UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): January 30,
2006
CAPE
COASTAL TRADING CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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000-50995
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52-2372260
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
Number)
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8550
West Bryn Mawr, Suite 200
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Chicago,
Illinois
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60631
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(Address
of principal executive offices)
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(Zip
Code)
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(773)
272-5000
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
5.02 Departure
of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
Item
5.02(a) Resignation of a Director
Effective
January 30, 2006, Geoffrey Alison resigned as a member of Cape Coastal Trading
Corporation’s (the “Company”) Board of Directors. The resignation of Mr. Alison
was not the result of any disagreement with the Company on any matter relating
to the Company’s operations, policies or practices.
Item
5.02(d) Election of a New Director
Effective
January 30, 2006, the Board of Directors of the Company appointed Stuart
Romenesko as a director. Mr. Romenesko’s appointment as director was not
pursuant to any agreement or understanding between Mr. Romenesko and a third
party. Mr. Romenesko is not expected to be named to a committee of the Board
of
Directors at this time.
Mr.
Romenesko is an executive officer of Petters Group Worldwide, LLC (“Petters
Group”) and currently serves on the board of directors of several Petters Group
operating companies. As a result of a recent merger, previously reported on
the
Company’s Current Report on Form 8-K filed on January 5, 2006, uBid, Inc.
(“uBid”) is a wholly-owned subsidiary of the Company. On April 2, 2003, uBid and
Petters Group, a holder of greater than 5% of the Company’s common stock,
executed a Shared Resources Agreement with a term of one year and automatic
renewals of one year until terminated by either party with 60 days’ prior
notice. Pursuant to this agreement, Petters Group provided executive, facilities
management, finance, general and administrative, legal, marketing, merchandising
and operations services to uBid for which uBid was charged $360,000 in 2005,
$264,000 for the year ended December 31, 2004 and $198,000 from April 2003
through December 2003. uBid terminated the Shared Resources Agreement as of
January 31, 2006.
The
Company purchases products from Petters Group for direct purchase sales.
Purchases from Petters Group were $1.5 million and $0.5 million for the periods
ended December 31, 2004 and 2003, respectively and $0.5 million for the
nine months ended September 30, 2005.
Petters
Group owns approximately 25% of the outstanding shares of WSS Media Inc.,
located in Minneapolis, Minnesota. During the year ended December 31, 2005,
the
Company sold approximately $223,000 in product to WSS Media Inc. At year end,
the balance was unpaid. Mr. Romenesko is the Chairman of the Board of WSS
Media.
In
2003,
the Company issued a convertible promissory note in the principal amount of
$0.5
million for the benefit of Petters Group. The promissory note bore interest
at
an annual rate of 8%. This note plus accrued interest was paid in full on April
1, 2005.
On
April
2, 2003, the Company entered into a secured revolving credit agreement and
promissory note with Petters Group for up to $5.0 million. On November 22,
2004,
the Company entered into a second secured revolving credit agreement and
promissory note for up to $4.0 million. In March 2005, the second agreement
was
increased to $5.5 million. Both agreements were secured by a subordinated
security interest in all of the Company’s assets. Both agreements were scheduled
to expire March 31, 2006. Borrowings under the revolving line bore an annual
interest rate of 14%. There were no financial covenants provided for in the
agreements. In connection with the Company’s private offering on December 29,
2005, the Company cancelled these promissory notes as consideration in the
private offering for the issuance to Petters Company, Inc. of 1,222,222 shares
of common stock and warrants to purchase 305,556 shares of common stock, and
the
issuance to the Petters Group of 1,111,111 shares of common stock and warrants
to purchase 277,778 shares of common stock.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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CAPE
COASTAL TRADING
CORPORATION
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| Dated:
February 2, 2006 |
By: |
/s/ Robert
H. Tomlinson, Jr. |
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Name: Robert
H. Tomlinson, Jr. |
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Title: President
and Chief Executive Officer |