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

##### FORM
10-Q

(Mark One)

[X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

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 Company 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 (713)
236-1818

(Address of Principal Executive Offices.(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 ­­XNo .

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
January 12, 2011, the Company had 320,866,147 shares of common stock
issued and outstanding.

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



|TABLE OF CONTENTS                                                                                                                                                                 |  |     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                  |  |     
|                                                                                                                                                                                  |  | Page
|PART I: FINANCIAL INFORMATION                                                                                                                                                     |  |     
|                                                                                                                                                                                  |  |     
|Item 1. Financial Statements                                                                                                                                                      |  | 3   
|Balance Sheets as September 30, 2009
				(unaudited) and December 31, 2008 (audited)                                                                                              |  | 3   
|Statements of Operations For the Three
				and Nine Months ending September 30, 2009 and 2008 and from
				inception (January 1, 2007) through September 30, 2009
				(unaudited) |  | 4   
|Statements of Cash Flows For the Nine
				Months Ended September 30 , 2009 and 2008 and from inception
				(January 1, 2007) through September 30, 2009 (unaudited)               |  | 5   
|Notes to Financial
				Statements (unaudited)                                                                                                                                     |  | 6   
|                                                                                                                                                                                  |  |     
|Item 2. Management’s Discussion and Analysis of
				Financial Condition and Results of Operations                                                                                 |  | 12  
|                                                                                                                                                                                  |  |     
|Item 3. Quantitative and Qualitative Disclosures About Market
				Risk                                                                                                            |  | 18  
|                                                                                                                                                                                  |  |     
|Item 4T. Controls and Procedures                                                                                                                                                  |  | 18  
|                                                                                                                                                                                  |  |     
|PART II: OTHER INFORMATION                                                                                                                                                        |  |     
|                                                                                                                                                                                  |  |     
|Item 1. Legal Proceedings                                                                                                                                                         |  | 19  
|                                                                                                                                                                                  |  |     
|Item 1A.Risk Factors                                                                                                                                                              |  | 19  
|                                                                                                                                                                                  |  |     
|Item 2. Unregistered Sales of Equity Securities and Use of
				Proceeds                                                                                                           |  | 19  
|                                                                                                                                                                                  |  |     
|Item 3. Defaults upon Senior Securities                                                                                                                                           |  | 19  
|                                                                                                                                                                                  |  |     
|Item 4. Submission of Matters to a vote of Security Holders                                                                                                                       |  | 20  
|                                                                                                                                                                                  |  |     
|Item 5. Other Information                                                                                                                                                         |  | 20  
|                                                                                                                                                                                  |  |     
|Item 6. Exhibits                                                                                                                                                                  |  | 20  
|                                                                                                                                                                                  |  |     
|Signatures                                                                                                                                                                        |  | 20  
|                                                                                                                                                                                  |  |     

Page 2

CALA
CORPORATION (A Development Stage Company)BALANCE
SHEETS

|                                                    | September 30, 2009         | December 31, 2008        
|--------------------------------------------------- | -------------------------- | -------------------------
|                                                    | (Unaudited)                | (Audited)                
|ASSETS                                              |                            |                          
|Total current assets                                | $                       -- | $                      --
|                                                    |                            |                          
|Equipment                                           |                            |                          
|Fixed assets-net of depreciation of $45,308
				and |                            |                          
|$36,713, respectively                               | --                         | 6,595                    
|Total equipment                                     | --                         | 6,595                    
|                                                    |                            |                          
|Other assets                                        |                            |                          
|Website development costs                           | 16,377                     | 23,877                   
|Total assets                                        | $                16,377    | $                30,472  
|                                                   
|LIABILITIES AND STOCKHOLDERS' DEFICIT              
|                                                   
|Current liabilities                                 |                           
|Accounts payable and accrued expenses               | $ 48,225                   | $ 49,972                 
|Note payable                                        | 62,000                     | 60,000                   
|Due to related party                                | 69,010                     | 65,419                   
|Accruedconsulting                                   | 358,600                    | 133,600                  
|Taxes payable                                       | 11,599                     | 11,599                   
|Total current liabilities                           | 549,435                    | 320,590                  
|                                                    |                            |                          
|Total liabilities                                   | 549,434                    | 320,590                  
|                                                    |                            |                          
|Stockholders' deficit                               |                            |                          
|Common stock                                        |                            |                          
|$0.005 par value; 400,000,000 shares authorized     |                            |                          
|Issued and outstanding: 320,866,147 and304,866,147, |                            |                          
|respectively                                        | 1,604,329                  | 1,524,329                
|Additional paid-in capital                          | 11,861,259                 | 11,909,259               
|Accumulated deficit                                 | (11,886,789)               | (11,886,789)             
|Accumulated deficit during development stage        | (2,110,740)                | (1,835,801)              
|Treasury stock - 56,533 shares at cost              | (1,116)                    | (1,116)                  
|Total stockholders' deficit                         | (533,057)                  | (290,118)                
|Total liabilities and stockholders’ deficit         | $                16,377    | $                30,472  

