##### FORM 10-KSB/A

(Mark One)[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

| Oklahoma                                      | 73-1251800                                                |
|-----------------------------------------------|-----------------------------------------------------------|
| (State or OtherJurisdiction of Incorporation) |  (I.R.S. Employer or Organization IdentificationNo.) |
|                                          |                                                      |
| 13 Main Street, Titusville. Florida 32796     |
| (Address of Principal ExecutiveOffices)       |
|                                               |
| (713) 302-8689                                |
| (Company's Telephone Number)                  |

Indicate by check mark whether the  Company (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 Company was required to file such reports), and  (2) been subject to such filing requirements for the past 90 days.  Yes ­­     X       No            .

Indicate by check mark whether the Company is a large  accelerated filer, an accelerated file, non-accelerated filer, or a smaller  reporting company.  

| Large accelerated filer [   ]    Non-accelerated filer [   ] | Accelerated filed [   ]      Smaller reporting company [X] |
|----------------------------------------------------------------------------------|----------------------------------------------------------------------|

Indicate by check mark whether  the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [] No [X]

                As  of June 30, 2008, the Company had 302,547,100 shares of common stock issued and outstanding.  Transitional Small Business Disclosure  Format (check one): Yes          No    X   .

| **TABLE OF CONTENTS**             |
|-----------------------------------|
|                              |
| **PART I: FINANCIAL INFORMATION** |
| Item 1.                           | Financial Statements | 3 |
|                              | Condensed Balance Sheets as of June 30, 2008 and December 31, 2007 | 3 |
|                              | Condensed Statements of Operations For the Three Months and Six Months | 4 |
|                              | Ended June 30,2008 and 2007 and from January 1, 2007 through June 30, 2008 |  |
|                              | Condensed Condensed Statements of Cash Flows For  the Six Months Ended June 30, | 5 |
|                              | 2008 and 2007 and from January 1, 2007 through June 30,    2008 |  |
|                              | Notes to Financial Statements | 6 |
|                              |   |   |
| Item 2.                           | Management’s Discussion and    Analysis of Financial Condition and Results of Operations | 13 |
|                              |   |   |
| Item 3.                           | Quantitative and Qualitative Disclosures About Market Risk | 17 |
|                              |   |   |
| Item 4T.                          | Controls and Procedures | 17 |
|                              |   |   |
| **PART II: OTHER INFORMATION**    |
| Item 1.                           | Legal Proceedings | 18 |
|                              |   |   |
| Item 1A.                          | Risk Factors | 18 |
|                              |   |   |
| Item 2.                           | Unregistered Sales of Equity Securities and Use of Proceeds | 18 |
|                              |   |   |
| Item 3.                           | Defaults upon Senior Securities | 19 |
|                              |   |   |
| Item 4.                           | Submission of Matters to a vote of Security Holders | 19 |
|                              |   |   |
| Item 5.                           | Other Information | 19 |
|                              |   |   |
| Item 6.                           | Exhibits | 19 |
|                              |   |   |
|                              | **Signatures** | 19 |

