Letter From CEO, Michael Wynhoff
Dear Pacific Sands Shareholders,
Fiscal year 2006 was one of validation on multiple fronts for Pacific Sands, our management team and our shareholders. Through the combination of careful management of our expense structure and a dedication to a carefully crafted marketing and sales strategy, Pacific Sands, Inc. achieved its first ever profitable quarter in the 4th quarter of fiscal 2006.
Pacific Sands' ecoONE® products are now sold or distributed by more than 200 retail outlets. Our products have also been added to the portfolio of major pool and spa product distribution centers with reach to thousands more prospective retail centers and tens of thousands of potential customers. More importantly, we now have OEM manufacture and distribution deals with two major U.S. Spa manufacturers. In February of 2006, a spa manufacturer began including a custom-branded version of the ecoONE® starter kit with every one of the approximately 15,000 spas they sell annually. In March, we also established a master distribution arrangement with Hawkeye Manufacturing, makers of Hawkeye and Barefoot lines of luxury hot tubs.
In addition to our rapidly expanding dealer, distributor and manufacturer base, we have expanded our direct and Internet retail sales base from a scattered few customers to a well over a $100,000 a year business.
As a result, in fiscal 2006 we established thousands of new ecoONE® users. At the end of our previous fiscal year, we estimated that between 50 and 70 new customers tried our spa system every month. With the relatively recent additions of our manufacturer distribution arrangements, we now estimate that number to be nearing 1,700 new users every single month. With the product's high customer retention rate, this is exactly the kind of growth we need to swiftly push Pacific Sands to growing and sustainable profitability.
We have been asked why we stress the pool and spa products as much as we do when we have an award-winning core technology at our disposal with such a broad range of applications. The ecoONE® pool and spa products are truly remarkable in their industry-unique combination of efficacy, safety and cost-effectiveness. Based on the success profiles of other alternative products on the market, we believe that the income potential for these product lines in the pool and spa chemical market alone is in the tens of millions of dollars.
In addition to our expanding presence in the pool and spa chemical market, we are making our initial inroads into the environment and health-friendly household cleaning product market.
Environment and health-friendly, nontoxic products are at the leading edge of rapid growth in the consumer marketplace. We have targeted three key factors that are essential to our continuing and future growth and our eventual emergence as a leader in that sector:
1) Respond swiftly to changing market dynamics and customer demands.
2) Supply new and innovative products to that market and its customers.
3) Communicate our product's message to that market.
In fiscal year 2006 we added two key personnel to our staff who will be instrumental in our ability to meet those challenges.
In September of 2005, Dr. Jack Hagarty, former lead chemist for SC Johnson Wax, joined our staff in-house our research chemist. Dr. Hagarty is spearheading the development of our new product lines. In fiscal 2006 his efforts led to our “Kid-Friendly” ecoONE® household cleaning product line which will receive significantly increased marketing focus in fiscal year 2007.
In July of 2006, we welcomed Robert Krug to the Pacific Sands full time staff as Marketing Director. Mr. Krug's marketing career spans more than 22 years with 12 of the most recent years spent leading the creative team of the Unilever North America, the second largest consumer package goods company in the world. During his tenure at Unilever, Robert took products to market through a variety of channels including television commercials, public events, print and video news releases. He was also a pioneer in the early years of internet marketing. We believe that Robert's vast experience in a broad spectrum of marketing initiatives will be the key that unlocks the multi-billion dollar marketplaces in which we compete.
In conclusion, we believe that our winning combination of responsible, skilled management and staff, our aggressive marketing initiatives, our unique product offerings and our demonstrated ability to turn those products into profit, all combine to give Pacific Sands the edge we need to become an emerging leader in the rapidly-expanding earth, health and kid-friendly market.
While a small profit in fiscal 4th quarter is not necessarily a guarantee of our ultimate success or future profits, it is without doubt a validation of our sustained dedication to our sales, marketing and management strategy and, more importantly, a validation of the faith and support that you, our shareholders have shown our company over the years.
Sincerely,
Michael L. Wynhoff
President / CEO
Pacific Sands, Inc. |
