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 JUNE 30, 2018

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.)

701 N. Post Oak Rd. #615, Houston, TX 77024	(713) 380-5147
(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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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	¨	Accelerated filed	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

As of August 3, 2018, the Company had 334,866,147 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes ¨ No x

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Balance Sheets as at June 30, 2018 (unaudited) and December 31, 2017	3
	Statements of Operations for the three and six months ended June 30, 2018 and 2017 (unaudited)	4
	Statements of Cash Flows for the six months ended June 30, 2018 and 2017 (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	11
Item 4.	Controls and Procedures	11
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults upon Senior Securities	14
Item 4.	Mine Safety Disclosure	14
Item 5.	Other Information	14
Item 6.	Exhibits	14
	Signatures	15

 

2

CALA CORPORATION

BALANCE SHEETS

(Unaudited)

	June 30, 2018			December 31, 2017
ASSETS
Cash held in trust	$	487		$	987
Current assets		487			987
Total assets	$	487		$	987
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	171,489		$	156,183
Due to related party		195,967			185,254
Accrued officer salary		2,983,600			2,833,600
Taxes payable		11,599			11,599
Notes payable		60,000			60,000
Contingent liabilities		321,667			321,667
Total current liabilities		3,744,322			3,568,303
Total liabilities		3,744,322			3,568,303
Stockholders’ deficit
Common stock $0.005 par value; 400,000,000 shares authorized Issued and outstanding: 334,866,147 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		1,674,329			1,674,329
Additional paid-in capital		11,840,859			11,840,859
Accumulated deficit		(17,258,407	)		(17,081,888	)
Treasury stock – 156,533 shares at cost, respectively		(616	)		(616	)
Total stockholders’ deficit		(3,743,835	)		(3,567,316	)
Total liabilities and stockholders’ deficit	$	487		$	987

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

 

3

CALA CORPORATION

STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
General and administrative expense	$	83,276		$	75,646		$	165,464		$	163,479
Total operating expenses		83,276			75,646			165,464			163,479
Loss from operations		(83,276	)		(75,646	)		(165,464	)		(163,479	)
Other expense
Interest expense		(5,633	)		(5,049	)		(11,055	)		(9,909	)
Total other income expense		(5,633	)		(5,049	)		(11,055	)		(9,909	)
Net loss	$	(88,909	)	$	(80,695	)	$	(176,519	)		(173,388	)
Earnings per share:
Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic and diluted weighted average number of common shares outstanding		334,866,147			332,415,598			334,866,147			344,305,707

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

4

CALA CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months June 30, 2018			For the Six Months June 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(176,519	)	$	(173,388	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		26,019			5,842
Officers salary payable		150,000			150,000
Net cash used in operating activities		(500	)		(17,546	)
CASH FLOW FROM FINANCING ACTIVITIES
Common stock issued for cash		--			25,000
Proceeds from advances - related party		--			646
Net cash provided by financing activities		--			25,646
NET INCREASE (DECREASE) IN CASH		(500	)		8,100
CASH AT BEGINNING OF PERIOD		987			--
CASH AT END OF PERIOD	$	487		$	8,100
SUPPLEMENTAL INFORMATION:
Interest paid	$	--		$	--
Taxes paid	$	--		$	--
NON CASH TRANSACTIONS
Expenses paid by related party on behalf of the Company	$	10,713		$	--

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

5

CALA CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2018 (Unaudited)

NOTE 1 - ORGANIZATION, DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Cala Corporation, (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 intends to build an underwater resort but has been unable to secure the financing necessary to begin construction on such a facility. It is considering other businesses which may align with the Company’s objectives”

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2017 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).

The results of operations for the three and six months period ended June 30, 2018 are not necessarily indicative of the results for the full fiscal year ending December 31, 2018.

NOTE 2 - GOING CONCERN

The accompanying unaudited interim financial statements are prepared on a basis of accounting assuming that the Company is a going concern that contemplates realization of assets and satisfaction of liabilities in the normal course of business. The Company, as shown in the accompanying balance sheets, has limited assets and an accumulated deficit and working capital deficit as of June 30, 2018. The Company has not established any source of revenue to cover its operating costs. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s management plans to engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue-producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

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NOTE 3 - RELATED PARTY TRANSACTIONS

During the six months ending June 30, 2018, the Company accrued $150,000 for salary payable to an officer of the Company resulting in a balance due of $2,983,600 which has been accrued and not paid. As of December 31, 2017, salary payable due to officer was $2,833,600. The balance is unsecured, non-interest bearing and due on demand.

During the six month period ending June 30, 2018, an officer paid expenses of $10,713 on behalf of the Company. As of June 30, 2018 and December 31, 2017, the outstanding balance was $195,967 and $185,254, respectively. The balance is unsecured, non-interest bearing and due on demand.

The Company maintains an office at 701 North Post Oak Road, Suite 615, Houston TX 77024 and the location is provided rent free by the CEO.

NOTE 4 - NOTE PAYABLE

In January 2007, the Company issued a note for $60,000 bearing interest at 10% on the principal and accrued interest compounding monthly. As of June 30, 2018 and December 31, 2017, the outstanding principal balance of the note was $60,000 and had accrued interest of $149,171 and $138,115, respectively. The note, including principal and interest, is in default and still outstanding.

NOTE 5 - LEGAL MATTERS

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

On February 18, 2009, the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 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, 2013 the judgment for cause $183,766 was lodged and entered by the court making the judgment effective as of that date.

 

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. As of this date the judgment has not been signed by the plaintiff attorney or the judge presiding over the case so actual liability is hard to determine.