**CALA CORPORATION****(A Development Stage Company)**  CONDENSED BALANCE SHEETS

|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                    | **June 30, 2008**                                                                                                | **December 31, 2007**                                                                                                      |
|                                                                                                                                                          | (Unaudited)                                                                                                      | (Audited)                                                                                                                  |
| **ASSETS**                                                                                                                                                    |                                                                                                             |                                                                                                                       |
|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
| **Current assets**                                                                                                                                            |                                                                                                             |                                                                                                                       |
|       Cash                                                                                                                           | $                   -- |  $             13,147                                     |
|                 Total current assets                                               | --                                                                                                               | 13,147                                                                                                                     |
|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
| **Property and equipment**                                                                                                                                    |                                                                                                             |                                                                                                                       |
|        Fixed assets-net of depreciation    of  $74,245 and $64,742, respectively                                      | 571,063                                                                                                          | 583,285                                                                                                                    |
|        Land                                                                                                                     | 150,000                                                                                                          | 150,000                                                                                                                    |
|                 Total property and equipment                                       | 721,063                                                                                                          | 733,285                                                                                                                    |
|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
| **Other assets**                                                                                                                                              |                                                                                                             |                                                                                                                       |
|       Development costs                                                                                                              | 710,205                                                                                                          | 710,205                                                                                                                    |
|       Website development costs – net of    amortization of $1,123 and $0, respectively                                        |           28,877                                               |                     -- |
|                        Total assets             | $      1,460,144                                                                   | $        1,456,637                                                                 |
|                                                                                                                                                          |
|            **LIABILITIES AND STOCKHOLDERS'    EQUITY**                                                      |
|                                                                                                                                                          |
| **Current liabilities**                                                                                                                                       |                                                                                                             |
|        Accounts payable and accrued expenses                                                                                    | $           78,615                                             |  $            13,280                                           |
|        Bank overdraft                                                                                                           | 1,039                                                                                                            | --                                                                                                                         |
|        Credit card payable                                                                                                      | 35,569                                                                                                           | 72,584                                                                                                                     |
|        Mortgage – current portion                                                                                         | 37,611                                                                                                           | 8,550                                                                                                                      |
|        Note payable                                                                                                             | 60,000                                                                                                           | 60,000                                                                                                                     |
|        Due to related party                                                                                                     | 4,055                                                                                                            | 782                                                                                                                        |
|        Accrued officers salary                                                                                                  | 95,000                                                                                                           | --                                                                                                                         |
|        Taxes payable                                                                                                            |              11,599                                                 |                  11,599                                   |
|                  Total current liabilities                                    | 323,488                                                                                                          | 166,795                                                                                                                    |
|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
| **Long term liabilities**                                                                                                                                     |                                                                                                             |                                                                                                                       |
|        Mortgage                                                                                                                 | 578,407                                                                                                          | 580,613                                                                                                                    |
|        Less: Mortgage-current portion                                                                                           |            (37,611)                                                           |                 (8,550)                                        |
|                    Total long term    liabilities                   |               540,796                                          |               572,063                                                    |
|                         Total liabilities  | 864,284                                                                                                          |                   738,858                            |
|                                                                                                                                                          |                                                                                                             |                                                                                                                       |
| **Stockholders' equity**                                                                                                                                      |                                                                                                             |                                                                                                                       |
|         Common stock                                                                                                       |                                                                                                             |                                                                                                                       |
|          $0.005 par value; 400,000,000 shares authorized 302,547,100 shares issued and                                |                                                                                                             |                                                                                                                       |
|                   outstanding and 294,916,147 shares issued and    outstanding  Respectively | 1,512,734                                                                                                        | 1,474,579                                                                                                                  |
|        Paid-in capital                                                                                                          | 11,890,664                                                                                                       | 11,852,509                                                                                                                 |
|        Accumulated deficit                                                                                                      | (11,886,789)                                                                                                     | (11,886,789)                                                                                                               |
|        Accumulated deficit during development    stage                                                                          | (919,633)                                                                                                        | (721,403)                                                                                                                  |
|        Treasury stock - 56,533 shares at cost                                                                                   | (1,116)                                                                                                          | (1,116)                                                                                                                    |
|                Total stockholders' equity                                               | 595,860                                                                                                          | 717,779                                                                                                                    |
|                Total liabilities and    stockholders’ equity                      | $         1,460,144                                                                     | $      1,456,637                                                                             |

The accompanying notes are an integral part of these  condensed financial statements 

**CALA  CORPORATION****(A Development  Stage Company)**  CONDENSED  STATEMENTS OF OPERATIONS**(Unaudited)**
 

**For three Months Ended******

**For Six Months Ended******

**From January 1,**

 

**June 30, 2008**

**June 30, 2007**

**June 30, 2008**

**June 30, 2007**

**2007 through****June 30, 2008**

 

 

 

 

 

 
Income
$                   --
$                 --$                --$                --$                       --  General and administrative expense146,594           131,426
174,341

262,170

870,658 
  Depreciation and amortization               7,235             6,111         13,346
         12,222

                37,792

 

Total operating    expenses

153,829

          137,537 

187,687

274,392

908,450

 

 

 

 

 

 

 

        Loss from    operations
(153,829)       (137,537)(187,687)(274,392)  (908,450)
 

 

 

 

 

 

 
  Other income(expense)
 

 

 

