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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, 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, 2011
 
OR
 
o 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)
 
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 o No x

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 o Accelerated filed o
Non-accelerated filer o
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 o No x

As of August 18, 2014 the Company had 320,866,147 shares of common stock issued and outstanding.
 
Transitional Small Business Disclosure Format (check one): Yes o No x
 


 
 

 
TABLE OF CONTENTS
 
     
Page
 
PART I: FINANCIAL INFORMATION      
         
Item 1.
Financial Statements
     
 
Balance Sheets as at September 30, 2011 (unaudited) and December 31, 2010 (audited)
    3  
 
Statements of Operations for the three and nine months ending September 30, 2011 and 2010 (unaudited)
    4  
 
Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 (unaudited)
    5  
 
Notes to Financial Statements (unaudited)
    6  
           
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    9  
           
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    16  
           
Item 4T.
Controls and Procedures
    16  
           
PART II: OTHER INFORMATION        
           
Item 1.
Legal Proceedings
    17  
           
Item 1A.
Risk Factors
    17  
           
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    17  
           
Item 3.
Defaults upon Senior Securities
    17  
           
Item 4.
Submission of Matters to a vote of Security Holders
    17  
           
Item 5.
Other Information
    17  
           
Item 6.
Exhibits
    18  
           
Signatures     19  
 
 
2

 

CALA CORPORATION
BALANCE SHEETS
(Unaudited)
 
    September 30,
2011
    December 31,
 2010
 
             
ASSETS
Total current assets
  $ -     $ -  
                 
Other assets
               
Website development
    -       3,877  
Total assets
  $ -       3,877  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
Current liabilities                
Accounts payable and accrued expenses
  $ 76,848     $ 72,270  
Notes payable
    62,000       62,000  
Due to related party
    105,506       83,272  
Accrued officers salary
    958,600       733,600  
Taxes payable
    11,599       11,599  
Contingent liability
    321,667       321,667  
Total current liabilities
    1,536,220       1,284,408  
                 
Total liabilities
    1,536,220       1.284,408  
                 
Stockholders' deficit
               
Common stock
               
$0.005 par value; 400,000,000 shares authorized
               
Issued and outstanding: 320,866,147 and 320,866,147, respectively
    1,604,329       1,604,329  
Additional paid-in capital
    11,861,259       11,861,259  
Accumulated deficit
    (15,000,692 )     (14,745,003 )
Treasury stock - 56,533 shares at cost
    (1,116 )     (1,116 )
Total stockholders' deficit
    (1,536,220 )     (1,280,531 )
Total liabilities and stockholders’ deficit
  $ --     $ 3,877  

The accompanying notes are an integral part of these unaudited financial statements.
 
 
3

 
 
CALA CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
 
   
For Three Months Ended
September 30,
   
For Nine Months Ended
 September 30,
 
   
2011
   
2010
   
2011
   
2010
 
Revenue
  $ -       -     $ -     $ -  
General and administrative expense
    78,469       78,550       243,806       232,916  
Depreciation and amortization
    -       2,500       3,877       7,500  
Total operating expenses
    78,469       81,050       247,683       240,416  
                                 
Loss from operations
    (78,469 )     (81,050 )     (247,683 )     (240,416 )
                                 
Other income(expense)                                
                                 
Interest expense
    (2,777 )     (2,550 )     (8,006 )     (7,392 )
Total other income (expense)
    (2,777 )     (2,550 )     (8,006 )     (7,392 )
                                 
Net loss
  $ (81,246 )   $ (83,600 )   $ (255,689 )   $ (247,808 )
                                 
Earnings per share:
                               
Net loss per share- basic
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
Weighted average number of shares outstanding -basic
    320,866,147       320,866,147       320,866,147       320,866,147  
 
The accompanying notes are an integral part of these unaudited financial statements.

