8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Earliest Event Reported: May 4, 2007

Pacific Sands, Inc.

(Exact name of registrant)

Nevada	00-29483	88-0322882
(State of Incorporation)	(Commission file Number)	(I.R.S. Employer Id. No.)
1509 Rapids Dr. Racine WI		53404
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:(262) 619-3261

Item 8.01 Other Events.

Pacific Sands, Inc. received notice on May 4, 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 by Mr. Paulus during his tenure as CEO of the company.

On or about February 16, 2007 the company’s attorney sent Mr. Paulus a letter denying the validity of the note and the underlying debt based on the following claims made by the company against Mr. Paulus:

1) Discrepancies between compensation reported on SEC filings and actual compensation.

2) Failure to execute the duties of CEO.

3) Misuse of funds raised by the company.

4) Self-dealing stock transactions resulting in the dilution of company value

and other significant issues.

On the same day that we received notice of the lawsuit, we received a response from Paulus's counsel denying the claims raised by the company in the February 16, 2007 correspondence.

Pacific Sands retained legal counsel in Fresno, California to vigorously dispute this matter and take whatever counter actions may be necessary and in the best interest of the shareholders of the company.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Letter to Mr. Paulus from Pacific Sands, Inc.’s attorney, dated February 16, 2007.

99.2 Response letter from Mr. Paulus’ attorney to Pacific Sands, Inc.’s attorney, dated May 4, 2007.

99.3 Notice of lawsuit filed dated April 30, 2007.

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized.

	Pacific Sands, Inc.
	(Registrant)
Date: May 9, 2007	/s/ Michael Wynhoff
	Michael Wynhoff, CEO

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EX-99.1

O’Connor,            

DuMez, Alia         

& McTernan, S.C.

ATTRONEYS AT LAW

John O’Connor Robert I. DuMez Gino M. Alia J. Michael McTernan _______________   Of Counsel: Karin Anderson Riccio Michael R Cholak         February 16, 2007 Legal Assitants: Debbie Gourdoux Beverly Kozerski Donna Nicolazzi Lori Andrea Ann Niccolai Susan Stahl

VIA EMAIL

Stan_p@pacbell.net

& U.S. Mail

Mr. Stanley Paulus

Paulus Construction

601 West Shaw, Suite D

Clovis, California 93612

Re:Pacific Sands, Inc.

Dear Mr. Paulus:

As you know, I represent Pacific Sands, Inc. I have contacted you, but given your failure to respond directly to me, and your statements to my clients, it appears that you wish to handle matters without legal representation.

Therefore, I provide you the following request.

The Company’s records reflect an alleged claim of approximately $105,000 ostensibly owed to you for past services. Upon examination, it is apparent that any sums that may be due to your employment are more than offset by the following alleged items:

1. Discrepancies between your reported compensation and the actual compensation you received.

2. Failure to execute the duties of CEO.

3. Misuse of funds raised by the Company.

4. Self dealing stock transactions resulting in the dilution of Company value.

1. Compensation:

On December 1, 1998, the Company issued 705,600 restricted common shares to you for services rendered. The estimated fair market value of these services was $658 however the stock issuance is valued at $639,414.

6633 Green Bay Road Kenosha, WI  53142 (262) 654-8600 odam-law.com

On August 13, 1999 the Company issued 200,000 restricted common shares to your wife, Rita Paulus, for alleged services rendered. The estimated fair market value of these services was $200, however the stock issuance was valued at $34,000.

On September 13, 2002, the Company issued 3,000,000 shares of restricted stock to you and 750,000 shares of restricted stock to your wife, Rita Paulus. The stock issuance was valued at $187,500.

An apparent cash bonus of $122,500 was granted in 2000 to you for no apparent reason.

The Company can not determine the approval or the reason for any of these transactions. Please provide a detailed response providing the approval of these transactions and the legitimate business reason for each of them.

2. Failure to execute the duties of CEO including but not limited to:

It appears that you failed to dedicate your full-time attention to the business. It appears that you continued to operate Paulus Construction from the same office as Pacific Sands during your tenure as CEO of Pacific Sands.

