U.S.
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

##### FORM 10-K

OR

[ ]
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: 000-15109

CALA
CORPORATION(Exact
name of Registrant as Specified in Its Charter)



|Oklahoma                                           | 73-1251800                                              
|-------------------------------------------------- | --------------------------------------------------------
|(State
				or Other Jurisdiction of Incorporation) | (I.R.S.
				Employer or Organization Identification No.)

1314 Texas Street, Suite
400, Houston, TX 77002(Address of Principal Executive
Offices) (Zip Code)

Registrant’s
telephone number:(713) 302-8689

Securities
registered pursuant to Section 12(b) of the Act: None

Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.005
Par Value

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 of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) been subject to such filing requirements for the
past 90 days. Yes ­­NoX.

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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 shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ­­NoX.

The
Registrant’s revenues for the fiscal year ended December 31,
2008 was zero. The aggregate market value of the voting stock held by
non-affiliates of the Registrant as of June 30, 2008 $ 733,374 As of
April 20, 2010, the Registrant had 320,866,147 shares of common stock
issued and outstanding.

Transitional
Small Business Disclosure Format (check one): Yes ­­NoX.

Page 1

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TABLE OF
CONTENTS



PART I

|Item 1. Business                                                | 3
|--------------------------------------------------------------- | -
|Item 1A. Risk
				Factors                                       | 4
|Item 2. Property                                                | 7
|Item 3. Legal
				Proceedings                                   | 8
|Item 4. Submission
				of Matters to a Vote of Security Holders | 8

PART II

|Item 5. Market for
				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 8. Financial
				Statements                                                                      | 12
|Item 9. Changes in
				and Disagreements with Accountants on Accounting and Financial
				Disclosure  | 12
|Item 9A. Controls
				and Procedures                                                                  | 12
|Item 9B. Other
				Information                                                                        | 12

PART III

|Item 10. Directors,
				Executive Officers, Promoters and Control Persons and Corporate
				Governance; Compliance with Section 16(a) of the Exchange Act | 12
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|Item 11. Executive
				Compensation                                                                                                                       | 14
|Item 12. Security
				Ownership of Certain Beneficial Owners and Management and Related
				Stockholder Matters                                           | 14
|Item 13. Certain
				Relationships and Related Transactions and Director Independence                                                                     | 15
|Item 14. Principal
				Accountant Fees and Services                                                                                                       | 15

PART IV

|Item 15. Exhibits,
				Financial Statement Schedules | 16
|---------------------------------------------------- | --
|Signatures                                           | 17



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Cala Corporation (formerly
Magnolia Foods, Inc.) was incorporated on September 13, 1985 under
the laws of the State of Oklahoma. The Registrant's sole industry
segment was the business of owning, operating, licensing and joint
venturing restaurants. In addition, the Registrant operated
restaurants under lease which were discontinued during the year.
Currently, the Registrant is in the development stage of building an
underwater resort and casino.

The Registrant has designed
an undersea resort. The Registrant, through the expertise of Mr. Ray
Francis has solved the naval engineering problems originally
presented by the project. Mr. Francis, brings to the table over 40
years of maritime experience that is second to none in the maritime
industry. Mr. Francis talents allow for a design that benefits the
customer’s safety, maximizes the openness and space of the
facility, and maintains the primary focus of human contact with
marine life. This coupled with Joseph Cala’s knowledge and
experience in the hospitality industry, along with eight years of
intensive study and seemingly endless trial and error, enabled the
Registrant to finalize two naval engineered designs for the Undersea
Resort and Residence. The Registrant engaged Mr. Clive Jones, a
former senior executive with Economic Research Associates, to help
with business development. Mr. Jones has over 40 years of experience
in worldwide leisure travel and tourism development, and he was the
visionary behind of many landmark resorts and theme parks. In
addition, the Company is working with prestigious maritime companies
such as Stodga of Poland and FinCantieri of Italy.

The
Registrant plans to build the first UnderSea Resort & Casino, the
first Undersea Residence, and the first Residence Fractional
Ownership. The development will be the residence and the fractional
ownership, and the project will be financed from pre-selling
individual units. Management believes that the project has a great
chance of success. The Registrant is in discussions with members of
the timeshare and fractional unit industry to explore the possibility
of a partnership or contractual arrangement with the Registrant. The
undersea residences have the entire ocean available with no purchase
costs, and without the limitations of land. According to the Future
Timeshare Buyers 2004 Market Profile, 13.4 million adults are
interested in purchasing some form of timeshare during the next two
years. The next generation of owners is well educated and the highest
concentration of interest in purchasing is among GenXers. In
addition, the study documents that prospective owners are experienced
and enthusiastic travelers.

The
Registrant completed the design phase of development and is seeking
financing to begin the construction phase of the project. Included in
the financing stage is the concept of pre-selling the vessels prior
to the beginning of construction. As of this date the Registrant does
not have any commitments for financing or purchase of any units. The
Registrant initiated a contract with a shipyard for building the
units.

Management
believes that the project has a great chance of success however;
there can be no assurance that (i) such individual unit or fractional
ownership will be sold or significant revenue will be generated, and
(ii) anticipated costs will not be significantly exceeded by actual
costs incurred.



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The
Registrant owns no patents or trademarks, and has no employees.



ITEM 1A
RISK FACTORS

(a) Limited Prior
Operations, History of Operating Losses, and Accumulated Deficit May
Affect Ability of Registrant to Survive.

The
Registrant has had limited prior operations to date. Since the
Registrant’s principal activities recently have been limited to
seeking new business ventures, it has no recent record of any
revenue-producing operations. Consequently, there is only a limited
operating history upon which to base an assumption that the
Registrant will be able to achieve its business plans. In addition,
the Registrant has only limited assets. As a result, there can be no
assurance that the Registrant will generate significant revenues in
the future; and there can be no assurance that the Registrant will
operate at a profitable level. Accordingly, the Registrant’s
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in connection with the
establishment of a new business.

The
Registrant incurred General and Administrative expenses of $234,762
for the year ending 2008 and $694,705 for the year ending 2007. Stock
for services consisted of zero and $332,000 of the total general and
administrative expense for the years ending 2008 and 2007,
respectively. Officers salary of $150,000 and legal and accounting of
$46,235 were the major components of G&A during the year ended
2008 while consulting expense of $64,241 and legal and accounting of
$62,932 were the other major components for the year ending 2007.

The
Registrant has incurred net losses: $1,114,398 for the fiscal year
ended December 31, 2008 and $721,403 for the fiscal year ended
December 31, 2007. The Registrant’s current liabilities exceed
its current assets by $320,590 as of December 31, 2008 and $184,366
as of December 31, 2007. At December 31, 2008, the Registrant had an
aggregate accumulated deficit and accumulated deficit during the
development stage of $13,722,590 ($11,886,789 and $1,835,801,
respectively). This raises substantial doubt about the Registrant’s
ability to continue as a going concern.

As a
result of the fixed nature of many of the Registrant’s
expenses, the Registrant may be unable to adjust spending in a timely
manner to compensate for any unexpected delays in the development and
marketing of the Registrant’s products or any capital raising
or revenue shortfall. Any such delays or shortfalls will have an
immediate adverse impact on the Registrants business, operations and
financial condition.



The working capital
requirements associated with any adopted plan of business of the
Registrant may be significant. The Registrant anticipates, based on
currently proposed assumptions relating to its operations (including
with respect to costs and expenditures and projected cash flow from
operations), that it must seek financing to continue its operations
(an amount which is as yet to be determined). However, such
financing, when needed, may not be available, or on terms acceptable
to management. The ability of the Registrant to continue as a going
concern is dependent on additional sources of capital and the success
of the Registrant’s business plan. The Registrant’s
independent accountant audit report included in this Form 10-K
includes a substantial doubt paragraph regarding the Registrant’s
ability to continue as a going concern.

