UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended~~: September~~ 30December 31, 2015

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period ~~from____________________to______________________~~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 ☒ No ☐

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 ☒ No ☐

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 ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒

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

The number of shares outstanding of each of the issuer's classes of common equity, as of ~~November~~ 16February 24, ~~2015~~2016 are as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	~~108~~248,~~386~~852,~~729~~356

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements	3
	Balance Sheets as of September 30, 2015, (unaudited) and June 30, 2015	3
	Balance Sheets as of December 31, 2015, (unaudited) and June 30, 2015	3
	Statements of Operations for the Three Months Ended September 30, 2015, and 2014, (unaudited)	4
	Statements of Operations for the Three and Six Months Ended December 31, 2015, and 2014 (unaudited)	4
	Statements of Cash Flows for the Three Months Ended September 30, 2015, and 2014, (unaudited)	5
	Statements of Cash Flows for the Six Months Ended December 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	1316
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1519
Item 4.	Controls and Procedures	1620
PART II OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	1720
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	1720
Item 3.	DEFAULTS UPON SENIOR SECURITIES	1720
Item 4.	MINE SAFETY DISCLOSURES	1720
Item 5.	OTHER INFORMATION	1720
Item 6.	SIGNAT EXHIBITS	1821
SIGNATURES	~~SIGNATURES~~	1922

PACIFIC SANDS, INC.
BALANCE SHEETS
SEPTEMBER 30, 2015, AND JUNE 30, 2015
DECEMBER 31, 2015, AND JUNE 30, 2015
ASSETS
	September 30, 2015			June 30, 2015
	December 31, 2015			June 30, 15
Current assets:	(Unaudited)
Cash and cash equivalents	$	1416,~~651~~702		$	30,908
Trade receivables, net of allowances for doubtful accounts of $5,000		4628,~~816~~116			121,094
Inventories		~~217~~202,~~249~~185			258,917
Other current assets		7662,~~273~~939			48,705
Total Current Assets		~~354~~309,~~989~~942			459,624
Property and equipment, net		~~185~~170,~~793~~856			201,711
Other Assets		1,~~939~~762			2,115
Total Assets	$	~~542~~482,~~721~~560		$	663,451
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	~~460~~541,~~303~~671		$	439,597
Accrued expenses		137,183			150,486
Customer Deposits		50,000			-
Current portion of notes payable and capital leases		561,783			533,929
Accrued expenses		117,608			150,486
Convertible notes, less discount of $181,417 and $155,042		90,333			17,708
Current portion of notes payable and capital leases		511,835			533,929
Derivative Liability		436,503			276,377
Convertible notes, less discount of $79,609 and $55,790		104,808			17,708
Total Current Liabilities		1,686,105			1,418,097
Embedded conversion derivative liability		216,361			276,377
Notes payable and capital leases, less current portion		68,099			88,375
Total Current Liabilities		1,542,283			1,418,097
Total Liabilities		1,754,204			1,506,472
Notes payable, less current portion		57,470			88,375
Stockholders' Deficit
Total Liabilities		1,599,753			1,506,472
Stockholders' deficit
Preferred series A stock (1,000,000 shares authorized, 0 shares issued and outstanding)		-			-
Common stock (200,000,000 shares authorized, 91,986,292 and 89,811,292 shares issued and outstanding)		91,986			89,811
Common stock (400,000,000 shares authorized, 184,182,008 and 89,811,292 shares issued and outstanding.)		184,181			89,811
Additional paid in capital		6,~~250~~522,~~002~~155			6,214,378
Accumulated deficit		(7,~~553~~823,~~471~~529	)		(7,147,210	)
Total Stockholders' Deficit		(1,211,483	)		(843,021	)
Total Stockholders' Equity		(1,117,193	)		(843,021	)
Total Liabilities and Stockholders' Deficit	$	542,721		$	663,451
Total Liabilities and Stockholders' Equity	$	482,560		$	663,451

See accompanying notes.

PACIFIC SANDS, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015, AND 2014 (UNAUDITED)

PACIFIC SANDS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2015, AND 2014
(UNAUDITED)
	Three months ended December 31,						Six months ended December 31,
	2015			2014			2015			2014
Net sales	$	166,430		$	831,677		$	393,939		$	1,317,722
Cost of sales		95,176			500,173			272,007			801,536

Gross profit		71,254			331,504			121,932			516,186

Selling and administrative expenses		234,473			447,623			515,351			1,041,086

Loss from operations		(163,219	)		(116,119	)		(393,419	)		(524,900	)

Other income
Other income		5,564			727			6,586			1,270
Gain (loss) on derivative liability		72,430			(12,776	)		11,304			8,101

Interest expense		(184,833	)		(90,167	)		(300,790	)		(159,598	)

Loss before income taxes		(270,058	)		(218,335	)		(676,319	)		(675,127	)

Income taxes		-			-			-			-

Net loss	$	(270,058	)	$	(218,335	)	$	(676,319	)	$	(675,127	)

Loss per share:
Basic	$	*		$	*		$	(.01	)	$	(.01	)
Diluted	$	*		$	*		$	(.01	)	$	(.01	)

Weighted average shares outstanding:
Basic		112,180,008			71,973,054			101,271,265			71,239,631
Diluted		112,180,008			71,973,054			101,271,265			71,239,631

*Less than $.01

	Three months ended September 30,
	2015			2014
Net sales	$	227,509		$	486,045
Cost of sales		176,831			301,363
Gross profit		50,678			184,682
Selling and administrative expenses		280,878			593,463
Income (Loss) from operations		(230,200	)		(408,781	)
Other income/expense
Other income		1,022			542
Gain (loss) on derivative liability		(61,126	)		20,878
Interest expense		(115,957	)		(69,431	)
		(176,061	)		(48,011	)
Income (Loss) before income taxes		(406,261	)		(456,792	)
Income taxes		-			-
Net income (loss)	$	(406,261	)	$	(456,792	)
Basic and diluted loss per share	$	(0.004	)	$	(0.006	)
Basic and diluted weighted average shares outstanding		90,361,564			70,506,208

See accompanying notes.

