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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2007
Commission File Number 333-135852
COASTAL MEDIA INC.
(Exact name of registrant as specified in its charter)
[Download Table]
Nevada 7812 20-4952339
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification No.)
1574 Gulf Road #139
Point Roberts, WA 98281
Phone:(360)226-7310 Fax: (610)643-9902
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [X]
For the fiscal year ended June 30, 2007 the company had no revenue.
As of June 30, 2007, the registrant had 3,600,000 shares of common stock issued
and outstanding. No market value has been computed based upon the fact that no
active trading market had been established as of June 30, 2007.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
PART I
Item 1. Description of Business 3
Item 2. Description of Property 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Securities Holders 13
PART II
Item 5. Market for Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities 13
Item 6. Management's Discussion and Analysis or Plan of Operation 16
Item 7. Financial Statements 21
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 32
Item 8A. Controls and Procedures 32
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons 32
Item 10. Executive Compensation 34
Item 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 35
Item 12. Certain Relationships and Related Transactions 36
Item 13. Exhibits 36
Item 14. Principal Accountant Fees and Services 36
Signatures 37
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PART I
ITEM 1 - 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 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 will 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.
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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.
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 is 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 are 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 outfitted and
operates 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 has been 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 operates 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 is 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 consumes an average
of 25 litres of diesel fuel per hour at cruising speed and regular maintenance
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required at every 100 hours of operation. The boat requires 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 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.
DISTRIBUTION METHODS
We initially plan to market and distribute Coastal Media's DVDs in Canada and
through our online internet store. We will 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 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
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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. Our directors have agreed to alternate
using a mobile phone that has the customer service phone number forwarded to it
so if they are not in the office, one of them will be always be available
between 9:00 a.m. and 5:00 p.m., Monday through Friday to address customer
service issues if required. 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
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 we compete with is Cruiser's Guide to the San Juan's. 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 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 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.
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SOURCES AND AVAILABILITY OF PRODUCTS
We currently 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
source the materials and are 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 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
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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
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 labelling and advertising regulations
imposed by each country that we intend to export our products to.
GOVERNMENT AND INDUSTRY REGULATION
We are subject to federal laws and regulations that relate directly or
indirectly to our operations including securities laws. We are also 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.
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. Our directors have agreed to alternate
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using a mobile phone that has the customer service phone number forwarded to it
so if they are not in the office, one of them will be always be available
between 9AM and 5PM Monday through Friday to address customer service issues if
required. 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.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-B for a small business issuer under the Securities Exchange Act of
1934. We are subject to disclosure filing requirements, including filing Form
10K-SB annually and Form 10Q-SB quarterly. In addition, we will file Form 8K and
other proxy and information statements from time to time as required. We do not
intend to voluntarily file the above reports in the event that our obligation to
file such reports is suspended under the Exchange Act. The public may read and
copy any materials that we file with the Securities and Exchange Commission,
("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.
RISK FACTORS
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 directors have agreed to alternate using a mobile phone
that has the customer service phone number forwarded to it so if they are not in
the office, one of them will be always be available between 9AM and 5PM Monday
through Friday to address customer service issues if required. 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 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.
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SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES AND LACK AN
OPERATING HISTORY, AN INVESTMENT IN OUR SHARES 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 only recently completed our
offering and 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.
WE DO NOT YET HAVE ANY SUBSTANTIAL ASSETS AND ARE TOTALLY DEPENDENT UPON OUR
CASH TO FULLY FUND OUR BUSINESS. IF WE DO NOT GENERATE REVENUE, OUR BUSINESS
WILL FAIL.
Our current cash balance is $30,844. There can be no assurance that we will
generate revenues or that revenues will be sufficient to maintain our business.
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.
We do not have an alternate source of funds should we fail to generate revenues.
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 our business plans and generate revenue, we will be
faced with several options:
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.
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 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.
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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.
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 offer 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.
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.
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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 operate 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
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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.
