 2009
Table of Contents
Part I
ITEM 1. BUSINESS 4
ITEM 1A. RISK FACTORS 7
ITEM 1B. UNRESOLVED STAFF COMMENTS 7
ITEM 2. PROPERTIES 7
ITEM 3. LEGAL PROCEEDINGS 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
Part II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 8
ITEM 6. SELECTED FINANCIAL DATA 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 33
ITEM 9A. CONTROLS AND PROCEDURES 33
ITEM 9B. OTHER INFORMATION 34
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS AND CORPORATE GOVERANCE; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT 35
ITEM 11. EXECUTIVE COMPENSATION 37
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDERS MATTERS 38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE 41
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 41
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 42
4
PART I
ITEM 1. BUSINESS
We were incorporated under the laws of the State of Nevada on February
22, 2005. Community Alliance is a specialized advertising and marketing
company that commenced operations in mid-2005. We were originally a
wholly subsidiary of Fresh Ideas Media, Inc. and were spun out of Fresh
Ideas in Form 10 spinout out in March, 2009. We 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 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 have divided the 45 states licensed into 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.
Community Alliance has one subsidiary, Our Best Wishes, Inc., which was
a wholly owned subsidiary of Fresh Ideas Media and was assigned over to
Community Alliance. Community Alliance was organized for the purpose of
selling sub-licenses to publish and market the products in defined
territories in the 45 states included in the license agreement.
Community Alliance is engaged in selling sub-licenses for the custom
take-home school folder product and, in the future, we propose to sell
sub-licenses for the direct mail greeting card product through Our Best
Wishes. Our primary business to date has been the sale by Community
Alliance of sub-licenses to market the custom school take-home folder
product in four states.
The Community Alliance Custom School Take-Home Folder product is a
folder produced by Community Alliance that displays advertising by
community businesses and is distributed free of charge to elementary
schools. The schools, in turn, pass out a folder to each student, who
uses it to carry homework and school communications home to the parent.
Community businesses sponsor their local school and realize marketing
value by publishing their advertisement on the folder, which is the main
method of communication between home and elementary school.
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.
Our offices are located at 4980 Silver Pine Drive, Castle Rock, Colorado
80108, and our telephone number is (303) 730-7939
Our Business and Business Strategy
Fresh Ideas Media, Inc., the parent company of Community Alliance, Inc.,
had acquired and assigned over to Community Alliance, the exclusive
license, and right to grant sub-licenses, to publish and market the
advertising product of custom school take-home folders in 45 states of
the United States. Community Alliance plans to sell sub-licenses to
5
market the custom school take-home folder in all 45 states. As of
November 30, 2009, we had sold sub-licenses to market the school folder
product in four states. However, none of those sublicenses had
performed as per the sub-license agreements and all four sub-licenses
agreements have been cancelled.
Our subsidiary, Our Best Wishes, Inc., is a wholly-owned subsidiary of
Community Alliance and was formed to market sub-licenses for the
greeting card product. The Our Best Wishes Greeting Card is still in the
development stage and marketing activities for this product have not yet
commenced.
Services Offered
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, 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; and
- 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
6
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.
Community Alliance Custom School Take-Home Folder Program
Community Alliance, Inc. was formed to take full advantage of the
opportunities presented by the Community Alliance Custom School Take-
Home Folder program, as well as other synergistic business products and
services. Venitech, LLC, a Colorado limited liability company, and
100%-owned by Ms. Ruth Daily, has licensed the business concept,
trademarks and trade secrets in connection with the products for 45
states of the United States to Fresh Ideas Media, which, in turn,
transferred the license to Community Alliance, which was at the time, a
wholly owned subsidiary. Community Alliance was organized to market
sub-licenses for the school folder program in all states of the United
States, except Colorado, Florida, Nebraska, Oklahoma and Texas. The
members of Venitech do not have the desire or capability to market their
products on a national level. They reviewed and accepted the business
model of Fresh Ideas Media and licensed the Business Concept to Fresh
Ideas Media, who, in turn, assigned the License Agreement to Community
Alliance, Inc. Ms. Daily received a 42.5% equity ownership interest in
Fresh Ideas Media for her services in organizing Community Alliance.
Thus, when Community Alliance was spun out of Fresh Ideas Media, Inc.
Ms. Daily kept her same percentage of ownership of 42.5% of Community
Alliance. As of the date of November 30, 2009, Ms. Daily owns 37% of
Community Alliance. Ms. Daily is presently an officer and director of
Community Alliance, Inc.