PACIFIC SANDS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015, AND 2014
FOR THE SIX MONTHS ENDED DECEMBER 31, 2015, AND 2014
(UNAUDITED)
	2015			2014
Cash flows from operating activities
Cash flows from operating activities:
Net income (loss)	$	(406,261	)	$	(456,792	)
Net loss	$	(676,319	)	$	(675,127	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Adjustments to reconcile net loss to net cash provided by (used in) operating activities -
Depreciation and amortization		1837,~~835~~875			1635,~~487~~540
Common shares issued for interest		-			22,000
Accretion of debt discount		192,141			71,823
Common shares issued for services		37,800			93,722
Stock options		-			63,478
Stock option expense		-			47,609
Common shares issued for interest		-			45,333
(Gain) loss on derivative		61,126			(20,877	)
Common shares issued for services		161,457			99,722
Accretion of debt discount		72,625			26,375
Deferred Rent		-			(8,800	)
Deferred rent		-			(4,400	)
(Gain) loss on derivative		(11,304	)		(8,101	)
Changes in assets and liabilities -
Trade accounts receivable		7492,~~278~~978			4162,~~208~~476
Inventories		4156,~~668~~732			(~~159~~11,~~522~~201	)
Other assets		(2713,~~391~~881	)		(~~223~~11,~~217~~883	)
Deferred Revenue		-			247,560
Customer deposits		50,000			20,000
Accounts payable and other current liabilities		769,~~403~~194			8592,~~208~~769
Net Used in Operating Activities		(119,917	)		(321,639	)
Net Cash Used in Operating Activities		(41,127	)		(123,971	)
Cash flows from investing activities
Cash flows from investing activities:
Purchase of equipment		(2,917	)		(5,454	)
Purchases of equipment		(7,020	)		(10,316	)
Net Cash Used in Investing Activities		(2,917	)		(5,454	)
Prepaid brand development and other costs		-			(96,720	)
Cash flows from financing activities
Net Cash Used in Investing Activities		(7,020	)		(107,036	)
Proceeds from convertible note		99,000			70,000
Cash flows from financing activities:
Proceeds from notes payable		120,000			149,640
Convertible notes payable		99,000			70,000
Repayment of notes payable and long term obligations		(112,423	)		(148,425	)
Proceeds from notes payable		270,000			159,640
Net Cash Provided by Financing Activities		106,577			71,215
Repayment of notes payable and long term obligations		(335,059	)		(249,331	)
Net decrease in cash and cash equivalents		(16,257	)		(255,878	)
Net Cash Provided by Used in Financing Activities		33,941			(19,691	)
Net decrease in cash and cash equivalents		(14,206	)		(250,698	)
Cash and cash equivalents:
Beginning of period		30,908			266,190
End of period	$	1416,~~651~~702		$	1015,~~312~~492

See accompanying notes.

PACIFIC SANDS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015, AND 2014
FOR THE SIX MONTHS ENDED DECEMBER 31, 2015, AND 2014
(UNAUDITED)
	2015			2014
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest		$	3370,~~040~~242		$	2548,~~092~~201
Income taxes		$	-		$	-
Supplemental disclosure of non cash financing and investing activities:
Supplemental disclosure of non-cash financing and investing activities
Conversion of debt to equity		$	-		$	65,000
Conversion of debt and embedded derivative liabilities to equity		$	235,045		$	88,280
Capital lease for equipment		$	-		$	72,453
Acquisition of stock for note payable		$	-		$	-

See accompanying notes.

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, 2015. 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 2015, 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") 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.

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 product are sold in numerous retail outlets around the country and in Europe as well as ~~dozens~~many of the top environmentally-oriented websites~~, including the Company's website~~.

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 $18,835 and $16,487 during the three months ended September 30, 2015, and 2014, respectively.

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 are 50% of total customer sale. There are two sets of criteria used to determine if a customer deposit is required. The first criterion is foreign customers. To ensure the validity and collectability of a foreign order the Company requires 50% of the total sale to be paid up front. The remaining 50% of the sales is to be paid upon completion of the order and prior to shipping the order to the customer. The second criterion is a new private label customer. These orders would require a 50% total deposit and the remaining 50% paid upon completion of order and prior to shipment. All customer deposits are held as a liability until the order is completed.

Advertising and Promotional Costs - Advertising and promotion costs are expensed as incurred.

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

~~Income~~Depreciation ~~Taxes~~and -Amortization ~~The Company accounts for income taxes under Section 740~~-~~10-30~~ ofFor ~~the~~financial ~~FASB~~reporting ~~Accounting Standards Codification~~purposes, ~~which~~depreciation ~~requires~~and ~~recognition~~amortization of ~~deferred~~property ~~tax assets~~ and ~~liabilities~~equipment ~~for~~has ~~the expected future tax consequences of events that have~~ been ~~included~~computed inover ~~the~~estimated ~~financial~~useful ~~statements~~lives ~~or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases~~ of ~~assets~~two ~~and liabilities using enacted tax rates in effect for the year in which the differences are expected~~ to ~~reverse. Deferred~~seven ~~tax~~years ~~assets~~primarily ~~are~~using ~~reduced by a valuation allowance to~~ the ~~extent~~straight-line ~~management concludes it is more likely than not that the assets will not be realized~~method. ~~Deferred~~Depreciation ~~tax assets~~ and ~~liabilities~~amortization ~~are~~charges ~~measured~~totaled ~~using~~$37,875 ~~enacted~~and ~~tax~~$35,540 ~~rates~~during ~~expected to apply to taxable income in~~ the six ~~years~~months inended ~~which~~December ~~those~~31, ~~temporary~~2015, ~~differences are expected to be recovered or settled. The effect on deferred tax assets~~ and ~~liabilities~~2014, ~~of a change in tax rates is recognized in the Statement of Operations in the period that includes the enactment date~~respectively.

~~The~~Revenue ~~Company~~Recognition ~~adopted section 740~~-~~10-25~~ ofRevenue ~~the~~is ~~FASB~~recognized ~~Accounting~~when ~~Standards~~the ~~Codification~~related ~~("Section~~products ~~740-10-25").~~are ~~Section~~shipped ~~740-10-25~~unless ~~addresses~~ the ~~determination~~customer ofis ~~whether~~under ~~tax benefits claimed or expected to be claimed on~~ a ~~tax~~bill-and-hold ~~return should be recorded in the financial statements~~arrangement. Under ~~Section~~a ~~740~~bill-10and-~~25,~~hold ~~the~~arrangement ~~Company~~revenue ~~may~~is ~~recognize~~recognized when the ~~tax~~product ~~benefit~~is ~~from~~manufactured, aninvoiced ~~uncertain~~and ~~tax~~set ~~position~~aside ~~only~~in ifa itspecifically isdesignated ~~more~~finished ~~likely~~goods ~~than~~area. ~~not~~Upon ~~that~~invoicing ~~the~~under ~~tax~~this ~~position~~arrangement ~~will~~ownership behas ~~sustained~~passed onto ~~examination by~~ the ~~taxing~~buyer ~~authorities,~~with ~~based~~no onresidual ~~the~~warranty ~~technical~~obligation ~~merits~~or right of ~~the position~~return. ~~The~~ ~~tax~~All ~~benefits~~customers ~~recognized~~under ina ~~the~~bill-and-hold ~~financial~~arrangement ~~statements~~have ~~from~~committed ~~such~~to apurchases ~~position~~and ~~should~~have bespecifically ~~measured~~requested ~~based~~they be on ~~the largest benefit that has~~ a ~~greater~~bill-and-hold ~~than~~arrangement. ~~fifty~~In ~~(50)~~all ~~percent~~cases ~~likelihood~~goods ofare ~~being~~transferred ~~realized~~to ~~upon~~a ~~ultimate~~designated ~~settlement. Section~~finished ~~740-10-25~~goods ~~also~~fulfillment ~~provides~~location ~~guidance~~under ona ~~de-recognition,~~fulfillment ~~classification,~~arrangement ~~interest~~ and ~~penalties~~are oncomplete ~~income~~and ~~taxes,~~ready ~~accounting~~for inshipment. ~~interim~~These ~~periods~~ bill-and-hold ~~requires~~goods ~~increased~~are ~~disclosures. The~~either ~~Company~~privately ~~had~~labeled noor ~~material~~set ~~adjustments~~aside toexclusively ~~its liabilities~~ for ~~unrecognized income tax benefits according to~~ the ~~provisions~~customers ~~of Section 740-10-25~~use.