It appears that while your construction business was prosperous, you failed to dedicate your efforts to the Company, which in part, resulted in annual revenues during your last year as CEO amounting to less than $50,000 after 7 years of being CEO.

Furthermore, it appears that you failed to reimburse the Company while you were sharing office space and incurring related business expenses that benefited your construction business during your tenure.

Please provide a detailed response including but not limited to: the annual sales and expenses of your construction business, any offices (other than at the Company) that your construction business maintained, any reimbursement to the Company for your use of Company funds by your construction business, and any and all agreements that allowed such an arrangement.

3. Misuse of Company Funds:

3,700,000 shares were issued to acquire “technical books for resale” when it appears you made no effort to actually sell the books, nor were any sold during the entire time they were in inventory.

Please provide a detailed explanation of this transaction to acquire these technical books, including but not limited to: who received the shares, who was the owner of the books, copies of all contracts and other materials outlining this transaction, and any appraisal or other documentation that supports the value of this transaction.

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4. Self Dealings:

Significant shares were issued at par to management and entities associated with management while the Company was selling shares to private investors at $1 per share. These transactions included but were not limited to:

On July 6, 1997, the Company sold for cash, restricted common stock to its officers and directors as follows: Ermine Trust 3,333,333 shares for $3,333 (while the shares in question were later granted back to you by the Ermine Trust) and 1,666,667 shares to you for $1,667.

Please provide a detailed explanation for these transactions and the approvals that were obtained to allow these to occur.

Finally, the Company has questions regarding the following issues:

a. The Company was carrying an accounts receivable balance of $235,718.40 for the construction of the Hurriflow Wastewater system. Please provide all details of your efforts made to collect this debt.

b. Please explain in detail the business judgment used to retain the SEC auditor, Alex D. Domantay, which you hired during your tenure. Furthermore, please explain how you paid him and why.

The Company believes that you owe detailed explanations to the above items and potentially monies far in excess of the amounts you claim you are owed. I look forward to your response so we can amicably resolve these differences in short order.

Very truly yours,

/s/ J. Michael McTernan       

J. Michael McTernan

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EX-99.2

DOWLING, AARON & KEELER
INCORPORATED
ATTORNEYS AND COUNSELORS AT LAW
8080 NORTH PALM AVENUE, THIRD FLOOR
FRESNO, CALIFORNIA 93711-5707	TELEPHONE (559) 432-4500
	FACSIMILE (559) 432-4590
MAILING ADDRESS
PO BOX 28902	WRITERS E-MAIL
FRESNO, CALIFORNIA 93729-8902	jburnside@daklaw.com
	DANIEL K. WHITEHURST
	JAMES C. SHERWOOD
	OF COUNSEL
May 4, 2007
	BLAINE PETTITT (1916-2002)

VIA FACSIMILE AND U.S. MAIL

J. Michael McTernan

O’Connor, DuMez, Alia & McTernan, S.C.

6633 Green Bay Road

Kenosha, WI 53142

Re: Pacific Sands, Inc.

Dear Mr. McTernan:

This Firm and the undersigned represent Mr. Stan Paulus, and this letter will respond to your correspondence of February 16, 2007 that invited Mr. Paulus to answer to a number of detailed charges of improper conduct concerning his past role in the management and affairs of Pacific Sands, Inc.

The claims of wrongdoing are categorically denied by Mr. Paulus. In fact, the corporation was so unconcerned that Mr. Paulus might have conducted himself improperly in the past that Mr. Michael L. Wynhoff, as the President of Pacific Sands, Inc., in June 2004 executed a written Final Settlement Agreement between the parties plus a separate indemnification agreement. The latter document is sweeping in nature as Pacific Sands agrees to indemnify and hold Stanley Paulus harmless from all claims and liabilities related to anything he might have ever done pertaining to Pacific Sands. A similar instrument was also drawn and executed in favor of his spouse, Rita Paulus. Copies of these instruments are enclosed as the many statements in your February 16, 2007 letter would lead one to believe they were not furnished to you.

