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,
2008

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

(Address of
Principal Executive Offices)

(713)
302-8689.

(Company’s
Telephone Number)

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

Page 1

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|TABLE
				OF CONTENTS                                                                                                                                              |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                                   |  |     
|                                                                                                                                                                   |  | Page
|PART I: FINANCIAL
				INFORMATION                                                                                                                                  |  |     
|                                                                                                                                                                   |  |     
|Item 1. Financial
				Statements                                                                                                                                   |  | 3   
|Balance Sheets as
					of September 30, 2008 and December 31, 2007                                                                                                 |  | 3   
|Statements of
					Operations For the Three Months and Nine Months Ended September
					30, 2008 and 2007 and from January 1, 2007 through September 30,
					2008 |  | 4   
|Statements of Cash
					Flows For the Nine Months Ended September 30, 2008 and 2007 and
					from January 1, 2007 through September 30, 2008                       |  | 5   
|Notes to Financial
					Statements                                                                                                                                 |  | 6   
|                                                                                                                                                                   |  |     
|Item 2. Management’s
				Discussion and Analysis of
				Financial Condition and Results of Operations                                                              |  | 14  
|                                                                                                                                                                   |  |     
|Item 3. Quantitative
				and Qualitative Disclosures About Market Risk                                                                                             |  | 20  
|                                                                                                                                                                   |  |     
|Item 4T. Controls
				and Procedures                                                                                                                               |  | 20  
|                                                                                                                                                                   |  |     
|PART II: OTHER
				INFORMATION                                                                                                                                     |  |     
|                                                                                                                                                                   |  |     
|Item 1. Legal
				Proceedings                                                                                                                                      |  | 21  
|                                                                                                                                                                   |  |     
|Item
				1A. Risk Factors                                                                                                                                          |  | 21  
|                                                                                                                                                                   |  |     
|Item 2. Unregistered
				Sales of Equity Securities and Use of Proceeds                                                                                            |  | 21  
|                                                                                                                                                                   |  |     
|Item 3. Defaults
				upon Senior Securities                                                                                                                        |  | 22  
|                                                                                                                                                                   |  |     
|Item 4. Submission
				of Matters to a vote of Security Holders                                                                                                    |  | 22  
|                                                                                                                                                                   |  |     
|Item 5. Other
				Information                                                                                                                                      |  | 22  
|                                                                                                                                                                   |  |     
|Item 6. Exhibits                                                                                                                                                   |  | 23  
|                                                                                                                                                                   |  |     
|Signatures                                                                                                                                                         |  | 23  
|                                                                                                                                                                   |  |     

Page 2

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CALA
CORPORATION(A Development Stage Company)BALANCE
SHEETS

|                                                              | September
				30, 2008 | December
				31, 2007
|------------------------------------------------------------- | ---------------------- | ---------------------
|                                                              | (Unaudited)            | (Audited)            
|ASSETS                                                        |                        |                      
|Current assets                                                |                        |                      
|Cash                                                          | $
				--               | $
				13,147         
|Total current assets                                          | --                     | 13,147               
|                                                              |                        |                      
|Property and
				equipment                                    |                        |                      
|Fixed assets-net of
				depreciation of $36,447 and           |                        |                      
|$74,245,
				respectively                                     | 8,860                  | 583,285              
|Land                                                          | --                     | 150,000              
|Total property and
				equipment                              | --                     | 733,285              
|                                                              |                        |                      
|Other assets                                                  |                        |                      
|Development costs                                             | --                     | 710,205              
|Website development
				costs – net of amortization of $3,623 |                        |                      
|and $0, respectively                                          | 26,377                 | --                   
|Total assets                                                  | $ 35,237               | $
				1,456,637      
|                                                             
|LIABILITIES AND
				STOCKHOLDERS' EQUITY(DEFICIT)            
|                                                             
|Current liabilities                                           |                       
|Accounts payable and
				accrued expenses                     | $ 21,914               | $ 13,280             
|Credit card payable                                           | 20,099                 | 72,584               
|Mortgage –
				current portion                                | --                     | 8,550                
|Note payable                                                  | 60,000                 | 60,000               
|Due to related party                                          | 64,618                 | 782                  
|Accrued officers
				salary                                   | 95,000                 | --                   
|Taxes payable                                                 | 11,599                 | 11,599               
|Total current
				liabilities                                 | 273,230                | 166,795              
|                                                              |                        |                      
|Long term
				liabilities                                     |                        |                      
|Mortgage                                                      | --                     | 580,613              
|Less:
				Mortgage-current portion                            | --                     | (8,550)              
|Total long term
				liabilities                               | --                     | 572,063              
|Total liabilities                                             | 237,230                | 738,858              
|                                                              |                        |                      
|Stockholders'
				equity( deficit)                            |                        |                      
|Common stock                                                  |                        |                      
|$0.005 par value;
				400,000,000 shares authorized           |                        |                      
|Issued and
				outstanding: 304,866,147 and 294,916,147,      |                        |                      
|respectively                                                  | 1,524,328              | 1,474,579            
|Additional paid-in
				capital                                | 11,909,259             | 11,852,509           
|Accumulated deficit                                           | (11,886,789)           | (11,886,789)         
|Accumulated deficit
				during development stage              | (1,783,675)            | (721,403)            
|Treasury stock -
				56,533 shares at cost                    | (1,116)                | (1,116)              
|Total stockholders'
				equity (deficit)                      | (237,993)              | 717,779              
|Total liabilities
				and stockholders’ equity (deficit)      | $ 35,237               | $
				1,456,637      

