Pacific Sands, Inc. Form 10-QSB March 31, 2007

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

 
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

 
[    ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________
 
Commission FIle Number:  000-29483

Pacific Sands, Inc.
(Exact name of small business issuer as specified in its charter)
 
Nevada
88-0322882
State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

1509 Rapids Drive, Racine, WI 53404
(Address of principal executive offices)

(262) 619-3261
(Issuer's telephone number)

 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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.

Yes     X      No ____
 
As of May 21, 2007, the Company had 34,319,124.000 shares outstanding of its $.001 par value common stock.


Transitional Small Business Disclosure Format (check one):

Yes  ____   No    X   




 
 
Table of Contents


PART I   FINANCIAL INFORMATION
     
Item 1.
Financial Statements
3
     
 
Report of Independent Registered Public Accounting Firm
3
     
 
Condensed Balance Sheets as of March 31, 2007 (unaudited) and June 30, 2006 (audited)
4
     
 
Condensed Statements of Operations for the Three and Nine Months Ended March 31, 2007 and 2006 (unaudited)
5
     
 
Condensed Statements of Stockholders' Equity Nine Months Ended March 31, 2007 and 2006 (unaudited)
6
     
 
Condensed Statements of Cash Flows for the Nine Months Ended March 31, 2007 and 2006 (unaudited)
7
     
 
Notes to Condensed Financial Statements (unaudited)
8
     
Item 2.
Management's Discussion and Analysis or Plan of Operation
16
     
Item 3.
Quantitative and Qualitative Disclosers About Market Risk
19
     
Item 4.
Controls and Procedures
19
     
PART II   OTHER INFORMATION
     
Item 1.
Legal Proceedings
21
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
21
     
Item 3.
Defaults Upon Senior Securities
21
     
Item 4.
Submission of Matters to a Vote of Security Holders
21
     
Item 5.
Other Information
21
     
Item 6.
Exhibits
21
     
Signatures
22


 
2
 
Item 1
Financial Information
 
Frank L. Sassetti & Co.
Certified Public Accountants

The Board of Directors
Pacific Sands, Inc.

We have reviewed the balance sheet of PACIFIC SANDS, INC. as of March 31, 2007 and the related statements of operations for the nine months ended March 31, 2007 and 2006, and the statements of stockholders' equity and cash flows for the nine months ended March 31, 2007 and 2006. These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquires of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews we are not aware of any material modifications that should be made to the financial statements referred to above for them to be 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 15 to the financial statements, the Company has a significant accumulated deficit which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 15. The financial statements do not include any adjustments that might result from the outcome of this uncertainly.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the balance sheet of PACIFIC SANDS, INC. as of June 30, 2006 and the related statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated September 12, 2006, we expressed an unqualified opinion on these financial statements. In our opinion, the information set forth in the accompanying balance sheet as of June 30, 2006 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Frank L. Sassetti & Co

May 21, 2007
Oak Park, Illinois

 
 
 
 
611 W. North Avenue * Oak Park, Illinois 60302 * Phone (708)386-1433 * Fax (708) 386-0139

 
3
 
PACIFIC SANDS, INC.

BALANCE SHEETS

MARCH 31, 2007 AND JUNE 30, 2006

ASSETS
  
   
March 31,
 
June 30,
  
   
2007
  
2006
  
   
(A Review)
  
 
  
CURRENT ASSETS
              
Cash and cash equivalents
 
$
16,080
  
$
4,977
  
Trade receivables, net of allowances for doubtful accounts
    
67,674
   
112,587
 
Due from shareholder
    
500
       
Inventories
    
57,419
   
77,069
 
Prepaid expenses
    
8,039
   
7,212
 
Total Current Assets
    
149,712
   
201,845
 
               
PROPERTY AND EQUIPMENT
              
Furniture and fixtures & office equipment
    
24,031
   
10,238
 
Manufacturing equipment
    
12,204
   
12,204
 
Leasehold improvements
    
3,035
   
3,035
 
Deposit on software costs
    
15,277
   
20,269
 
 
    
54,547
   
45,746
 
Less accumulated depreciation
    
13,273
   
6,940
 
Property and Equipment, net
    
41,274
   
38,806
 
               
OTHER ASSETS
              
Accounts receivable - other (net of allowance for doubtful accounts of $ 235,718)
    
