10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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, 2015

OR

o 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 Registrant as specified in its charter)

Nevada	88-0322882
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

4611 Green Bay Road Kenosha, WI	53144
(Address of Principal Executive Offices)	(Zip Code)

Issuer’s Telephone Number, Including Area Code:  (262) 925-0123

N/A

 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the issuer (1) filed 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 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x     No  o

Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, a non-accelerated or a smaller reporting company. See the definition of “large accelerated filer, accelerated filer and smaller reporting company “in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer   o	Accelerated filer   o
Non-accelerated filer   o	Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o      No x

The number of shares outstanding of each of the issuer's classes of common equity, as of May 15, 2015 are as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	89,811,292

TABLE OF CONTENTS

PART I  FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements	3
	Balance Sheets as of  March  31, 2015  (unaudited) and June 30, 2014	3
	Statements of Operations for the Three and Nine Months Ended March  31, 2015 and 2014 (unaudited)	4
	Statements of Cash Flows for the Nine Months Ended March  31, 2015 and 2014 (unaudited)	5
	Notes to Financial Statements (unaudited)	7
Item 2.	Management Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	21
PART II  OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	22
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
Item 3.	DEFAULTS UPON SENIOR SECURITIES	22
Item 4.	MINE SAFETY DISCLOSURES	22
Item 5.	OTHER INFORMATION	22
Item 6.	EXHIBITS	23
SIGNATURES		24

2

PACIFIC SANDS, INC.
BALANCE SHEETS
MARCH 31, 2015 AND JUNE 30, 2014
ASSETS
	March 31, 2015		June 30, 2014
Current assets:	(Unaudited)
Cash and cash equivalents	$	4,985	$	266,190
Trade receivables, net of allowances for doubtful accounts of $24,435 and $11,425, respectively		223,107		344,562
Inventories		203,561		259,423
Other current assets		130,997		17,835
Total Current Assets		562,650		888,010
Property and equipment, net		220,547		191,255
Other asset		2,290		2,820
Total Assets	$	785,487	$	1,082,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	504,858	$	411,313
Accrued expenses		98,883		54,111
Deferred rent expenses		-		8,800
Current portion of notes payable and capital leases, less debt discount		414,582		346,815
Embedded conversion derivative liability		13,100		68,298
Total Current Liabilities		1,031,423		889,337
Notes payable - less current portion		116,165		230,123
Total Liabilities		1,147,588		1,119,460
Stockholders'  deficit
Preferred series A stock (1,000,000 shares authorized, 0 shares issued and outstanding)		-		-
Common stock, par value $0.001 per share; (200,000,000 shares authorized, 85,790,953 and 66,811,354  shares issued and outstanding, at March 31, 2015, and June 30, 2014, respectively)		85,790		66,811
Additional paid in capital		6,178,243		5,710,231
Accumulated deficit		(6,626,134)		(5,814,417)
Total Stockholders' Deficit		(362,101)		(37,375)
Total Liabilities and Stockholders' Deficit	$	785,487	$	1,082,085

See accompanying notes.

3

PACIFIC SANDS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2015, AND 2014
(UNAUDITED)
	Three months ended March 31,				Nine months ended March 31,
	2015		2014		2015		2014
Net sales	$	592,491	$	781,253	$	1,910,213	$	2,046,338
Cost of sales		281,486		474,931		1,083,022		1,223,961
Gross profit		311,005		306,322		827,191		822,377
Selling and administrative expenses		392,270		370,434		1,433,356		926,852
Loss from operations		(81,265)		(64,112)		(606,165)		(104,475)
Other income (expense)
Interest expense		(83,767)		(20,973)		(243,365)		(42,094)
Gain(loss) on derivative liability		22,959		-		31,060		-
Other income (expense)		5,483		1,454		6,753		2,163
Total other expense		(55,325)		(19,519)		(205,552)		(39,931)
Loss before income taxes		(136,590)		(83,631)		(811,717)		(144,406)
Income taxes		-		-		-		-
Net loss	$	(136,590)	$	(83,631)	$	(811,717)	$	(144,406)
Loss per share:
Basic	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)
Diluted	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)
Weighted average share outstanding:
Basic		76,559,510		64,326,051		72,987,036		64,430,687
Diluted		76,559,510		64,326,051		72,987,036		64,430,687

See accompanying notes.

4

PACIFIC SANDS, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2015, AND 2014
(UNAUDITED)
	2015		2014
Cash flows from operating activities:
Net loss	$	(811,717)	$	(144,406)
Adjustments to reconcile net loss to net cash used in operating activities -
Depreciation and amortization		54,347		48,361
Stock options		63,478		79,348
Common shares issued for services and compensation		99,722		-
Gain (loss) on derivative		(31,060)		-
Accretion of debt discount		119,957		-
Common shares issued for interest		49,153		12,000
Deferred rent		(8,800)		(13,200)
Changes in assets and liabilities:
Trade accounts receivable		121,455		(135,234)
Inventories		55,862		(90,266)
Other assets		(7,314)		7,068
Accounts payable and other current liabilities		138,317		309,104
Net Cash Provided by (Used in) Operating Activities		(156,600)		72,775
Cash flows from investing activities:
Purchases of equipment		(11,185)		(25,073)
Prepaid brand development and other costs		(105,318)		-
Net Cash Used in Investing Activities		(116,503)		(25,073)
Cash flows from financing activities:
Proceeds from common stock issued		-		5,000
Convertible notes payable		70,000		-
Proceeds from notes payable		311,240		220,958
Repayment of notes payable and long term obligations		(369,342)		(331,882)
Net Cash Provided by (Used in) Financing Activities		11,898		(105,924)
Net decrease in cash and cash equivalents		(261,205)		(58,222)
Cash and cash equivalents:
Beginning of period		266,190		90,040
End of period	$	4,985	$	31,818

See accompanying notes.

5

PACIFIC SANDS, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2015, AND 2014
(UNAUDITED)
	2015		2014
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	82,005	$	29,652
Income taxes	$	-	$	-
Supplemental disclosure of non-cash financing and investing activities
Conversion of debt and derivative liability to equity	$	209,638	$	-
Acquisition of stock for notes payable	$	-	$	31,000
Conversion of accrued interest to equity	$	49,153	$	12,000

See accompanying notes.

6

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS 

1.               BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Pacific Sands, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Pacific Sands, Inc’s Annual Report filed with the SEC on Form 10-K for the year ended June 30, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported elsewhere in this Form 10-Q have been omitted.

2.               DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Pacific Sands, Inc. with the right to do business as Natural Water Technologies (the "Company" or “Pacific Sands”) was incorporated in Nevada on July 7, 1994.  Pacific Sands develops, manufactures, markets and sells a range of nontoxic, environmentally friendly cleaning and water-treatment products based on proprietary blended botanical, nontoxic and natural chemical technologies. The Company’s products have applications ranging from water maintenance (spas, swimming pools, fountains, decorative ponds) to cleaning (nontoxic household and industrial) and pet care.

In February of 2008, the Company acquired Natural Choices Home Safe Products, LLC (“Natural Choices”), a developer and manufacturer of environmentally friendly cleaning and laundry products. The acquisition added dozens of new products to the Pacific Sands portfolio of earth, health, pet and kid-friendly offerings, including Oxy-Boost™ an oxygen-bleach based, chlorine-free bleach alternative. The Company now has a large selection of oxygen- bleach based formulations available both for retail distribution under its ecoone®, e-2 elemental earth® and Natural Choices™ brands as well as for contract manufacturing and re-label.

The Company markets and sells its product lines directly, over the Internet and through pool, spa, hardware, specialty and other retail outlets in the US, Canada and Europe. The products are also sold via Pacific Sands distributors, manufacturers’ representatives and internationally established pool and spa industry distribution networks. The Company’s products are also sold through numerous popular pool and spa websites.  The Company’s Natural Choices branded products are sold in numerous retail outlets around the country and in Europe as well as dozens of the top environmentally-oriented websites.

Inventories - Inventories are stated at the lower of cost or market on the first-in, first-out (FIFO) basis.

