UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000
Commission File Number 000-29483
Pacific Sands, Inc.
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(Name of Registrant)
Nevada 88-0322882
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(State of Incorporation) (I.R.S Employer
Identification No.
601 W Shaw Ave #D Clovis CA 93612
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(Address of principal executive offices) (Zip Code)
(559) 325-7023
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(Registrant's Telephone Number
Indicate by check mark whether registrant (1) has tiled all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that registrant was required
to file sucb report(s), and (2) has been subject to such filing requirements
for the past 90 days.
X Yes No
- ----
Number of shares outstanding; 14,650,931 Common Stock
PART 1- FINANCIAL INFORMATION
Item 1. Financial statements.
PACIFIC SANDS, INC.
DBA NATURAL WATER TECHNOLOGIES
FINANCIAL STATEMENTS
Nine Months Ended March 31, 2000
TABLE OF CONTENTS
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Page
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FINANCIAL STATEMENTS (Unaudited).:
Balance Sheets as of March 31. 2000 and June 30, 1999 F-1
Statements of Operations and Retained Earnings for the nine
months ended March 31, 2000 and 1999 F-2
Statements of Cash Flow, for the nine months ended
March 31, 2000 and 1999 F-3
Statement of Changes in Shareholders Equity F-4
Note, to Financial Statements F-6
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
PACIFIC SANDS. INC.
DBA, NATURAL WATER TECHNOLOGIES
BALANCE SHEET
March 31, 2000 June 30, 1999
(Unaudited) (note 1)
---------------- ---------------
ASSETS
- -------
<S> <C> <C>
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . $ 60,402 $ 18,800
Accounts receivable. . . . . . . . . . . 3,151 -
Inventory. . . . . . . . . . . . . . . . 22,297 21,736
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Total current assets . . . . . . . . . . 85,850 40,536
FIXED ASSETS, Net. . . . . . . . . . . . . 6,152 1,713
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TOTAL ASSETS . . . . . . . . . . . . . . $ 92,002 $ 42.249
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LIABILITES AND SHAREHOLDERS' EQUITY
- -----------------------------------
CURRENT Liabilities
Accounts payable . . . . . . . . . . . . $ 3,701 $ 2,705
Accrued expenses . . . . . . . . . . . . - -
Payroll and other taxes. . . . . . . . . 1,345 25,000
Accrued wages. . . . . . . . . . . . . . 5,400 3,479
Income tax payable . . . . . . . . . . . - 1,600
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- Total current liabilities. . . . . . . 10,446 32,784
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Common stock. 3.001 par value;
20,000000 shares authorized; 14,660,931
and 8,262,300 issued and outstanding
at March 31, 2000 and June 30. 1999. . . 14,650 8,262
Additional paid in capital . . . . . . . 657,641 362,299
Retained earnings {deficit). . . . . . . (560,717) 331,078)
Treasury stock . . . . . . . . . . . . . (30,018) (30,018)
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TOTAL SHAREHOLDERS' EQUITY . . . . . . 81,556 9,465
TOTAL LIABILITIES AND
SHAREHOLDERS' Equity . . . . . . . . . $ 92,002 $ 42,249
================ ===============
</TABLE>
See accompanying notes to the financial statements
end accountants' compilation report.
F-1
PACIFIC SANDS, INC.
DBA, NATURAL WATER TECHNOLOGIES
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
2O00 1999
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<S> <C> <C>
REVENUE:
Sales. . . . . . . . . . . . . . . . . $ 20,16O $ 11,061
Cost of sales. . . . . . . . . . . . . 3,024 1,659
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GROSS PROFIT. . . . . . . . . . . . . 17,136 9,402
EXPENSES:
General, sales and administrative. . . 245,975 74,066
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(LOSS) FROM OPERATIONS . . . . . . . . . ( 228,839) (64,664)
INCOME TAX . . . . . . . . . . . . . . . 800 800
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NET (LOSS) . . . . . . . . . . . . . . . ( 229,639) ( 65,464)
RETAINED EARNINGS (Deficit) - beginning. (331,078) ( 228.601)
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RETAINED EARNINGS (Deficit) - end. . . . ($560,717) ($294,065)
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BASIC AND DILUTED WEIGHTED
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING . . . . . . . . . . . 8,076,619 5,392,120
BASIS LOSS PER COMMON SHARE. . . . . . . ($0.07) ($0.05)
DILUTED LOSS PER COMMON SHARE. . . . . . ($0.07) ($0.05)
</TABLE>
See accompanying notes to the financial statements
end accountants' compilation report.