 
      Other income10,450         13,55121,59224,06172,506      Interest expense(9,310)        (11,809)(18,592)(21,047)    (67,035)      Impairment loss on fixed asset
--

--

--

(1,612)

(1,612)
         Other expense
          (10,976)

                   --

       (13,542)

                  --

              (15,041)

 
      Total other    income (expense)            (9,836)             1,742(10,542)(1,402)(11,182)
 

 

 

 

 

 

 

     Net loss
$      (163,665) $   (135,795)$   (198,229)$ (272,990)$          (919,632)
 

 

 

 

 

 

 

Earnings per share(Basic):

 

 

 

 

 

Loss from operations

$        (0.00)

 $        (0.00)

$     (0.00)

$   ( 0.00)

 
Weighted average number of shares outstanding (Basic)301,541,605278,155,460 298,788,897270,987,707 
  The accompanying notes are an integral part  of these condensed financial statements 
**4**
**CALA  CORPORATION****(A Development  Stage Company)****CONDENSED STATEMENTS  OF CASH FLOWS**(Unaudited)

 

 

 

 
**For Six Months****From Jan. 1, 2007**
 

 

 

 
**Ended June 30,****through**
 

 

 

 

**2008**

**2007**

**June 30, 2008**

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net loss
$   (198,229)  $ (272,990)(919,632)
 

Adjustments to reconcile loss from continuing

 

 

 

      operations to    net cash used in operating activities:

 

 

 

 

 

 

Impairment loss

--

1,612

1,612

 

 

 

Depreciation and amortization

13,346

12,222

37,793

 

 

 

Stock based compensation issued for services

--

232,100

332,000

 

         Allowance    for doubtful accounts

--

--

60,500

 

         Financing    cost

--

--

105,000

 

Changes in operating assets and liabilities:

 

 

 

 

         Bank    overdraft

1,039

7,366

1,038

          

         Increase in    accounts receivable

--

--

(10,500)

 

 

 

Increase(decrease) in accounts payable and accrued expense

65,335

(8,377)

65,614

 

 

 

Increase(decrease) in accrued liabilities - related party
     98,273
     (49,168)

       98,245

 

 

 

     Net cash used    in operating activities 

(20,236)

(59,581)

(228,330)

 

 

 

 

 

 

 

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 
         Payments for    development costs----(70,001)
* *
              Disposal of    fixed assets      --
      --

4,833

* *

        Website    development costs

   (30,000)

               --

     (30,000)

* *

               Net    cash used investing activities 

--

--

(95,168)

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

      Payments made on mortgage

(2,206)

(4,932)

(10,757)

 

      Proceeds from notes    payable

--

60,000

60,000

 

      Payments on notes    payable-related party

--

--

(76,173)

 

      Proceeds from insurance

--

4,834

4,834

 

      Proceeds from issuance of    common stock

76,310

71,000

278,760
       Proceeds from credit line
--

15,580

72,584

 

      Payment on credit card

     (37,015)

              --

      (37,015)

 

 

        Net cash    provided by financing activities 

37,089

146,482

287,399

 

 

 

 

 

 

 

NET CHANGE IN CASH 

     (13,147)

(36,099)

      (36,100)

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

      13,147

      36,099

      36,100

 

 

 

 

 

 

 

CASH AT END OF PERIOD
$                --$            --$                  --
 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

Interest paid
$         5,071 $    15,420$            7,724The accompanying notes are an integral part to these  financial statements**5**
**CALA CORPORATION****(A Development  Stage Company)****NOTES TO CONDENSED  FINANCIAL STATEMENTS****June****30****, 2008****(Unaudited)**
**NOTE  1 - DESCRIPTION OF BUSINESS**
Cala  Corporation, (formerly Magnolia Foods, Inc.), (the “Company”) 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 - GOING CONCERN**

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  aggregate accumulated deficit and accumulated deficit during the development  stage of the Company is $12,806,422 ($11,886,789 and $919,633, respectively).  The Company 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.  The financial statements  do not include any adjustments that might be necessary if the Company is unable  to continue as a going concern.