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

Page 3

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

|                                                         | For
			three Months Ended September 30, 2009 | For
			three Months Ended September 30, 2008 | For
			Nine Months Ended September 30, 2009 | For
			Nine Months Ended   September 30, 2008 | From
			(January 1,2007)
			through September 30, 2009 (Development Stage Period)
|-------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | ------------------------------------------- | --------------------------------------------- | ---------------------------------------------------------------------------------
|Income                                                   | $
			      --                                | $
			  --                                    | $
			 --                                    | $
			 -                                       | $
			         --                                                                 
|General and administrative
			expense                    | 77,964                                       | 16,950                                       | 250,301                                     | 191,290                                       | 1,182,269                                                                        
|Depreciation and
			amortization                         | 2,064                                        | 8,612                                        | 14,095                                      | 21,958                                        | 62,764                                                                           
|                                                         | Total operating expenses                     | 80,028                                       | 25,562                                      | 264,396                                       | 213,248                                                                          
|                                                         |                                              |                                              |                                             |                                               |                                                                                  
|Loss from operations                                     | (80,028)                                     | (25,562)                                     | (264,396)                                   | (213,248)                                     | (1,245,033)                                                                      
|                                                         |                                              |                                              |                                             |                                               |                                                                                  
|Other income(expense)                                    |                                              |                                              |                                             |                                              
|Other income                                             |                                              | 1,500                                        |                                             | 23,092                                        | 74,007                                                                           
|Interest expense                                         | (3,590)                                      | (8,026)                                      | (10,543)                                    | (26,619)                                      | (89,685)                                                                         
|Impairment loss on assets                                | --                                           | (710,205)                                    | --                                          | (710,205)                                     | (711,817)                                                                        
|Loss on disposal of assets                               | --                                           | (121,559)                                    | --                                          | (121,559)                                     | (121,560)                                                                        
|Other expense                                            | --                                           | (192)                                        | --                                          | (13,734)                                      | (16,653)                                                                         
|                                                         | Total other income
			(expense)              | (83,618)                                     | (838,481)                                   | (10,543)                                      | (849,024)                                                                        
|                                                         |                                              |                                              |                                             |                                               |                                                                                  
|Net loss                                                 | $
			(83,618)                                | $
			(864,043)                               | $
			(274,939)                              | $(1,062,272)                                  | $
			(2,110,740)                                                                 
|Earnings per
			share(Basic):                            |                                              |                                              |                                             |                                               |                                                                                  
|Loss from operations                                     | $
			(0.00)                                  | $
			(0.00)                                  | $       (0.00)                              | $
			(0.00)                                   |                                                                                  
|Weighted average number of
			shares outstanding (Basic) | 320,866,147                                  | 302,347,100                                  | 319,219,088                                 | 299,950,789                                   |                                                                                  

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

Page 4

CALA
CORPORATION (A Development Stage Company) STATEMENTS OF CASH
FLOWS(Unaudited)

