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 JUNE 30, 2009

OR

[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
______________

COMMISSION
FILE NUMBER: 000-15109

CALA
CORPORATION

Exact
Name of Company as Specified in Its Charter)

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

1314
Texas Street, Suite 400, Houston, TX 77002 (713) 236-1818

(Address of Principal Executive Offices)
(Company’s Telephone Number)

Indicate by check mark
whether the Company (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes ­­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 December
16, 2010, the Company had 320,866,147 shares of
common stock issued and outstanding.

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

Page
1





|TABLE OF CONTENTS                                                                                                                                      |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                       |  |     
|                                                                                                                                                       |  | Page
|PART I: FINANCIAL INFORMATION                                                                                                                          |  |     
|                                                                                                                                                       |  |     
|Item 1. Financial Statements                                                                                                                           |  | 3   
|Balance Sheets as June 30, 2009
				(unaudited) and December 31, 2008 (audited)                                                                        |  | 3   
|Statements of Operations For the
				Three and Six Months ending June 30, 2009 and 2008 and from
				January 1, 2007 through June 30, 2009 (unaudited) |  | 4   
|Statements of Cash Flows For the
				Three and Six Months Ended June 30 , 2009 and 2008 and from
				January 1, 2007 through June 30, 2009 (unaudited) |  | 5   
|Notes to Financial Statements
				(unaudited)                                                                                                          |  | 6   
|                                                                                                                                                       |  |     
|Item 2. Management’s Discussion and Analysis of
				Financial Condition and Results of Operations                                                      |  | 13  
|                                                                                                                                                       |  |     
|Item 3. Quantitative and Qualitative Disclosures About Market
				Risk                                                                                 |  | 19  
|                                                                                                                                                       |  |     
|Item 4T. Controls and Procedures                                                                                                                       |  | 19  
|                                                                                                                                                       |  |     
|PART II: OTHER INFORMATION                                                                                                                             |  |     
|                                                                                                                                                       |  |     
|Item 1. Legal Proceedings                                                                                                                              |  | 20  
|                                                                                                                                                       |  |     
|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. Submission of Matters to a vote of Security Holders                                                                                            |  | 20  
|                                                                                                                                                       |  |     
|Item 5. Other Information                                                                                                                              |  | 20  
|                                                                                                                                                       |  |     
|Item 6. Exhibits                                                                                                                                       |  | 20  
|                                                                                                                                                       |  |     
|Signatures                                                                                                                                             |  | 21  
|                                                                                                                                                       |  |     

Page
2

CALA
CORPORATION (A Development Stage Company)BALANCE
SHEETS

|                                                                                  | June 30, 2009 | December 31, 2008
|--------------------------------------------------------------------------------- | ------------- | -----------------
|                                                                                  | (Unaudited)   | (Audited)        
|ASSETS                                                                            |               |                  
|Total current assets                                                              | $ --          | $ --             
|                                                                                  |               |                  
|Equipment                                                                         |               |                  
|Fixed assets-net of depreciation of $43,243 and                                   |               |                  
|$38,713, respectively                                                             | 2,064         | 6,595            
|Total equipment                                                                   | 2,064         | 6,595            
|                                                                                  |               |                  
|Other assets                                                                      |               |                  
|Website development costs-net of amortization
				$11,123and $6,123, respectively | 18,877        | 23,877           
|Total assets                                                                      | $ 20,941      | $ 30,472         
|                                                                                 
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                            
|                                                                                 
|Current liabilities                                                               |              
|Accounts payable and accrued expenses                                             | $ 45,922      | $ 49,972         
|Note payable                                                                      | 62,000        | 60,000           
|Due to related party                                                              | 67,260        | 65,419           
|Accrued officers salary                                                           | 283,600       | 133,600          
|Taxes payable                                                                     | 11,599        | 11,599           
|Total current liabilities                                                         | 470,381       | 320,590          
|                                                                                  |               |                  
|Total liabilities                                                                 | 470,381       | 320,590          
|                                                                                  |               |                  
|Stockholders' deficit                                                             |               |                  
|Common stock                                                                      |               |                  
|$0.005 par value; 400,000,000 shares authorized                                   |               |                  
|Issued and outstanding: 320,866,147 and
				294,916,147,                          |               |                  
|respectively                                                                      | 1,604,329     | 1,524,329        
|Additional paid-in capital                                                        | 11,861,259    | 11,909,259       
|Accumulated deficit                                                               | (11,886,789)  | (11,886,789)     
|Accumulated deficit during development stage                                      | (2,027,123)   | (1,835,801)      
|Treasury stock - 56,533 shares at cost                                            | (1,116)       | (1,116)          
|Total stockholders' deficit                                                       | (449,440)     | (290,118)        
|Total liabilities and stockholders’ deficit                                       | $ 20,941      | $ 30,472         