7

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

Depreciation and Amortization - For financial reporting purposes, depreciation and amortization of property and equipment has been computed over estimated useful lives of two to seven years primarily using the straight-line method.  Depreciation and amortization charges totaled $54,347 and $48,361 during the nine months ended March 31, 2015, and 2014, respectively.

Income Taxes - The Company uses the asset and liability method in accounting for income taxes.  Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.  The temporary differences relate primarily to net operating loss carry-forwards and deferred compensation charges.  A valuation allowance is recorded for deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized through future operations.

The income tax accounting process for uncertainty in income taxes 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 whether 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 statements. Management's review of the Company’s possible tax positions at March 31, 2015, and June 30, 2014, did not result in any positions requiring disclosure.  Should the Company need to record interest and/or penalties related to uncertain tax positions, or other tax authority assessments, it would classify such expenses as part of the income tax provision.

The Company’s income tax returns for the years ending June 30, 2012, 2013 and 2014 are subject to examination by the IRS and related states, generally for three years after filed.

Revenue Recognition - Revenue is recognized when the related products are shipped unless the customer is under a “bill and hold” arrangement. Under a “bill and hold” arrangement revenue is recognized when the product is manufactured, invoiced and set aside in a specifically designated finished goods area. Upon invoicing under this arrangement ownership has passed to the buyer with no residual warranty obligation or right of return. All customers under a “bill and hold” arrangement have committed to purchases and have specifically requested they be on a “bill and hold” arrangement. In all cases goods are transferred to a designated finished goods fulfillment location under a fulfillment arrangement and are complete and ready for shipment. These “bill and hold” goods are either privately labeled or set aside exclusively for the customers use.

Customer Deposits – The Company reserves the right to request deposits on product orders. Deposits are requested for new customers or larger-than-normal orders for regular customers. When the Company receives a deposit on a large order then the Company may choose to progress bill for that order.

Accounts Receivable - The Company makes judgments as to the collectability 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 collectability of the receivables. Management believes that the current specific and general receivable reserves aggregating $24,435 are adequate as of March 31, 2015.

Advertising and Promotional Costs - Advertising and promotion costs are expensed as incurred.  During the nine months ended March 31, 2015, and 2014, advertising and promotion costs totaled $440,829 and $58,393, respectively.

8

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

Basic and Diluted Net Loss Per Share - Basic net loss per share is based upon the weighted average number of common shares outstanding.  Dilutive shares related to outstanding convertible promissory notes are not included in the computation of the weighted average number of shares outstanding for dilutive net loss per common share, as the effect would be anti-dilutive.

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.

Recent Accounting Pronouncements –In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018.

9

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

3.               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, 2015, the Company has incurred cumulative losses of $6,626,134 and a stockholders’ deficit of $362,101.  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 through the sale of common stock, debt financings 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.

4.               INVENTORIES

Inventories at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Raw materials	$	154,209	$	219,222
Finished goods		49,352		40,201
Total	$	203,561	$	259,423

5.               PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Furniture	$	35,997	$	35,997
Manufacturing equipment		288,217		210,483
Office Equipment		55,543		54,435
Leasehold improvements		90,116		85,320
Computer software		52,150		52,150
Less accumulated depreciation and amortization		(301,476)		(247,130)
Property and equipment, net	$	220,547	$	191,255

10

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

6.               ACCRUED EXPENSES

Accrued expenses at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Accrued compensation	$	92,024	$	37,295
Accrued payroll liabilities		1,514		3,354
Accrued expense		19		386
Accrued interest		5,326		13,076
Total	$	98,883	$	54,111

7.               NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Promissory note – unrelated party		25,000		53,800
Convertible notes (3)		17,500		63,000
Notes payable – stockholder		230,000		304,000
Promissory note – related party				65,000
Notes payable – former executive officer		9,060		55,863
Capital lease (2)		51,630		-
Note payable – Capital Access (1)		124,545		-
Promissory Note – Kenosha Area Business Alliance		78,845		91,065
Debt discount		(5,833)		(55,790)
Total obligations		530,747		576,938
Less current maturities		(414,582)		(346,815)
Total long term liabilities	$	116,165	$	230,123

11

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

The scheduled annual maturities for notes payable and capital lease obligations are as follows for the years ending March 31,

2015	$	414,582
2016		67,381
2017		24,692
2018		20,547
2019 and thereafter		3,545

(1) The Company issued a short term note payable for $150,000 to support current operations and payoff an existing higher rate note. This note bears 19% annual interest and matures on April 12, 2016. Under the terms of this agreement daily payments of $540.90 are required.

(2) The Company entered into a capital lease agreement for new manufacturing equipment. The lease has a $1 purchase option upon maturity. The lease agreement was for $72,453. This note requires monthly payments of $2,466. This lease bears 18.4% annual interest and matures on July 7, 2017.

(3) The Company issued two additional convertible notes for $32,500 and $37,500, during the three months ended September 30, 2014, for a total of $130,000 in convertible debt. During the current fiscal year $115,500 of the convertible debt was converted into equity.

The fair value of the conversion features are calculated at the time of issuance and the Company discounts the debt and records a derivative liability for the calculated value using a Black-Scholes option-pricing model. Changes in the fair value of the derivative liability thereafter are recorded in other income (expense) in the statement of operations. Upon conversion of the convertible debt to stock, the Company reclassifies the related embedded conversion derivative liability to paid-in capital. The Company recognizes expense for accretion of the convertible debentures discount over the term of the note. The Company has considered the provision of ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in each debenture could result in the note principal converted to a variable number of the Company’s common shares.

Debt Discount – Costs incurred with parties who are providing short-term financing, which include the fair value of an embedded derivative conversion, are reflected as a debt discount and are amortized over the life of the related debt. When the debt is repaid, the related debt discount is recorded as additional interest expense and the related derivative liability is relieved into additional paid in capital.

12

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

At March 31, 2015, convertible notes totaled $17,500 of which $5,833 was attributable to the discount on debt. For the period ended March 31, 2015, $119,957 of the debt discount was amortized and recorded as interest expense.

At March 31, 2015, $115,500, $94,138 and $3,820, of the convertible debt, derivative liability and accrued interest, respectively were converted into 13,708,207 shares of common stock. $94,138 is the portion of the derivative that was written off to equity and $9,723 of the remaining debt discount was amortized and recorded as interest expense.

The following table presents the embedded conversion derivative liabilities, the Company’s only financial liabilities measured and recorded at fair value on the Company’s balance sheet on a recurring basis, and their level within the fair value hierarchy as of March 31, 2015:

	Level 1		Level 2		Level 3
Embedded conversion derivative liability:
March 31, 2015	$	-	$	-	$	13,100

The following table reconciles for the period ended March 31, 2015, the beginning and ending balances for financial instruments that are recognized at fair value in the financial statements:

Balance at June 30, 2014	$	68,298
Issued during period ending March 31, 2015		70,000
Reductions in fair value due to conversion of Convertible Debentures into common stock		(94,138	)
Gain on fair value adjustments to embedded conversion derivative liabilities		(31,060	)
Balance of embedded derivative liability as of March 31, 2015	$	13,100

13

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

8.               STOCKHOLDERS’ DEFICIT

Transactions for the nine months ended March 31, 2015, are as follows:     

On July 1, 2014, the Company issued 175,000 shares of common stock for $7,000 for payment of interest on a note payable.

On July 4, 2014, the Company issued 500,000 shares of common stock for $15,000 for payment of interest on a note payable.

On July 9, 2014, the Company issued 1,934,400 shares of common stock to an outside consulting company for prepayment of services to be rendered of $77,376.

On July 18, 2014, the Company issued 288,467 shares of common stock to officers of the company for $11,539 for payment of compensation.

On July 31, 2014, the Company issued 120,192 shares of common stock to an officer of the company for $4,808 for payment of compensation.

On August 8, 2014, the Company issued 1,625,000 shares of common stock to a related party for $65,000 to convert a note payable.

On October 1, 2014, the Company issued 120,000 shares of common stock to an employee for $6,000 as payment for compensation.

On October 4, 2014, the Company issued 300,000 shares of common stock for $15,000 as payment of interest on a note payable.

On November 17, 2014, the Company issued 208,333 shares of common stock for $8,333 as payment of interest on a note payable. 