Page 4

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If funding
is insufficient at any time in the future, the Registrant may not be
able to take advantage of business opportunities or respond to
competitive pressures, or may be required to reduce the scope of its
planned product development and marketing efforts, any of which could
have a negative impact on its business, operating results and
financial condition. In addition, insufficient funding may have a
material adverse effect on the company’s financial condition,
which could require the company to:

 curtail
operations significantly;

 sell
significant assets;

 seek
arrangements with strategic partners or other parties that may
require the company to relinquish significant rights to products,
technologies or markets; or

 explore
other strategic alternatives including a merger or sale of the
company. To the extent that the Registrant raises additional capital
through the sale of equity or convertible debt securities, the
issuance of such securities will result in dilution to existing
stockholders. If additional funds are raised through the issuance of
debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such
debt could impose restrictions on the Registrant’s operations.
Regardless of whether the Registrant’s cash assets prove to be
inadequate to meet the Registrant’s operational needs, the
Registrant may seek to compensate providers of services by issuance
of stock in lieu of cash, which will also result in dilution to
existing shareholders.



(c) Loss
of Current Management Could Have Adverse Impact on Business and
Prospects for Registrant.

The
Registrant’s success is dependent upon the hiring and retention
of key personnel. None of the officers or directors has any
employment or non-competition agreement with the Registrant.
Therefore, there can be no assurance that these personnel will remain
employed by the Registrant. Should any of these individuals cease to
be affiliated with the Registrant for any reason before qualified
replacements could be found, there could be material adverse effects
on the Registrant’s business and prospects.

In
addition, all decisions with respect to the management of the
Registrant will be made exclusively by the officers and directors of
the Registrant. Investors will only have rights associated with
stockholders to make decisions which affect the Registrant. The
success of the Registrant, to a large extent, will depend on the
quality of the directors and officers of the Registrant. Accordingly,
no person should invest in the shares unless he is willing to entrust
all aspects of the management of the Registrant to the officers and
directors.

Page 5

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(d)
Potential Conflicts of Interest May Affect Ability of Officers and
Directors to Make Decisions in the Best Interests of Registrant.

The
officers and directors have other interests to which they devote
time, either individually or through partnerships and corporations in
which they have an interest, hold an office, or serve on boards of
directors, and each will continue to do so notwithstanding the fact
that management time may be necessary to the business of the
Registrant. As a result, certain conflicts of interest may exist
between the Registrant and its officers and/or directors which may
not be susceptible to resolution.

In
addition, conflicts of interest may arise in the area of corporate
opportunities which cannot be resolved through arm’s length
negotiations. All of the potential conflicts of interest will be
resolved only through exercise by the directors of such judgment as
is consistent with their fiduciary duties to the Registrant. It is
the intention of management, so as to minimize any potential
conflicts of interest, to present first to the board of directors to
the Registrant, any proposed investments for its evaluation.



(e)
Limitations on Liability, and Indemnification, of Directors and
Officers May Result in Expenditures by Registrant.

The
Registrant’s Certificate of Incorporation contain provisions to
eliminate, to the fullest extent permitted by the Oklahoma
Corporation Law, as in effect from time to time, the personal
liability of directors of the Registrant for monetary damages arising
from a breach of their fiduciary duties as directors. The Certificate
of Incorporation and the Amended and Restated By-Laws of the
Registrant include provisions to the effect that the Registrant may,
to the maximum extent permitted from time to time under applicable
law, indemnify any director, officer, or employee to the extent that
such indemnification and advancement of expense is permitted under
such law, as it may from time to time be in effect. Any limitation on
the liability of any director, or indemnification of directors,
officer, or employees, could result in substantial expenditures being
made by the Registrant in covering any liability of such persons or
in indemnifying them.



(f)
Absence of Cash Dividends May Affect Investment Value of Registrant’s
Stock.

The board
of directors does not anticipate paying cash dividends on the common
stock for the foreseeable future and intends to retain any future
earnings to finance the growth of the Registrant’s business.
Payment of dividends, if any, will depend, among other factors, on
earnings, capital requirements and the general operating and
financial conditions of the Registrant as well as legal limitations
on the payment of dividends out of paid-in capital.



(g)
Non-Cumulative Voting May Affect Ability of Some Shareholders to
Influence Mangement of Registrant.

Holders of
the shares of common stock of the Registrant are not entitled to
accumulate their votes for the election of directors or otherwise.
Accordingly, the holders of a majority of the shares present at a
meeting of shareholders will be able to elect all of the directors of
the Registrant, and the minority shareholders will not be able to
elect a representative to the Registrant’s board of directors.

Page 6

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(h) No
Assurance of Continued Public Trading Market and Risk of Low Priced
Securities May Affect Market Value of Registrant’s Stock.

There has
been only a limited public market for the common stock of the
Registrant. The common stock of the Registrant is currently quoted on
the Pink Sheets LLC. As a result, an investor may find it difficult
to dispose of, or to obtain accurate quotations as to the market
value of the Registrant’s securities. In addition, the common
stock is subject to the low-priced security or so called “penny
stock” rules that impose additional sales practice requirements
on broker-dealers who sell such securities. The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional
disclosure in connection with any trades involving a stock defined as
a penny stock (generally, according to recent regulations adopted by
the U.S. Securities and Exchange Commission (“SEC”), any
equity security that has a market price of less than $5.00 per share,
subject to certain exceptions), including the delivery, prior to any
penny stock transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith. The
regulations governing low-priced or penny stocks sometimes limit the
ability of broker-dealers to sell the Registrant’s common stock
and thus, ultimately, the ability of the investors to sell their
securities in the secondary market.



(i)
Failure to Maintain Market Makers May Affect Value of Registrant’s
Stock.

If the
Registrant is unable to maintain a Financial Industry Regulatory
Authority member broker/dealers as market makers, the liquidity of
the common stock could be impaired, not only in the number of shares
of common stock which could be bought and sold, but also through
possible delays in the timing of transactions, and lower prices for
the common stock than might otherwise prevail. Furthermore, the lack
of market makers could result in persons being unable to buy or sell
shares of the common stock on any secondary market. There can be no
assurance the Registrant will be able to maintain such market makers.



(j) Sale
of Shares Eligible For Future Sale Could Adversely Affect the Market
Price.

All of the
shares of common stock that are currently held, directly or
indirectly, by significant shareholders of the Registrant as shown in
the chart under Part III, Item 11 of this Form 10-K, have been issued
in reliance on the private placement exemption under the Securities
Act of 1933. Such shares will not be available for sale in the open
market without separate registration except in reliance upon Rule 144
under the Securities Act of 1933. In general, under Rule 144 a
person, or persons whose shares are aggregated, who has beneficially
owned shares acquired in a non-public transaction for at least one
year, including persons who may be deemed affiliates of the
Registrant, as defined, would be entitled to sell within any
three-month period a number of shares that does not exceed 1% of the
then outstanding shares of common stock, provided that current public
information is then available. If a substantial number of the shares
owned by these shareholders were sold under Rule 144 or a registered
offering, the market price of the common stock could be adversely
affected.



ITEM 2. PROPERTY.
The Registrant maintains an
office at 1314 Texas Street, Suite 400, Houston, TX 77002. It
currently does not own any equipment at that location.

Page 7

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ITEM 3.
LEGAL PROCEEDINGS.

In 2003,
the Registrant obtained a judgment against I.M.O.I.L, Gisella
Manciniand Quirino Caparelli in the amount of $2.7 million. The
judgment has not been collected and is not included in the financial
statements. During the years ending in 2008 and 2007, the Registrant
has not actively pursued the collection of the judgment. The
Registrant received the judgment resulting from a lawsuit initiated
by the Registrant due to losses incurred from lack of performance by
the defendant in a merger agreement with the Registrant. As the
defendant is in a foreign jurisdiction the Registrant feels it is
unlikely the judgment will be collected without the investment of
large legal fees.

