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With an accumulated deficit of US$11.2 million, Cala Corporation, the company discussing with the Malta Shipyards and Malta Enterprise in the presence of GWU, is technically a solvent company but only by a whisker.
This newspaper obtained a copy of the Form 10QSB filed before the U.S.Securities and Exchange Commission for quarter ending 30/09/06. This is its most recent filing document made public as early this year its auditor resigned and a new one has been appointed.
The main asset of the company is in Land, buildings and construction still in progress as the only amount of cash it has is US$34,830which are not enough to settle the amounts due for debts, accrued salaries and other creditors. Moreover, the building has a mortgage pledged against it.
Up to September 2006, the company only registered a sale of US$32,000 which is even less than the interest it has to pay on loans. The company exacerbated its losses with other selling, administrative, general expenses and depreciation. This is also reflected in the cash flow where the company has registered further deterioration of its financial strength.
The company has expansion plans to develop its underwater resort. It discontinued the operation of a restaurant and in its last report registered a loss from this operation. It now has a second restaurant under lease and by the reporting period of quarter 3 of last year has a contingent liability of US$540, 000 on it.
The same filing with the SEC reports on the going concern capability of Cala Corporation. With an accumulated loss of US$11.5 million and no established revenue to cover its operating costs, there is uncertainty that raises doubt if the company can operate as a going concern. This will be possible if additional resources are ploughed in and the plans are realized.
There is a good explanation of Cala Corp’s plans. As a start, it is involved developing an undersea Spa. However it has to sell 10,000 memberships at US$100,000 each to earn the revenue. Its next plan is to hire a casino operator with a casino design firm. Moreover, it is also building plans to build the first undersea resort and casino. Residences will be sold on fractional ownership based on the time share concept.
Interestingly for us in Malta, is a statement that the company “is in final discussions with the government of Malta regarding taking over the Marsa shipyard”. The company plans to build one undersea ship per year and is working closely with the Malta Enterprise as well as with the country representative.
It goes on to add that as soon as the Maltese Government has granted Marsa Shipyard to the Corporation, “one of the most prestigious and respected investment bankers” will start their due diligence to finance 70% of the total Undersea construction. This banker is unnamed.
With a net working deficit of US$427,000 and substantial losses, there are concerns on the going concern of the company. Indeed it does not have the cash to maintain capital requirements for the next 12 months ending late summer this year and needs to raise additional capital to meet its Business plan.
The SEC return for end September 2006 has been certified and presented by Joseph Cala as the Principal Executive Officer and Principal Financial Officer. Cala Corporation’s stock have underperformed in the last year to the index and the shareholders’ stock have experienced a negative return of 40% according to the Bloomberg source and the market capitalization is valued at US$4.7 million. |
