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      STATES</strong></font></div>
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      AND EXCHANGE COMMISSION</strong></font></div>
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      D.C. 20549 </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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      <hr style="COLOR: black" align="center" noshade size="1" width="12%">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Date
      of Report (Date of earliest event reported): January 30,
      2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <hr style="COLOR: black" align="center" noshade size="1" width="12%">
    </div>
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      COASTAL TRADING CORPORATION </strong></font></div>
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      name of registrant as specified in its charter) </strong></font></div>
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      <hr style="COLOR: black" align="center" noshade size="1" width="12%">
    </div>
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          <tr>
            <td align="left" valign="middle" width="26%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
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                or other jurisdiction</strong></font></div>
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                incorporation)</strong></font></div>
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                File Number)</strong></font></div>
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          <tr>
            <td valign="middle" width="39%">
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                West Bryn Mawr, Suite 200</strong></font></div>
            </td>
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            <td valign="middle" width="37%">&#160;</td>
          </tr>
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            <td valign="top" width="39%">
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                Illinois </strong></font></div>
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            <td valign="top" width="37%">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td valign="top" width="37%">
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                Code)</strong></font></div>
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      272-5000 </strong></font></div>
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      telephone number, including area code) </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
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      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
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                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425) </font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
            <td align="left" valign="top" width="3%">
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                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12) </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
            <td align="left" valign="top" width="3%">
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                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b)) </font></div>
            </td>
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      </table>
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          <tr>
            <td align="left" valign="top" width="3%">
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                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
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                240.13e-4(c)) </font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <hr style="COLOR: black" align="center" noshade size="2" width="12%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Departure
      of Directors or Principal Officers; Election of Directors; Appointment of
      Principal Officers</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02(a) Resignation of a Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      January 30, 2006, Geoffrey Alison resigned as a member of Cape Coastal Trading
      Corporation&#8217;s (the &#8220;Company&#8221;) Board of Directors. The resignation of Mr. Alison
      was not the result of any disagreement with the Company on any matter relating
      to the Company&#8217;s operations, policies or practices. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02(d) Election of a New Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      January 30, 2006, the Board of Directors of the Company appointed Stuart
      Romenesko as a director. Mr. Romenesko&#8217;s appointment as director was not
      pursuant to any agreement or understanding between Mr. Romenesko and a third
      party. Mr. Romenesko is not expected to be named to a committee of the Board
      of
      Directors at this time. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Romenesko is an executive officer of Petters Group Worldwide, LLC (&#8220;Petters
      Group&#8221;) and currently serves on the board of directors of several Petters Group
      operating companies. As a result of a recent merger, previously reported on
      the
      Company&#8217;s Current Report on Form 8-K filed on January 5, 2006, uBid, Inc.
      (&#8220;uBid&#8221;) is a wholly-owned subsidiary of the Company. On April 2, 2003, uBid and
      Petters Group, a holder of greater than 5% of the Company&#8217;s common stock,
      executed a Shared Resources Agreement with a term of one year and automatic
      renewals of one year until terminated by either party with 60 days&#8217; prior
      notice. Pursuant to this agreement, Petters Group provided executive, facilities
      management, finance, general and administrative, legal, marketing, merchandising
      and operations services to uBid for which uBid was charged $360,000 in 2005,
      $264,000 for the year ended December&#160;31, 2004 and $198,000 from April 2003
      through December 2003. uBid terminated the Shared Resources Agreement as of
      January&#160;31, 2006. </font></div>
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      Company purchases products from Petters Group for direct purchase sales.
      Purchases from Petters Group were $1.5 million and $0.5 million for the periods
      ended December 31, 2004 and 2003, respectively and $0.5&#160;million for the
      nine months ended September&#160;30, 2005.</font></div>
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      Group owns approximately 25% of the outstanding shares of WSS Media Inc.,
      located in Minneapolis, Minnesota. During the year ended December 31, 2005,
      the
      Company sold approximately $223,000 in product to WSS Media Inc. At year end,
      the balance was unpaid. Mr. Romenesko is the Chairman of the Board of WSS
      Media.</font></div>
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      2003,
      the Company issued a convertible promissory note in the principal amount of
      $0.5
      million for the benefit of Petters Group. The promissory note bore interest
      at
      an annual rate of 8%. This note plus accrued interest was paid in full on April
      1, 2005.</font></div>
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      2, 2003, the Company entered into a secured revolving credit agreement and
      promissory note with Petters Group for up to $5.0 million. On November 22,
      2004,
      the Company entered into a second secured revolving credit agreement and
      promissory note for up to $4.0 million. In March 2005, the second agreement
      was
      increased to $5.5 million. Both agreements were secured by a subordinated
      security interest in all of the Company&#8217;s assets. Both agreements were scheduled
      to expire March 31, 2006. Borrowings under the revolving line bore an annual
      interest rate of 14%. There were no financial covenants provided for in the
      agreements. In connection with the Company&#8217;s private offering on December 29,
      2005, the Company cancelled these promissory notes as consideration in the
      private offering for the issuance to Petters Company, Inc. of 1,222,222 shares
      of common stock and warrants to purchase 305,556 shares of common stock, and
      the
      issuance to the Petters Group of 1,111,111 shares of common stock and warrants
      to purchase 277,778 shares of common stock.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.</font></div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CAPE
                COASTAL TRADING </strong></font></div>
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CORPORATION</strong></font></div>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
              February 2, 2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/&#160;Robert
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              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Name:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:<font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt" size="3">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President
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{"company-data": {"conformed-name": "CAPE COASTAL TRADING CORP", "cik": "0001219097", "assigned-sic": "5961", "irs-number": "522372260", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-50995", "film-number": "06573228"}, "business-address": {"street1": "8550 WEST BRYN MAWR", "street2": "SUITE 200", "city": "CHICAGO", "state": "IL", "zip": "60631", "phone": "(773) 272-5000"}, "mail-address": {"street1": "8550 WEST BRYN MAWR", "street2": "SUITE 200", "city": "CHICAGO", "state": "IL", "zip": "60631"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
      of Report (Date of earliest event reported): January 30,
      2006
CAPE
      COASTAL TRADING CORPORATION
(Exact
      name of registrant as specified in its charter)
Delaware
000-50995
52-2372260
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File Number)
(I.R.S.
