NAPLES, Fla., Nov. 8, 2012 /PRNewswire/ -- Coastal Capital Acquisition Corp. (OTCPink: CCAJ) today released a letter to shareholders from its' Chief Executive Officer Anthony "Tony" DiNorcia concerning recent stock activity.
Over the last 45 days our stock has experienced significant volume and price fluctuations that have concerned many of you. I have read many investor website postings that speculate what has happened and believe that I have an obligation to the shareholders to provide you additional information. While we originally believed that disclosure in our September 30, 2012 quarterly report would be sufficient, I now believe that this additional disclosure is necessary.
The original purpose of the stock transfer agreement dated April 30, 2012 under which Earth Surfaces of America, Inc. ("Earth Surfaces") became a subsidiary of CCAJ was to provide a mechanism for Earth Surfaces to raise additional capitalization. The agreement contained provisions for Earth Surfaces to rescind the transaction until July 15, 2012. Shortly before the rescission deadline, we were approached by George Lambro who represented that he would provide us funding of at least $600,000 if we did not rescind the stock transfer agreement. Based on our conversations and verbal commitments by Mr. Lambro, I agreed to move forward. On August 14, 2012 this verbal agreement was formalized when the Company signed a commitment agreement under which Lambro Ventures, LLC ("LLC"), a company that we later found out was non-existent, agreed to purchase from the Company common shares for up to $600,000.
In late July 2012, we received notifications from Mr. Lambro, Deanna Lambro, Rene Galizio and George Kelly representing their ownership of CCAJ's convertible notes and related accrued interest and requesting conversion of the notes to the Company's common stock under the provisions of the notes. We later learned that Rene Galizio was associated with Mr. Lambro. On August 17, 2012, the Company issued approximately 385 million shares to convert the notes and accrued interest, of which approximately 291 million shares were issued to Lambro, Lambro and Galizio. Based on legal opinions, these were issued as free trading shares.
We understand that Lambro paid others to promote our stock and was responsible for the large trading volume. We also believe that he and a group that he put together began to dump on the market, in a disorganized fashion, a significant number of shares that they controlled resulting in the significant reduction in stock prices. Lambro may be continuing to dump shares further depressing the stock price.
The Company has not entered into any agreements to promote our stock nor have we paid anyone to do so.
Mr. Lambro agreed to loan the Company funds until the August 14 commitment agreement could be completed. Approximately $19,000 was received or paid to a consultant on the Company's behalf. These funds were all used for Company related expenses. Mr. Lambro also verbally agreed to provide the Company an additional $56,000 to be used to pay off debt of the Company. On October 10, 2012 and again on October 18, 2012, Mr. Lambro wrote checks to us both of which were not honored. It is now our belief that Mr. Lambro agreed to provide the Company funds and wrote the checks with no intentions of assisting us but rather to provide himself and his group time to dump company stock. I also have come to the belief that Mr. Lambro had no intention of providing the Company funds per the August 14, 2012 agreement.
Since late August, CCAJ has released, with the advice of a consultant, various press releases that we believed would provide our shareholders information about Earth Surfaces, promote the company and that would lead to higher stock prices. Our intent was to promote our stock for the benefit of our shareholders and not to hurt them.
It may have been naive of us to build a relationship with Mr. Lambro, but our intent was to promote the company and achieve our overall goal of raising additional capitalization. I want to let you know that the directors and senior management of CCAJ, and I personally, continue to believe that CCAJ and its subsidiary Earth Surfaces offer significant value to investors. We will continue to base our decisions on what we believe will be in the best interest of the Company and its shareholders. Further, we will continue to seek the additional capitalization that the Company needs to grow and succeed.
Finally, management is evaluating if it has legal or regulatory remedies against Lambro. If any of you know additional information that may assist us in this effort please communicate with me.
Chief Executive Officer
Coastal Capital Acquisition Corp.
Follow Earth Surfaces of America at www.earthsurfaces.net
Tony DiNorcia, Chief Executive Officer
Coastal Capital Acquisition Corp & Earth Surfaces of America
SOURCE Coastal Capital Acquisition Corp.