 
4

 

CALA CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
For Nine Months Ended
September 30,
2011
   
For Nine Months Ended
September 30,
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  $ (255,689 )   $ (247,808 )
Adjustments to reconcile loss from continuing
               
operations to net cash used in operating activities:
               
Depreciation and amortization
    3,877       7,501  
Changes in operating assets and liabilities:
               
Increase (decrease) in accounts payable and accrued expense
    4,578       6,336  
Accrued officers salary
    225,000       225,000  
                 
Net cash used in operating activities
    (22,234 )     (8,971 )
                 
CASH FLOW FROM FINANCING ACTIVITIES
               
Proceeds from due to related party
    22,234       8,971  
Net cash provided by financing activities
    22,234       8,971  
                 
NET CHANGE IN CASH
    -       -  
                 
CASH AT BEGINNING OF PERIOD
    -       -  
                 
CASH AT END OF PERIOD
  $ -     $ -  
SUPPLEMENTAL INFORMATION:
               
Interest paid
  $ 597     $ -  
Income taxes paid
  $ -     $ -  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
5

 
 
CALA CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2011
(Unaudited)
 
NOTE  1 - ORGANIZATION AND BASIS OF PRESENTATION
 
Organization
 
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 early stage of building an underwater resort and casino but to date has not begun any construction.
 
Financial Statements Presented
 
The accompanying unaudited interim 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, 2011 are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010.
 
In July 2014, the Company elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.
 
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 of the Company is $15,000,692. 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.
 
 
6

 

NOTE  3 - RELATED PARTY TRANSACTIONS

During the nine months ending September 30, 2011, the Company accrued $225,000 for salary payable to an officer of the Company resulting in a balance due of $958,600 which has been accrued and not paid. As of December 31, 2010, salary payable due to officer was $733,600

During the nine months period ending September 30, 2011, an officer advanced $22,234 to the Company for operating expenses and for an outstanding balance of $105,506 and $83,272 as of December 31, 2010.
 
NOTE  4 - NOTE PAYABLE
 
In January 2007, the Company issued an unsecured note for $60,000 bearing interest at 10% on the principal and accrued interest compounding monthly. 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 of September 30, 2011 and December 31, 2010, the outstanding principle balance of the note was $60,000 and $60,000 and had accrued interest of $39, 879 and $32,470, respectively.
 
NOTE  5 - LEGAL MATTERS
 
On January 20, 2010, a complaint was filed against the Company in the Superior Court of California case # CIVWS09-0049 terminating the lease at 500 Bollinger Canyon Way, San Roman, CA due to subleasing the premises without consent of the landlord. A judgment was entered giving the landlord possession of the premises with no monetary amount awarded.
 
On February 18, 2009 the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 issued by the Company. 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 and principal shareholder has agreed to a judgment of $176,667 plus attorney’s fees of $25,000. On October 27, 2011 the judgment was entered in the Jefferson County District Court in favor of the plaintiff.
 
 
7

 

The Company and its principal stockholder has agreed to a judgment in Harris Court Texas District Court (Cause# 2010-36988 with the plaintiff of the case to pay the plaintiff $115,000 plus legal costs of $5,000. The settlement calls for a $50,000 payment on January 12, 2012 plus payments of $2,000 per month thereafter. No payments have been made to date.
 
NOTE 6 - SUBSEQUENT EVENTS
 
On July 26, 2012 the Company announced an agreement to purchase the trademark of Calcio Lecco 1912, a sports team. The agreement was cancelled by mutual agreement of both parties.
 
 
8

 
 
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.
 
 
9

 
 
Results of Operations
 
(a) Revenues
 
The Company reported no revenues for the nine months ended September 30, 2011 and 2010.
 
(b) General and Administrative Expenses
 
The Company incurred total general and administrative expenses of $78,469 and $243, 806 for the three and nine months ended September 30, 2011 as compared to $78,550 and $232,916 for the three and nine months ended September 30, 2010.
 
(c) Amortization
 
Amortization for the three and nine months ended September 30, 2011 was  zero and $3,877 compared to $2,500 and $7,500 for the same periods ending September 30, 2010.
 
(d) Interest Expense
 
The Company incurred interest charges of 2,777 and $8,006 during the three and nine months ended September 30, 2011 and $2,550 and $7,392 for the same period’s in2010. The increase in interest is due to interest compounding on the $60,000 note outstanding.
 
