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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 10 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended: June 30, 2004
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Pacific Sands, Inc.
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(Exact name of registrant)
Nevada 88-0322882
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(State of Incorporation) (I.R.S. Employer Id. No.)
1509 Rapids Drive, Racine, WI 53404
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (262) 619-3261
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Securities registered under Section 12(b) of the Exchange Act: Common Stock
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days [X]Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporation by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for fiscal year 2004: $61,703
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of October 8, 2004 the aggregate market value of
common equity held by non-affiliates was $1,587,605.00.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of October 8, 2004 there were
30,298,973 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format (Check one): Yes ; No X
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of the Business 3
Item 2. Description of Property 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 5
Item 6. Management's Discussion and Plan of Operation 8
Item 7. Financial Statements F1-F11
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 11
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act 12
Item 10. Executive Compensation 13
Item 11. Security Ownership of Certain Beneficial Owners
and Management 14
Item 12. Certain Relationships and Related Transactions 15
Item 13 Exhibits 15
Item 14. Principal Accountant Fees and Services 15
Signatures 16
Exhibits 17
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PART I
Forward-Looking Statements.
The Company has made forward-looking statements in this Form 10-KSB that are
subject to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of operations. Also, when
any of the words `may,' `plan,' `seek,' `estimate,' `continue,' `believes,'
`expects,' `intends,' `anticipates,' or similar expressions are used, the
Company is making forward-looking statements. All statements other than
statements of historical fact included in this Form 10-KSB are forward-looking
statements. Such forward-looking statements are based on management's current
expectations and beliefs and are subject to a number of factors which could mean
the actual result may materially differ from those described in the
forward-looking statement. Although the Company believes these forward-looking
statements to be reasonable, there can be no assurance that such expectations
will prove to be correct. For these statements the Company claims the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
Item 1. Description of Business.
Pacific Sands, Inc. (the "Company" or "Pacific Sands") was incorporated in the
State of Nevada on July 7, 1994. The Company's fiscal year ends June 30. The
Company is a C-Corporation for federal income tax purposes. The Company does not
have subsidiaries or affiliated entities. The Company also does business as
"Natural Water Technologies."
The Company manufactures, markets and sells nontoxic cleaning and water
treatment products with applications ranging from spa and swimming pool
treatment to cleaning and pet care.
The Company has a mature, actively marketed product line in the Eco One Spa
Treatment system. Eco One Spa Treatment system consists of: Eco One Spa
Treatment, a nontoxic, single bottle spa treatment solution used for maintaining
water clarity and reducing or eliminating foaming, scum lines, odors, itching,
and rashes. Eco One also simplifies often difficult water chemistry by helping
to maintain a stable pH and alkalinity. Eco One Filter Boost is a nontoxic blend
of minerals and enzymes that increase spa filter performance, making the filter
easier to clean and more effective by removing water contaminants such as oils,
phosphates, lotions and other user byproducts. Eco One Spa Cleanser is a
nontoxic product used to purge spas of contaminant buildup in the plumbing and
machinery to achieve consistently cleaner, healthier water. Eco One Cover
Cleaner and restorer is a nontoxic vinyl cleaner and conditioner necessary for
restoring and maintaining expensive spa covers.
Currently the Companymarkets and sells The Eco One Spa Treatment products over
the internet and through retail outlets in the US, Canada and the United
Kingdom.
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Pacific Sands' Eco One line of spa treatment products is the first in a proposed
line of Eco One cleaning and water treatment solutions. Company is working to
expand the Eco One line to include pool treatment, general household cleaning
products and pet sprays.
Pacific Sands products are based on a unique, proprietary blend of food grade
compounds, plant and mineral extracts, combined with a complex profile of
enzymes designed specifically for each product's application. The result is a
superior line of products aimed at the emerging demand for products that are
environmentally friendly, safe, effective and affordable.
The Company is currently engaged in developing and implementing a marketing
strategy to increase sales of its products through wide domestic and
international pool and spa distribution channels.
Additionally, the has a well-developed line of nontoxic household cleaning and
pet-care products. Management is developing a direct response television
marketing strategy to introduce the nontoxic household cleaning products to the
consumer marketplace in the third quarter of fiscal year 2005.
The Company currently has two full-time employees. Additional services required
by the Company are handled on an independent contractor basis.
Risk Factors
In addition to the other information contained on this Form 10-KSB report, the
following risk factors should be considered carefully.
THE COMPANY HAS EXPERIENCED LOSSES FROM OPERATIONS SINCE COMMENCING OPERATIONS
Since commencing operations, the Company has not been profitable on an annual or
quarterly basis. The Company may not, in the future generate sufficient revenues
to achieve sustainable profitability.
POSSIBLE DIFFICULTY FINANCING PLANNED GROWTH
The company's present plans require an amount of expenditure and working
capital. In the future the Company will require financing in addition to the
cash generated from operations to fund planned growth. If additional resources
are unavailable the Company may be unable to grow according to its present plan.
MANAGEMENT'S ASSUMPTIONS REGARDING THE FUTURE MARKET MAY BE FAULTY
Management assumes there will be an increased desirability in the retail market
for nontoxic, environment and health friendly products for cleaning and water
treatment use. Should management's assumptions as to this increased desirability
be faulty, the Company may have difficulty achieving its planned growth.
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT THE COMPANY
The Company is run by a small number of key personnel. Should the Company
experience a loss of these key people due to their inability or unwillingness to
continue in their present positions, the Company's business and financial
results could be materially adversely affected.
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Item 2. Description of Property.
The Company leases office space for their principal executive offices,
manufacturing and warehouse facility and owns no property.
