<Page>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month Ended May 31, 2008 Commission File Number 0-14884
SAND TECHNOLOGY INC.
(Translation of registrant's name in English)
215 REDFERN, SUITE 410
WESTMOUNT, QUEBEC, CANADA H3Z 3L5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F /X/ Form 40-F / /
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes / / No /X/
If "Yes" is marked, indicated below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-N/A.
<Page>
Sand Technology Inc. (the "Company") incorporates this Form 6-K Report by
reference into the Prospectus contained in the Company's Registration Statement
on Form F-3 (333-51014).
2
<Page>
[SAND(TM) TECHNOLOGY LOGO]
INVESTOR RELATIONS:
de Jong & Associates,
sndt@dejong.org
+(1) 760/943-9065
PRESS RELEASE
SAND ANNOUNCES SECOND QUARTER RESULTS
MONTREAL, MAY 5th, 2008: SAND Technology Inc. (OTCBB:SNDTF), an international
provider of intelligent enterprise information management software, today
reported results for the six-month period ended January 31, 2008. The Company
reported a loss for the first half of fiscal year 2008 of $796,263, or ($0.05)
per share on revenues of $3,204,446. In comparison with the first half of fiscal
year 2007, the operating loss has decreased by 40%, on substantially the same
level of revenues.
"We are pleased in the improvement of our net results over the same period last
year." said Arthur Ritchie, President and Chief Executive Officer of SAND.
"Although we were expecting stronger revenues, we remain encouraged by the level
of interest and the pipeline for our SAND/DNA products in general and our new
SAND/DNA for SAP BI offering," added Ritchie. "In addition we have realized an
increase in partner interest and participation, along with several speaking
opportunities and articles to be published in the foreseeable future", said
Ritchie.
ABOUT SAND TECHNOLOGY(R)
SAND Technology provides organizations worldwide with a unique vantage point
from which to survey the competitive landscape. SAND's advanced analytic data
management products empower users with a better understanding of their business
environment through better access to their business data.
SAND Technology-based solutions include CRM analytics, financial analysis,
regulatory compliance and specialized Business Intelligence applications for
government and security, healthcare, telecommunications, financial services,
retail and other business sectors.
SAND Technology has offices in the United States, Canada, the United Kingdom and
Central Europe. For more information, visit www.sand.com
All Rights Reserved. SAND Technology and Nucleus are registered trademarks, and
SAND Analytic Server, SAND Searchable Archive, See What's on the Horizon,
ANALYTICS @ THE SPEED OF BUSINESS, and all related SAND- and Nucleus-based marks
and designs, are trademarks of SAND Technology Inc. Other trademarks are the
property of their respective owners.
Certain statements contained in this press release are "forward looking
statements" within the meaning of the United States Securities Act of 1933 and
of the United States Securities Exchange Act of 1934. The forward-looking
statements are intended to be subject to the safe harbour protection provided by
these Acts. We have based these forward-looking statements on our current
expectations and projections about future results, levels of activity, events,
trends or plans. Such forward-looking statements are not guarantees and are
subject to known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of SAND to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. All forward looking statements
included in this press release are based on current expectations and on
information available to SAND on the date of this press release. For a more
detailed discussion of these risks and uncertainties and other business risks,
see SAND's current Annual Report and SAND's reports to the Securities and
Exchange Commission. You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date made. We undertake
no obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after the date
they are made or to reflect the occurrence of unanticipated events.