|                                                         |                                                                       |                        |                                                                 | For Nine Months Ended September
				30,2009 | For Nine Months Ended September
				30,2008 | From January 1, 2007 through
				September 30, 2009 (DevelopmentStage
				Period)
|-------------------------------------------------------- | --------------------------------------------------------------------- | ---------------------- | --------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | ---------------------------------------------------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES                     |                                                                       |                        |                                                                
|                                                         | Net loss                                                              | $ (274,939)            | $ (1,062,272)                                                   | $ (2,110,740)                              
|                                                         | Adjustments to reconcile loss from continuing                         |                        |                                                                 |                                            
|operations to net cash used in operating
				activities: |                                                                       |                        |                                                                
|                                                         |                                                                       |                        | Impairment loss                                                 | --                                          | 710,205                                     | 711,818                                                                          
|                                                         |                                                                       |                        | Depreciation and amortization                                   | 14,095                                      | 21,957                                      | 65,262                                                                           
|                                                         |                                                                       |                        | Stock based compensation issued for services                    | 22,000                                      | --                                          | 354,000                                                                          
|                                                         | Allowance for doubtful accounts                                       | --                     | -                                                               | 60,500                                     
|                                                         | Financing cost                                                        | --                     | -                                                               | 105,000                                    
|                                                         | Loss on disposal of assets                                            | --                     | 121,559                                                         | 121,560                                    
|                                                         |                                                                       |                        |                                                                 |                                            
|                                                         | Changes in operating assets and liabilities:                          |                        |                                                                 |                                            
|                                                         | Increase in accounts receivable                                       | --                     | --                                                              | (10,500)                                   
|                                                         |                                                                       |                        | Increase (decrease) in accounts payable and
				accrued expense | (1,748)                                     | 16,245                                      | 42,837                                                                           
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|                                                         |                                                                       |                        | Accrued officers salary                                         | 225,000                                     | 95,000                                      | 358,600                                                                          
|                                                         |                                                                       |                        | Decrease in taxes payable                                       | --                                          | --                                          | (28)                                                                             
|                                                         | Net cash used in operating activities                                 | (15,592)               | (97,306)                                                        | (301,691)                                  
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|CASH FLOW FROM INVESTING ACTIVITIES                      |                                                                       |                        |                                                                
|Payment for development costs                            | --                                                                    | --                     | (70,001)                                                       
|Disposal of fixed assets                                 | --                                                                    | --                     | 4,832                                                          
|                                                         | Net cash used investing activities                                    | --                     | --                                                              | (65,169)                                   
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|CASH FLOW FROM FINANCING ACTIVITIES                      |                                                                       |                        |                                                                
|                                                         | Payments made on mortgage                                             | --                     | (3,693)                                                         | (12,244)                                   
|                                                         | Proceeds from notes payable                                           | 2,000                  | 63,837                                                          | 62,000                                     
|                                                         | Proceeds from issuance of common stock                                | --                     | 76,500                                                          | 278,950                                    
|                                                         | Proceeds from notes payable –related
				parties                      | 13,592                 | (52,485)                                                        | 2,055)                                     
|                                                         |                                                                       |                        |                                                                 |                                             |                                            
|                                                         | Net cash provided by financing activities                             | 15,592                 | 84,159                                                          | 330,761                                    
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|NET CHANGE IN CASH                                       | --                                                                    | (13,147)               | (36,099)                                                       
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|CASH AT BEGINNING OF PERIOD                              | --                                                                    | 13,147                 | 36,099                                                         
|                                                         |                                                                       |                        |                                                                 |                                             |                                             |                                                                                  
|CASH AT END OF PERIOD                                    | $                 
				--                                             | $                --    | $                
				--                                       
|SUPPLEMENTAL INFORMATION:                                |                                                                       |                        |                                                                
|                                                         | Interest paid                                                         | $               991    | $     23,105                                                    | $        53,495                            
|                                                         | Shares issued for services classified as a
				capital cost           | $                    - | $               --                                              | $       268,000                            
|                                                         | Satisfaction of accounts payable with common
				stock                | --                     | $             
				--                                           | $         30,000                           
|                                                         | Satisfaction of notes payable with common stock                       | $                   -- | $               --                                              | $       145,000                            
|                                                         | Satisfaction of notes payable – related
				parties with common stock | $          10,000      | $               --                                              | $           0,000                          

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

Page
5

CALA
CORPORATION (A Development Stage Company) NOTES TO FINANCIAL
STATEMENTSSeptember 30, 2009(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 $13,997,529 ($11,886,789 and $2,110,740, 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. 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.

NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.
Basis of Presentation – The accompanying financial statements
included herein have been prepared by the Company, without audit,
pursuant to the rules and regulations under 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
nine months ended September 30, 2009 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-K for the year ended December 31, 2008.

Page
6

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
Financial Statement Accounting Board Accounting Standards
Codification 260 (ASC 260) "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 September 30, 2009, 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 financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

E.
Stock Based Compensation-Stock based compensation is
accounted for using ASC 505“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 – 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 previously
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 SAB-104. During nine month period
ending September 30, 2009, no revenue was received by the Company.

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:

Page
7

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 ASC 360-10, “Property,
Plant, and Equipment”. 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.