The
Company is the defendant in a lawsuit filed on February 21, 2008 in
Brevard County, Florida Case No: 05-2008-CA-019105 which was brought
by the mortgage holder of the property owned by the Company at 13
Main Street Titusville, FL. The matter was heard on March 14, 2008
and the Company was ordered to commence monthly payments of $3,272.32
to the plaintiff beginning on April 16, 2008 and on the same date
each month thereafter. The Company did not meet the requirements of
the Agreement.

On
September 30, 2008, the Company entered into a stipulated settlement
agreement with the owner and mortgage holder of the building. An
order adopting the stipulation was issued by the Eighth Circuit Court
of Brevard County, Florida on October 3, 2008. Under the terms of the
agreement the Company was to vacate the building on October 12, 2008
and dismiss any counter claims it has against the mortgage holder of
the property. The mortgage holder of the building waived all
deficiency against the Company and assumed title of the building.

On January
20, 2009, a complaint was filed against the Company in the Superior
Court of California case # CIVWS09-0049 terminating the lease at 500
Bollinger Canyon Way, San Roman, CA due to subleasing the premises
without consent of the landlord. A judgment was entered giving the
landlord possession of the premises with no monetary amount awarded.

None.

Market Information.

The
Registrant’s common stock trades on the National Quotation
Bureaus’ Pink Sheets (now know as Pink Sheets LLC), where it
continues to trade under the symbol “CCAA”. The range of
closing prices shown below is as reported by this market. The
quotations shown reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not necessarily represent actual
transactions.

Page
8

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Per Share Common Stock
Bid Prices by Quarter For
the Fiscal Year Ended on December 31, 2008 (1)

|                                    | High  | Low   
|----------------------------------- | ----- | ------
|Quarter
			Ended December 31, 2008  | 0.006 | 0.0012
|Quarter
			Ended September 30, 2008 | 0.007 | 0.0015
|Quarter
			Ended June 30, 2008      | 0.012 | 0.0030
|Quarter
			Ended March 31, 2008     | 0.020 | 0.0010

|                                    | High   | Low  
|----------------------------------- | ------ | -----
|Quarter
			Ended December 31, 2007  | 0.025  | 0.006
|Quarter
			Ended September 30, 2007 | 0.029  | 0.012
|Quarter
			Ended June 30, 2007      | 0.028  | 0.017
|Quarter
			Ended March 31, 2007     | 0.0324 | 0.019



Holders of
Common Equity.

As of
December 31, 2008, the Registrant had approximately 515 shareholders
of record.

The Registrant has not
declared or paid a cash dividend to stockholders since it was
incorporated. The Board of Directors presently intends to retain any
earnings to finance Registrant operations and does not expect to
authorize cash dividends in the foreseeable future. Any payment of
cash dividends in the future will depend upon the Registrant's
earnings, capital requirements and other factors.

Sales of Unregistered
Securities.

The
Registrant made no sales of unregistered securities (restricted
stock) during the year which have not been reported in the 10 Q’s
filed for the first three quarters for the year ending December 31,
2008.

The following discussion
should be read in conjunction with the financial statements of the
Registrant and notes thereto contained elsewhere in this report.



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The Registrant intends to
take advantage of any reasonable business proposal presented which
management believes will provide the Registrant and its stockholders
with a viable business opportunity.  The board of directors will
make the final approval in determining whether to complete any
acquisition, and unless required by applicable law, the articles of
incorporation or bylaws or by contract, stockholders' approval will
not be sought.

The
Registrant designed to build the first UnderSea Resort & Casino,
the first Undersea Residence, and the first Residence Fractional
Ownership. The first development will be the residence and the
fractional ownership, and the project will be financed from
pre-selling individual units. The Registrant estimates that the
average residential development should generate approximately $600
million of revenue from the sale of the units while the total
development cost should be approximately $460 million. This is based
on initial estimates of unit costs and revenue generated in the sale
of the vessels as it is the intent of the Registrant to build the
vessels under the Registrants design for sale to prospective buyers.
The Registrant does not initially intend to own any of the vessels
being built. Therefore, the management believes that the project has
a great chance of success however there can be no assurance that (i)
such individual unit or fractional ownership will be sold or
significant revenue will be generated, and (ii) anticipated costs
will not be significantly exceeded by actual costs incurred. The
possibilities in this industry are tremendous, because demand for
oceanic properties is the highest it has ever been and the supply is
scarce. The undersea residences have the ocean available with no
purchase costs, and without the limitations of land.

The
Registrant plans to finalize plans for securing the financing and
construction of the resort. The beginning of construction is
dependent on the Registrant completing its plan of financing and
contracting for the construction, both of which will highly impact
the Registrants ability to carry out its business plan.

The
investigation of business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents,
and other instruments will require substantial management time and
attention and will require the Registrant to incur costs for payment
of accountants, attorneys, and others.  If a decision is made
not to participate in or complete the acquisition of a specific
business opportunity, the costs incurred in a related investigation
will not be recoverable.  Further, even if an agreement is
reached for the participation in a specific business opportunity by
way of investment or otherwise, the failure to consummate the
particular transaction may result in the loss to the Registrant of
all related costs incurred.



On December 1, 2005, the
Registrant purchased a building and land for an aggregate amount of
$750,000 of which the Registrant paid $150,000 plus closing costs and
a mortgage note of $600,000. The mortgage bears an interest rate of
eight (8%) percent with 240 monthly principal and interest payments
of $5,020.24 stating on January 16, 2006. The note contains a
prepayment penalty of $50,000 if the note is paid prior to December
16, 2007.

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On July
16, 2006, the mortgage was modified with a principal balance of
$592,592.51 extending the mortgage through July 15, 2036. The
mortgage was amended to eliminate the prepay penalty of $50,000 in
the original mortgage, grant a reduction in the mortgage principal of
$100,000 if the mortgage is paid off on or before February 17, 2007
and reduced the interest rate to five and one quarter percent
(5.25%). A late fee of five percent (5%) on payment over ten (10)
days was added to the mortgage. The prepayment reduction was not
realized during the year and has expired.

On
September 30, 2008, the Company agreed to vacate the building and
return title to the mortgage holder. Upon vacating the building the
mortgage holder through a court order relieved the Company of all
liabilities connected to the ownership and occupancy of the building.
The result of this transaction was a loss on disposal of assets of
$121,560.



Critical
Accounting Policies.

The
SEC has issued Financial Reporting Release No. 60, “Cautionary
Advice Regarding Disclosure About Critical Accounting Policies”
(“FRR 60”); suggesting companies provide additional
disclosure and commentary on their most critical accounting policies.
In FRR 60, the Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a
company’s financial condition and operating results, and
require management to make its most difficult and subjective
judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. Based on this definition, the
Registrant’s most critical accounting policies include the use
of estimates in the preparation of financial statements.
The methods, estimates and judgments the Registrant uses in applying
these most critical accounting policies have a significant impact on
the results the company reports in its financial statements.

The
preparation of these financial statements requires the Registrant to
make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, the
Registrant evaluates these estimates, including those related to
revenue recognition and concentration of credit risk. The Registrant
bases its estimates on historical experience and on various other
assumptions that is 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.



Forward
Looking Statements.

The
foregoing plan of operation contains “forward looking
statements” within the meaning of Rule 175 of the Securities
Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934,
as amended. The words “believe,” “expect,”
“anticipate,” “intends,” “forecast,”
“project,” and similar expressions identify
forward-looking statements. These are statements that relate to
future periods and include, but are not limited to, statements as to
the Registrant’s estimates as to the adequacy of its capital
resources, its need and ability to obtain additional financing, its
operating losses and negative cash flow, and its critical accounting
policies. Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those projected. These risks and uncertainties include, but are
not limited to, those discussed above. These forward-looking
statements speak only as of the date hereof. The Registrant expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in its expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statement is based.

Page 11

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ITEM 8.
FINANCIAL STATEMENTS.

Financial
statements are audited and included herein beginning on Exhibit 1,
page 18 and are incorporated herein by this reference.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

ITEM 9A.
CONTROLS AND PROCEDURES.