ITEM 2 - 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 began
paying $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 utilize the vessel of our Secretary, Jon Suk, the
M.V. Karmel Bar while we are in the organizational stage. We began paying him a
monthly rent of $50 for the vessel in July 1, 2006. 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.
We currently have no investment policies as they pertain to real estate, real
estate interests or real estate mortgages.
ITEM 3 - LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any
knowledge of any threatened litigation.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of security holders during the year ended
June 30, 2007.
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is listed for quotation on the Over-the-Counter Bulletin Board
under the symbol "CSLA". To date there has not been an active trading market.
13
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).
Our shares are considered 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, which:
- contains a description of the nature and level of risk in the market
for penny stock in both public offerings and secondary trading;
- 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 of 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" price for the penny stock 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;
14
- 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.
SHARES AVAILABLE UNDER RULE 144
There are currently 2,000,000 shares of common stock that are considered
restricted securities under Rule 144 of the Securities Act of 1933. All
2,000,000 shares are held by affiliates, as that term is defined in Rule
144(a)(1). In general, under Rule 144 as amended, a person who has beneficially
owned and held restricted securities for at least one year, including
affiliates, may sell publicly without registration under the Securities Act,
within any three-month period, assuming compliance with other provisions of the
Rule, a number of shares that do not exceed the greater of(i) one percent of the
common stock then outstanding or, (ii) the average weekly trading volume in the
common stock during the four calendar weeks preceding such sale. A person who is
not deemed an "affiliate" of our Company and who has beneficially owned shares
for at least two years would be entitled to unlimited re-sales of such
restricted securities under Rule 144 without regard to the volume and other
limitations described above.
HOLDERS
As of June 30, 2007, we have 3,600,000 Shares of $0.001 par value common stock
issued and outstanding held by 30 shareholders of record.
The stock transfer agent for our securities is Holladay Stock Transfer.
DIVIDENDS
We have never declared or paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the development
and expansion of our business, and we do not anticipate paying any cash
dividends on its common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then
existing conditions, including our financial condition and results of
15
operations, capital requirements, contractual restrictions, business prospects,
and other factors that the board of directors considers relevant.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
We have generated no revenue since inception and have incurred $18,682 in
expenses through June 30, 2007.
The following table provides selected financial data about our company for the
years ended June 30, 2007 and 2006.
Balance Sheet Data: 6/30/07 6/30/06
------------------- ------- -------
Cash $ 30,844 $ 9,449
Total assets $ 31,318 $ 9,449
Total liabilities $ 0 $ 0
Shareholders' equity $ 31,318 $ 9,449
Cash provided by financing activities from inception was $50,000, resulting from
the sale of $10,000 of our common stock to our directors and $40,000 in an
initial public offering, which was completed on February 9, 2007.
PLAN OF OPERATION
GOING CONCERN
We were issued an opinion by our auditors that raised substantial doubt about
our ability to continue as a going concern based on our current financial
position.
BUSINESS OPERATIONS OVERVIEW
Our registration statement became effective on September 13, 2006. We completed
our offering of 1,600,000 common shares on February 9, 2007. Our budget is based
on operations which will be completely funded by the $40,000 raised through our
offering. We currently have $30,844 in cash.
We incurred operating expenses of $18,131 and $551 for the years ended June 30,
2007 and 2006, respectively. These expenses consisted of general operating
expenses incurred in connection with the day to day operation of our business
and the preparation and filing of our periodic reports.
Our net loss for the years ended June 30, 2007 and 2006 was $18,131 and $551,
respectively.
MILESTONES FOR BUSINESS OPERATIONS
The following criteria for the milestones are based on management's estimates
only.
16
COMPLETED MILESTONES TO IMPLEMENT OUR OPERATIONS
JUNE - AUGUST 2006:
Jon Suk secured the domain name coastalmarinemedia.com for our internet website.
Jan Aaron Sigurgeirson and Jon Suk began preparing M.V. Karmel Bar for
operations with hull preparation, powerplant and transmission general
maintenance. Jon Suk designed company logo and selected colors for marketing
collateral and researched and hired a professional video editor to gather advice
on appropriate techniques for gathering video footage. Jan Aaron Sigurgeirson
researched the availability of books and DVDs similar in subject matter to our
planned product.
Jon Suk and Jan Aaron Sigurgeirson conducted initial photography and videography
of the Ganges Harbour area of Salt Spring Island, B.C. for DVD content
development. Purchased and reviewed books and DVDs deemed to be in our similar
target market, for competitive research. Researched and purchased print media
magazines appropriate for potential advertising outlets for our products.
Researched advertising rates. Researched over the internet, online stores that
market and sell similar products. Jon Suk began 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 will appear.
SEPTEMBER - DECEMBER 2006:
Jon Suk and Jan Aaron Sigurgeirson continued photography and videography of Salt
Spring Island area and approaching passages. The imagery collected during our
marine operations will be used to develop visual content for the DVD and also to
populate our corporate website and planned online store.
Jon Suk researched and selected--on a per project basis--an artist skilled in
Adobe/Macromedia Flash to program the Flash portion of the DVD content. Marine
safety equipment was purchased for installation on the vessel.
Professional video editors were interviewed and a candidate was selected to
assist with editing of footage and composing video and sound for the DVD.
JANUARY - APRIL 2007:
In order to continue achieving our operational goals, our activities during this
period was directed toward securing funding via our SB-2 share offering.
Vessel maintenance for marine operations for the spring season was performed.
Draft design for the initial DVD's product packaging was developed. A plan for
the DVD's menu-driven user interface was developed.
17
MAY 2007:
Jon Suk designed drafts of packaging insert and disc graphics for the disc
package. Prototype discs were test recorded in-house utilizing recordable DVD.
Until sales volumes exceed approximately 250 discs per month, discs are
manufactured in-house. When the volume is exceeded, an outside manufacturer may
be engaged to replicate the discs. Jon Suk, who has experience working with disc
duplication, will manage this process once it becomes necessary to engage an
outside vendor to produce discs in quantity. DVD content and scripts were
revised by Jan Aaron Sigurgeirson. Routine vessel maintenance was performed by
Jan Aaron Sigurgeirson for visual inspection of the deck and hull interior.
Necessary maintenance including debris removal, repairs, inspection of zinc
sacrificial anodes, and application of deck coating was performed. Jon Suk
developed the visual content of the website with existing images compiled to
date in order to continue to develop a website that is visually engaging and
consistent with the marketing plan of the company.
JUNE 2007:
Jon Suk conducted marine operations to develop additional visual content,
covering the Southern Gulf Islands to include Bedwell Harbour, Montague Harbour,
and Tsehum Harbour. Jan Aaron Sigurgeirson conducted research and development
for competitive comparisons at marine specialty retailers in our local target
market areas such as Nikka Industries, in the Vancouver area, and West Marine in
the Victoria area. Jon Suk performed rough edits of video footage.
JULY 2007:
Jon Suk and Jan Aaron Sigurgeirson continued marine operations at the planned
areas of coverage to continue adding to our footage and photography library. Jan
Aaron Sigurgeirson evaluated radar systems for the vessel which is needed in the
fall to compile footage for the all-weather and instrument assisted navigation
portions of the DVD.
AUGUST 2007:
Jon Suk and Jan Aaron Sigurgeirson continued marine operations at the planned
areas of coverage in the Southern Gulf Islands of British Columbia. Areas of
focus for this stage of the production cycle was passages and approaches
important to the visitors of the Southern Gulf Islands which are Active Pass,
Dodd Narrows, Porlier Pass, and Boundary Pass. Jan Aaron Sigurgeirson wrote the
accompanying script for the new visual footage.
