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, 2010

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 ­­NoX.

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
27, 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
				of September 30, 2010 (unaudited) and December 31, 2009 (audited)                                                                                |  | 3   
|Statements of
				Operations For the Three and Nine Months ending September, 2010
				and 2009 and from January 1, 2007 through September 30, 2010
				(unaudited)     |  | 4   
|Statements of Cash
				Flows For the Three and Nine  Months Ended September 30 , 2010
				and 2009 and from January 1, 2007 through September 30, 2010
				(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                                                                                                                                                   |  | 20  
|                                                                                                                                                                       |  |     
|Item 2. Unregistered Sales of Equity Securities and Use of
				Proceeds                                                                                                |  | 20  
|                                                                                                                                                                       |  |     
|Item 3. Defaults upon Senior Securities                                                                                                                                |  | 20  
|                                                                                                                                                                       |  |     
|Item 4. [Remove and Reserve]                                                                                                                                           |  | 20  
|                                                                                                                                                                       |  |     
|Item 5. Other Information                                                                                                                                              |  | 20  
|                                                                                                                                                                       |  |     
|Item 6. Exhibits                                                                                                                                                       |  | 21  
|                                                                                                                                                                       |  |     
|Signatures                                                                                                                                                             |  | 21  

Page
2

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CALA
CORPORATION (A Development Stage Company)BALANCE
SHEETS

|                                                          | September 30, 2010          | December 31, 2009           
|--------------------------------------------------------- | --------------------------- | ----------------------------
|                                                          | (Unaudited)                 | (Audited)                   
|ASSETS                                                    |                             |                             
|Total current assets                                      | $                        -- | $                         --
|                                                          |                             |                             
|Other assets                                              |                             |                             
|Website development costs-net of amortization
				$23,623 |                             |                             
|and $16,123, respectively                                 | 6,377                       | 13,877                      
|Total assets                                              | $                6,377      | $                13,877     
|                                                         
|LIABILITIES AND STOCKHOLDERS' DEFICIT                    
|                                                         
|Current liabilities                                       |                            
|Accounts payable and accrued expenses                     | 55,271                      | $                48,935     
|Note payable                                              | 62,000                      | 62,000                      
|Due to related party                                      | 80,949                      | 71,978                      
|Accrued officers salary                                   | 658,600                     | 433,600                     
|Taxes payable                                             | 11,599                      | 11,599                      
|Total current liabilities                                 | 868,419                     | 628,112                     
|                                                          |                             |                             
|Total liabilities                                         | 868,419                     | 628,112                     
|                                                          |                             |                             
|Stockholders' deficit                                     |                             |                             
|Common stock                                              |                             |                             
|$0.005 par value; 400,000,000 shares authorized           |                             |                             
|Issued and outstanding: 320,866,147 and
				320,866,147,  |                             |                             
|respectively                                              | 1,604,329                   | 1,604,329                   
|Additional paid-in capital                                | 11,861,259                  | 11,861,259                  
|Accumulated deficit                                       | (11,886,789)                | (11,886,789)                
|Accumulated deficit during development stage              | (2,439,726)                 | (2,191,918)                 
|Treasury stock - 56,533 shares at cost                    | (1,116)                     | (1,116)                     
|Total stockholders' deficit                               | (862,042)                   | (614,235)                   
|Total liabilities and stockholders’ deficit               | $                6,377      | $                 13,877    

