Borislav Tonev

Pacific Sands, Inc. (OTCMKTS:PFSD) Climbs as Investors Hope for the Best

by Borislav Tonev February 26, 2016

Pacific Sands, Inc. (OTCMKTS:PFSD, PFSD message board) filed its quarterly report for the period ended December 31, 2015 after the end of yesterday's session and right off the bat, we should note that it's rather disappointing.

The company has been around for close to twenty-two years now, but it still appears to be struggling to establish solid and profitable operations. Here's what the figures look like:

  • cash: $17 thousand
  • current assets: $310 thousand
  • current liabilities: $1.5 million
  • quarterly revenues: $166 thousand
  • quarterly net loss: $270 thousand

If you're still not convinced that the report is terrible, you should probably consider the fact that the quarterly sales are 80% down compared to the figures logged during the same period of 2014. The reason for this is a decline in orders posted by a large private label which, the management team says, might be a competitor.

As is often the case in Pennyland, the problems don't end with the financial statement. Due to the appalling lack of cash, PFSD was forced to issue quite a few convertible notes last year. The company decided not to bother explaining the actual conversion terms, but it did say that during the second half of 2015, it converted about $87 thousand worth of debt into nearly 76 million shares which brings the average conversion rate down to $0.001. According to the 10-Q, at the end of December, there was about $184 thousand worth of outstanding notes and during the first two months of this year, an undisclosed amount of it was converted into about 65 million shares.

All in all, this doesn't appear to be PFSD's finest hour. The members of the management team reckon, however, that they can save the company. A couple of recent press releases tell us that in January, PFSD initiated a restructuring program which is supposed to minimize the effects of the dilutive debt and boost sales. We were eager to find out a bit more about it in the 10-Q, but sadly, all the report says is that some interest rates were renegotiated, and that a $39 thousand convertible note will be repaid with cash instead of stock.

Apparently, investors reckon that this will be enough to stop PFSD's downfall. Yesterday, they helped the ticker gain 54% and reach a close of $0.002 per share for the first time in over a month.

You should be the one to decide whether you should keep a safe distance or whether you should stick around and hope for some more gains. Don't forget, however, that the market has yet to react to the disappointing quarterly figures and that millions of shares might be waiting to be unleashed into the hands of investors who haven't done their due diligence properly.

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