FUTURE MILESTONES:
SEPTEMBER 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. Key Southern Gulf Islands
18
destinations include Maple Bay, Wallace Island, and Winter Cove. Key San Juan
Islands destinations include Eastsound and Lime Kiln. Jon Suk and Jan Aaron
Sigurgeirson plan to collaborate on the composition of scripts for planned video
sections of the disc. Friends and associates in the marine industry will be
engaged to provide information or footage as appropriate to the sections of the
disc. Jon Suk will design layouts for print advertising to be sent to magazines
such as "Pacific Yachting" and "Sea." Jan Aaron Sigurgeirson will conduct test
marketing of the DVD at local sales outlets such as Volume 2 Books, which
specializes in marine-oriented publications and the online store. Jan Aaron
Sigurgeirson to conduct periodic maintenance of the vessel to keep it in optimal
operating condition. Planned tasks are visual inspection of the vessel
structure, powerplant operation, electrical system operation, safety systems
such as life vests and fire extinguishers, and changing of required engine oil
and components subject to wear-and-tear.
CRITICAL ACCOUNTING POLICIES
Our financial statements have been prepared in accordance with generally
accepted accounting principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgment.
The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:
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.
19
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.
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.
Our Management does not believe that any recently issued, but not yet effective
accounting standards if currently adopted, would have a material effect on the
our current financial statements.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this Form 10-KSB that are not historical
facts are "forward-looking statements" which can be identified by the use of
terminology such as "estimates," "projects," "plans," "believes," "expects,"
"anticipates," "intends," or the negative or other variations, or by discussions
of strategy that involve risks and uncertainties. We urge you to be cautious of
the forward-looking statements, that such statements, which are contained in
this Form 10-QSB, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events.
20
All written forward-looking statements made in connection with this Form 10-KSB
that are attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
The safe harbors of forward-looking statements provided by the Securities
Litigation Reform Act of 1995 are unavailable to issuers not subject to the
reporting requirements set forth under Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended. As we have not registered our securities
pursuant to Section 12 of the Exchange Act, such safe harbors set forth under
the Reform Act are unavailable to us.
ITEM 7 - FINANCIAL STATEMENTS
The audited financial statements for the year ended June 30, 2007 immediately
follow.
21
COASTAL MEDIA, INC.
INDEX
Report of Independent Registered Public Accounting Firm 23
Financial Statements:
Balance Sheet - June 30, 2007 and 2006 24
Statement of Operations - Years ended June 30, 2007 and 2006 25
May 19, 2006 through June 30, 2007
Statement of Stockholders' Equity - Years ended June 30, 2007 and 2006 26
May 19, 2006 through June 30, 2007
Statement of Cash Flows - Years ended June 30, 2007 and 2006 27
May 19, 2006 through June 30, 2007
Notes to Financial Statements 28
22
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, 2007 and 2006, and the related
statement of operations, stockholders' equity and cash flows for the years ended
June 30, 2007 and 2006 the period from May 19, 2006 (inception), to June 30,
2007. 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, 2007 and 2006, and the results of its operations
and cash flows for the years ended June 30, 2007 and 2006 and from May 19, 2006
(inception), to June 30, 2007 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
-------------------------------
Seattle, Washington
September 27, 2007
23
COASTAL MEDIA INC.
(A Development Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
[Download Table]
As of As of
June 30, June 30,
2007 2006
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 30,844 $ 9,449
-------- --------
TOTAL CURRENT ASSETS 30,844 9,449
FIXED ASSETS
Office Equipment 474 --
-------- --------
TOTAL FIXED ASSETS 474 --
-------- --------
TOTAL ASSETS $ 31,318 $ 9,449
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan Payable to a Director $ -- $ --
-------- --------
TOTAL CURRENT LIABILITIES -- --
TOTAL LIABILITIES -- --
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares
authorized; 3,600,000 and 2,000,000 shares issued and
outstanding as of June 30, 2007 and December 31, 2006 3,600 2,000
Additional paid-in capital 46,400 8,000
Deficit accumulated during development stage (18,682) (551)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 31,318 9,449
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 31,318 $ 9,449
======== ========
See Notes to Financial Statements
24
COASTAL MEDIA INC.
