As Filed With the Securities and Exchange Commission on July 19, 2006
Registration No. 333-______
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COASTAL MEDIA INC.
(Name of small business issuer in its charter)
Nevada 7812 20-4952339
(State of Incorporation) (Primary SIC Number) (IRS Employer Number)
1574 Gulf Road #3094
Point Roberts, WA, 98281
Phone: (360)226-7862 Fax: (610)643-9902
(Address and telephone number of principal executive offices)
Joseph I. Emas
1224 Washington Avenue
Miami Beach, FL 33139
Phone: (305)531-1174 Fax: (305)531-1274
(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Each
Class of Proposed Proposed
Securities Number of Offering Maximum Amount of
to be Shares to be Price Per Aggregate Registration
Registered Registered Share(2) Offering(3) Fee(1)
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Common Stock 1,600,000 $.025 $40,000 $4.28
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(1) Registration Fee has been paid via Fedwire.
(2) This is the initial offering and no current trading market exists for our
common stock. The price paid for the currently issued and outstanding
common stock was valued at $0.005 per share.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to such section 8(a), may determine.
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PROSPECTUS
COASTAL MEDIA INC.
1,600,000 SHARES OF COMMON STOCK
$.025 PER SHARE
This is the initial offering of common stock of Coastal Media Inc. and no public
market exists for the securities being offered. Coastal Media Inc. is offering
for sale a total of 1,600,000 shares of its common stock on a self-underwritten,
best effort, all-or-none basis. The shares will be offered at a fixed price of
$.025 per share for a period of 180 days from the date of this prospectus. There
is no minimum number of shares required to be purchased per investor. We intend
to open a standard bank checking account to be used only for the deposit of
funds received from the sale of shares in this offering. This offering is on a
best effort, all-or-none basis, meaning if all shares are not sold and the total
offering amount is not deposited by the expiration date of the offering, all
monies will be returned to investors, without interest or deduction. See "Use of
Proceeds" and "Plan of Distribution".
Coastal Media Inc. is a development stage company and currently has no
operations. Any investment in the shares offered herein involves a high degree
of risk. You should only purchase shares if you can afford a complete loss of
your investment.
BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY,
THE RISK FACTORS SECTION, BEGINNING ON PAGE 4.
Neither the U.S. Securities and Exchange Commission nor any state securities
division has approved or disapproved these securities, or determined if this
prospectus is current, complete, truthful or accurate. Any representation to the
contrary is a criminal offense.
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Offering Total
Price Amount of Underwriting Proceeds
Per Share Offering Commissions to Us
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Common Stock $.025 $40,000 $0 $40,000
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE WILL
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion, Dated , 2006
TABLE OF CONTENTS
Page No.
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SUMMARY OF PROSPECTUS .................................................... 3
General Information about Our Company ............................... 3
The Offering ........................................................ 3
RISK FACTORS ............................................................. 4
RISKS ASSOCIATED WITH OUR COMPANY ........................................ 4
RISKS ASSOCIATED WITH THIS OFFERING ...................................... 6
USE OF PROCEEDS .......................................................... 8
DETERMINATION OF OFFERING PRICE .......................................... 9
DILUTION ................................................................. 9
PLAN OF DISTRIBUTION ..................................................... 10
Terms of the Offering ............................................... 10
Procedures for Subscribing .......................................... 11
LEGAL PROCEEDINGS ........................................................ 11
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS ............. 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ........... 12
DESCRIPTION OF SECURITIES ................................................ 13
INTEREST OF NAMED EXPERTS AND COUNSEL .................................... 13
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION ..................... 13
ORGANIZATION WITHIN THE LAST FIVE YEARS .................................. 14
DESCRIPTION OF OUR BUSINESS .............................................. 14
Principal Products and Their Markets ................................ 14
Distribution Methods ................................................ 16
Status of Any Publicly Announced New Products ....................... 16
Competition ......................................................... 16
Sources and Availability of Products ................................ 17
Dependence on One or a Few Major Customers .......................... 17
Patents and Trademarks .............................................. 17
Need for Any government Approval of Principal Products .............. 17
Government and Industry Regulation .................................. 18
Research and Development Activities ................................. 18
Environmental Laws .................................................. 18
Employees and Employment Agreements ................................. 18
PLAN OF OPERATION ........................................................ 18
DESCRIPTION OF PROPERTY .................................................. 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................... 22
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ................. 22
EXECUTIVE COMPENSATION ................................................... 24
FINANCIAL STATEMENTS ..................................................... 24
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ............................ 24
2
COASTAL MEDIA INC.
231 KINGS LANE
SALT SPRING ISLAND, BC, CANADA V8K 2P7
SUMMARY OF PROSPECTUS
You should read the following summary together with the more detailed business
information, financial statements and related notes that appear elsewhere in
this prospectus. In this prospectus, unless the context otherwise denotes,
references to "we," "us," and "our" are to Coastal Media Inc.
GENERAL INFORMATION ABOUT OUR COMPANY
Coastal Media Inc. was incorporated in the State of Nevada on May 24, 2006. We
were formed to manufacture, market, distribute and sell DVDs under the Coastal
Media brand name. We are a development stage company and have not yet commenced
operations or generated any revenues. We have been issued a "substantial doubt"
going concern opinion from our auditors and our only asset is our cash in the
bank of $9,449.
Our administrative offices are currently located at the residence of our
President, Jan Aaron Sigurgeirson at 231 Kings Lane, Salt Spring Island, BC V8K
2P7 Canada. Beginning August 1, 2006 we will pay $100 per month for the use of
the facilities, consisting of a small office and an area used for production of
our DVDs. Our registered statutory office is located at 711 South Carson Street,
Suite 4, Carson City, Nevada 89701. Our fiscal year end is June 30.
THE OFFERING
Following is a brief summary of this offering. Please see the Plan of
Distribution and Terms of the Offering sections for a more detailed description
of the terms of the offering.
Securities Being Offered 1,600,000 shares of common stock, par value
$.001.
Offering Price per Share $.025
Offering Period The shares are being offered for a period not
to exceed 180 days, unless extended by our
Board of Directors for an additional 90 days.
In the event we do not sell all of the shares
before the expiration date of the offering, all
funds raised will be promptly returned to the
investors, without interest or deduction.
Net Proceeds to Our Company $40,000
Use of Proceeds We intend to use the proceeds to pay for
offering expenses and to expand our business
operations.
Number of Shares Outstanding
Before the Offering: 2,000,000
Number of Shares Outstanding
After the Offering: 3,600,000
Our officers, directors, control persons and/or affiliates do not intend to
purchase any shares in this offering. If all the shares in this offering are
sold, our executive officers and directors will own 56% of our common stock. Due
to the controlling amount of their share ownership, they will have a significant
influence in determining the outcome of all corporate transactions.
3
RISK FACTORS
AN INVESTMENT IN THESE SECURITIES INVOLVES AN EXCEPTIONALLY HIGH DEGREE OF RISK
AND IS EXTREMELY SPECULATIVE IN NATURE. IN ADDITION TO THE OTHER INFORMATION
REGARDING OUR COMPANY CONTAINED IN THIS PROSPECTUS, YOU SHOULD CONSIDER MANY
IMPORTANT FACTORS IN DETERMINING WHETHER TO PURCHASE SHARES. FOLLOWING ARE WHAT
WE BELIEVE ARE ALL OF THE MATERIAL RISKS INVOLVED IF YOU DECIDE TO PURCHASE
SHARES IN THIS OFFERING.
RISKS ASSOCIATED WITH OUR COMPANY:
OUR OFFICERS AND DIRECTORS CURRENTLY DEVOTE ONLY PART TIME SERVICES TO THE
COMPANY AND ARE ALSO INVOLVED IN OTHER BUSINESS ACTIVITIES. THE COMPANY'S NEEDS
COULD EXCEED THE AMOUNT OF TIME OR LEVEL OF EXPERIENCE THEY MAY HAVE. THIS COULD
RESULT IN THEIR INABILITY TO PROPERLY MANAGE COMPANY AFFAIRS, RESULTING IN OUR
REMAINING A START-UP COMPANY WITH NO REVENUES OR PROFITS.
Jan Aaron Sigurgeirson, the president and director of the company, currently
devotes approximately 8 - 12 hours per week to company matters. Jon Suk, our
secretary and director, also currently devotes approximately 8 - 12 hours per
week to company matters. Our business plan does not provide for the hiring of
any additional employees until sales will support the expense. Until that time
the responsibility of developing the company's business, the offering and
selling of the shares through this prospectus and fulfilling the reporting
requirements of a public company all fall upon Mr. Sigurgeirson and Mr. Suk. Mr.
Sigurgeirson has not had experience serving as a principal accounting officer or
principal financial officer in a public company. We have not formulated a plan
to resolve any possible conflict of interest with their other business
activities. In the event they are unable to fulfill any aspect of their duties
to the company we may experience a shortfall or complete lack of sales resulting
in little or no profits and eventual closure of the business.
SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES AND LACK AN
OPERATING HISTORY, AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY RISKY
AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN
OUR BUSINESS PLANS.
Our company was incorporated in June 2006; we have not yet commenced our
business operations; and we have not yet realized any revenues. We have no
operating history upon which an evaluation of our future prospects can be made.
Based upon current plans, we expect to incur operating losses in future periods
as we incur significant expenses associated with the initial startup of our
business. Further, we cannot guarantee that we will be successful in realizing
revenues or in achieving or sustaining positive cash flow at any time in the
future. Any such failure could result in the possible closure of our business or
force us to seek additional capital through loans or additional sales of our
equity securities to continue business operations, which would dilute the value
of any shares you purchase in this offering.
WE DO NOT YET HAVE ANY SUBSTANTIAL ASSETS AND ARE TOTALLY DEPENDENT UPON THE
PROCEEDS OF THIS OFFERING TO FULLY FUND OUR BUSINESS. IF WE DO NOT RECEIVE
FUNDING, OUR BUSINESS WILL FAIL.