Community Alliance had sold sub-licenses in the four States of Arizona,
Missouri Ohio and Kentucky, however, only one paid the full amount of
$10,000 all four of those sub-licenses have now been cancelled because
of lack of performance.
Community Alliance relied heavily upon Ms Daily in recruiting and
training new possible sub-licensees. However, due to some unusual
circumstances including Ms. Daily moving to Australia for an extended
period of time, she has been unable to participate as she expected in
the growth of Community Alliance.
7
Community Alliance feels that we have not been successful in selling
sub-licenses to date and is presently exploring other options for
Community Alliance. We do intend to continue with our business plan
unless other options develop that we feel would be an advantage to our
shareholders.
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.
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 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. We have also learned that some school districts do not allow
their individual schools to distribute through students, any materials
that include paid advertising.
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
8
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.
License Agreement
The license agreement with Venitech pertaining to the products being
developed and/or marketed by Community Alliance and Our Best Wishes
grants to us the exclusive rights to the trademarks "Community Alliance"
and "Our Best Wishes" in 45 states of the United States. In addition,
the license agreement grants to us, during the term of the agreement and
in the territory of the 45 states, the sole and exclusive right and
license to use and develop the business concept, including copyrights,
trademarks, intellectual property and know-how owned or developed by
Venitech, for the marketing of the products. Under the license
agreement, we also obtained the right to sub-license the business
concept and related rights in 45 states.
The original license agreement required the payment of $30,000, with an
initial payment of $10,000 and payment of 30% of the sub-license fee for
each sub-license sold thereafter until the full amount of $30,000 has
been paid. Thereafter, we were required to pay Venitech 20% of the sub-
license fee for each sub-license sold.
Under a new License Agreement with Venitech, dated April 1, 2009, which
supersedes all other agreements and addendums thereto, the new Agreement
grants to Community Alliance the exclusive license to the 45 states. In
addition, Ventiech turned over all of the accounts in the State of
Colorado, which Venitech had generated, with the exception of Jefferson
County. Venitech has been supplying schools with the folders for
several years in Colorado. The new License Agreement did away with any
royalty fees to be paid on any sales, except that Venitech is to receive
ten percent (10%) of the amount received by Community Alliance for the
sale of any sub-license.
The states of Texas, Florida, Nebraska, Oklahoma and Jefferson
County, Colorado were excluded from the territory covered by the license
agreement. The reason for the exclusion of Jeffeson County, Colorado is
that a relation of the principal of Venitech, Ruth Daily, operates in
Jefferson County, Colorado. Four other states were excepted from the
contract because the licensor has either licensed, assisted or is
otherwise related to other companies engaged in the business of
supplying take-home school folders to elementary schools in those
states.
The term of the license agreement with Venitech is a period of five
years through April 1, 2009 until April 1, 2015, with the right to renew
the agreement for an additional three years through April 1, 2018 under
certain circumstances. Our right to renew the license agreement is
contingent on certain circumstances happening, including:
A. All fees which are due and payable by the Licensee to the
Licensor are paid as per the terms of the Agreement.
9
B. Licensee is not otherwise in default under the License
Agreement.
C. Licensee gives Licensor notice in writing of its intent to
renew no later than January 15, 2015.
For the past two years, the Jefferson county school projects have been
implemented by Raine Daily, the sister of Ruth Daily. By mutual
agreement, Raine Daily will continue providing take home folders to
Jefferson County schools under Raine Daily's own separated business
arrangements. Going forward the revenues generated in Jefferson county
are separate from Community Alliance. Excluding Jefferson County, there
are 300 elementary schools in Colorado, 38 of which have been
participating in the program. Community Alliance is confident that
additional revenues can be generated by offering the school folder
program to the remaining counties in Colorado.
For entering into the new License Agreement and doing away with all
royalty payments except for a 10%fee on money received from the sale of
any sub-license, it was agreed by Community Alliance to issue to Ruth
Daily, the sole owner of Venitech, 1,000,000 shares of the authorized
but unissued share of the common stock of Community Alliance.
Marketing the Take Home School Folders
Community Alliance proposes to sell sub-licenses to the take-home school
folder territories in the 42 states. We established the fee for a sub-
license for a sub-license territory to be $10,000. 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 concern of management is to have
qualified individuals as sub-licensees.
