Cala Corporation

I would like to reply to Andrew Borg-Cardona's letter Joseph Calá And The Shipyards (October 4).   

First of all, I do not issue derogatory and impertinent remarks. I only stated the truth and nothing but the truth.   

Secondly, my company did not suffer losses from business operations but non-stop investment for research and development of the undersea ship design. However, under the Sarbannes and Oxley Accounting Act the R&D investment is reported by the auditors as losses due to the tax credit rules. For example, several months ago Chris Bell made similar accusations that my company's losses were $12.5 million when in reality the United States tax office (IRS) owes that amount to my company in the form of credits against future profits. In simple English, any time a corporation invests in R&D, booked as losses carried forward in order for the company to recuperate their 100 per cent R&D investment toward future profits.

I feel that Investments Minister Austin Gatt has no clue about the current global shipbuilding industry through which Malta Shipyards Limited could easily bring Lm400 million into the Maltese economy. Infact, the rule of thumb is that for every Lm350 million in direct investment 25,000 new jobs are created. Unless, of course, Dr Gatt plans to transfer the MSL real estate assets to the private sector for a cruise terminal, yacht marina, ocean front hotels, shopping centres and high end condos. If this is the case than Dr Gatt must hire an international consulting firm such as Credit Suisse, Goldman Sachs and Pricewaterhouse Coopers to conduct a transparent Request For Bids (RFB) in order to avoid fraud or special interest. However, the above industries bring little cash into the economy, including low wages, while the shipbuilding industry brings wealth and prestige to Malta.  

Next, Dr Borg-Cardona is correct that Cala is a penny stock company and trades in pinksheets over the counter market. However, he failed to inform readers that Nasdaq is part of the same market. In simple terms, Nasdaq, OTC and pinksheets trade in the same national market which means that Cala Corp. is under the same rules and regulations of Nasdaq and the Securities Exchanges and Commission as Microsoft, Google or Apple would be. There is no difference between Cala Corp, Apple, Microsoft or Google except their market cap.

In addition, what Dr Borg-Cardona failed to say is that every start-up company starts with a very negative cash flow and massive losses until the company is able to produce and sell their products. Five years ago Google couldn't pay their rent or telephone bills while today it is the 15th largest company in the world.

Dr Borg Cardona stated that in the financial markets, the term "penny stock" commonly refers to any stock trading outside one of the major exchanges and is often considered pejorative. The truth is as follows:

Pinksheets refers to the colour of the stock certificated - it used to be coloured in pink.

OTC or Over The Counter means that before computers the actual trade took place on the main street and not Wall Street, usually inside the 10,000 brokerage firm offices located throughout the country.

Nasdaq means National Association Stock Dealers Automatic Quotation which means that it is a market similar to the import and export industry. Therefore, Nasdaq is a member of the national market and it has never been a stock exchange. However, a few days ago Nasdaq announced that it has purchased Boston Exchanges in order to become an exchange.

Any stock trading under $1 is a penny stock. Therefore, if the stock price is 0.99 cents it is considered a penny stock. Also, the price of the shares has nothing to do with the company's net worth. The stock price is a very speculative currency that fluctuates based on buyers and sellers. Therefore, there is no relation between the company assets and profits.

It would take 60 days for Cala Corp to bring its shares to $1, $5 or $10.

The company decides the initial stock price. However, the investment bankers control the daily floats and share prices.

The price of the shares is only important if the company uses its shares as currency to purchase assets, otherwise it's another speculative currency.

Cala Corp plans to pay for the purchase of MSL through the buyers' letters of credit. For example, our buyers will provide either a bank guarantee or letters of credit in order to purchase our ships. At the same time, our company investment bankers will advance in full the necessary funds to purchase MSL including building ships. It's done everyday in the world of commerce. In addition, under the Securities and Exchanges Commission the company has the ability to issue corporate yield bonds for the amount of $500 million. According to Goldman Sachs underwriter the full amount would be sold within 20 minutes.   

Lastly, if Cala Corp doesn't have the necessary funds and our company is broke then Dr Gatt should force chairman John White Cassar and CEO Chris Bell to give me a purchase price for the MSL or at least the quotation price to build our ships inside Marsa shipyard.

The truth is alive and well, always.