On December 31, 2014, the Company issued 600,000 shares of common stock for $12,000 to convert a portion of a convertible note payable.

On January 23, 2015, the Company issued 674,157 shares of common stock for $12,000 to convert a portion of a convertible note payable.

On January 29, 2015, the Company issued 1,034,483 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On February 3, 2015, the Company issued 1,562,500 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On March 4, 2015, the Company issued 1,309,091 shares of common stock for $9,000 to convert a portion of a convertible note payable and $2,520 in lieu of interest.

On March 10, 2015, the Company issued 2,112,676 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On March 19, 2015, the Company issued 3,081,967 shares of common stock for $17,500 to convert a portion of a convertible note payable and $1,300 in lieu of interest.

On March 24, 2015, the Company issued 3,333,333 shares of common stock for $20,000 to convert a portion of a convertible note payable.

14

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

9.                 OPTIONS

For all of the Company’s stock-based compensation plans, the fair value of each grant was estimated at the date of grant using the Black-Scholes option-pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield (which is assumed to be zero, as the Company has not paid cash dividends to date and does not currently expect to pay cash dividends) and the expected term of the option. Expected volatilities utilized in the model are based mainly on the historical volatility of the Company’s stock price over a period commensurate with the expected life of the share option as well as other factors. The risk-free interest rate is derived from the zero-coupon U.S. government issues with a remaining term equal to the expected life at the time of grant.

On November 1st, 2013, the Company granted certain consultants options to purchase 3,174,000 shares of common stock under an agreement at an exercise price of $0.06 per share. Approximately eight (8) percent of the options vested monthly through October 31, 2014. The Company recorded a total expense of $63,478 related to these options during the nine months ended March 31, 2015.

Expected Life (years)	10
Risk free rate of return	2.710	%
Dividend yield	0
Volatility factor	262	%

15

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

10.               LOSS PER SHARE

Basic loss per common share is based on the weighted average number of common shares outstanding in each period and net loss.

The following table sets forth the computation of basic and diluted loss per share.

	Three months ended March 31,						Nine months ended March 31,
	2015			2014			2015			2014
Net loss – basic	$	(136,590	)	$	(83,631	)	$	(811,718	)	$	(144,406	)
Interest expense for conversion of promissory note		-			-			-			-
Net loss diluted		(132,770	)		(86,631	)		(807,898	)		(144,406	)
Weighted average shares – basic		76,559,510			64,326,051			72,987,036			64,430,687
Incremental shares outstanding
Assuming the conversion of dilutive
Convertible promissory notes
Weighted average shares – diluted		76,559,510			64,326,051			72,987,036			64,430,687
Loss per share
Basic	$	(0.002	)	$	(0.001	)	$	(0.01	)	$	(0.002	)
Diluted	$	(0.002	)	$	(0.001	)	$	(0.01	)	$	(0.002	)

Convertible promissory notes (and related expenses) were not included in the computation of diluted loss per common share for the three- and nine-month periods ended March 31, 2015 and 2014, since their inclusion would have resulted in an anti-dilutive effect.

16

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

11.             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, 2015, and June 30, 2014, are as follows:

	March 31, 2015		June 30, 2014
Net operating loss carryforwards	$	1,814,000	$	1,476,000
Deferred compensation		4,000		23,000
Deferred rent expense		-		4,000
Accounts receivable allowance		10,000		5,000
Valuation allowance		(1,828,000)		(1,505,000)
Net deferred tax asset	$	--	$	--

At March 31, 2015, the Company has net operating loss carry-forwards for Federal tax purposes of approximately $4,319,000 which, if unused to offset future taxable income, will expire in years beginning in 2018. 

17

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-K FOR THE YEAR ENDED JUNE 30, 2013 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.

General

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, ecoONE Marketing Group and Natural Choices Home Safe Products.

The Company develops, manufactures, markets and sells a range of non-toxic, environmentally 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).

The Company has a two mature, actively marketed product lines known as the ecoONE® Spa Treatment system as well as ecoONE® Pool conditioner and Natural Choices household cleaning products.

The Company markets and sells its product lines directly, through pool, spa, hardware, specialty and other retail outlets in the US, Canada and Europe. The products are also sold via Pacific Sands distributors, manufacturers’ representatives and internationally established pool and spa industry distribution networks. The Company’s products are also sold through numerous popular pool and spa websites.  The Company’s Natural Choices branded products are sold in numerous retail outlets around the country as well as dozens of the top environmentally-oriented websites. The Company has revamped its own website and has been selling products through the Company’s website.

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

Management believes the Company must continue to provide new and innovative products and branding to the consumer in order to grow its business. Research and product development activities, designed to enable sustained organic growth, continued to carry a high priority during the past fiscal year. While many of the benefits from these efforts will not be realized until future years, management believes these activities demonstrate the Company’s commitment to future growth. The Company has entered into a service agreement with an outside marketing development group in which the outside marketing development group provides the Company with consulting services to assist in enhancing the value of the Company’s current products and facilitate change and innovation for existing products branded by the Company.

Management intends to continue the aggressive marketing and sale of its products through a widening base of retail outlets, distribution centers, OEM arrangements and private label manufacturing 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.

To date, the Company has funded operations through a combination of revenues from the sale of its products, established credit with vendors, issuing convertible debt and the sale of rule 144 stock 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.

18

RESULTS OF OPERATIONS

Results for the three months ending March 31, 2015, compared to the three months ending March 31, 2014.

For the three months ended March 31, 2015, net sales were $592,491, a decrease of 32% from net sales of $781,253 for the three months ended March 31, 2014. The Company has rebalanced its customer base, reducing the amount of concentration away from a few higher volume low margin customers with less than favorable payment terms to a broader mix of smaller and medium sized companies accepting more favorable payment terms and who have potential to grow with the Company in the future.

For the three months ended March 31, 2015, cost of sales was $281,486 compared to $474,931 for the same period in the previous fiscal year.  The Company’s gross margin was 52% for the three months ended March 31, 2015, and 39% for the three months ended March 31, 2014. The Company has conducted a complete and detailed review of all the products offered including re-costing and evaluating the profitability and long term viability of each item. As a result the Company reduced the total number of items being offered by approximately 35%, with only slight impact to our total revenue. As a result the gross margin improved by 13%. These changes have also freed up considerable capacity so the Company is in a position to grow the sales of higher margin items that have more potential for growth in general.

For the three months ended March 31, 2015, and 2014, selling and general administrative expenses were $392,270 and $370,434, respectively. We have made some significant progress in developing some new marketing and branding initiatives that will help us better capitalize on some of our existing product lines as well as to establish our own brands in the market in other categories.

Interest expense for the three months ended March 31, 2015, was $83,767 compared to $20,973 for the three months ended March 31, 2014.  During the three months ended March 31, 2015, the Company expensed $48,134 of debt discount to interest expense. The additional increase in interest expense is due to higher rate of financing.

The Company recorded a net loss of $136,590 or $0.002 loss per share for the three months ended March 31, 2015, as compared to a net loss of $83,631 or $0.001 loss per share for the three months ended March 31, 2014.

Results for the nine months ending March 31, 2015 compared to the nine months ending March 31, 2014.

For the nine months ended March 31, 2015, net sales were $1,910,213, a decrease of 7% over net sales of $2,046,338 for the nine months ended March 31, 2014. The decrease in sales is related to the Company rebalancing its customer base from low margin customers to higher margin customers.

For the nine months ended March 31, 2014, cost of sales was $1,083,021 compared to $1,223,961 for the same period in the previous fiscal year.  The Company’s gross margin increased from 40% for the nine months ended March 31, 2014, to 43% for the current fiscal year to date. The decreased cost and increased margin is a reflection of the Company working with more customers that allow for a greater gross margin.

For the nine months ended March 31, 2015, and 2014, selling and general administrative expenses were $1,433,357 and $926,852, respectively. This increase is due to the continued investment in marketing and new product development.

Interest expense for the nine months ended March 31, 2015, was $243,366 compared to $42,094 for the nine months ended March 31, 2014. During the nine months ended March 31, 2015, the Company expensed $119,957 of debt discount to interest expense. The remaining increase in interest expense is due to higher cost financing.