3
<Page>
SAND TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<Table>
<Caption>
IN CANADIAN DOLLARS
-------------------
As at As at
Jan. 31, 2008 July 31, 2007
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 62,643 $ 330,711
Accounts Receivable, Net $ 1,668,060 $ 1,582,957
Prepaid Expenses $ 180,188 $ 150,964
------------------------------
$ 1,910,891 $ 2,064,632
Capital Assets, Net $ 144,855 $ 181,669
Other Assets, Net $ 55,423 $ 110,847
------------------------------
$ 2,111,169 $ 2,357,148
==============================
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Liabilities $ 1,151,952 $ 1,076,116
Deferred Revenue $ 1,386,247 $ 1,305,270
Due to Shareholder $ 1,158,283 $ 750,144
Deferred Credits $ 92,901 $ 107,569
------------------------------
$ 3,789,383 $ 3,239,099
------------------------------
SHAREHOLDERS' DEFICIENCY
Common Stock $ 38,530,441 $ 38,530,441
Contributed Surplus $ 305,110 $ 305,110
Deficit $ (40,513,765) $ (39,717,502)
------------------------------
$ (1,678,214) $ (881,951)
------------------------------
$ 2,111,169 $ 2,357,148
==============================
</Table>
4
<Page>
SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<Table>
<Caption>
IN CANADIAN DOLLARS
-------------------
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jan. 31, 2008 Jan 31, 2008 Jan 31, 2007 Jan. 31, 2007
-------------- -------------- -------------- --------------
Revenues $ 1,419,521 $ 3,204,446 $ 1,861,658 $ 3,332,065
--------------------------------------------------------------------
Operating expenses
Cost of Sales and Product
Support $ (387,191) $ (799,355) $ (466,315) $ (899,990)
Research and Development Costs $ (498,179) $ (1,090,676) $ (584,086) $ (1,159,952)
Amortization of capital assets
and acquired technology $ (46,689) $ (95,758) $ (50,849) $ (101,869)
Selling, general and
administrative expenses $ (926,242) $ (1,920,016) $ (1,248,635) $ (2,495,350)
--------------------------------------------------------------------
Total operating expense $ (1,858,301) $ (3,905,805) $ (2,349,885) $ (4,657,161)
--------------------------------------------------------------------
Operating Income (Loss) $ (438,780) $ (701,359) $ (488,227) $ (1,325,096)
Interest Income, Net $ (52,563) $ (94,904) $ (868) $ (531)
--------------------------------------------------------------------
Net Earnings (Loss) $ (491,343) $ (796,263) $ (489,095) $ (1,325,627)
====================================================================
Earnings (Loss) per share $ (0.03) $ (0.05) $ (0.04) $ (0.10)
Weighted average number of
shares outstanding 14,318,189 14,318,189 12,818,189 12,818,189
</Table>
5
<Page>
SAND TECHNOLOGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
QUARTERLY REPORT
SECOND QUARTER ENDED JANUARY 31, 2008
6
<Page>
MANAGEMENT'S DISCUSSION AND ANALYSIS - JANUARY 31, 2008
THIS MANAGEMENT DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
ATTACHED JANUARY 31, 2008 UNAUDITED CONSOLIDATED BALANCE SHEET, CONSOLIDATED
STATEMENTS OF OPERATIONS, CONSOLIDATED STATEMENT OF CASH FLOWS AND RELATED NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. READERS SHOULD ALSO REFER TO
SAND TECHNOLOGY INC'S (SAND) 2007 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ON PAGES 7 TO 27 OF SAND'S 2007
ANNUAL REPORT.
CERTAIN STATEMENTS CONTAINED IN THIS DISCUSSION ARE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE UNITED STATES SECURITIES ACT OF 1933 AND OF THE UNITED
STATES SECURITIES EXCHANGE ACT OF 1934. THE FORWARD-LOOKING STATEMENTS ARE
INTENDED TO BE SUBJECT TO THE SAFE HARBOUR PROTECTION PROVIDED BY THESE ACTS. WE
HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT EXPECTATIONS AND
PROJECTIONS ABOUT FUTURE RESULTS, LEVELS OF ACTIVITY, EVENTS, TRENDS OR PLANS.
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES AND ARE SUBJECT TO KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF SAND TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING
STATEMENTS BY TERMINOLOGY SUCH AS "GUIDANCE", "MAY", "WILL", "SHOULD", "COULD",
"WOULD", "EXPECT", "PLAN", "ANTICIPATE", "BELIEVE", "ESTIMATE", "CONTINUE", OR
THE NEGATIVE OF SUCH TERMS OR OTHER SIMILAR EXPRESSIONS. ALL FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS DISCUSSION ARE BASED ON CURRENT EXPECTATIONS AND ON
INFORMATION AVAILABLE TO THE CORPORATION ON APRIL 4, 2008. FOR A MORE DETAILED
DISCUSSION OF THESE RISKS AND UNCERTAINTIES AND OTHER BUSINESS RISKS, SEE SAND'S
CURRENT ANNUAL REPORT AND ITS REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE MADE. WE UNDERTAKE NO OBLIGATION TO PUBLICLY
RELEASE THE RESULT OF ANY REVISION OF THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE THEY ARE MADE OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.