Evaluation
of Disclosure Controls and Procedures.

Within the
90 days prior to the end of the period covered by this report, the
Registrant carried out an evaluation of the effectiveness of the
design and operation of its disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as
amended (“Exchange Act”). This evaluation was done under
the supervision and with the participation of the Registrant’s
president. Based upon that evaluation, he concluded that the
Registrant’s disclosure controls and procedures are not
effective in gathering, analyzing and disclosing information needed
to satisfy the Registrant’s disclosure obligations under the
Exchange Act.

Changes in
Disclosure Controls and Procedures.

There were
no significant changes in the Registrant’s disclosure controls
and procedures, or in factors that could significantly affect those
controls and procedures since their most recent evaluation.

ITEM 9B
OTHER INFORMATION

ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.

On
February 28, 2006, John Del Fevro resigned as a director of the
Registrant. On October 1, 2006, Larry Pfautsch was elected to the
board of directors and Robert Mosley resigned. On November 1, 2006,
Ray Francis was elected to the board of directors of the Registrant.

The name,
age, and respective position of the directors and executive officer
of the Registrant are set forth below. The director named below will
serve until the next annual meeting of the Registrant’s
stockholders or until his successors are duly elected and have
qualified. Directors are elected for a term until the next annual
stockholders’ meeting. Officers will hold their positions at
the will of the board of directors, absent any employment agreement,
of which none currently exist or are contemplated. There are no
arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders
may directly or indirectly participate in or influence the management
of the Registrant’s affairs. There are no other promoters or
control persons of the Registrant. There are no legal proceedings
involving the directors of the Registrant.

Page 12

---

Joseph
Cala, 48, Director, Chairman and CEO

Mr. Cala
has been an international business owner most of his professional
life. He began his career at an early age rising to top management
positions in some of the most prestigious and luxurious resorts in
the world. Mr. Cala, as Chairman & CEO of Cala Corporation has
been involved in various ventures such as: Fila Sportswear USA; Mondi
Fashions, USA; L'Italiano Restaurants and Weddings in California,
Hawaii and Japan, Cala Hotels, Inc. dba Undersea Resort; and Hydrogen
Future, Inc.



Mr. Francis, President of
UnderSea Resort Design, was elected to the Board of Directors of Cala
Corporation. Having completed his undersea naval design to the strict
maritime rules of Lloyds Register of Shipping, Mr. Francis conducts
his day to day operational responsibilities at the UnderSea Resort
Headquarters and will commence his role as a director and principal
in the Company’s oceanic construction operations.

Compliance
with Section 16(a) of the Securities Exchange Act.

Section
16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than
10% of any class of the Registrant’s equity securities to file
initial reports of ownership and reports of changes in ownership with
the Securities and Exchange Commission (“SEC”). Executive
officers, directors and beneficial owners of more than 10% of any
class of the Registrant’s equity securities are required by SEC
regulations to furnish the Registrant with copies of all Section
16(a) forms they file.

Based
solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the registrant under Rule 16a-3(d) during fiscal 2002,
and certain written representations from executive officers and
directors,the Registrant
is unaware of any required reports that have not been timely filed.

Page 13

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ITEM 11.
EXECUTIVE COMPENSATION.

Summary
Compensation Table

|Name
				and principal position | Year                                 | Annual
				compensation          | Long-term
				compensation
|------------------------------- | ------------------------------------ | -------------------------------- | --------------------------
|Salary($)                       | Bonus($)                             | Other
				annual compensation($) | Awards                    
|Restrictedstockaward(s)($)      | Securitiesunder-lyingoptions/SARs(#) | LTIPpayouts($)                  
|Joseph Cala,(1)President        | 2008
				2007
				2006               | 150,000
				300,000
				352,986  | -
				-
				-             

There are no annuity,
pension or retirement benefits proposed to be paid to officers,
directors, or employees of the Registrant in the event of retirement
at normal retirement date as there is no existing plan provided for
or contributed to by the Registrant. In addition, no remuneration is
proposed to be paid in the future, directly or indirectly, by the
Registrant to any officer or director since there is no existing plan
as of December 31, 2008 which provides for such payment.



ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The
following table sets forth information regarding the beneficial
ownership of shares of the Registrant’s common stock as of
March 31, 2010 (320,886,147issued and outstanding) by (i)
all stockholders known to the Registrant to be beneficial owners of
more than 5% of the outstanding common stock; and (ii) all officers
and directors of the Registrant, individually and as a group (each
person has sole voting power and sole dispositive power as to all of
the shares shown as beneficially owned by them):

Page 14

---

|Title of
			Class | Name and
			Address of Beneficial Owner                                 | Amount
			and Nature of Beneficial Owner | Percent
			of Class
|----------------- | ----------------------------------------------------------------------- | ---------------------------------------- | -------------------
|Common
			Stock   | Joseph
			Cala1314 Texas StreetHouston, TX 77002                        | 114,042,405                              | 35.5%              
|Common
			Stock   | Larry
			Pfautsch1314 Texas StreetHouston, TX 77002                     | 11,500,000                               | 3.6%               
|Common
			Stock   | Raymond
			Francis1314 Texas StreetHouston, TX 77002                    | 12,000,000                               | 3.7%               
|Common
			Stock   | Shares
			of all directors and executive officers as a group (1 person) | 137,542,405                              | 42.8 %             



Other than as set forth
below, during the last two fiscal years there have not been any
transaction that have occurred between the Registrant and its
officers, directors, and five percent or greater shareholders.

In 2005,
the officer of the Registrant was issued 7,000,000 shares to reduce
accrued salary of $112,500. On January 2006, an officer of the
Registrant returned 300,000 shares of common stock and received $
15,000 in cash. The shares were cancelled. On August 2006, an officer
of the Registrant returned 7,166,425 shares to the Registrant for a
note payable of $ 214,993. The shares were cancelled. On November 21,
2006, the Registrant issued an officer of the Registrant 16,611,111
shares of common stock valued at $ 352,986 for salary for the year
ended 2006. On February 2, 2007, the Registrant issued 15,000,000
shares of common stock valued at $ 300,000 for salary for the year
ended 2007.



Page 15

---

Tax Fees.

The
aggregate fees billed in each of the last two fiscal years for
professional services rendered by De Joya Griffith: $0.



All Other
Fees.

The
aggregate fees billed in each of the last two fiscal years for
products and services provided by De Joya Griffith: $0.



Audit
Committee.



PART IV



ITEM 15
EXHIBITS AND REPORTS ON FORM 8-K

Exhibits included or
incorporated by reference herein are set forth under the Exhibit
Index.

On February 27, 2007, the
Registrant filed an 8-K appointing the accounting firm of the firm De
Joya Griffith & Company, LLC, of Henderson, Nevada, as the
principal accountant to audit the Registrant's financial statements
for the fiscal year of the Registrant ended December 31, 2006.

On March
10, 2008, the Registrant filed an 8-K announcing a contract between
the Registrant and Odys Shipyard for building the Undersea vessels.
Under the terms of the contract the contract becomes effective when
the registrant has place a 50% deposit on the first vessel to be
built. The Registrant had 100 days from the date of the contract to
make the initial deposit or Odys Shipyard may unilaterally cancel the
contract. The Registrant has no financial obligations until the
initial payment has been completed. The Registrant has not met its
obligations per the contract so the contact could be cancelled by the
shipyard.

On
November 19, 2008, the Registrant filed an 8-K that the Company had
created a new hospitality management division. The new division
mission is to sign hospitality management contracts with independent
owners.

The
Registrant has held discussions and received affirmative agreement
with the New York Harbor Department to dock resort ships in the
Hudson River. As of this date no written contract has been completed.

Page 16

---

SIGNATURE

Pursuant
to the requirements of Section 13 or 15(d) 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.