The company recorded a net loss of $811,717, or $0.011 loss per share for the nine months ended March 31, 2015. This compares to a net loss of $144,406, or $0.002 per share for the nine months ended March 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that the Company is positioned for sales growth but will require additional funding to continue operations. The Company's ability to achieve its objectives is dependent upon its ability to sustain and enhance its current revenue stream and to continue to raise funds through loans, vendor credit and the private placement of restricted 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 (subsequently converted to notes payable to officers), debt financings 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.

19

At March 31, 2015, the Company had negative net working capital of $468,773 composed of current assets of $562,650 and current liabilities of $1,031,423. That is compared to the $1,327 at June 30, 2014, when current assets were $888,010 and current liabilities were $889,337. The Company is currently looking for reasonable financing opportunities.

Net cash used in operating activities during the nine months ended March 31, 2015, was $156,600, substantially lower than the $72,775 cash provided by operating activities during the nine months ended March 31, 2014.

To finance the operating activities for the nine months ending March 31, 2015, the Company issued $70,000 in convertible notes and obtained other short term financing. For the nine months ending March 31, 2014, the Company issued $5,000 of common stock and used cash provided by operating activities.

At June 30, 2014, the Company had a stockholders’ deficit of $37,375. At March 31, 2015, the Company had stockholders’ deficit of $362,101.

The Company has no “off balance sheet” source of liquidity arrangements.

Item 3.  Quantitative and Qualitative Disclosures 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:

While the Company has not been profitable since commencing operations in 1994, for the quarter ending March 31, 2015, the Company continues to make significant improvements in manufacturing infrastructure. Continued investments in advertising and promotions resulted in Selling and Administrative expenses increasing by 35%.

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.

20

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

Evaluation of Disclosure Controls and Procedures

Based upon an evaluation of the effectiveness of disclosure controls and procedures, our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2015, Judson Just, the CFO, had resigned his position to pursue another career opportunity. The accountant for the Company provides oversight of financial transactions and Michael Michie, the CEO, reviews all financial transactions. The Company believes that while there are acceptable segregation issues as a small company this move will provide some financial benefit to the Company and with the overlapping of oversight the risk will be minimized.

21

PART II OTHER INFORMATION

Item 1 – LEGAL PROCEEDINGS

None

Item 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3 – DEFAULTS UPON SENIOR SECURITIES

None 

Item 4 – MINE SAFETY DISCLOSURES

None

Item 5 – OTHER INFORMATION

None

22

Item 6 – EXHIBITS

(a)	Exhibit Index
Exhibit	Description of the Exhibit
31.1	Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 INS	XBRL Instance Document*
101 SCH	XBRL Schema Document*
101 CAL	XBRL Calculation Linkbase Document*
101 LAB	XBRL Labels Linkbase Document*
101 PRE	XBRL Presentation Linkbase Document*
101 DEF	XBRL Definition Linkbase Document*

*           The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

23

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 15, 2015	By:	/s/ Michael Michie
		Michael Michie Chief Executive Officer

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 15, 2015	By:	/s/ Michael Michie
		Michael Michie Chief Financial Officer

24

EX-31.1

EXHIBIT 31.1

Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael D. Michie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Sands, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2015	/s/ Michael D. Michie
	Michael D. Michie
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael Michie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Sands, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2015	/s/ Michael Michie
	Michael Michie
	Chief Financial Officer
	(principal accounting officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Pacific Sands, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael D. Michie, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d), as applicable of the Securities Exchange Act of 1934: and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2015	/s/ Michael D. Michie
	Michael D. Michie
	Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Pacific Sands, Inc. and will be retained by Pacific Sands, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Pacific Sands, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael Michie, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d), as applicable of the Securities Exchange Act of 1934: and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2015	/s/ Michael Michie
	Michael Michie
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Pacific Sands, Inc. and will be retained by Pacific Sands, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

2. Description of Business and Significant Accounting Policies: Depreciation and Amortization, Policy (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Depreciation and amortization	$ 54,347	$ 48,361

XML

9. Options: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	9 Months Ended
	Mar. 31, 2015
Details
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.71%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	262.00%

XML

7. Notes Payable and Capital Lease Obligations (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Jun. 30, 2014
Notes payable - less current portion	$ 116,165	$ 230,123
Less debt discount	5,833	55,790
Accretion of debt discount	119,957
Convertible notes payable
Notes payable - less current portion	$ 17,500	$ 63,000

XML

10. Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Details
Net loss	$ (136,590)	$ (83,631)	$ (811,717)	$ (144,406)
Net Income (Loss) Available to Common Stockholders, Diluted	$ (132,770)	$ (86,631)	$ (807,898)	$ (144,406)
Weighted average shares outstanding: Basic	76,559,510	64,326,051	72,987,036	64,430,687
Weighted average shares outstanding: Diluted	76,559,510	64,326,051	72,987,036	64,430,687
Loss per share: Basic	$ (0.002)	$ (0.001)	$ (0.011)	$ (0.002)
Loss per share: Diluted	$ (0.002)	$ (0.001)	$ (0.011)	$ (0.002)

XML

7. Notes Payable and Capital Lease Obligations: Schedule of notes payable and capital lease obligations (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Notes payable - less current portion	$ 116,165	$ 230,123
Less debt discount	(5,833)	(55,790)
Long-term Debt and Capital Lease Obligations, Including Current Maturities	530,747	576,938
Current portion of notes payable and capital leases	(414,582)	(346,815)
Promissory Note - Unrelated Party
Notes payable - less current portion	25,000	53,800
Convertible notes payable
Notes payable - less current portion	17,500	63,000
Notes payable - stockholders
Notes payable - less current portion	230,000	304,000
Promissory Note - Related Party
Notes payable - less current portion		65,000
Promissory Note - Former executive officer
Notes payable - less current portion	9,060	55,863
Capital Lease
Notes payable - less current portion	51,630
Note payable - Capital Access
Notes payable - less current portion	124,545
Promissory Note - Kenosha Area Business Alliance
Notes payable - less current portion	$ 78,845	$ 91,065

XML

7. Notes Payable and Capital Lease Obligations: Schedule of Derivative Liabilities at Fair Value (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Derivative Liabilities at Fair Value

		Level 1		Level 2		Level 3
Embedded conversion derivative liability:
March 31, 2015	$	-	$	-	$	13,100

XML

11. Income Taxes (Details) (USD $)	Mar. 31, 2015
Details
Operating loss carryforwards	$ 4,319,000

XML

2. Description of Business and Significant Accounting Policies: Use of Accounting Estimates (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Use of Accounting Estimates

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.

XML

7. Notes Payable and Capital Lease Obligations: Schedule of Derivative Liabilities at Fair Value (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Embedded conversion derivative liability	$ 13,100	$ 68,298

XML

3. Going Concern (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Accumulated deficit	$ 6,626,134	$ 5,814,417
Total Stockholders' Equity	$ 362,101	$ 37,375

XML

11. Income Taxes: Schedule of deferred tax assets (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of deferred tax assets

	March 31, 2015		June 30, 2014
Net operating loss carryforwards	$	1,814,000	$	1,476,000
Deferred compensation		4,000		23,000
Deferred rent expense		-		4,000
Accounts receivable allowance		10,000		5,000
Valuation allowance		(1,828,000)		(1,505,000)
Net deferred tax asset	$	--	$	--