The only cash currently available is the cash paid by our founders for the
acquisition of their shares. In the event we do not sell all of the shares and
raise the total offering proceeds, there can be no assurance that we would be
able to raise the additional funding needed to fully implement our business
plans or that unanticipated costs will not increase our projected expenses for
the year following completion of this offering. Our auditors have expressed
substantial doubt as to our ability to continue as a going concern.
WE DO NOT HAVE ANY ADDITIONAL SOURCE OF FUNDING FOR OUR BUSINESS PLANS AND MAY
BE UNABLE TO FIND ANY SUCH FUNDING IF AND WHEN NEEDED, RESULTING IN THE FAILURE
OF OUR BUSINESS.
Other than the shares offered by this prospectus, no other source of capital has
been has been identified or sought. As a result we do not have an alternate
source of funds should we fail to complete this offering. If we do find an
alternative source of capital, the terms and conditions of acquiring such
capital may result in dilution and the resultant lessening of value of the
shares of stockholders.
If we are not successful in raising sufficient capital through this offering, we
will be faced with several options:
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1. abandon our business plans, cease operations and go out of business;
2. continue to seek alternative and acceptable sources of capital; or
3. bring in additional capital that may result in a change of control.
In the event of any of the above circumstances you could lose a substantial part
or all of your investment. In addition, there can no be guarantee that the total
proceeds raised in this offering will be sufficient, as we have projected, to
fund our business plans or that we will be profitable. As a result, you could
lose any investment you make in our shares.
WE CANNOT PREDICT WHEN, OR IF, WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A
TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
We have not yet produced any products and have not yet generated any revenues
from operations. In order for us to continue with our plans and open our
business, we must raise the capital to do so through this offering. The timing
of the completion of the milestones needed to commence operations and generate
revenues is contingent on the success of this offering. There can be no
assurance that we will generate revenues or that revenues will be sufficient to
maintain our business. As a result, you could lose all of your investment if you
decide to purchase shares in this offering and we are not successful in our
proposed business plans.
THE MARINE PUBLISHING AND MEDIA INDUSTRY IS HIGHLY COMPETITIVE. IF WE CANNOT
DEVELOP AND MARKET A DESIRABLE OFFERING OF DVDS THAT THE PUBLIC IS WILLING
PURCHASE, WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS MAY BE
ADVERSELY AFFECTED AND WE MAY NEVER BE ABLE TO GENERATE ANY REVENUES.
The marine publishing and media industry is intensely competitive. We will
compete against a number of large well-established companies with greater name
recognition, a more comprehensive range of products, and with substantially
larger resources than ours; including production and distribution capabilities.
In addition to these large competitors there are numerous smaller operations
that have developed and are marketing products similar to ours. Our competitors
include Magic Lamp Productions and Bennett Marine Video. We are developing a
type of product that has not been widely adopted in the marine publishing
industry. There can be no assurance that we can compete successfully with DVDs
in this established market dominated by the printed book and video cassette
media formats. If we cannot successfully develop a niche market in this highly
competitive industry, we may never be able to generate revenues or become
profitable. As a result, you may never be able to liquidate or sell any shares
you purchase in this offering.
OUR CONTINUED OPERATIONS DEPEND ON THE PUBLIC'S ACCEPTANCE OF OUR DVDS. IF THE
PUBLIC DOESN'T FIND OUR PRODUCTS DESIRABLE WE MAY NOT BE ABLE TO GENERATE ANY
REVENUES, WHICH WOULD RESULT IN A FAILURE OF OUR BUSINESS AND A LOSS OF ANY
INVESTMENT YOU MAKE IN OUR SHARES.
The ability to produce a line of DVDs that the public finds desirable and
willing to purchase is critically important to our success. We cannot be certain
that the DVDs that we will be offering will be appealing to the public and as a
result there may not be any demand for our products and our sales could be
limited and we may never realize any revenues.
BECAUSE OUR MANAGEMENT HAS NO DIRECT EXPERIENCE IN THE MARINE PUBLISHING
INDUSTRY, OUR BUSINESS HAS A HIGHER RISK OF FAILURE.
Our officers and directors have no direct experience in the marine publishing
industry. With no direct training or experience, our management may not be fully
aware of the specific requirements related to working in this industry. Their
decisions and choices may not take into account standard purchasing, marketing
or managerial approaches that publishing companies commonly use. Consequently
our operations, earnings and ultimate financial success may suffer irreparable
harm as a result.
VOLATILE COMMODITY ENERGY PRICES POSE A RISK TO OUR BUSINESS OPERATIONS.
Because of our heavy reliance on diesel fuel to power our vessel in order to
research and develop our content, sudden and significantly higher fuel price
increases in the future will adversely affect our ability to conduct marine
operations and to collect our content in a comprehensive manner to support the
development of our product.
5
MAJOR MECHANICAL FAILURE OR LOSS OF VESSEL WILL POSE A SIGNIFICANT RISK TO
CONTINUED BUSINESS OPERATIONS.
The company does not own the vessel from which it conducts operations. Should
the vessel become unavailable for use through accident, loss, or major
mechanical failure such as loss of engine, the company has no provisions to
procure a replacement vessel and may not be able to perform major component
replacement on the vessel to return it to operational status.
BECAUSE WE DO NOT CURRENTLY HAVE ANY PATENT OR TRADEMARK PROTECTION FOR OUR
PROPOSED DVDS THERE IS NO GUARANTEE SOMEONE ELSE WILL NOT DUPLICATE OUR IDEAS
AND BRING THEM TO MARKET BEFORE WE DO, WHICH COULD SEVERELY LIMIT OUR PROPOSED
SALES AND REVENUES.
We currently have no patents or trademarks for our planned products or brand
name. If business operations become established, we may seek such protection,
however, we currently have no plans to do so. Since we have no patent or
trademark rights unauthorized persons may attempt to copy aspects of our
business, including our products, web site design or marketing materials. Any
encroachment upon our corporate information, including the unauthorized use of
our brand name, the use of a similar name by a competing company or a lawsuit
initiated against us for infringement upon another company's proprietary
information or improper use of their trademark, may affect our ability to create
brand name recognition, cause customer confusion and/or have a detrimental
effect on our business. Litigation or proceedings before the U.S. or
International Patent and Trademark Offices may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets and
domain name and/or to determine the validity and scope of the proprietary rights
of others. Any such infringement, litigation or adverse proceeding could result
in substantial costs and diversion of resources and could seriously harm our
business operations and/or results of operations.
WE WILL BE SUBJECT TO THE MANY RISKS OF DOING BUSINESS INTERNATIONALLY,
INCLUDING BUT NOT LIMITED TO THE DIFFICULTY OF ENFORCING LIABILITIES IN FOREIGN
JURISDICTIONS, MAKING IT DIFFICULT FOR AN INVESTOR TO EFFECT SERVICE UPON THE
COMPANY.
We are a Nevada corporation and, as such, are subject to the jurisdiction of the
State of Nevada and the United States courts for purposes of any lawsuit, action
or proceeding by investors herein. An investor would have the ability to effect
service of process in any action on the company within the United States. In
addition, we will be operating as a foreign corporation doing business in Canada
and are subject to the local laws of Canada governing investor's ability to
bring actions in foreign courts and enforce liabilities against a foreign
private issuer, or any person, based on U.S. federal securities laws. Generally,
a final and conclusive judgment obtained by investors in U.S. courts would be
recognized and enforceable against us in the Canadian courts having jurisdiction
without reexamination of the merits of the case.
Since all of our officers and directors reside outside the United States,
substantially all or a portion of the assets of each are located outside the
United States. As a result, it may not be possible for investors to affect
service of process within the United States upon such persons or to enforce
against them judgments obtained in United States courts predicated upon the
civil liability provisions of the federal securities laws of the United States.
BECAUSE WE OPERATE IN A FOREIGN COUNTRY, OUR BUSINESS WILL BE SUBJECT TO FOREIGN
CURRENCY FLUCTUATIONS AND RISKS WHICH COULD SEVERELY IMPACT OUR REVENUES AND
RESULTS OF OPERATIONS.
While our bank account is in U.S. Dollars and is held in a U.S. bank, we will be
conducting the majority of our business, at least initially, in the Canadian
Dollar. The Canadian Dollar has traded in a fairly narrow range over the past
several years so we currently only have limited exposure to exchange rate
fluctuations. At some point in the future the exchange rate could fluctuate
substantially more which would cause us exposure to exchange rate risk as our
profits would then be subject to exchange rate fluctuations. If in the future
there are much wider fluctuations in the exchange rate, we could reduce our
transaction and translation gains and losses associated with converting foreign
currency into U.S. Dollars by entering into foreign exchange forward contracts
to hedge certain transaction and translation exposures.
RISKS ASSOCIATED WITH THIS OFFERING:
THE SHARES BEING OFFERED ARE DEFINED AS "PENNY STOCK", THE RULES IMPOSED ON THE
SALE OF THE SHARES MAY AFFECT YOUR ABILITY TO RESELL ANY SHARES YOU MAY
PURCHASE, IF AT ALL.
6
The shares being offered are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. The Exchange Act and such
penny stock rules generally impose additional sales practice and disclosure
requirements on broker-dealers who sell our securities to persons other than
certain accredited investors who are, generally, institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,600,000 or
annual income exceeding $200,000, or $300,000 jointly with spouse, or in
transactions not recommended by the broker-dealer. For transactions covered by
the penny stock rules, a broker-dealer must make a suitability determination for
each purchaser and receive the purchaser's written agreement prior to the sale.
In addition, the broker-dealer must make certain mandated disclosures in penny
stock transactions, including the actual sale or purchase price and actual bid
and offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may affect the ability of
broker-dealers to make a market in or trade our common stock and may also affect
your ability to resell any shares you may purchase in this offering in the
public markets. See the Plan of Distribution section on page 11.
WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL
ANY SHARES.
This offering is self-underwritten, that is, we are not going to engage the
services of an underwriter to sell the shares; we intend to sell them through
our officers and directors, who will receive no commissions. They will offer the
shares to their friends, relatives, acquaintances and business associates;
however, there is no guarantee that they will be able to sell any of the shares.
In the event all of the shares are not sold before the expiration date of the
offering, all funds raised will be promptly returned to the investors, without
interest or deduction.
DUE TO THE LACK OF A TRADING MARKET FOR OUR SECURITIES, YOU MAY HAVE DIFFICULTY
SELLING ANY SHARES YOU PURCHASE IN THIS OFFERING.
There is presently no demand for our common stock and no public market exists
for the shares being offered in this prospectus. We plan to contact a market
maker to file an application on our behalf to have our common stock listed for
quotation on the Over-the-Counter Bulletin Board (OTCBB) immediately following
the effectiveness of this Registration Statement. The OTCBB is a regulated
quotation service that displays real-time quotes, last sale prices and volume
information in over-the-counter (OTC) securities. The OTCBB is not an issuer
listing service, market or exchange. Although the OTCBB does not have any
listing requirements per se, to be eligible for quotation on the OTCBB, issuers
must remain current in their filings with the SEC or applicable regulatory
authority. Market Makers are not permitted to begin quotation of a security
whose issuer does not meet this filing requirement. Securities already quoted on
the OTCBB that become delinquent in their required filings will be removed
following a 30 or 60 day grace period if they do not make their required filing
during that time. We cannot guarantee that our application will be accepted or
approved and our stock listed and quoted for sale. As of the date of this
filing, there have been no discussions or understandings between Coastal Media
Inc., or anyone acting on our behalf, with any market maker regarding
participation in a future trading market for our securities. If no market is
ever developed for our common stock, it will be difficult for you to sell any
shares you purchase in this offering. In such a case, you may find that you are
unable to achieve any benefit from your investment or liquidate your shares
without considerable delay, if at all. In addition, if we fail to have our
common stock quoted on a public trading market, your common stock will not have
a quantifiable value and it may be difficult, if not impossible, to ever resell
your shares, resulting in an inability to realize any value from your
investment.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR
SHARES.
Our existing stockholders acquired their shares at a cost substantially less
than that which you will pay for the shares you purchase in this offering.
Accordingly, any investment you make in these shares will result in the
immediate and substantial dilution of the net tangible book value of those
shares from the $.025 you pay for them. Upon completion of the offering, the net
tangible book value of your shares will be $.014 per share, $.011 less than what
you paid for them.
WE WILL BE HOLDING ALL PROCEEDS FROM THE OFFERING IN A STANDARD BANK CHECKING
ACCOUNT UNTIL ALL SHARES ARE SOLD HOWEVER THERE IS NO GUARANTEE ALL OF THE FUNDS
WILL BE USED AS OUTLINED IN THIS PROSPECTUS.
All funds received from the sale of shares in this offering will be deposited
into a standard bank checking account until all shares are sold and the offering
is closed, at which time, the proceeds will be transferred to our business
operating account. We have committed to use the proceeds raised in this offering
for the uses set forth in the proceeds table. However, certain factors beyond
our control, such as increases in certain costs, could result in the company
being forced to reduce the proceeds allocated for other uses in order to
7
accommodate these unforeseen changes. The failure of our management to use these
funds effectively could result in unfavorable returns. This could have a
significant adverse effect on our financial condition and could cause the price
of our common stock to decline.
OUR DIRECTORS WILL CONTINUE TO EXERCISE SIGNIFICANT CONTROL OVER OUR OPERATIONS,
WHICH MEANS AS A MINORITY SHAREHOLDER, YOU WOULD HAVE NO CONTROL OVER CERTAIN
MATTERS REQUIRING STOCKHOLDER APPROVAL THAT COULD AFFECT YOUR ABILITY TO EVER
RESELL ANY SHARES YOU PURCHASE IN THIS OFFERING.
After the completion of this offering, our executive officers and directors will
own 56% of our common stock. Due to the controlling amount of their share
ownership, they will have a significant influence in determining the outcome of
all corporate transactions, including the election of directors, approval of
significant corporate transactions, changes in control of the company or other
matters that could affect your ability to ever resell your shares. Their
interests may differ from the interests of the other stockholders and thus
result in corporate decisions that are disadvantageous to other shareholders.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE,
WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
Our business plan allows for the estimated $6,000 cost of this Registration
Statement to be paid from the proceeds of the offering. We plan to contact a
market maker immediately following the effectiveness of this Registration
Statement and apply to have the shares quoted on the OTC Electronic Bulletin
Board. To be eligible for quotation on the OTCBB, issuers must remain current in
their filings with the SEC. Market Makers are not permitted to begin quotation
of a security whose issuer does not meet this filing requirement. Securities
already quoted on the OTCBB that become delinquent in their required filings
will be removed following a 30 or 60 day grace period if they do not make their
required filing during that time. In order for us to remain in compliance we
will require future revenues to cover the cost of these filings, which could
comprise a substantial portion of our available cash resources. If we are unable
to generate sufficient revenues to remain in compliance it may be difficult for
you to resell any shares you may purchase, if at all.
USE OF PROCEEDS
Assuming we are able to sell all of the shares and complete the offering, which
we can't guarantee, the gross proceeds to us will be $40,000. We expect to
disburse those proceeds in the priority set forth below, during the first 12
months following successful completion of this offering:
Total Proceeds $40,000
Less: Estimated Offering Expenses 6,000
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Proceeds to Us: $34,000
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Fuel 3,750
Vessel Maintenance 2,400
Content Development 2,750
Travel and Trade Shows 3,000
Inventory and Supplies 2,500
Advertising and Marketing 3,200
Equipment and Furniture 2,500
Accounting and Legal 5,700
Research and Development 700
Office and Administration 800
Insurance 700
Vessel Rent 400
Office Rent 800
Working Capital 4,800
-------
Total Net Proceeds $34,000
=======
8
DETERMINATION OF OFFERING PRICE
The offering price of the shares has been determined arbitrarily by us. The
price does not bear any relationship to our assets, book value, earnings, or
other established criteria for valuing a privately held company. In determining
the number of shares to be offered and the offering price we took into
consideration our cash on hand and the amount of money we would need to
implement our business plans. Accordingly, the offering price should not be
considered an indication of the actual value of our securities.
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders.
As of June 30, 2006, the net tangible book value of our shares was $9,449 or
approximately $.005 per share, based upon 2,000,000 shares outstanding.
Upon completion of this offering, but without taking into account any change in
the net tangible book value after completion of this offering other than that
resulting from the sale of the shares and receipt of the total proceeds of
$40,000, the net tangible book value of the 3,600,000 shares to be outstanding
will be $49,449, or approximately $.014 per share. Accordingly, the net tangible
book value of the shares held by our existing stockholders (2,000,000 shares)
will be increased by $.009 per share without any additional investment on their
part. The purchasers of shares in this offering will incur immediate dilution (a
reduction in the net tangible book value per share from the offering price of
$.025 per Share) of $.011 per share. As a result, after completion of the
offering, the net tangible book value of the shares held by purchasers in this
offering would be $.014 per share, reflecting an immediate reduction in the
$.025 price per share they paid for their shares.
After completion of the offering, the existing shareholders will own 56% of the
total number of shares then outstanding, for which they will have made a cash
investment of $10,000, or $.005 per share. Upon completion of the offering, the
purchasers of the shares offered hereby will own 44% of the total number of
shares then outstanding, for which they will have made a cash investment of
$40,000, or $.025 per Share.
The following table illustrates the per share dilution to the new investors and
does not give any effect to the results of any operations subsequent to June 30,
2006:
Price Paid per Share by Existing Shareholders $ .005
Public Offering Price per Share $ .025
Net Tangible Book Value Prior to this Offering $ .005
Net Tangible Book Value After Offering $ .014
Increase in Net Tangible Book Value per Share
Attributable to cash payments by new purchasers $ .009
Immediate Dilution per Share to New Investors $ .011
The following table summarizes the number and percentage of shares purchased,
the amount and percentage of consideration paid and the average price per share
paid by our existing stockholders and by new investors in this offering:
9
Total
Price Number of Percent of Consideration
Per Share Shares Held Ownership Paid
--------- ----------- --------- ----
Existing
Stockholders $ .005 2,000,000 56% $10,000
Investors in
This Offering $ .025 1,600,000 44% $40,000
PLAN OF DISTRIBUTION
There is currently no market for any of our shares and we can provide no
assurance that the shares offered will have a market value or that they can be
resold at the offering price. We can also provide no assurance when an active
secondary market might develop, or that a public market for our securities may
be sustained even if it is developed.
We plan to contact a market maker to file an application on our behalf to have
our common stock listed for quotation on the Over-the-Counter Bulletin Board
(OTCBB) immediately following the effectiveness of this Registration Statement.
The OTCBB is a regulated quotation service that displays real-time quotes, last
sale prices and volume information in over-the-counter (OTC) securities. We do
not know how long this process will take and we cannot guarantee that our
application will be accepted or approved and our stock listed and quoted for
sale. As of the date of this filing, there have been no discussions or
understandings between Coastal Media Inc., nor anyone acting on our behalf, with
any market maker regarding participation in a future trading market for our
securities. If no market is ever developed for our common stock, it will be
difficult for you to sell any shares you purchase in this offering. In such a
case, you may find that you are unable to achieve any benefit from your
investment or liquidate your shares without considerable delay, if at all. In
addition, if we fail to have our common stock quoted on a public trading market,
your common stock will not have a quantifiable value and it may be difficult, if
not impossible, to ever resell your shares, resulting in an inability to realize
any value from your investment.
This is a self-underwritten offering. This prospectus is part of a prospectus
that permits our officers and directors to sell the shares directly to the
public, with no commission or other remuneration payable to them for any shares
they sell. There are no plans or arrangements to enter into any contracts or
agreements to sell the shares with a broker or dealer. Our officers and
directors will sell the shares and intend to offer them to friends, family
members and business acquaintances. In offering the securities on our behalf,
our officers and directors will rely on the safe harbor from broker dealer
registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934,
which sets forth those conditions under which a person associated with an Issuer
may participate in the offering of the Issuer's securities and not be deemed to
be a broker-dealer.
a. Our officers and directors are not subject to a statutory
disqualification, as that term is defined in Section 3(a)(39) of the
Act, at the time of their participation; and,
b. Our officers and directors will not be compensated in connection with
their participation by the payment of commissions or other
remuneration based either directly or indirectly on transactions in
securities; and
c. Our officers and directors are not, nor will be at the time of their
participation in the offering, an associated person of a
broker-dealer; and
d. Our officers and directors meet the conditions of paragraph (a)(4)(ii)
of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform,
or are intended primarily to perform at the end of the offering,
substantial duties for or on behalf of our company, other than in
connection with transactions in securities; and (B) is not a broker or
dealer, or been associated person of a broker or dealer, within the
preceding twelve months; and (C) have not participated in selling and
offering securities for any Issuer more than once every twelve months
other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our officers, directors, control persons and affiliates of same do not intend to
purchase any shares in this offering.
TERMS OF THE OFFERING
The Shares will be sold at the fixed price of $.025 per share until the
completion of this offering. There is no minimum amount of subscription required
per investor.
10
This offering will commence on the date of this prospectus and continue for a
period of 180 days, unless we extend the offering period for an additional 90
days, or unless the offering is completed or otherwise terminated by us (the
"Expiration Date").
This is a "best efforts", "all or none" offering and, as such, we will not be
able to spend any of the proceeds unless and until all shares are sold and all
proceeds are received. We intend to hold all monies collected for subscriptions
in a separate bank account until the total amount of $40,000 has been received.
At that time, the funds will be transferred to our business account for use in
the implementation of our business plans. In the event the offering is not sold
out prior to the Expiration Date, all monies will be returned to investors,
without interest or deduction.
PROCEDURES FOR SUBSCRIBING
If you decide to subscribe for any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check or
certified funds to us. All checks for subscriptions should be made payable to
Coastal Media Inc.
LEGAL PROCEEDINGS
We are not involved in any pending legal proceeding nor are we aware of any
pending or threatened litigation against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Each of our directors is elected by the stockholders to a term of one year and
serves until his or her successor is elected and qualified. Each of our officers
is appointed by the Board of Directors to a term of one year and serves until
his or her successor is duly elected and qualified, or until he or she is
removed from office. The Board of Directors has no nominating, auditing or
compensation committees.
The name, address, age and position of our officers and directors is set forth
below:
Name and Address Age Position(s)
---------------- --- -----------
Jan Aaron Sigurgeirson 43 President, CEO and
231 Kings Lane Chairman of the Board
Salt Spring Island, BC V8K 2P7
Jon Suk 41 Treasurer, CFO,
136 Bradley Road Secretary and Director
Salt Spring Island, BC V8K 1J5
The persons named above have held their offices/positions since inception of our
Company and are expected to hold said offices/positions until the next annual
meeting of our stockholders. The officers and directors are our only officers,
directors, promoters and control persons.
BACKGROUND INFORMATION ABOUT OUR OFFICERS AND DIRECTORS
MR. JAN AARON SIGURGEIRSON has been President, CEO and Chairman of the Board of
Directors of the Company since inception. From April 2001 to present, he is
self-employed, operating Aladdin Website Solutions, located in Salt Spring
Island, B.C., an internet services provider specializing in search engine
optimization, website management, and systems consulting. From May 2001 to
present he has been employed by Gulf Islands Water Taxi Ltd., a privately held
B.C. corporation located in Salt Spring Island, B.C., as a vessel master and
deckhand. From January 1998 to March 2001 he was employed at Halliburton UK
Ltd., in the position of Systems Security Analyst, in Aberdeen, Scotland. Prior
to 2001, Mr. Sigurgeirson had been employed as a commercial fisherman for 18
years off the coast of British Columbia from Vancouver to the Haida Gwaii both
inshore and offshore. Mr. Sigurgeirson has lectured at the University of British
Columbia in Vancouver, B.C., and at Malaspina College in Nanaimo, B.C., on the
subject of internet search engine optimization for websites.
11
Mr. Sigurgeirson attended Aberdeen College in Aberdeen, Scotland, UK from 1999
to 2001 in the Higher National Certificate for Computing programmer.
MR. JON SUK has been the Treasurer, CFO, Secretary and a Director of our company
since inception. From March 2001 to the present he has been President of
BN-Borealis Networks, Inc., a privately held B.C. corporation. Borealis
Networks, located in Salt Spring Island, B.C., is an internet services provider
specializing in website hosting services, website development, e-commerce and
technical consulting. From May 1993 to March 2001 he was President of Image
Factory, a privately held B.C. corporation located in Richmond, B.C. Image
Factory, Inc. is a digital imaging pre-press studio with graphic design and
systems consulting support. He has also served as a Director of Image Factory
from May 1993 to present. From November 1999 to May 2001 he was President and a
Director of Bidder Communications. Inc., a publicly traded Nevada corporation
that operated as an internet auction provider located in Vancouver, B.C. He is
currently President and a Director of Mystica Candle Corp. from June 2005 to
present.
Mr. Suk attended the University of British Columbia in Vancouver, B.C. where he
studied English Literature from 1985 to 1989.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this prospectus, the total
number of shares owned beneficially by each of our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The table also reflects what such ownership will
be assuming completion of the sale of all shares in this offering, which we
can't guarantee. The stockholders listed below have direct ownership of their
shares and possess sole voting and dispositive power with respect to the shares.
No. of No. of Percentage
Shares Shares of Ownership
Name and Address Before After Before After
Beneficial Owner Offering Offering Offering Offering
- ---------------- -------- -------- -------- --------
Jan Aaron Sigurgeirson 1,000,000 1,000,000 50% 30%
136 Bradley Road
Salt Spring Island, BC V8K 1J5
Jon Suk 1,000,000 1,000,000 50% 30%
136 Bradley Road
Salt Spring Island, BC V8K 1J5
All Officers and
Directors as a Group (2) 2,000,000 2,000,000 100% 60%
FUTURE SALES BY EXISTING STOCKHOLDERS
A total of 2,000,000 shares have been issued to the existing stockholders, all
of which are held by of our officers and directors and are restricted
securities, as that term is defined in Rule 144 of the Rules and Regulations of
the SEC promulgated under the Act. Under Rule 144, such shares can be publicly
sold, subject to volume restrictions and certain restrictions on the manner of
sale, commencing one year after their acquisition. Any sale of shares held by
the existing stockholders (after applicable restrictions expire) and/or the sale
of shares purchased in this offering (which would be immediately resalable after
the offering), may have a depressive effect on the price of our common stock in
any market that may develop, of which there can be no assurance.
Our principal shareholders do not have any existing plans to sell their shares
at any time after this offering is complete.
12
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital stock consists of 75,000,000 shares of common stock, par
value $.001 per share. The holders of our common stock (i) have equal ratable
rights to dividends from funds legally available therefore, when, as and if
declared by our Board of Directors; (ii) are entitled to share in all of our
assets available for distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs; (iii) do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions or rights; and (iv) are entitled to one non-cumulative vote per share
on all matters on which stockholders may vote.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in such event, the holders of the remaining shares will not
be able to elect any of our directors. After this offering is completed, the
present stockholders will own 56% of our outstanding shares and the purchasers
in this offering will own 44%.
CASH DIVIDENDS
As of the date of this prospectus, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our Board of Directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to
pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the below described experts or counsel have been hired on a contingent
basis and none of them will receive a direct or indirect interest in the
Company.
Our financial statements for the period from inception to the year ended June
30, 2006 included in this prospectus have been audited by George Stewart, CPA,
2301 S. Jackson St., Suite 101-G, Seattle, WA 98144. We include the financial
statements in reliance on his reports, given upon his authority as an expert in
accounting and auditing.
Joseph I. Emas, 1224 Washington Avenue, Miami Beach, FL has passed upon the
validity of the shares being offered and certain other legal matters and is
representing us in connection with this offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
13
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
ORGANIZATION WITHIN LAST FIVE YEARS
Coastal Media Inc. was incorporated in Nevada on May 24, 2006 to engage in the
business of manufacturing, marketing, distributing and selling our marine DVDs.
At that time Jan Aaron Sigurgeirson was appointed as President and Principal
Executive Officer and Jon Suk as Secretary, Treasurer and Principal Accounting
and Financial Officer of the company and the board of directors voted to seek
capital and begin development of our business plan. We received our initial
funding of $10,000 through the sale of common stock to Mr. Sigurgeirson and Mr.
Suk who each purchased 1,000,000 shares of our Common Stock at $0.005 per share
on June 14, 2006.
DESCRIPTION OF BUSINESS
PRINCIPAL PRODUCTS AND THEIR MARKETS
Our principal products will be a cruising guides website and multimedia DVD for
pleasure boating. We plan to initially sell these DVDs in Canada and the U.S.
through our online internet store and retail outlets. The website will have a
public section as well as paid subscriber area containing information and media
not available on the public site. We will write, photograph, video and produce
DVDs geared to the cruising and recreational boating market to provide a
cruising guide to popular destinations beginning in the Northwest. We will
photograph and film from the water, key passages to destinations. A website will
be designed and programmed to sell the DVDs and complement the DVD's content
with additional resources.
We intend to incorporate into the DVD digitized navigational charts, motion
graphics such as Flash, diagrams and video footage along with text and voice
commentary. Coastal Media DVDs will be made with high quality materials in
environmentally responsible packaging that will have a minimum impact on the
environment, and wherever possible, incorporate materials that are recyclable.
The DVDs will be recorded and labeled in-house using recordable media and inkjet
printer. If the demand for the product exceeds our ability to produce in-house,
the DVDs will be duplicated at a mass-manufacturing facility such as Cinram.
In-house recording on demand will allow the company to produce timely updates to
our content on an ongoing basis without the large capital expense of ordering
mass-manufactured DVDs.
Coastal Media DVDs will appeal to the boat owners and operators who are
traveling, or plan to travel, to and within the geographic regions we plan to
cover in our products, as well as those with general interest in boating. Our
Coastal Media DVDs will initially be sold in Canada and through our planned
online internet store to customers seeking practical guides to cruising within
the coastal areas to be included in our DVDs.
The area we initially plan to develop content for in the initial product is
Ganges Harbour on Salt Spring Island, B.C., a popular cruising destination in
the Pacific Northwest. We plan to develop new products based on the remainder of
the B.C. Southern Gulf Islands and popular harbors and recreational areas such
as Bedwell Harbour, Montague Harbour and Tsehum Harbour. We further plan to
develop content for the San Juan Islands and their popular destinations. Upon
completion of these areas, and pending viability for expansion and availability
of capital, we plan to develop content in more remote destinations such as
Desolation Sound in the central coast of British Columbia, as well as
international areas such as the Caribbean and the Adriatic Sea.
The subject matter we plan to include in the multimedia content of the DVDs
includes:
Destination guides - Navigation tips and destination information to describe the
different routes to the destination.
General navigation concepts such as vessel maneuvering, navigation tools and
techniques such as visual navigation, electronic navigation such as GPS (Global
Positioning System) and RADAR, weather reports and tides and currents tables for
optimal travel through popular passages.
14
Radio protocols - The use of commercial traffic information to become aware of
key vessel traffic within the travel area for ease of navigation and collision
avoidance.
Piloting/Pilothouse Guide - Visual guides to the rules of the road, courtesy
when encountering other vessels
Trip planning - Recreation and shopping guides for the areas of coverage.
Provisions and Menu planning - Stocking the boat with food provisions and ideas
for complementing fish and seafood commonly found in the destination areas.
Cruising with children and pets.
Content Development Platform:
The multimedia content to be developed requires on-the-water presence in order
to simulate suggested navigational approaches and information. Jon Suk owns
ex-fishing vessel M.V. Karmel Bar which will be provided to the company as the
platform for transportation to and from destinations content creation, as well
as the following equipment for use by the company to develop the multimedia
content: Canon EOS20D professional digital camera, Canon Elura digital video
(DV) camera, Garmin GPSMAP 298C marine GPS & depth sonar. Digital photography
and videography will be reviewed and edited on an onboard computer and
catalogued for content assembly.
Operational Best Practices:
While there are no regulations requiring the adoption, installation and use of
commercial grade safety equipment on our vessel, the company intends to outfit
and operate the M.V. Karmel Bar in a manner consistent with the directors'
professional experience on commercially licensed vessels, and with the content
provided in our DVDs. The vessel needs to be prepared for operations with the
addition of safety equipment including life jackets, inflatable emergency life
raft, RADAR, 2 VHF radios (one tuned to the prevailing coast guard channel, and
one tuned to the prevailing commercial traffic channel for the areas within
which we are operating)
Environmental best practices:
The company will operate the vessel using a best practices approach that
includes minimal discharge from the vessel bilge by using widely available
pump-out facilities located at major harbors. Wherever available, the vessel
M.V. Karmel Bar will be fueled with bio-diesel during its operations.
Hull & engine maintenance:
Operation of a vessel in a marine environment results in wear and tear on the
vessel, the power plant and peripheral equipment. The vessel is expected to
consume an average of 25 litres of diesel fuel per hour at cruising speed and
regular maintenance required at every 100 hours of operation. The vessel will
require a `haul-out' at a dry dock facility equipped with a travel-lift system
in order to conduct hull maintenance to remove organisms that will attach to the
hull during our operations, and to conduct necessary repair if needed, along
with re-application of anti-fouling coating to discourage the growth of
organisms on the hull of the vessel.
Overhead & expenses:
Fuel, vessel maintenance, office, marketing, computer for media editing and
production, web application and Flash programming.
As our content is developed and product offerings expanded, additional website
domain name names will need to be secured and purchased in order to best market
our products.
Sales Policy:
Buyers of our products and will be offered a money-back guarantee (within 7 days
of receipt of delivery by carrier) to ensure customer satisfaction. Customers
who buy from a retailer will return their DVD to the original purchase location,
who will then return it to us for reimbursement. Customers who buy from our
online store will be required to cover shipping charges to return it to us.
15
Corporate Identity and Marketing:
The logo and corporate colors for Coastal Media Inc. is under development. The
company plans to advertise using both print-based media outlets such as boating
magazines, as well as online outlets such as websites serving the cruising
market as well as purchase of keyword-based advertising to generate traffic to
our website and online shop.
Additional Planned Revenue Sources:
Advertising through product/service placement on our DVDs and display
advertising on our website. Potential advertisers and co-marketing partners
include marinas, whale watching tour operators, and charter companies such as
fishing charters, dive charters, sailing charters and bare boat charter service
providers. In addition, other business categories include accommodations,
restaurants, locality specific attractions (Art Studios, Antique Shops, Tourist
Sites) and local Chambers of Commerce. The advertisers will pay a fee for
inclusion in a service directory, either on the DVDs or the website, or both.
They may also be included as product placement where appropriate. The company
plans to seek affiliate partners for advertising and sales referrals through
adword, pay-per-click, and click-through links from our website.
DISTRIBUTION METHODS
We initially plan to market and distribute Coastal Media's DVDs in Canada and
through our planned online internet store. We plan to wholesale or consign our
DVDs to book and media distributors, marine specialty and general interest book
stores, and marine chandlery shops in Canada. Once we start to become better
known we hope to be able to export to the United States and internationally by
attendance at industry and trade shows such as the Seattle Boat Show.
We will fulfill all internet customer orders from our office on Salt Spring
Island, BC, Canada. We will pack the items and then deliver them via Canada
Post's Parcel Service or other shipping company for distribution to consumers in
Canada and internationally. We are committed to shipping accurate orders,
efficiently and in a timely manner. Delivery time is currently estimated to be
within three to five business days from the date of the receipt of the order for
domestic orders and ten to fifteen business days for international orders. We
will charge each customer in advance for the shipping costs associated with the
order. Any import duties or taxes in effect and payable at the destination will
be the responsibility of the customer.
The typical shopping experience at our planned online store will begin with the
display of DVDs and description of the content and areas covered, and order
fulfillment including the ordering process and extending through product
delivery and post-purchase support. We believe that the ability to accurately
fulfill orders, ship orders quickly to a customer and being responsive when
handling customer inquiries is as important to customer satisfaction as a
superior product. We believe that a high level of customer service and support
is critical to retaining and expanding a reliable, repeat customer base and for
establishing and maintaining a trusted brand name. Accordingly, while we
currently do not have the financial resources, or the need to employ any
customer service personnel, we do intend to develop a stringent customer service
policy. Once we commence sales, management will be available by phone or via
e-mail, from 9:00 a.m. to 5:00 p.m., Pacific Standard Daylight Time, Monday
through Friday, and during non-business hours via voicemail. We will provide
order and shipping confirmations (with tracking numbers) or notifications of
out-of-stock items to customers via e-mail. We are dedicated to providing
superior customer satisfaction to secure repeat customers and referrals.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS
We have not publicly announced any new products.
COMPETITION
The marine publishing industry is large, diverse and well established. We will
compete against other small companies like ours, as well as large companies that
have a similar business and large marketing companies, importers and
distributors that sell products similar to or competitive with ours. An example
of the companies with whom we will compete is Cruiser's Guide to the San Juans.
Our research to date has shown there is no cruising-guide DVDs in our planned
areas of content development with the exception of the San Juan Islands.
We believe that our competitive strengths will consist of the quality of the
visual and audio content, practical information, educational and entertainment
value and a well-designed online shop. Although there are many companies that
produce boating videos and DVDs, much of the content is dry and academic. As we
plan to target our DVDs toward an affluent and leisure seeking clientele, we
believe that informational content should be provided in a concise, engaging
manner. With such an approach to our product we believe that we will develop a
niche market with few direct competitors at the early stage. The cruising market
16
is comprised of an affluent demographic. We believe that the consumers in this
market are willing to pay higher prices for an informational DVD product than
they would pay for an entertainment DVD such as motion picture or travel DVDs.
While conducting our research we were unable to find many products geared
directly to our target market and we could only find a few companies that
specialized in producing boating DVDs. The market is still largely filled with
VHS video cassettes which we believe do not offer the same level of convenience
and functionality of a menu-driven DVD. Generally speaking, a major online
retailer, Boating DVD, has its limited selection of DVDs priced at $39.95. We
believe that a similar price range of $39.95 to $49.95 will be a competitive
price for the Coastal Media DVDs.
SOURCES AND AVAILABILITY OF PRODUCTS
We currently plan to source our materials including blank DVD recordable media
and cases from EMJ Datasystems of Guelph, Ontario, Canada. However, they need
not be the exclusive or major provider of raw materials as recordable DVD media
is a widely available commodity product available from many wholesale and retail
outlets. We will source the materials and be responsible for production. We do
not currently have any long-term agreements in place for the supply of
recordable discs, mass-manufactured discs, disc cases or other raw materials
that compose our product. Although we plan to choose only high quality materials
in the manufacture of our DVDs, they are readily available from a large number
of suppliers in Canada, the U.S. and abroad. We will continually source new
materials from other suppliers who may produce different materials, materials of
higher quality or similar materials that are lower priced.