The sub-licensee is required to use Community Alliance for production of
the products. We have established a publication fee of $1,900 per
school folder. However, we may reduce the publication fee for small
schools. This fee covers the creation of advertisements for the
sponsors and the artwork, production, printing and shipping of, and
overhead and profit to Community Alliance on, the school folders.
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 Best Wishes, a wholly-
owned subsidiary of Community Alliance. Our Best Wishes intends, in
turn, to sub-license the rights to the greeting card product to sub-
licensees in sub-license territories in these 45 states.
The fee for a sub-license for a sub-license territory will be $10,000,
except for the first five sub-licenses, which we will be granted free of
charge to existing sub-licensees of Community Alliance for the school
take-home folder product at the time that Community Alliance is prepared
to issue sub-licenses. After the first five sub-licenses, we will offer
existing sub-licensees for the school folder product the first right to
10
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.
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, Inc. 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.
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
11
devote approximately 10% of their business time on the business of
Community Alliance, Inc. 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. There has been no activity in that subsidiary other than
organization activity.
ITEM 1A. RISK FACTORS
Not applicable
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable
ITEM 2. PROPERTIES
Our company 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 3. LEGAL PROCEEDINGS.
The registrant is not involved in any legal proceedings at this date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Item 5(a)
a) Market Information. The registrant began trading publicly on the
NASD Over the Counter Bulletin Board in July 2009 under the symbol COMA.
The following table sets forth the range of high and low bid quotations
for the registrant's common stock. The quotations represent inter-
dealer prices without retail markup, markdown or commission, and may not
necessarily represent actual transactions.
Quarter Ended High Bid Low Bid
07/31/09 $.10 $.10
11/30/09 $.10 $.03
b) Holders. At January 31, 2010, there were approximately 52
shareholders of the registrant.
c) Dividends. Holders of the registrant's common stock are entitled to
receive such dividends as may be declared by its board of directors. No
dividends on the registrant's common stock have ever been paid, and the
registrant does not anticipate that dividends will be paid on its common
stock in the foreseeable future.
d) Securities authorized for issuance under equity compensation plans.
None.
e) Performance graph. Not applicable.
f) Sale of unregistered securities. On June 21, 2009, American
Business Services, Inc. a company which is wholly owned by Phil E. Ray,
converted $10,000 of a Convertible Promissory Note into 1,000,000
shares of common stock of Community Alliance.
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuer and
affiliated purchasers.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 into 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 second
quarter on 2010.
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.
14
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 years ended November 30, 2009 and 2008, Community Alliance did
not pursue any investing activities.
For the year ended November 30, 2009, Community Alliance had notes
payable-borrowings of $29,050 and amount due from/to parent company of
$1,000 resulting in net cash provided by financing activities of
$28,050.
Comparatively, for the year ended November 30, 2008, Community Alliance
notes payable-borrowings of $10,000. As a result, Community Alliance
had net cash provided by financing activities of $10,000 for the year
ended November 30, 2008.
On a long term basis, liquidity is dependent on continuation of
operation and receipt of revenues.
Results of Operations
Year Ended November 30, 2009 Compared to Year Ended November 30, 2008
Revenues were $44,499 for the year ended November 30, 2009 compared to
$23,665 for the year ended November 30, 2008. Costs of goods sold for
the year ended November, 2009 were $13,810 compared to $13,127 for the
year ended November 30, 2008. We have not sold any new sub-license
agreements since early 2006.
Operating expenses increased from $40,927 for the year ended November
30, 2008 to $77,388 for the year ended November 30, 2009. The increase
in these expenses was mainly due to the substantial increase in general
and administrative expenses from $524,927 for the year ended November
30, 2008 to $72,055 for the year ended November 30, 2009 due to legal
and accounting fees relating to the required SEC filings.
Community Alliance had net loss of $(31,072) for the year ended November
30, 2008 compared to a net loss of $(46,467) for the year ended November
30, 2009. Net loss was primarily due to increase general and
administrative 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.
15
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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Contractual Obligations
The registrant has no material contractual obligations
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Community Alliance, Inc.