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

Page 3

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

|                                                        | For three
			Months Ended September30, 2010 | For three
			Months Ended September30, 2009 | For
			Nine Months Ended September 30, 2010 | For
			Nine Months Ended September 30, 2009 | From
			January 1, 2007 through September 30, 2010 (DevelopmentStage
			Period)
|------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | ------------------------------------------- | ------------------------------------------- | -------------------------------------------------------------------------------
|Income                                                  | $
			   --                                  | $
			  --                                   | $
			--                                     | $               --                          | $
			          --                                                              
|General and administrative                              |                                             |                                             |                                             |                                             |                                                                                
|expense                                                 | 78,550                                      | 77,964                                      | 232,916                                     | 250,301                                     | 1,488,566                                                                      
|Impairment loss on assets                               |                                             |                                             |                                             |                                             | 711,817                                                                        
|Loss on disposal of assets                              |                                             |                                             |                                             |                                             | 121,560                                                                        
|Depreciation and
			amortization                        | 2,500                                       | 2,064                                       | 7,500                                       | 14,095                                      | 75,265                                                                         
|                                                        | Total operating expenses                    | 81,050                                      | 80,028                                      | 240,416                                     | 264,396                                                                        
|                                                        |                                             |                                             |                                             |                                             |                                                                                
|Loss from operations                                    | (81,050)                                    | (80,028)                                    | (240,416)                                   | (264,396)                                   | (2,397,208)                                                                    
|                                                        |                                             |                                             |                                             |                                             |                                                                                
|Other income (expense)                                  |                                             |                                             |                                             |                                            
|Other income                                            | --                                          | --                                          | --                                          | --                                          | 74,007                                                                         
|Interest expense                                        | (2,550)                                     | (3,590)                                     | (7,392)                                     | (10,543)                                    | (99,872)                                                                       
|Other expense                                           | --                                          | --                                          | --                                          | --                                          | (16,653)                                                                       
|                                                        | Total other income
			(expense)             | (2,550)                                     | (3,590)                                     | (7,392)                                     | (10,543)                                                                       
|                                                        |                                             |                                             |                                             |                                             |                                                                                
|Net loss                                                | $
			(83,600)                               | $   (83,618)                                | (247,808)                                   | (274,939)                                   | $
			(2,439,726)                                                               
|Earnings per share:                                     |                                             |                                             |                                             |                                             |                                                                                
|Net loss per share- basic                               | $
			(0.00)                                 | $
			(0.00)                                 | $
			(0.00)                                 | $
			(0.00)                                 |                                                                                
|Weighted average number of
			shares outstanding- basic | 320,866,147                                 | 320,866,147                                 | 320,866,147                                 | 319,219,088                                 |                                                                                

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

Page 4

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

|                                         |                                                                                                            |                                               |                                                                  | For Nine Months Ended September
				30,2010 | For Nine Months Ended September
				30,2009 | From January 1, 2007 throughSeptember 30, 2010(Development
				Stage Period)
|---------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | ----------------------------------------------------------------------------
|CASH FLOWS FROM OPERATING
				ACTIVITIES |                                                                                                            |                                               |                                                                 
|                                         | Net loss                                                                                                   | $ (247,808)                                   | $ (274,939)                                                      | $ (2,439,726)                              
|                                         | Adjustments to reconcile
				loss from continuing operations to net cash
				used in operating activities: |                                               |                                                                  |                                            
|                                         |                                                                                                            |                                               | Impairment loss                                                  | --                                          | --                                          | 711,818                                                                     
|                                         |                                                                                                            |                                               | Depreciation and
				amortization                                | 7,501                                       | 14,095                                      | 75,263                                                                      
|                                         |                                                                                                            |                                               | 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                                                                                 | --                                            |                                                                  | 121,560                                    
|                                         | Changes in operating
				assets and liabilities:                                                           |                                               |                                                                  |                                            
|                                         | Increase in accounts
				receivable                                                                        | --                                            | --                                                               | (10,500)                                   
|                                         |                                                                                                            |                                               | Increase (decrease) in
				accounts payable and accrued expenses | 6,336                                       | (1,748)                                     | 49,883                                                                      
|                                         |                                                                                                            |                                               | Accrued officers salary                                          | 225,000                                     | 225,000                                     | 658,600                                                                     
|                                         |                                                                                                            |                                               | Increase(decrease) in
				taxes payable                          | --                                          | --                                          | (28)                                                                        
|                                         |                                                                                                            |                                               | Net cash used in operating
				activities                        | (8,971)                                     | (15,592)                                    | (313,630)                                                                   
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|CASH FLOW FROM INVESTING
				ACTIVITIES  |                                                                                                            |                                               |                                                                 
|Payment for
				development costs        | --                                                                                                         | --                                            | (70,001)                                                        
|Web development
				cost                 |                                                                                                            |                                               |                                                                 
|Disposal of fixed
				assets             | --                                                                                                         | --                                            | 4,832                                                           
|                                         | Net cash used investing
				activities                                                                     | --                                            | --                                                               | (65,169)                                   
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|CASH FLOW FROM FINANCING
				ACTIVITIES  |                                                                                                            |                                               |                                                                 
|                                         | Payments made on mortgage                                                                                  | --                                            |                                                                  | (12,244)                                   
|                                         | Proceeds from notes
				payable                                                                            | --                                            | 2,000                                                            | 62,000                                     
|                                         | Proceeds from issuance of
				common stock                                                                 | --                                            | --                                                               | 278,950                                    
|                                         | Proceeds from notes
				payable -  related party                                                           | 8,971                                         | 13,592                                                           | 13,994                                     
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                            
|                                         |                                                                                                            | Net cash provided by
				financing activities | 8,971                                                            | 15,592                                      | 342,700                                    
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|NET CHANGE IN CASH                       | --                                                                                                         | --                                            | (36,099)                                                        
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|CASH AT BEGINNING OF
				PERIOD          | --                                                                                                         | --                                            | 36,099                                                          
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|CASH AT END OF PERIOD                    | $ 
				            --                                                                                      | $
				       --                               | $ 
				                --                                       
|                                         |                                                                                                            |                                               |                                                                  |                                             |                                             |                                                                             
|SUPPLEMENTAL INFORMATION:                |                                                                                                            |                                               |                                                                 
|                                         | Interest paid                                                                                              | $ 
				              --                       | $
				   991                                                     | $
				    53,495                           
|                                         | Shares issued for service
				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                                                     | $
				   10,000                            