**NOTE 3 - SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES**  A.       Basis of Presentation – The accompanying  condensed financial statements included herein have been prepared by the  Company, without audit, pursuant to the rules and regulations under Article  10 of Regulation S-X of the Securities and Exchange Commission. Certain  information and footnote disclosures normally included in financial statements  prepared in accordance with accounting principles generally accepted in the United States  have been condensed or omitted pursuant to such rules and regulations,  although we believe that the disclosures are adequate to make the information  presented not misleading. In the opinion of management, all adjustments (which  include normal recurring adjustments) necessary for a fair presentation of the  results for the interim periods have been made. The results for the three and  six months ended June 30, 2008 are not necessarily indicative of results to be  expected for the full fiscal year. These financial statements should be read in  conjunction with the financial statements and notes thereto included in our  Annual Report on Form 10-KSB/A for the year ended December 31, 2007.

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 (“SFAS”)  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 June 30, 2008, 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.
**6**
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.        Policy in Regards to Issuance of Common  Stock in a Non-Cash Transaction - The Company's accounting policy for issuing  shares in a non-cash transaction is to issue the equivalent amount of stock equal  to the fair market value of the assets or services received.

F.        Shares Returned  to Treasury – During 2005, 23,200 shares were repurchased to Treasury for $116.  During 2006, 33,333 shares were repurchased to treasury for $1,000.

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. Revenue is recognized when it is due and  payable by the tenants and in accordance with the basic principle of Financial  Accounting Concept No. 5 (SFAC No.5) and SAB-104.
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**Vehicles5 Years Building10-40 years 
I.        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 Company’s most critical accounting policies include the use  of estimates in the preparation of financial statements. The  methods, estimates and judgments the Company 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 Company 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 Company evaluates  these estimates, including those related to revenue recognition and  concentration of credit risk.  The Company  bases its estimates on historical experience and on various other assumptions  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.
**7**

J.          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 is 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 exceed 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.

K.       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 therefrom.  Development stage companies report cumulative costs from the enterprise's  inception.

**NOTE 4 - 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 did 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.

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.
**8**

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.

**NOTE 5 - RELATED PARTY  TRANSACTIONS**

On  February 2, 2007, an officer of the Company was issued 15,000,000 shares of  restricted common stock valued at $300,000 in lieu of salary for the year ended  2007. 

The  shares issued were recorded using the fair market value of the services  provided. The officer is also reimbursed for expenses paid on behalf of the  Company as needed.   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 (See Note 7; Development Costs).

During the six months  period ending June 30, 2008 the Company acc rued  $ 95,000  for salary payable to an officer of the Company. 

**NOTE  6 - FIXED ASSETS**

         Fixed Assets at June 30, 2008 and  December 31, 2007 consist of the following:
6/30/08 12/31/07Building$600,000 --Land150,000 --Vehicles45,308      --      795,308 --Less Accumulated Depreciation and amortization (74,245)      --      $721,063 $     --
Depreciation  expense for the three months ended June 30, 2008 and 2007 was $6,111 and $6,111,  and for the six months in the same periods were $ 12,223 and $6,111, respectively.
**9**

For the six months ended  June 30, 2007, the Company incurred an impairment loss on a vehicle.  The loss was treated as follows:
Original value$       8,000Less accumulated depreciation(1,554)Less insurance  payment on loss(4,834)     Impairment loss$       1,612
**NOTE 7 - DEVELOPMENT COSTS**

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 will 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$ 660,205Engineering of glass  design25,000Consulting fees to  administrator25,000     Total Development Costs$710,205
  

**NOTE 8- 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 June 30, 2008 and December 31, 2007, the outstanding principle balance of  the note was $60,000 and $60,000 and had accrued interest of $3,390 and $6,283,  respectively.

**NOTE 9- LONG TERM DEBT**

On July 16, 2006, the  Company signed a Mortgage Modification Agreement with the lender on the  building. Under the terms of the agreement, the mortgage was modified to extend  the maturity date to July 15, 2036, the interest rate was reduced to 5.25% per  annum and the $50,000 prepayment penalty was removed. If the note was paid in  full by February 16, 2007, the note would be reduced by $100,000. The payment  was not made by the required date, therefore, the note reduction did not take  effect. In addition, a late fee penalty of 5% was added on all payments made  later than 10 days from the initial due date. 
**10**

The Company is in  default on the mortgage and is 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  has met the requirements of the Agreement as of June 30, 2008, however is still  3 months in arrears on the mortgage payments per the mortgage payment schedule. 