-
   
-
 
Note Receivable
    
6,590
    
-
 
Security deposits
    
841
   
841
 
Total Other Assets
    
7,431
   
841
 
Total Assets
  
$
198,417
  
$
241,492
  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
CURRENT LIABILITIES
              
Accounts payable
  
$
80,409
  
$
99,795
  
Current maturities of long-term debt
    
18,215
    
9,877
 
Accrued expenses
    
98,767
   
59,691
 
Deferred compensation
    
264,280
   
227,934
 
Notes payable - other
    
51,329
   
61,177
 
Total Current Liabilities
    
513,000
    
458,474
 
               
LONG TERM LIABILITIES
              
Capital leases, less current portion
    
13,440
    
22,609
 
Total Long Term Liabilities
    
13,440
    
22,609
 
               
STOCKHOLDERS' EQUITY
              
Common stock
    
40,878
   
38,345
 
Additional paid in capital
    
3,508,090
   
3,041,947
 
Treasury stock, at cost
    
(132,030
)
  
(151,030
)
Accumulated deficit
    
(3,744,961
)
  
(3,168,853
)
Total Stockholders' Deficit
    
(328,023
)
  
(239,591
)
Total Liabilities and Stockholders' Deficit
  
$
198,417
  
$
241,492
  

The accompanying notes are an integral part of the financial statements.


4
 
PACIFIC SANDS, INC.
 
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED MARCH 31, 2007 AND 2006


   
 Three months ended
 
Nine months ended
  
   
 March 31,
 
March 31,
 
   
 2007
  
2006
  
2007
  
2006
  
   
 (A Review)
  
(A Review)
  
(A Review)
  
(A Review)
  
                    
NET SALES
  
$
151,486
  
$
136,805
  
$
377,612
  
$
267,387
  
COST OF SALES
    
69,074
    
57,606
    
175,797
    
117,606
  
GROSS PROFIT
    
82,412
    
79,199
    
201,815
    
149,781
  
                           
OPERATING EXPENSES
                          
Selling and administrative expenses
    
194,318
    
188,229
    
554,898
    
490,638
  
Stock based compensation for board of directors
    
8,000
          
51,160
        
Stock based compensation related to options
          
-
    
134,211
    
-
  
Total operating expenses
    
202,318
    
188,229
    
740,269
    
490,638
  
LOSS FROM OPERATIONS
    
(119,906
)
  
(109,030
)
  
(538,454
)
  
(340,857
)
                           
OTHER INCOME (EXPENSES)
                          
Interest expense
    
(13,118
)
  
(2,434
)
  
(37,828
)
  
(5,138
)
Loss on disposal of assets
    
-
          
-
    
(2,680
)
Miscellaneous income
    
171
    
16
    
174
    
31
  
Total Other Income (Expenses)
    
(12,947
)
  
(2,418
)
  
(37,654
)
  
(7,787
)
LOSS BEFORE INCOME TAXES
    
(132,853
)
  
(111,448
)
  
(576,108
)
  
(348,644
)
                           
INCOME TAXES
    
-
    
-
    
-
    
-
  
NET LOSS
  
$
(132,853
)
$
(111,448
)
$
(576,108
)
$
(348,644
)
                           
BASIC AND DILUTED NET LOSS PER SHARE
  
$
(0.003
)
$
(0.004
)
$
(0.015
)
$
(0.012
)
                           
BASIC AND DILUTED WEIGHTED AVERAGE SHARES
    
40,553,922
    
30,537,094
    
39,688,438
    
30,018,273
  

 
 
 
 
 
 
 
The accompanying notes are an integral part of the financial statements.

5
 
PACIFIC SANDS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 2007 AND 2006

   
Common Stock
                      
   
Par value - $.001
                      
   
50,000,000 shares authorized
      
Treasury Stock
          
           
Additional Paid
  
Number of
      
Accumulated
  
 
  
   
Shares
  
Amount
  
In Capital
  
Shares
  
Amount
  
Deficit
  
Total
  
                               
Balance at June 30, 2005
   
36,844,298
  
$
36,844
  
$
2,879,170
    
(7,559,187
)
$
(151,030
)
$
(2,858,642
)
$
(93,658
)
                                             
Issuance of Common Stock:
                                            
For Cash
    
636,673
    
637
    
67,835
                      
68,472
  
For Options Exercised
    
-
    
-
    
-
                      
-
  
For Cancellation of Debt
                                        
-
  
For Professional services
    
656,072
    
656
    
50,749
                      
51,405
  
For Salaries
    
60,000
    
60
    
15,251
                      
15,311
  
                                             
Net loss
                                 
(348,644
)
  