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

Page
3

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



|                                                         | For three Months Ended
			September 30, 2008 | For three Months Ended
			September 30, 2007 | For Nine Months Ended September
			30, 2008 | For Nine Months Ended September
			30, 2007 | From Inception (January 1,2007)
			through September 30, 2008
|-------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | ------------------------------------------- | ------------------------------------------- | -------------------------------------------------------------
|Income                                                   | $ --                                         | $ --                                         | $ --                                        | $ --                                        | $ --                                                         
|General and administrative expense                       | 16,950                                       | 221,708                                      | 191,290                                     | 485,379                                     | 887,608                                                      
|Depreciation and amortization                            | 8,612                                        | 6,111                                        | 21,958                                      | 18,336                                      | 46,403                                                       
|                                                         | Total operating expenses                     | 25,562                                       | 227,819                                     | 213,248                                     | 503,713                                                      
|                                                         |                                              |                                              |                                             |                                             |                                                              
|Loss from operations                                     | (25,562)                                     | (227,819)                                    | (213,248)                                   | (503,713)                                   | (934,011)                                                    
|                                                         |                                              |                                              |                                             |                                             |                                                              
|Other income(expense)                                    |                                              |                                              |                                             |                                            
|Other income                                             | 1,500                                        | 8,162                                        | 23,092                                      | 33,724                                      | 74,007                                                       
|                                                         |                                              |                                              |                                             |                                             |                                                              
|Interest expense                                         | (8,026)                                      | (6,710)                                      | (26,619)                                    | (27,757)                                    | (75,062)                                                     
|Impairment loss on assets                                | (710,205)                                    | --                                           | (710,205)                                   | (1,612)                                     | (711,817)                                                    
|Loss on disposal of assets                               | (121,559)                                    | --                                           | (121,559)                                   |                                             | (121,559)                                                    
|Other expense                                            | (192)                                        | --                                           | (13,734)                                    | --                                          | (15,234)                                                     
|                                                         | Total other income (expense)                 | (838,481)                                    | (1,452)                                     | (849,024)                                   | 4,355)                                                       
|                                                         |                                              |                                              |                                             |                                             |                                                              
|Net loss                                                 | $ (864,043)                                  | $ (226,367)                                  | $ (1,062,272)                               | $ (499,358)                                 | $ (1,783,675)                                                
|                                                         |                                              |                                              |                                             |                                             |                                                              
|Earnings per share(Basic):                               |                                              |                                              |                                             |                                             |                                                              
|Loss from operations                                     | $ (0.00)                                     | $ (0.00)                                     | $ (0.00)                                    | $ ( 0.00)                                   |                                                              
|Weighted average number of shares outstanding
			(Basic) | 302,347,100                                  | 285,084,764                                  | 299,950,789                                 | 273,786,046                                 |                                                              