We initially plan to be responsible for the manufacturing of our DVDs. This will
enable us to manufacture our DVDs in smaller batches without requiring a large
amount of working capital required by factory duplication, and ensure quality
control. We recognize that, if we grow, we may require additional employees or
contractors for manufacturing our DVDs. If the demand for our DVDs exceeds our
capacity for production, we believe the revenue generated will enable us to
produce the DVDs through a contract manufacturer.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We feel that, because of the potential wide base of customers for our products,
there will be no problem with dependence on one or few major customers. Should a
large publishing company or major distributor or retailer show interest in
either an exclusive or non-exclusive agreement for the sale of our DVDs in large
volumes, the company will pursue it if we feel it is in the best interest of the
company.
PATENTS AND TRADEMARKS
We believe our products to be unique. We currently have no patents or trademarks
for our products or brand name; however, as business is established and
operations expand, we may seek such protection. Despite efforts to protect our
proprietary rights, such as our brand and product line names, since we have no
patent or trademark rights unauthorized persons may attempt to copy aspects of
our business, including our web site design, products, product information and
sales mechanics or to obtain and use information that we regard as proprietary,
such as the technology used to operate our web site and content. Any
encroachment upon our proprietary information, including the unauthorized use of
our brand name, the use of a similar name by a competing company or a lawsuit
initiated against us for infringement upon another company's proprietary
information or improper use of their trademark, may affect our ability to create
brand name recognition, cause customer confusion and/or have a detrimental
effect on our business. Litigation or proceedings before the U.S. or
International Patent and Trademark Offices may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets and
domain name and/or to determine the validity and scope of the proprietary rights
of others. Any such litigation or adverse proceeding could result in substantial
costs and diversion of resources and could seriously harm our business
operations and/or results of operations.
NEED FOR GOVERNMENTAL APPROVAL OF PRINCIPAL PRODUCTS
We do not require any government approval for the manufacturing or distribution
of any of our products.
We are subject to regulation by the World Trade Organization. Generally, these
international trade agreements benefit our business rather than burden it
because they tend to reduce trade quotas, duties, taxes and similar impositions.
However, these trade agreements may also impose restrictions that could have an
adverse impact on our business, by limiting the countries where we might market
and sell our products. Also, regulations in individual countries that we plan to
17
export our products to could always adversely change for us by imposing or
increasing quotas, duties and taxes, limiting the amount of products we can
export to their country or making our goods less competitive compared to
products exported from other countries.
We are not subject to any government regulations in Canada where we intend to
have our DVDs manufactured and sold initially. Once we start to export our DVDs
we will have to ensure that we comply with labeling and advertising regulations
imposed by each country that we intend to export our products to.
GOVERNMENT AND INDUSTRY REGULATION
We will be subject to federal laws and regulations that relate directly or
indirectly to our operations including securities laws. We will also be subject
to common business and tax rules and regulations pertaining to the operation of
our business.
RESEARCH AND DEVELOPMENT ACTIVITIES
Other than time spent researching our proposed business we have not spent any
funds on research and development activities to date. Our business plan allows
for spending $700 of our funding on research and development activities during
the next twelve months.
ENVIRONMENTAL LAWS
Our operations are not subject to any environmental laws.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
We currently have two employees, both of which are our executive officers, Jan
Aaron Sigurgeirson and Jon Suk. Jan Aaron Sigurgeirson devotes approximately 8 -
12 hours a week on company organization, laying out future marketing and sales
plans and designing our web site and products. Jon Suk devotes 8 - 12 hours per
week to our business and currently is responsible for sourcing suppliers for
materials and manufacturing our DVDs. If the demand for our DVDs exceeds our
capacity for order fulfillment, we believe the revenue generated will enable us
to hire staff to meet the demand. There are no formal employment agreements
between the company and our current employees.
PLAN OF OPERATION
We have generated no revenues since inception and have incurred $551 in expenses
as of June 30, 2006.
The following table provides selected financial data about our company for the
period from the date of incorporation through June 30, 2006. For detailed
financial information, see the audited financial statements included in this
prospectus.
Balance Sheet Data: 06/30/06
------------------- --------
Cash $9,449
Total assets $9,449
Total liabilities $ 0
Shareholders' equity $9,449
Other than the shares offered by this prospectus, no other source of capital has
been has been identified or sought. To date, we have never had any discussions
with any possible acquisition candidate nor have we any intention of doing so.
We expect that we will only be able to complete the first four months of our
business plan without additional funds. In order to fully implement our business
plan for the remaining 8 months we would require $34,000. If we are unable to
receive funding from this offering we would postpone our cost-intensive plans
such as marine photography and videography, equipment purchases, travel and
trade shows and advertising while we investigate alternative funding. Our
directors have verbally agreed to loan the company funds to complete the
registration process and continue operations in a limited scenario until sales
will support operations, but we will require full funding to implement our
complete business plan. We currently have no plans to hire additional employees
in the next twelve months unless sales are sufficient to cover the cost.
18
PROPOSED MILESTONES TO IMPLEMENT BUSINESS OPERATIONS
The following criteria for the milestones are based on management's estimates
only. The number of DVDs we plan to manufacture and make available for sale and
the other projected milestones are approximations only and subject to adjustment
based on costs and needs. In addition to the monthly expense amounts budgeted we
have set aside $4,800 in working capital.
JUNE 2006:
A domain name for the company website was researched by Jan Aaron Sigurgeirson
for optimal search engine ranking. Jon Suk secured the domain name
coastalmarinemedia.com. Sufficient capital exists to fund planned operations.
Budget: Accounting & Legal $500, Office Administration & Insurance $200 - Total
$700
JULY 2006:
Jan Aaron Sigurgeirson and Jon Suk to prepare M.V. Karmel Bar for operations
with hull preparation, powerplant and transmission general maintenance. Jon Suk
to design company logo and colors for marketing collateral. Jon Suk to research
and hire professional video editor to gather advice on appropriate techniques
for gathering video footage. Jan Aaron Sigurgeirson to research the availability
of books and DVDs similar in subject matter to our planned product. Purchase and
review books and DVDs deemed to be in a similar target market, for competitive
research. Sufficient capital exists to reach planned operational milestones.
Budget: Fuel $250, Equipment & Maintenance $2,000, Content Development $250, R&D
$100, Accounting & Legal $1,500, Office Administration & Insurance $200, Vessel
Rent $50 - Total $4,350
AUGUST 2006:
Jon Suk and Jan Aaron Sigurgeirson will conduct initial photography and
videography of Ganges Harbour area of Salt Spring Island, B.C. for DVD content
development. Research and purchase print media magazines appropriate for
potential advertising outlets for our products. Research advertising rates.
Research over the internet, online stores that market and sell similar products.
Jon Suk to design graphics for company uniform, consisting of baseball-style
hats and golf shirts and t-shirts to be worn by crew for all photography and
videography in which our crew appear. Sufficient capital exists to reach planned
operational milestones.
Budget: Fuel $1,000, Advertising & Marketing $300, R&D $200, Office
Administration & Insurance $200, Vessel & Office Rent $150 - Total $1,850
SEPTEMBER 2006:
Jon Suk and Jan Aaron Sigurgeirson to continue photography and videography of
Salt Spring Island area and approaching passages in order to develop visual
content for the DVD. Sufficient capital exists to reach planned operational
milestones.
Budget: Fuel $1,000, Equipment & Maintenance $400, Inventory & Supplies $250,
Accounting & Legal $200, Office Administration & Insurance $200, Vessel & Office
Rent - Total $2,200
OCTOBER 2006:
Jon Suk and Jan Aaron Sigurgeirson to continue photography and videography of
Salt Spring Island area and approaching passages. The imagery collected during
our marine operations will also be used to populate our corporate website, and
planned online store. Jon Suk to research and hire--on a project basis--an
artist skilled in Adobe/Macromedia Flash to program the Flash portion of the DVD
content. Marine safety equipment to be purchased for installation on the vessel.
A computer will be installed to use as the editing and authoring platform. The
company must raise investment capital in order to continue marine operations and
purchase equipment. If the company is not able to raise investment capital, it
will only be able to maintain operations at a level consistent with the prior
months and may not be able to develop the product to a marketable stage.
Investment funding is a prerequisite to the purchase and installation of marine
safety equipment.
19
Budget: Fuel $750, Equipment & Maintenance $200, Content Development $500,
Advertising & Marketing $100, Office Equipment $2,500, R&D $400, Accounting &
Legal $1,000, Office Administration & Insurance $200, Vessel & Office Rent $150
- - Total $5,800
NOVEMBER 2006:
Jon Suk and Jan Aaron Sigurgeirson to continue photography and videography of
Salt Spring Island area and approaching passages. Jon Suk and Jan Aaron
Sigurgeirson to design and program corporate website. Jan Aaron Sigurgeirson
will optimize our website for keywords and links in order to increase its
visibility on major search engines. Jon Suk to design draft product packaging
design for the initial DVD. Jan Aaron Sigurgeirson to write script for DVD
narrative. Investment funding is a prerequisite to continued content and product
development.
Budget: Fuel $250, Equipment & Maintenance $200, Content Development $750,
Inventory & Supplies $500, Advertising & Marketing $100, R&D $300, Accounting &
Legal $1,000, Office Administration & Insurance $200, Vessel & Office Rent $150
- - Total $3,450
DECEMBER 2006:
Jon Suk to launch our corporate website. A professional video editor will be
contracted to assist with editing of footage and composing video and sound for
the DVD. Jon Suk will design and author the DVD, programming footage and script
into a menu-driven visual interface. Prototype DVDs will be recorded for testing
on computer and dedicated DVD player platforms. Investment funding is a
prerequisite to continued content and product development. Without funding, we
will not be able to contract a profession editor to provide us with consulting
in order for the company to be able to develop our product with commercial-grade
visuals.