                Employer
Identification
                Number)
8550
                West Bryn Mawr, Suite 200
Chicago,
                Illinois
60631
(Address
                of principal executive offices)
(Zip
                Code)
(773)
      272-5000
(Registrant's
      telephone number, including area code)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
¨
Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425)
¨
Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12)
¨
Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b))
¨
Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c))
1
Item
      5.02
Departure
      of Directors or Principal Officers; Election of Directors; Appointment of
      Principal Officers
.
Item
      5.02(a) Resignation of a Director
Effective
      January 30, 2006, Geoffrey Alison resigned as a member of Cape Coastal Trading
      Corporation's (the "Company") Board of Directors. The resignation of Mr. Alison
      was not the result of any disagreement with the Company on any matter relating
      to the Company's operations, policies or practices.
Item
      5.02(d) Election of a New Director
Effective
      January 30, 2006, the Board of Directors of the Company appointed Stuart
      Romenesko as a director. Mr. Romenesko's appointment as director was not
      pursuant to any agreement or understanding between Mr. Romenesko and a third
      party. Mr. Romenesko is not expected to be named to a committee of the Board
      of
      Directors at this time.
Mr.
      Romenesko is an executive officer of Petters Group Worldwide, LLC ("Petters
      Group") and currently serves on the board of directors of several Petters Group
      operating companies. As a result of a recent merger, previously reported on
      the
      Company's Current Report on Form 8-K filed on January 5, 2006, uBid, Inc.
      ("uBid") is a wholly-owned subsidiary of the Company. On April 2, 2003, uBid and
      Petters Group, a holder of greater than 5% of the Company's common stock,
      executed a Shared Resources Agreement with a term of one year and automatic
      renewals of one year until terminated by either party with 60 days' prior
      notice. Pursuant to this agreement, Petters Group provided executive, facilities
      management, finance, general and administrative, legal, marketing, merchandising
      and operations services to uBid for which uBid was charged $360,000 in 2005,
      $264,000 for the year ended December 31, 2004 and $198,000 from April 2003
      through December 2003. uBid terminated the Shared Resources Agreement as of
      January 31, 2006.
The
      Company purchases products from Petters Group for direct purchase sales.
      Purchases from Petters Group were $1.5 million and $0.5 million for the periods
      ended December 31, 2004 and 2003, respectively and $0.5 million for the
      nine months ended September 30, 2005.
Petters
      Group owns approximately 25% of the outstanding shares of WSS Media Inc.,
      located in Minneapolis, Minnesota. During the year ended December 31, 2005,
      the
      Company sold approximately $223,000 in product to WSS Media Inc. At year end,
      the balance was unpaid. Mr. Romenesko is the Chairman of the Board of WSS
      Media.
In
      2003,
      the Company issued a convertible promissory note in the principal amount of
      $0.5
      million for the benefit of Petters Group. The promissory note bore interest
      at
      an annual rate of 8%. This note plus accrued interest was paid in full on April
      1, 2005.
On
      April
      2, 2003, the Company entered into a secured revolving credit agreement and
      promissory note with Petters Group for up to $5.0 million. On November 22,
      2004,
      the Company entered into a second secured revolving credit agreement and
      promissory note for up to $4.0 million. In March 2005, the second agreement
      was
      increased to $5.5 million. Both agreements were secured by a subordinated
      security interest in all of the Company's assets. Both agreements were scheduled
      to expire March 31, 2006. Borrowings under the revolving line bore an annual
      interest rate of 14%. There were no financial covenants provided for in the
      agreements. In connection with the Company's private offering on December 29,
      2005, the Company cancelled these promissory notes as consideration in the
      private offering for the issuance to Petters Company, Inc. of 1,222,222 shares
      of common stock and warrants to purchase 305,556 shares of common stock, and
      the
      issuance to the Petters Group of 1,111,111 shares of common stock and warrants
      to purchase 277,778 shares of common stock.
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.
CAPE
                COASTAL TRADING
CORPORATION
Dated:
              February 2, 2006
By:
/s/ Robert
              H. Tomlinson, Jr.
Name:
Robert
              H. Tomlinson, Jr.
Title:
President
              and Chief Executive Officer