The
accompanying notes are an integral part of these financial
statements.Page 5

CALA CORPORATION (A Development Stage Company) NOTES TO
FINANCIAL STATEMENTSSeptember 30, 2010(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 and is classified as a Development Stage Company
under ASC Topic 915.

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 $14,326,515 ($11,886,789 and $2,439,726, 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

Page 6

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for a fair presentation of the results for the interim periods have
been made. The results for the nine months ended September 30, 2010
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, 2009.

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, 2010, the Company had no issuable
shares qualified as dilutive. Had there been dilutive securities they
would be excluded from the loss per share calculation because their
inclusion would be antidilutive.

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

E.
Stock Based Compensation-Stock based compensation is
accounted for using ASC 718“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 Company recognizes revenue upon shipment of a product to
the customer or upon completion of the service the Company is
providing. The Company did not have any revenue during the periods
ending September 30, 2010 and 2009.

Page
7

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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.

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 financial statements have been prepared in
accordance with 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

The Company has
evaluated the recent accounting pronouncements through ASU 2011-04
and believes that none of them will have a material effect on the
Company’s financial statements.



NOTE 5 - RELATED PARTY
TRANSACTIONS



During
the nine months period ending September 30, 2010, the Company accrued
$225,000 for salary payable to an officer of the Company with a
balance due from the Company of $658,600 which has been accrued and
not paid. As of December 31, 2009, salary payable due to officer was
$433,600.



During
the nine month period ending September 30, 2010, an officer advanced
$8,971 to the Company for operating expenses and debt reduction for
an outstanding balance of $80,948 as of September 30, 2010 and
$71,978 as of December 31, 2009.

Page 8

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NOTE 6 – WEBSITE DEVELOPMENT

Website
Development at September 30, 2010 and December 31, 2009 consisted of
the following:

|                              | 9/30/2010     | 12/31/09    
|----------------------------- | ------------- | ------------
|Website Development           | 25,000        | 25,000      
|Less accumulated amortization | (18,624)      | (11,123)    
|                              | ------------- | ----------- 
|                              | $ 6,376       | $13,877     
|                              | ============= | ============

Amortization
expense for the nine months ended September 30, 2010 was $7,500 and
$8,623 for the same period in 2009.

NOTE 7- NOTE
PAYABLE

In
January 2007, the Company issued an unsecured note for $60,000
bearing interest at 10% on the principal and accrued interest
compounding monthly. The Company renewed the note payable agreement
in March 2008 thereby issuing a note for $60,000 bearing interest at
11% on the principal and accrued interest compounding annually.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, 2010 and December 31, 2009, the outstanding principle
balance of the note was $60,000 and $60,000 and had accrued interest
of $29,520 and $22,480, respectively.



Additionally
in June 2009, the Company received $2,000 in other advances to meet
the day to day expenses of the Company. Such advances are
non-interest bearing and due on demand. As of September 30, 2010 and
December 31, 2009, the outstanding balance in advances was $2,000 and
$2,000, respectively.

NOTE 8 –
STOCKHOLDERS’ EQUITY

The
Company did not have any issuances during the nine months ending
September 30, 2010.

Page 9

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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. As of September 30,
2010 there has been no effort on the part of the lessor to collect
any portion of the outstanding contingent liability of the lease.



Then
following is a schedule by year of the future minimum rental payments
required under the operating lease that has non-cancelable lease
terms in excess of one year as of September 30, 2010:

|2010  | $
						       25,500
|----- | ---------------------
|2011  | 102,000              
|2012  | 102,000              
|2013  | 102,000              
|2014  | 102,000              
|2015  | 102,000              
|2016  | 2,267                
|Total | $
						      537,767

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 sub-lessee terminated
payment of the $1,500 in August 2008. AS of September 30, 2010 there
has been no effort on the part of the lessor to collect on any
portion of the outstanding contingent liability of the lease.