XML

8. Stockholders' Deficit (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Jun. 30, 2014
Common stock shares issued	85,790,953	66,811,354
Stock Issuance 1
Common stock shares issued	175,000
Proceeds from common stock issued	$ 7,000
Stock Issuance 2
Common stock shares issued	500,000
Proceeds from common stock issued	15,000
Stock Issuance 3
Common stock shares issued	1,934,400
Proceeds from common stock issued	77,376
Stock Issuance 4
Common stock shares issued	288,467
Proceeds from common stock issued	11,539
Stock Issuance 5
Common stock shares issued	120,192
Proceeds from common stock issued	4,808
Stock Issuance 6
Common stock shares issued	1,625,000
Proceeds from common stock issued	65,000
Stock Issuance 7
Common stock shares issued	120,000
Proceeds from common stock issued	6,000
Stock Issuance 8
Common stock shares issued	300,000
Proceeds from common stock issued	15,000
Stock Issuance 9
Common stock shares issued	208,333
Proceeds from common stock issued	8,333
Stock Issuance 10
Common stock shares issued	600,000
Proceeds from common stock issued	12,000
Stock Issuance 11
Common stock shares issued	674,157
Proceeds from common stock issued	12,000
Stock Issuance 12
Common stock shares issued	1,034,483
Proceeds from common stock issued	15,000
Stock Issuance 13
Common stock shares issued	1,562,500
Proceeds from common stock issued	15,000
Stock Issuance 14
Common stock shares issued	1,309,091
Proceeds from common stock issued	9,000
Stock Issuance 15
Common stock shares issued	2,112,676
Proceeds from common stock issued	15,000
Stock Issuance 16
Common stock shares issued	3,081,967
Proceeds from common stock issued	17,500
Stock Issuance 17
Common stock shares issued	3,333,333
Proceeds from common stock issued	$ 20,000

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7. Notes Payable and Capital Lease Obligations: Schedule of Maturities of Notes Payable and Capital Lease Obligations (Details) (USD $)	Mar. 31, 2015
Details
2015	$ 414,582
2016	67,381
2017	24,692
2018	20,547
2019 and thereafter	$ 3,545

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4. Inventories

9 Months Ended

Mar. 31, 2015

Notes

4. Inventories

4.               INVENTORIES

Inventories at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Raw materials	$	154,209	$	219,222
Finished goods		49,352		40,201
Total	$	203,561	$	259,423

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4. Inventories: Schedule of inventories (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Raw Materials	$ 154,209	$ 219,222
Finished goods	49,352	40,201
Inventories	$ 203,561	$ 259,423

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5. Property and Equipment: Schedule of Property and Equipment (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Property and Equipment

	March 31, 2015		June 30, 2014
Furniture	$	35,997	$	35,997
Manufacturing equipment		288,217		210,483
Office Equipment		55,543		54,435
Leasehold improvements		90,116		85,320
Computer software		52,150		52,150
Less accumulated depreciation and amortization		(301,476)		(247,130)
Property and equipment, net	$	220,547	$	191,255

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4. Inventories: Schedule of inventories (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of inventories

	March 31, 2015		June 30, 2014
Raw materials	$	154,209	$	219,222
Finished goods		49,352		40,201
Total	$	203,561	$	259,423

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11. Income Taxes: Schedule of deferred tax assets (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Net operating loss carryforwards	$ 1,814,000	$ 1,476,000
Deferred compensation	4,000	23,000
Deferred rent expense		4,000
Accounts receivable allowance	10,000	5,000
Valuation allowance	$ (1,828,000)	$ (1,505,000)

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5. Property and Equipment: Schedule of Property and Equipment (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Accumulated depreciation and amortization	$ (301,476)	$ (247,130)
Property and equipment, net	220,547	191,255
Furniture and Fixtures
Property, Plant and Equipment, Gross	35,997	35,997
Equipment
Property, Plant and Equipment, Gross	288,217	210,483
Office Equipment
Property, Plant and Equipment, Gross	55,543	54,435
Leasehold Improvements
Property, Plant and Equipment, Gross	90,116	85,320
Computer Equipment
Property, Plant and Equipment, Gross	$ 52,150	$ 52,150

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6. Accrued Expenses: Schedule of accrued expenses (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of accrued expenses

	March 31, 2015		June 30, 2014
Accrued compensation	$	92,024	$	37,295
Accrued payroll liabilities		1,514		3,354
Accrued expense		19		386
Accrued interest		5,326		13,076
Total	$	98,883	$	54,111

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7. Notes Payable and Capital Lease Obligations: Schedule of notes payable and capital lease obligations (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of notes payable and capital lease obligations

	March 31, 2015		June 30, 2014
Promissory note – unrelated party		25,000		53,800
Convertible notes (3)		17,500		63,000
Notes payable – stockholder		230,000		304,000
Promissory note – related party				65,000
Notes payable – former executive officer		9,060		55,863
Capital lease (2)		51,630		-
Note payable – Capital Access (1)		124,545		-
Promissory Note – Kenosha Area Business Alliance		78,845		91,065
Debt discount		(5,833)		(55,790)
Total obligations		530,747		576,938
Less current maturities		(414,582)		(346,815)
Total long term liabilities	$	116,165	$	230,123

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3. Going Concern

9 Months Ended

Mar. 31, 2015

Notes

3. Going Concern

3.               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, 2015, the Company has incurred cumulative losses of $6,626,134 and a stockholders’ deficit of $362,101.  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 through the sale of common stock, debt financings 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.

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7. Notes Payable and Capital Lease Obligations: Schedule of Maturities of Notes Payable and Capital Lease Obligations (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Maturities of Notes Payable and Capital Lease Obligations

2015	$	414,582
2016		67,381
2017		24,692
2018		20,547
2019 and thereafter		3,545

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2. Description of Business and Significant Accounting Policies: Accounts Receivable (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Allowance for doubtful accounts	$ 24,435	$ 11,425

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9. Options (Details) (USD $)	9 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures			3,174,000
Stock options	$ 63,478	$ 79,348

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Balance Sheets (USD $)	Mar. 31, 2015	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 4,985	$ 266,190
Trade receivables, net of allowances for doubtful accounts of $24,435 and $11,425, respectively	223,107	344,562
Inventories	203,561	259,423
Other current assets	130,997	17,835
Total Current Assets	562,650	888,010
Property and equipment, net	220,547	191,255
Other asset	2,290	2,820
Total Assets	785,487	1,082,085
Current liabilities:
Accounts payable	504,858	411,313
Accrued expenses	98,883	54,111
Deferred rent expense, current		8,800
Current portion of notes payable and capital leases, less debt discount	414,582	346,815
Embedded conversion derivative liability	13,100	68,298
Total Current Liabilities	1,031,423	889,337
Notes payable - less current portion	116,165	230,123
Total Liabilities	1,147,588	1,119,460
Stockholders' deficit
Preferred series A stock (1,000,000 shares authorized, 0 shares issued and outstanding)
Common stock, par value $0.001 per share; (200,000,000 shares authorized, 85,790,953 and 66,811,354 shares issued and outstanding, at March 31, 2015, and June 30, 2014, respectively)	85,790	66,811
Additional paid in capital	6,178,243	5,710,231
Accumulated deficit	(6,626,134)	(5,814,417)
Total Stockholders' Deficit	(362,101)	(37,375)
Total Liabilities and Stockholders' Equity	$ 785,487	$ 1,082,085

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6. Accrued Expenses: Schedule of accrued expenses (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Accrued Salaries, Current	$ 92,024	$ 37,295
Accrued Payroll Taxes, Current	1,514	3,354
Other Accrued Liabilities, Current	19	386
Accrued Interest	5,326	13,076
Total Accrued Expenses	$ 98,883	$ 54,111

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1. Basis of Presentation

9 Months Ended

Mar. 31, 2015

Notes

1. Basis of Presentation

1.               BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Pacific Sands, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Pacific Sands, Inc’s Annual Report filed with the SEC on Form 10-K for the year ended June 30, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported elsewhere in this Form 10-Q have been omitted.

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9. Options: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

Expectedlife(years)	10
Riskfreerateofreturn	2.710%
Dividendyield	0
Expectedvolatility	262%

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2. Description of Business and Significant Accounting Policies: Accounts Receivable (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Accounts Receivable

Accounts Receivable - The Company makes judgments as to the collectability 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 collectability of the receivables. Management believes that the current specific and general receivable reserves aggregating $24,435 are adequate as of March 31, 2015.