Item 3. Legal Proceedings.
The Company is engaged in no legal proceedings at this time. Presently, the
Company does not foresee any future involvement in legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the Security Holders during the quarter
ended June 30, 2004.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Market Information
The Company's common stock trades on the National Association of Securities
Dealers Electronic Bulletin Board under the symbol PFSD.
Following are the high and low sales price for each quarter (trading commenced
October 16, 1998);
Quarter End High Low
December 31, 1998 1.50 0.250
March 31, 1999 1.312 0.250
June 30, 1999 0.875 0.080
September 30, 1999 0.25 0.10
December 31, 1999 0.201 0.038
March 31, 2000 0.45 0.034
June 30, 2000 0.260 0.031
September 30, 2000 0.240 0.101
December 31, 2000 0.165 0.030
March 31, 2001 0.187 0.030
June 30, 2001 0.220 0.090
September 30, 2001 0.160 0.060
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December 31, 2001 0.190 0.060
March 31, 2002 0.150 0.070
June 30, 2002 0.120 0.050
September 30, 2002 0.090 0.040
December 31, 2002 0.110 0.040
March 31, 2003 0.080 0.040
June 30, 2003 0.110 0.040
September 30, 2003 0.090 0.040
December 31, 2003 0.050 0.030
March 31, 2004 0.050 0.020
June 30, 2004 0.050 0.020
As of October 8, 2004, there were approximately 60 Holders.
The Company has never declared a cash dividend.
Description of the Recent Sale of Unregistered & Registered Securities
On February 23, 2001 the Company issued 50,000 shares of restricted stock to
Khachig Hovanessian for graphic arts services in connection with an internet
site.
During January and February 2001 the Company caused to be returned to treasury
1,250,000 shares of common stock which were issued in exchange for services to
Wade Hanson, Aileen Pitts, Lori Chittenden and Noel Moya, and 800,000 shares of
common stock in exchange for a license agreement in fiscal 2000 with Hurriclean
Corp. were returned.
At January 25, 2001, the Company issued to Stan Paulus a note for prior services
in the amount of $26,250.00. In exchange, Mr. Paulus returned to treasury
700,000 shares of stock that had been issued to him for these services. On
January 25, 2001, the Company issued to Rita Paulus a note for prior services in
the amount of $9,375.00. In exchange, Mrs. Paulus returned to treasury 250,000
shares of stock that had been issued to her for these services. The notes were
issues at 10% per annum payable on a monthly installment of $1,187.66. During
the 2001 fiscal year, 958,333.25 shares were put up by Mr. Stan Paulus as
collateral on behalf of the Company. Of these shares 658,333.25 were transferred
to a third party owner at July 16, 2001.To date all payments on these notes have
been deferred to a date when the Company has the resources to make said payments
or the authorized shares are increased.
In 2002 fiscal year the Company raised money through the vehicle of a
convertible debenture program. Such program allowed the option of full repayment
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plus 8% per annum at August 2002, or the right to convert such debt at a rate of
75% of the bid price the day prior to the date of election of conversion. All
those who participated in the convertible debenture program elected to convert
their debenture amount into shares of the Company. The debenture program closed
in September of 2002. The Company issued 2,009,465 shares in fiscal year 2002,
as a result of this debenture program.
On September 13, 2002 the Company issued 2,000,000 shares of restricted stock to
Gaia, Inc. for services to the company. In addition, 1,000,000 shares of
restricted stock were issued to Waypoint Holding, Inc. in exchange for a
contract which gives the Company the North American Continent distributorship of
the Waypoint Holding, Inc. product.
Due to nonperformance of contract by Waypoint Holding ,Inc., on July 16, 2003
their One Million shares were returned to treasury.
On September 13, 2002, 100,000 shares of restricted stock were issued to Kach
Hovanessian for his services in designing and providing labels for the company's
household cleaning product, Eco One.
On September 13, 2002, as per their service contracts the Company issued 750,000
shares of restricted stock to Rita Paulus and 300,000 shares of restricted stock
to Harold Dahl for their services as officers and directors of the company. The
Company issued 3,000,000 shares of restricted stock to Stanly Paulus in exchange
for the Company asset known as "technical books for resale."
On September 13, 2002 the Company issued to Robert Warren 1,000,000
shares of restricted stock as compensation for services and to reimburse him for
transferring 700,000 shares of his own stock to a firm to help handle the
company's investor relations.
On September 24, 2002, Paul Fresolone was issued 250,000 shares of restricted
stock for the sum paid of $10,000. October 29, 2002, Paul Fresolone was issued
150,000 shares of restricted stock for his work towards placing the company's
products in retail sales establishments.
On December 16, 2002, the Company issued 200,000 shares of restricted stock to
Glen Dunning and 300,000 shares of restricted stock to Michael Wynhoff as
repayment for past services rendered.
On May 16, 2003, the Company issued to Joseph T. Ploch 100,000 shares of
restricted stock for services in shareholder relations and Communications.
On June 17, 2004, the Company sold for cash, 1,000,000 shares of restricted
stock to Mark Rauscher for $30,000. The Company sold for cash, 1,000,000 shares
of restricted stock to Vincent Esqueda for $30,000. The Company sold for cash,
500,000 shares of restricted stock to John Becker for $15,000.
As a result of the negotiated transition in management, a total of 7,559,187
shares of common stock formerly held by insiders and related parties will be
acquired and returned to treasury within the first two quarters of the next
fiscal year.
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Item 6. Management's Discussion and Plan of Operation.
On June 15, 2004, the Company experienced a change in management and moved its
principal operations to Racine, WI.