(348,644
)
                                             
Balance at March 31, 2006
    
38,197,043
  
$
38,197
  
$
3,013,005
    
(7,559,187
)
$
(151,030
)
$
(3,207,286
)
$
(307,114
)
                                             
Balance at June 30, 2006
   
38,344,760
  
$
38,345
  
$
3,041,947
    
(7,559,187
)
$
(151,030
)
$
(3,168,853
)
$
(239,591
)
                                             
Issuance of Common Stock:
                                            
For Cash
    
550,000
    
550
    
55,350
                      
55,900
  
For Professional Services
    
785,141
    
885
    
90,987
                      
91,872
  
In Lieu of Interest Payment
    
187,098
    
187
    
14,523
                      
14,710
  
For Cancellation of Debt
    
375,200
    
375
    
38,432
                      
38,807
  
For Salaries
    
486,112
    
486
    
51,690
                      
52,176
  
                                             
Issuance of Treasury Stock:
                                            
For Cash
                
68,000
    
850,000
    
17,000
          
85,000
  
                                             
Exercised Stock options
    
50,000
    
50
    
12,950
    
100,000
    
2,000
          
15,000
  
                                             
Stock based compensation related to options
                
134,211
                      
134,211
  
                                             
Net loss
                                 
(576,108
)
  
(576,108
)
                                             
Balance at March 31, 2007
    
40,778,311
  
$
40,878
  
$
3,508,090
    
(6,609,187
)
$
(132,030
)
$
(3,744,961
)
$
(328,023
)

 
 
 
 
 
 
 
The accompanying notes are an integral part of the financial statements.
6
 
PACIFIC SANDS, INC.

STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 2007 AND 2006

   
 2007
  
2006
  
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  
$
(576,108
)
$
(348,644
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities -
              
Depreciation
    
6,333
    
4,726
  
Loss on disposal of equipment
    
-
    
2,680
  
Deferred compensation
    
36,346
    
79,488
  
Compensation expense on stock options granted
    
134,211
    
-
  
Common shares and rights issued for services and compensation
    
158,758
    
66,714
  
Due from shareholder
    
(500
)
      
Changes in assets and liabilities -
             
Trade accounts receivable
    
44,913
    
(30,781
)
Inventories
    
19,650
    
(14,074
)
Prepaid expenses
    
(827
)
  
4,683
  
Note receivables
    
(6,590
)
  
59,496
  
Accounts payable and other current liabilities
    
19,690
    
87,990
  
Net Cash Used in Operating Activities
    
(164,124
)
  
(87,722
)
               
CASH FLOWS FROM INVESTING ACTIVITIES
              
Purchases of equipment
    
(8,801
)
  
(2,704
)
Net Cash Used in Investing Activities
   
(8,801
)
  
(2,704
)
               
CASH FLOWS FROM FINANCING ACTIVITIES
              
Issuance of common stock
    
10,900
    
68,472
  
Issuance of treasury stock
    
125,000
        
Issuance of notes payable
    
71,809
    
75,341
  
Exercised stock options
    
20,000
        
Repayment of notes payable
    
(43,681
)
  
(49,586
)
Net Cash Provided by Financing Activities
    
184,028
    
94,227
  
               
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
11,103
    
3,801
  
CASH AND CASH EQUIVALENTS
              
Beginning of period
    
4,977
    
541
  
End of period
  
$
16,080
  
$
4,342
  
               
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
              
Cash paid during the period for
              
Interest
  
$
24,710
  
$
8,769
  
Income taxes
 
$
-
  
$
-
  
               
SUPPLEMENTAL INFORMATION FROM NONCASH FINANCING ACTIVITIES
              
Conversion of debt to equity
  
$
38,807
        
Capital Lease Obligations
  
$
6,368
  
$
11,181
  
 

 
The accompanying notes are an integral part of the financial statements.
 
7
 
PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006
(A Review)

1.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Pacific Sands, Inc. with the right to do 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.

Interim Financial Statements - The balance sheet as of March 31, 2007 and the statements of operations for the three and nine months ended March 31, 2007 and 2006 and the statements of stockholders' equity and cash flows for the nine months ended March 31, 2007 and 2006, are unaudited. In the opinion of management, such financial statements reflect all adjustments, which were of a normal and recurring nature, necessary for a fair presentation of financial position as of March 31, 2007 and the results of operations and cash flows for the nine months ended March 31, 2007 and 2006.