Long term debt is payable as follows:
Design payments to ship yards$ 660,205Engineering of glass design25,000Consulting fees to administrator25,000Total Development Costs$710,205 Fiscal Year 20099,48220109,995201110,531201211,100201310,531Thereafter518,851 $   579,186
**NOTE 10 –  STOCKHOLDERS’ EQUITY**

During the six months ending  June 30, 2008, the Company issued 7,630,953 shares of common stock for cash  with a value of $76,309.

**NOTE 11 - 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; however, the Company is  liable for the lease through January 8, 2016.

On April 10, 2006, the  Company entered into a lease consisting of approximately 2,450 square feet for  a restaurant in 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.  
**11**

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 June 30,  2008:
Fiscal Year 2009172,2962010174,3962011176,5742012178,8122013181,098Thereafter                              392,201     Total          $ 1,362,251
On February 15, 2008, the Company signed a contract with the Odys Shipyard for building Undersea vessels.  Under the terms of the contract, the contract becomes effective when the Company has placed a 50% deposit on the first vessel to be built. The Company has 100 days from the date of the contract to make the initial deposit or Odys Shipyard may unilaterally cancel the contract. The Company has no financial obligations until the initial payment has been completed. No payments have been made to the shipyard under the contract and the Company  has not received any notice of cancellation from the shipyard. 

**NOTE  12 - LEGAL MATTERS**

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 has met the requirements  of the Agreement as of June 30, 2008.   (See Note 13 – Subsequent Events)

The  Company is in receipt of a letter from the Securities and Exchange Commission  dated August 10, 2007.  The letter pointed  to certain deficiencies in the 10-KSB that was filed for the year ending  December 31, 2006.  The Company responded  to the letter and has filed an amended copy of the 10-KSB/A for the year end  December 31, 2006. The Company received an additional response letter from the  SEC dated April 4, 2008. The Company has incorporated certain recommendations  by the SEC into the 10-KSB/A for the year ended December 31, 2007 which was  filed on July 29, 2008.

**NOTE  13 – SUBSEQUENT EVENT**

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 will  assume title of the building.  

** **
**12**

**ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF  OPERATIONS.**

The following discussion and  analysis of the Company’s financial condition and results of operations is  based upon, and should be read in conjunction with, its unaudited financial  statements and related notes included elsewhere in this Form 10-Q, which have  been prepared in accordance with accounting principles generally accepted in  the United States.

**Overview.**

The  Company  is in the planning and development  stage of building 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. The Company estimates that the resort and  casino will include a 50,000 square foot world class Spa by Pevonia and a  200,000 square foot convention center. The development should generate  approximately $600 million of revenue from the sale of the units while  the total development cost should be approximately $460 million. The Company is  in discussions with leaders in the hospitality, gambling, spa and convention  industry to explore the possibility of a partnership or contractual arrangement  with the Company. The undersea resort ships have the ocean available without  the limitations of land. In addition, several locations are going to be three  miles offshore the Florida  coast because it’s considered international water and thus tax free.  

The Company also intends to take advantage of any  reasonable business proposal presented which management believes will provide  the Company and its stockholders with a viable business opportunity and fits  within the objectives of the Company and its business development.  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.  Along with the development of the Undersea Resort and Casino, the investigation  of specific 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 Company  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 Company of all related costs incurred.  If and when the Company locates a business opportunity, management of the Company  will give consideration to the dollar amount of that entity's profitable  operations and the adequacy of its working capital in determining the terms and  conditions under which the Company would consummate such an acquisition.   Potential business opportunities, no matter which form they may take, will most  likely result in substantial dilution for the Company’s shareholders due to the  issuance of stock to acquire such an opportunity. 

**Results of Operations.**

**(a)        Revenues.**

The Company reported no revenues for the three months and  six months ended June 30, 2008 and no revenue for the same periods ended June  30, 2007.  The Company does receive  rental income from the building it owns and this revenue is classified as Other  Income. The Company received other income of $10,450 for the three months and $21,592 for the six months ended June 30, 2008 and $13,551 and $24,061  for the respective periods ending June 30, 2007.
**13**

**(b)        General and Administrative Expenses**.

The Company incurred  total selling, general and administrative expenses of $146,594 for the three  months and $174,341 for the six months ended June 30, 2008 as compared to $131,426  for the three months and $262,170 for the six months ended June 30, 2007. The  increase in this expense category was due primarily accrued salary due officer  for services representing $100,000 for the six months period. 