On June 15, 2004, Rita Paulus resigned her position as treasurer and member of
the board of directors of the company.
On June 15, 2004, Harold Dahl resigned his position as a member of the board of
directors of the company.
On June 15, 2004, Stanly Paulus resigned his positions as President and CEO of
the Company and, as the sole member of the board of directors, appointed Michael
L. Wynhoff to the board of directors and president and CEO.
On June 15, 2004, the board of directors appointed Michael D. Michie to the
board of directors and as the Treasurer of the company.
On June 30, 2004, Mark Rauscher accepted an appointment to the board of
directors. Stan Paulus stepped down as the Company Secretary and Mark Rauscher
was appointed Secretary.
Under the terms of the transition agreement with Stan and Rita Paulus, the
Company agreed to pay back the balance all outstanding notes payable for cash
loaned to the Company during their tenure without interest. The total notes
payable at the time of the transition was $45,791.39, of which $25,000 was paid
in FY 2004. A final payment of $20,791.39 is due 15 October, 2004.
Additionally, Stanley Paulus has been retained as a consultant by the Company to
aid in the transitional process for which he will be paid a sum of $4,208.61.
As part of the terms of the transition, Stan and Rita Paulus have agreed to
waive $189,819.20 of the $289,819.20 back wages owed them in return for a
commitment from the Company to pay the remaining $100,000 within a period of two
years from the date of the transition. As a result of this debt relief, the
Company booked $189,819.20 as forgiveness of officers' salaries through an
addition to paid in capital for the fiscal year ending June 30, 2004
The sale of the Company asset known as "technical books for resale," when
completed, will result in the return to treasury of 4,859,187 shares of common
stock held by Stan and Rita Paulus. Upon completion of the transition, Stan and
Rita Paulus will continue to hold 600,000 shares of Company common stock.
Management has secured a lease on a production, warehouse and office facility
located in the Rapids Business Center in Racine, Wisconsin.
Management is establishing research, mixing, filling, labeling, packaging,
warehousing and shipping operations in an 11,000 square foot space located in
this facility. The Company additionally occupies two offices for marketing,
sales and management operations.
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The Company has established the first phase of a technologically integrated
order entry and fulfillment system to streamline sales processing and shipping
operations.
Management has developed a plan to construct an efficient and scaleable
production facility which design specifications show will be capable of mixing,
manufacturing, packaging and shipping in excess of 35,000 units of liquid
product per day. Based on a modular work station design model, the operation can
be run efficiently by between 1 and 9 employees, depending on product demand.
Due to the economy of design, management believes that it currently has
sufficient financial resources to complete the production system as designed.
Management anticipates that this facility will be complete before the end of the
first quarter of fiscal year 2005.
With this manufacturing system in place, the Company can easily implement the
manufacturing support for the introduction of its complete line of earth and
health friendly cleaning, pet care and water treatment products.
Management is developing an in-house strategy to introduce new products to
market quickly, inexpensively and effectively. By utilizing available new
printing technology, the Company will be able to develop, design, and print
product labels, sales tools, brochures and point of purchase displays in house
in order to test market new products. This ability gives the Company the
flexibility to test market new products and product designs without the expenses
of a full scale marketing campaign.
Once a new product has been successfully tested in the marketplace, the Company
then has the ability to very quickly move to full scale production and
distribution. This strategy gives the Company the ability to adjust to the
changing marketplace while keeping the expenses associated with bringing a new
product to market at a minimum.
Management believes it has sufficient capital and resources in place at this
time to implement this strategy.
At this time, the Company achieves substantially all of its revenues from the
sale of the Eco One line of Spa water treatment products. The Company foresees
increased sales in these products over the next fiscal year based upon an
increase in internet sales, direct sales and sales through retail outlets
throughout the US, Canada and overseas.
Management has developed a five part plan to increase sales of the EcoOne Spa
product over the next fiscal year that includes the following goals:
1) Repackaging and re-label product. Redesign sales tools.
2) Introduce product to market at industry pool and spa shows to pursue national
sales growth.
3) Increased and aggressive internet advertising and marketing.
4) Develop and produce a point of purchase and promotional sales video.
5) Hire a pool and spa professional to manage national wholesale sales.
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Management has sufficient capital in place to begin execution of the first
phases of this strategy. Management believes that it will be able to raise
additional capital, beyond increased sales, required to execute this marketing
strategy.
The Company has researched and developed several new products based on its
proprietary "chem-zime" (chemical and enzyme) technology over the last 4 years.
Products include the Eco One line of Environment and Health friendly household
cleaning products: Eco One All Purpose Cleaner, Eco One Kitchen and Bath, Eco
One Tub and Tile, Eco One Nursery Spray and others. These products are
formulated, tested labeled and ready for introduction to the general
marketplace.
Management is developing a strategy to bring a "whole house solution" suite of
environment and health friendly cleaning product to market via "direct response
television" in the third quarter of fiscal year, 2005.
Management believes in the viability of direct response television marketing,
both as a profit engine for retail sales and its ability to open new retail
markets. Management believes that these products fill a unique niche in the
market for consumers who seek safe alternatives to many toxic cleaning products.
There is no assurance that management will be successful in any of its current
marketing plans.
Changes in Business Model:
As of June 17, 2004 the Company has moved from its storefront location in Clovis
California. The Company has abandoned its prior business model of direct store
front sales. Current management believes the Company will realize more success
with its plan to more aggressively pursue the wholesale marketplace which
consists of thousands of pool and spa dealers throughout the country.
As of June 17, 2004 the Company has abandoned its pursuit of wholesale and
direct retail of specialty technical books in order to actively pursue the
marketing and sales of its core line of proprietary environment and health
friendly cleaning, pet care and water treatment products. As part of the
management transition settlement, the Company transferred, through an agreement
of sale, its entire inventory of technical books to former management.