Budget: Equipment & Maintenance $200, Content Development $1,000, Advertising &
Marketing $500, Accounting & Legal $175, Office Administration & Insurance $200,
Vessel & Office Rent $150 - Total $2,225
JANUARY 2007:
Jan Aaron Sigurgeirson will conduct test marketing of DVD at local sales outlets
and the online store. Content will be revised as necessary according to feedback
received during test marketing. In order to be able to produce our DVDs at
saleable quantity and package it with marketable packaging, we require the
availability of funding, The office space will need telephone, computer, fax and
accessories.
Budget: Equipment & Maintenance $200, Travel & Tradeshows $1,000, Advertising &
Marketing $500, Accounting & Legal $1,500, Office Administration & Insurance
$200, Vessel & Office Rent $150 - Total $3,550
FEBRUARY 2007:
Jon Suk will design packaging insert and disc graphics for printing and
inclusion into the package of the final product. Jon Suk will design layouts for
print advertising to be sent to magazines. Vessel preparation for operations for
the spring season will be performed. We plan to attend the Seattle, Victoria and
Vancouver Boat Shows and promote the DVD to the public and retailers. Without
investment capital, we will not be able to prepare for and attend trade shows.
This will adversely affect our ability to promote the product and create demand
for it. Lack of capital will adversely affect our ability to produce and market
our planned products at volume, and Investment funding is a prerequisite to
continued business development.
Budget: Fuel $250, Equipment & Maintenance $200, Content Development $500,
Travel & Trade Shows $1,000, Inventory & Supplies $1,000, Advertising &
Marketing $500, Accounting & Legal $175, Office & Administration $100, Vessel &
Office Rent $150 - Total $3,875
MARCH 2007:
Jon Suk and Jan Aaron Sigurgeirson will begin marine operations to develop new
content for inclusion in a planned follow-up release of a DVD covering the
Southern Gulf Islands of British Columbia and San Juan Islands of Washington
20
State. Jon Suk plans to expand our local exposure by sending samples of our
products to marine specialty retailers in our local target market areas such as
Nikka Industries, in the Vancouver area, and West Marine in the Victoria area.
Company will continue placement of print advertising. Jon Suk will launch an
online store with a secure shopping cart. To support internet store sales,
keyword advertising campaigns will be conducted by Jan Aaron Sigurgeirson via
Google and other online outlets. Our products will now be made available for
shipping to online customers in Canada, the U.S., and internationally.
Investment funding is a prerequisite for the company to expand its marketing
efforts. If the company is not able to raise capital, the online store cannot be
supported by keyword advertising campaigns, and print advertising cannot be
purchased to support sales at the online store and our retailers. Lack of
capital would negatively affect our ability to attend trade shows and to ship
samples of our product to retailers. Investment funding is a prerequisite to
continued business development.
Budget: Fuel $500, Equipment & Maintenance $400, Travel & Trade Shows $1,000,
Inventory & Supplies $500, Advertising & Marketing $500, Accounting & Legal
$175, Office Administration & Insurance $200, Vessel & Office Rent $150 - Total
$3,425
APRIL 2007:
Company will continue placement of print advertising. Depending on
order/production requirements a part-time production assistant may be needed to
help manufacture DVDs, process orders and payments, ship orders, order supplies
and perform customer service duties. We would only hire the assistant if
revenues allowed for the expense as we have not designated any proceeds from
this offering for salaries. Jon Suk will begin a direct marketing campaign to
contacts made at boat shows by mailing sample product to retailers in our target
markets. Follow-up contact will be made by phone or e-mail. Investment funding
is a prerequisite to continued advertising and marketing and a lack thereof will
negatively affect our ability to establish a market for our products.
Budget: Fuel $1,000, Equipment & Maintenance $200, Inventory & Supplies $250,
Advertising & Marketing $500, Accounting & Legal $1,500, Office Administration &
Insurance $200, Vessel & Office Rent $150 - Total $3,800
MAY 2007:
Jon Suk and Jan Aaron Sigurgeirson will continue marine operations at the
planned areas of coverage which include the Southern Gulf Islands of British
Columbia and San Juan Islands of Washington State. Jan Aaron Sigurgeirson will
write the script for the DVD of the new visual footage. Company will continue
placement of print advertising. We plan to continue expansion of retail outlets
for the DVDs in Canada and the U.S. through wholesale and consignment. Planned
expansion of retail outlets in Canada and the U.S. without investment funding to
support advertising and marketing would adversely affect our ability to continue
content development and our ability to develop future products. Without capital
investment the company may not be able to generate sufficient revenue to sustain
operations and meet financial obligations into the future.
Budget: Fuel $1,000, Equipment & Maintenance $800, Inventory & Supplies $250,
Advertising & Marketing $500, Accounting & Legal $175, Office Administration &
Insurance $200, Vessel & Office Rent $150 - Total $3,075
21
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
DESCRIPTION OF PROPERTY
We do not currently own any property. Our administrative offices are currently
located at the residence of our President, Jan Aaron Sigurgeirson at 231 Kings
Lane, Salt Spring Island, BC V8K 2P7 Canada. Beginning August 1, 2006 we will
pay $100 per month for the use of the facilities, consisting of a small office
and an area used for production of our DVDs.
For our marine operations we will utilize the vessel of our Secretary, Jon Suk,
the M.V. Karmel Bar while we are in the organizational stage. We will pay him a
monthly rent of $50 for the vessel beginning July 1, 2006 and continuing through
June 2007 at which time we will review the rental fees. The Karmel Bar is a
classic motor vessel of wooden construction, built by Albion Shipyards in 1967.
It was used, prior to acquisition by Jon Suk, as a commercial fishing vessel on
the coast of British Columbia and Alaska. The vessel is powered by a 146HP GM
Bedford diesel engine, manufactured in England. The transmission is a
Borg-Warner Velvet Drive reduction gear which drives a single shaft and screw
for propulsion. The vessel is equipped with sleeping accommodation for a total
of 3 crewmembers, a marine head, an oil stove for heating and cooking and a
fresh water storage tank.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 2006, 1,000,000 shares were issued to Jan Aaron Sigurgeirson, an officer
and director and 1,000,000 shares were issued to Jon Suk, an officer and
director, in exchange for $.005 per share, or a total of $10,000 in cash.
Beginning July 1, 2006 the company will pay a monthly rent of $50 to Mr. Suk for
the use of his vessel for marine operations. Beginning August 1, 2006 the
company will pay a monthly rent of $100 to Mr. Sigurgeirson for the use of the
administrative offices.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No public market currently exists for shares of our common stock. Following
completion of this offering, we intend to contact a market maker to file an
application on our behalf to have our common stock listed for quotation on the
Over-the-Counter Bulletin Board.
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. The shares offered by this prospectus constitute penny stock under the
Securities and Exchange Act. The shares will remain penny stocks for the
foreseeable future. The classification of penny stock makes it more difficult
for a broker-dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his/her investment. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document prepared by the Commission, which:
-- contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
22
-- contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation to such duties or other requirements of the
Securities Act of 1934, as amended;
-- contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance
of the spread between the bid and ask price;
-- contains a toll-free telephone number for inquiries on disciplinary
actions;
-- defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
-- contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the
transaction;
- the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
- monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
REGULATION M
Our officers and directors, who will offer and sell the Shares, are aware that
they are required to comply with the provisions of Regulation M promulgated
under the Securities Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes the officers and directors, sales agents, any
broker-dealer or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.
As an exception to these rules, an underwriter may engage in transactions
effected in accordance with Regulation M that are intended to stabilize,
maintain or otherwise affect the price of our common stock. The underwriter may
engage in over-allotment sales, syndicate covering transactions, stabilizing
transactions and penalty bids in accordance with Regulation M. Over-allotments
occur when an underwriter sells more shares than it purchases in an offering. In
order to cover the resulting short position, the underwriter may exercise the
over-allotment option described above. Additionally, an underwriter may engage
in syndicate covering transactions. Syndicate covering transactions are bids for
or purchases of stock on the open market by the underwriter in order to reduce a
short position incurred by the underwriter on behalf of the underwriting
syndicate. There is no contractual limit on the size of any syndicate covering
transaction. Stabilizing transactions consist of bids or purchases made by an
underwriter for the purpose of preventing or slowing a decline in the market
price of our securities while the offering is in progress. A penalty bid is an
arrangement permitting the underwriter to reclaim the selling concession that
would otherwise accrue to an underwriter if the common stock originally sold by
the underwriter was later repurchased by the underwriter and therefore was not
effectively sold to the public by such underwriter.
We have not and do not intend to engage the services of an underwriter in
connection with the offer and sale of the shares in this offering.
In general, the purchase of a security to stabilize or to reduce a short
position could cause the price of the security to be higher than it might
otherwise be. Sales of securities by us or even the potential of these sales
could have a negative effect on the market price of the shares of common stock
offered hereby.
23
REPORTS
We are subject to certain reporting requirements and will furnish annual
financial reports to our stockholders, certified by our independent accountants,
and will furnish un-audited quarterly financial reports in our quarterly reports
filed electronically with the SEC. All reports and information filed by us can
be found at the SEC website, www.sec.gov.
STOCK TRANSFER AGENT
The stock transfer agent for our securities is Holladay Stock Transfer, 2939 N.
67th Place, Scottsdale, Arizona 85251, telephone (480) 481-3940.
EXECUTIVE COMPENSATION
Currently, none of our officers and/or directors is being compensated for their
services during the development stage of our business operations.
The officers and directors are reimbursed for any out-of-pocket expenses they
incur on our behalf. In addition, in the future, we may approve payment of
salaries for our officers and directors, but currently, no such plans have been
approved. We also do not currently have any benefits, such as health insurance,
life insurance or any other benefits available to our employees.