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 two to seven years primarily using the straight-line method. Depreciation charges totaled $6,332 and $4,726 during the nine months ended March 31, 2007 and 2006, 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 the nine months ended March 31, 2007 and 2006, advertising and promotion costs totaled $20,630 and $36,041, 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.


8
 
PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006

1.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Accounts Receivable - The Company makes judgments as to the collectibility of trade and other accounts receivable based on historic trends and future expectations. Management estimates an allowance for doubtful receivables, which reflects its current assessment of the collectibility of the receivables. Management believes that the current specific and general receivable reserves aggregating $243,615 is adequate as of March 31, 2007.

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.

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 as of March 31, 2007 and June 30, 2006 consisted of the following.

   
March 31, 2007
  
June 30, 2006
  
           
Raw materials
  
$
48,814
  
$
49,364
  
               
Finished goods
    
8,605
   
27,705
 
               
   
$
57,419
  
$
77,069
  


9
 
PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006

3.
LONG TERM OBLIGATIONS

Long term obligations consists of a four year lease agreement for software dated June 20, 2005 with an imputed interest rate of 14.45%, a two year lease agreement for computer hardware with an imputed interest rate of 22.94% placed in service in December, 2005, a three year lease for computer hardware with an imputed interest rate of 21.62%, placed in service in August, 2005, a three and a half year lease agreement for software dated January 6, 2006 with an imputed interest rate of 12.64% and a two year computer lease with an imputed interest rate of 22.81%, placed in service in September, 2006. Monthly installment payments are $691, $67, $93, $312 and $59, respectively with a bargain purchase option at the end of each lease of $1. The transactions have been accounted for as capital leases in accordance with generally accepted accounting principles.

The Company received a line of credit from Dell Financial Services for $15,000 with an imputed interest rate of 27.24% for any outstanding balance. As of March 31, 2007 the company owes $5,750 with a monthly payment of $144 for accounting and e-commerce servers placed in service in March 2007.

The scheduled maturities are as follows for the years ending March 31,

2008
  
$
18,215
  
2009
    
8,533
  
2010
    
4,907
  

4.
NOTES PAYABLE - OTHER

Notes payable - other consist of various small unsecured notes to stockholders/officers at rates fluctuating up to 10%. Management intends to restructure its debt. As of March 31, 2007, $14,710 in interest has been converted to equity.


5.
STOCKHOLDERS' EQUITY

On December 22, 2006, under private placement agreements, the Company issued 850,000 shares of treasury stock for $85,000. In addition to these shares the Company issued 625,000 options to these investors at $.10 that expire on May 31, 2007, which are callable by the Company after February 1, 2007 and 625,000 options at $.15 that expire on June 30, 2007, which are callable by the Company after May 1, 2007. Of the 625,000 options that were issued at $.10, 150,000 were exercised and 475,000 were called by the Company as of March 31, 2007. None of the $.15 options were exercised. The remaining 625,000, $.15 options are outstanding as of March 31, 2007. Through May 21, 2007, these options have not been called by the Company.



10

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006

6.
STOCK-BASED COMPENSATION

The Company currently records stock based compensation under SFAS 123 ("SFAS 123R"), "Share-Based Payment", that focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions utilizing the modified perspective method. This statement replaces SFAS 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123R requires companies to expense the fair value of employee stock options and similar awards.

During the quarter ended September 30, 2006, the Company modified 3,000,000 options that were set to expire on July 5, 2006 by reissuing for one year with no vesting period at the same price. On September 28, 2006 these 3,000,000 vested options were surrendered and reissued for four years with no vesting period and exercise prices as follows; 2,000,000 shares at $.16 and 1,000,000 shares at $1.00.

The fair value of each option award is estimated on the date of grant using the standard Black-Scholes-Merton model and modified using calculations based on likely "expected term" rather than "contractual term" additionally modified by historic likelihood that the participants will exercise the options based on previous exercise behavior. The Historic volatility was calculated using weekly price observations for the expected term of the options. Expected Term was calculated using the formula (vesting term plus original contractual term divided by two). The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury constant maturity for one year at July 3, 2006 and the difference between three and five years at September 28, 2006.