As of June 17, 2004 the Company has indefinitely suspended research on
agricultural and industrial wastewater treatment in order to actively pursue the
marketing and sales of its core chemical product lines.
As of June 17, 2004 the Company has indefinitely suspended research into cooling
tower treatment until such time as it is financially viable for the Company to
compete in that market place. As a result, Company has canceled its
long-standing cooling tower maintenance contract with a Fresno based
manufacturer. This action will result in a reduction in revenue from this
activity of approximately $5,000 in the next fiscal year.
In order to fund operation as needed through the course of fiscal year 2004,
management plans to sell restricted common stock. Of the 7,559,187 shares of
common stock that will be returned to treasury as a result of the transition,
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management has earmarked 2,500,000 shares to be sold to qualified individuals.
The board of Directors has set policy on the sale of these shares as follows:
Sales will be limited to "Accredited Investors" as defined in Rule 501 of
Regulation D promulgated under the 1933 Act. Such sales shall be at the
discretion of the Board of Directors and in blocks of no less than 100,000
shares. The price shall be set at a 20% discount from the average closing price
of the stock as reported on the NASD Over the Counter Bulletin Board for the 30
days previous to the date of the sale. Should the Company elect to sell all of
the earmarked shares the Company foresees raising between $150,000 and $200,000
based upon this policy.
Stock issued as a result of these sales will bear the restrictive legend: "The
shares represented by this certificate have not been registered under the
Securities Act of 1933 ("The Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement under the Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the satisfaction of the
company."
Item 7. Financial Statements.
See F-1 through F-11 attached.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
As of September 14, 2004, Registrants principal independent auditor, Alex D.
Domantay & Associates, declined to stand for re-election. The decision by the
independent auditor to decline to stand for re-election had nothing to do with
any disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope procedure limitation as required by the
profession or the S-K regulations, between the auditor and the registrant. The
decision by the independent auditor to decline to stand for re-election was
based upon the retirement of one of the essential principles in the firm of the
independent auditor.
As of September 14, 2004, registrant has retained the services of Frank L.
Sassetti & Company to act as registrant's principal accountant to audit
registrant's financial statements.
8A. N/A
8B. Other Information
On October 8, 2004, the Company received written communication from Frank L.
Sassetti & Co., its independent auditor, confirming that they did not intend to
rely on the fiscal year end June 30, 2003, report issued by Alex Domantay &
Assoc. due to questions regarding independence. In addition, it was confirmed
that Frank L. Sassetti would review the September 2003, December 2003, and March
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2004 quarterly reports, as Alex Domantay & Assoc.'s registration license had
lapsed in October 2003. See Exhibit 7 for a copy of the communication.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
Directors of the Company:
Name Age Title
Michael L. Wynhoff 39 Director
Michael D. Michie 43 Director
Mark R. Rauscher 41 Director
Stanley Paulus 57 Director
All directors have indefinite terms of office.
Michael L. Wynhoff became a director on June 14, 2004
Michael D. Michie became a director on June 14, 2004
Mark Rauscher became a director on June 30, 2004.
Stanley Paulus became a director on February 4, 1998.
Officers of the Company
Name Age Title
Michael L. Wynhoff 39 President / CEO
Michael D. Michie 43 CFO / Treasurer
Mark R. Rauscher 41 Secretary
***Note - As of June 16, 2004, Stanley Paulus resigned as President/CEO of the
Company. Michael Wynhoff became President / CEO of the Company June 16, 2004.
As of June 16, 2004, Rita Paulus resigned as Treasurer of the Company. Michael
Michie became CFO/VP of Marketing on June 16, 2004.
As of June 30, 2004, Stanley Paulus resigned as Secretary of the Company. Mark
Rauscher became Secretary on June 30, 2004.
Business Experience:
Michael L. Wynhoff - Michael L. Wynhoff was appointed President and CEO by the
board of directors on June 14, 2004. From 2000 to 2004, Mr. Wynhoff worked as a
marketing and public relations consultant, focusing his efforts on environmental
products companies, including Pacific Sands. From 1999 through 2000 he was the
Director of Marketing and Operations at Domain Host International. Prior to
1999, Mr. Wynhoff was involved in the film and television industries as a
writer, producer and coordinator of feature films and television commercials.
Michael Wynhoff graduated from Carthage College in 1987 with a BA in Speech,
Communications and Theatre.
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Michael D. Michie - Michael D. Michie was appointed CFO/Treasurer by the Board
of Directors on June 14, 2004. From 2003 to 2004, Mr. Michie privately consulted
challenged businesses while concurrently serving as Business Manager for a large
real estate investor/broker group. He established cost containment measures as
well as performance metrics for eight real estate holding companies. He produced
and refined accurate revenue projections providing investors the knowledge to
make better investment decisions. Prior to 2003, he was a Territory Sales
Manager for Creo Products, Inc, a high technology company located in Vancouver,
BC. During his tenure with Creo he achieved over 70% market share in his
territory of responsibility, Previous to 1999, Mr. Michie worked for the DuPont
Corporation beginning in 1994. He was a shared recipient of a regional Pinnacle
Award for regional performance in electronic imaging as well as a Recipient of
DuPont's "commitment to excellence" award.
Mark R. Rauscher - Mr. Rauscher is a technical marketing specialist employed by
DuPont Imaging Technologies. For the last 5 years, he has worked in product
development, sales support, and marketing support in the printing and imaging
industries.
