ITEM 1. BUSINESS
PRINCIPAL PRODUCTS AND THEIR MARKETS
Our original business plan which we commenced in June 2006 was to operate a cruising guides website and produce and sell multimedia DVD for pleasure boating. While we have vigorously pursued our business plan it is apparent that we cannot continually incur operating losses in the future and have decided that we can no longer continue with our business operations as detailed in our original business plan because of a lack of financial results and a lack of available financial resources.
We are looking for other potential business opportunities that might be available to the Company. Our management is analyzing various alternatives available to our Company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis includes sourcing additional forms of financing to fund a new business plan, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our original business are not good.
There can be no assurances that there will be other business opportunities available nor can there be any certainties of the business industry of the opportunity that might be available nor any indication of the financial resources required of any possible business opportunity. If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail.
DISTRIBUTION METHODS
There are no distribution methods currently identified.
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS
We have not publicly announced any new products.
COMPETITION
We currently have no immediate competitors.
SOURCES AND AVAILABILITY OF PRODUCTS
We do not have any sources or availability of products requirements at this time.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We do not depend on one or a few major customers.
PATENTS AND TRADEMARKS
We currently have no patents or trademarks.
NEED FOR GOVERNMENTAL APPROVAL OF PRINCIPAL PRODUCTS
We do not require any government approval for any of our products.
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 original 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
From inception to the yearend covered by this annual report we had two employees, both of which were our executive officers, Jan Aaron Sigurgeirson and Jon Suk. On September 8, 2008 Jan Aaron Sigurgeirson resigned as our President, Chief Executive Officer and as a director and Jon Suk resigned as our Secretary, Treasurer, Chief Financial Officer and as a director. As a result, prior to such resignations, on September 8, 2008 we appointed Leslie A. Schaefer as president, secretary, treasurer, director and chief financial officer of our company.
There are no formal employment agreements between the company and our current employee.
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-K for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements, including filing Form 10K annually and Form 10Q 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.
ITEM 1A.
ITEM 1A. RISK FACTORS
OUR OFFICER AND DIRECTOR CURRENTLY DEVOTES ONLY PART TIME SERVICES TO THE COMPANY AND IS INVOLVED IN OTHER BUSINESS ACTIVITIES. THE COMPANY'S NEEDS COULD EXCEED THE AMOUNT OF TIME OR LEVEL OF EXPERIENCE SHE MAY HAVE. THIS COULD RESULT IN HER INABILITY TO PROPERLY MANAGE COMPANY AFFAIRS, RESULTING IN OUR REMAINING A START-UP COMPANY WITH NO REVENUES OR PROFITS.
Leslie Schaefer, the officer and director of the company, 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 and fulfilling the reporting requirements of a public company all fall upon Ms. Schaefer. We have not formulated a plan to resolve any possible conflict of interest with her other business activities. In the event she is unable to fulfill any aspect of her 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 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 and we have not yet realized any revenues. We have no profitable 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 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 $14,277. 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.
ITEM 2.
ITEM 2. PROPERTIES
We do not currently own any property. Our administrative offices are currently located at the residence of our President, Leslie A. Schaefer.
We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages.
ITEM 3.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the year ended June 30, 2008.
PART II
ITEM 5.
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.
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;
- 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, 2008, 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 operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
We are still in our development stage and have no revenues to date.
We incurred operating expenses of $13,867 and $18,131 for the years ended June 30, 2008 and 2007, respectively. These expenses consisted of general operating expenses incurred in connection with the day to day operation of our business and compliance with filing requirements.
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, selling 1,600,000 shares at the offering price of $.025.
Our auditors have expressed their doubt about our ability to continue as a going concern unless we are able to generate profitable operations.
LIQUIDITY AND CAPITAL RESOURCES
We expect that our current cash balance of $14,227 will allow us to complete the next 6 months without additional funds, in a limited operations scenario. Our director has verbally agreed to loan the company funds to continue operations in a limited scenario until sales will support operations. We currently have no plans to hire additional employees in the next twelve months unless sales are sufficient to cover the cost.
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.
BUSINESS OPERATIONS OVERVIEW
Our registration statement became effective on September 13, 2006. Our offering of 1,600,000 common shares was completed on February 9, 2007.
Our original business plan which we commenced in June 2006 was to operate a cruising guides website and produce and sell multimedia DVD for pleasure boating. While we have vigorously pursued our business plan it is apparent that we cannot continually incur operating losses in the future and have decided that we can no longer continue with our business operations as detailed in our original business plan because of a lack of financial results and a lack of available financial resources.
We are looking for other potential business opportunities that might be available to the Company. Our management is analyzing various alternatives available to our Company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis includes sourcing additional forms of financing to fund a new business plan, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our original business are not good.
There can be no assurances that there will be other business opportunities available nor can there be any certainties of the business industry of the opportunity that might be available nor any indication of the financial resources required of any possible business opportunity. We anticipate that any new acquisition or business opportunities by us will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If we require additional financing and we are unable to acquire such funds, our business may fail.
At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity or whether the opportunity's operations will be profitable.
As of the date hereof, we have not been successful in our business efforts. We are uncertain about our continued ability to raise funds. Further, we believe that we would have more difficulties raising capital for our existing operations than for a new business opportunity. We have not entered into any formal written agreements for a business combination or opportunity. If any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.