   
July 3, 2006
  
September 28, 2006
         
Weighted average volatility
  
116%
  
161%
Expected dividends
  
0%
  
0%
Expected term (in years)
  
1
  
2
Risk free rate
  
5.260%
  
4.585%

A summary of option activity as of March 31, 2007 and changes during the year then ended is presented below:

       
Price per share
   
Shares
  
Range
  
Weighted Average
             
Balance, June 30, 2006
  
3,000,000
  
 $.03 - $.10  
 
$0.053
Granted /modified
  
6,000,000
  
 $.03 - $1.00
  
$0.247
Exercised
            
Cancelled
  
(3,000,000)
  
$.03 - $.10 
 
$0.053
Expired
  
(3,000,000)
  
$.03 - $.10 
 
$0.053
             
Outstanding at March 31, 2007
  
3,000,000
  
 $.16 - $1.00
  
$0.440


11

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006

7.
LEASE COMMITMENT

The Company entered into a one and a half year lease expiring July 31, 2007 for 11,000 square feet of office and warehouse space for $1,987 per month which then increased to $2,049 in February, 2007. The Company is responsible for insuring the premises. Rent expense was approximately $18,006 and $16,994 for the nine months ended March 31, 2007 and 2006 respectively.


8.
BASIC AND DILUTED LOSS PER SHARE

The following table illustrates the reconciliation of the numerators and denominators of the basic and diluted loss per share computations.

   
Nine months ending
March 31,
  
   
2007
  
2006
  
Basic and diluted loss per share:
              
Numerator:
              
Net loss
  
$
(576,108
)
$
(348,644
)
               
Denominator:
              
Basic and diluted weighted average number of common shares outstanding during the period
    
39,688,436
    
30,018,273
  
               
Basic and diluted loss per share
  
$
0.015
 
$
(0.012
)

Since the Company has incurred losses from all periods presented, the dilutive per share calculation is the same as the basic calculation.

9.
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 March 31, 2007 are as follows:

Deferred tax asset
      
       
Net operating loss carryforwards
  
$
850,000
  
         
Valuation allowance
    
(850,000
)
         
Net deferred tax asset
  
$
-
  

At March 31, 2007 the Company has net operating loss carryforwards for Federal tax purposes of approximately $2,428,000 which, if unused to offset future taxable income, will expire in years beginning in 2018.


12

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006

10.
RELATED PARTY TRANSACTIONS AND FORGIVENESS OF DEBT

On June 15, 2004, Stan and Rita Paulus resigned as officers and board members of the Company and were replaced by a new management team. As part of the transition in management, several transactions occurred which are all recorded below.

Stan and Rita agreed to waive all unpaid compensation from the Company except for $100,000, which shall be paid in full within three years of the transition date.

The Paulus' purchased from the Company the inventory known as "technical books" for the sum of $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 was an additional write down of the inventory of $28,500. This amount was recorded as a reduction to additional paid in capital based on the related party nature of the transaction. Since the shares were still being held in escrow by legal counsel at June 30, 2004, the transaction was recorded as due from shareholder. As of June 30, 2006, the shares had been returned to treasury.
 
On June 14, 2006, one day prior to the due date of the unpaid compensation to the Paulus' of $100,000, the Company and the Paulus' agreed to extend the payment until January, 2007 with monthly payments of $25,000 beginning in October, 2006. In addition, there was a $5,000 note payable rolled into the monthly payment plan due January, 2007. In July, 2006 100,000 shares of restricted stock were issued as in exchange for extending the payment. The value of the shares was $6,000 and is included in interest expense for the six month period ended December 31, 2006

Subsequent to December 31, 2006, management has decided to commence negotiation with the Paulus' to reduce or eliminate the debt. Current management cites certain nonperformance issues on the part of the Paulus' at the time that they were officers and board members of the Company.

Additonally, two of the current officers of the company have agreed to defer a substantial portion of their salaries until such time as it may be paid. As of March 31, 2007, the deferred compensation for these two officers was $ 156,470. Prior to accepting the position as an officer of the company, one of the current officers agreed to defer $11,500 of his professional consulting services which is still unpaid as of March 31, 2007. The deferred compensation charges to operations for the nine months ended March 31, 2007 and 2006 was $36,346 and $79,488, respectively.

Finally, a relative of the CFO, received 25,000 shares of stock, with a value of $2,500, for consulting services provided to the Company during the quarter ended September 30, 2006. This tranaction is believed to be at arm's length and is not significant to the financial position or results of operations of the Company.


13

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 2007 AND 2006 AND JUNE 30, 2006

11.
RECENT PRONOUNCEMENTS

In September 2006, the FASB issued Statement of Financial Accounting Standards No 157, "Fair Value Measurements". This statement defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. The statement is effective in the fiscal first quarter of 2008 and the Company will adopt the statement at that time. The Company believes that the adoption of SFAS No 157 will not have a material effect on its results of operations, cash flows or financial position.
 
In June 2006, the FASB released FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," an interpretation of FASB Statement No. 109 ("FIN48").  Fin 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  A Company must determine wether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation procedures, based on the technical merits of the position.  Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statement.
 
This interpretation is effective for the fiscal years beginning after December 15, 2006.  Earlier application of the provisions of this interpretation is interim financial statement, in the period this interpretation is adopted.  The provisions of FIN 48 are not expected to have a material affect on the company's consolidated financial statements.
 
In March 2006, the FASB issued SFAS N. 156, "Accounting for Serviceing of Financial Assets." which provides an approach to simplify efforsts to obtain hedge-like (offset) accounting.  This Statement amends FASB SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," with respect to the accounting for separately recognized servicing assets and servicing liabilities.
 
The Statement (1) requires an entity to recognize a servicing asset of servicing liability each time it undertakes an obligation to service a financial assest by entering into a servicing contract in certian situations:  (2) requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable:  (3) permits an entity to choose either the amortization method or the fair value method for subsequent measurement for each class or separately recognized servicing assests or servicing liabilities:  (4) permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by an entity with recognized servicing rights, provided the securities reclassified offset the entity's exposure to changes in the fair value of the servicing assets or liabilities:  (5) requires separate presentation of servicint assest and servicing liabilities subsequently measured a fair value in the balance sheet and additional disclosure for all separately recognized servicing assets and servicing liabilities.
 
SFAS No. 156 is effective for all separately recognized servicing assets and liabilities as of the beginning of an entity's fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain circumstances.  The Statements also describes the manner in which it should be initially applied.  The provisions of the SFAS No. 156 are not expected to affect the Company's financial statements.

12.
DISPUTED PAYABLES WRITTEN OFF

During the fiscal year ended June 30, 2004, the Company accrued professional fees for services. During the fiscal year ended June 30, 2005, the Company threatened to sue the vendor for dispute of services performed if they pursued this debt and after sending repeated letters to resolve the matter and not having any response for over two years, management has decided to write off the disputed amount and has reflected this in the quarter ended June 30, 2006 statement of operations.

13.
CONTINGENCIES

Accounts receivable from a major former customer, Mariani Raisin Company in the amount of $235,718 invoiced on October 25, 2001 and January 17, 2002 are being contested for compliance requirements. The customer maintained that the equipment did not work properly, but management felt that this 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 that there is the potential that a settlement could ultimately not be reached, an allowance for bad debts of $235,718 exists. Bad debt expense in the amount of $62,226 was recorded in the statement of operations for the nine months ended March 31, 2006 related to this receivable.

The Company received notice on May 3, 2007 that a lawsuit had been filed against the Company in US District Court, Eastern District of California by the Company's former CEO, Stanley Paulus. The lawsuit demands payment of $105,000 plus penalties and legal fees for a note that was issued in June of 2006. The note was based on deferred salaries accrued for Mr. Paulus during his tenure as CEO of the Company. The Company has retained legal counsel in Fresno, California to vigorously dispute this matter and take whatever counter actions may be necessary in the best interest the Company.


14

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 AND JUNE 30, 2006


14.
CONCENTRATIONS

The Company distributes water treatment and nontoxic cleaning products to the entire U.S. market. For the nine months ended March 31, 2007, one customer accounted for approximately 20% of the Company's sales. For the nine months ended March 31, 2006, one customer accounted for approximately 16.7% of the Company's sales.

15.
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 March 31, 2007, the Company had incurred cumulative losses of $3,744,961. 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.















15

Item 2.
Management Discussion and Analysis of Financial Condition and Results of Operation

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN AS THEY ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS CONCERNING FUTURE EVENTS OR FUTURE PERFORMANCE OF THE COMPANY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH ARE ONLY PREDICTIONS AND SPEAK ONLY AS OF THE DATE HEREOF. FORWARD-LOOKING STATEMENTS USUALLY CONTAIN THE WORDS "ESTIMATE," "ANTICIPATE," "BELIEVE," "EXPECT," OR SIMILAR EXPRESSIONS, AND ARE SUBJECT TO NUMEROUS KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW VARIOUS RISKS AND UNCERTAINTIES IDENTIFIED BELOW, AS WELL AS THE MATTERS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON 10-KSB FOR THE YEAR ENDED JUNE 30, 2006 AND ITS OTHER SEC FILINGS. THESE RISKS AND UNCERTAINTIES COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR PUBLICLY ANNOUNCE REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR DEVELOPMENTS.
 