Stanley Paulus - Stanly Paulus has overseen the creation and development of
Pacific Sands. Mr. Paulus brought to market the spa products through Pacific
Sands and has developed the distribution of the product through increased sales.
Mr. Paulus has diversified experience includes sales and marketing, water
treatment and general contracting. Mr. Paulus has, for almost 25 years worked as
a General Contractor for high end custom homes. Additionally, he has developed,
manufactured and marketed custom made cabinets and kitchen accessories for the
past ten years.
Compliance with Section 16(a) of the Exchange Act:
During the past fiscal year Stanley Paulus and Rita Paulus failed to timely file
reports required by Section 16 (a) of the Exchange Act. The Company will request
said filings by Rita Paulus and Harold Dahl. In addition, the Company will
request necessary filings from current members of the board of directors and
officers and other necessary parties.
Item 10. Executive Compensation.
Summary Compensation Table
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted
Name Stock LTIP All
Position Year Salary Bonus Other Awards Options Payouts Other
Stanley 2004 $-0- -0- -0- -0- -0- -0- -0-
Paulus 2003 $15,000 -0- -0- 3,000,000 -0- -0- -0-
President 2002 $22,750 -0- -0- -0- -0- -0- -0-
Rita 2004 $-0- -0- -0- -0- -0- -0- -0-
Paulus 2003 $-0- -0- -0- 750,00 -0- -0- -0-
Treasurer 2002 $8,187 -0- -0- -0- -0- -0- -0-
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As of June 16, 2004, Stanley Paulus resigned as President/CEO of the Company.
Michael Wynhoff became President / CEO of the Company June 16, 2004. Mr. Wynhoff
was compensated $2,400 for his services in fiscal year 2004.
As of June 16, 2004, Rita Paulus resigned as Treasurer of the Company. Michael
Michie became CFO/VP of Marketing on June 16, 2004. Mr. Michie was compensated
$2,780 for his services in the fiscal year 2004.
As of June 30, 2004, Stanley Paulus resigned as Secretary of the Company. Mark
Rauscher became Secretary on June 30, 2004. Mr. Rauscher received no
compensation for his services in the fiscal year 2004.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Name and Address of Amount of Percent of
Beneficial Owner Beneficial Ownership Class
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Stanley Paulus 4,509,187 14.8%
601 W. Shaw Suite D (3,909,187 shares currently
Clovis, CA 93615 held in escrow to be returned
to treasury)
Rita Paulus 950,000 shares 3.1%
601 W. Shaw Suite D (950,000 shares currently
Clovis, CA 93615 held in escrow to be returned
to treasury)
Harold Dahl 1,000,000 shares 3.3%
PO Box 434
Fairview, MT 59221
Gaia Inc.
350 Center Street Suite 500 2,000,000 shares 6.6%
Reno, NV 89501 (2,000,000 shares currently
held in escrow to be returned
to treasury)
Mark Rauscher 1,000,000 shares 3.3%
337 Hillview Drive
Gurnee, IL 60031
Michael Wynhoff 975,218 shares 3.2%
1228 Carlisle Avenue
Racine, WI 53404
Michael Michie 19,500 shares 0.01%
4809 5th Avenue
Kenosha, WI 53140
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Item 12. Certain Relationships and Related Transactions.
Related Party Transaction:
On June 17, 2004 Stan Paulus and Rita Paulus offered to purchase from the
Company the complete inventory item known as "technical books for resale" for
the sum of $121,479.68 in the form of 4,859,187 shares of their Pacific Sands
common stock based on the market vale of the stock on that day of 2.5 cents per
share, or the average of the prevailing best bid of 2 cents per share and the
prevailing best ask of 3 cents per share. The selling price represented a
$28,520.32 reduction in the stated value of the books of $150,000.
Company President Michael Wynhoff and VP of Marketing and sales, Michael Michie
determined after examining the inventory that the costs associated with shipping
the books to the new company location, storage, insurance and advertising and
sales expenses would far exceed the $28,520.32 discount and agreed to the sale.
At the end of this fiscal year, the 4,959,187 shares of stock were held in
escrow, pending the completion of the transaction.
On June 15, 2004, the Company was approached by a representative of Gaia Media,
wishing to sell 2,000,000 shares of Pacific Sands common stock for $19,550. As
this price was far below market value at the time, the Company accepted and
purchased the stock from Gaia Media. At the end of the fiscal year, that stock
was held in escrow.
On June 15, 2004 the Company was approached by David Anderson, wishing to sell
700,000 shares of Pacific Sands common stock for $10,000. As this price was far
below market value at the time, management accepted the offer and the stock is
currently being held in escrow pending the completion of the transaction.
Item 13. Exhibits.
Attached Exhibits
-------- --------------------------------------------------------------- -------
EXHIBIT NAME PAGE
NUMBER NUMBER
-------- --------------------------------------------------------------- -------
(31) Certification 17
(32) Certification - Rule ss.1350 20
(7) Correspondence dated October 8, 2004, from Frank L. Sassetti & 21
Company, Independent Auditors, regarding non-reliance upon a
previously issued audit report and completed interim reviews
Item 14. Principal Accountant Fees and Services.
Audit Fees:
-15-
Alex D. Domantay & Assoc. charged the Company audit fees of $42,920.00 in the
fiscal year 2004, which amount included the quarterly filings.
Alex D. Domantay & Assoc. charged the Company audit fees of $32,000.00 in the
fiscal year 2003, which amount included the quarterly filings
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) Pacific Sands, Inc.
