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CALA CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
[July 24, 2014]

CALA CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


(Edgar Glimpses Via Acquire Media NewsEdge) 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 early 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.

Results of Operations (a) Revenues The Company reported no revenues for the six months periods ended June 30, 2011 and 2010.

(b) General and Administrative Expenses The Company incurred general and administrative expenses of $82,950 for the three months and $165,337 for the six months ended June 30, 2011 as compared to $79,287 for the three months and $154,366 for the six months ended June 30, 2010. The higher cost in 2011 over 2010 was attributed to greater accounting and legal costs incurred in 2011.

10 -------------------------------------------------------------------------------- (c) Depreciation and amortization Depreciation and amortization for the three and six months periods ended June 30, 2011 was $1,377 and $3,877 and $2,500 and $5,00 for the same periods ending June 30, 2010, respectively. The depreciation is attributable to a vehicle owned by the Company and the amortization of the Company's web site.

(d) Interest Expense The Company incurred interest charges of $2,710 and $5,229 during the three and six months ended June 30, 2011 and $2,464 and $4,841 for the respective periods in 2010.

(e) Net Loss The Company reported a net loss of $87,037 and $174,443 for the three and six months ended June 30, 2011 as compared to a net loss of $84,251 and $164,207 for the same periods ended June 30, 2010. The increased loss for the periods in 2011, however minimal was primarily attributable to higher 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.

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

Operating Activities The net cash used in operating activities was $11,520 for the six months period ending June 30, 2011 compared to net cash used of $3,791 for the six months ended June 30, 2010. This increase is due primarily to the $10,000 greater net loss offset by lower depreciation and amortization plus increased accounts payable and accrued interest in 2011 compared to the same period in 2010.

Investing Activities Net cash used in investing activities was zero for the six months period ending June 30, 2011 and zero for the same period ending June 30, 2010.

Financing Activities Net cash provided by financing activities was $11,520 for the six month period ending June 30, 2011 and $3,791 for the same period ending June 30, 2010.

Financing activities for the period ending June 30, 2011 were higher and attributed to greater advances from related party compared to the period ended June 30, 2010.

Liquidity and Capital Resources As of June 30, 2011, the Company had total current assets of zero and total current liabilities of $1,454,974, resulting in net working capital deficit of $1,454,974. During the six months ended June 30, 2011 and 2010, the Company incurred losses of $255,701 and $164,207, respectively. The accumulated deficit of the Company is $14,919,446. 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.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

However, the ability of the Company to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, to retain its current financing, to obtain additional financing, and ultimately attain profitability.

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

12 -------------------------------------------------------------------------------- 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.

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.

13 -------------------------------------------------------------------------------- (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.

(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.

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