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" and ecoONE Marketing Group.
 
The Company develops, manufactures, markets and sells a range of non-toxic, environment friendly cleaning and water-treatment products based on proprietary blended botanical and nontoxic chemical technologies. The company's products have applications ranging from water installation maintenance (spas, swimming pools, fountains, decorative ponds) to cleaning (non-toxic household and industrial) and pet care.
 
The Company has a mature, actively marketed product line known as the ecoONE® Spa Treatment system as well as ecoONE® Pool conditioner and the Pacific Sands All-Purpose Hose Filter. Pacific Sands is also the master distributor for Rain Forest Blue, an EPA Registered chlorine and bromine free, non irritating, odor free, bactericide / algaecide alternative for the treatment of pool water.
 
Currently the Company markets and sells its product lines over the Internet and through numerous retail outlets in the US, Canada and Europe. The products are also sold via Pacific Sands distributors, manufacturer's representatives and internationally established pool and spa industry distribution networks.

The company's goal is to achieve sustained and significant profitability through revenues achieved by marketing and sale of its nontoxic, earth, health and kid-friendly, ecoONE® Pool, Spa, Household Cleaning and other product lines.

In July of 2004, management began the implementation of a three year market saturation strategy for the ecoONE® line of pool and spa products. The strategy has been very successful to date, resulting in sharp increases in sales, dealer and distributor outlets and industry recognition.

Management intends to continue the aggressive marketing and sale of its products through direct retail and a widening base of retail outlets, distribution centers and OEM arrangements in order to achieve its goals.

The company's ability to achieve its objectives is dependent on its ability to sustain and enhance its revenue stream and to continue to raise funds through loans, credit and the private placement of restricted securities until such time as the company achieves sustained fiscal profitability.

16


To date, the Company has funded operations through a combination of revenues from the sale of its products, established credit with vendors, and the sale of rule 144 stocks through private placement. The company's failure to continue to raise adequate financing to fund operations may jeopardize its existence. (See “Liquidity and Capital Resources”)

Management knows of no additional trends or uncertainties beyond those discussed that are reasonably likely to have a material impact on the company's short or long-term liquidity.

RESULTS OF OPERATIONS

Results for the three and nine months ending March 31, 2007 compared to the three and nine months ending March 31, 2006.

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 current quarter 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. (see - Stock Based Compensation)

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.

***************************


17

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's ability to achieve its objectives is dependent on its ability to sustain and enhance its revenue stream and to continue to raise funds through loans, credit and the private placement of restricted securities until such time as the company achieves profitability. To date, management has been successful in raising cash on an as-needed basis for the continued operations of the company. There is no guarantee that management will be able to continue to raise needed cash in this fashion.

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.


18

Item 3
Quantitative and Qualitative Disclosers About Market Risk

An investment in the common stock of the Company involves a high degree of risk. In addition to the other information in this report, the following risk factors should be considered carefully in evaluating the Company and its business. This Report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words "estimate," "anticipate," "believe," "plan," "expect," or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this report, including the matters set below and in the Company's other SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements. The Company undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.
 
THE COMPANY HAS EXPERIENCED LOSSES FROM OPERATIONS SINCE COMMENCING OPERATIONS:
With the exception of 4th quarter, 2006, the Company since commencing operations, has not been profitable on an annual or quarterly basis. The company cannot guarantee that recent quarterly profitability will continue on a quarter by quarter 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 a continuing and 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 adversely affected.

Item 4.
Controls and Procedures

(a) Evaluation of disclosure controls and procedures
 
We maintain disclosure controls and procedures designed to ensure that financial information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the required time periods, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding disclosure.