Index to the Financial Statements
Report of Independent Registered Public Accounting Firm 17
Balance Sheets as of November 30, 2009 and 2008 18
Statements of Operations For the Years
Ended November 30, 2009 and 2008 19
Statements of Stockholders' Equity (Deficit) For
the Years Ended November 30, 2009 and 2008 20
Statements of Cash Flows For the Years Ended
November 30, 2009 and 2008 22
Notes to Financial Statements 24
17
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 consolidated balance sheets of
Community Alliance, Inc. (a development stage company) as of November
30, 2008 and 2009, and the related consolidated 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, 2009. 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 consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Community Alliance, Inc. at November 30, 2008 and 2009,
and the consolidated 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, 2009 in
conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated 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.
18
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
Nov. 30, Nov. 30
2008 2009
-------- ---------
ASSETS
Current assets
Cash $ 21,776 $ 573
Deferred license expense - current 16,000 -
-------- --------
Total current assets 37,776 573
-------- --------
Deferred license expense 2,654 -
-------- --------
2,654 -
-------- --------
Total Assets $ 40,430 $ 573
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ - $ -
License account payable-related party 35,050 -
Due to parent company 5,775 -
Unearned revenue - current 2,000 -
-------- --------
Total current liabilities 42,825 -
-------- --------
Notes payable - related party 37,250 29,050
Unearned revenue 1,841 -
-------- --------
Total Liabilities 81,916 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;
1,507,000 (2008) and 3,507,000
(2009) shares issued and outstanding 1,507 3,507
Additional paid in capital 28,493 85,969
Deficit accumulated during the
development stage (71,486) (117,953)
-------- --------
19
Total Stockholders' Equity (41,486) (28,477)
-------- --------
Total Liabilities and Stockholders' Equity $ 40,430 $ 573
======== ========
The accompanying notes are an integral part
of the financial statements.
20
COMMUNITY ALLIANCE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Feb. 22, 2005
(Inception)
Year Ended Year Ended Through
Nov. 30, 2009 Nov. 30, 2008 Nov. 30, 2009
------------- ------------- -------------
Sales $ 23,665 $ 44,499 $ 99,304
Cost of goods sold 13,810 13,127 45,137
--------- --------- ---------
Gross profit 9,855 31,372 54,167
--------- --------- ---------
Operating expenses:
Amortized license 16,000 5,333 36,904
General and administrative 24,927 72,055 134,663
--------- --------- ---------
40,927 77,388 171,567
--------- --------- ---------
Gain (loss) from operations (31,072) (46,016) (117,400)
--------- --------- ---------
Other income (expense)
Interest expense - (451) (553)
--------- --------- ---------
- (451) (553)
--------- --------- ---------
Income (loss) before provision
for income taxes (31,072) (46,467) (117,953)
Provision for income tax - - -
--------- --------- ---------
Net income (loss) $ (31,072) $ (46,467) $(117,953)
========= ========= =========
Net income (loss) per share
(Basic and fully diluted) $ (0.02) $ (0.02)
========= =========
Weighted average number of
common shares outstanding 1,507,000 2,840,333
========= =========
The accompanying notes are an integral part
of the financial statements
21
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(1) ($.001 Par) Capital Stage Equity
------------------ ------- ----------- --------
Balances at February
22, 2005 - $ - $ - $ - $ -
Stock issuance to parent
company for licensing 1,507,000 1,507 28,493 - 30,000
Net income (loss) for
the period - - - (21,428) (21,428)
--------- ------ ------- -------- --------
Balances at November
30, 2005 1,507,000 $1,507 $28,493 $(21,428) $ 8,572
Net income (loss)
for the period - - - (9,252) (9,252)
--------- ------ ------- -------- --------
Balances at November
30, 2006 1,507,000 $1,507 $28,493 $(30,680) $ (680)
Net income (loss)
for the period - - - (9,734) (9,734)
--------- ------ ------- -------- --------
Balances at November
30, 2007 1,507,000 $1,507 $28,493 $(40,414) $(10,414)
========= ====== ======= ======== ========
Net income (loss)
for the period - - - (31, 072) (31,072)
--------- ------ ------- -------- --------
Balances at November
30, 2008 1,507,000 $1,507 $28,493 $(71,486) $(41, 486)
Stock issued for debt
Satisfaction 2,000,000 2,000 43,050 - 45,050
Paid in capital - debt
Relief - - 14,426 - 14,426
Net income (loss) for
The year - - - (46,467) (46,467)
--------- ------ ------- -------- --------
Balances at November 30,
2009 3,507,000 $3,507 $85,969 $(117,953) $(28,477)
========= ====== ======= ======== ========
(1)As restated for a 15,070 for 1 forward stock split on August 25, 2008
The accompanying notes are an integral part
of the financial statements.