SAND REPORTS ITS UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS IN CANADIAN
DOLLARS AND IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(GAAP).
ALL FINANCIAL FIGURES ARE IN CANADIAN DOLLARS UNLESS OTHERWISE NOTED. SAND
REPORTS ITS UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS IN CANADIAN DOLLARS AND
IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).
OVERVIEW
During the 2007 fiscal year, SAND continued its process, started in
previous years, of engaging integrator and systems partners in active sales
situations for its high-performance analytical application products. In
particular, the SAND Searchable Archive product (now named SAND/DNA Access)
began to gain traction and mindshare as a method for managing growth in data
warehouse environments in a fashion that is very complementary to existing
industry standards. In conjunction with partners like SAP, the company has
readied specific application offerings, using this exciting product, to make it
easy to adopt. During 2007, the company launched the SAND/DNA brand for its
products in conjunction with the SAP offering with high interest from industry
analysts, partners, and prospective customers.
7
<Page>
Despite the growing conditioning of the market to its new solutions to
intelligent information management, the company recognizes the potentially
lengthy sales cycles required to gain strong market acceptance of these new
approaches, and therefore significantly lowered its expense rate. At the same
time it engaged refined skills in the area of Marketing and Business Development
geared towards the SAND/DNA applications.
The result in the first half of this Fiscal Year (2008) was the
continuation of a significant reduction in operating losses although sales have
decreased slightly. While we expect that our new solutions will only start
contributing to revenues and profits later this year and the beginning of the
next fiscal year, we are encouraged by the trends in our financial performance
which should only improve further as they come to stream.
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL 2008 COMPARED WITH SECOND QUARTER OF FISCAL 2007 AND
FIRST HALF OF FISCAL 2008 COMPARED WITH FIRST HALF OF FISCAL 2007
Revenue
Sales revenue for the second quarter ended January 31, 2008 was $1,419,521,
a decrease of 24% from sales of $1,861,658 for the second quarter ended January
31, 2007. In North America, sales were $530,646, an increase of 57% from sales
of $337,751 in the second quarter of fiscal 2007. In Europe, sales in the second
quarter of fiscal 2008 were $888,875, a decrease of 42% from sales of $1,523,907
in the second quarter of fiscal 2007.
Sales revenue for the first half of fiscal 2008 was $3,204,446, a decrease
of 4% from sales of $3,332,065 for the first half of fiscal 2007. In North
America sales were $1,240,315, an increase of 34% from sales of $928,523 in the
first half of fiscal 2007. In Europe, sales in the first half of fiscal 2008
were $1,964,131, a decrease of 18% from sales of $2,403,542 in the first half of
fiscal 2007.
In North America the increase in our revenues can be explained primarily by
the increased sales from our alliances during the first half of fiscal 2008. In
Europe the decrease is associated primarily to delays in the procurement process
from some opportunities.
We recognize revenues from software licenses in accordance with the
provisions of the American Institute of Certified Public Accountants Statement
of Position 97-2, which requires that companies defer revenue and profit
recognition if four specified criteria of a sale are not met. In addition, we
are required to allocate revenue to multiple element arrangements. We typically
contract professional services on a time-and-materials basis and such revenues
are recognized as services when they are performed. Revenues from support and
maintenance are recognized rateably over the term of the applicable support and
maintenance agreement.
8
<Page>
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salaries, commissions
and other personnel-related costs, the impact of foreign exchange gains and
losses, travel expenses, advertising programs and other promotional activities
associated with the selling and marketing of our products and services. Selling,
general and administrative expenses decreased by 26% to $926,242 for the second
quarter ended January 31, 2008 from $1,248,635 for the second quarter ended
January 31, 2007. For the first half of fiscal 2008, selling, general and
administrative expenses were $1,920,016 compared to $2,495,350 during the first
half of fiscal 2007, a decrease of 23%.