Cala
									Corporation

Joseph Cala,
								President



|Signature                              | Title                                                               | Date             
|-------------------------------------- | ------------------------------------------------------------------- | -----------------
|/s/ Joseph CalaJoseph Cala             | President
				(principal financial and accounting officer)/Director | April
			23, 2010
|/s/ Raymond
				FrancisRaymond Francis | Director                                                            | April
			23, 2010
|/s/ Larry
				PfautschLarry Pfautsch   | Director                                                            | April
			23, 2010



Page 17

---

CALA
CORPORATION



FINANCIAL
STATEMENTS AND ACCOMPANYING FOOTNOTES



TABLE OF
CONTENTS





1. REPORT
	OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .......19

1. BALANCE
	SHEET...............................................................................
	.20

1. STATEMENTS
	OF OPERATIONS......................................................
	......21

1. STATEMENT
	OF STOCKHOLDERS’ EQUITY (DEFICIT)................................22

1. STATEMENTS
	OF CASH FLOWS..............................................................23

1. NOTES TO
	FINANCIAL STATEMENTS......................................................
	25







Page 18

---





De
Joya Griffith & Company, LLC

CERTIFIED
PUBLIC ACCOUNTANTS & CONSULTANTS

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
and Stockholders

Cala Corp

Houston,
TX



We have
audited the accompanying balance sheets of Cala Corp (A Development
Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders’ equity (deficit), and
cash flows for the years then ended and from January 1, 2007 through
December 31, 2008. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In
our opinion, based on our audit, the financial statements referred to
above present fairly, in all material respects, the financial
position of Cala Corp (A Development Stage Company) as
of December 31, 2008 and 2007, and the results of its operations and
cash flows for the years then ended and from January 1, 2007 through
December 31, 2008 in conformity with accounting principles generally
accepted in the United States.

The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 4
to the financial statements, the Company has suffered losses from
operations and current liabilities exceed current assets, all of
which raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regards to these matters
are also described in Note 4. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.

/s/ De
Joya Griffith & Company, LLC

De Joya
Griffith & Company, LLC

Henderson,
NV

Page 19

---

CALA
CORPORATION(A DEVELOPMENT STAGE COMPANY)BALANCE SHEETSAS
OF DECEMBER 31, 2008 AND 2007(AUDITED)

ASSETS

|                                                                                                                         | 2008         | 2007          
|------------------------------------------------------------------------------------------------------------------------ | ------------ | --------------
|Current
			assets                                                                                                        |              |               
|Cash                                                                                                                     | $ --         | $
			13,147   
|Total
			current assets                                                                                                  | --           | $
			13,147   
|                                                                                                                         |              |               
|Fixed
			assets, net of accumulated depreciation of $38,712 and $62,022                                                  | 6,595        | 583,285       
|Land                                                                                                                     | --           | 150,000       
|Total
			fixed assets                                                                                                    | 6,595        | 733,285       
|                                                                                                                         |              |               
|Other
			assets                                                                                                          |              |               
|Website
			development                                                                                                   | 23,877       | --            
|Development
			Cost                                                                                                      | --           | 710,206       
|Total
			assets                                                                                                          | $
			30,472  | $
			1,456,637
|                                                                                                                         |              |               
|LIABILITIES
			AND STOCKHOLDERS’ EQUITY(DEFICIT)                                                                         |             
|                                                                                                                         |             
|Current
			liabilities                                                                                                   |             
|Accounts
			payable and accrued expense                                                                                  | $ 49,972     | $ 85,864      
|Notes
			payable - officer/stockholder                                                                                   | 65,419       | 782           
|Officer
			salary payable                                                                                                | 133,600      | --            
|Mortgage-current
			portion                                                                                              | --           | 39,268        
|Taxes
			payable                                                                                                         | 11,599       | 11,599        
|Notes
			payable                                                                                                         | 60,000       | 60,000        
|Total
			current liabilities                                                                                             | 320,590      | 197,513       
|                                                                                                                         |              |               
|Long term
			liabilities                                                                                                 |              |               
|Mortgage                                                                                                                 | --           | 580,613       
|Less:
			Mortgage-current portion                                                                                        | --           | (39,268)      
|Total long
			term liabilities                                                                                           | --           | 541,345       
|Total
			liabilities                                                                                                     | 320,590      | 738,858       
|                                                                                                                         |              |               
|Stockholders’
			equity(deficit)                                                                                         |              |               
|Common
			stock,                                                                                                         |              |               
|$0.005 par value;
				400,000,000 shares authorized issued and outstanding 304,866,147
				and 294,916,147,respectively: | 1,524,329    | 1,474,579     
|Additional
			paid-in capital                                                                                            | 11,909,259   | 11,852,509    
|Accumulated
			deficit                                                                                                   | (11,886,789) | (11,886,789)  
|Accumulated
			deficit during development stage                                                                          | (1,835,801)  | (721,403)     
|Treasury
			stock -56,533 shares @cost                                                                                   | (1,116)      | (1,116)       
|Total
			stockholders’ equity(deficit)                                                                                   | (290,118)    | 717,779       
|Total
			liabilities and stockholders’ equity (deficit)                                                                  | $
			30,472  | $
			1,456,637

The
accompanying notes are an integral part to the financial statements

Page 20

---

CALA
CORPORATION(A DEVELOPMENT-STAGE COMPANY)STATEMENTS OF
OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007, AND
FROM JANUARY 1, 2007 TO DECMBER 31, 2008(AUDITED)

|                                                       | 2008             | 2007           | January
			1, 2007 to December 31, 2008
|------------------------------------------------------ | ---------------- | -------------- | ---------------------------------------
|Income                                                 | $ --             | $ --           | $ --                                   
|                                                       |                  |                |                                        
|General
			and administrative expense                  | 234,762          | 694,705        | 929,467                                
|Depreciation
			and amortization                       | 26,724           | 24,446         | 51,170                                 
|Total
			operating expenses                            | 261,486          | 719,151        | 980,637                                
|                                                       |                  |                |                                        
|Loss from
			operations                                | (261,486)        | (719,151)      | (980,637)                              
|                                                       |                  |                |                                        
|Other
			income (expense)                              |                  |                |                                        
|Interest
			expense                                    | (30,698)         | (48,443)       | (79,141)                               
|Other
			income                                        | 23,092           | 50,915         | 74,007                                 
|Impairment
			loss on fixed asset                      | (710,205)        | (1,612)        | (711,817)                              
|Other
			expense                                       | (13,541)         | (3,112)        | (16,653)                               
|Loss on
			disposal of assets                          | (121,560)        | --             | (121,560)                              
|Total
			other income (expense)                        | (852,912)        | (2,252)        | (855,164)                              
|                                                       |                  |                |                                        
|Net loss                                               | $
			(1,114,398) | $
			(721,403) | $
			1,835,801)                        
|                                                       |                  |                |                                        
|Earnings
			per share:                                 |                  |                |                                        
|Net loss
			per share-basic                            | $(0.00)          | $(0.00)        |                                        
|Weighted
			average number of shares outstanding-basic | 300,554,791      | 280,079,254    |                                        