(A Development Stage Company)
Statement of Operations
--------------------------------------------------------------------------------
[Download Table]
May 19, 2006
(inception)
Year Ended Year Ended through
June 30, June 30, June 30,
2007 2006 2007
---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ --
---------- ---------- ----------
TOTAL REVENUES -- -- --
PROFESSIONAL FEES 6,900 -- 6,900
DEPRECIATION 35 35
GENERAL & ADMINISTRATIVE EXPENSES 11,197 551 11,748
---------- ---------- ----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 18,131 551 18,682
---------- ---------- ----------
NET INCOME (LOSS) $ (18,131) $ (551) $ (18,682)
========== ========== ==========
BASIC EARNINGS PER SHARE $ (0.01) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,622,466 2,000,000
========== ==========
See Notes to Financial Statements
25
COASTAL MEDIA INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From May 19, 2006 (Inception) through June 30, 2007
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Deficit
Common Additional Accumulated
Common Stock Paid-in During
Stock Amount Capital Development Total
----- ------ ------- ----------- -----
BALANCE, MAY 19, 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
========== ======= ======== ========= =========
Stock issued for cash on February 9, 2007
@ $0.025 per share 1,600,000 1,600 38,400 40,000
Net loss, June 30, 2007 (18,131) (18,131)
---------- ------- -------- --------- ---------
BALANCE, JUNE 30, 2007 3,600,000 $ 3,600 $ 46,400 $ (18,682) $ 31,318
========== ======= ======== ========= =========
See Notes to Financial Statements
26
COASTAL MEDIA INC.
(A Development Stage Company)
Statement of Cash Flows
--------------------------------------------------------------------------------
[Enlarge/Download Table]
May 19, 2006
(inception)
Year Ended Year Ended through
June 30, June 30, June 30,
2007 2006 2007
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(18,131) $ (551) $(18,682)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Loan Payable to a Director -- -- --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (18,131) (551) (18,682)
CASH FLOWS FROM INVESTING ACTIVITIES
Office Equipment (509) -- (509)
Depreciation 35 -- 35
-------- -------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (474) -- (474)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,600 2,000 3,600
Additional paid-in capital 38,400 8,000 46,400
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 40,000 10,000 50,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 21,395 9,449 30,844
CASH AT BEGINNING OF PERIOD 9,449 -- --
-------- -------- --------
CASH AT END OF YEAR $ 30,844 $ 9,449 $ 30,844
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See Notes to Financial Statements
27
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2007
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 commenced limited start up 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 a June 30 year-end.
B. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued Statement of Financial Accounting Standards
("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.
28
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2007
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
E. INCOME TAXES
Income taxes are provided in accordance with SFAS No. 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.
F. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided principally on the straight-line method over the
estimated useful lives of the assets, which are generally 3 to 27 years. The
amounts of depreciation provided are sufficient to charge the cost of the
related assets to operations over their estimated useful lives. Upon sale or
other disposition of a depreciable property, cost and accumulated depreciation
are removed from the accounts and any gain or loss is reflected in other income.
The Company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of fixed assets
or whether the remaining balance of fixed assets should be evaluated for
possible impairment. The Company uses an estimate of the related undiscounted
cash flows over the remaining life of the fixed assets in measuring their
recoverability.
NOTE 3. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had limited operations during the period from May 19, 2006 (date of
inception) to June 30, 2007 and generated a net loss of $18,682. 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 $30,844
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.
29
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2007
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common stock.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. The Company
has been paying a Jon Suk, a director, $50 per month for use of his boat. The
Company also paid Jan Aaron Sigurgeirson, President, $100 per month for use of
office space and services from inception until October 2006. The officers and
directors of the Company may, in the future, become involved in other business
opportunities as they become available, they may face a conflict in selecting
between the Company and their other business opportunities. The Company has not
formulated a policy for the resolution of such conflicts.
NOTE 6. INCOME TAXES
As of June 30, 2007
-------------------
Deferred tax assets:
Net operating tax carryforwards $ 18,682
Tax Rate 34%
--------
Gross deferred tax assets 6,352
Valuation allowance (6,352)
--------
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, 2007, the Company has a net operating loss carryforwards of
approximately $18,682. Net operating loss carryforward expires twenty years from
the date the loss was incurred.