~~The~~Advertising ~~Company's income tax returns for the year's ending June 30, 2012, 2013,~~ and ~~2014,~~Promotional ~~are~~Costs ~~subject~~- toAdvertising ~~examination by the IRS~~ and ~~related~~promotion ~~states,~~costs ~~generally~~are ~~for~~expensed ~~three~~as ~~years after filed~~incurred.

~~Accounts~~Income ~~Receivable~~Taxes -– The Company ~~makes~~adopted ~~judgments~~section as740 toof the ~~collectability~~FASB ofAccounting ~~trade~~Standards ~~and~~Codification. ~~other~~The Company accounts ~~receivable~~for ~~based~~income ontaxes ~~historic~~under ~~trends~~Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future ~~expectations.~~tax ~~Management~~consequences ~~estimates~~of anevents ~~allowance~~that ~~for~~have ~~doubtful~~been ~~receivables~~included in the financial statements or tax returns. Under this method, ~~which~~deferred ~~reflects~~tax ~~its~~assets ~~current~~and ~~assessment~~liabilities ofare based on the ~~collectability~~differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the ~~receivables~~year in which the differences are expected to reverse. Deferred ~~Management~~tax ~~believes~~assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the ~~current~~assets ~~specific~~will not be realized. Deferred tax assets and ~~general~~liabilities ~~receivable~~are ~~reserve~~measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of ~~$5,000~~a change in tax rates is ~~adequate~~recognized asin the Statement of ~~September~~Operations ~~30,~~in ~~2015~~the period that includes the enactment date.

~~For~~Section 740-10-25 addresses the ~~period~~determination ~~ended~~of ~~September~~whether ~~30,~~tax ~~2015,~~benefits ~~there~~claimed ~~was~~or ~~one~~expected ~~customer~~to ~~that~~be ~~accounted~~claimed ~~for~~on ~~12%~~a oftax ~~sales~~return ~~and~~should 0%be ofrecorded ~~receivables~~in the financial statements. Under ~~During~~Section 740-10-25, the ~~period~~Company ~~ended~~may ~~September~~recognize ~~30,~~the ~~2014,~~tax ~~there~~benefit ~~was~~from ~~one~~an ~~customer~~uncertain tax position only if it is more likely than not that ~~accounted~~the ~~for~~tax ~~49.8%~~position ofwill ~~sales~~be ~~and~~sustained ~~47%~~on examination by the taxing authorities, based on the technical merits of ~~receivables.~~the position. The ~~Company~~tax ~~has~~benefits ~~shifted~~recognized toin ~~selling~~the ~~more~~financial ofstatements ~~its~~from ~~branded~~such ~~products~~a ~~and~~position ~~reducing~~should be measured based on the ~~amount~~largest benefit that has a greater than fifty (50) percent likelihood of ~~private~~being ~~label~~realized ~~production~~upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company ishad no ~~longer~~material ~~producing~~adjustments ~~the~~to ~~private~~its ~~label~~liabilities ~~brand~~for ofunrecognized ~~its~~income ~~prior~~tax ~~largest~~benefits ~~customer~~and does not believe there are uncertain tax positions according to the provisions of Section 740-10-25.

~~Basic~~The ~~and~~Company's ~~Diluted~~income ~~Net~~tax ~~Loss~~returns ~~Per~~for ~~Share - Basic loss per share is based upon~~ the ~~weighted~~year's ~~average~~ending ~~number~~June ~~of common shares outstanding as. There were no common stock equivalents as of September~~ 30, 2015., ~~Dilutive~~2014, ~~shares~~ and ~~stock~~2013, ~~options~~are ~~have~~subject ~~not~~to ~~been~~examination ~~included~~by in the ~~computation~~IRS ofand ~~net~~related ~~loss per common share~~states, asgenerally ~~the~~for ~~effect~~three ~~would~~years beafter ~~anti-dilutive as of September 30, 2015~~filed.

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 $5,000 are adequate as of December 31, 2015.

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

Basic and Diluted Net Earnings (Loss) Per Share - Basic net earnings (loss) per share is based upon the weighted average number of common shares outstanding. Dilutive convertible shares and stock options 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 antidilutive.

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.

8Recent 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.

~~PACIFIC~~The ~~SANDS~~standard is effective for annual periods beginning after December 15, ~~INC~~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.

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 ~~September~~December 3031, 2015, the Company has incurred cumulative losses of $7,~~553~~823,~~471~~529. 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~~restructuring 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 ~~September~~December 3031, 2015, and June 30, 2015, consisted of the following:

	September 30, 2015		June 30, 2015
	December 31, 2015		June 30, 2015
Raw materials	$	~~183~~176,~~487~~235	$	204,032
Finished goods		3325,~~762~~950		54,885
Total	$	~~217~~202,~~249~~185	$	258,917

5. PROPERTY AND EQUIPMENT

Property and equipment at ~~September~~December 3031, 2015, and June 30, 2015, consisted of the following:

	September 30, 2015			June 30, 2015
	December 31, 2015			June 30, 2015
Furniture and office equipment	$	35,997		$	35,997
Furniture	$	35,997		$	35,997
Manufacturing equipment		~~288~~292,~~217~~320			288,217
Office equipment		58,460			55,543
Leasehold improvements		90,116			90,116
Computer software		52,150			52,150
Office equipment		58,460			55,543
Less accumulated depreciation and amortization		(358,187	)		(320,312	)
Total Property and equipment		524,940			522,024
Property and equipment, net	$	170,856		$	201,711
Less accumulated depreciation and amortization		(339,147	)		(320,312	)
Property and equipment, net	$	185,793		$	201,711