As of June 30, 2018, the Company has accrued $321,667 for the legal liabilities.

A Desist and Refrain Order was issued by the State of California Department of Corporations against Joseph Cala and Cala Corp. on March 28, 2012 prohibiting Joseph Cala or Cala Corp. from selling securities in the State of California. This order resulted from a complaint made by an individual who made a loan to Cala Corp. for the office building purchased by the Company in Titusville, Florida. Due to the financial restraints of the Company at the time, and the costs associated with defending against the action, the Company elected not to fight the order and allowed the order to become final. The order remains in full force and effect until further order of the California Corporations Commissioner.

NOTE 6 - SUBSEQUENT EVENT

Subsequent to June 30, 2018 an officer and director of the Company directly paid on behalf of the Company $2,750 in accounts payable.

 

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

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

Overview

The Company intends to take advantage of reasonable business proposals 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.

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.

Results of Operations

Revenues

The Company reported no revenues for the three and six months ended June 30, 2018 and 2017.

General and Administrative Expenses

The Company incurred total selling, general and administrative expenses of $83,276 and $165,464 for the three and six months ended June 30, 2018 as compared to $75,646 and $163,479 for the three and six months ended June 30, 2017. The change in this expense category was insignificant in 2018 over 2017.

Interest Expense

The Company incurred interest charges of $5,633 and $11,055 for the three and six months ended June 30, 2018 and $5,049 and $9,909 for the same periods in 2017. The increase in interest is due to the interest calculation on the note plus accrued interest increasing the interest amount each quarter.

 

9

Net Loss

The Company reported a net loss of $88,909 and $176,519 for the three and six months and ended June 30, 2018 as compared to a net loss of $80,695 and $173,388 for the same period ended June 30, 2017. The losses for the three and six month period was primarily attributable to accrual of officer salaries plus accounting fees.

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:

Key Personnel

The Company’s success is largely dependent on the personal efforts and abilities of its senior management. The loss of certain members of the Company’s senior management, including the Company’s chief executive officer, chief financial officer and chief technical officer, could have a material adverse effect on the Company’s business and prospects.

Operating Activities

The net cash used in operating activities was $500 for the six months ended June 30, 2018 compared to net cash used of $17,546 for the six months ended June 30, 2017. This decrease is due primarily to an increase in accounts payable and accrued liabilities in 2018 over 2017

Financing Activities

Net cash provided by financing activities was zero for the six month period ending June 30, 2018 and $25,646 for the same period ending June 30, 2017. Cash provided in in 2017 from the sale of common stock of $25,000.

Liquidity and Capital Resources

As of June 30, 2018, the Company had total current assets of $487 and total current liabilities of $3,744,332 resulting in net working capital deficit of $3,743,835. During the six months ended June 30, 2018 and 2017, the Company incurred losses of $176,519 and $173,388, respectively. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s independent accountants’ audit report included in the Form 10-K for the year ended December 31, 2017 includes a substantial doubt paragraph regarding the Company’s ability to continue as a going concern.

 

10

The accompanying unaudited interim 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.

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

We believe that inflation has not had a significant impact on our operations since inception.

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 4: CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31 and 32. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

11

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, our management, under the supervision and with participation of our Principal Executive Officer and Principal Financial Officer (the “Certifying Officers”) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2018. Based on that evaluation, our management concluded that the controls are not effective because there is a material weakness in our disclosure controls and procedures over financial reporting. The material weakness results from a lack of written procedures which effectively documents the proper procedures and descriptions of the duties of all persons involved in the disclosure controls of the Company. The Company hopes to implement plans to document the procedures and internal controls of the Company. A material weakness is a deficiency, or a combination of control deficiencies, in disclosure control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. This does not include an evaluation by the Company’s registered public accounting firm regarding the Company’s internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the six months ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management believes that the Unaudited Financial Statements included herein present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented.

 

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PART II – OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

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

On February 18, 2009, the Company received a letter demanding payment on the deficiencies of 2 notes totaling $125,000 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, 2013 the judgment for cause $183,766 was lodged and entered by the court making the judgment effective as of that date.

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. As of this date the judgment has not been signed by the plaintiff attorney or the judge presiding over the case so actual liability is hard to determine

As of June 30, 2018, the Company has accrued $321,667 for the legal liabilities.

A Desist and Refrain Order was issued by the State of California Department of Corporations against Joseph Cala and Cala Corp. on March 28, 2012 prohibiting Joseph Cala or Cala Corp. from selling securities in the State of California. This order resulted from a complaint made by an individual who made a loan to Cala Corp. for the office building purchased by the Company in Titusville, Florida. Due to the financial restraints of the Company at the time, and the costs associated with defending against the action, the Company elected not to fight the order and allowed the order to become final. The order remains in full force and effect until further order of the California Corporations Commissioner

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ITEM 1A: RISK FACTORS

There have been no material changes to the Company’s risk factors as previously disclosed in our most recent 10-K filing for the year ending December 31, 2017.

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

In January 2007, the Company issued an unsecured note for $60,000 bearing interest at 10% on the principal and accrued interest compounding monthly. The Company renewed the note payable agreement in March 2008 thereby issuing a note for $60,000 bearing interest at 11% on the principal and accrued interest compounding annually. As of June 30, 2018, the outstanding principle balance of the note was $60,000 and had accrued interest of $149,171. The note including principal and interest is in default and still outstanding.

ITEM 4: MINE SAFETY DISCLOSURE.

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.

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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 3, 2018	By:	/s/ Joseph Cala
		Joseph Cala, President
		Principal Executive Officer and Chief Financial Officer

15

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).

16