J.
The accompanying consolidated financial statements have been prepared
in accordance with the ASC 915 " Development-Stage Entities".
A development-stage entity 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 4 - RECENT
ACCOUNTING PRONOUNCEMENTS

In
January 2010, the FASB issued guidance to amend the disclosure
requirements related to recurring and nonrecurring fair value
measurements. The guidance requires new disclosures on the transfers
of assets and liabilities between Level 1 (quoted prices in active
market for identical assets or liabilities) and Level 2 (significant
other observable inputs) of the fair value measurement hierarchy,
including the reasons and the timing of the transfers. The guidance
became effective for the Company beginning January 1, 2010. The
adoption of this guidance does not have a material impact on the
Company’s financial statements.



NOTE 5 - RELATED PARTY
TRANSACTIONS



During
the nine month period ending September 30, 2009, the Company accrued
$225,000 for salary payable to an officer of the Company with a
balance due from the Company of $358,600 which has been accrued and
not paid. As of December 31, 2008 salary payable due to officer was
$133,600.



During
the nine month period ending September 30, 2009, an officer advanced
$13,592 to the Company for operating expenses and debt reduction. The
outstanding balance was $69,010 as of September 30, 2009 and $65,419
as of December 31, 2008.

Page
8



NOTE 6 -
FIXED ASSETS



Fixed
Assets at September 30, 2009 and December 31, 2008 consisted of the
following:



|                              | 9/30/2009         | 12/31/08    
|----------------------------- | ----------------- | ------------
|Vehicles                      | 45,308            | 45,308      
|Less accumulated depreciation | (45,308)          | (38,713)    
|                              | -------------     | ----------- 
|                              | $              -- | $6,595      
|                              | =============     | ============



Depreciation
expense for the nine months ended September 30, 2009 was zero and
$6,595 for the same period in 2008.

NOTE 7 - WEBSITE
DEVELOPMENT

Website
Development at September 30, 2009 and December 31, 2008 consisted of
the following:



|                              | 9/30/2009             | 12/31/08    
|----------------------------- | --------------------- | ------------
|Website Development           | 25,000                | 25,000      
|Less accumulated amortization | (8,623)               | (1,122)     
|                              | -------------         | ----------- 
|                              | $              16,377 | $23,877     
|                              | =============         | ============



Amortization
expense for the nine months ended September 30, 2009 was $8,623 and
$1,123 for the same period in 2008.

NOTE 8- NOTES
PAYABLE

In
January 2007, the Company issued a note for $60,000 bearing interest
at 10% on the principal and accrued interest compounding monthly.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.As
September 30, 2009 and December 31, 2008, the outstanding principle
balance of the note was $60,000 and $60,000 and had accrued interest
of $20,235 and $13,923, respectively.



On
June 26, 2009, the Company issued an unsecured demand note bearing no
interest for $2,000.

Page9

NOTE 8 – STOCKHOLDERS’ DEFICIT

During
the period ending March 31, 2009 the Company issued 16,000,000 shares
of common stock with a total value of $32,000 ($0.002 per share).

On
January 28, 2009 the Company issued 5,000,000 shares of common stock
valued at $10,000 to reduce advances by officer from $74,760 to
$64,760.

On
January 28, 2009 the Company issued 11,000,000 shares of common stock
valued at $22,000 for services rendered.

NOTE
9 - 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.

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 September 30, 2009:



|2009  | $
						    25,500 
|----- | -------------------
|2010  | 102,000            
|2011  | 102,000            
|2012  | 102,000            
|2013  | 102,000            
|2014  | 102,000            
|2015  | 102,000            
|2016  | 2,267              
|Total | $
						    614,267





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.A
judgment was



Page10

entered
giving the landlord possession of the premises with no monetary
amount awarded; however, the Company may continue to have a
contingent liability for the balance of the lease.he
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 September 30, 2009:



|2009               | $             17,574
|------------------ | --------------------
|2010               | 72,396              
|2011               | 74,574              
|2012               | 76,812              
|2013and thereafter | 265,680             
|Total              | $
						     507,036



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 10- LEGAL
MATTERS

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
February 18, 2009, the Company received a letter demanding payment on
the deficiencies of 2 notes totaling $125,000 the Company had issued.
Subsequent to this an action was originated in the District Court of
Jefferson County Texas (case # A-183,766). The Plaintiff contends the
Company had not paid the principal or interest on promissory notes
issued in 2004. In 2005 the Company issued stock of 3,400,000 and
2,500,000 shares to the plaintiff in full payment of the outstanding
notes and interest to the plaintiff.  The Company maintains the notes
and interest were paid in full by the issuance of the Company stock
for payment of the notes and the Company has no further liability. As
of the end of this period there has been no activity on this matter.

Page 11

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.

OverviewThe
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.

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.

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.

Page 12

Results
of Operations

(a)
Revenues.