Page 10

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The following is a schedule by
year of the future minimum rental payments required under the
operating lease that has non-cancelable lease terms in excess of one
year as of September 30, 2010:



|2010  | 18,074  
|----- | --------
|2011  | 74,574  
|2012  | 76,812  
|2013  | 79,113  
|2014  | 81,492  
|2015  | 83,937  
|2016  | 21,138  
|Total | $435,140

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 two notes the Company issued totaling $125,000.
Subsequent to this, an action was originated in the District Court of
Jefferson County Texas (case # A-183,766). The Plaintiff contends the
Company has not paid the principal or interest on the 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.  As of September 30, 2010, the
Company maintains the notes and interest were paid in full by the
issuance of Company stock for payment of the notes and the Company
has no further liability and there has been no activity in the suit.

Page 11

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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. 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

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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.

Results
of Operations

(a)
Revenues.

The
Company reported no revenues for the nine months periods ended
September 30, 2010 and 2009.

(b)
General and Administrative Expenses

The
Company incurred general and administrative expenses of $78,550 for
the three months and $232,916 for the nine months ended September 30,
2010 as compared to $77,964 for the three months and $250,301 for the
nine months ended September 30, 2009. There was little change from
period to period mainly due to the inactivity of the Company in both
2010 and 2009.

(c)
Depreciation and amortization

Depreciation
and amortization for the three and nine months periods ended
September 30, 2010 was $2,500 and $7,500 and $2,064 and $14,095 for
the same periods ending September 30, 2009, respectively.  The
depreciation is attributable to a vehicle owned by the Company and
the amortization of the Company’s web site.

(d)
Interest Expense

The
Company incurred interest charges of $2,550 and $7,392 during the
three and nine months ended September 30, 2010 and $3,950 and $10,543
for the respective periods in 2009.

(e) Net Loss

The
Company reported a net loss of $83,600 and $247,808 for the three and
nine months ended September 30, 2010 as compared to a net loss of
$83,618 and $274,939 for the same periods ended September 30, 2009.
The decreased loss for the periods in 2010, however minimal was
primarily attributable to lower cost legal and accounting and other
expenses.

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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 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 $8,971 for the nine months
period ending September 30, 2010 compared to net cash used of 15,592
for the nine months ended

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September 30, 2009. This decrease is due primarily to the lower net
loss and depreciation and amortization plus increased accounts
payable and accrued interest in 2010 compared to the same period in
2009.

Investing
Activities

Net
cash used in investing activities was zero for the nine months period
ending September 30, 2010 and zero for the same period ending
September 30, 2009.

Financing
Activities

Net
cash provided by financing activities was $8,971 for the nine month
period ending September 30, 2010 and $15,592 for the same period
ending September 30, 2009. Financing activities for the period ending
September 30, 2010 were lower due to less activity in the period
compared to the period ended September 30, 2009.

Liquidity
and Capital Resources

As
of September 30, 2010, the Company had total current assets of zero
and total current liabilities of $868,419, resulting in net working
capital deficit of $868,419. During the nine months ended September
30, 2010 and 2009, the Company incurred losses of $247,808 and
$274,939, respectively. The aggregate accumulated deficit and
accumulated deficit during the development stage of the Company is
$14,326,515 ($11,886,789 and $ 2,439,726, 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, 2009  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

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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:

- 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.

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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) 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

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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)

Page
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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 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 two notes the Company issued totaling $125,000.
Subsequent to this, an

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action was originated in the District Court of Jefferson County Texas
(case # A-183,766). The Plaintiff contends the Company has not paid
the principal or interest on the 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.
The Company maintains the position the notes and interest were paid
in full by the issuance of stock to the plaintiff and the Company has
no 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, 2009.

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 an unsecured note for $60,000
bearing interest at 10% on the principal and accrued interest
compounding monthly.The
Company renewed the note payable agreement in March 2008 thereby
issuing a note for $60,000 bearing interest at 11% on the principal
and accrued interest compounding annually.As
of September 30, 2010, the outstanding principle balance of the note
was $60,000 and had accrued interest of $29,520. The note including
principal and interest is in default and still outstanding.

ITEM
4: [REMOVE AND RESERVE]

ITEM
5: OTHER INFORMATION

NONE

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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.

|Date: June
			27, 2011 | By: /s/
			Joseph Cala                                        
|---------------------- | --------------------------------------------------------------
|                       | Joseph
			Cala                                                
|                       | Principal
			Executive Officer and Principal 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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