30
COASTAL MEDIA INC.
(An Development Stage Company)
Notes to Financial Statements
June 30, 2007
NOTE 8. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123, "Share-Based Payment". 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.
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.
On February 9, 2007 the Company completed its SB-2 offering and issued a total
of 1,600,000 shares of common stock to twenty eight unrelated investors for cash
in the amount of $0.025 per share for a total of $40,000.
As of June 30, 2007 the Company had 3,600,000 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, 2007:
Common stock, $ 0.001 par value: 75,000,000 shares authorized; 3,600,000 shares
issued and outstanding.
31
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 8A - CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as of the end of the period covered
by this report. Based on this evaluation, our principal executive officer and
principal financial officer concluded as of the evaluation date that our
disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms relating to our company, including any
consolidating subsidiaries, and was made known to us by others within those
entities, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
PART III
ITEM 9 - 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 42 Treasurer, CFO,
136 Bradley Road Secretary and Director
Salt Spring Island, BC V8K 1J5
32
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.
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.
CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business
operations and two officer and directors, we believe a code of ethics would have
limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and employees. ITEM 10 -
33
ITEM 10 - EXECUTIVE COMPENSATION
Currently, our officers and/or directors are not 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 are party to any
employment agreements.
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Jan Aaron
Sigurgeirson 2007 0 0 0 0 0 0 0 0
CEO,
President,
Director 2006 0 0 0 0 0 0 0 0
Jon Suk 2007 0 0 0 0 0 0 0 0
Treasurer,
Secretary,
CFO, Director 2006 0 0 0 0 0 0 0 0
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
[Enlarge/Download Table]
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Jan Aaron 0 0 0 0 0 0 0 0 0
Sigurseirson
Jon Suk 0 0 0 0 0 0 0 0 0
34
DIRECTOR COMPENSATION
[Enlarge/Download Table]
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Jan Aaron 0 0 0 0 0 0 0
Sigurseirson
Jon Suk 0 0 0 0 0 0 0
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of the date of this annual report, 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 stockholders listed below have direct
ownership of their shares and possess sole voting and dispositive power with
respect to the shares.
Name and Address No. of Percentage
Beneficial Owner Shares of Ownership
---------------- ------ ------------
Jan Aaron Sigurgeirson 1,000,000 30%
136 Bradley Road
Salt Spring Island, BC V8K 1J5
Jon Suk 1,000,000 30%
136 Bradley Road
Salt Spring Island, BC V8K 1J5
All Officers and
Directors as a Group (2) 2,000,000 60%
35
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
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.
We do not currently have any conflicts of interest by or among our current
officers, director, key employees or advisors. We have not yet formulated a
policy for handling conflicts of interest; however, we intend to do so prior to
hiring any additional employees.
ITEM 13 - EXHIBITS
The following exhibits are included with this filing:
Exhibit
Number Description
------ -----------
3(i) Articles of Incorporation*
3(ii) Bylaws*
31.1 Sec. 302 Certification of CEO
31.2 Sec. 302 Certification of CFO
32.1 Sec. 906 Certification of CEO
32.2 Sec. 906 Certification of CFO
----------
* Included in our original SB-2 filed with the Securities & Exchange
Commission on July 19, 2006 under File Number 333-135852.
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
For the year ended June 30, 2007, the total fees charged to the company for
audit services, including quarterly reviews were $5,400, for audit-related
services were $Nil, for tax services were $Nil and for other services were $Nil.
For the year ended June 30, 2006, no fees were charged to the company for audit
services, audit-related services, tax or other services.
36
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
September 28, 2007 Coastal Media Inc., Registrant
By: /s/ Jan Aaron Sigurgeirson
-----------------------------------------------
Jan Aaron Sigurgeirson, Director, President and
Principal Executive Officer
September 28, 2007 By: /s/ Jon Suk
-----------------------------------------------
Jon Suk, Director, Treasurer,
Chief Financial Officer and Principal
Accounting Officer
37
Dates Referenced Herein and Documents Incorporated by Reference
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