22
COMMUNITY ALLIANCE
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Feb. 22, 2005
(Inception)
Year Ended Year Ended Through
Nov. 30, 2009 Nov. 30, 2008 Nov. 30, 2009
------------- ------------- -------------
Cash Flows From Operating Activities:
Net income (loss) during the
development stage $ (31,072) $ (46,467) $(117,953)
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 (4,000) 18,654 -
Related party payable 33,050 - 35,050
Accrued interest payable - 451 451
Deferred revenues (10,845) (3,841) -
Accounts payable (2,525) - -
--------- --------- ---------
Net cash provided by (used for)
operating activities (7,392) (31,203) (52,452)
--------- --------- ---------
Cash Flows From Investing Activities:
- - -
Net cash provided by (used for)
investing activities - - -
Cash Flows From Financing Activities:
Notes payable - borrowings 29,050 10,000 42,550
Notes payable - payments - - (3,500)
Due from/to parent company 1,000 - 13,975
-------- -------- --------
Net cash provided by (used for)
financing activities 28,050 10,000 53,025
-------- -------- --------
Net Increase (Decrease) In Cash 20,658 (21,203) 573
Cash At The Beginning Of The Period 1,118 21,776 -
-------- -------- --------
Cash At The End Of The Period $ 1,118 $ 573 $ 573
======== ======== ========
23
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 2008, the Company issued 2,000,000 common shares in satisfaction of
$45,050 in debt.
Feb. 22, 2005
(Inception)
Year Ended Year Ended Through
Nov. 30, 2009 Nov. 30, 2008 Nov. 30, 2009
------------- ------------- -------------
Supplemental Disclosure
Cash paid for interest $ - $ - $ 102
Cash paid for income taxes $ - $ - $ -
The accompanying notes are an integral part
of the financial statements
24
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Consolidated Financial Statements
November 30, 2008 and 2009
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.
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.
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.
25
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Consolidated Financial Statements - (Continued)
November 30, 2008 and 2009
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 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.
26
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Consolidated Financial Statements - (Continued)
November 30, 2008 and 2009
Advertising expenses
Advertising costs are expensed when incurred. No advertising was
conducted during the twelve months ended November 30, 2008 or 2009.
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 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, 2009, the Company had two notes payable to a
corporation controlled by an officer totaling $29,050. One note for
$10,000 bears no interest until November 18, 2010, and 6% per annum
thereafter until due in full at December 31, 2010. The other note for
$19,050 bears no interest until June 1, 2010, and 6% per annum
thereafter until due in full at December 31, 2010.
27
Community Alliance, Inc. and Subsidiary
(A Developmental Stage Enterprise)
Notes to Consolidated Financial Statements - (Continued)
November 30, 2008 and 2009
In 2009, a corporation controlled by an officer was issued 1,000,000
common shares for $10,000 in note payable debt satisfaction, and the
same corporation contributed $8,651 in debt relief to the capital of
the corporation while an additional $5,775 owed to the Company's former
parent corporation was also contributed to the Company's capital.
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.
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, 2008 and 2009 the Company had net operating loss
carryforwards of approximately $71,000 and $117,000 which begin to
expire in 2028. The deferred tax asset of $14,000 and $23,000 created by
the net operating losses has been offset by a 100% valuation allowance.
The change in the valuation allowance in fiscal year 2008 and 2009 was
approximately $6,000 and $9,000.
28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
We maintain disclosure controls and procedures, as defined in Rules 13a-
15(e) and 15d-15(e) under the Exchange Act that are designed to insure
that information required to be disclosed in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and
reported within the periods specified in the Securities and Exchange
Commission's rules and forms and that such information is accumulated
and communicated to our management, including our Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), or the persons
performing similar functions, to allow timely decisions regarding
required disclosure.
Under the supervision and with the participation of our CEO and CFO, or
the persons performing similar functions, our management has evaluated
the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this annual report. Based on that
evaluation, our CEO and CFO, or the persons performing similar
functions, concluded that our disclosure controls and procedures were
effective as of November 30, 2009.
Management's Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control over
financial reporting is the process designed by and under the supervision
of our CEO and CFO, or the persons performing similar functions, to
provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external
reporting in accordance with accounting principles generally accepted in
the United States of America. Management has evaluated the
effectiveness of our internal control over financial reporting using the
criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control over Financial Reporting
- Guidance for Smaller Public Companies.
