SOURCE: Pacific Sands, Inc.

November 26, 2008 13:00 ET

Pacific Sands Reports Fiscal 1Q 2009 Results

New Products Drive 96% Sales Increase; In-House Manufacturing Initiative Completed; New Retail and Corporate Websites Go Live; Natural Choices Private Label Branding Continues to Expand

RACINE, WI--(Marketwire - November 26, 2008) - Pacific Sands, Inc. (OTCBB: PFSD), which manufactures environmentally friendly, non-toxic liquid and powder cleaning, laundry, and water treatment products, reported net sales of $352,806 fiscal quarter ended September 30, 2008 compared with net sales of $179,807 in fiscal first quarter 2008. The company had a net loss of $64,912 or $0.002 on 39.2 million weighted average shares compared with a net loss of $53,829 or $0.002 in fiscal first quarter 2008 on 34 million weighted average shares.

"We are very encouraged with the increasing market enthusiasm for the Natural Choices™ 'home safe' cleaning and laundry products, as well as our 'low chem' ecoone® pool and spa water management systems," said Michael Wynhoff, president. "Direct consumer response is growing, and we have numerous retailers, distributors and marketing companies in the pipeline interested in selling our products as private label brands."

The company completed its expansion of its in-house manufacturing capabilities to accommodate production requirements for its products. This investment, said Wynhoff, eliminates the need to outsource to contract manufacturers and will result in lower manufacturing costs. For the three months ended September 30, 2008, cost of goods sold was $161,950 compared to $62,863 for the same period in the previous fiscal year, while gross margin decreased from 65% for the three months ended September 30, 2007 to 54% for the current fiscal quarter.

These changes were primarily due to products from Natural Choices, which Pacific Sands acquired in February 2008. Prior to the acquisition, Natural Choices manufactured the bulk of their liquid and powder cleaning and laundry products through contract manufacturers, which added significantly to their cost of manufacturing those products. Pacific Sands has made significant capital expenditures, including building an in-house powder filling facility.

"We are very enthusiastic about the increased sales and the prospect of improved gross margins resulting from our manufacturing investment," noted Wynhoff. "It will take two, possibly three quarters to fully realize these economies of scale as we implement a full range of manufacturing process control and procedures to maximize the efficiency of our new capabilities. We also have great flexibility to manufacture, fill and label the growing number of private label and brand extension products being sold through national retailers."

Wynhoff explained one of the major benefits of selling environmentally friendly products through private label and brand extension is the opportunity to reach a broader scope of consumers who are actively seeking nontoxic and earth-friendlier alternatives. For example, a customer looking for a 'mission specific' cleaning product, such as a deck and patio cleaner, is now more likely to choose the chlorine free alternative product that's safer for kids, pets and plants. Our private label products give existing brands the ability to enhance their revenue base while making responsible use of their brand identity. The company currently sells to approximately 30 private label and brand extension customers.

Increased manufacturing efficiency and significantly higher long-term volumes will ultimately enable the company to maintain a cost-competitive margin structure while generating increasing cash flow from operations, noted Wynhoff.

Pacific Sands (www.pacificsands.biz) has also recently gone live with fully updated websites: its website for its line of environmentally friendly pool and spa products (www.ecooneSpa.com), and its expanded site for Natural Choices and oxygenated cleaning products (www.ecogeeks.com) provide sophisticated ordering and informational options to facilitate direct purchases by consumers and retailers. The packaging of its Natural Choices™ branded cleaning products line is currently being redesigned and updated.

"While private label sales to major distributors offer the best opportunity for rapid sales expansion, revenue from direct sales provides an important foundation for our products and enhances the company's overall visibility," explained Wynhoff.

Sales, general & administrative expenses in the quarter increased to $239,680 versus $167,806 in first quarter 2008, primarily reflecting the addition of key marketing employees and executives. The company has been able to increase manufacturing output with minimal investment in manufacturing employees.

"Based on sales trends, we anticipate adding up to three manufacturing and one administrative employee by spring to keep pace with increasing sales," said Wynhoff. "We expect any increase in SG&A at that time will be more than offset by resulting sales." Wynhoff added that management actually anticipates a slight decline in SG&A accompanied with a modest increase in gross margin percentage in fiscal quarters two and three due to increased in-house manufacturing and the implementation of cost saving and efficiency programs.

The company's quarterly performance was impacted by a significant year-over-year rise in interest expense related to additional financing for manufacturing expansion, the Natural Choices acquisition and ongoing cash requirements. Wynhoff said that cash to maintain daily operations and fund marketing and sales initiatives continues to be the company's primary challenge, and is seeking favorable financing to manage operations while nurturing sales growth.

"The economic conditions have had minimal impact on sales because people need cleaning products and have maintained their commitment to choosing environmentally friendly alternatives," he explained. "However, the scarcity of funding liquidity and financing sources has come at a difficult time for a company requiring operating and growth capital. We are pursuing numerous options for interim and long-term growth financing."

Wynhoff concluded: "We remain very enthusiastic about our prospects, particularly with our private label and brand extension business. Our private label and brand extension inquiries entering the sales funnel have increased to nearly ten unique projects per week in the last four to five months. The quality of these leads has also improved dramatically and we now have numerous potential 100,000 unit plus projects in the works."

About The Company

Pacific Sands, Inc. (www.pacificsandsinc.com) is a rapidly growing company that develops, markets and sells unique, nontoxic, earth, health and child-friendly products for cleaning, pet care and pool & spa water maintenance applications. In 2008, the company's ecoone® Spa Treatment system was cited by the pool and spa industry's Aqua Magazine as a 'greener' alternative to conventional spa water care and as a "Top 50 product for 2008" by Pool and Spa News. Citing the versatility of the company's core formula and referring to it as a "...hinge pin technology," Wal-Mart's Innovation Network awarded one of the company's product the highest "Success Likelihood Score" ever granted in that program's 22 year history.

Pacific Sands environmentally friendly products for cleaning, laundry and pool and spa care are available at www.ecoone.biz and www.EcoGeeks.com.

Safe Harbor Act Disclaimer

The statements contained in this release and statements that the company may make orally in connection with this release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in the forward-looking statements, since these forward-looking statements involve risks and uncertainties that could significantly and adversely impact the company's business. Therefore, actual outcomes and results may differ materially from those made in forward-looking statements.

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