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

Page
3

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

|                                                         | For three
				Months Ended June30,
				2009 | For three
				Months Ended June30,
				2008 | For
				Six Months Ended June 30, 2009 | For
				Six Months Ended June 30, 2008 | From
				January 1, 2007 through June 30, 2009 (DevelopmentStage Period)
|-------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | -------------------------------------- | -------------------------------------- | ------------------------------------------------------------------------
|Income                                                   | $ --                                        | $ --                                        | $ --                                   | $ --                                   | $ --                                                                    
|General and
				administrative                           |                                             |                                             |                                        |                                        |                                                                         
|expense                                                  | 77,268                                      | 146,594                                     | 174,838                                | 174,341                                | 1,104,305                                                               
|Depreciation and
				amortization                        | 4,765                                       | 7,235                                       | 9,531                                  | 13,346                                 | 60,700                                                                  
|                                                         | Total operating expenses                    | 82,033                                      | 153,829                                | 184,369                                | 187,687                                                                 
|                                                         |                                             |                                             |                                        |                                        |                                                                         
|Loss from operations                                     | (82,033)                                    | (153,829)                                   | (184,369)                              | (187,687)                              | (1,165,005)                                                             
|                                                         |                                             |                                             |                                        |                                        |                                                                         
|Other income (expense)                                   |                                             |                                             |                                        |                                       
|Other income                                             | --                                          | 10,450                                      | --                                     | 21,592                                 | 74,007                                                                  
|Interest expense                                         | (3,938)                                     | (9,310)                                     | (6,953)                                | (18,592)                               | (86,095)                                                                
|Impairment loss on assets                                | --                                          | --                                          | --                                     | --                                     | (711,817)                                                               
|Loss on disposal of
				assets                           | --                                          | --                                          | --                                     | --                                     | (121,560)                                                               
|Other expense                                            | --                                          | (10,976)                                    | --                                     | (13,542)                               | (16,653)                                                                
|                                                         | Total other income
				(expense)            | (85,972)                                    | (9,836)                                | (6,953)                                | (10,542)                                                                
|                                                         |                                             |                                             |                                        |                                        |                                                                         
|Net loss                                                 | $ (85,972)                                  | $ (163,665)                                 | (191,322)                              | (198,229)                              | $ (2,027,123)                                                           
|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                                 | 301,541,605                                 | 318,404,609                            | 298,788,897                            |                                                                         

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

Page
4

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

|                                                         |                                                                       |                                               |                                                                 | For Six Months Ended June 30,2009 | For Six Months Ended June 30,2008 | From January 1, 2007 throughJune
				30, 2009(Development Stage Period)
|-------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------- | --------------------------------------------------------------- | --------------------------------- | --------------------------------- | -----------------------------------------------------------------------
|CASH FLOWS FROM OPERATING
				ACTIVITIES                 |                                                                       |                                               |                                                                
|                                                         | Net loss                                                              | $ (191,322)                                   | $ (198,229)                                                     | $ (2,027,123)                    
|                                                         | Adjustments to reconcile
				loss from continuing                     |                                               |                                                                 |                                  
|operations to net cash
				used in operating activities: |                                                                       |                                               |                                                                
|                                                         |                                                                       |                                               | Impairment loss                                                 | --                                | --                                | 711,818                                                                
|                                                         |                                                                       |                                               | Depreciation and
				amortization                               | 9,531                             | 13,346                            | 60,698                                                                 
|                                                         |                                                                       |                                               | 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 expense | (4,052)                           | 65,335                            | 40,533                                                                 
|                                                         |                                                                       |                                               | Bank overdraft                                                  | --                                | 1,039                             |                                                                        
|                                                         |                                                                       |                                               | Accrued officers salary                                         | 150,000                           | 98,273                            | 283,600                                                                
|                                                         |                                                                       |                                               | Increase(decrease) in
				taxes payable                         | --                                | --                                | (28)                                                                   
|                                                         |                                                                       |                                               | Net cash used in operating
				activities                       | (13,843)                          | (20,236)                          | (299,942)                                                              
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|CASH FLOW FROM INVESTING
				ACTIVITIES                  |                                                                       |                                               |                                                                
|Payment for development
				costs                        | --                                                                    | --                                            | (70,001)                                                       
|Web development cost                                     |                                                                       | (30,000)                                      |                                                                
|Disposal of fixed assets                                 | --                                                                    | --                                            | 4,832                                                          
|                                                         | Net cash used investing
				activities                                | --                                            | (30,000)                                                        | (65,169)                         
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|CASH FLOW FROM FINANCING
				ACTIVITIES                  |                                                                       |                                               |                                                                
|                                                         | Payments made on mortgage                                             | --                                            | (2,206)                                                         | (12,244)                         
|                                                         | Proceeds from notes
				payable                                       | 2,000                                         | --                                                              | 62,000                           
|                                                         | Proceeds from issuance of
				common stock                            | --                                            | 76,310                                                          | 278,950                          
|                                                         | Proceeds from due to
				related party                                | 11,843                                        | --                                                              | (306))                           
|                                                         |                                                                       |                                               |                                                                 |                                   |                                  
|                                                         |                                                                       | Net cash provided by
				financing activities | 13,843                                                          | 37,089                            | 329,012                          
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|NET CHANGE IN CASH                                       | --                                                                    | (13,147)                                      | (36,099)                                                       
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|CASH AT BEGINNING OF
				PERIOD                          | --                                                                    | 13,147                                        | 36,099                                                         
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|CASH AT END OF PERIOD                                    | $      
				--                                                        | $ --                                          | $    
				   --                                                
|                                                         |                                                                       |                                               |                                                                 |                                   |                                   |                                                                        
|SUPPLEMENTAL INFORMATION:                                |                                                                       |                                               |                                                                
|                                                         | Interest paid                                                         | $     991                                     | $ 23,105                                                        | $ 53,495                         
|                                                         | Shares issued for service
				classified as a capital cost            | $ --                                          | $ --                                                            | $ 268,000                        
|                                                         | Satisfaction of accounts
				payable with common stock                | $ --                                          | $ 30,000                                                        | $ 30,000                         
|                                                         | Satisfaction of notes
				payable with common stock                   | $ --                                          | $ --                                                            | $ 145,000                        
|                                                         | Satisfaction of notes
				payable – related parties with common stock | $ 10,000                                      | $ --                                                            | $ 10,000                         

Page 5

CALA
CORPORATION (A Development Stage Company) NOTES TO FINANCIAL
STATEMENTSJune 30, 2009(Unaudited)

# NOTE 1 - DESCRIPTION OF BUSINESS

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

NOTE 2 - GOING CONCERN

The
Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. The aggregate accumulated deficit
and accumulated deficit during the development stage of the Company
is $13,913,912 ($11,886,789 and $2,027,123, respectively). The
Company has not established revenues sufficient to cover its
operating costs. This uncertainty raises substantial doubt about the
Company's ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company's plan. These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from this
uncertainty.

NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.
Basis of Presentation – The accompanying financial statements
included herein have been prepared by the Company, without audit,
pursuant to the rules and regulations under Regulation S-X of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to such
rules and regulations, although we believe that the disclosures
are adequate to make the information presented not misleading. In the
opinion of management, all adjustments, (which include normal
recurring adjustments) necessary for a fair presentation of the
results for the interim periods have been made. The results for the
six months ended June 30, 2009 are not necessarily indicative of
results to be

Page
6

expected
for the full fiscal year. These financial statements should be read
in conjunction with the financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended
December 31, 2008.

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 June 30, 2009, the Company had no issuable shares
qualified as dilutive. Had there been dilutive securities they would
be excluded from the loss per share calculation because their
inclusion would be antidilutive.

D.
Estimates - The preparation of 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 505 “Stock-Based Compensation”,which
establishes standards for the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. It
also addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of
the entity’s equity instruments or that may be settled by the
issuance of those equity instruments. We determine the value of stock
issued at the date of grant. We also determine at the date of grant
the value of stock at fair market value or the value of services
rendered (based on contract or otherwise) whichever is more readily
determinable.

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

G.
Revenue Recognition – During the six months period ending June
30, 2008 income received by the Company was rental income from the
tenants leasing space in the building owned by the Company which is
outside the normal operations of the Company. Revenue was recognized
when it is due and payable by the tenants and in accordance with
SAB-104. During the period six months period ending June 30, 2009 no
revenue was receive by the Company.

Page
7

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

Description Useful life

Vehicles
5 years

Building
10-40 years

I.
The Company accounts for the underwater sea resort and ship
development costs in accordance with 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

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 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. The adoption of ASC 825 had
no impact on our financial statements.

Page 8



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
provisions of ASC 810 become effective as of the beginning of our
2009 fiscal year. The adoption of ASC 810-10-65 had no impact on our
financial statements.

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.

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



In
September 2009, the FASB issued Accounting Standards Update 2009-12,*Fair Value
Measurements and Disclosures (Topic 820): Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its
Equivalent). This update provides amendments to Topic 820 for the
fair value measurement of investments in certain entities that
calculate net asset value per share (or its equivalent). It is
effective for interim and annual periods ending after December 15,
2009. Early application is permitted in financial statements for
earlier interim and annual periods that have*

*Page
9*

*not
been issued.*The
Company does not expect the provisions of ASU 2009-12 to have a
material effect on the financial position, results of operations or
cash flows of the Company.



Accounting Standards Update 2009-1 to
2009-11, had no material affect on the Company’s financial
statements.

NOTE 5 - RELATED PARTY TRANSACTIONS



During the six months
period ending June 30, 2009, the Company accrued $150,000 for salary
payable to an officer of the Company with a balance due from the
Company of $283,600 which has been accrued and not paid. As of
December 31, 2008, salary payable due to officer was $133,600.



During the six months
period ending June 30, 2009, an officer advanced $11,843 to the
Company for operating expenses and debt reduction for an outstanding
balance of $67,260 as of June 30, 2009 and $65,419 as of December 31,
2008.

NOTE 6 - FIXED ASSETS



Fixed Asset at June 30,
2009 and December 31, 2008 consist of the following:

|                              | 6/30/2009     | 12/31/08    
|----------------------------- | ------------- | ------------
|Vehicles                      | 45,308        | 45,308      
|Less accumulated depreciation | (43,244)      | (38,713)    
|                              | ------------- | ----------- 
|                              | $ 2,064       | $6,595      
|                              | ============= | ============



Depreciation
expense for the six months ended June 30, 2009 was $4,531 and $13,346
for the same period in 2008.

