SOURCE: Pacific Sands, Inc.

October 14, 2008 09:00 ET

Pacific Sands Reports Record Revenue, Gross Profit in Fiscal 2008

Net Sales Rise 64% Year Over Year; Net Loss Decreases by 43%; Natural Choices Acquisition Drives Revenue Increases; Fourth Quarter Sales Rise 88%; 16th Consecutive Period of Quarter Over Same Quarter Sales Growth

RACINE, WI--(Marketwire - October 14, 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 $976,357 for the fiscal year ended June 30, 2008 compared with net sales of $596,774 in fiscal 2007. The company's net loss of $312,908 or $0.009 per fully diluted share in fiscal 2008 was a substantial improvement compared with a net loss of $551,097 or $0.017 per fully diluted share the prior year.

Fiscal fourth quarter 2008 revenues rose to $412,171, up 88% from $219,162 in fourth quarter 2007. The growth reflected in fourth quarter sales represents the 16th consecutive period of quarter over same quarter sales growth since the company experienced a complete management transition in June 2004.

Pacific Sands (www.pacificsands.biz) acquired Natural Choices Home Safe Products LLC in February 2008. The company said revenue from Natural Choices products, combined with increased direct internet retail sales, sales to retail outlets, distribution outlets and OEM manufacturers accounted for most of the revenue gains.

"The Natural Choices line of cleaning and laundry products has dramatically changed our company's profile, giving us the means to expand our footprint and drive sales through a number of new channels," said Michael Wynhoff, president and CEO. "In only eight months, this line, with dozens of products, has enabled us to establish significant new manufacturing agreements. We have an increasing number of brand extension and contract manufacturing opportunities in the pipeline, giving us confidence we can continue sharply increasing sales through fiscal 2009."

Wynhoff said the company will focus on growing its contract manufacturing and branded product business with retailers in fiscal 2009. These larger contracts will enable the company to accelerate its revenue growth. Pacific Sands already has a number of brand extension and private label contracts in place in which the company manufactures and labels products under the retailer or manufacturer's brand name. The company's flexible manufacturing capabilities enable it to easily create OEM branded products from its extensive line of cleaning and laundry products. The company has successfully applied the same strategy for years with its nontoxic pool, spa and water treatment products.

"We have added two sales managers to drive new sales initiatives, particularly in the area of new contract manufacturing," explained Wynhoff. "We have selectively added employees to handle increased volume and have leased additional manufacturing space to manage additional volume and expand our shipping capabilities."

Pacific Sands has also enhanced its retail and Internet sales capabilities with recently upgraded Internet sales sites. Wynhoff said the company has remained conservative in its consumer advertising and marketing expenditures to conserve cash, however, selective expansion of these outreach efforts may occur as business and market conditions warrant. The company has dedicated resources to creating a substantial web presence for its nontoxic and eco-friendly cleaning, laundry and pool and spa products and the majority of its retail and private label sales have originated from high ranking search engine presence.

In fiscal 2008, Pacific Sands' gross profit rose to $571,725 compared with $366,050 last year, although it remained relatively consistent as a percent of sales compared with fiscal 2007. Management anticipates the in-house manufacturing capabilities, completed in July, will significantly reduce cost of goods sold and generate improving margins. Before the acquisition, most Natural Choices products were made by contract manufacturers and Pacific Sands continued this practice throughout fiscal 2008 while installing new equipment and processes to handle both liquid and powder packaging in-house.

"The margins for cleaning products are generally lower than for our water treatment products," noted Wynhoff. "However, we see tremendous opportunity to improve margins through in-house manufacturing, which is much less costly than contracting manufacturing. We have more than enough capacity to handle major volume increases without much additional capital expenditure. In addition, our leased Racine manufacturing facility has a very low cost per square foot."

Net cash used in operating activities during the year ended June 30, 2008 was $155,423 compared to $155,400 during the year ended June 30, 2007. In September the Company arranged a three-year interest-only convertible note with a conversion floor of .10 per share, giving the company a flexible stock and cash payment option at the conversion date.

Wynhoff explained that while most of the company's operating costs have been adequately covered by growing revenues, the acquisition of Natural Choices, expanding Pacific Sands' manufacturing capabilities and adding personnel required additional financing. In addition, the company needs to make up-front investments for ingredients and packaging, requiring the company to build additional inventory as new contracts are added. DSOs have also stretched a bit, he added, due primarily to general economic conditions prompting companies to pay as slowly as possible.

"We continue to face the challenge of financing our operations and investing for growth while working with a relatively small revenue base," said Wynhoff. "However, we view it as a good problem to have, because we are seeing very positive acceptance of our products and substantial revenue growth.

"The marketplace continues to embrace the concept of cleaning products that are safe, child- and pet-friendly, and have no toxic impact on the environment," he continued. "People are making the commitment. This is a lifestyle choice as anything, and these tend to be very loyal customers, which gives us additional confidence in our goal to begin generating net income in fiscal 2009. We're proud to be providing socially responsible green products that are also driving a viable business model."

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 the soon-to-be-launched 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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