Research and Development Expenses
Research and development expenses consist primarily of salaries and other
personnel-related costs of technical and engineering personnel associated with
our research and product development activities, including the enhancement and
localization of existing products, quality assurance and testing as well as the
cost of materials and equipment used in research and development activities.
Research and development expenses decreased by 15% to $498,179 for the second
quarter ended January 31, 2008 from $584,086 for the second quarter ended
January 31, 2007. For the first half of fiscal 2008, research and development
expenses were $1,090,676 compared to $1,159,952 during the first half of fiscal
2007, a decrease of 6%. For the remainder of fiscal 2008, we expect that
Research and Development expenditures will not vary significantly in absolute
dollars.
Cost of Sales
Cost of sales consists primarily of the costs related to the sale of
third-party software, including certain license fees and royalties, as well as
the costs related to systems architects who assist clients to implement systems
and provide support services. Cost of sales decreased by 17% to $387,191 for the
second quarter ended January 31, 2008 from $466,315 for the second quarter ended
January 31, 2007. For the first half of fiscal 2008, cost of sales was $799,355
compared to $899,990 during the first half of fiscal 2007, a decrease of 11%.
The decrease for the first half of fiscal 2008 reflects in part the decrease in
revenue. Cost of revenues from services may vary due to the mix of services
provided by SAND's personnel relative to services provided by outside
consultants and to varying levels of expenditures necessary to build the service
sector.
Operations
SAND generated a net loss of $491,343 in the second quarter ended January
31, 2008 as compared to a net loss of $489,095 in the second quarter ended
January 31, 2007. Net loss was $796,263 in the first half of fiscal 2008 as
compared to a net loss of $1,325,627. These results reflect the transitional
nature of the business and distribution model of SAND, as it moves progressively
towards being profitable. We believe that this transition is likely to continue
during the next few quarters.
Liquidity and Capital Resources
Cash and investments as at January 31, 2008 were $62,643 compared with
$348,997 as at January 31, 2007. SAND does not have a line of credit with a
commercial bank. In light of
9
<Page>
operating losses suffered in the current and past years, the Corporation's
ability to realize its assets and discharge its liabilities depends on the
continued financial support of its shareholders and creditors and its ability to
obtain additional financing. The Corporation's management will continue to
search for additional sources of debt and equity financing. There can be no
assurance that the Corporation's activities will be successful and as a result
there is doubt regarding the going concern assumption.
10
<Page>
SAND TECHNOLOGY INC.
QUARTERLY REPORT
SECOND QUARTER ENDED JANUARY 31, 2008
NOTICE TO READERS OF THE UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements of Sand Technology Inc. for
the period ended January 31, 2008 have not been reviewed by Sand
Technology Inc.'s external auditors.
11
<Page>
SAND TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS
(IN CANADIAN DOLLARS)
<Table>
<Caption>
AS AT As at
JANUARY 31, July 31,
2008 2007
- ------------------------------------------------------------------------------------------------
$ $
(UNAUDITED) (audited)
ASSETS
Current assets
Cash & cash equivalents 62,643 330,711
Accounts receivable 1,668,060 1,582,957
Prepaid expenses 180,188 150,964
- ------------------------------------------------------------------------------------------------
1,910,891 2,064,632
Capital assets, net (Note 2) 144,855 181,669
Other assets (Note 3) 55,423 110,847
- ------------------------------------------------------------------------------------------------
2,111,169 2,357,148
================================================================================================
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 1,151,952 1,076,116
Deferred revenue 1,386,247 1,305,270
Due to a Shareholder (Note 4) 1,158,283 750,144
Deferred credits 92,901 107,569
- ------------------------------------------------------------------------------------------------
3,789,383 3,239,099
- ------------------------------------------------------------------------------------------------
SHAREHOLDERS' DEFICIENCY
Common stock (Note 5)
Authorized
An unlimited number of Class "A" common shares,
without par value
Issued and outstanding
14,318,189 common shares (14,318,189 in July 31, 2007) 38,530,441 38,530,441
Contributed surplus 305,110 305,110
Deficit (40,513,765) (39,717,502)
- ------------------------------------------------------------------------------------------------
(1,678,214) (881,951)
- ------------------------------------------------------------------------------------------------
2,111,169 2,357,148
================================================================================================
</Table>
See notes to the consolidated financial statements
12
<Page>
SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN CANADIAN DOLLARS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS Three months SIX MONTHS Six months
ENDED ended ENDED ended
JANUARY 31, January 31, JANUARY 31, January 31,
2008 2007 2008 2007
- ---------------------------------------------------------------------------------------------------------
$ $ $ $
REVENUES 1,419,521 1,861,658 3,204,446 3,332,065
- ---------------------------------------------------------------------------------------------------------
Cost of sales and product support (387,191) (466,315) (799,355) (899,990)
Research and development, net (498,179) (584,086) (1,090,676) (1,159,952)
Amortization of capital and other
assets (46,689) (50,849) (95,758) (101,869)
Selling, general and
administrative expenses (926,242) (1,248,635) (1,920,016) (2,495,350)
- ---------------------------------------------------------------------------------------------------------
Total operating expenses (1,858,301) (2,349,885) (3,905,805) (4,657,161)
=========================================================================================================
Operating loss (438,780) (488,227) (701,359) (1,325,096)
Interest income (expense) (52,563) (868) (94,904) (531)
- ---------------------------------------------------------------------------------------------------------
NET LOSS (491,343) (489,095) (796,263) (1,325,627)
Deficit at beginning of period (40,022,422) (38,027,510) (39,717,502) (37,190,978)
- ---------------------------------------------------------------------------------------------------------
DEFICIT AT END OF PERIOD (40,513,765) (38,516,605) (40,513,765) (38,516,605)
=========================================================================================================
Basic and diluted
loss per share (0.03) (0.04) (0.05) (0.10)
- ---------------------------------------------------------------------------------------------------------
Weighted average number of
shares outstanding 14,318,189 12,818,189 14,318,189 12,818,189
Net effect of dilutive stock
options and warrants - - - -
- ---------------------------------------------------------------------------------------------------------
Weighted average number of
diluted shares outstanding 14,318,189 12,818,189 14,318,189 12,818,189
=========================================================================================================
</Table>
See notes to the consolidated financial statements
13
<Page>
SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN CANADIAN DOLLARS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS Three months SIX MONTHS Six months
ENDED ended ENDED ended
JANUARY 31, January 31, JANUARY 31, January 31,
2008 2007 2008 2007
- --------------------------------------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net loss (491,343) (489,095) (796,263) (1,325,627)
Items not affecting cash
Amortization of capital and 46,689 50,849 95,758 101,869
other assets
Changes in non-cash
operating working
capital items (Note 9) 259,103 104,448 42,486 199,309
- --------------------------------------------------------------------------------------------------
(185,551) (333,798) (658,019) (1,024,449)
- --------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital assets (3,520) (3,954) (3,520) (24,434)
- --------------------------------------------------------------------------------------------------
(3,520) (3,954) (3,520) (24,434)
- --------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Due to Shareholder 166,101 - 408,139 -
Deferred credits (7,334) (7,334) (14,668) (14,668)
- --------------------------------------------------------------------------------------------------
158,767 (7,334) 393,471 (14,668)
- --------------------------------------------------------------------------------------------------
Decrease in cash and (30,304) (345,086) (268,068) (1,063,551)
Cash equivalents
Cash & cash equivalents,
beginning of period 92,947 694,083 330,711 1,412,548
- --------------------------------------------------------------------------------------------------
CASH & CASH EQUIVALENTS,
END OF PERIOD 62,643 348,997 62,643 348,997
==================================================================================================
</Table>
See notes to the consolidated financial statements
14
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
The Corporation is involved in the design, development, marketing and support of
software products and services that enable users to retrieve usable business
information from large amounts of data. The software products, collectively
known as the SAND/DNA and the SAND/DNA Analytics, are designed to provide an
efficient and cost-effective way for business users to make fast easy inquiries
of large databases without the intervention of specialist Information Technology
professionals. The Corporation is considered to have only one reportable
business segment.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared in accordance with Canadian
generally accepted accounting principles and on the basis of the going
concern assumption, meaning that it is assumed that the Corporation will
be able to realize its assets and discharge its liabilities in the normal
course of operations.