NOTE 7- NOTE
PAYABLE

In
January 2007, the Company issued a note for $60,000 bearing interest
at 10% on the principal and accrued interest compounding monthly. 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 June 30, 2009 and December 31, 2008, the
outstanding principle balance of the note was $60,000 and $60,000 and
had accrued interest of $18,051 and $13,926, respectively.



On
June 26, 2009, the Company issued a note for $2,000 payable on demand
and bearing no interest.

Page
10

NOTE 8 –
STOCKHOLDERS’ EQUITY

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

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

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

NOTE
9 - COMMITMENTS & CONTINGENCIES

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

Then
following is a schedule by year of the future minimum rental payments
required under operating leases that have non-cancelable lease terms
in excess of one year as of June 30, 2009:



|2009  | 51,000  
|----- | --------
|2010  | 102,000 
|2011  | 102,000 
|2012  | 102,000 
|2013  | 102,000 
|2014  | 102,000 
|2015  | 102,000 
|2016  | 2,267   
|Total | $665,267



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

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11



The
following is a schedule by year of the future minimum rental payments
required under operating leases that have non-cancelable lease terms
in excess of one year as of June 30, 2009:



|2009  | 35,148  
|----- | --------
|2010  | 72,396  
|2011  | 74,574  
|2012  | 76,812  
|2013  | 79,113  
|2014  | 81,492  
|2015  | 83,937  
|2016  | 21,138  
|Total | $524,610

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 had 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 had not paid the principal or interest
on promissory notes issued in 2004. In 2005, the Company issued stock
of 3,400,000 and 2,500,000 shares to the plaintiff in full payment of
the outstanding notes and interest to the plaintiff. As of June 30,
2009, 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.

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12

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

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

Overview.

The
Company is in the planning and development stage of building the
first UnderSea Resort & Casino, the first Undersea Residence, and
the first Residence Fractional Ownership. The development will be the
residence and the fractional ownership, and the project will be
financed from pre-selling individual units. The Company estimates
that the resort and casino will include a 50,000 square foot world
class Spa by Pevonia and a 200,000 square foot convention center. The
development should generate approximately $600 million of revenue
from the sale of the units while the total development cost should be
approximately $460 million. The Company is in discussions with
leaders in the hospitality, gambling, spa and convention industry to
explore the possibility of a partnership or contractual arrangement
with the Company. The undersea resort ships have the ocean available
without the limitations of land.

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

Page
13

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 three and six months periods
ended June 30, 2009 and 2008. The Company did receive rental income
from the building it owned and revenue from the sublease of one of
the restaurants it released during the six months period ending June
30, 2008. This revenue is classified as Other Income. The Company
received other income of $0 and $21,592 for the six months ended June
30, 2009 and 2008, respectively. The lack of revenue in 2009 was due
to the relinquishing of the building in 2008 and rent not being paid
by the restaurants.

(b)
General and Administrative Expenses.

The
Company incurred total selling, general and administrative expenses
of $77,268 for the three months and $174,838 for the six months ended
June 30, 2009 as compared to $146,594 for the three months and
$174,341 for the six months ended June 30, 2008. The decrease in this
expense category for the three months in 2009 for the comparison
periods was due primarily to zero building expenses in 2009 compared
to 2008 as the building had been returned to the mortgage holder in
2008.

(c)
Depreciation and amortization.

Depreciation
and amortization for the three and six months periods ended June 30,
2009 was $4,765 and $9,531 and $7,235 and $13,346 for the same
periods ending June 30, 2008, respectively. The depreciation is
attributable to the building that was owned by the Company in 2008
and vehicle owned by the Company.

(d)
Interest Expense.

The
Company incurred interest charges of $3,938 and $6,953 during the
three and six months ended June 30, 2009 and $9,310 and $18,592 for
the respective periods in 2008. The lower interest during the 2009
period was due to the relinquishing of the building in 2008 and no
interest on the mortgage being paid in 2009.

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14

(e)
Net Loss.