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10. Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

	Three months ended March 31,					Nine months ended March 31,
		2015		2014		2015		2014
Net loss – basic	$	(136,590)	$	(83,631)	$	(811,717)	$	(144,406)
Interest expense for conversion of promissory note		-		-		-		-
Net loss diluted		(132,770)		(86,631)		(807,898)		(144,406)
Weighted average shares – basic		76,559,510		64,326,051		72,987,036		64,430,687
Incremental shares outstanding
Assuming the conversion of dilutive
Convertible promissory notes
Weighted average shares – diluted		76,559,510		64,326,051		72,987,036		64,430,687
Loss per share
Basic	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)
Diluted	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)

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2. Description of Business and Significant Accounting Policies: Basic and Diluted Net Loss Per Share (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Basic and Diluted Net Loss Per Share

Basic and Diluted Net Loss Per Share - Basic net loss per share is based upon the weighted average number of common shares outstanding.  Dilutive shares related to outstanding convertible promissory notes are not included in the computation of the weighted average number of shares outstanding for dilutive net loss per common share, as the effect would be anti-dilutive.

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2. Description of Business and Significant Accounting Policies

9 Months Ended

Mar. 31, 2015

Notes

2. Description of Business and Significant Accounting Policies

2.               DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Pacific Sands, Inc. with the right to do business as Natural Water Technologies (the "Company" or “Pacific Sands”) was incorporated in Nevada on July 7, 1994.  Pacific Sands develops, manufactures, markets and sells a range of nontoxic, environmentally friendly cleaning and water-treatment products based on proprietary blended botanical, nontoxic and natural chemical technologies. The Company’s products have applications ranging from water maintenance (spas, swimming pools, fountains, decorative ponds) to cleaning (nontoxic household and industrial) and pet care.

In February of 2008, the Company acquired Natural Choices Home Safe Products, LLC (“Natural Choices”), a developer and manufacturer of environmentally friendly cleaning and laundry products. The acquisition added dozens of new products to the Pacific Sands portfolio of earth, health, pet and kid-friendly offerings, including Oxy-Boost an oxygen-bleach based, chlorine-free bleach alternative. The Company now has a large selection of oxygen- bleach based formulations available both for retail distribution under its ecoone®, e-2 elemental earth® and Natural Choices brands as well as for contract manufacturing and re-label.

The Company markets and sells its product lines directly, over the Internet and through pool, spa, hardware, specialty and other retail outlets in the US, Canada and Europe. The products are also sold via Pacific Sands distributors, manufacturers’ representatives and internationally established pool and spa industry distribution networks. The Company’s products are also sold through numerous popular pool and spa websites.  The Company’s Natural Choices branded products are sold in numerous retail outlets around the country and in Europe as well as dozens of the top environmentally-oriented websites.

Inventories - Inventories are stated at the lower of cost or market on the first-in, first-out (FIFO) basis.

Depreciation and Amortization - For financial reporting purposes, depreciation and amortization of property and equipment has been computed over estimated useful lives of two to seven years primarily using the straight-line method.  Depreciation and amortization charges totaled $54,347 and $48,361 during the nine months ended March 31, 2015, and 2014, respectively.

Income Taxes - The Company uses the asset and liability method in accounting for income taxes.  Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.  The temporary differences relate primarily to net operating loss carry-forwards and deferred compensation charges.  A valuation allowance is recorded for deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized through future operations.

The income tax accounting process for uncertainty in income taxes 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 whether 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 statements. Management's review of the Company’s possible tax positions at March 31, 2015, and June 30, 2014, did not result in any positions requiring disclosure.  Should the Company need to record interest and/or penalties related to uncertain tax positions, or other tax authority assessments, it would classify such expenses as part of the income tax provision.

The Company’s income tax returns for the years ending June 30, 2012, 2013 and 2014 are subject to examination by the IRS and related states, generally for three years after filed.

Revenue Recognition - Revenue is recognized when the related products are shipped unless the customer is under a “bill and hold” arrangement. Under a “bill and hold” arrangement revenue is recognized when the product is manufactured, invoiced and set aside in a specifically designated finished goods area. Upon invoicing under this arrangement ownership has passed to the buyer with no residual warranty obligation or right of return. All customers under a “bill and hold” arrangement have committed to purchases and have specifically requested they be on a “bill and hold” arrangement. In all cases goods are transferred to a designated finished goods fulfillment location under a fulfillment arrangement and are complete and ready for shipment. These “bill and hold” goods are either privately labeled or set aside exclusively for the customers use.

Customer Deposits – The Company reserves the right to request deposits on product orders. Deposits are requested for new customers or larger-than-normal orders for regular customers. When the Company receives a deposit on a large order then the Company may choose to progress bill for that order.

Accounts Receivable - The Company makes judgments as to the collectability 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 collectability of the receivables. Management believes that the current specific and general receivable reserves aggregating $24,435 are adequate as of March 31, 2015.

Advertising and Promotional Costs - Advertising and promotion costs are expensed as incurred.  During the nine months ended March 31, 2015, and 2014, advertising and promotion costs totaled $440,829 and $58,393, respectively.

Basic and Diluted Net Loss Per Share - Basic net loss per share is based upon the weighted average number of common shares outstanding.  Dilutive shares related to outstanding convertible promissory notes are not included in the computation of the weighted average number of shares outstanding for dilutive net loss per common share, as the effect would be anti-dilutive.

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.

Recent Accounting Pronouncements – In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018.

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Balance Sheets (Parenthetical)
Allowance for doubtful accounts	$ 24,435	$ 11,425
Preferred stock shares authorized	1,000,000	1,000,000
Preferred stock shares issued
Preferred stock shares outstanding
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	85,790,953	66,811,354
Common stock shares outstanding	85,790,953	66,811,354

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2. Description of Business and Significant Accounting Policies: Nature of Business (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Nature of Business

Nature of Business - Pacific Sands, Inc. with the right to do business as Natural Water Technologies (the "Company" or “Pacific Sands”) was incorporated in Nevada on July 7, 1994.  Pacific Sands develops, manufactures, markets and sells a range of nontoxic, environmentally friendly cleaning and water-treatment products based on proprietary blended botanical, nontoxic and natural chemical technologies. The Company’s products have applications ranging from water maintenance (spas, swimming pools, fountains, decorative ponds) to cleaning (nontoxic household and industrial) and pet care.

In February of 2008, the Company acquired Natural Choices Home Safe Products, LLC (“Natural Choices”), a developer and manufacturer of environmentally friendly cleaning and laundry products. The acquisition added dozens of new products to the Pacific Sands portfolio of earth, health, pet and kid-friendly offerings, including Oxy-Boost an oxygen-bleach based, chlorine-free bleach alternative. The Company now has a large selection of oxygen- bleach based formulations available both for retail distribution under its ecoone®, e-2 elemental earth® and Natural Choices brands as well as for contract manufacturing and re-label.

The Company markets and sells its product lines directly, over the Internet and through pool, spa, hardware, specialty and other retail outlets in the US, Canada and Europe. The products are also sold via Pacific Sands distributors, manufacturers’ representatives and internationally established pool and spa industry distribution networks. The Company’s products are also sold through numerous popular pool and spa websites.  The Company’s Natural Choices branded products are sold in numerous retail outlets around the country and in Europe as well as dozens of the top environmentally-oriented websites.

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Document and Entity Information	9 Months Ended
	Mar. 31, 2015	May 15, 2015
Document and Entity Information
Entity Registrant Name	PACIFIC SANDS INC
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Entity Central Index Key	0001069799
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		89,811,292
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Incorporation, State Country Name	Nevada
Entity Incorporation, Date of Incorporation	Jul. 07, 1994

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2. Description of Business and Significant Accounting Policies: Inventories (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Inventories

Inventories - Inventories are stated at the lower of cost or market on the first-in, first-out (FIFO) basis.

