HALL RIGHT NOW: Can Pompey avoid this latest Cala-mity?
By Mike Hall
Friday 13 Jan 2012 17:34:00
Browse all Hall Right Now articles


So Italian-American businessman Joseph Cala wants to ride in to save Pompey.

Sit down, make yourself a drink and concentrate hard. The time has come to have a look at the reality of Joseph Cala's situation and see how it stacks up against the rhetoric. Regular readers of this column may already have an inkling of where this is heading...

One of Mr Cala's companies is Cala Corp. So what does its entry at business week have to say?

He is described as: 'J. Joseph Cala, Giuseppe is a Founder and has been Chairman of the Board, Chief Executive Officer of Cala Corporation since October 1999 and serves as its President, principal Accounting officer and Chief Financial Officer. Mr. Cala has been an international business owner most of his professional life. Mr. Cala began his career at an early age rising to top management positions in some of the most prestigious and luxurious resorts in the world. Mr. Cala, as Chairman and Chief Executive Officer of the Cala group has been involved in various ventures such as: Fila Sportswear USA; Mondi Fashions, USA; L'Italiano Restaurants and Weddings in California, Hawaii and Japan, Cala Hotels, Inc..dba Undersea Resort; and Hydrogen Future, Inc.' Reference: http://investing.businessweek.com/research/stocks/people/person.asp?

Hmmm. Our research has not been able to establish his top management positions at prestigious and luxurious resorts to date and none are listed on his linkedin.com profile. Refere nce: http://www.linkedin.com/pub/joseph-cala/3/728/344

Of the businesses he is described as being involved with the picture is equally vague.

  • Fila Sportswear USA – no record of any separate USA company seems to exist
  • Mondi Fashions USA – There is a Mondi Fashions – a business described as a family-owned fashion store with 1 to 4 employees and a turnover of less than $500,000 pa – the lowest category available for listing. The company does not have a website.
  • L'Italiano Restaurants and Weddings in California, Hawaii and Japan – No trace of this company can be found.
  • Cala Hotels, Inc. - no trace of this company seems to exist. Not to be confused with CalaHotels.Com, a small but successful Hebridean hotel company.
  • Hydrogen Future, Inc. - no trace of this company can be found.

Now it could be that these companies do exist but have subtly different names, or possibly they have now gone out of business. However, one would expect that these business would have websites, stock symbols and leave the sort of trail of documentation in its wake that any substantial company does. The fact they don't is not encouraging.

It gets worse.

Undersea Resort – this refers to http://www.undersearesort.com – which is the website for Cala Corp.

On its homepage the website contains a series of pictures of entirely unrelated landmarks such as the Golden Gate bridge but no pictures of any completed developments. The homepage states: 'Welcome! Cala has started the pre-sale for the entire UnderSea Resort and Casino ships, a new ocean leisure concept incorporating the elegance of a luxury undersea atmosphere habitat. The UnderSea ships will also include the largest casino and spa ever built. Each Undersea Resort will be sold around $600 million unless the prospective buyer interior outfitting plans are otherwise. In addition, the company is in discussion with several major municipalities to place few or several Undersea Resort, Convention and Spa in order to meet the market demands.'

Some facts to bear in mind here; Undersea Resort and Cala Corp were founded in 2007 but Cala claims on his Linkedin profile to have been running the business since 1998. The absence of any claim to have ever built anything, the use of the word 'pre-sale' and the phrasing reinforces the inference that nothing has ever actually been built. Until 2006 Cala was a restaurant ownership business called Magnolia Foods but closed that business down in order to build Undersea resorts.

The website contains no listing for sales and marketing contact, simply a blank page. The website seems to be suffering a series of reliability issues and has little information other than a floor plan which appears to be the QEII.

Here is the Nasdaq listing for CCAA:

Last Sale: $ 0.002
No shares have been sold in the company for 50 days.