F-2
<PAGE>
PACIFIC SANDS, INC.
DBA, NATURAL WATER TECHNOLOGIES
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended March 31.
2000 1999
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<S> <C> <C>
NET (LOSS)
Adjustments to reconcile net loss
to net cash used by operating activities:. . ($229,639) ($65,464)
Depreciation . . . . . . . . . . . . . . . 493 285
Shares Issued for services . . . . . . . . 1,730 755
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TOTAL ADJUSTMENTS. . . . . . . . . . . . . (227,415) ( 64,424)
(INCREASE)DECREASE IN ASSETS
Accounts receivable. . . . . . . . . . . . (3,151)
Inventory. . . . . . . . . . . . . . . . . (561) 2,917
INCREASE (DECREASE) IN LIABILITIES
Accounts payable . . . . . . . . . . . . . 996
Accrued expenses . . . . . . . . . . . . . (25,000) (10,905)
Payroll and other taxes. . . . . . . . . . (2,134) 2,590
Accrued wages. . . . . . . . . . . . . . . . 5,400
Income taxes payable . . . . . . . . . . . (1,600) 800
Wages payable. . . . . . . . . . . . . . . - 6,000
Loan payable . . . . . . . . . . . . . . . - 800
Shareholder loan payable . . . . . . . . . - 1,000
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NET CASH USED BY OPERATING Actives . . . . ( 253,466) (61,222)
CASH ROWS FROM INVESTING Activities
Purchase of fixed assets . . . . . . . . . ( 4,932) (1,903)
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CASH FLOWS FROM FINANCING Activities
Common stock Issuance. . . . . . . . . . . 300,000 132,674
Purchase. of company stock
(Treasury stock) . . . . . . . . . . . . - ( 30,018)
NET GAIN PROVIDED BY FINANCING ACTIVITIES. 300,000 102,656
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INCREASE IN CASH. . . . . . . . . . . . . 41,602 39,531
CASH - beginning of period . . . . . . . . 18,800 6,944
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CASH - end of period . . . . . . . . . . . $ 60,402 $ 45,475
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SUPPLEMENTAL CASH ROWS Information:
Cash paid during the period for:
Taxes. . . . . . . . . . . . . . . . . . . $ 1,600 $ -0-
Interest . . . . . . . . . . . . . . . . . $ -0- $ -0-
NON-CASH FINANCING TRANSACTIONS;
Common shares Issued for services. . . . . 1,730 755
</TABLE>
F-3
See accompanying notes to the financial statements
end accountants' compilation report.
<PAGE>
PACIFIC SANDS, (NC.
DBA, NATURAL WATER TECHNOLOGIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Nine Months Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Additional Retained
Number of Par Common Paid-In Earnings Treasury Stock Stockholders'
Share Value Stock Capital (Deficit) _Shares Amount Equity
----------- ---------- ------- -------- --------- -------------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
July 6,1997
To management at par for cash . . 5,000,000 $ .001 $ 5,000 $ 5,000
July 6, 1997
For execution of Company's
Financing and Reorganization Plan 300,000 .001 300 $ 19,700 20,000
July 11, 1997
Consulting services regarding
Financing plan. . . . . . . . . . 500,000 .001 500 500
August 5, 1997
Assignment of inventory . . . . . 1,000,000 .001 1,000 22,690 23,690
November 27,1997 -
June 30, 1998. . . . . . . . . . 197,250 .001 197 187,603 181,800
Net loss - June 30. 1998. . . . . . (228,601) (228,601)
Balance June 30, 1998 . . . . . . . 6,997,250 .001 6,997 229,993 (228,601) 8,389
July 16, 1998
7,700 shares at $1.00 . . . . . . . 7,700 .001 8 7,893 7,701
July 21- .July 30. 1988
40.300 shares at $1.00. . . . . . 40,300 .001 40 40,280 40,300
October 10, 1998 -
January 27. 1999 - services . . . . 145,000 .001 145 145
</TABLE>
See accompanying notes to the financial statements end accountants' compilation
report.
F-4
<PAGE>
PACIFIC SANDS. INC.