DOWLING, AARON & KEELER

INCORPORATED

ATTORNEYS AND COUNSELORS AT LAW

J. Michael McTernan

May 4, 2007

Page 2

A fair reading of them leads one to conclude the matters now being complained of were settled and fully resolved. The same fair reading also leads one to conclude they are being raised for the sole purpose of extracting from Mr. Paulus some measure of forgiveness of the debt the corporation presently owes him. Please be advised that tactic will not succeed. This office has already filed a civil action in the United States District Court for the Eastern District of California (Fresno) against Pacific Sands, Inc. to collect on the past due promissory note. A courtesy copy of the complaint is enclosed. It was served on the corporation’s Chief Financial Officer, Michael Michie on May 3, 2007. In providing you and advance copy of the complaint together with this letter of explanation, we are hopeful that common sense will prevail and that the corporation will pay Mr. Paulus all sums secured by the promissory note.

It is not the desire of Mr. Paulus to participate in protracted litigation, so in the spirit of resolving the matter at the earliest opportunity, we present you this response of Mr. Paulus to the many questions set forth in your letter. The topic titles which follow are in the same order as you presented them.

1. Compensation. The information you were presented on the issuance of shares to Mr. Paulus is incorrect. In 1998 Mr. Paulus acquired from another shareholder, Monsoon International, 658,333.25 shares of its capital stock. A new certificate was issued to Mr. Paulus to replace the certificate that was surrendered by Monsoon International. For reasons unknown, the corporation’s accountant reported to the Securities and Exchange Commission that Mr. Paulus owned 705,600 shares yet there does not exist any one or more share certificates that have ever totaled that number. It can only be concluded the incorrect reporting of shared owned was human error.

With regard to stock issued to Rita Paulus, it is true the company issued to her 200,000 shares for services rendered. At that time, however, she was owed well in excess of $34,000 for unpaid wages. This quarrel notwithstanding, the stock was reconveyed to the corporation in May 2004 so the debate is academic.

Stan Paulus never received any cash bonus of $122,500 or any other significant number for that matter, in calendar year 2000. If there is a cnacelled check to evidence such a payment, Mr. Paulus would like to see it.

2. Failure to execute the duties of CEO. These allegations are frivolous and to demand financial records of the construction company be produced is denied. When Pacific Sands was organized long ago by Mr. Paulus, it needed a place of business. Not having a steady and reliable revenue stream with which to service a lease in a commercial building and pay all of the usual overhead expenses of a business, it was operated out of the construction office. Further, since it was a fledgling business and Mr. Paulus was in need of food, clothing and shelter, he continued to operate his construction company in the normal course. The Accusations now being leveled are not only frivolous but any right of action thereon was long ago barred by every conceivable statute of limitations.

DOWLING, AARON & KEELER

INCORPORATED

ATTORNEYS AND COUNSELORS AT LAW

J. Michael McTernan

May 4, 2007

Page 3

3. Misuse of company funds. Mr. Paulus transferred to the corporation holistic health books by Christine Hill in exchange for 3,750,000 shares of stock of which 2,000,000 shares constitute a reissuance of stock to Mr. Paulus that he had previously given back to the corporation so that it could pay other employees. This transaction was revisited and resolved as set out in the Final Settlement Agreement dated June 17, 2004 where the book inventory was reacquired in exchange for the surrender of shares. The subject transaction was part of the “final and complete agreement” between the parties. Accordingly, it can no longer serve as the basis of a legitimate disagreement.

4. Self dealing. We are unable to fathom the relevance of this complained of stock transaction that took place nearly 10 years ago. In the Private Placement Memorandum dated August 15, 1997 the issuance of this stock is disclosed. Therefore, would you please share with us the relevance of the subject transaction at this time in history.

As to the Hurriflow Wastewater matter, the correct information is that in 2002 the company hired an engineer who built a new product to clean wastewater. The account receivable balance was for the sale of the product to a customer who refused to pay for it because it turned out the product did not satisfactorily perform. Mr. Wynhoff even worked on this project himself. It was an unfortunate business result, yet one for which no corporate office can be personally held to answer.