The
accompanying notes are an integral part to the financial statements

Page 21

---

CALA
CORPORATION(A DEVELOPMENT-STAGE COMPANY)STATEMENT OF
STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER
31, 2008 AND 2007(AUDITED)

|                                                                                 | Common
			StockNumberShares | $0.005
			Amount | Additional
			Paid-InCapital | Accumulated
			Deficit | Development
			Stage Accumulative Deficit | Stock
			Subscription | Treasury
			Shares | Stock        | Total
			Stockholders’ Equity (Deficit)
|-------------------------------------------------------------------------------- | --------------------------- | ---------------- | ---------------------------- | ---------------------- | ----------------------------------------- | --------------------- | ------------------ | ------------ | ---------------------------------------
|Balance
			12/31/06                                                              | 249,251,980                 | 1,246,258        | $11,133,380                  | $
			(11,886,789)      | $ --                                      | (50,000)              | $
			(56,533)      | $ (1,116)    | $441,733                               
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares issued for
			cash @$0.01-.35 per share                                   | 13,814,167                  | 69,071           | 133,379                      | --                     | --                                        | --                    | --                 | --           | 202,450                                
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares
			issued for servicesclassified as a capitalized cost @$0.02
			pershare | 10,600,000                  | 53,000           | 215,000                      | --                     | --                                        | --                    | --                 | --           | 268,000                                
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares
			issued for Services @$0.02-0.03 per share                              | 1,250,000                   | 6,250            | 25,750                       | --                     | --                                        | --                    | --                 | --           | 32,000                                 
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares
			issued for Salaries @$0.02 per share                                   | 15,000,000                  | 75,000           | 225,000                      | --                     | --                                        | --                    | --                 | --           | 300,000                                
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares
			issued in lieuof debt @$0.01 per share                                 | 5,000,000                   | 25,000           | 120,000                      | --                     | --                                        | --                    | --                 | --           | 40,000                                 
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Allowance
			for outstanding receivable                                          |                             |                  |                              |                        |                                           | 50,000                |                    |              | 50,000                                 
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Net Loss                                                                         | --                          | --               | --                           | --                     | (721,403)                                 | --                    | --                 | --           | (721,403)                              
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Balance
			12/31/07                                                              | 294,916,147                 | $
			1,474,579   | $11,852,509                  | $
			(11,886,789)      | $
			(721,403)                            | $ --                  | $
			(56,533)      | $
			(1,116) | $
			717,780                           
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Shares
			issued for cash $0.01 per share                                        | 6,950,000                   | 34,750           | 41,750                       | --                     | --                                        | --                    | --                 | --           | 76,500                                 
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Stock
			issued in lieu ofAccounts payable                                       | 3,000,000                   | 15,000           | 15,000                       | --                     | --                                        | --                    | --                 | --           | 30,000                                 
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Net Loss                                                                         | --                          | --               | --                           | --                     | (1,114,398)                               | --                    | --                 | --           | (1,114,398)                            
|                                                                                 |                             |                  |                              |                        |                                           |                       |                    |              |                                        
|Balance12/31/08                                                                  | 304,866,147                 | $
			1,524,329   | $11,909,259                  | $(11,886,789)          | $
			(1,835,801)                          | $ --                  | $
			(56,533)      | $ (1,116)    | $(290,118)                             

The
accompanying notes are an integral part of the financial statements

Page 22

---

CALA
CORPORATION(A DEVELOPMENT-STAGE COMPANY)STATEMENTS OF CASH
FLOWSFOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 AND FROM
JANUARY 1, 2007 TO DECEMBER 31, 2008(AUDITED)

|                                                                                                          | 2008         | 2007       | January
			1, 2007 to December 31, 2008
|--------------------------------------------------------------------------------------------------------- | ------------ | ---------- | ---------------------------------------
|CASH FLOW
			FROM OPERATING ACTIVITIES                                                                    |              |            |                                        
|Net loss                                                                                                  | $(1,114,398) | $(721,403) | $(1,835,801)                           
|Adjustments
			to reconcile net loss from continuing operations to net cash used
			in operating activity |              |            |                                        
|Depreciation
			and amortization                                                                          | 26,722       | 24,445     | 51,167                                 
|Impairment
			on assets                                                                                   | 710,205      | 1,612      | 711,818                                
|Stock
			issued for services                                                                              | --           | 332,000    | 332,000                                
|Loss on
			disposition of assets                                                                          | 121,560      | --         | 121,560                                
|Bad debt
			expense                                                                                       | --           | 60,500     | 60,500                                 
|Financing
			cost                                                                                         | --           | 105,000    | 105,000                                
|Change in
			operating assets and liabilities:                                                            |              |            |                                        
|(Increase)
			in accounts receivable                                                                      | --           | (10,500)   | (10,500)                               
|Accounts
			payable and accrued liabilities                                                               | (28,279)     | 72,865     | 44,585                                 
|Officer
			salary payable                                                                                 | 133,600      | --         | 133,600                                
|Increase
			(decrease) in taxes payable                                                                   | --           | (28)       | (28)                                   
|Net cash
			used in operating activities                                                                  | (150,590)    | (135,509)  | (286,099)                              
|                                                                                                          |              |            |                                        
|CASH FLOW
			FROM INVESTING ACTIVITIES:                                                                   |              |            |                                        
|Cash used
			on development costs                                                                         | --           | (70,001)   | (70,001)                               
|Disposal
			of fixed asset                                                                                | --           | 4,832      | 4,832                                  
|Net cash
			used in investing activities                                                                  | --           | (65,169)   | (65,169)                               
|                                                                                                          |              |            |                                        
|CASH FLOW
			FROM FINANCING ACTIVITIES:                                                                   |              |            |                                        
|Proceed
			from note payable                                                                              | --           | 60,000     | 60,000                                 
|Proceeds
			on notes payable- related party                                                               | 64,636       | (76,173)   | (11,537)                               
|Proceeds
			from issuance of common stock                                                                 | 76,500       | 202,450    | 278,950                                
|Payments
			made on mortgage payable                                                                      | (3,693)      | (8,551)    | (12,244)                               
|Net cash
			provided by financing activities                                                              | 137,443      | 177,726    | 315,169                                
|                                                                                                          |              |            |                                        
|NET CHANGE
			IN CASH                                                                                     | (13,147)     | (22,952)   | (36,099)                               
|                                                                                                          |              |            |                                        
|CASH AT
			BEGINNING OF YEAR                                                                              | 13,147       | 36,099     | 36,099                                 
|                                                                                                          |              |            |                                        
|CASH AT
			END OF YEAR                                                                                    | $ --         | $ 13,147   | $ --                                   

The
accompanying notes are an integral part of the financial statements

Page 23

---

Supplemental
schedule of cash flow information:

|Interest
			paid | $ 22,508 | $ 29,996 | $ 52,504
|---------------- | -------- | -------- | --------
|Income tax       | $ -      | $ -      | $ -     

|Satisfaction
			of accounts payable with common stock          |          |           |          
|-------------------------------------------------------------- | -------- | --------- | ---------
|3,000,000
			shares @ $0.01 per share                          | $ 30,000 | $ --      | $ 30,000 
|Satisfaction
			of note payable with common stock              |          |           |          
|5,000,000
			shares @ $0.01 per share                          | $ --     | $ 145,000 | $ 40,000 
|Shares
			issued for services classified as a capitalized cost | $ --     | $ 268,000 | $ 268,000

The
accompanying notes are an integral part of the financial statements

Page 24

---

CALA
CORPORATION(A DEVELOPMENT-STAGE COMPANY)NOTES TO FINANCIAL
STATEMENTS(AUDITED)

# NOTE
1: DESCRIPTION OF BUSINESS

Cala
Corporation (formerly Magnolia Foods, Inc.) was incorporated on June
13, 1985 under the laws of the State of Oklahoma. The Company's sole
industry segment was the business of owning, operating, licensing and
joint venturing restaurants. The Company discontinued this line of
business on December 31, 2006. The Company is in the development
stage of building an underwater resort and casino. The Company became
a Development-Stage Company as of January 1, 2007.



NOTE 2:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis -
The Company uses the accrual method of accounting.

B. Cash
and cash equivalents - The Company considers all short term, highly
liquid investments that are readily convertible within three months
to known amounts as cash equivalents. Currently, it has no cash
equivalents.

C. Loss
per share - Net loss per share is provided in accordance with
Statement of Financial Accounting Standards No. 128 "Earnings
Per Share". Basic loss per share reflects the amount of losses
for the period available to each share of common stock outstanding
during the reporting period, while giving effect to all dilutive
potential common shares that were outstanding during the period, such
as stock options and convertible securities. As of December 31, 2008
and 2007, the Company had no issuable shares qualified as dilutive.
Had there been dilutive securities they would be excluded from the
loss per share calculation because their inclusion would be
antidilutive.