By /s/ Michael Wynhoff
Michael Wynhoff, CEO, Director
Date: October 11, 2004
In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Michael Michie
Michael Michie, CFO, Director
Date: October 11, 2004
By: /s/ Mark Rauscher
Mark Rauscher, Secretary, Director
Date: October 11, 2004
-16-
INDEX TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2004 AND 2003
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-11
-F1-
Frank L. Sassetti & Co.
Certified Public Accountants
The Board of Directors
Pacific Sands, Inc. dba Natural Water Technologies
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheet of Pacific Sands, Inc. dba
Natural Water Technologies as of June 30, 2004, and the related statements of
operations, stockholders' equity and cash flows for each of the two years in the
period ended June 30, 2004. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pacific Sands, Inc. dba
Natural Water Technologies as of June 30, 2004, and the results of its
operations and its cash flows for each of the two years in the period ended June
30, 2004, in conformity with accounting principles generally accepted in the
United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has a significant accumulated deficit which
raises substantial doubt about the Company's abilty to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 10. The financial statements do not include any adjustments that might
result from the outcome of this uncertainly.
/s/ Frank L. Sassetti & Co.
October 8, 2004
Oak Park, Illinois
6611 W. North Avenue * Oak Park, Illinois 60302 *
Phone (708) 386-1433 * Fax (708) 386-0139
-F2-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
BALANCE SHEET
JUNE 30, 2004
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 44,098
Trade receivables (net of allowance for doubtful
accounts of $176,223) 63,301
Inventories 5,598
Prepaid expenses 925
-----------
Total and Current Assets $ 113,922
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 17,198
Accrued expenses 40,237
Notes payable 50,792
-----------
Total Current Liabilities 108,227
-----------
LONG TERM LIABILITIES
Accrued officers' salaries 100,000
-----------
Total Long Term Liabilities 100,000
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 30,299
Additional paid in capital 2,560,602
Treasury stock, at cost (5,514)
Accumulated deficit (2,558,212)
Less: Due from shareholder (121,480)
-----------
Total Stockholders' Equity (94,305)
-----------
Total Liabilities and Stockholders' Equity $ 113,922
===========
The accompanying notes are an integral part
of the financial statements
-F3-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2004 AND 2003
2003
2004 (Restated)
------------- -------------
NET SALES $ 61,703 $ 61,254
COST OF SALES 11,612 21,398
------------- -------------
GROSS PROFIT 50,091 39,856
SELLING AND
ADMINISTRATIVE EXPENSES 225,277 372,916
------------- -------------
LOSS FROM OPERATIONS (175,186) (333,060)
------------- -------------
OTHER INCOME
Forgiveness of debt 36,415
------------- -------------
LOSS BEFORE INCOME TAXES (138,771) (333,060)
INCOME TAXES
------------- -------------
NET LOSS $ (138,771) $ (333,060)
============= =============
BASIC AND DILUTED NET LOSS
PER SHARE $ (0.005) $ (0.012)
------------- -------------
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES 27,898,092 26,931,373
============= =============
The accompanying notes are an integral part
of the financial statements
-4-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
STATEMENTS OF STOCKHOLDERS' EQUITY
JUNE 30, 2004 AND 2003
Common Stock Treasury Stock
------------ --------------
Number of Additional Paid Number of Accumulated Shareholder
Shares Amount In Capital Shares Amount Deficit Receivable Total
---------- ------- ---------- --------- --------- ------------ ---------- ----------
Balance at July 1, 2002 19,648,873 $19,649 $2,032,128 (320,523) $(40,189) $(2,086,381) $ $ (74,793)
Issuance of common stock
For professional services 4,050,000 4,050 134,775 311,523 34,675 173,500
For distribution rights 1,000,000 1,000 39,000 40,000
For technical and
environmental books 3,750,000 3,750 146,250 150,000
For office expenses 100,000 100 3,900 4,000
For cash 250,000 250 9,750 10,000
Net loss (Restated) (333,060) (333,060)
---------- ------- ---------- --------- --------- ------------ ---------- ----------
Balance at June 30,
2003 (Restated) 28,798,873 28,799 2,365,803 (9,000) (5,514) (2,419,441) (30,353)
Cancellation of
distribution rights (1,000,000) (1,000) (39,000) (40,000)
Issuance of common stock
for cash 2,500,000 2,500 72,500 75,000
Forgiveness of officers'
salaries 189,819 189,819
Sale of inventory to
shareholder (28,520) (121,480) (150,000)
Net loss (138,771) (138,771)
---------- ------- ---------- --------- --------- ------------ ---------- ----------
Balance at June 30, 2004 30,298,873 $30,299 $2,560,602 (9,000) $ (5,514) $(2,558,212) $(121,480) $ (94,305)
========== ======= ========== ========= ========= ============ ========== ==========
The accompanying notes are an integral part
of the financial statements
-F5-
PACFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2004 AND 2003
2003
2004 (Restated)
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(138,771) $(333,060)
Adjustments to reconcile net loss to net
cash used in operating activities -
Depreciation 1,380 1,840
Loss from disposal of equipment 1,032
Common shares and rights issued for
services and compensation 332,500
Changes in assets and liabilities -
Trade accounts receivable 62,775 54,644
Inventories (2,654) (143,098)
Prepaid expenses 497 (1,422)
Accounts payable (37,380) 7,120
Other current liabilities 35,028 2,278
Wages payable 67,500 46,500
---------- ----------
Net Cash Used in Operating Activities (10,593) (32,698)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes 12,500 20,000
Payment of notes (37,500) (1,500)
Issuance of common stock 75,000 10,000
---------- ----------
Net Cash Provided by Financing Activities 50,000 28,500
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 39,407 (4,198)
CASH AND CASH EQUIVALENTS
Beginning of year 4,691 8,889
---------- ----------
End of year $ 44,098 $ 4,691
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for
Interest $ -- $ --
========== ==========
Income taxes $ -- $ --
========== ==========
SUPPLEMENTAL INFORMATION FROM NONCASH INVESTING AND FINANCING
ACTIVITIES
Issuance of distribution rights and shares $ $ 40,000
Cancellation of distribution rights and shares $ (40,000) $
Sale of technical and environmental books
to stockholder for shares of stock $ 150,000 $
Forgiveness of accrued officer/stockholder salaries $ 189,819 $
The accompanying notes are an integral part
of the financial statements
-F6-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - Pacific Sands, Inc. doing business as Natural Water
Technologies (the "Company") was incorporated in Nevada on July 7, 1994
with an original authorized capital stock of 25,000 shares of $0.001 par
value which was increased to 20,000,000 shares in 1997 with the same par
value. On May 6, 2002, the authorized capital stock was increased to
50,000,000 shares.