**(c)        Depreciation  and amortization.**

Depreciation and amortization for the three months and six  months ended June 30, 2008 was $7,235 and $13,346.  For the same periods ending June 30, 2007  depreciation and amortization recorded was $6,111 and $12,222.  The depreciation is attributable to the  building and vehicles owned by the Company. 

**(d)        Interest  Expense.**

The Company incurred interest charges of $9,310 and $18,592  during the three months and six months ended June 30, 2008.  During the same periods ending June 30 2007, the  Company incurred interest charges of $11,809 and $21,047, respectively. 

 **(e)     Net  Loss.**

The Company reported a net loss of $163,665 for the three  months and $198,229 for the six months ended June 30, 2008 as compared to a net  loss of $135,795 and $272,990 for the same period ended June 30, 2007. The loss  was attributable to increased general and administrative costs during the  period ending June 30, 2008.

**Factors  That May Affect Operating Results.**

The  operating results of the Company can vary significantly depending upon a number  of factors, many of which are outside its control.  General factors that may affect the Company’s  operating results include:

·          Market  acceptance of and changes in demand for products and services;·          A small number of customers account  for, and may in future periods account for, substantial portions           of the Company’s revenue, and revenue could decline because of delays in customer  orders or the            failure to retain customers;  ·          gain or loss of clients or strategic  relationships;   ·          Announcement or introduction of new  services and products by the Company or by its competitors;  ·          Price competition;  ·          The ability to upgrade and develop  systems and infrastructure to accommodate growth;·          The ability to introduce and market  products and services in accordance with market demand;  ·          Changes in governmental regulation;  and·          Reduction in or delay of capital  spending by clients due to the effects of terrorism, war and political           instability.
**Key Personnel.**

The Company’s success is largely dependent on the personal efforts and  abilities of its senior management.  The  loss of certain members of the Company’s senior management, including the Company’s  chief executive officer, chief financial officer and chief technical officer,  could have a material adverse effect on the Company’s business and prospects.
**14**

**Operating Activities.**

The  net cash used in operating activities was $20,236 for the six months ended June  30, 2008 compared to net cash used of $59,581 for the six months ended June 30,  2007.  This decrease is due primarily to the  increase in accrued liabilities for the period ended June 30, 2008 compared to  the same period in 2007.

**Investing Activities.**

Net cash used in  investing activities was zero for the six months period ending June 30, 2007 and  zero for the same period ending June 30, 2008.  

**Financing Activities.**
Net cash provided by financing activities was $37,089  for the six month period ending June 30, 2008 and $146,482 for the same period  ending June 30, 2007.  Financing activities  for the period ending June 30, 2007 were higher due to a combination of stock  sales and note issued totaling
$131,000 in the  period ended June 30, 2007 verses stock sales of $76,310 and a reduction of  credit lines by $37,015 in the period ended June 30, 2008. 

**Liquidity and Capital  Resources.**

As of June 30, 2008, the Company had total  current assets of zero and total current liabilities of $323,488, resulting in  net working capital deficit of $323,488.   During the six months ended June 30, 2008 and  2007, the Company incurred losses of $198,229 and $272,990, respectively. The aggregate  accumulated deficit and accumulated deficit during the development stage of the  Company is $12,806,422 ($11,886,789 and $919,633, respectively).  These factors raise  substantial doubt as to the Company’s ability to continue as a going  concern.  In fact, the  Company’s independent accountants’ audit report included in the Form 10-KSB/A  for the year ended December 31, 2007 includes a substantial doubt paragraph  regarding the Company’s ability to continue as a going concern.

The accompanying  financial statements have been prepared assuming that the Company will continue  as a going concern which contemplates the realization of assets and the  satisfaction of liabilities in the normal course of business.  However, the ability of the Company to  continue as a going concern on a longer-term basis will be dependent upon its  ability to generate sufficient cash flow from operations to meet its  obligations on a timely basis, to retain its current financing, to obtain  additional financing, and ultimately attain profitability. 