D.
Estimates - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could
differ from those estimates.

E.Stock Based Compensation -Stock based compensation is
accounted for using Statement of Financial Accounting Standards No.
123R “ Accounting for Stock-Based Compensation”,which establishes standards
for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses
transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity’s
equity instruments or that may be settled by the issuance of those
equity instruments. We determine the value of stock issued at the
date of grant. We also determine at the date of grant the value of
stock at fair market value or the value of services rendered (based
on contract or otherwise) whichever is more readily determinable.

F. Shares
Returned to Treasury- In 2006, 33,333 shares were repurchased to
treasury for $ 1,000. In 2005, 23,200 shares were purchased for
treasury at the cost of $ 116. The repurchased treasurer shares are
carried at cost and are held for resale.

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G. Revenue
Recognition- The income received by the Company is rental income from
the tenants leasing space in the building owned by the Company which
is outside the normal operations of the Company. Rental income is not
recognized as revenue by the Company but is a component of Other
Income as it is outside the normal revenue producing activity.

H.
Property and Equipment-Property and equipment consisting of
improvements, equipment and furniture and fixtures are recorded at
cost and are depreciated using the straight-line method over the
useful estimated life. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals, and betterments
are capitalized. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are
removed from the respective accounts, and any gain or loss is
included in operations. A summary of estimated useful lives is as
follows:

|Description | Useful
								life
|----------- | -------------------
|Vehicles    | 5
								years    
|Building    | 10-40
								years



I. The
Company accounts for the underwater sea resort and ship development
costs in accordance with SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. The Company reviews its long-lived
assets for impairment on an annual basis or whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and
used in measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amounts of
the assets exceeds the fair value of the asset. Assets to be disposed
of are reported at the lower of the carrying amount or fair market
value less costs to sell.

J. The
accompanying consolidated financial statements have been prepared in
accordance with the Statement of Financial Accounting Standards No. 7
"Accounting and Reporting by Development-Stage Enterprises".
A development-stage enterprise is one in which planned principal
operations have not commenced or if its operations have commenced,
there has been no significant revenue there from. Development-stage
companies report cumulative costs from the enterprise's inception.



NOTE 3:
RECENT ACCOUNTING PRONOUNCEMENTS

In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements”.  SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosure about fair
values.  This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years.  Management believes
that the adoption of SFAS No. 157 will not have a material impact on
the consolidated financial results of the Company.

In
February 2007, the FASB issued Statement No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities,
including an amendment of FASB Statement No. 115" (FAS 159). FAS
159 permits companies to choose to measure many financial instruments
and certain other items at fair value that are not currently required
to be measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons between
companies that choose different measurement attributes for similar
types of assets and liabilities. The provisions of FAS 159 become
effective as of the beginning of our 2009 fiscal year. We are
currently evaluating the impact that FAS 159 will have on our
financial statements.

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In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 which
applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only
those entities that have an outstanding noncontrolling interest in
one or more subsidiaries or that deconsolidate a subsidiary. The
statement is effective for annual periods beginning after December
15, 2008.

In March
2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities – an amendment of
FASB Statement No. 133,” (SFAS “161”) as amended
and interpreted, which requires enhanced disclosures about an
entity’s derivative and hedging activities and thereby improves
the transparency of financial reporting. Disclosing the fair values
of derivative instruments and their gains and losses in a tabular
format provides a more complete picture of the location in an
entity’s financial statements of both the derivative positions
existing at period end and the effect of using derivatives during the
reporting period. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial
performance, and cash flows. SFAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning
after November 15, 2008. Early adoption is permitted.

At
December 31, 2007, the Company did not have any derivative
instruments or hedging activities. Management is aware of the
requirements of SFAS 161 and will disclose when appropriate.

In May
2008, the Financial Accounting Standards Board (“FASB”)
issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – An interpretation of FASB Statement No.
60”. SFAS 163 requires that an insurance enterprise recognize a
claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial
obligation. It also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim
liabilities, and requires expanded disclosures about financial
guarantee insurance contracts. It is effective for financial
statements issued for fiscal years beginning after December 15, 2008,
except for some disclosures about the insurance enterprise’s
risk-management activities. SFAS 163 requires that disclosures about
the risk-management activities of the insurance enterprise be
effective for the first period beginning after issuance. Except for
those disclosures, earlier application is not permitted. The adoption
of this statement is not expected to have a material effect on the
Company's future reported financial position or results of
operations.

In
June 2009, the FASB issued Statement of Financial Accounting
Standards No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles,” (“SFAS
168”). SFAS 168 replaces FASB Statement No. 162, “The
Hierarchy of Generally Accepted Accounting Principles”,
and establishes the FASB Accounting Standards Codification
(“Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements
in conformity with generally accepted accounting principles (“GAAP”).
SFAS 168 is effective for interim and annual periods ending after
September 15, 2009. The Company will begin to use the new
Codification when referring to GAAP in its annual report on Form 10-K
for the fiscal year ending December 31, 2009. This will not have an
impact on the results of the Company

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The Company's financial
statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal
course of business. The Company has an aggregate deficit and
accumulated deficit during the development stage of $13,722,590
($11,886,789 and $1,835,801, respectively) and has not established
revenues sufficient to cover its operating costs. This uncertainty
raises substantial doubt about the Company's ability to continue as a
going concern. The ability of the Company to continue as a going
concern is dependent on additional sources of capital and the success
of the Company's plan. 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 result from this uncertainty.

On February 2, 2007 an
officer of the Company was issued 15,000,000 of restricted common
stock with a value of $300,000 for salary for the year ended 2007.

During the
year ended 2007, the Company issued a director of the Company
10,600,000 shares of common stock valued at $268,000 for consulting
fees included in Development Costs.

During the
year ended December 2008, the Company accrued $150,000 for salary
payable to an officer of the Company; $16,400 of the accrued salary
has been paid resulting in an outstanding balance of $133,600 as of
December 31, 2008.

During the
year ended December 31, 2008, an officer advanced additional funds of
$64,636 to the Company for debt reduction and operating expenses for
an outstanding Notes payable-officer/stockholder balance of $65,419
as of December 31, 2008.

NOTE 6:
COMMITMENTS & CONTINGENCIES

On January
9, 2006, the Company entered into a lease at 3160 Danville Blvd.
Suite A, Alamo, CA consisting of 4,500 square feet for a restaurant.
The duration of the lease is 10 years with a renewable option for 5
more years. The monthly rent on the space is $ 8,500 plus taxes and
common area charges. Monthly rental may be adjusted on an annual
basis. On August 1, 2006, the Company assigned the lease to a
non-affiliated third party but the Company remains liable for the
lease until it terminates on January 8, 2016.

Then
following is a schedule by year of the future minimum rental payments
required under operating leases that have non-cancelable lease terms
in excess of one year as of December 31, 2008:

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|2009  | 102,000  
|----- | ---------
|2010  | 102,000  
|2011  | 102,000  
|2012  | 102,000  
|2013  | 102,000  
|2014  | 102,000  
|2015  | 102,000  
|2016  | 2,267    
|Total | $ 716,267



On April
10, 2006 the Company entered into a lease consisting of approximately
2,450 square feet for a restaurant at 500 Bollinger Canyon Way, Roman
CA. The duration of the lease is 10 years. On August 1, 2006, the
Company discontinued its operations in the restaurant business. As a
result, the Company assigned the lease to a non-affiliated third
party on a sub lease basis. The Company is still fully obligated to
the terms of this lease. However, the non affiliated party will
assume all payments. Under the terms of the agreement, the sub-lessee
pays the monthly lease of $ 5,400 per month for the duration of the
lease plus an additional 60 equal monthly installments of $1,500 to
the Company. The subleasee terminated payment of the $ 1,500 in
August 2008. (See Note 11 – Subsequent Events)

The
following is a schedule by year of the future minimum rental payments
required under operating leases that have non-cancelable lease terms
in excess of one year as of December 31, 2008:

|2009  | 70,296   
|----- | ---------
|2010  | 72,396   
|2011  | 74,574   
|2012  | 76,812   
|2013  | 79,113   
|2014  | 81,492   
|2015  | 83,937   
|2016  | 21,138   
|Total | $ 559,758

NOTE 7-
NOTE PAYABLE

In January
2007, the Company issued a note for $60,000 bearing interest at 10%
on the principal and accrued interest compounding monthly. As of
December 31, 2008 and December 31, 2007, the outstanding principle
balance of the note was $60,000 and $60,000 and had accrued interest
of $13,923 and $6,283, respectively. On November 1, 2009 the note
holder made demand for payment by December 1, 2009. The note
including principal and interest is in default and still outstanding.