Under the supervision and with the participation of our CEO and CFO, or
the persons performing similar functions, our management has assessed
the effectiveness of our internal control over financial reporting as of
November 30, 2009, and concluded that it is effective.
This annual report does not include an attestation report of the
registrant's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the registrant's registered public accounting firm
29
pursuant to temporary rules of the Securities and Exchange Commission
that permit the registrant to provide only management's report in this
annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Under the supervision and with the participation of our CEO and CFO, or
those persons performing similar functions, our management has evaluated
changes in our internal controls over financial reporting that occurred
during the fourth quarter of 2009. Based on that evaluation, our CEO
and CFO, or those persons performing similar functions, did not identify
any change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our
internal control over financial reporting is subject to various inherent
limitations, including cost limitations, judgments used in decision
making, assumptions about the likelihood of future events, the soundness
of our systems, the possibility of human error, and the risk of fraud.
Moreover, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate
because of changes in conditions and the risk that the degree of
compliance with policies or procedures may deteriorate over time.
Because of these limitations, there can be no assurance that any system
of disclosure controls and procedures or internal control over financial
reporting will be successful in preventing all errors or fraud or in
making all material information known in a timely manner to the
appropriate levels of management.
ITEM 9B. OTHER INFORMATION
None
30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our directors and executive officers are:
Name Age Position
---- --- --------
Phillip E. Ray 72 President, Chief Executive Officer,
Director
A. Terry Ray 65 Secretary, Director
Ruth Daily 49 Treasurer, Director
Mr. Phil E. 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 the sole shareholder of VentureVest
Capital Corporation and American Business Services, Inc., 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 Directors 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, 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.
Ms. Alice Terry 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.
31
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 38 schools in Colorado and is generating between $70,000 and $100,000
in revenue. In February of 2008, Venitech entered into a Licensing
Agreement with Community Alliance, 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, except for Jefferson County, and the
revenue generated from the sales of advertising from the school folders.
Ms. Daily has became a director of the Company and has continued to
contract with schools and to sell advertising for the school folders in
Colorado for the benefit of the Company, and to do so on a commission
only basis.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
an officer, director, or greater-than-10% shareholder of the registrant
must file a Form 4 reporting the acquisition or disposition of
registrant's equity securities with the Securities and Exchange
Commission no later than the end of the second business day after the
day the transaction occurred unless certain exceptions apply.
Transactions not reported on Form 4 must be reported on Form 5 within 45
days after the end of the registrant's fiscal year. Such persons must
also file initial reports of ownership on Form 3 upon becoming an
officer, director, or greater-than-10% shareholder. To our knowledge,
based solely on a review of the copies of these reports furnished to it,
the officers, directors, and greater than 10% beneficial owners complied
with all applicable Section 16(a) filing requirements during 2009.
Code of Ethics Policy
We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
Corporate Governance.
There have been no changes in any state law or other procedures by which
security holders may recommend nominees to our board of directors. In
addition to having no nominating committee for this purpose, we
currently have no specific audit committee and no audit committee
financial expert. Based on the fact that our current business affairs
are simple, any such committees are excessive and beyond the scope of
our business and needs.
32
Indemnification.
The registrant shall indemnify to the fullest extent permitted by, and
in the manner permissible under the laws of the State of Colorado, 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 the
registrant, or served any other enterprise as director, officer or
employee at the request of the registrant. The board of directors, in
its discretion, shall have the power on behalf of the registrant 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 the registrant.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
registrant, the registrant 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 the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant 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, the registrant 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.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE REGISTRANT 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 11. EXECUTIVE COMPENSATION
The following table set forth certain information as to the compensation
paid to our sole executive officer.
No executive of Community Alliance has received compensation since the
inception of Community Alliance. We have not determined when we will
be in a position to pay our officers.
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 as of November 30, 2009.
We do not have any equity compensation plans outstanding as of November
30, 2009.
33
Director Compensation
We do not pay our directors compensation and have no intention to pay
our directors compensation in the near future.
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
The following tabulates holdings of shares of the registrant by each
person who, subject to the above, holds of record or is known by
management to own beneficially more than 5.0% of the common shares and,
in addition, by all directors and officers of the registrant
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.