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Statements Of Operations (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statements Of Operations
Net sales	$ 592,491	$ 781,253	$ 1,910,213	$ 2,046,338
Cost of sales	281,486	474,931	1,083,022	1,223,961
Gross profit	311,005	306,322	827,191	822,377
Selling and administrative expenses	392,270	370,434	1,433,356	926,852
Loss from operations	(81,265)	(64,112)	(606,165)	(104,475)
Other income (expense)
Interest expense	(83,767)	(20,973)	(243,365)	(42,094)
Gain(loss) on derivative liability	22,959		31,060
Other income (expense)	5,483	1,454	6,753	2,163
Total other expense	(55,325)	(19,519)	(205,552)	(39,931)
Loss before income taxes	(136,590)	(83,631)	(811,717)	(144,406)
Income taxes
Net loss	$ (136,590)	$ (83,631)	$ (811,717)	$ (144,406)
Loss per share:
Loss per share: Basic	$ (0.002)	$ (0.001)	$ (0.011)	$ (0.002)
Loss per share: Diluted	$ (0.002)	$ (0.001)	$ (0.011)	$ (0.002)
Weighted average share outstanding:
Weighted average shares outstanding: Basic	76,559,510	64,326,051	72,987,036	64,430,687
Weighted average shares outstanding: Diluted	76,559,510	64,326,051	72,987,036	64,430,687

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7. Notes Payable and Capital Lease Obligations

9 Months Ended

Mar. 31, 2015

Notes

7. Notes Payable and Capital Lease Obligations

7.               NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Promissory note – unrelated party		25,000		53,800
Convertible notes (3)		17,500		63,000
Notes payable – stockholder		230,000		304,000
Promissory note – related party				65,000
Notes payable – former executive officer		9,060		55,863
Capital lease (2)		51,630		-
Note payable – Capital Access (1)		124,545		-
Promissory Note – Kenosha Area Business Alliance		78,845		91,065
Debt discount		(5,833)		(55,790)
Total obligations		530,747		576,938
Less current maturities		(414,582)		(346,815)
Total long term liabilities	$	116,165	$	230,123

The scheduled annual maturities for notes payable and capital lease obligations are as follows for the years ending March 31,

2015	$	414,582
2016		67,381
2017		24,692
2018		20,547
2019 and thereafter		3,545

(1) The Company issued a short term note payable for $150,000 to support current operations and payoff an existing higher rate note. This note bears 19% annual interest and matures on April 12, 2016. Under the terms of this agreement daily payments of $540.90 are required.

(2) The Company entered into a capital lease agreement for new manufacturing equipment. The lease has a $1 purchase option upon maturity. The lease agreement was for $72,453. This note requires monthly payments of $2,466. This lease bears 18.4% annual interest and matures on July 7, 2017.

(3) The Company issued two additional convertible notes for $32,500 and $37,500, during the three months ended September 30, 2014, for a total of $130,000 in convertible debt. During the current fiscal year $115,500 of the convertible debt was converted into equity.

The fair value of the conversion features are calculated at the time of issuance and the Company discounts the debt and records a derivative liability for the calculated value using a Black-Scholes option-pricing model. Changes in the fair value of the derivative liability thereafter are recorded in other income (expense) in the statement of operations. Upon conversion of the convertible debt to stock, the Company reclassifies the related embedded conversion derivative liability to paid-in capital. The Company recognizes expense for accretion of the convertible debentures discount over the term of the note. The Company has considered the provision of ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in each debenture could result in the note principal converted to a variable number of the Company’s common shares.

Debt Discount – Costs incurred with parties who are providing short-term financing, which include the fair value of an embedded derivative conversion, are reflected as a debt discount and are amortized over the life of the related debt. When the debt is repaid, the related debt discount is recorded as additional interest expense and the related derivative liability is relieved into additional paid in capital.

At March 31, 2015, convertible notes totaled $17,500 of which $5,833 was attributable to the discount on debt. For the period ended March 31, 2015, $119,957 of the debt discount was amortized and recorded as interest expense.

At March 31, 2015, $115,500, $94,138 and $3,820, of the convertible debt, derivative liability and accrued interest, respectively were converted into 13,708,207 shares of common stock.  $94,138 is the portion of the derivative that was written off to equity and $9,723 of the remaining debt discount was amortized and recorded as interest expense.

The following table presents the embedded conversion derivative liabilities, the Company’s only financial liabilities measured and recorded at fair value on the Company’s balance sheet on a recurring basis, and their level within the fair value hierarchy as of March 31, 2015:

		Level 1		Level 2		Level 3
Embedded conversion derivative liability:
March 31, 2015	$	-	$	-	$	13,100

The following table reconciles for the period ended March 31, 2015, the beginning and ending balances for financial instruments that are recognized at fair value in the financial statements:

Balance at June 30, 2014	$	68,298
Issued during period ending March 31, 2015		70,000
Reductions in fair value due to conversion of Convertible Debentures into common stock		(94,138)
Gain on fair value adjustments to embedded conversion derivative liabilities		(31,060)
Balance of embedded derivative liability as of March 31, 2015	$	13,100

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6. Accrued Expenses

9 Months Ended

Mar. 31, 2015

Notes

6. Accrued Expenses

6.               ACCRUED EXPENSES

Accrued expenses at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Accrued compensation	$	92,024	$	37,295
Accrued payroll liabilities		1,514		3,354
Accrued expense		19		386
Accrued interest		5,326		13,076
Total	$	98,883	$	54,111

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2. Description of Business and Significant Accounting Policies: Advertising and Promotional Costs (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Advertising and Promotional Costs

Advertising and Promotional Costs - Advertising and promotion costs are expensed as incurred.  During the nine months ended March 31, 2015, and 2014, advertising and promotion costs totaled $440,829 and $58,393, respectively.

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2. Description of Business and Significant Accounting Policies: Depreciation and Amortization, Policy (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Depreciation and Amortization, Policy

Depreciation and Amortization - For financial reporting purposes, depreciation and amortization of property and equipment has been computed over estimated useful lives of two to seven years primarily using the straight-line method.  Depreciation and amortization charges totaled $54,347 and $48,361 during the nine months ended March 31, 2015, and 2014, respectively.

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10. Loss Per Share

9 Months Ended

Mar. 31, 2015

Notes

10. Loss Per Share

10.               LOSS PER SHARE

Basic loss per common share is based on the weighted average number of common shares outstanding in each period and net loss.

The following table sets forth the computation of basic and diluted loss per share.

	Three months ended March 31,					Nine months ended March 31,
		2015		2014		2015		2014
Net loss – basic	$	(136,590)	$	(83,631)	$	(811,717)	$	(144,406)
Interest expense for conversion of promissory note		-		-		-		-
Net loss diluted		(132,770)		(86,631)		(807,898)		(144,406)
Weighted average shares – basic		76,559,510		64,326,051		72,987,036		64,430,687
Incremental shares outstanding
Assuming the conversion of dilutive
Convertible promissory notes
Weighted average shares – diluted		76,559,510		64,326,051		72,987,036		64,430,687
Loss per share
Basic	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)
Diluted	$	(0.002)	$	(0.001)	$	(0.011)	$	(0.002)

Convertible promissory notes (and related expenses) were not included in the computation of diluted loss per common share for the three- and nine-month periods ended March 31, 2015 and 2014, since their inclusion would have resulted in an anti-dilutive effect.

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8. Stockholders' Deficit

9 Months Ended

Mar. 31, 2015

Notes

8. Stockholders' Deficit

8.               STOCKHOLDERS’ DEFICIT

Transactions for the nine months ended March 31, 2015, are as follows:     

On July 1, 2014, the Company issued 175,000 shares of common stock for $7,000 for payment of interest on a note payable.

On July 4, 2014, the Company issued 500,000 shares of common stock for $15,000 for payment of interest on a note payable.

On July 9, 2014, the Company issued 1,934,400 shares of common stock to an outside consulting company for prepayment of services to be rendered of $77,376.

On July 18, 2014, the Company issued 288,467 shares of common stock to officers of the company for $11,539 for payment of compensation.

On July 31, 2014, the Company issued 120,192 shares of common stock to an officer of the company for $4,808 for payment of compensation.

On August 8, 2014, the Company issued 1,625,000 shares of common stock to a related party for $65,000 to convert a note payable.

On October 1, 2014, the Company issued 120,000 shares of common stock to an employee for $6,000 as payment for compensation.

On October 4, 2014, the Company issued 300,000 shares of common stock for $15,000 as payment of interest on a note payable.

On November 17, 2014, the Company issued 208,333 shares of common stock for $8,333 as payment of interest on a note payable. 

On December 31, 2014, the Company issued 600,000 shares of common stock for $12,000 to convert a portion of a convertible note payable.