The
Company reported no revenues for the three and nine months ended
September 30, 2009 and 2008. The Company did receive rental income in
2008 from the building it owned and revenue from the sublease of one
of the restaurants it leased. This revenue is classified as Other
Income. The Company received other income of $1,500 and $23,092 for
the three and nine months ended September 30, 2008.

(b)
General and Administrative Expenses.

The
Company incurred total general and administrative expenses of $77,964
for the three months and $257,801 for the nine months ended September
30, 2009 as compared to $16,950 for the three months and $191,290 for
the three and nine months ended September 30, 2008. The increase in
this expense category for the three and nine months in 2009 was due
to an increase of officer salary accrual during 2009 over 2008.

(c)
Depreciation and amortization.

Depreciation
and amortization for the three and nine months periods ended
September 30, 2009 was $2,064 and $14,095 and $8,612 and $21,958 for
the same periods ending September 30, 2008, The depreciation is
attributable to the building that was owned by the Company in 2008,
website development costs and vehicle owned by the Company.

(d)
Interest Expense.

The
Company incurred interest charges of $3,590 and $10,543 during the
three and nine months ended September 30, 2009 and $8,026 and $26,619
for the respective periods in 2008.The lower interest during the 2009
period was due to the relinquishing of the building in 2008 and no
interest on the mortgage being paid in 2009.

(e) Net Loss.

The
Company reported a net loss of $83,618 and $274,939 for the three and
nine months ended September 30, 2009 as compared to a net loss of
$864,043 and $1,062,272 for the same period ended September 30, 2008.
The decreased in net loss in 2009 over the same periods in 2008 is
attributed to the write down of the development costs of the undersea
vessel and the loss on the building returned to the mortgage holders
in 2008.

Page 13

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.

Operating
Activities.

The
net cash used in operating activities was $15,592 for the nine months
period ending September 30, 2009 compared to net cash used of $97,306
for the nine months ended September 30, 2008. This decrease of cash
used is due primarily to the reduction of accounts payable and an
impairment loss in 2008.

Page 14

Investing
Activities.

Net
cash used in investing activities was zero for the nine months period
ending September 30, 2009 and 2008.

Financing
Activities.

Net
cash provided by financing activities was $15,592 for the nine month
period ending September 30, 2009 and $84,159 for the same period
ending September 30, 2008. Financing activities for the period ending
September 30, 2009 were lower due to stock sales of $76,500 and note
proceeds of $63,837 in the period ended September 30, 2008.

Liquidity
and Capital Resources.

As
of September 30, 2009, the Company had total current assets of zero
and total current liabilities of $549,435, resulting in net working
capital deficit of $549,435. During the nine months ended September
30, 2009 and 2008, the Company incurred losses of $274,939 and
$1,062,272, respectively. The aggregate accumulated deficit and
accumulated deficit during the development stage of the Company is
$13,997,529 ($11,886,789 and $2,110,740, 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-K for the
year ended December 31, 2008 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.

Page 15

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:

- 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

Page 16

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) non-cash
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.

(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.

Page 17

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.

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

Page 18

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.

On
February 18, 2009, the Company received a letter demanding payment on
the deficiencies of 2 notes totaling $125,000 the Company had issued.
Subsequent to this an action was originated in the District Court of
Jefferson County Texas (case # A-183,766). The Plaintiff contends the
Company had not paid the principal or interest on promissory notes
issued in 2004. In 2005 the Company issued stock of 3,400,000 and
2,500,000 shares to the plaintiff in full payment of the outstanding
notes and interest to the plaintiff.  The Company maintains the notes
and interest were paid in full by the issuance of common stock to the
plaintiff and the Company has no further liability.

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.

ITEM
1A. RISK FACTORS.

There
have been no material changes to the Company’s risk factors as
previously disclosed in our most recent 10-K filing for the year
ending December 31, 2008.

ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

No shares were
issued during the period that had not been reported in the previous
10-Q.

ITEM
3. DEFAULTS UPON SENIOR SECURITIES.

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 September 30, 2009, the outstanding principle balance of the note
was $60,000 and had accrued interest of $20,235. The note including
principal and interest is in default and still outstanding.



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

None

ITEM
5. OTHER INFORMATION.

NONE

ITEM 6. EXHIBITS.

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

32 Section 1350
Certification of Joseph Cala.

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: January 12,
2011			 By: /s/ Joseph Cala

Joseph Cala, President

Principal Executive Officer and Chief Financial Officer



EXHIBIT
INDEX



|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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