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Stock
Phillip E. Ray(2) 1,300,000(direct) 37.07%
4980 Silver Pine Drive 110,000(indirect) 3.14%
Castle Rock, CO 80108
Ruth Daily 1,300,000 37.07%
4980 Silver Pine Drive
Castle Rock, CO 80108
A. Terry Ray(3) 1,410,000(indirect) 40.21%
4980 Silver Pine Drive
Castle Rock, CO 80108
All directors and officers
as a group (3 persons) 2,600,000 74.14%
110,000 3.14%
(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 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.
(2)Phillip E. Ray is the beneficial owner of 1,410,000 shares of our
common stock through his direct ownership of 1,300,000 shares of our
common stock and through his positions as the sole officer, director
and shareholder of American Business Services, Inc., which owns
50,000 shares of our common stock, and the majority shareholder and
sole officer and director of VentureVest Capital Corporation, which
owns 60,000 shares of our common stock.
34
(3)A. Terry Ray is the beneficial owner of the 1,410,000 shares of
our common stock directly and indirectly held by her spouse, Phillip
E. Ray.
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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
At November 30, 2009, Community Alliance had two notes payable to a
corporation controlled by Phil Ray, an officer totaling $29,050. One
note for $10,000 bears no interest until November 18, 2010, and 6% per
annum thereafter until due in full at December 31, 2010. The other note
for $19,050 bears no interest until June 1, 2010, and 6% per annum
thereafter until due in full at December 31, 2010.
In 2009, American Business Services, Inc., a corporation controlled by
Phil Ray, an officer, was issued 1,000,000 common shares for $10,000 in
note payable debt satisfaction, and the same corporation contributed
$8,651 in debt relief to the capital of the corporation while an
additional $5,775 owed to Community Alliance's former parent
corporation was also contributed to Community Alliance's capital.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees. We incurred aggregate fees and expenses of approximately
$4,810 and $7,980 respectively, from Ronald R. Chadwick, P.C. for the
2009 and 2008 fiscal years. Such fees included work completed for our
annual audits and for the review of our financial statements included in
our Form 10-Q.
Tax Fees. We did not incur any aggregate tax fees and expenses from
Ronald R. Chadwick, P.C. for the 2009 and 2008 fiscal years for
professional services rendered for tax compliance, tax advice, and tax
planning.
All Other Fees. We did not incur any other fees from Ronald R. Chadwick,
P.C. during fiscal 2009 and 2008.
The board of directors, acting as the Audit Committee considered
whether, and determined that, the auditor's provision of non-audit
services was compatible with maintaining the auditor's independence.
All of the services described above for fiscal years 2009 and 2008 were
approved by the board of directors pursuant to its policies and
procedures. We intend to continue using Ronald R. Chadwick, P.C.
solely for audit and audit-related services, tax consultation and tax
compliance services, and, as needed, for due diligence in acquisitions.
35
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) List of Financial statements included in Part II hereof
Independent Auditor's Report
Balance Sheets, November 30, 2009 and 2008
Statements of Operations for the years ended November 30, 2009 and 2008
Statements of Stockholders' Equity for the years ended November 30, 2009
and 2008
Statements of Cash Flows for the years ended November 30, 2009
and 2008
Notes to the Financial Statements
(a)(2) List of Financial Statement schedules included in Part
IV hereof: None
(a)(3) Exhibits
The following of exhibits are filed with this report:
(10.1) License Agreement Dated June 12, 2009 between Venitech,
LLC and Community Alliance, Inc.
(10.2) Convertible Promissory Note dated June 1, 2009, in the
principal amount of $19,040 payable by American Business
Services, Inc., as the maker, to Community Alliance, Inc., as
the holder.
(10.3) Convertible Promissory Note dated November 18, 2009, in
the principal amount of $10,000 payable by American Business
Services, Inc., as the maker, to Community Alliance, Inc., as
the holder.
(31-1) 302 certification - CEO
(31-2) 302 certification - CFO
(32-1) 906 certification - CEO
(32-2) 906 certification - CFO
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this
Report to be signed on its behalf by the undersigned duly authorized
person.
Date: February 12, 2010
Community Alliance, Inc.
/s/ Phillip E. Ray
------------------------------
By: Phillip E. Ray, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Corporation and in the capacities and on the dates
indicated.
/s/ Phillip E. Ray CEO and Director February 12, 2010
--------------------
Phillip E. Ray
/s/A. Terry Ray Director February 12, 2010
--------------------
A. Terry Ray
/s/Ruth Daily CFO, Controller February 12, 2010
-------------------- Director
Ruth Daily