910

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

6. ACCRUED EXPENSES

Accrued expenses at ~~September~~December 3031, 2015, and June 30, 2015, consisted of the following:

	September 30, 2015		June 30, 2015
	December 31, 2015		June 30, 2015
Accrued compensation	$	~~128~~40,~~561~~100	$	~~144~~147,823
Accrued payroll taxes		1,006		1,200
Accrued payroll withholding taxes and penalties		60,848		1,200
Accrued expenses – other		-		340
Accrued expense – other		95		340
Accrued interest		716,~~616~~565		4,123
Total	$	~~137~~117,~~183~~608	$	150,486

7. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

~~Notes~~Long ~~payable~~term obligations at ~~September~~December 3031, 2015, and June 30, 2015, consisted of the following:

	September 30, 2015			June 30, 2015
	December 31, 2015			June 30, 2015
Promissory note – unrelated parties (1)	$	~~264~~178,~~959~~774		$	~~247~~274,084
Notes payable - stockholders		220,000			220,000
Notes payable – stockholders		251,868			220,000
Promissory Note – Kenosha Area Business Alliance		7066,~~389~~064			74,648
Capital Lease		39,554			45,592
Capital lease		37,619			45,592
Note payable – Vendor		34,980			34,980
Note payable - vendor		34,980			34,980
Total notes payable		629,882			622,304
Total obligations		569,305			622,304
Less current maturities		(~~561~~511,~~783~~835	)		(533,929	)
	$	68,099		$	88,375
Total long-term liabilities	$	57,470		$	88,375

~~The scheduled annual maturities for notes payable are as follows for the years ending September 30,~~11

2015	$	561,783
2016		34,185
2017		19,941
2018		13,973
2019		-

PACIFIC SANDS, INC.

(1) During the quarter the Company issued a short term note payable on July 23, 2015, for $60,000 to support current operations. This note bears 25.92% annual interest and matures on March 22, 2016. Under the terms of this agreement daily payments of $482.14 are required. The balance as of September 30, 2015 was $41,669. The Company issued a short term note payable on September 24, 2015, for $50,000 to support current operations. This note bears 43% annual interest and matures on January 30, 2016. Under the terms of this agreement daily payments of $812.50 are required. The balance as of September 30, 2015 was $47,159.

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 December 31,

2017	$	511,835
2018		28,430
2019		20,242
2020		8,798
2021 and thereafter		-

(1)

During the quarter ended December 31, 2015, the Company issued a short term note payable for $150,000 to support current operations and payoff two higher interest rate loans. This note bears 38% annual interest and matures on August 21, 2016. Under the terms of this agreement daily payments of $1,242 are required. The balance as of December 31, 2015, was $105,357. During the quarter ended September 30, 2015, the Company issued a short term note payable on July 23, 2015, for $60,000 to support current operations. This note bears 35% annual interest and matures on March 22, 2016. Under the terms of this agreement daily payments of $482.14 are required. The balance as of December 31, 2015 was $19,643. The Company issued a short term note payable on September 24, 2015, for $50,000 to support current operations. This note bears 43% annual interest and matures on January 30, 2016. Under the terms of this agreement daily payments of $812.50 are required. The note was paid in full during the period ended December 31, 2015.

8.	CONVERTIBLE DEBT

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.

A convertible note of $45,000 was issued on July 30, 2015. This note is set to mature on August 1, ~~2016~~2017. The derivative calculation was $104,852, of which $45,000 was recorded to debt discount and $59,852 to derivative gain/loss.

A convertible note of $54,000 was issued on August 12, 2015. This note is set to mature on May 11, 2016. The derivative calculation was $67,162, of which $54,000 was recorded to debt discount and $13,162 to derivative gain/loss.

At ~~September~~December 3031, 2015, convertible notes totaled $~~271~~184,~~750~~417 of which $~~181~~79,~~417~~609 was attributable to the discount on debt. For the period ended ~~September~~December 3031, 2015, $72192,~~625~~141 of the debt discount was amortized and recorded as interest expense.

During the period ended December 31, 2015, portions of convertible debt were converted into equity. $87,333 was converted into 75,795,279 shares of common stock, $147,712 is the portion of the derivative that was converted to equity and $19,433 of the remaining debt discount was recorded as interest expense.

The derivatives were valued using the Black-Scholes option pricing model with the following assumptions:

	Remeasurement			Initial Measurement
	September 30, 2015			August 7, 2015			July 30, 2015
	December 31, 2015			August 12, 2015			July 30, 2015
Market value of stock on measurement date	$	0.~~016~~0015		$	0.02		$	0.03
Risk-free interest rate		0.09~~-.34~~	%		0.09	%		0.34	%
Dividend yield		0	%		0	%		0	%
Volatility factor		~~147-220~~218	%		206	%		223	%
Term	Various			9 months			12 months

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 September 30, 2015:12

	Level 1		Level 2		Level 3
Embedded conversion derivative liability:
September 30, 2015	$	-	$	-	$	436,503

PACIFIC SANDS, INC.

~~The~~NOTES ~~following~~TO ~~table~~FINANCIAL ~~reconciles for the period ended September 30, 2015, the beginning and ending balances for financial instruments that are recognized at fair value in the financial statements:~~STATEMENTS

Balance at June 30, 2015	$	276,377
Issued during period ending September 30, 2015		99,000
(Gain) Loss on fair value adjustments		61,126
Reductions in fair value due to conversion of Convertible Debentures into common stock		-
Balance of embedded conversion of derivative liability as of September 30, 2015	$	436,503

	Level 1		Level 2		Level 3
Embedded conversion derivative liability:
December 31, 2015	$	-	$	-	$	216,361

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

Balance at June 30, 2015	$	276,377
Issued during period ending December 31, 2015		99,000
(Gain) Loss on fair value adjustments		(11,304	)
Reductions in fair value due to conversion of Convertible Debentures into common stock		(147,712	)
Balance of embedded conversion of derivative liability as of December 31, 2015	$	216,361

9. STOCKHOLDERS' DEFICIT

~~Transactions~~On ~~for~~September 28, 2015, the ~~three~~board ~~months~~of ~~ended~~directors ~~September~~polled ~~31,~~a ~~2015,~~majority ~~are~~of asshareholders ~~follows:~~ and gained approval to increase the authorized shares to 400,000,000.

Transactions for the six months ended December 31, 2015, are as follows:

On July 16, 2015, the Company issued 125,000 shares of common stock for $5,000 for payment of services rendered.