DBA, NATURAL WATER TECHNOLOGIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
$Continued)
Nine Months Ended March 31. 2000
(Unaudited)
<TABLE>
<CAPTION>
Additional Retained
Number of Par Common Paid-In Earnings Treasury Stock Stockholders
Shares Value Stock Capital (Deficit) Shares Amount Equity
------------ ---------- ---------- ---------- ---------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
February 3, 1999 -
March 9, 1999 - services . . $ 110,200 $ .001 $ 110 $ 110
March 16, 1999
220,000 shares . . . . . . 220,000 .001 220 $ 44,680 44,900
March 17, 1999 - services. . 500,000 .001 500 500
March 25, 1999 . . . . . . . 100,000 .001 100 39,673 39,773
March 26, 1999 -
June 25, 1999 - services . . 141,850 .001 142 142
Purchase of treasury shares
March 16 - May 21, 1999. (49,000) ($30,018) ( 30,018)
Net loss - June 30, 1999 . . ($102,477) (102,477)
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Balance June 30, 1999. . . . 8,262,300 .001 8,262 362,299 { 331,078) (49,000) (30,018) 9,465
August 13, 1999 - services . 1,730,000 .001 1,730 1,730
October 26. 1999
December 26. 1999. . . . . . 1,158,631 .001 1,158 58,842 80,000
January 18, 2000 -
February 11, 2000 . services 3,500,000 .001 3,500 236,500 240,000
Nat loss - March 31. 2000. . - - - (229,639) - - (229,639)
Balance Mach 31. 2000. . . . 14,650,931 .001 $ 14,650 $ 657,641 ($560,717) (49,000) ($30,018) ($81,556)
</TABLE>
See accompanying notes to the financial statements and accountants compilation
letter.
F-5
PACIFIC SANDS. INC.
DBA, NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
unaudited)
BASIS OF PRESENTATION
The accompanying unaudited financial statements of Pacific Sands, Inc., dba,
Natural Water Technologies, have been prepared in accordance with generally
accepted accounting principle.
for interim financial information basis consistent with the audited financial
statements for the year ended June 30, 1999 and in accordance with the
instructions to Form 10-0.
The balance sheet at June 30. 1999 has been derived from the audited financial
statements at that date but does not include all the information end footnotes
required by generally accepted accounting principles .for complete financial
statements.
- - for further~ information,, refer to the financial statements and footnotes
included in the Company's annual report or, Form 10-K for the year ended June
30, 1999,
2 - NATURE OP OPERATIONS
PACIFIC SANDS, INC. (the Company) Doing business as NATURAL WATER TECHNOLOGIES
was incorporated under the laws of the State of Nevada. The Company formulates,
manufactures. and distributes for domestic and international use a special
product formulation that has no toxicity yet has numerous uses. The formulated
compound eliminates germs and bacteria. The end product has household,
commercial end hygiene applications.
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
- --------------------
Revenue from sales of products to distributors and resellers is recognized upon
shipment when no significant vendor obligations remain and collection of the
receivable is probable. When significant obligations remain alter the product
has been delivered, revenue Is not recognized until such obligations have been
completed ~r are no longer significant. The costs of any significant obligations
are accrued when the, revenue is recognized.
Cash Equivalents
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Cash equivalents consist of funds invested in money market accounts arid
investments with a maturity of three months or less when purchased. There were
no cash equivalents for the nine months ended March 31, 2000,
F-6
DBA, NATURAL WATER TECHNOLOGIES
- NOTES TO FINANCIAL STATEMENTS
(Continued)
March 31, 2000
(Unaudited)
3 SUMMARY OP SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
- ------------------
The preparation of financial statements In conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in financial statements and accompanying notes.
Actual results could differ from those estimates.
Issuance of Shares for Services
- -----------------------------------
Valuation of shares for services is based on the estimated fair market value of
the services performed.
Income Taxes
- -------------
The Company uses the liability method of accounting for income taxes specified
by SFAS No109 "Accounting for Income Taxes", whereby deferred tax liabilities
and assets are determined based on the difference between financial statements
end tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. Deferred in assets
era recognized and measured based on the likelihood of realization of the
related tax benefit in the future. The Company had no material net deferred tax
assets or liabilities at March 31, 2000.
Inventory
- ---------
Inventory is stated at lower of cost or market. Cost is determined principally
on the first-in first-out method.
Property and Equipment
- ------------------------
Depreciation for equipment and vehicles are computed using the straight-lien
method calculated to depreciate the cost of assets over the estimated useful
lives. Leasehold improvements are amortized over the life of the original lease.
Costs of maintenance and repair are charged to expense while costs of
significant renewals end betterments are capitalized.