The
accompanying notes are an integral part of these condensed 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, 2008 | For
			Nine Months Ended September 30, 2007 | From
			January 1, 2007 through September 30, 2008
|------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | --------------------------------------------------
|CASH FLOWS FROM
			OPERATING ACTIVITIES                 |                                                                |                                              |                                                               
|                                                        | Net loss                                                       | $
			(1,062,272)                             | $
			(499,358)                                                 | $
			(1,783,675)                           
|                                                        | Adjustments to
			reconcile loss from continuing               |                                              |                                                                |                                            
|operations to net
			cash used in operating activities: |                                                                |                                              |                                                               
|                                                        |                                                                |                                              | Impairment loss                                                | 710,205                                     | 1,612                                       | 711,817                                           
|                                                        |                                                                |                                              | Depreciation and
			amortization                               | 21,957                                      | 18,336                                      | 41,848                                            
|                                                        |                                                                |                                              | Stock based
			compensation issued for services                | --                                          | 598,241                                     | 332,000                                           
|                                                        | Allowance for
			doubtful accounts                             | --                                           | -                                                              | 60,500                                     
|                                                        | Financing cost                                                 | --                                           | -                                                              | 105,000                                    
|                                                        | Loss on disposal of
			assets                                  | 121,559                                      |                                                                | 121,559                                    
|                                                        |                                                                |                                              |                                                                |                                            
|                                                        | Changes in operating
			assets and liabilities:                |                                              |                                                                |                                            
|                                                        | Increase in accounts
			receivable                             | --                                           | --                                                             | (10,500)                                   
|                                                        |                                                                |                                              | Increase (decrease)
			in accounts payable and accrued expense | 16,245                                      | 7,523                                       | 16,245                                            
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|                                                        |                                                                |                                              | Increase (decrease)
			in accrued liabilities - related party  | 95,000                                      | (70,646)                                    | 94,972                                            
|                                                        |                                                                |                                              | Net cash used in
			operating activities                       | (97,306)                                    | 55,708                                      | (310,234)                                         
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|CASH FLOW FROM
			INVESTING ACTIVITIES                  |                                                                |                                              |                                                               
|                                                        | Payments for
				development costsDisposal of fixed
				assets | --
			--                                     | (338,000)
			--                                                | (70,001)
			4,832                          
|                                                        | Net cash used
			investing activities                          | --                                           | (338,000)                                                      | (65,169)                                   
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|CASH FLOW FROM
			FINANCING ACTIVITIES                  |                                                                |                                              |                                                               
|                                                        | Payments
			made on mortgage                                   | (3,693)                                      | (6,375)                                                        | (12,244)                                   
|                                                        | Proceeds
			from notes payable                                 | 63,837                                       | 60,000                                                         | 123,837                                    
|                                                        | Payments on
			notes payable-related party                     | --                                           | --                                                             | (76,173)                                   
|                                                        | Proceeds
			from insurance                                     | --                                           | 4,834                                                          | 4,834                                      
|                                                        | Proceeds
			from issuance of common stock                      | 76,500                                       | 119,000                                                        | 278,950                                    
|                                                        | Proceeds
			from credit card                                   | (52,485)                                     | 68,980                                                         | 20,099                                     
|                                                        |                                                                |                                              |                                                                |                                             |                                            
|                                                        |                                                                | Net cash provided by
			financing activities | 84,159                                                         | 246,439                                     | 339,303                                    
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|NET CHANGE IN CASH                                      | (13,147)                                                       | (35,853)                                     | (36,100)                                                      
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|CASH AT BEGINNING OF
			PERIOD                          | 13,147                                                         | 36,099                                       | 36,100                                                        
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|CASH AT END OF PERIOD                                   | $       --                                                     | $ 246                                        | $       --                                                    
|                                                        |                                                                |                                              |                                                                |                                             |                                             |                                                   
|SUPPLEMENTAL
			INFORMATION:                            |                                                                |                                              |                                                               
|                                                        | Interest paid                                                  | $       --                                   | $ 23,105                                                       | $ 7,724                                    
|                                                        | Income taxes paid                                              | $        --                                  | $        --                                                    | $        --                                
|                                                        | Satisfaction of
			accounts payable with common stock          | $ 30,000                                     | $       --                                                     | $ 30,000                                   



The
accompanying notes are an integral part to these financial statements

Page 5

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CALA
CORPORATION(A Development Stage Company)NOTES TO FINANCIAL
STATEMENTSSeptember30,
2008(Unaudited)

# NOTE 1 -
DESCRIPTION OF BUSINESS

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

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 $13,670,464
($11,886,789 and $1,783,675, 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 condensed 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
three and nine months ended September 30, 2008 are not necessarily
indicative of results to be expected for the full fiscal year. These
financial statements should be read in conjunction with the financial
statements and notes thereto included in our Annual Report on
Form 10-KSB/A for the year ended December 31, 2007.

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

Page 6

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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, 2008, the Company had no issuable
shares qualified as dilutive. Had there been dilutive securities they
would be excluded from the loss per share calculation because their
inclusion would be antidilutive.



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



E. Policy
in Regards to Issuance of Common Stock in a Non-Cash Transaction -
The Company's accounting policy for issuing shares in a non-cash
transaction is to issue the equivalent amount of stock equal to the
fair market value of the assets or services received.



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

G. Revenue
Recognition - The income received by the Company is rental income
from the tenants leasing space in the building owned by the Company
which is outside the normal operations of the Company. Revenue is
recognized when it is due and payable by the tenants and in
accordance with SAB-104.

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

Description
			Useful life

Vehicles 5 years

Building 10-40 years

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

Page 7

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most
critical accounting policies include the use
of estimates in the preparation of financial statements.
The methods, estimates and judgments the Company uses in applying
these most critical accounting policies have a significant impact on
the results the Company reports in its financial statements.

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



J. 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.



K. 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
September 2006, the FASB issued ASC 820 “Fair Value
Measurements and Disclosures”.  ASC 820 defines fair
value, establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosure about fair
values.  This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years.  Management believes
that the adoption of ASC 820 did not have a material impact on the
consolidated financial results of the Company.

In
February 2007, the FASB issued ASC 825, "Financial Instruments".
ASC 825 permits companies to choose to measure many financial
instruments and certain other items at fair value that are not
currently required to be measured at fair value and establishes
presentation and disclosure requirements designed to facilitate
comparisons between companies that choose

Page 8

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different
measurement attributes for similar types of assets and liabilities.
The provisions of ASC 825 become effective as of the beginning of our
2009 fiscal year. We are currently evaluating the impact that ASC 825
will have on our financial statements.

In
December 2007, the FASB issued ASC 810-10-65, “Consolidation”
which applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only
those entities that have an outstanding noncontrolling interest in
one or more subsidiaries or that deconsolidate a subsidiary. The
statement is effective for annual periods beginning after December
15, 2008.

In March
2008, the FASB issued ASC 815, “Derivatives and Hedging”,
which requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the
transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format
provides a more complete picture of the location in an entity’s
financial statements of both the derivative positions existing at
period end and the effect of using derivatives during the reporting
period. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for
under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows. ASC 815 is
effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. Early adoption is
permitted.

At
December 31, 2007, the Company did not have any derivative
instruments or hedging activities. Management is aware of the
requirements of ASC 815 and will disclose when appropriate.

In
May 2008, the Financial Accounting Standards Board (“FASB”)
issued ASC 944,“Financial
Services Insurance”. ASC 944requires that an insurance
enterprise recognize a claim liability prior to an event of default
when there is evidence that credit deterioration has occurred in an
insured financial obligation. It also clarifies how Statement 60
applies to financial guarantee insurance contracts, including the
recognition and measurement to be used to account for premium revenue
and claim liabilities, and requires expanded disclosures about
financial guarantee insurance contracts. It is effective for
financial statements issued for fiscal years beginning after December
15, 2008, except for some disclosures about the insurance
enterprise’s risk-management activities. ASC 944requires that
disclosures about the risk-management activities of the insurance
enterprise be effective for the first period beginning after
issuance. Except for those disclosures, earlier application is not
permitted. The adoption of this statement is not expected to have a
material effect on the Company's future reported financial position
or results of operations.