On September 11, 2015, the Company issued 2,050,000 shares of common stock to an employee for $32,800 for payment of compensation.

11On November 3, 2015, the Company issued 950,000 shares of common stock to an employee for $15,504 for payment of compensation.

~~PACIFIC~~On ~~SANDS~~November 6, ~~INC~~2015, the Company issued 15,450,437 shares of common stock to an officer for $108,153 for payment of compensation.

On December 7, 2015, the Company issued 1,315,789 shares of common stock to convert a portion of a convertible note payable.

On December 7, 2015, the Company issued 5,408,444 shares of common stock to convert a portion of a convertible note payable.

On December 15, 2015, the Company issued 8,000,000 shares of common stock to convert a portion of a convertible note payable.

On December 17, 2015, the Company issued 6,143,228 shares of common stock to convert a portion of a convertible note payable.

On December 18, 2015, the Company issued 10,823,077 shares of common stock to convert a portion of a convertible note payable.

On December 21, 2015, the Company issued 10,823,077 shares of common stock to convert a portion of a convertible note payable.

On December 22, 2015, the Company issued 6,989,702 shares of common stock to convert a portion of a convertible note payable.

On December 23, 2015, the Company issued 12,230,769 shares of common stock to convert a portion of a convertible note payable.

On December 23, 2015, the Company issued 5,310,949 shares of common stock to convert a portion of a convertible note payable.

On December 30, 2015, the Company issued 8,750,244 shares of common stock to convert a portion of a convertible note payable.

PACIFIC SANDS, INC.

NOTES TO FINANCIAL STATEMENTS

10. ~~INCOME (~~ LOSS) PER SHARE

Basic ~~income (~~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 ~~income (~~loss) per share.

	Three months ended September 30,
	Three months ended December 31,						Six months ended December 31,
	2015			2014			2015			2014
Numerator:
Net loss - basic	$	(270,058	)	$	(218,335	)	$	(676,319	)	$	(675,127	)
Basic and diluted income (loss)	$	(406,261	)	$	(456,792	)
Interest expense on conversion of promissory notes		-			-			-			-
Denominator:
Net loss diluted		(270,058	)		(218,335	)		(676,319	)		(675,127	)
Basic and diluted per share data - weighted average shares		90,361,564			70,506,208
Weighted average shares - basic		112,180,966			71,973,054			101,271,265			71,239,631
Basic and diluted loss per share	$	(.004	)	$	(.006	)
Weighted average shares - diluted		112,180,966			71,973,054			101,271,265			71,239,631
Loss per share
Basic	$	*		$	*		$	(.01	)	$	(.01	)
Diluted	$	*		$	*		$	(.01	)	$	(.01	)

*Less than $.01

Anti-dilutive securities not included in net loss per share calculation:

	Three months ended September 30,
	Six months ended December 31,
	2015		2014
Stock options		3,174,000		3,174,000
Convertible debt		38215,~~704~~000,~~308~~000		414,~~156~~400,~~250~~000

~~11. INCOME TAXES~~14

~~The~~PACIFIC ~~Company~~SANDS, ~~recognizes deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of its assets and liabilities~~INC. ~~Deferred assets are reduced by a valuation allowance when deemed appropriate.~~

~~The~~NOTES ~~tax~~TO ~~effects~~FINANCIAL ~~of existing temporary differences that give rise to significant portions of deferred tax assets at September 30, 2015, and June 30, 2015, are as follows:~~STATEMENTS

	September 30, 2015			June 30, 2015
Net operating loss carryforwards	$	2,136,000		$	2,033,000
Accounts receivable allowance		2,000			2,000
Valuation allowance		(2,138,000	)		(2,035,000	)
Net deferred tax asset	$	--		$	--

11. STOCK OPTIONS

AtOn ~~September~~November 3015, ~~2015~~2013, the Company ~~has~~entered ~~net~~into ~~operating~~a ~~loss~~marketing ~~carry-forwards~~consulting ~~for~~agreement, ~~Federal~~which ~~tax~~included ~~purposes~~authorizing issuance of ~~approximately $5~~3,~~085~~174,000 ~~which,~~stock ifoptions ~~unused~~ to ~~offset~~purchase ~~future~~shares ~~taxable~~of ~~income,~~the ~~will~~Company's ~~expire~~common instock at an exercise price of $0.06 per share. The term of the options is ten years. ~~beginning~~As inof ~~2019~~December 31, 2015, no stock options have been excercised and 3,174,000 are still outstanding.

12. ~~SUBSEQUENT~~ INCOME ~~EVENTS~~TAXES

OnThe ~~November~~Company 3,recognizes ~~2015,~~deferred tax assets and liabilities for temporary differences between the ~~Company~~financial ~~issued~~reporting ~~950,000~~and ~~shares~~tax basis of ~~common~~its ~~stock~~assets asand ~~payment~~liabilities. Deferred ~~for~~assets ~~accrued~~are ~~salaries~~reduced by a valuation allowance when deemed appropriate.

OnThe ~~November~~tax 6,effects ~~2015,~~of ~~the~~existing ~~Company~~temporary ~~issued~~differences ~~15,450,437~~that ~~shares~~give rise to significant portions of ~~common~~deferred ~~stock~~tax toassets ~~the~~at ~~CEO~~December as31, ~~payment~~2015 ~~for~~and ~~accrued~~June ~~salaries.~~30, 2014 are as follows:

	December 31, 2015			June 30, 2015
Net operating loss carryforwards	$	2,200,000		$	2,033,000
Accounts receivable allowance		2,000			2,000
Valuation allowance		(2,202,000	)		(2,035,000	)
Net deferred tax asset	$	--		$	--

At December 31, 2015, the Company has net operating loss carry-forwards for Federal tax purposes of approximately $6,132,000 which, if unused to offset future taxable income, will expire in years beginning in 2018.

13. Concentrations

For the period ended December 31, 2015, the Company had no customers that represented more than 10% of the Company's sales. For the period ended December 31, 2014, the Company's two largest customers accounted for 38% and 33% of sales, respectively and account receivable amounts are 50% and 0%, respectively.

14. Subsequent Events

During January 2016, the Company has restructured nearly a quarter of a million dollars of very high cost debt to much lower interest rates and on more sustainable payment terms.

During January 2016, portions of convertible debt were converted for a combined total of 39,783,872 shares of common stock issued for the conversions.

During February 2016, portions of convertible debt were converted for a combined total of 24,886,476 shares of common stock issued for the conversions.

On February 11, 2016, the Company came to an agreement with a vendor where the vendor agreed to allow the Company to write off the balance due to the vendor for nearly $100,000.

