SOURCE: Pacific Sands, Inc.

May 22, 2007 08:55 ET

Pacific Sands Books 11th Consecutive Quarter of Same Quarter Sales Growth -- Fiscal Year to Date Sales up 41%

RACINE, WI -- (MARKET WIRE) -- May 22, 2007 -- Pacific Sands, Inc. (OTCBB: PFSD), a leading provider of environmentally friendly pool and spa care products, is pleased to report the company's 11th straight quarter of same-quarter sales growth.

RESULTS OF OPERATIONS

For the three months ending March 31, 2007, net sales were $151,486, an increase of 10.7% over $136,805 in sales booked for the same period in 2006. For the nine months ending March 31, 2007, net sales were $377,612, an increase of 41% over $267,387 in sales booked for the same period in 2006.

The increase in sales is attributable to a number of factors including more retail outlets carrying the ecoONE® spa treatment products, increased direct Internet retail sales and an OEM contract with a major spa manufacturer which includes privately branded ecoONE® starter kits with their new spas sold. Anticipated growth rate was slowed somewhat in the third quarter due to two major customers delaying early stocking orders.

Gross profits for the three months ending March 31, 2007 were $82,412 compared to $79,199, an increase of 4% over the same period the previous fiscal year. Gross profits for the nine months ending March 31, 2007 were $201,815 compared to $149,781, an increase of 34.7% over the same period the previous fiscal year.

For the three months ending March 31, 2007, selling and general administrative expenses were $194,318, up 3.2% compared to $188,229 for the three months ending March 31, 2006. For the nine months ending March 31, 2007, selling and general administrative expenses were $554,898, up 13% compared to $490,638 for the nine months ending March 31, 2006.

For the three months ending March 31, 2007, total operating expenses were $202,318, up 7.5% compared to $188,229 for the three months ending March 31, 2006. For the nine months ending March 31, 2007, total operating expenses were $740,269, up 51% compared to $490,638 for the nine months ending March 31, 2006. The nine month figure includes $51,160 of restricted stock issued to members of the board of directors in return for their agreeing to allow 'in the money options' to expire and board member compensation. The nine-month figure also includes $134,211 for options to purchase Rule 144 restricted common stock issued to management and board members for prices ranging between $.16 and $1.00 per share.

Loss from operations for the three months ending March 31, 2007 was $119,906 compared to $109,030 for the same period the previous fiscal year. Loss from operations for the nine months ending March 31, 2007 was $538,454 compared to $340,857 for the same period the previous fiscal year, the increase largely due to the above-mentioned options.

The company incurred a net loss of $132,853 for the three months ending March 31, 2007 compared to $111,448 for the same period the previous fiscal year. The company incurred a net loss of $576,108 for the nine months ending March 31, 2007 compared to $348,644 for the same period the previous fiscal year.

The company currently has no income tax liabilities.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that the company is positioned for sales growth but will require additional funding to continue operations and expansion. The company's ability to achieve its objectives is dependent on its ability to continue to sustain and enhance its current revenue stream and to continue to raise funds through loans, credit and the private placement of securities until such time as the company sustains fiscal profitability. To date, the Company has funded operations and expansion through a combination of revenues from the sale of its products, established credit with vendors, deferred salaries and the sale of Rule 144 stock through private placement. The Company's failure to continue to raise adequate financing to fund planned expansion may jeopardize its plans for growth.

Cash and cash equivalents totaled $16,080 on March 31, 2007 versus $4,977 on June 30, 2006.

Total current assets as of March 31, 2007 were $149,712 compared to $201,845 on June 30, 2006. Of the current assets, the company had $67,674 in trade receivables on March 31, 2007 versus $112,587 in trade receivables on June 30, 2006 and $57,419 in inventories versus $77,069 in inventories on June 30, 2006. The reduction in trade receivables is partially a reflection of a more aggressive collection stance taken on the part of the company. Additionally, the company experienced a sharp surge in sales in the latter part of the fourth quarter of fiscal 2006 with accounts receivable carrying over into the first quarter.

Total assets were $198,417 on March 31, 2007 versus $241,492 on June 30, 2006. The reduction in total assets is roughly commensurate with reduction in accounts receivable and inventory.

At the end of the period ending March 31, 2007 accounts receivable had a balance of $67,674 and total current liabilities were $507,462.

Included in Total Current Liabilities is $264,280 in deferred compensation.

Deferred Compensation includes combined salaries of $159,280 owed to Company CEO Michael Wynhoff and CFO Michael Michie, who deferred substantial portions of their salaries for fiscal years 2005, 2006 and 2007. Mr. Wynhoff and Mr. Michie continue to defer these past-due salaries until the company is in a position to pay.

Current liabilities also reflects $105,000 which had been booked as deferred salary to former CEO Stanley Paulus and was converted to a note in June of 2006. This balance is currently being disputed by the company primarily for Mr. Paulus' failure to disclose certain transactions as compensation during his tenure as CEO and other significant issues. Mr. Paulus has filed suit to collect and, as of May 17, 2007, the matter remained unresolved.

Net cash used in operations was $164,124 for the nine months ending March 31, 2007 compared to $87,722 for the same period of the previous fiscal year.

Net cash provided by financing activities was $184,028 for the nine-month period ending March 31, 2007, compared to $94,227 for the same period the previous fiscal year.

The company has no material commitments for capital expenditures at this time. The company has no "off balance sheet" source of liquidity arrangements.

The company presently employees six full time and three part time employees.

For the complete filing, please visit www.sec.gov

About Pacific Sands

Pacific Sands is publicly traded on the NASDAQ OTCBB. The company's core ecoONE® pool, spa and household cleaning product lines are nontoxic and deliver earth, health and kid-safe alternatives.

More information available at www.pacificsands.biz

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.

Contact Information

  • Contact:
    Investor Relations
    Andrew Barwicki
    516-662-9461