Page 9

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

The shares
issued were recorded using the fair market value of the services
provided. The officer is also reimbursed for expenses paid on behalf
of the Company as needed.

During the
year ended 2007, the Company issued a director of the Company
10,600,000 shares of common stock valued at $268,000 for consulting
fees included in Development Costs (See Note 7-Development Costs).

|                                  | 9/30/08       | 12/31/07    
|--------------------------------- | ------------- | ------------
|Building                          | --            | 600,000     
|Vehicles                          | 45,308        | 45,308      
|Land                              | --            | 150,000     
|                                  | ------------  | ----------- 
|                                  | 45,308        | 795,308     
|Less accumulated
				depreciation | (36,447)      | (62,023)    
|                                  | ------------- | ----------- 
|                                  | $ 8,860       | $733,285    
|                                  | ============= | ============

Depreciation expense for
the three months ended September 30, 2008 and 2007 was $6,111 for
both years, and for the nine months in the same periods were $18,334
and $18,336, respectively.

During the
nine months ended September 30, 2008, the Company defaulted on the
mortgage loan related to its land and building with a historical cost
of $750,000 and accumulated depreciation of $43,190. Consequently,
the title to the land and building were transferred to the mortgage
holder as settlement for the outstanding mortgage loan totaling
$584,531 resulting in a net loss on disposal of assets totaling
$121,559 for the nine months ended September 30, 2008. (See Note 9
for additional discussion).

Page 10

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|Original value                     | $ 8,000
|---------------------------------- | -------
|Less accumulated
				depreciation  | (1,554)
|Less insurance
				payment on loss | (4,834)
|Impairment
			loss                 | $ 1,612

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

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

The
Company has incurred the following development costs to date:

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



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



NOTE 8-
NOTE PAYABLE

In January
2007, the Company issued a note for $60,000 bearing interest at 10%
on the principal and accrued interest compounding monthly. As of
September 30, 2008 and December 31, 2007, the outstanding principle
balance of the note was $60,000 and $60,000 and had accrued interest
of $11,409 and $6,283, respectively.

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



The Company defaulted on
the mortgage and was the defendant in a lawsuit brought by the
mortgage holder of the property. The Company was ordered to commence
monthly payments of $3,272 to the plaintiff beginning on April 16,
2008 and on the same date each month thereafter. The Company has met
the requirements of the Agreement as of September 30, 2008, however
is still 3 months in arrears on the mortgage payments per the
mortgage payment schedule.



On
September 30, 2008, the Company reached an agreement with the
mortgage holder that returned the building to the mortgage holder and
negated any amounts due from the Company to the mortgage holder. The
transaction resulted in a net loss on disposal of assets totaling
$121,559.

|Historical
				Value-Building  | $
				600,000  
|------------------------------ | ---------------
|Historical
				Value-Land      | 150,000        
|Depreciation                   | (43,910)       
|Carrying
				value             | 706,090        
|Mortgage
				debt              | 584,531        
|Loss
				on disposal of assets | $
				(121,559)

NOTE 10 –
STOCKHOLDERS’ EQUITY

In January
2008, the Company issued 1,000,000 shares of common stock for $10,000
cash or $0.01 per share.

In March
2008, the Company issued 5,000,000 shares of common stock net of fees
for $49,809 cash or $0.01 per share.

In May
2008, the Company issued 1,450,000 shares of common stock for $14,500
cash or $0.01 per share.

In July
2008, the Company issued 3,000,000 shares of common stock in lieu of
accounts payable for a total of $30,000 or $0.01 per share.

Page 12

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NOTE 11 -
COMMITMENTS & CONTINGENCIES

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

On April
10, 2006, the Company entered into a lease consisting of
approximately 2,450 square feet for a restaurant at 500 Bollinger
Canyon Way, San 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. (See Note 13: Subsequent
Events)

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, 2008:

|2009       | 43,202    
|---------- | ----------
|2010       | 174,396   
|2011       | 176,574   
|2012       | 178,812   
|2013       | 181,098   
|Thereafter | 392,201   
|Total      | $1,146,283

On February 15, 2008, the
Company signed a contract with the Odys Shipyard for building
Undersea vessels. Under the terms of the contract, the contract
becomes effective when the Company has placed a 50% deposit on the
first vessel to be built. The Company has 100 days from the date of
the contract to make the initial deposit or Odys Shipyard may
unilaterally cancel the contract. The Company has no financial
obligations until the initial payment has been completed. No payments
have been made to the shipyard under the contract and the Company has
not received any notice of cancellation from the shipyard.