On February 12, 2016, the Company came to an agreement with a lender of a convertible note where the lender agreed to a repayment plan at 0% interest for the balance of $32,000 on the previously convertible note and to release the current reserved common stock shares upon full repayment.

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, ~~2011~~2010 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~~ecoONE® Marketing Group and Natural Choices Home Safe Products (see discussion below).

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 mature, actively marketed product line known as the ~~ecoone~~ecoONE® Spa Treatment system. ~~The~~as ~~ecoone®~~well ~~brand~~as isecoONE® anPool ~~inclusive~~conditioner ~~line~~and ~~that provides all~~ the ~~necessary~~Pacific ~~components~~Sands toAll-Purpose ~~maintain~~Hose ~~spa's and keep them running simply, safely, and naturally~~Filter.

The Company's ~~other~~markets ~~brand~~and issells ~~Natural~~its ~~Choices,~~product ~~which~~lines isdirectly, athrough ~~line of earth-~~pool, ~~health-~~spa, ~~pet-~~hardware, specialty and ~~kid-friendly~~other ~~cleaning~~retail ~~and~~outlets ~~laundry~~in ~~products~~the US, Canada and Europe. The ~~top~~products ~~selling~~are ~~product~~also issold ~~Oxy-Boost™~~via anPacific ~~oxygen-bleach~~Sands ~~based~~distributors, ~~chlorine-free~~manufacturers' ~~bleach~~representatives ~~alternative~~and internationally established pool and spa industry distribution networks. ~~Throughout~~The ~~the~~Company's ~~last~~products ~~six~~are ~~months~~also ~~the~~sold ~~company~~through ~~has~~numerous ~~re-launched~~popular ~~the~~pool and spa websites. The Company's Natural Choices ~~brand~~branded ~~and~~products ~~began~~are ~~marketing~~sold ~~initiatives~~in tonumerous ~~sell~~retail tooutlets ~~consumers~~around ~~direct~~the ~~from~~country ~~the~~as ~~Company~~well inas ~~addition~~dozens toof ~~our~~the ~~numerous~~top ~~distributors~~environmentally-oriented websites.

The Company's ~~has~~goal ais ~~large~~to ~~selection~~achieve ofsustained ~~oxygen-bleach~~profitability ~~based~~through ~~formulations~~revenues ~~available~~achieved ~~both~~by ~~for~~marketing ~~retail~~and ~~distribution~~sales ~~under~~of its ~~ecoone®~~nontoxic, ~~and~~earth-, ~~Natural~~health- ~~Choices~~and ~~brands~~kid-friendly, asecoONE® ~~well~~Pool, asSpa, ~~for~~Household ~~contract~~Cleaning ~~manufacturing~~ and ~~private~~other ~~label~~product lines.

13Management intends to continue the 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 goal is to achieve sustained profitability through revenues achieved by marketing and sales of its nontoxic, earth-, health- and kid-friendly, ecoone® and Natural Choices product lines.

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

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

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

RESULTS OF OPERATIONS

Results for the three months ending ~~September~~December 3031, 2015, compared to the three months ending ~~September~~December 3031, 2014.

For the three months ended ~~September~~December 3031, 2015, net sales were $~~227~~166,~~509~~430, a decrease of 5380% over net sales of $~~486~~831,~~045~~677 for the three months ended ~~September~~December 3031, 2014. ~~The~~This ~~decrease~~change inwas ~~quarter~~due ~~one~~to ~~sales~~the isshift ~~attributable~~in todeveloping athe ~~reduction~~Company's inbrand ~~private~~and ~~label~~not ~~sales~~manufacturing ~~and~~for a ~~generally~~large ~~slower~~private ~~quarter~~label ~~for~~customer ~~sales~~that asis ~~trends~~a ~~have~~potential ~~shown~~competitor inof the ~~past. The~~ Company's ~~has~~brand ~~moved towards sales~~ of ~~it branded product lines and has shifted away from manufacturing a large private label customers goods~~products.

For the three months ended ~~September~~December 3031, 2015, ~~cost~~costs of sales ~~was~~were $~~176~~95,~~831~~176 compared to $~~301~~500,~~363~~173 for the same period in the previous fiscal year. The Company's gross margin ~~decreased~~increased from ~~37.9~~39% for the three months ended ~~September~~December 3031, 2014, to ~~22.3~~43%. ~~The~~for ~~increase in COGS compared to revenue and~~ the ~~decreased~~current ~~gross~~fiscal ~~margin~~quarter is due to ~~lower~~increased sales ~~and~~of anhigh ~~inability~~margin ~~to support current manufacturing labor and overhead costs~~products.

For the three months ended ~~September~~December 3031, 2015, and 2014, selling and general administrative expenses were $~~280~~234,~~878~~474 and $~~593~~447,~~463~~623, respectively. ~~The~~This 48% decrease in ~~administrative~~operating ~~expense~~expenses is due to a reduction ofin ~~sales~~labor ~~staff,~~force ~~marketing,~~ and ~~other~~overhead ~~expenses~~costs as the Company works to restructure its operations.

Interest expense for the three months ended ~~September~~December 3031, 2015, was $~~115~~184,~~957~~833 ~~compared~~a to51% increase from the $6990,~~431~~167 recorded for the three months ended ~~September~~December 3031, 2014. The increase in interest expense isincludes ~~due~~amortization toof debt ~~financed~~discount atof ~~higher~~$41,930 ~~rates~~ and ~~the~~higher ~~current~~rate ~~period~~short ~~interest~~term ~~includes~~debt ~~the~~secured ~~amortization~~to ofsupport ~~debt~~current ~~discount for $72,625~~operations.

The Company recorded a net loss of $~~406~~270,~~261~~058 or les than $0.~~004~~01 loss per share for the three months ended ~~September~~December 3031, 2015, as compared to a net loss of $~~456~~218,~~792~~335 or less than $0.~~006~~ 01 loss per share for the three months ended ~~September~~December 3031, 2014.

14Results for the six months ending December 31, 2015, compared to the six months ending December 31, 2014.

For the six months ended December 31, 2015, net sales were $393,939, a decrease of 70% over net sales of $1,317,722 for the six months ended December 31, 2014 The decrease is due to the reduction in orders from a larger private label customer whose products may be a direct competitor product to the Company's brand. In addition the sales for the 6 months ending December 31, 2015 were also affected by the significant debt service cost issues described above in the analysis and discussion for the 3 month period ending December 31, 2015.

For the six months ended December 31, 2015, cost of sales was $272,007 compared to $801,536 for the same period in the previous fiscal year. The Company's gross margin decreased from 39% for the six months ended December 31, 2014 compared to 31% for the current fiscal year to date. The decreased gross margin was due to the decrease in sales and production not allowing for the absorption of fixed manufacturing costs over a higher level of sales.