The Company manufactures and distributes nontoxic cleaning and water
treatment products with applications ranging from home spas and swimming
pools to cleaning and pet care.
Inventories - Inventories are stated at the lower of cost or market on the
first-in, first-out (FIFO) basis.
Depreciation - For financial reporting purposes, depreciation of property
and equipment has been computed over estimated useful lives of three to
five years primarily using the straight-line method. Depreciation charges
totaled $1,380 and $1,840 during the years ended June 30, 2004 and 2003,
respectively.
Revenue Recognition - Revenue from sales to distributors and resellers is
recognized when the related products are shipped.
Advertising and Promotional Costs - Advertising and promotion costs are
expensed as incurred. During fiscal years ended June 30, 2004 and 2003,
advertising and promotion costs totaled $451 and $11,237, respectively.
Income Taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards (SFAS) 109. Under the asset and liability
method of SFAS 109, deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory rates
applicable to future years to the difference between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities.
Basic and Diluted Net Loss Per Share - Net loss per share is calculated in
accordance with Statement of Financial Accounting Standards 128, Earnings
Per Share ("SFAS 128"). Basic net loss per share is based upon the weighted
average number of common shares outstanding. Diluted net loss per share is
based on the assumption that all dilutive convertible shares and stock
options were converted or exercised. Dilution is computed by applying the
treasury stock method. Under this method, options and warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance,
if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period.
-F7-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Statement of Cash Flows - For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments purchased with an
initial maturity of three months or less to be cash equivalents.
2. INVENTORIES
Inventories consist exclusively of raw materials because of the
transitional state of the Company at June 30, 2004.
3. NOTES PAYABLE
Notes payable consist of various small unsecured notes to stockholders
at rates fluctuating up to 8%. Management has not accrued any interest
since it intends to restructure its debt.
4. DISTRIBUTION RIGHTS
During the year ended June 30, 2004, the Company cancelled the
distribution rights on 1,000,000 shares of common stock. The rights had
been valued at $.04 per share. The effect of this cancellation resulted in
a decrease of $40,000 to the Company's stockholders' equity.
5. LEASE COMMITMENT
The Company entered into a one year lease expiring May 31, 2005 for
11,000 square feet of office and warehouse space for $576 per month. The
Company is responsible for insuring the premises. Rent expense was
approximately $8,800 and $8,000 for the years ended June 30, 2004 and 2003,
respectively.
-F8-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
6. BASIC AND DILUTED LOSS PER SHARE
The following table illustrates the reconciliation of the numerators
and denominators of the basic loss per share computations. The Company has
no potentially dilutive securities, options, warrants or other rights
outstanding.
Year Ended June 30,
-------------------
2004 2003
------------- -------------
Basic and diluted loss per share:
Numerator:
Net loss $ (138,771) $ (333,060)
------------- -------------
Denominator:
Basic and diluted weighted average
number of common shares outstanding
during the period 27,898,092 26,931,373
------------- -------------
Basic and diluted loss per share $ (0.005) $ (0.012)
============= =============
7. INCOME TAXES
The Company recognizes deferred tax assets and liabilities for
temporary differences between the financial reporting and tax bases of its
assets and liabilities. Deferred assets are reduced by a valuation
allowance when deemed appropriate.
The tax effects of existing temporary differences that give rise to
significant portions of deferred tax assets at June 30, 2004 are as
follows:
Deferred tax asset
Net operating loss carryforwards $ 642,900
Valuation allowance (642,900)
----------
Net deferred tax asset $ -
==========
At June 30, 2004, the Company has a net operating loss carryforwards
for Federal tax purposes of approximately $1,714,000 which, if unused to
offset future taxable income, will expire in years beginning in 2018.
8. RELATED PARTY TRANSACTIONS AND FORGIVENESS OF
INDEBTEDNESS
On June 15, 2004, Stan and Rita Paulus resigned as officers of the
Company and were replaced by a new management team. As part of the
transition in management, several transactions occurred which are
identified below.
-F9-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
8. RELATED PARTY TRANSACTIONS AND FORGIVENESS OF INDEBTEDNESS (CONTINUED)
The Paulus' agreed to waive certain unpaid compensation ($189,819)
from the Company except for $100,000, which shall be paid in full within
two years of the transition date.
The Paulus' purchased from the Company the inventory known as
"technical books" for $150,000 in exchange for 4,859,187 shares of Pacific
Sands, Inc. common stock. Based on the average market value of the
Company's stock, which valued these shares at $121,480, there is an
additional write down of the inventory of $28,520. This amount is recorded
as a reduction to additional paid in capital based on the related party
nature of the transaction. Since the shares were held in escrow by legal
counsel at June 30, 2004, the value of the shares has been recorded as due
from shareholder as of the balance sheet date. In addition, restricted
common stock was sold to new shareholders, the proceeds were deposited into
this escrow fund and certain obligations of the Company were satisfied from
these funds. As of June 30, 2004, the cash in escrow totaled $ 19,550.
The new management team has reviewed the aged outstanding trade
payables and trade receivables and concluded that $36,044 of net trade
payables are extinguished.
9. CONTINGENCIES
The Company was involved in a lawsuit with a supplier for non-payment
of invoices. This matter concerned what the Company believed were
deficiencies in the work of the supplier. The parties entered into a
settlement agreement, wherein the supplier would perform repairs to their
work and then the Company would pay. Since no action has been performed by
the supplier and since the repairs can no longer be made, management has
concluded to extinguish the debt.
Accounts receivable from a major customer in the amount of $235,718
invoiced on October 25, 2001 and January 17, 2002 is being contested for
compliance requirements. The customer maintained that certain equipment did
not work properly, while management contests that the equipment was built
to customer specifications. Accordingly, management intends to vigorously
pursue the outstanding receivable. Since counsel suggests that this amount
cannot be collected without incurring some legal costs and since there is
the potential that a settlement could ultimately be reached, an allowance
for bad debts of $176,223 has been recorded.
10. CONCENTRATIONS
The Company distributes water treatment and nontoxic cleaning products
to the entire U.S. market. One customer represented over 90% of the
accounts receivable at June 30, 2004, however the Company no longer sells
to this customer. No single customer or supplier accounts for greater than
ten percent (10%) of the Company's sales or purchases.
-F10-
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
11. GOING CONCERN
The accompanying financial statements have been presented assuming
that the Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company's assets and the satisfaction of
its liabilities in the normal course of business. Through June 30, 2004,
the Company had incurred cumulative losses of $2,558,212. The Company's
successful transition to attaining profitable operations is dependent upon
obtaining financing adequate to fulfill its development, marketing, and
sales activities, and achieving a level of revenues adequate to support the
Company's cost structure. Management's plan of operations anticipates that
the cash requirements of the Company for the next twelve months will be met
by obtaining capital contributions through the sale of common stock and
from current operations. However, there is no assurance that the Company
will be able to fully implement its plan in order to generate the funds
needed on a going concern basis.
12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the quarterly results of operations for
the years ended June 30, 2004 and 2003:
Quarter ended
-------------------------------------------------------------
September 30, December 31, March 31, June 30,
2002 2002 2003 2003
-------------- ------------- ------------ -------------
Net sales $ 19,641 $ 13,414 $ 12,076 $ 16,123
Gross profit 11,784 8,049 7,246 12,777
Net earnings (loss) (181,288) (37,290) (42,390) (72,092)
Net earnings (loss)
per share- basic
and diluted (0.009) (0.001) (0.001) (0.003)
Weighted average
basic and diluted
shares 19,648,873 26,931,373 28,698,873 28,748,873
Quarter ended
-------------------------------------------------------------
September 30, December 31, March 31, June 30,
2003 2003 2004 2004
-------------- ------------- ------------ -------------
Net sales $ 14,348 $ 10,681 $ 14,595 $ 22,079
Gross profit 10,085 10,406 11,676 17,924
Net earnings (loss) (23,585) (26,950) (116,092) 27,856
Net earnings (loss)
per share- basic
and diluted (0.001) (0.001) (0.004) 0.001
Weighted average
basic and diluted
shares 28,192,047 27,789,873 27,789,873 27,817,346
-F11-
EXHIBIT 31
CERTIFICATION
I, Michael Wynhoff, certify that:
1. I have reviewed this annual report on Form 10-KSB of Pacific Sands, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly presents in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"), and;
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and controls and procedures based on our evaluation
as of the Evaluation Date:
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and to the audit committee
of Registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and,
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls;
and,
-17-
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of or most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 11, 2004
/s/ Michael Wynhoff
- ------------------------------------
Michael Wynhoff, Chief Executive Officer
EXHIBIT 31
CERTIFICATION
I, Michael Michie, certify that:
1. I have reviewed this annual report on Form 10-KSB of Pacific Sands, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly presents in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"), and;
-18-
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and controls and procedures based on our evaluation
as of the Evaluation Date:
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and to the audit committee
of Registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and,
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls;
and,
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of or most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 11, 2004
/s/ Michael Michie
- ------------------------------------
Michael Michie, CFO
-19-
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the June 30, 2004 Annual Report of Pacific Sands, Inc. (the
"Registrant") on Form 10-KSB for the period ended June 30, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Michael Wynhoff, Chief Executive Officer of the Registrant, certify, in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that based on my knowledge:
(i) the Report, to which this certification is attached as an exhibit,
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m); and,
(ii) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.
Dated: October 11, 2004 /s/ Michael Wynhoff
Michael Wynhoff
Chief Executive Officer
-20-
EXHIBIT 7
FRANK L. SASSETTI & CO.
Certified Public Accountants
6611 W. North Ave
Oak Park, Ill 60302
Pacific Sands
1509 Rapids Drive
Racine, WI 53404
Attn: Audit committee
October 8, 2004
Gentlemen:
This letter is to inform you that we do not intend to rely on the
report of the predecessor auditor for the year ended June 30, 2003 as his
independence may have been impaired. In addition we will issue review reports
for the quarters ended September 30, 2003, December 31, 2003 and March 31, 2004
since the predecessor auditor's license with the PCAOB lapsed in October 2003.
Sincerely,
/s/Frank L. Sassetti & Co.
Frank L. Sassetti & Co.
-21-
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