NOTE 12 -
LEGAL MATTERS

The
Company was the defendant in a lawsuit filed on February 21, 2008 in
Brevard County, Florida Case No: 05-2008-CA-019105 which was brought
by the mortgage holder of the property owned by the Company at 13
Main Street Titusville, FL. The matter was heard on March 14, 2008
and the Company was ordered to commence monthly payments of $3,272.32
to the plaintiff beginning on April 16, 2008 and on the same date
each month thereafter.

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

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



NOTE 13 –
SUBSEQUENT EVENT

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

On
November 2, 2009, the Company issued 16,000,000 shares of common
stock with a value of $32,000 for services.

Page 14

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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 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.

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Results
of Operations.

(a)
Revenues.

The
Company reported no revenues for the three months and nine months
ended September 30, 2008 and no revenue for the same periods ended
September 30, 2007. The Company did receive rental income from the
building it owned and revenue from the sublease of one of the
restaurants it released. This revenue is classified as Other Income.
The Company received other income of $1,500 for the three months and
$23,092 for the nine months ended September 30, 2008 and $8,162 and
$33,724 for the respective periods ending September 30, 2007.



(b)
General and Administrative Expenses.

The
Company incurred total selling, general and administrative expenses
of $16,950 for the three months and $191,290 for the nine months
ended September 30, 2008 as compared to $221,708 for the three months
and $485,379 for the nine months ended September 30, 2007. The
decrease in this expense category was due primarily to reduced
accrued salary due officer for services and lower administrative
costs.



(c)
Depreciation and amortization.

Depreciation
and amortization for the three months and nine months ended September
30, 2008 was $8,612 and $21,958. For the same periods ending
September 30, 2007, depreciation and amortization recorded was $6,111
and $18,336. The depreciation is attributable to the building that
was owned by the Company and vehicle owned by the Company.



(d)
Interest Expense.

The
Company incurred interest charges of $8,026 and $26,619 during the
three months and nine months ended September 30, 2008. During the
same periods ending September 30 2007, the Company incurred interest
charges of $6,710 and $27,757, respectively.



(e)
Other Income and expense

The
Company, due to relinquishing the building incurred a loss on
disposal of assets of $121,559 during the period ending September 30,
2008. None was incurred during the same period in 2007.

The
development costs for the undersea ship project were impaired during
the period ending September 30, 2008 as construction has not been
started on the project. The impairment loss was $710,205 for the
period ending September 30, 2008 compared to a similar loss of $1,612
during the same period in 2007. Even though the Company has impaired
the cost of development, the Company continues it efforts to bring
the project to fruition.



(f) Net
Loss.

The
Company reported a net loss of $864,043 for the three months and
$1,062,272 for the nine months ended September 30, 2008 as compared
to a net loss of $226,367 and $499,358 for the same period ended
September 30, 2007. The loss for the quarter ended September 30, 2008
was primarily attributable to the loss on the building and the
impairment of the development cost during the period ending September
30, 2008.

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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 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 $97,306 for the nine months
ended September 30, 2008 compared to net cash used of $55,708 for the
nine months ended September 30, 2007. This increase is due primarily
to the loss on the building for the period ended September 30, 2008
compared to the same period in 2007.

Investing
Activities.

Net cash
used in investing activities was $338,000 for the nine months period
ending September 30, 2007 and zero for the same period ending
September 30, 2008.

Financing
Activities.

Net cash
provided by financing activities was $84,159 for the nine month
period ending September 30, 2008 and $246,439 for the same period
ending September 30, 2007. Financing activities for the period ending
September 30, 2007 were higher due to a combination of stock sales
and note issued totaling $179,000 in the period ended September 30,
2007 versus stock sales of $76,500 and a reduction of credit lines by
$52,485 in the period ended September 30, 2008.