For the six months ended December 31, 2015 and 2014, selling and general administrative expenses were $515,352 and $1,041,086, respectively, or a 50.4% decrease. The decrease is due to suspension of marketing research for brand development and the Company restructuring its overhead expense.

Interest expense for the six months ended December 31, 2015, was $300,790 compared to $159,598 for the six months ended December 31, 2014. This 47% increase is a result of amortization of debt discount of $71,823 and financing of short-term debt at higher interest rates.

The Company recorded a net loss of $676,319 or $0.01 loss per share for the six months ended December 31, 2015, compared to a net loss of $675,127 or less than $0.01 loss per share for the six months ended December 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

~~Management~~The ~~believes~~Company ~~that~~has ~~the~~been ~~Company~~working iswith ~~positioned~~a ~~for~~full ~~sales~~time ~~growth~~consultant ~~but~~that ~~will~~was ~~require~~added ~~additional~~to ~~funding~~the toboard ~~continue~~on ~~operations~~January 1, 2016. The Company's ~~ability~~has tobeen ~~achieve~~reorganizing its ~~objectives~~operations ~~is dependent upon its ability to sustain~~ and ~~enhance~~restructuring its ~~current~~debt. ~~revenue~~Subsequent ~~stream and~~ to ~~continue to raise funds through loans, vendor credit and~~ the ~~private~~end ~~placement~~ of ~~restricted securities until such time as~~ the ~~Company~~quarter ~~sustains~~over ~~fiscal~~one ~~profitability.~~quarter Toof ~~date, the Company has funded operations and expansion through~~ a ~~combination~~million ofdollars ~~revenues from the sale~~ of ~~its~~debt ~~products,~~was ~~established~~restructured ~~credit with vendors, deferred salaries (subsequently converted~~ to ~~common~~lower ~~stock~~interest ~~issued~~rates ~~to officers), debt financings~~ and ~~the~~longer ~~sale~~term ofpayment ~~rule~~plans. ~~144~~This ~~stock~~has ~~through~~resulted ~~private~~in ~~placement.~~a ~~The~~very ~~Company's~~substantial ~~failure~~cut toin ~~continue~~debt toservice ~~raise~~costs ~~adequate~~each ~~financing~~month tobeginning ~~fund~~from ~~planned~~the ~~expansion~~time ~~may~~the ~~jeopardize~~new ~~its~~debt ~~plans~~agreements ~~for~~became ~~growth~~effective.

AtAdditionally ~~September 30, 2015,~~ the ~~Company~~company ~~had~~has ~~current~~reduced ~~assets~~selling ~~of $354,989~~ and ~~total~~general ~~assets~~administrative ofexpenses ~~$542,721, compared~~ to ~~June~~less ~~30,~~than ~~2015, when current assets were~~ $~~459~~200,~~624~~000 ~~and~~per ~~total~~quarter ~~assets~~effective ~~were $663~~January,~~451.~~ ~~Cash and cash equivalents at September 30~~1, ~~2015, was $14,651 compared to $30,908 at June 30, 2015~~2016.

~~Current~~These ~~liabilities~~cost atand ~~September~~debt ~~30,~~service ~~2015,~~reductions ~~were~~have ~~$1,686,105~~reduced asthe ~~compared~~profit toand ~~$1,418,097~~loss atbreakeven ~~June~~point ~~30,~~to ~~2015.~~a ~~Current~~required ~~liabilities~~level ~~include accounts payable, current portion~~ of ~~notes~~sales ~~payable,~~more ~~accrued~~attainable ~~expenses,~~with ~~and~~current ~~other~~limited ~~current~~working ~~debt~~capital.

~~Non-~~ The Company's ability to achieve its objectives is still dependent upon its ability to enhance its current ~~liabilities~~revenue atstream ~~September~~and ~~30,~~to ~~2015~~continue to raise funds through loans, vendor credit and ~~June~~the ~~30,~~private ~~2015,~~placement ~~were~~of ~~$68~~restricted securities until such time as the Company sustains fiscal profitability. To date,~~099~~ the Company has funded operations and ~~$88~~expansion through a combination of revenues from the sale of its products,~~375~~ established credit with vendors, ~~respectively.~~deferred ~~Non-current~~salaries, ~~liabilities~~debt asfinancings and the sale of ~~September~~rule ~~30,~~144 ~~2015~~stock through private placement. To date, ~~include~~management ahas ~~note~~been ~~payable~~successful toin ~~Kenosha~~raising ~~Area~~cash ~~Business~~on ~~Alliance~~an as-needed basis for ~~$52,697~~the ~~and~~continued aoperations ~~note~~of ~~payable~~the Company. There is no guarantee that management will be able to acontinue ~~capital~~to ~~lease~~raise ~~for~~needed ~~$15,402~~cash in this fashion.

~~For~~The ~~the~~Company's ~~period~~failure ~~ending~~to ~~September~~continue ~~30,~~to ~~2015,~~raise ~~the~~adequate ~~Company~~financing ~~received~~to ~~two~~fund ~~loans,~~planned ~~totaling~~growth ~~$120,000,~~may tojeopardize ~~meet~~its ~~operating needs~~operations.

~~Net~~At ~~cash~~December ~~used~~31, in2015, ~~operating~~the ~~activities~~Company ~~during~~had ~~the~~current ~~three~~assets ~~months~~of ~~ended~~$309,942 ~~September~~and ~~30,~~total ~~2015,~~assets ~~was~~of $~~119~~482,~~917~~560, compared to ~~$321~~June 30,~~639~~ ~~used~~2015 inwhen ~~operating~~current ~~activities~~assets ~~during~~were ~~the~~$459,624 ~~three~~and ~~months~~total ~~ended~~assets ~~September~~were 30$663, ~~2014~~451.

~~During~~Current ~~the~~liabilities ~~three~~at ~~months~~December ~~ended September 30~~31, 2015, ~~net~~were ~~cash~~$1,542,283 ~~provided~~as bycompared ~~financing~~to ~~activities was~~ $~~106~~1,~~577~~418,097 ~~which~~at ~~included~~June ~~proceeds~~30, of2015. ~~$120,000~~Current ~~from~~liabilities ~~debt~~include ~~issued,~~accounts ~~$99~~payable,~~000~~ current portion of ~~convertible~~notes ~~debt~~payable, ~~issued~~accrued expenses, and customer deposits. The Company currently has $~~112~~50,~~423~~000 of ~~debt~~customer ~~repayments~~deposits. asThe ~~compared~~customer todeposits ~~the~~represent ~~previous~~80% ~~fiscal~~of ~~quarter~~the ~~net~~total ~~cash~~order. ~~provided~~These bydeposits ~~financing~~are ~~activities~~non-refundable ~~was~~since ~~$71,215,~~they ~~which~~are ~~included~~for ~~proceeds~~custom ofordered ~~$149,640~~products. ~~from~~The ~~debt~~Company ~~issued,~~will ~~$70,000~~recognize ofthe ~~convertible~~deposit ~~debt~~as ~~issued~~revenue ~~and~~upon ~~$148,425~~completion of ~~debt~~the ~~repayments~~order.