In addition, none of our officers, directors or employees is party to any
employment agreements.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Comp.
-------------------------- ----------------
Other
Name and Annual
Position(s) Year Salary Bonus Comp. Awards Payouts
- ----------- ---- ------ ----- ----- ------ -------
Jan Aaron Sigurgeirson 2006 None None None None None
President, CEO & Director
Jon Suk 2006 None None None None None
Treasurer, CFO,
Secretary & Director
FINANCIAL STATEMENTS
Our fiscal year end is June 30. We intend to provide annual reports, including
audited financial statements prepared by an Independent Certified Public
Accountant, to our stockholders. Our financial statements for the period from
inception to the year ended June 30, 2006, audited by George Stewart, Certified
Public Accountants, immediately follow.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
24
COASTAL MEDIA, INC.
INDEX
Report of Independent Registered Public Accounting Firm F-2
Financial Statements:
Balance Sheet - June 30, 2006 F-3
Statement of Operations - May 19, 2006 through June 30, 2006 F-4
Statement of Stockholders' Equity - May 19, 2006 through June 30, 2006 F-5
Statement of Cash Flows - May 19, 2006 through June 30, 2006 F-6
Notes to Financial Statements F-7
F-1
GEORGE STEWART, CPA
2301 SOUTH JACKSON STREET, SUITE 101-G
SEATTLE, WASHINGTON 98144
(206) 328-8554 FAX(206) 328-0383
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Coastal Media, Inc.
I have audited the accompanying balance sheet of Coastal Media, Inc. (A
Development Stage Company) as of June 30, 2006, and the related statement of
operations, stockholders' equity and cash flows for the period from May 19, 2006
(inception), to June 30, 2006. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Coastal Media, Inc., (A Development
Stage Company) as of June 30, 2006, and the results of its operations and cash
flows from May 19, 2006 (inception), to June 30, 2006 in conformity with
generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #3 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
# 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ George Stewart, CPA
- ----------------------------
Point Roberts, Washington
July 13, 2006
F-2
COASTAL MEDIA INC.
(An Development Stage Company)
Balance Sheet
- --------------------------------------------------------------------------------
As of
June 30,
2006
-------
ASSETS
CURRENT ASSETS
Cash $ 9,449
-------
TOTAL CURRENT ASSETS 9,449
-------
$ 9,449
=======
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 0
-------
TOTAL CURRENT LIABILITIES --
TOTAL LIABILITIES --
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares
authorized; 2,000,000 shares issued and outstanding
as of June 30, 2006 2,000
Additional paid-in capital 8,000
Deficit accumulated during exploration stage (551)
-------
TOTAL STOCKHOLDERS' EQUITY 9,449
-------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 9,449
=======
See Notes to Financial Statements
F-3
COASTAL MEDIA INC.
(An Development Stage Company)
Statement of Operations
- --------------------------------------------------------------------------------
May 19, 2006
(inception)
through
June 30,
2006
-----------
REVENUES
Revenues $ --
-----------
TOTAL REVENUES --
GENERAL & ADMINISTRATIVE EXPENSES 551
-----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES (551)
-----------
NET INCOME (LOSS) $ (551)
===========
BASIC EARNINGS PER SHARE $ (0.00)
===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,000,000
===========
See Notes to Financial Statements
F-4
COASTAL MEDIA INC.
(An Development Stage Company)
Statement of Changes in Stockholders' Equity
From May 19, 2006 (Inception) through June 30, 2006
- --------------------------------------------------------------------------------
Deficit
Common Additional Accumulated
Common Stock Paid-in During
Stock Amount Capital Development Total
----- ------ ------- ----------- -----
BALANCE, APRIL 14, 2006 -- $ -- $ -- $ -- $ --
Stock issued for cash on May 19, 2006
@ $0.005 per share 2,000,000 2,000 8,000 10,000
Net loss, June 30, 2006 (551) (551)
---------- ------- ------ ------- -------
BALANCE, JUNE 30, 2006 2,000,000 $ 2,000 $8,000 $ (551) $ 9,449
========== ======= ====== ======= =======
See Notes to Financial Statements
F-5
COASTAL MEDIA INC.
(An Development Stage Company)
Statement of Cash Flows
- --------------------------------------------------------------------------------
May 19, 2006
(inception)
through
June 30,
2006
--------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (551)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Accounts Payable --
--------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (551)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES --
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 2,000
Additional paid-in capital 8,000
--------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 10,000
--------
NET INCREASE (DECREASE) IN CASH 9,449
CASH AT BEGINNING OF PERIOD --
--------
CASH AT END OF YEAR $ 9,449
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ --
========
Income Taxes $ --
========
See Notes to Financial Statements
F-6
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2006
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Coastal Media Inc. (the Company) was incorporated under the laws of the State of
Nevada on May 19, 2006. The Company was formed to engage in the business of
manufacturing, marketing, distributing and selling its marine DVDs.
The Company is in the development stage. Its activities to date have been
limited to capital formation, organization and development of its business plan.
The Company has not commenced operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected that June 30 end the accounting year.
B. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective May 19, 2006 (date of
inception).
Basic net loss per share amounts is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
C. CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
D. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.
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COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2006
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
E. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
NOTE 3. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had no operations during the period from May 19, 2006 (date of
inception) to June 30, 2006 and generated a net loss of $551. This condition
raises substantial doubt about the Company's ability to continue as a going
concern. Because the Company is currently in the development stage and has
minimal expenses, management believes that the company's current cash of $9,449
is sufficient to cover the expenses they will incur during the next twelve
months in a limited operations scenario or until they raise additional funding.
Management plans to raise additional funds through debt or equity offerings.
Management's current plan includes a SB-2 registration statement with the U.S.
Securities and Exchange Commission of 1,600,000 shares for sale at $.025 per
share to raise capital of $40,000 to implement their business plan. There is no
guarantee that the Company will be able to raise any capital through this or any
other offerings.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common.
NOTE 5. RELATED PARTY TRANSACTIONS
The officers and directors of the Company may, in the future, become involved in
other business opportunities as they become available and they may face a
conflict in selecting between the Company and their other business
opportunities. The Company has not
F-8
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2006
NOTE 5. RELATED PARTY TRANSACTIONS (Continued)
formulated a policy for the resolution of such conflicts.
Jon Suk and Jan Aaron Sigurgeirson, officers and directors of the Company, will
not be paid for any underwriting services that they perform on behalf of the
Company with respect to the Company's upcoming SB-2 offering. They will also not
receive any interest on any funds that they advance to the Company for offering
expenses prior to the offering being closed which will be repaid from the
proceeds of the offering.
NOTE 6. INCOME TAXES
As of June 30, 2006
-------------------
Deferred tax assets:
Net operating tax carryforwards $ 551
Other 0
-------
Gross deferred tax assets 551
Valuation allowance (551)
-------
Net deferred tax assets $ 0
=======
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
NOTE 7. NET OPERATING LOSSES
As of June 30, 2006, the Company has a net operating loss carryforwards of
approximately $551. Net operating loss carryforward expires twenty years from
the date the loss was incurred.
NOTE 8. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
F-9
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2006
NOTE 8. STOCK TRANSACTIONS (Continued)
On May 19, 2006 the Company issued a total of 2,000,000 shares of common stock
to two directors for cash in the amount of $0.005 per share for a total of
$10,000.
As of June 30, 2006 the Company had 2,000,000 shares of common stock issued and
outstanding.
NOTE 9. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of June 30, 2006:
Common stock, $ 0.001 par value: 75,000,000 shares authorized; 2,000,000 shares
issued and outstanding.
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DEALER PROSPECTUS DELIVERY OBLIGATION
"UNTIL ______________, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS."
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
As regards indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors or officers pursuant to the
foregoing provisions, we are informed that, in the opinion of the Commission,
such indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses incurred or (expected) relating to this Prospectus and distribution is
as follows:
Legal $3,500
Accounting 1,800
Transfer Agent fees 600
Printing of Prospectus 100
------
TOTAL $6,000
======
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities
without registration since inception. No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
On June 14, 2006, 1,000,000 shares of common stock were issued to Jan Aaron
Sigurgeirson, an officer and director and 1,000,000 shares of common stock were
issued to Jon Suk, an officer and director, as founders' shares, in exchange for
$10,000, or $.005 per share. These securities were issued in reliance upon the
exemption contained in Section 4(2) of the Securities Act of 1933. These
securities were issued to the promoters of the company, bear a restrictive
legend and were issued to non-US residents.
EXHIBITS
The following exhibits are included with this registration statement filing:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation
3.2 Bylaws
5 Opinion re: Legality
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (See Exhibit 5)
99 Subscription Agreement
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UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts which, individually or
together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) Include any additional or changed material information on the
plan of distribution.
2. For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that time
to be the initial bona fide offering.
3. File a post-effective amendment to remove from registration any of the
securities registered which remain unsold at the end of the offering.
(b) The undersigned Registrant hereby undertakes to provide to the purchasers in
this offering, certificates in such denominations and registered in such names
as required to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities Act
(the "Act") may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer, or controlling of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act, and will be governed by the
final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
1. For determining any liability under the Securities Act, it will treat
the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the small business issuer under Rule
424(b)(1) or (4) or 497(h) under the Securities Act as part of this
registration statement as of the time the Commission declared it
effective.
2. For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
bona fide offering of those securities.
II-2
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Province of British Columbia, Country of Canada.
July 14, 2006 Coastal Media Inc., Registrant
By: /s/ Jan Aaron Sigurgeirson
-----------------------------------------------
Jan Aaron Sigurgeirson, Director, President and
Principal Executive Officer
July 14, 2006 By: /s/ Jon Suk
-----------------------------------------------
Jon Suk, Director, Treasurer,
Chief Financial Officer and Principal
Accounting Officer
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