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Liquidity
and Capital Resources.

As of
September 30, 2008, the Company had total current assets of zero and
total current liabilities of $273,230, resulting in net working
capital deficit of $273,230. During the nine months ended September
30, 2008 and 2007, the Company incurred losses of $1,062,272 and
$499,358, respectively. The aggregate accumulated deficit and
accumulated deficit during the development stage of the Company is
$13,670,464 ($11,886,789 and $1,783,675, respectively). These factors
raise substantial doubt as to the Company’s ability to continue
as a going concern. In fact, the Company’s independent
accountants’ audit report included in the Form 10-KSB/A for the
year ended December 31, 2007 includes a substantial doubt paragraph
regarding the Company’s ability to continue as a going concern.

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

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

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

- 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

Page 18

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rights,
preferences and privileges senior to holders of common stock and the
terms of such debt could impose restrictions on our operations.
Regardless of whether our cash assets prove to be inadequate to meet
our operational needs, we may seek to compensate providers of
services by issuance of stock in lieu of cash, which may also result
in dilution to existing shareholders.

### Off
Balance Sheet Arrangements.

The
Company does not engage in any off balance sheet arrangements that
are reasonably likely to have a current or future effect on our
financial condition, revenues, and results of operations, liquidity
or capital expenditures.

Inflation.

The impact
of inflation on our costs and the ability to pass on cost increases
to customers over time is dependent upon market conditions. We are
not aware of any inflationary pressures that have had any significant
impact on our operations over the past quarter, and the Company does
not anticipate inflationary factors will have a significant impact on
future operations.

Critical
Accounting Policies.

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

Page 19

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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.

ITEM 4T. 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

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

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

Changes
in Disclosure Controls and Procedures.

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

PART II
– OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS.

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

The
Company is the defendant in a lawsuit filed on February 21, 2008 in
Brevard County, Florida Case No: 05-2008-CA-019105 which was brought
by the mortgage holder of the property owned by the Company at 13
Main Street Titusville, FL. The matter was heard on March 14, 2008
and the Company was ordered to commence monthly payments of $3,272.32
to the plaintiff beginning on April 16, 2008 and on the same date
each month thereafter. The Company has not met the requirements of
the Agreement as of September 30, 2008.

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

Page 21

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ITEM
1A. RISK FACTORS.

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

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

The
Company made the following sales of unregistered (restricted)
securities during the nine months ending September 30, 2008:

(a) On
January 9, 2008, the Company sold a total of 1,000,000 shares of
common stock to an individual for cash. These shares were valued at a
total of $10,000 ($0.01 per share).

(b) On
March 27, 2008, the Company issued a total of 5,000,000 shares of
common stock to an individual for cash for a total value of $49,809
($0.01 per share).

(c) On May
16, 2008, the Company issued a total of 350,000 shares of common
stock to an individual for cash for a total value of $3,500 ($0.01
per share).

(d) On May
28, 2008, the Company issued a total of 1,100,000 shares of common
stock to five individuals for cash with a total value of $11,000
($0.01 per share).

(e) On
July 2, 2008, the Company issued a total to 3,000,000 shares of
common stock to one individual for accounts payable with a total
value of $30,000 ($0.01per share)

No
commissions were paid in connection with any of these sales. These
sales were undertaken under Rule 506 of Regulation D under the
Securities Act of 1933. Each of the transactions did not involve a
public offering and each of the investors represented that he/she was
a “sophisticated” or “accredited” investor as
defined in Rule 502 of Regulation D.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.

The
Company was in default on the mortgage on the building it owns at 13
Main Street Titusville, FL. The Company was the defendant in a
lawsuit brought by the mortgage holder of the property and was
ordered to commence monthly payments of $3,272.32 to the plaintiff
beginning on April 16, 2008 and on the same date each month
thereafter. The Company has not met the requirements of the
Agreement.

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

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

None

Page 22

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ITEM 5.
OTHER INFORMATION.

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

On
November 19, 2008, the Company filed an 8-K noting the formation of a
management division within the Company. No activity has taken place
within the division since the announcement.

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



31 Rule
	13a-14(a)/15d-14(a) 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.

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