On January 23, 2015, the Company issued 674,157 shares of common stock for $12,000 to convert a portion of a convertible note payable.

On January 29, 2015, the Company issued 1,034,483 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On February 3, 2015, the Company issued 1,562,500 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On March 4, 2015, the Company issued 1,309,091 shares of common stock for $9,000 to convert a portion of a convertible note payable and $2,520 in lieu of interest.

On March 10, 2015, the Company issued 2,112,676 shares of common stock for $15,000 to convert a portion of a convertible note payable.

On March 19, 2015, the Company issued 3,081,967 shares of common stock for $17,500 to convert a portion of a convertible note payable and $1,300 in lieu of interest.

On March 24, 2015, the Company issued 3,333,333 shares of common stock for $20,000 to convert a portion of a convertible note payable.

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9. Options

9 Months Ended

Mar. 31, 2015

Notes

9. Options

9.               OPTIONS

For all of the Company’s stock-based compensation plans, the fair value of each grant was estimated at the date of grant using the Black-Scholes option-pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield (which is assumed to be zero, as the Company has not paid cash dividends to date and does not currently expect to pay cash dividends) and the expected term of the option. Expected volatilities utilized in the model are based mainly on the historical volatility of the Company’s stock price over a period commensurate with the expected life of the share option as well as other factors. The risk-free interest rate is derived from the zero-coupon U.S. government issues with a remaining term equal to the expected life at the time of grant.

On November 1^st, 2013, the Company granted certain consultants options to purchase 3,174,000 shares of common stock under an agreement at an exercise price of $0.06 per share. Approximately eight (8) percent of the options vested monthly through October 31, 2014. The Company recorded a total expense of $63,478 related to these options during the nine months ended March 31, 2015.

Expectedlife(years)	10
Riskfreerateofreturn	2.710%
Dividendyield	0
Expectedvolatility	262%

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11. Income Taxes

9 Months Ended

Mar. 31, 2015

Notes

11. Income Taxes

11.             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, 2015, and June 30, 2014, are as follows:

	March 31, 2015		June 30, 2014
Net operating loss carryforwards	$	1,814,000	$	1,476,000
Deferred compensation		4,000		23,000
Deferred rent expense		-		4,000
Accounts receivable allowance		10,000		5,000
Valuation allowance		(1,828,000)		(1,505,000)
Net deferred tax asset	$	--	$	--

At March 31, 2015, the Company has net operating loss carry-forwards for Federal tax purposes of approximately $4,319,000 which, if unused to offset future taxable income, will expire in years beginning in 2018. 

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7. Notes Payable and Capital Lease Obligations: Fair value assets rollforward (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Fair value assets rollforward

Balance at June 30, 2014	$	68,298
Issued during period ending March 31, 2015		70,000
Reductions in fair value due to conversion of Convertible Debentures into common stock		(94,138)
Gain on fair value adjustments to embedded conversion derivative liabilities		(31,060)
Balance of embedded derivative liability as of March 31, 2015	$	13,100

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7. Notes Payable and Capital Lease Obligations: Fair value assets rollforward (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Jun. 30, 2014
Details
Embedded conversion derivative liability	$ 13,100	$ 68,298
Financial instruments recognized at fair value issued during the period	70,000
Reductions in fair value due to conversion of Convertible Debentures into common stock	(94,138)
Gain on fair value adjustments to embedded conversion derivative liabilities	$ (31,060)

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2. Description of Business and Significant Accounting Policies: Revenue Recognition (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Revenue Recognition

Revenue Recognition - Revenue is recognized when the related products are shipped unless the customer is under a “bill and hold” arrangement. Under a “bill and hold” arrangement revenue is recognized when the product is manufactured, invoiced and set aside in a specifically designated finished goods area. Upon invoicing under this arrangement ownership has passed to the buyer with no residual warranty obligation or right of return. All customers under a “bill and hold” arrangement have committed to purchases and have specifically requested they be on a “bill and hold” arrangement. In all cases goods are transferred to a designated finished goods fulfillment location under a fulfillment arrangement and are complete and ready for shipment. These “bill and hold” goods are either privately labeled or set aside exclusively for the customers use.

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2. Description of Business and Significant Accounting Policies: Statement of Cash Flows (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Statement of Cash Flows

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.

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7. Notes Payable and Capital Lease Obligations: Conversion of Debt to Equity (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Conversion of debt and derivative liability to equity	$ 209,638
Conversion of accrued interest to equity	49,153	12,000
Convertible Debt
Conversion of debt and derivative liability to equity	115,500
Derivative Liability
Conversion of debt and derivative liability to equity	94,138
Accrued Interest
Conversion of accrued interest to equity	$ 3,820

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2. Description of Business and Significant Accounting Policies: Advertising and Promotional Costs (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Advertising Expense	$ 440,829	$ 58,393

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Statements Of Cash Flows (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net loss	$ (811,717)	$ (144,406)
Adjustments to reconcile net loss to net cash used in operating activities -
Depreciation and amortization	54,347	48,361
Stock options	63,478	79,348
Common shares issued for services and compensation	99,722
Gain (loss) on derivative	(31,060)
Accretion of debt discount	119,957
Common shares issued for interest	49,153	12,000
Deferred rent	(8,800)	(13,200)
Changes in assets and liabilities:
Change in trade accounts receivable	121,455	(135,234)
Change in inventories	55,862	(90,266)
Change in other assets	(7,314)	7,068
Change in accounts payable and other current liabilities	138,317	309,104
Net Cash Provided by (Used in) Operating Activities	(156,600)	72,775
Cash flows from investing activities:
Purchases of equipment	(11,185)	(25,073)
Prepaid brand development and other costs	(105,318)
Net Cash Used in Investing Activities	(116,503)	(25,073)
Cash flows from financing activities:
Proceeds from common stock issued		5,000
Convertible notes payable	70,000
Proceeds from notes payable	311,240	220,958
Repayment of notes payable and long term obligations	(369,342)	(331,882)
Net Cash Provided by (Used in) Financing Activities	11,898	(105,924)
Net decrease in cash and cash equivalents	(261,205)	(58,222)
Cash and cash equivalents:
Beginning of period	266,190	90,040
End of period	4,985	31,818
Cash paid during the period for:
Cash paid for interest	82,005	29,652
Cash paid for income taxes
Supplemental disclosure of non-cash financing and investing activities
Conversion of debt and derivative liability to equity	209,638
Acquisition of stock for notes payable		31,000
Conversion of accrued interest to equity	$ 49,153	$ 12,000

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5. Property and Equipment

9 Months Ended

Mar. 31, 2015

Notes

5. Property and Equipment

5.               PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2015, and June 30, 2014, consisted of the following:

	March 31, 2015		June 30, 2014
Furniture	$	35,997	$	35,997
Manufacturing equipment		288,217		210,483
Office Equipment		55,543		54,435
Leasehold improvements		90,116		85,320
Computer software		52,150		52,150
Less accumulated depreciation and amortization		(301,476)		(247,130)
Property and equipment, net	$	220,547	$	191,255

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2. Description of Business and Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Recent Accounting Pronouncements

Recent Accounting Pronouncements – In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018.

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2. Description of Business and Significant Accounting Policies: Nature of Business (Details)	9 Months Ended
	Mar. 31, 2015
Details
Entity Incorporation, State Country Name	Nevada
Entity Incorporation, Date of Incorporation	Jul. 07, 1994

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2. Description of Business and Significant Accounting Policies: Income Taxes (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Income Taxes

Income Taxes - The Company uses the asset and liability method in accounting for income taxes.  Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.  The temporary differences relate primarily to net operating loss carry-forwards and deferred compensation charges.  A valuation allowance is recorded for deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized through future operations.

The income tax accounting process for uncertainty in income taxes 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 whether 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 statements. Management's review of the Company’s possible tax positions at March 31, 2015, and June 30, 2014, did not result in any positions requiring disclosure.  Should the Company need to record interest and/or penalties related to uncertain tax positions, or other tax authority assessments, it would classify such expenses as part of the income tax provision.

The Company’s income tax returns for the years ending June 30, 2012, 2013 and 2014 are subject to examination by the IRS and related states, generally for three years after filed.