Our current cash flow will not be sufficient  to maintain our capital requirements for the next twelve months.  Accordingly, the Company will need to  continue raising capital through either debt or equity instruments.  The Company believes it will need to raise additional  capital to continue executing the business plan.  Whereas the Company has been successful in the past  in raising capital, no assurance can be given that these sources of financing  will continue to be available to us and/or that demand for our equity/debt  instruments will be sufficient to meet our capital needs, or that financing  will be available  on terms favorable to the Company.  The  financial statements do not include any adjustments relating to the  recoverability and classification of liabilities that might be necessary should  the Company be unable to continue as a going concern.

If funding is insufficient at any time in the  future, the Company may not be able to take advantage of business opportunities  or respond to competitive pressures, or may be required to reduce the scope of  our planned product development and marketing efforts, any of which could have  a negative impact on its business and operating results. In addition,  insufficient funding may have a material adverse effect on our financial  condition, which could require us to: 
**15**

·          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 Company raises additional capital through the sale of  equity or convertible debt securities, the issuance of such securities may  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 our operations. Regardless of whether our cash  assets prove to be inadequate to meet our operational needs, we may seek to  compensate providers of services by issuance of stock in lieu of cash, which  may also result in dilution to existing shareholders.
**Off  Balance Sheet Arrangements.**
The Company does not engage in any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.
**Inflation.**
The impact of inflation on our costs and the  ability to pass on cost increases to customers over time is dependent upon market  conditions. We are not aware of any inflationary pressures that have had any  significant impact on our operations over the past quarter, and the Company  does not anticipate inflationary factors will have a significant impact on  future operations. 

**Critical Accounting Policies. **

The Securities and Exchange Commission (“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 SEC 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  Company’s most critical accounting policies include: (a) use  of estimates in the preparation of financial statements; (b)  stock-based  compensation arrangements; and (c) revenue recognition.  The methods, estimates and judgments the  Company uses in applying these most critical accounting policies have a  significant impact on the results the Company reports in its financial  statements. 

**(a)        Use of Estimates in the Preparation of  Financial Statements.**

The  preparation of these financial statements requires the Company 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 Company evaluates these estimates, including those related to revenue  recognition and concentration of credit risk.   The Company bases its estimates on historical experience and on various  other assumptions that are believed to be reasonable under the circumstances,  the results of which form the basis for making judgments about the carrying  values of assets and liabilities that are not readily apparent from other  sources.  Actual results may differ from  these estimates under different assumptions or conditions.
**16**

**(b)        Stock-Based  Compensation Arrangements.**

The  Company may issue shares of common stock to various individuals and entities  for management, legal, consulting and marketing services.  These issuances will be valued at the fair  market value of the services provided and the number of shares issued is  determined, based upon the open market closing price of common stock as of the  date of each respective transaction.   These transactions will be reflected as a component of selling, general  and administrative expenses in the Company’s statement of operations.

**(c)        Revenue Recognition.**

Sales are recognized when the product or service  is delivered to the customer.  

**Forward Looking Statements.**

Information in this Form 10-Q 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.  When used in this Form  10-Q, the words “expects,” “anticipates,” “believes,” “plans,” “will” and  similar expressions are intended to identify forward-looking statements.  These are statements that relate to future periods  and include, but are not limited to, statements regarding our adequacy of cash,  expectations regarding net losses and cash flow, our need for future financing,  our dependence on personnel, and our operating expenses.  

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 as well as risks set forth above  under “Factors That May Affect Our Results.”  These forward-looking statements speak only  as of the date hereof.  The Company  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.

**ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

As a “smaller  reporting company” as defined by Item 10 of Regulation S-K, the Company is not  required to provide information required under this Item. 