Loss Per Share
- ----------------
In February, 1997, the Financial Accounting Standards Board I "FASt') issued
SFAS No. 129 "Earnings Per Share." The statement replaced primary EPS with basic
EPS which is computed by dividing reported earnings available to common
shareholders by weighted average ,hares outstanding. The provision requires the
calculation of diluted EPS The Company used the method specified by the
statement.
DBA, NATURAL WATER TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
March 31, 2000
(Unaudited)
4-RELATED PARTY TRANSACTIONS
There were 1.700.000 common shares issued to the Chairman and President and the
Board of Directors for services rendered during the nine months ended March 31,
2000 at an estimated f sir market value of . $1,700.
5- ADVERTISING
- - Advertising is expensed as incurred
6- TREASURY STOCK
Total cost for treasury stock was $30,018. Total number of shares held In
treasury was 49,000.
6 GOING CONCERN UNCERTAINTIES
At the end of the current period, the Company incurred an operating loss of
$229,639 II management will be unable to generate more revenue or secure
adequate financing to do its current business operational plan, there will be a
substantial doubt at the Company's ability to continue as a going concern. The
Company, however, believes that Its current financing and reorganization plan
will generate the resources required to continue and sustain its operation
indefinitely.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Pacific Sands, Inc. (the "Company" or 'Pacific Sands") was incorporated in the
State of Nevada on July 7, 994. The Companies 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 does business as "Natural Water Technologies," and produces a
nontoxic compound for eliminating germs and bacteria for use in spas and
cleaning products. The Company's target markets include retail and industrial
uses. The Company is currently marketing retail spa products and testing
equipment for cleaning industrial waste water. Such industrial use tests have
brought positive results. As such, the Company believes its marketing of its
products for industrial use will yield positive financial benefits for the
Company in the future.
This 10-Q includes "forward-looking statements" within the meaning of the
"safe-harbor' provisions of the Private Securities Litigation Reform Act of
1995. 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.
Management has worked to increased revenues through increased sales by the
Company. The Company does experience difficulties due to lack of liquidity and
has experienced an operating loss of $229,639. Management is seeking to improve
Liquidity by increasing revenues, striving to become more profitable, increase
marketing potential of the Company's products, license new technology and secure
adequate financing for its future operational plan However, there can be no
assurance that management will be successful in their endeavors.
The Company has no material commitments for any significant capital expenditures
at this time.
Item 3, Quantitative and Qualitative Disclosures About Market Risk,
The Company qualifies as a small business issuer as defined in Regulation S-K.
Section 230.405, and therefore is not required to provide this information.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not now involved, nor does it foresee being involved, in any
legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
On September 16, 1999, the Company entered into an unsecured debenture agreement
for $300,000 Date of maturity is September 16, 2001 at an interest rate of 8%
per annum. The Company has realized $300,000 in net cash since its June 30, 1999
year-end due to the above mentioned unsecured debenture agreement.
The Company reasonably estimates that $150,000 of this amount was used for
payments of salary to officers of the Company.
The remaining funds have been used for working capital for the Company and to
build test equipment which has enabled the Company to begin testing products for
Wal-Mart and other industrial waste water cleaning uses.
The Company has issued ~0,00O shares of common stock to by non-director or
officers of the Company as payment for work performed for the Company during
this first quarter.
Item 3. Defaults Upon Senior Securities.
The Company has no default upon senior securities.
Item 4. Submission of Matters to a Vote of Security Holders.
There has not been a matter voted upon by Security Holders during the quarterly
period ended March 31, 2000.
Item 5 Other Information
As of April 10,2000, Wade Hanson resigned as Director, CEO and Secretary of the
Company. Glen Dunning, age 37, has replace Wade Hanson as Secretary, as required
by Article IV, Section 1 of the Company's Articles of Incorporation. No
additional director has been appointed to fill the seat vacated by Wade Hanson.
The Company does not require the vacancy be filled according to Article IV,
Section 4 of its Articles of Incorporation.
<PAGE>
item 6. Exhibits and Reports on Form 8K
The Company has no Exhibits to be filled as part of this quarterly report No
Form 8-K reports have been filed by the Company during the quarter for which
this report is filed,
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pacific S
Pacific Sands, Inc.
(Registrant)
/s/ Stanley Paulus, President
- -----------------------------
Stanley Paulus, President
Date: May 19, 2000
/s/ Rita Paulus
- -----------------------------
Rita Paulus, Treasurer
Date: May 19, 2000