19

In connection with the completion of its audit of, and issuance of its report on, our financial statements for the year ended June 30, 2006, Frank L. Sassetti & Co. (“Sassetti”) considered our internal controls in order to determine their auditing procedures for the purpose of expressing their opinion on the financial statements and not to provide assurance on our internal controls. Sassetti identified deficiencies that existed in the design or operation of our internal controls over financial reporting that it considered to be “significant deficiencies” or “material weaknesses.” The Public Company Accounting Oversight Board (“PCAOB”) has defined “significant deficiency” as a control deficiency, or a combination of control deficiencies, that adversely affects the company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that the misstatement of the company’s annual or interim financial statements that is more than inconsequential will not be detected. The PCAOB has defined a “material weakness” as a “significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial will not be prevented or detected.”
 
During the first quarter ended September 30, 2005, we hired an outside accounting firm to assist in the timely reconciliation of general ledger accounts, and controls over property and equipment and debt documentation. However, significant deficiencies or material weaknesses in our internal controls related to segregation of incompatible duties and controls over inventory and equity transactions still exist. We have disclosed those significant deficiencies and material weaknesses to our Board of Directors. Additional effort will continue to work with our management and outside advisors with the goal to implement internal controls over financial reporting that are adequate and effective.
 
Because of inherent limitations of internal control, errors or fraud may nevertheless occur and not be detected. Also, projection of any evaluation of the internal control to future periods is subject to the risk that internal control may become inadequate because of changes in conditions or that the degree of compliance may deteriorate. Sassetti noted the following significant deficiencies that they believe to be material weaknesses: (i) Improve segregation of incompatible accounting department duties, (ii) Improve maintenance of accounting records by implementing the use of an accounting software system and (iii) Implement a Corporate Code of Conduct.
 
Based upon the above evaluation of Management, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are not yet effective, but the procedures are as effective as possible, considering the fact that there is a lack of segregation of duties which will continue until such time as the Company can support additional executive personnel to enhance segregation of duties.
 
(b) Changes in internal controls and procedures
 
There has been no change in our internal control over financial reporting during the third quarter ended March 31, 2007, that has materially affected, or is reasonably likely to material affect, our internal control over financial reporting.



20

PART II  OTHER INFORMATION

Item 1.
Legal Proceedings

There is a law suit filed against the Company by former CEO, Stanley Paulus for $105,000 plus attorney files and court costs, which was reported on Form 8-K, dated May 10, 2007.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

On January 10th, 2007, S. John May was issued 42,500 shares of restricted stock for professional services valued at $4,250.00.

On March 9th, 2007, Marc Paul Hujik was issued 42,500 shares of restricted stock for professional services valued at $4,250.00.

On March 9th, 2007, Andrew J. Barwicki was issued 70,000 shares of restricted stock for professional services valued at $7,000.00.

On March 9th, 2007, an accredited investor excersised option of 100,000 shares of Treasury stock for $10,000.

On March 9th, 2007, an accredited investor purchased 50,000 shares of restricted stock and excersised 50,000 options for $10,000.

On March 9th, 2007, The Sondra Blake Living Trust was issued 100,000 shares of restricted stock for professional services valued at $10,000.00.

On March 9th, 2007, John D. Hagarty was granted 20,000 shares of restricted stock as a stipend for BOD duties valued at 2,000.00

On March 9th, 2007, John D. Hagarty was issued 40,000 shares of restricted stock for professional services valued at $4,000.00.

On March 9th, 2007, Michael L. Wynhoff was granted 20,000 shares of restricted stock as a stipend for BOD duties valued at 2,000.00

On March 9th, 2007, Michael D. Michie was granted 20,000 shares of restricted stock as a stipend for BOD duties valued at 2,000.00

On March 9th, 2007, Mark R. Rauscher was granted 20,000 shares of restricted stock as a stipend for BOD duties valued at 2,000.00

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Submission of Matters to a Vote of Security Holders

No matters were submitted to the security holders for a vote during this quarter.

Item 5.
Other Information

 
Item 6.
Exhibits

 
31.1
CEO Certification

 
31.2
CFO Certification

 
32.1
CEO 906 Certification

 
32.2
CFO 906 Certification

Reference 8K issued on 5/10/07


21

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
PACIFIC SANDS, INC.
 
 
 
Dated: May 21, 2007 
By:
/s/ Michael Wynhoff                               
 
 
Michael Wynhoff
 
 
Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
Dated: May 21, 2007 
By:
/s/ Michael Michie                                 
 
 
Michael Michie
 
 
Chief Financial Officer
 
 
 


























22

Index of Exhibits
 
 
31.1
CEO Certification

 
31.2
CFO Certification

 
32.1
CEO 906 Certification

 
32.2
CFO 906 Certification



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23