The
Company reported a net loss of $85,972 and $191,322 for the three and
six months ended June 30, 2009 as compared to a net loss of $163,665
and $198,229 for the same periods ended June 30, 2008. The decreased
loss for the three months period in 2009 was primarily attributable
to lower cost legal and accounting and other expenses.

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.

Page
15

Operating
Activities.

The
net cash used in operating activities was $13,843 for the six months
period ending June 30, 2009 compared to net cash used of $20,236 for
the six months ended June 30, 2008. This decrease is due primarily to
the decrease of accounts payable and accrued expenses in 2009
compared to the same period in 2008.

Investing
Activities.

Net
cash used in investing activities was zero for the six months period
ending June 30, 2009 and $30,000 for the same period ending June 30,
2008.

Financing
Activities.

Net
cash provided by financing activities was $13,843 for the six month
period ending June 30 2009 and $37,089 for the same period ending
June 30, 2008. Financing activities for the period ending June 30,
2009 were lower due to stock sales of $76,310 in the period ended
June 30, 2008.

Liquidity
and Capital Resources.

As
of June 30, 2009, the Company had total current assets of zero and
total current liabilities of $470,381, resulting in net working
capital deficit of $470,381. During the six months ended June 30,
2009 and 2008, the Company incurred losses of $191,322 and $198,229,
respectively. The aggregate accumulated deficit and accumulated
deficit during the development stage of the Company is $13,913,912
($11,886,789 and $2,027,123, respectively). These factors raise
substantial doubt as to the Company’s ability to continue as a
going concern. In fact, the Company’s independent accountants’
audit report included in the Form 10-K for the year ended December
31, 2008 includes a substantial doubt paragraph regarding the
Company’s ability to continue as a going concern.

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

Page
16

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 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.

Page
17

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 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.

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18

(c)
Revenue Recognition.

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

Forward
Looking Statements.

Information
in this Form 10-Q contains “forward looking statements”
within the meaning of Rule 175 of the Securities Act of 1933, as
amended, and Rule 3b-6 of the Securities Act of 1934, as amended.
When used in this Form 10-Q, the words “expects,”
“anticipates,” “believes,” “plans,”
“will” and similar expressions are intended to identify
forward-looking statements. These are statements that relate to
future periods and include, but are not limited to, statements
regarding our adequacy of cash, expectations regarding net losses and
cash flow, our need for future financing, our dependence on
personnel, and our operating expenses.

Forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected. These
risks and uncertainties include, but are not limited to, those
discussed above as well as risks set forth above under “Factors
That May Affect Our Results.” These forward-looking statements
speak only as of the date hereof. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in its expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based.

ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM
4T. CONTROLS AND PROCEDURES.

Evaluation of
Disclosure Controls and Procedures.

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

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19

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 had 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 had not paid the principal or interest on
promissory notes, issued in 2004. In 2005, the Company issued stock
of 3,400,000 and 2,500,000 shares to the plaintiff in full payment of
the outstanding notes and interest to the plaintiff. The Company
maintains the position the notes and interest were paid in full by
the issuance of stock to the plaintiff and the Company has no
liability.

Page
20

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

ITEM
1A. RISK FACTORS.

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

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

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

3.
DEFAULTS UPON SENIOR SECURITIES.

In
January 2007, the Company issued a note for $60,000 bearing interest
at 10% on the principal and accrued interest compounding monthly. As
of June 30, 2009, the outstanding principle balance of the note was
$60,000 and had accrued interest of $18,051. The note including
principal and interest is in default and still outstanding.

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

None

ITEM
5. OTHER INFORMATION.

NONE



ITEM 6. EXHIBITS.

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

32 Section 1350 Certification of Joseph
Cala.



Page
21



SIGNATURE

Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Cala Corporation.



Dated: December 16, 2010 By: /s/
Joseph Cala

Joseph Cala, President

Principal Executive Officer and Chief Financial Officer





EXHIBIT
INDEX



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



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