OnNon-current ~~September~~liabilities ~~30,~~include ~~2015~~a $9,364 ~~the~~lease ~~Company~~payable ~~had~~due to an ~~accumulated~~unrelated ~~deficit~~party of ~~$7,553,471~~the Company and ~~total~~a ~~stockholders'~~note ~~deficit~~payable ofto Kenosha Area Business Alliance for $148,~~221,483~~106.

~~The~~Net ~~Company's~~cash ~~ability~~used toby ~~achieve~~operating ~~its~~activities ~~objectives~~during isthe ~~dependent~~six onmonths ~~its~~ended ~~ability~~December to31, ~~sustain~~2015, ~~and~~was ~~enhance~~$41,127 ~~its~~compared ~~revenue stream and~~ to ~~continue to raise funds through loans~~$123,971 ~~credit~~used ~~and~~by ~~the~~operating ~~private~~activities ~~placement~~during ~~of restricted securities until such time as~~ the ~~Company~~six ~~achieves~~months ~~profitability.~~ended ToDecember ~~date~~31, ~~management has been successful in raising cash on an as-needed basis for the continued operations of the Company~~2014. ~~There is no guarantee that management will be able to continue to raise needed cash in this fashion.~~

~~The~~During ~~Company~~the ~~has~~six nomonths ~~material~~ended ~~commitments~~December ~~for~~31, ~~capital~~2015, ~~expenditures~~the atCompany ~~this~~used ~~time.~~$7,020 ~~The~~in ~~Company~~investing ~~has~~activities, norepresenting ~~"off~~the ~~balance~~purchase ~~sheet" source~~ of ~~liquidity~~property ~~arrangements~~and equipment.

Net cash provided by financing activities for the six months ended December 31, 2015, was $33,941. During the six months ending December 31, 2015, the Company received proceeds from new debt of $270,000 and received proceeds of $99,000 from convertible notes. During the six months ended December 31, 2015, the Company repaid $335,059 of long term and short term debt.

On December 31, 2015, the Company had an accumulated deficit of $7,823,529 and total stockholders' deficit of $1,117,193 as compared to June 30, 2015, when accumulated deficit was $7,147,210 and stockholders' deficit was $843,021.

Total liabilities of $1,559,753 at December 31, 2015, is slightly increased from $1,506,472 at June 30, 2015, due to short term financing needs.

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 consistent profitability. To date, management has been successful in raising cash on an as-needed basis for the continued operations of the Company. There is no guarantee that management will be able to continue to raise needed cash in this fashion.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Not~~An ~~Required~~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.

15THE 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 December 31, 2015, the Company continued to make significant investments in its branding and marketing efforts to expand the Company's selling demographics.

POSSIBLE DIFFICULTY FINANCING PLANNED GROWTH:

In the future the Company will require financing in addition to the cash generated from operations to fund planned growth. If additional resources are unavailable, the Company may be unable to grow according to its present plan.

MANAGEMENT'S ASSUMPTIONS REGARDING THE FUTURE MARKET MAY BE FAULTY:

Management assumes there will be a continuing and increased desirability in the retail market for nontoxic, environment and health friendly products for cleaning and water treatment use. Should management's assumptions as to this increased desirability be incorrect, 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, ~~the~~our ~~Company's~~ 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

AsThe ~~reported~~Company has inreduced ~~our~~its ~~Annual~~accounting ~~Report~~staff onduring ~~Form 10-K for~~ the ~~year~~quarter ended ~~June~~December 3031, 2015, however management believes ~~there~~that ~~are~~compensating nocontrols ~~significant~~have ~~deficiencies~~been put in ~~the~~place ~~Company's~~to ~~internal~~mitigate ~~control~~risks ~~over~~associated ~~financial~~with ~~reporting~~lack Inof ~~making~~separation ~~this~~of ~~assessment,~~duties. ~~our~~The ~~management~~compensating ~~used~~controls ~~the~~include ~~criteria~~outsourcing ~~set~~certain ~~forth~~financial byfunctions to an independent contractor, the ~~Committee~~addition of ~~Sponsoring~~a ~~Organizations~~former ofCPA ~~the~~as ~~Treadway~~an ~~Commission~~outside ~~("COSO")~~board inmember ~~Internal~~to ~~Control-Integrated~~provide additional ~~Framework.~~oversight ~~Management~~and monthly ~~concluded~~reviews ~~that~~of ~~internal~~the ~~controls~~Company's financials The ~~over~~Company ~~financial~~believes ~~reporting~~that ~~were~~while ~~effective~~there are acceptable segregation issues as a small company with the overlapping of ~~June~~oversight ~~30,~~the ~~2015~~risk will be minimized.

There have not been any changes in the Company's internal control over financial reporting during the quarter ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II OTHER INFORMATION

Item 1 – LEGAL PROCEEDINGS

None

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

~~On July 16, 2015, the Company issued 125,000 shares of common stock for $5,000 for payment of services rendered~~None. ~~Common stock shares were issued in lieu of a payment.~~

On September 11, 2015, the Company issued 2,050,000 shares of common stock to an employee for $32,800 for payment of compensation. Common stock shares were issued in lieu of payment.

Item 3 – DEFAULTS UPON SENIOR SECURITIES

None

Item 4 – MINE SAFETY ~~DISCLOSURES~~DISCOSURES

~~Not Applicable~~None

Item 5 – OTHER INFORMATION

None

1720

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	Chairman of the Board Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Chairman of the Board 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
101.INS	XBRL Instance*
101.sch	XBRL Schema
101.SCH	XBRL Schema*
101.cal	XBRL Calculation
101.CAL	XBRL Calculation*
101.def	XBRL Defintion
101.DEF	XBRL Definition*
101.lab	XBRL Label
101.LAB	XBRL Label*
101.pre	XBRL Presentation
101.PRE	XBRL Presentation*

* 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.21

SIGNATURES

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

Dated: November 16, 2015	/s/ Michael D. Michie
	PACIFIC SANDS, INC.
	Michael D. Michie
Dated: February 24, 2016	By:	/s/ Michael Michie
	Chief Executive Officer Chief Financial Officer
		Michael Michie Chief Executive Officer
		Chief Financial Officer

1922

Filing Compare · PACIFIC SANDS INC