Reference: http://www.nasdaq.com/symbol/ccaa#ixzz1iVANlRP0

The company issued the following statement in 2010:

Cala To Raise Additional Capital
Cala Corporation filed its Form 10-Q with the Securities and Exchange Commission. The
company intends to raise additional capital. The company stated: “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 last statement on record shows the company to have made a net loss over its existence to date of $2,439,726. It has net assets of $6,377.

$6,376 of the companies assets appear to be the website. The rest of the company seemingly has assets of $1.

The account filing is qualified by it's auditors:

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 $14,326,515 ($11,886,789 and $2,439,726, 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.

Further, we see that Cala seems to have defaulted on repaying two loans of $60,000 without ever paying a penny of interest or the principal and, in these most recent accounts, was finding loans of $2,000 to support day to day operations.

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. 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 September 30, 2010 and December 31, 2009, the outstanding principle balance of the note was $60,000 and $60,000 and had accrued interest of $29,520 and $22,480, respectively.
Additionally in June 2009, the Company received $2,000 in other advances to meet the day to day expenses of the Company. Such advances are non-interest bearing and due on demand. As of September 30, 2010 and December 31, 2009, the outstanding balance in advances was $2,000 and $2,000, respectively.

Uh oh. The accounts also contain this revealing information:

'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.'

In other words, an agreement has been signed which commits no-one to anything, no money changed hands and nothing has happened. Meanwhile, poor Joe has had even less luck with a shipyard in Malta, losing a libel action after another adventure in the 'non-shipbuilding' business.

Friday, March 27, 2009, 11:01
Libel judgement against Joseph Cala confirmed on appeal
The Court of Appeal this morning confirmed a Magistrate's Court decision that Joseph Cala had libelled John Cassar White and Christopher Bell, former chairman and chief executive officer of Malta Shipyards Ltd, respectively. The Magistrates Court had found libellous an article "Cala Corporation Ceases Negotiations with Malta Shipyards", published online on www.euroinvestor.co.uk/news in May 2007 and repeated on www.di-ve.com and www.maltamedia.com. The Court of Appeal also confirmed the 10,000 euro sum of damages, payable to both plaintiffs.Dr Andrew Borg-Cardona appeared for the plaintiffs.
Reference: http://www.timesofmalta.com/articles/view/20090327/local/libel-judgement-against-joseph-cala-confirmed-in-appeal.250583

Furthermore this letter appeared in the Times of Malta from a Maltese lawyer:

Thursday, October 4, 2007 , by
Andrew Borg-Cardona, Valletta.
Joseph Cala and the shipyard
I write on behalf of the management of Malta Shipyards Ltd and refer to Joseph Cala's letter entitled Value Of The Shipyards (September 27).

Leaving aside the derogatory and impertinent remarks aimed at anyone in Malta who has not made obeisance to Mr Cala and given credence to his remarks over the last few months, I would like to focus on his statement that: "[His] company will pay cash to buy the entire shipyards' operation and [they] aren't interested in owning the real estate because [they] are shipbuilders. [Their] company has received $300 million in tax free bonds from the State of Alabama."

Purely for the record, Mr Cala's company are not shipbuilders and the "$300 million in tax free bonds" allegedly received from the State of Alabama are, in fact, tied to being spent in Alabama.

Precisely how Mr Cala intends to use this sum, if it is ever made available to him, to purchase a shipyard in Malta is not immediately clear.

The record also shows that Mr Cala's corporation suffered net losses of $800,000 and $900,000 over the last two years, at least according to its latest published accounts. Mr Cala, in the meantime, pays himself $352,000 annually.

It is also unclear what lies behind Mr Cala's repeated attempts at denigrating Malta Shipyard's management and giving an impression that his corporation is anything more than what it is: a corporation defined as a "Penny Stock" Pink Sheet company whose shares are traded "Over the Counter" (OTC). In the US financial markets, the term "Penny Stock" commonly refers to any stock trading outside one of the major exchanges and is often considered pejorative.