If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
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, 2008 and 2007, and the related statement of operations, stockholders' equity and cash flows for the years ended June 30, 2008 and 2007 the period from May 19, 2006 (inception), to June 30, 2008. 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, 2008 and 2007, and the results of its operations and cash flows for the years ended June 30, 2008 and 2007 and from May 19, 2006 (inception), to June 30, 2008 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 9, 2008
COASTAL MEDIA INC. (A Development Stage Company) Balance Sheet - --------------------------------------------------------------------------------
See Notes to Financial Statements
COASTAL MEDIA INC. (A Development Stage Company) Statement of Operations - --------------------------------------------------------------------------------
See Notes to Financial Statements
COASTAL MEDIA INC. (A Development Stage Company) Statement of Changes in Stockholders' Equity From May 19, 2006 (Inception) through June 30, 2008 - --------------------------------------------------------------------------------
See Notes to Financial Statements
COASTAL MEDIA INC. (A Development Stage Company) Statement of Cash Flows - --------------------------------------------------------------------------------
See Notes to Financial Statements
COASTAL MEDIA INC. (An Development Stage Company) Notes to Financial Statements June 30, 2008 - --------------------------------------------------------------------------------
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.
COASTAL MEDIA INC. (An Development Stage Company) Notes to Financial Statements June 30, 2008 - --------------------------------------------------------------------------------
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, 2008 and generated a net loss of $32,549. 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 $14,227 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.
COASTAL MEDIA INC. (An Development Stage Company) Notes to Financial Statements June 30, 2008 - --------------------------------------------------------------------------------
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, 2008 ------------------- Deferred tax assets: Net operating tax carryforwards $ 32,549 Tax Rate 34% -------- Gross deferred tax assets 11,067 Valuation allowance (11,067) --------
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, 2008, the Company has a net operating loss carryforwards of approximately $32,549. Net operating loss carryforward expires twenty years from the date the loss was incurred.
COASTAL MEDIA INC. (An Development Stage Company) Notes to Financial Statements June 30, 2008 - --------------------------------------------------------------------------------
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, 2008 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, 2008:
Common stock, $ 0.001 par value: 75,000,000 shares authorized; 3,600,000 shares issued and outstanding.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.
Management assessed the effectiveness of the Company's internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS: we do not have a functioning audit committee or any outside directors on the Company's Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
Management, including our Chief Executive Officer and Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On September 8, 2008 Jan Aaron Sigurgeirson resigned as our President, Chief Executive Officer and as a director and Jon Suk resigned as our Secretary, Treasurer, Chief Financial Officer and as a director. As a result, prior to such resignations, on September 8, 2008 we appointed Leslie A. Schaefer as president, secretary, treasurer, director and chief financial officer of our company.
Our board of directors and sole officer is now Leslie A. Schaefer.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Directors are 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) ---------------- --- ----------- Leslie A. Schaefer 54 President, Treasurer, CEO, CFO 3751 Appain Way, Suite 75 and Chairman of the Board Lexington, KY 40517-5929
The person named above has held her offices/positions since September 8, 2008 and is expected to hold said offices/positions until the next annual meeting of our stockholders.
BACKGROUND INFORMATION ABOUT OUR OFFICERS AND DIRECTORS
LESLIE A. SCHAEFER has been President, CEO, CFO and Chairman of the Board of Directors of the Company since September 8, 2008. Ms. Schaefer has over 30 plus years of management experience. In 1984, Ms Schafer launched the nation's first full service pet store and successfully copyrighted a unique retail store floor design, which subsequently was acquired and used across the United States by one of the largest pet chains in the United States. Her strong interest in animals led her into an active participated within the horse industry, where she has been directly responsible for the development and training of 15 World Champions and 2 Reserve World Champions.
Ms. Schafer turned her management interest to the oil and gas industry with a specific focus on Appalachia and the Mid Continent in 2002. During that time she performed advisory services to a variety of companies including Venture Capital firms in the United States. Her work has included due diligence reviews, project feasibility analysis and providing recommendations to senior management on a variety of matters. During this time she created and has served as President of Schafer Enterprises Ltd.
Ms. Schaefer attended Columbia College in 1973 where she studied Liberal Arts. In 2002 she received her NASD series 63 license.
FORMER OFFICERS AND DIRECTORS WHO HELD THEIR POSITIONS AT THE YEAR ENDED JUNE 30, 2008
MR. JAN AARON SIGURGEIRSON was been President, CEO and Chairman of the Board of Directors of the Company since inception until September 8, 2008. 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 was the Treasurer, CFO, Secretary and a Director of our company since inception until September 8, 2008. 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 one officer and director, 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 11.
ITEM 11. 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
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
DIRECTOR COMPENSATION
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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 ---------------- ------ ------------
Leslie A. Schaefer 0 0% 3751 Appain Way, Suite 75 Lexington, KY 40517
All Officers and Directors as a Group (1) 0 0%
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
ITEM 13.
ITEM 13. 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. Both Mr. Sigurgeirson and Mr. Suk resigned as officers and directors of the company on September 8, 2008.
We do not currently have any conflicts of interest by or among our current officer, 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 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
For the year ended June 30, 2008, the total fees charged to the company for audit services, including quarterly reviews were $5,700, for audit-related services were $Nil, for tax services were $Nil and for other services were $Nil.
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.
PART IV
ITEM 15.
ITEM 15. EXHIBITS
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.
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 26, 2008 Coastal Media Inc., Registrant
By: /s/ Leslie A. Schaefer ------------------------------------------------ Leslie A. Schaefer, Director, President and Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer