1/17/2006
NOTE: If you are a Pacific Sands shareholder and do not receive a copy of this letter and an investor kit within the week, it may be an indication that your broker is not reporting you as a shareholder. You may request an investor kit and sign up for our newsletter by sending an e-mail to: mick@pacificsandsinc.com
Dear Pacific Sands Friends, Investors and Customers,
Pacific Sands management believes that we will look back on 2005 as the year that the company emerged from being just another minor player to becoming a true competitor in the $13 billion pool and spa industry.
Over the course of 2005 we completely repackaged our ecoONE® pool and spa line and added industry-unique, innovative products like our ecoONE® Spa Pre-Filter. We then implemented an aggressive “demand side” marketing campaign that included Internet advertising, strategic search engine and media placement, and ads in eco-friendly consumer magazines such as “Natural Home and Garden.” 
In the last quarter of 2005, we began targeting pool and spa professionals, manufacturers and dealers with mailings of over 20,000 product postcards, ads in industry trade publications like “Pool and Spa News,” and a greatly expanded presence at the 2005 Pool and Spa Expo in Orlando, Florida.
The execution of our marketing campaign has led to a substantially broader user base which we have been able to successfully leverage into nearly 100 new retail outlets. We are now leveraging our expanding dealer base into an ever-widening distribution base. Our products are now being distributed by major industry players like California Specialty Distributors (www.csdonline.biz), Custom Distribution, Inc., Spa Parts Plus (www.spapartsplus.com), and a number of SCP Pool (NASDAQ: POOL) distribution outlets. Our two primary distribution outlets in Canada, Healthy Pool and Spa (www.healthypoolandspa.ca) in the West and ecoONE® Canada in the East, are implementing marketing campaigns including print, radio, television and direct marketing and are experiencing a rapidly expanding user base and dealer portfolio.
Perhaps the most significant development in 2005 was the initiation of an OEM re-label arrangement with one of the nation's leading spa manufacturers. We've developed a custom product specifically designed for their spas which will be included in new spas sold in the 2006 model year.
Pacific Sands is currently in varying stages of negotiations with numerous additional spa manufacturers who have expressed interest in distributing ecoONE® products with their spas. Providing the first system that a customer uses with their new spa is a remarkable competitive advantage for ecoONE®. Given ecoONE®'s estimated 80% customer retention rate, our marketing alliances with spa manufacturers have the potential to add literally 10's of thousands of new ecoONE® customers in the coming year.
This year we are already averaging roughly one new dealer every working day. This compares quite favorably to the one or two a month we were averaging before the product re-branding and marketing campaigns of 2005. Management believes that the company will add a minimum of 200 new ecoONE® outlets in 2006 with the majority of them carrying the entire product line by the end of the year.
As we anticipated in the management discussion of our 10-KSB, due to the seasonal nature of the pool and spa business, revenues did concentrate in the January – June quarters. Marketing monies that were spent in the fall and winter of 2004 paid off with sharp revenue spikes in January through late June of 2005. We expect a similar pattern in 2006, with the marketing and advertising efforts of late 2005 showing significant returns in the upcoming months.
Pacific Sands will add a considerable number of products to its portfolio this year including a complete kit of nontoxic, earth and health-friendly household cleaning products. We believe that the addition of these products will substantially offset the seasonal nature of the pool and spa industry and allow our quarter by quarter growth to continue on a sequential, not just annual basis.
Another major highlight of 2005 was the addition of Dr. Jack Hagarty, former Senior Product Research Chemist at SC Johnson and Sons to the Pacific Sands staff. Dr. Hagarty's years of experience in new product development will prove invaluable as the company moves forward with the introduction of multiple new product lines. His first addition to our portfolio is a new window and glass cleaner that has the added benefit of being naturally anti-bacterial without the use of an active pesticide. Testing among local cleaning professionals has generated universal praise including the hopefully prophetic, “It's way better than Windex.*” We look forward to a continuing stream of “way better than” product coming from Dr. Hagarty's lab.
In conclusion, I would like to point out that Pacific Sands management publicly set forth a series of very aggressive goals for 2005 and demonstrably accomplished the vast majority of those goals. Most importantly, we accomplished those goals without any substantial dilution of our shareholder's equity. It is our policy to continue our responsible and conservative approach to the capital structure of your company. We believe that we have a partnership trust with our investors and will continue to work diligently to maintain that trust.
Warm regards for a nontoxic and profitable 2006,
Michael L. Wynhoff
President/Chief Executive Officer
Pacific Sands , Inc.
Pacific Sands, Inc. develops, manufactures and markets environmentally safe, nontoxic cleaning, and water treatment solutions for industrial and consumer products. For more about the company, visit www.PacificSands.biz
NASD OTCBB: PFSD
(as of 1/6/2006)
Shares Outstanding: 30,364,564
Approximate Float: 16,000,000
52 Week High: .30
52 Week Low: .063
EPS: (.01)
Fiscal Year 2005 Revenues (ending June 30, 2005): $219,573
Calender 2005 Revenues: Approximately: $310,000 (unaudited)
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.
*Windex is a registered trademark of SC Johnson and Son.
Save BIG on algae-free pool for next spring: www.ecoONE.biz Coupon Code: CSRFB