(e) Net Loss
 
The Company reported a net loss of $81,246 and $255,689 for the three and nine months ended September 30, 2011 as compared to a net loss of $83,600 and $247,808 for the same periods ended September 30, 2010. The loss for the quarter ended September 30, 2011 was primarily attributable to accrual of officer salaries. The increase in 2011 from 2010 was due to additional administrative costs in 2011 compared to 2010
 
 
10

 
 
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.
 
 
11

 
 
Operating Activities
 
The net cash used in operating activities was $22,234 for the nine months ended September 30, 2011 compared to net cash used of $8,971 for the nine months ended September 30, 2010. This increase is due primarily to higher G&A in 2011 over in 2010.
 
Investing Activities
 
Net cash used in investing activities was zero for the nine months period ending September 30, 2011 and zero for the same period ending September 30, 2010.
 
Financing Activities
 
Net cash provided by financing activities was $22,234 for the nine month period ending September 30, 2011 and $8,971 for the same period ending September 30, 2010. Cash provided was from advances from a related party in both periods.
 
Liquidity and Capital Resources
 
As of September 30, 2011, the Company had total current assets of zero and total current liabilities of $1,536,220 resulting in net working capital deficit of $1,536,220. During the nine months ended September 30, 2011 and 2010, the Company incurred losses of $255, 689 and $247,808, respectively. The aggregate accumulated deficit of the Company is $15,000,692. 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, 2010 includes a substantial doubt paragraph regarding the Company’s ability to continue as a going concern.
 
 
12

 
 
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 assets or 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.
 
 
13

 
 
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.
 
 
14

 
 
(b) Stock-Based Compensation Arrangements
 
The Company may issue shares of common stock to various individuals and entities for management, legal, consulting and marketing services. These issuances will be valued at the fair market value of the services provided and the number of shares issued is determined, based upon the open market closing price of common stock as of the date of each respective transaction. These transactions will be reflected as a component of selling, general and administrative expenses in the Company’s statement of operations.
 
(c) Revenue Recognition
 
There were no sales in both quarters ending in September 30, 2011 and 2010.
 
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.
 
 
15

 
 
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required under this Item.
 
ITEM 4T - CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer, to allow timely decisions regarding required disclosure.
 
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected.
 
Within the 90 days prior to the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 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.
 
 
16

 
 
PART II – OTHER INFORMATION
 
ITEM 1 - LEGAL PROCEEDINGS
 
On January 20, 2010, a complaint was filed against the Company in the Superior Court of California case # CIVWS09-0049 terminating the lease at 500 Bollinger Canyon Way, San Roman, CA due to subleasing the premises without consent of the landlord. A judgment was entered giving the landlord possession of the premises with no monetary amount awarded.
 
On February 18, 2009 the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 issued by the Company. 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 and principal shareholder has agreed to a judgment of $176,667 plus attorney’s fees of $25,000. On October 27, 2011 the judgment was entered in the Jefferson County District Court in favor of the plaintiff.
 
The Company and its principal stockholder has agreed to a judgment in Harris Court Texas District Court (Cause# 2010-36988 with the plaintiff of the case to  pay the plaintiff $115,000  plus legal costs of $5,000. The settlement calls for a $50,000 payment on January 12, 2012 plus payments of $2,000 per month thereafter. No payments have been made to date. On October 27, 2011, judgment was entered in the Jefferson County District Court in favor of the plaintiff.
 
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, 2010.
 
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None
 
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
 
In January 2007, the Company issued a note for $60,000 bearing interest at 10% on the principal and accrued interest compounding monthly. As of September 30, 2011, the outstanding principle balance of the note was $60,000 and had accrued interest of $$39, 879. 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
 
 
17

 
 
ITEM 6 - EXHIBITS
 

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).

101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
18

 
 
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: August 19, 2014
By:
/s/ Joseph Cala  
    Joseph Cala  
   
President
Principal Executive Officer and Chief Financial Officer
 
 
 
19

 
 
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).
 
101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
20