In light of operating losses suffered in the current and past years, the
Corporation's ability to realize its assets and discharge its liabilities
depends on the continued financial support of its shareholders and
creditors and its ability to obtain additional financing. The
Corporation's management will continue to search for additional sources
of debt and equity financing.
There can be no assurance that the Corporation's activities will be
successful and as a result there is doubt regarding the "going concern"
assumption. These consolidated financial statements do not reflect
adjustments that would be necessary if the "going concern" assumption was
not appropriate. The adjustments to the carrying values of the assets and
liabilities, the reported expenses and the balance sheet classifications,
which could be material, may be necessary for these consolidated
financial statements.
USE OF ESTIMATES
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles, which require management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities at the date
of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
These unaudited interim consolidated financial statements do not include
all disclosures required for annual financial statements and should be
read in conjunction with the most recent annual financial statements as
at and for the year ended July 31, 2007.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Corporation and its wholly-owned subsidiaries. All inter-company
transactions and balances have been eliminated.
15
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Corporation generates revenues principally through two sources:
software licences and services. Software licence revenues are normally
generated from licensing the perpetual use of the Corporation's software
products. Service revenues are generated from sales of maintenance,
implementation, consulting and training services performed for customers
that licence the Corporation's products.
Revenue from the sale of software licence agreements are recognized upon
delivery of software if persuasive evidence of an arrangement exists,
collection is probable, the fee is fixed or determinable and
vendor-specific evidence of an arrangement exists to allocate the total
fee to the different elements of an arrangement. Vendor-specific
objective evidence is typically based on the price charged when an
element is sold separately, or, in the case of an element not yet sold
separately, the price established by management, if it is probable that
the price, once established, will not change before market introduction.
In circumstances where the implementation services are essential to the
functionality of the software or where the software requires significant
customization, the Corporation recognizes software licence revenue using
the percentage-of-completion method over the implementation period. The
percentage-of-completion is measured by the percentage of implementation
hours incurred to date to estimated implementation hours. Past experience
has shown expended hours to be the best measure of progress.
Revenues from maintenance services for licences previously sold and
implemented are recognized rateably over the terms of the contract.
Revenue from consulting and training services, not considered as part of
the implementation of software licences, are recognized as the services
are provided.
Amounts received in advance of the delivery of products or the
performance of services are classified as deferred revenue.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include unrestricted cash and highly liquid
investments.
CAPITAL ASSETS
Capital assets are recorded at cost and are amortized over their
estimated useful lives using the straight-line method over the following
periods:
<Table>
Furniture and equipment 5 years
Computer equipment 3 years
Leasehold Improvements over the lease term
</Table>
16
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER ASSETS
Other assets comprise contract costs. Contract costs are comprised of an
amount paid to the vendor upon the transfer of a long-term service
contract and will be amortized rateably over the term of the contract.
RESEARCH AND DEVELOPMENT COSTS
Research costs are charged to operations in the period in which they are
incurred. Development costs are expensed as incurred unless a project
meets the criteria under Canadian generally accepted accounting
principles for deferral and amortization. The Corporation has not
deferred any such development costs to date. Related tax credits are
recorded as a reduction of research and development expenses.
INCOME TAXES
Income taxes are accounted for using the liability method of tax
allocation. Future income tax assets and liabilities are determined based
on deductible or taxable temporary differences between the financial
statement values and tax values of assets and liabilities, using enacted
income tax rates expected to be in effect for the year in which the
differences are expected to reverse.
DEFERRED CREDITS
Deferred credits include deferred lease inducements, which are amortized
on a straight-line basis over the term of the lease.
FOREIGN EXCHANGE TRANSLATION
Revenue, expenses and acquisition of non-monetary assets denominated in
foreign currencies are translated into Canadian dollars at rates
prevailing on the transaction dates. Monetary assets and liabilities are
translated at rates in effect at the balance sheet date.