**ITEM 4T.   CONTROLS AND PROCEDURES.**

**Evaluation  of Disclosure Controls and Procedures.**

The Company maintains  disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule  15d-15(e) under the Securities Exchange Act of 1934, as amended) that are  designed to ensure that information required to be disclosed in our periodic  reports filed under the Exchange Act is recorded, processed, summarized and  reported within the time periods specified in the SEC’s rules and forms, and  that such information is accumulated and communicated to our management,  including our principal executive officer, to allow timely decisions regarding  required disclosure.
**17**

Because  of the inherent limitations in all control systems, no evaluation of controls  can provide absolute assurance that all control issues and instances of fraud,  if any, will be or have been detected.   These inherent limitations include the realities that judgments in  decision-making can be faulty, and that breakdowns can occur because of simple  error or mistake.  Additionally, controls  can be circumvented by the individual acts of some persons, by collusion of two  or more people, and/or by management override of the control.  The design of any system of controls also is  based in part upon certain assumptions about the likelihood of future events,  and there can be no assurance that any design will succeed in achieving its  stated goals under all potential future conditions; over time, controls may  become inadequate because of changes in conditions, and/or the degree of  compliance with the policies and procedures may deteriorate. Because of the  inherent limitations in a cost-effective internal control system, misstatements  due to error or fraud may occur and not be detected.

Within  the 90 days prior to the end of the period covered by this report, the Company  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 Company’s  president. Based upon that evaluation, he concluded that the Company’s  disclosure controls and procedures are not effective in gathering, analyzing  and disclosing information needed to satisfy the Company’s disclosure  obligations under the Exchange Act.

**Changes in Disclosure Controls and Procedures.**

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

**PART II – OTHER INFORMATION**

**ITEM 1.   LEGAL PROCEEDINGS.**

Other than as set  forth below, the Company is not a party to any material pending legal  proceedings and, to the best of its knowledge, no such action by or against the  Company has been threatened.

The Company is the  defendant in a lawsuit filed on February 12, 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 has met the requirements of the  Agreement as of June 30, 2008.

**ITEM 1A.  RISK FACTORS****.**

There have been no material changes to the  Company’s risk factors as previously disclosed in our most recent 10-KSB/A  filing for the year ending December 31, 2007.

**ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**                      The  Company made the following sales of unregistered (restricted) securities during  the six months ending June 30, 2008:      (a)  On January 9, 2008, the Company sold a total  of 1,000,000 shares of common stock to an individual for cash.  These shares were valued at a total of $10,000  ($0.01 per share).        (b)  On March 27, 2008, the  Company issued a total of 4,980,953 shares of common stock to an individual for  cash for a total value of $49,809 ($0.01 per share).       (c)  On May 16, 2008, the Company  issued a total of 350,000 shares of common stock to an individual for cash for  a total value of $3,500 ($0.01 per share).**18**
       (d)  On May 28, 2008, the Company  issued a total of 1,300,000 shares of common stock to five individuals for cash  with a total value of $13,000 ($0.01 per share).
No commissions were paid in  connection with any of these sales.   These sales were undertaken under Rule 506 of Regulation D under the  Securities Act of 1933.  Each of the  transactions did not involve a public offering and each of the investors  represented that he/she was a “sophisticated” or “accredited” investor as  defined in Rule 502 of Regulation D. 

**ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.**

The Company is in  default on the mortgage on the building it owns at 13 Main Street Titusville,   FL. The Company is the defendant  in a lawsuit brought by the mortgage holder of the property. and 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 has met the requirements  of the Agreement as of June 30, 2008. 

**ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

None

**ITEM 5.   OTHER INFORMATION.**

On March 10, 2008, the Company filed an 8-K announcing a contract between the Company and Odys Shipyard for building the Undersea vessels.  Under the terms of the contract, the contract becomes effective when the Company has placed a 50% deposit on the first vessel to be built. The Company has 100 days from the date of the contract to make the initial deposit or Odys Shipyard may unilaterally cancel the contract. The Company has no financial obligations until the initial payment has been completed. No payments have been made under the contract and the Company has not received any form of cancellation.

The Company 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.

**ITEM  6.  EXHIBITS.**

31  Rule 13a-14(a)/15d-14(a) Certification of Joseph  Cala.      

32  Section 1350 Certification of Joseph Cala.
**19**

**SIGNATURE**

  Pursuant to the  requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the  Company has duly caused this report to be signed on its behalf by the  undersigned, thereunto duly authorized.                                                                                                                     
  **Cala Corporation**      Dated:  July 27th, 2009  By: /s/ Joseph Cala  Joseph Cala, President   Principal Executive Officer and  Chief Financial Officer