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On July 16, 2006, the
Company signed a Mortgage Modification Agreement with a lender on a
building. Under the terms of the agreement, the mortgage was modified
to extend the maturity date to July 15, 2036, the interest rate was
adjusted to 5.25% per annum and the prepayment penalty was removed.
If the note was paid in full by February 16, 2007, the note would be
reduced by $ 100,000. In addition the interest rate was reduced to
5.25% and a late fee penalty of 5% was added on all payment later
than 10 days. The prepayment penalty of $ 50,000 was eliminated.

The
Company defaulted on the mortgage and was the defendant in a lawsuit
brought by the mortgage holder of the property. The Company was
ordered to commence monthly payments of $3,272 to the plaintiff
beginning on April 16, 2008 and on the same date each month
thereafter. The Company was not able to meet the requirements of the
Agreement and on September 30, 2008, the Company agreed to vacate the
building and return title to the mortgage holder. Upon vacating the
building the mortgage holder through a court order relieved the
Company of all liabilities connected to the ownership and occupancy
of the building. The transaction resulted in a net loss on disposal
of assets totaling $121,560.

|Historical
			Value-Building  |  | $ 600,000  
|----------------------------- |  | -----------
|Historical
			Value-Land      |  | 150,000    
|Depreciation                  |  | (43,910)   
|Carrying
			value             |  | 706,090    
|Mortgage
			debt              |  | 584,530    
|                              |  |            
|Loss on
			disposal of assets |  | $ (121,560)



|                                 | 12/31/08 | 12/31/07
|-------------------------------- | -------- | --------
|Building                         | --       | 600,000 
|Vehicles                         | 45,308   | 45,308  
|Land                             | --       | 150,000 
|                                 | 45,308   | 795,308 
|Less
			accumulated depreciation | (38,713) | (62,023)
|                                 | $ 6,595  | $733,285

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NOTE 10
– STOCKHOLDERS EQUITY

During the
year ending December 31, 2007 the Company issued the following shares
of common stock:

- 13,814,167
	shares at $0.01-$0.35 per share with a value of $202,450 for cash
- 11,850,000 shares at $0.02
	- $0.03 per share with a value of $300,000 for service
- 15,000,000 shares to a
	related party at $0.02 with a value of $300,000 for officers salary
- 5,000,000 shares at $0.01
	with a value of $40,000 for debt

During the
year ending December 31, 2008 the Company issued the following shares
of common stock:

- 6,950,000
	at $0.01-$0.02 with a value of $76,500 for cash.
- 3,000,000 shares at $0.01
	with a value of 30,000 for accounts payable



The Company accounts for
income taxes using the liability method, under which deferred tax
liabilities and assets are determined based on the difference between
the financial statement carrying amounts and the tax basis of assets
and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse.

As of
December 31, 2008, the Company had net operating loss carryforward of
approximately $12,837,578, which expire in varying amounts between
2009 and 2028. Realization of this potential future tax benefit is
dependent on generating sufficient taxable income prior to expiration
of the loss carryforward. The deferred tax asset related to this
potential future tax benefit has been offset by a valuation allowance
in the same amount. The amount of the deferred tax asset ultimately
realizable could be increased in the near term if estimates of future
taxable income during the carryforward period are revised.

Deferred
income tax assets of $4,493,152 and $4,103,113 at December 31, 2008
and 2007, respectively were offset in full by a valuation allowance

The
components of the Company’s net deferred tax assets, including
a valuation allowance, are as follows:

|                                                      |  | As of
			December 31, 2008 |  | As of
			December 31, 2007
|----------------------------------------------------- |  | -------------------------- |  | --------------------------
|Deferred
			tax assets:                               |  |                            |  |                           
|Net
			operating loss carryforward                    |  | $
			4,493,152             |  | $
			4,103,113            
|Stock
			based compensation                           |  | 335,049                    |  | 335,049                   
|                                                      |  |                            |  |                           
|Total
			deferred tax assets                          |  | 4,828,202                  |  | 4,438,162                 
|                                                      |  |                            |  |                           
|Net
			deferred tax assets before valuation allowance |  | 4,828,202                  |  | 4,438,162                 
|Less:
			Valuation allowance                          |  | (4,828,202)                |  | (4,438,162)               
|Net
			deferred tax assets                            |  | $ --                       |  | $ --                      



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A
reconciliation between the amounts of income tax benefit determined
by applying the applicable U.S. and State statutory income tax rate
to pre-tax loss is as follows:



|                                                        |  | As of
			December 31, 2008 | As of
			December 31, 2007
|------------------------------------------------------- |  | -------------------------- | --------------------------
|Statutory
			federal income tax                         |  | (35.0%)                    | (35.0%)                   
|Statutory
			state income tax                           |  | (6.0%)                     | (6.0%)                    
|Change
			in valuation allowance on deferred tax assets |  | 41.0%                      | 41.0%                     
|Effective
			tax rate                                   |  | 0.0%                       | 0.0%                      

The Company is developing
an under sea resort and ship for the recreational use by consumers.
The concept is in development stage or as better defined as the
“preacquisition phase”. The Company had expensed the
development costs through the fiscal year ending December 2005 while
in preliminary phase; however, elected to capitalize the costs moving
forward in accordance with the preacquisition guidance under
statement of Financial Accounting Standard No. 67, “Accounting
for Costs and Initial Rental Operations of Real Estate Projects.”

All common
costs are allocated to each residential unit benefited and is based
on the relative fair value before construction. Construction costs
will be allocated to each residential unit on the basis of relative
sales value of the unit. The preacquisition phase was completed
during the fiscal year ended December 31, 2007. The Company is in the
process of finding a buyer and funding the initial construction of a
vessel. Once the construction phase has been completed and the
residential units are available for sale, the Company planned to
allocate all capitalized costs to each residential unit and expense
them upon the sale of the residential units.

The
Company has incurred the following development costs to date:

|Design
							payments to ship yards    | $ 660,205
|--------------------------------------- | ---------
|Engineering
							of glass design      | 25,000   
|Consulting
							fees to administrator | 25,000   
|Total
							Development Costs          | $ 710,205

As of
September 30, 2008, the development costs were impaired as the
construction of the undersea ship relating to the development costs
has not been contracted or started. The asset, including blueprints
and construction plans for the undersea ship are feasible and usable
but the economic feasibility of financing the project under the
present economic conditions have not allowed the Company to go ahead
with the project. The Company will still continue to seek the
financing to complete the project and build an undersea ship however,
there is no assurance that the Company will be successful in
obtaining such needed funds.

As the
project has not continued into the construction phase during the year
ended December 31, 2008; the Company elected to impair the
development costs creating an impairment loss totaling $710,205.

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On January 20, 2009, a
complaint was filed against the Company in the Superior Court of
California case # CIVWS09-0049 terminating the lease at 500 Bollinger
Canyon Way, San Roman, CA due to subleasing the premises without
consent of the landlord. A judgment was entered giving the landlord
possession of the premises with no monetary amount awarded.

On
November 11, 2009, the Company issued 16,000,000 shares of common
stock to four individuals for services with a total value of $32,000.

|Number | Description                                                                    
|------ | -------------------------------------------------------------------------------
|31     | Rule
				13a-14(a)/15d-14(a) Certification of Joseph Cala (filed
				herewith).
|32     | Section
				1350 Certification of Joseph Cala (filed herewith).                

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