The accounts of the subsidiaries included in the consolidated financial
statements are translated into Canadian dollars using the temporal
method. Under this method, monetary items are translated at exchange
rates in effect at the balance sheet dates; non-monetary assets are
translated at historical exchange rates. Revenue and expenses are
translated at average exchange rates for the period, with the exception
of amortization of assets, which is translated at the same historical
exchange rates as the related assets. Translation losses and gains are
included in operations.
17
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOSS PER SHARE
Per share computations are based on the weighted average number of shares
outstanding during the period. The dilutive effect of options is
determined using the treasury stock method.
STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS
The Corporation accounts for stock-based compensation under the
recommendations of Section 3870 of the Canadian Institute of Chartered
Accountants (CICA) Handbook, STOCK-BASED COMPENSATION AND OTHER
STOCK-BASED PAYMENTS, which sets standards for recognizing, measuring and
disclosing stock-based compensation and other stock-based payments made
in exchange for goods and services. The standards require the Corporation
to use a fair-value based method for all stock-based awards and the
recognition of an expense in the financial statements. See Note 5, stock
option plan, for additional information.
GUARANTEES
In the normal course of its operations, the Corporation has entered into
agreements that contain certain features which meet the definition of a
guarantee under the guidance provided by Accounting Guideline 14.
Certain agreements with its customers include intellectual-property
indemnification obligations that are customary in the industry. These
obligations would generally require the Corporation to compensate a third
party for certain damages and claims incurred as a result of third-party
intellectual-property claims arising from these agreements.
The nature of these obligations prevents the Corporation from making a
reasonable estimate of the maximum potential amount it could be required
to pay. Historically, the Corporation has not made any payments under
such obligations. The adoption of these recommendations did not have an
impact on the Corporation's consolidated financial statements.
NEW ACCOUNTING POLICIES ADOPTED
STOCK-BASED COMPENSATION FOR EMPLOYEES ELIGIBLE TO RETIRE BEFORE THE
VESTING DATE
In July 2006, the Emerging Issues Committee (EIC) of the CICA issued
EIC-162, "Stock-based Compensation for Employees Eligible to Retire
before the Vesting Date". EIC-162 clarifies the accounting for
compensation costs relating to stock-based awards granted to employees.
EIC-162 requires that i) compensation costs attributable to stock-based
awards granted to employees who are eligible to retire on the grant date
be recognized on the grant date, and ii) compensation cost attributable
to stock-based awards granted to employees who will become eligible to
retire during the vesting period be recognized over the period from the
grant date to the date of retirement eligibility. This abstract is to be
applied retroactively, with restatement of prior periods, and is
effective for interim periods beginning on or after December 1, 2006. The
adoption of EIC-162 did not have a material impact on the Corporation's
financial statements
18
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
2. CAPITAL ASSETS
<Table>
<Caption>
JANUARY 31, 2008 July 31, 2007
------------------------------------------ -------------
Accumulated Net Book Net Book
Cost Depreciation Value Value
------------ ------------ ------------ -------------
$ $ $ $
Furniture and equipment 320,113 320,002 111 111
Computer equipment 631,821 572,159 59,662 81,762
Leasehold improvements 287,610 202,528 85,082 99,796
------------------------------------------------------------------------------------
1,239,544 1,094,689 144,855 181,669
====================================================================================
</Table>
3. OTHER ASSETS
<Table>
<Caption>
JANUARY 31, 2008 July 31, 2007
------------------------------------------ -------------
Accumulated Net Book Net Book
Cost Depreciation Value Value
------------ ------------ ------------ -------------
$ $ $ $
Contract Costs 471,100 415,677 55,423 110,847
------------------------------------------------------------------------------------
</Table>
4. DUE TO A SHAREHOLDER
During the year 2007, the Corporation formalized the conditions
pertaining to a loan obtained from a significant shareholder who is also
the President and Chief Executive Officer. The loan is repayable within
90 days of the receipt of a written demand from the shareholder. The loan
bears interest at 15%. In conjunction with the ratification of the loan
agreement, the Corporation also issued 103,061 warrants, each warrant
entitling to purchase one class "A" common share of the Corporation at a
price of US$0.44 per share and is valid for the term of the agreement.