Regarding the SEC auditor, Alex D. Domantay, it did turn out the gentleman was not properly licensed or approved by Securities and Exchange Commission. The new auditors, therefore, had to perform a new the audit of the company’s books that Mr. Domantay had been retained to perform. Fortunately, the corporation did not suffer any loss as a result of these events because the corporation in the first instance never paid Mr. Domantay. Mr. Paulus paid Mr. Domantay personally by transferring to him some shares of stock.

Once you have reviewed these matters thoroughly with your client, it would be appropriate you contact me so that we can put the final touches on arranging for the payment of the promissory note.

Very truly yours,

DOWLING, AARON & KEELER

/s/ James D. Burnside III                    

James D. Burnside III

EX-99.3

James D. Burnside III #75977

DOWLING, AARON & KEELER, INC.

8080 North Palm Avenue, Third Floor

P.O. Box 28902

Fresno, California 93729-8902

Tel: (559) 432-4500 / Fax: (559) 432-4590

Attorneys for Plaintiff, Stanley Paulus

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

STANLEY PAULUS,	Case No.
Plaintiffs,	COMPLAINT FOR MONEY DUE UNDER
	PROMISSORY NOTE
vs.
	DEMAND FOR JURY TRIAL
PACIFIC SANDS, INC., a Nevada corporation,
Defendants.

Plaintiffs, Stanley Paulus alleges:

JURISDICTION AND VENUE

1. The Court has jurisdiction of the subject matter of this action pursuant to 28 U.S.C. §1332(a)(1) in that the matter in controversy exceeds the sum of $75,000, exclusive of interests and costs, and is between citizens of different states.

2. Venue is appropriate in the Eastern District of California pursuant to 28 U.S.C. §1391(a)(2) because the offense or omissions on which plaintiff’s claim is based, including, where the promissory note was made and entered into, occurred in this District.

THE PARTIES

3. Plaintiff Stanley Paulus resides within the Eastern District of California.

COMPLAINT FOR MONEY DUE UNDER PROMISSORY NOTE

4. Defendant Pacific Sands, Inc. is a corporation organized under thelaws of the State of Nevada with its principal place of business located in Racine, Wisconsin. Its principal place of business waspreviously located in the City of Clovis, County of Fresno, California.

CHARGING ALLEGATIONS

5. On or about June 14, 2006, defendant Pacific Sands, Inc. executcd and delivered to plaintiff at Fresno, California its written promissory note, a true and correct copy of which is attached hereto as Exhibit A. Defendant promised and agreed to pay plaintiff the sumof $105,000 in installments commencing on October 1. 2006. The defendant also promised to compensate plaintiff in the form of stock asa latepayment forany installments not paid when due.

6. Defendant has failed tofulfill, and thus has breached, its obligations under the promissory note by its unexcusedfailure to make my installment payments of principal and failure to issue stock as and for a late payment penalty.

7. By virtue of the foresaid breach defendant is indebted toplaintiff in the sumof $105,000 forprincipal pluslate payment penalties.

8. The promissory note also provides that in any litigation brought to enforce thenote, the prevailing party should also be awarded its attorney fees and costs incurred. By virtue of the non-paymentplaintiff has been obligated toretain the services of Dowling, Aaron & Keeler, Inc., attorneys at law to enforce the note.

DEMAND FOR JURY TRIAL

9. Plaintiff hereby demands trial by jury.

WHEREFORE, plaintiff StanleyPaulus prays for judgment againstthedefendant Pacific Sands, Inc. asfollows:

1. For unpaid principal in the amount of $105,000.

2. For late payment penalties according to proof.

3. For reasonable attorneys feesaccording to proof.

COMPLAINT FOR MONEY DUE UNDER PROMISSORY NOTE

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4. For costs of suit incurred herein.

5. For such other and further relief as the court deems just and proper,

Dated:  April30, 2007	DOWLING, AARON & KEELER, INC.
	By:	/s/ James D. Burnside III
		James D. Burnside III
		Attorneys for Plaintiff, Stanley Paulus

COMPLAINT FOR MONEY DUE UNDER PROMISSORY NOTE

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