<SUBMISSION>
<ACCESSION-NUMBER>0001144204-06-003764
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20060130
<ITEMS>5.02
<FILING-DATE>20060202
<DATE-OF-FILING-DATE-CHANGE>20060202
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CAPE COASTAL TRADING CORP
<CIK>0001219097
<ASSIGNED-SIC>5961
<IRS-NUMBER>522372260
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
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<ACT>34
<FILE-NUMBER>000-50995
<FILM-NUMBER>06573228
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<BUSINESS-ADDRESS>
<STREET1>8550 WEST BRYN MAWR
<STREET2>SUITE 200
<CITY>CHICAGO
<STATE>IL
<ZIP>60631
<PHONE>(773) 272-5000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>8550 WEST BRYN MAWR
<STREET2>SUITE 200
<CITY>CHICAGO
<STATE>IL
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<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v034455.htm
<TEXT>
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      STATES</strong></font></div>
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</strong></font></div>
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      2006</strong></font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Departure
      of Directors or Principal Officers; Election of Directors; Appointment of
      Principal Officers</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02(a) Resignation of a Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      January 30, 2006, Geoffrey Alison resigned as a member of Cape Coastal Trading
      Corporation&#8217;s (the &#8220;Company&#8221;) Board of Directors. The resignation of Mr. Alison
      was not the result of any disagreement with the Company on any matter relating
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      January 30, 2006, the Board of Directors of the Company appointed Stuart
      Romenesko as a director. Mr. Romenesko&#8217;s appointment as director was not
      pursuant to any agreement or understanding between Mr. Romenesko and a third
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      of
      Directors at this time. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Romenesko is an executive officer of Petters Group Worldwide, LLC (&#8220;Petters
      Group&#8221;) 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&#8217;s Current Report on Form 8-K filed on January 5, 2006, uBid, Inc.
      (&#8220;uBid&#8221;) 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&#8217;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&#8217; 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&#160;31, 2004 and $198,000 from April 2003
      through December 2003. uBid terminated the Shared Resources Agreement as of
      January&#160;31, 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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&#160;million for the
      nine months ended September&#160;30, 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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&#8217;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&#8217;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.</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>&#160;</div>
    <div>
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td colspan="2">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CAPE
                COASTAL TRADING </strong></font></div>
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CORPORATION</strong></font></div>
            </td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
              February 2, 2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/&#160;Robert
              H. Tomlinson, Jr.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Name:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
              H. Tomlinson, Jr.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:<font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt" size="3">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President
              and Chief Executive Officer</font></font></td>
          </tr>

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