Depressing, huh? But back to the accounts which further state:

Results of Operations
(a) Revenues.
The Company reported no revenues for the nine months periods ended September 30, 2010 and 2009.

The inevitable conclusion is that Mr Cala has spent five years being Founder, President, CEO, Principal Accounting Officer and Chief Financial Officer of a company that has lost millions of dollars and has nothing to show for it barring an appalling website and a line drawing of a ship. There are no meaningful contracts, no up to date accounts, nothing built, nothing about to be built, no customers, no revenue and no takers for the stock.

Let's just have a look at the logic behind Mr Cala's business idea. For a start, he is not planning to develop “underwater resorts” as far as I can see, he is planning to build eight ocean liners with glass bottoms and moor them in harbours round the world. He calls them “UnderseaShips” but what does this mean? What is an UnderSea ship? Does it mean they are going to sink? Apparently he is going to use specialist technology to sink them 30 feet below sea level.

According to The News: Mr Cala said the vessels could be up to ‘three times bigger than Fratton Park’ once built, but claimed they are ‘too costly’ to construct". He said: ‘The underwater hotel is the fastest-growing industry in tourism.’ He also founded the Cala Corporation, which he said is now a ‘dormant’ public company, in 1985.

Of course this raises a number of questions. Mr Cala claims to have been involved with public companies for 25 years but has neglected to list any of them other than Cala on his Linkedin profile or his businessweek.com profile.

He claims to have a €100m fortune but there seems to be no immediately available information to specify how he would have come by this money. Indeed, in his News interview it was claimed; “Mr Cala, who said he is worth an estimated 100m euros, said he has worked in Mexico and Japan but would not fully disclose how he made his wealth.”

Most people tend to trumpet their success and play down their failures, particularly on LinkedIn. Inexplicably, Mr Cala seems determined to keep the causes of his self-proclaimed success hidden from public view.

Mr Cala claimed he would like to take Portsmouth public on one of the American stock exchanges “within three weeks”. Typically, an IPO takes six months to organise. What merchant bank would underwrite such a flotation? Why would any American buy shares in Portsmouth, a club that has seldom, if ever, delivered any profit to anyone? Investors typically want a return on their money. He went on to say: “Look at Juventus. Before it went public it was worth £20m, now it is worth £400m."

When a company is sold, whether it is to the public, institutional investors, other companies or to a private individual, it is sold for what it was worth. Juventus weren't sold for £400m because the mere act of quoting them on a stock exchange raised their value by 2000%. They were sold for £400m because that is what the market decided they were worth. The market has delivered a verdict on Pompey's value over the last few years, the club having been sold for £5m, then £2, then an IOU. The idea that simply floating a business on a stock exchange changes it's value is ridiculous.

Mr Cala also claims to have a long and successful track record of floating public companies in America. It would be interesting to know which companies these are, as there seems to be a complete dearth of information about them anywhere - including in any of the published biographical information Mr Cala has put into the public domain.

I'm sure you're getting the picture by now. But there's more. In his News interview Mr Cala said: ‘Right now I am a retired man who wants to get into football.' In fact he's already been there.

Last year Mr Cala decided to get involved with Salernitana in Italy's Serie C. I won't cut and paste the all the eerily familiar comments, but to sum it up; three weeks later they went bankrupt without him having apparently delivered a penny, let alone 35,000 crowds and paying 70% of their debts.

So there appears to be a pattern emerging here; like so many of the candidates wanting to take over Pompey, it is claimed that below the waterline is a large reservoir of money and business success over many years. What can be seen above the waterline however looks rather like the last little bit of the Titanic you could see as it plunged beneath the waves.

All in all, if Mr Cala wants to get (back) into football, I think I would prefer that he picked a club 17 miles west to start with.

The latin motto for Hall Right Now is: Pecunia enim et vetus funis per cartload excusat  This translates as: Money for old rope and excuses by the truckload.

The views of Mike Hall are his own and don't necessarily reflect the editorial view of pompey-fans.com


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