The residual valuation method was used to allocate the proceeds between
the liability component and the equity component. The value of the
liability component was determined to be the face value of the debt
because there is no maturity date and by difference, the value of the
equity instrument was determined to be nil.
5. COMMON STOCK
(a) AUTHORIZED
Unlimited number of Class "A" common shares without par value.
(b) STOCK OPTION PLANS
The company has two stock option plans. Under the 1996 Stock Incentive
Plan, the Company may grant options to its regular full-time employees
and those of its subsidiaries for up to a maximum of 1,100,000 common
shares. Under the 1996 Stock Option Plan, the Company may grant options
to its regular full-time employees directors and those of its
subsidiaries for up to a maximum of 900,000 common shares. Under both
plans, the exercise price of each option is not less than the market
price of the Company's shares on the Nasdaq National Market System or
since August 9, 2005 on the OTC Bulletin Board
19
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
5. COMMON STOCK (CONTINUED)
(OTCBB) on the day prior to the date of grant. Options vest rateably over
a five year period and the option's maximum term is 10 years.
Activity in the stock option plans for the six months period ended
January 31, 2008 and fiscal 2007 was as follows:
<Table>
<Caption>
SIX MONTHS ENDED
JANUARY 31, 2008 July 31, 2007
------------------- -------------------
WEIGHTED Weighted
AVERAGE average
OPTIONS EXERCISE Options exercise
(000) PRICE (000) price
-------- -------- -------- --------
# $US # $US
Outstanding,
beginning of period 1,169 1.52 1,041 1.59
Granted - - 288 1.00
Exercised - - - -
Forfeited 427 2.04 160 1.00
-------- -------- -------- --------
Outstanding,
End of period 742 1.22 1,169 1.52
======== ======== ======== ========
Options exercisable
at end of period 471 1.34 728 1.79
======== ======== ======== ========
</Table>
The following table summarizes significant ranges of outstanding options
held by directors, officers, and employees as of January 31, 2008:
<Table>
<Caption>
Options outstanding Options exercisable
--------------------------------- ---------------------
Weighted
average Weighted Weighted
remaining average average
Ranges of exercise Options life exercise Options exercise
prices ($US) (000) (years) price (000) Price
--------------------------------- ---------------------
# $US # $US
LESS THAN 1.00 160 8.47 0.69 160 0.69
1.00 to 1.99 521 17.25 1.00 250 1.00
3.00 to 3.99 20 8.47 3.37 20 3.37
4.00 to 4.99 30 9.99 4.63 30 4.63
5.00 to 5.99 5 12.68 5.00 5 5.00
6.00 to 6.99 6 11.28 6.46 6 6.46
--------------------------------- ---------------------
742 14.75 1.22 471 1.34
</Table>
20
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
5. COMMON STOCK (CONTINUED)
(c) SHARE AWARD PLAN
On November 2, 2006, the Board of Directors of SAND established a Share
Award Plan pursuant to which up to 1,000,000 Common Shares of the
Corporation shall be issuable under the Share Award Program through
direct and immediate issuances without any intervening option grants.
On August 28, 2007, the Board of Directors of the Corporation authorized
the award of up to 665,000 Common Shares. Since then, the Corporation has
awarded 652,500 Common Shares including grants which are dependant on the
Award Recipients achieving certain defined objectives. Vested Common
Shares shall be acquired by the Award Recipient upon payment of $0.001
per Common Share by the Award Recipient to the Corporation in the event
the Award Recipient is in the employ of the Corporation on the vesting
date of September 30, 2010 or upon a change in control of the
Corporation. As at January 31, 2008, 652,500 awarded Common Shares are
still outstanding (Nil as of July 31, 2007).
6. INCOME TAXES
There was no income tax accrued during the nine-month period ended
January 31, 2008.
7. COMMITMENTS
The Corporation is committed under operating leases for a total amount of
approximately $1,090,005. The minimum payments due in each of the
forthcoming years are as follows:
<Table>
<Caption>
$
2008 407,498
2009 275,317
2010 244,314
2011 162,876
</Table>
8. SEGMENTED INFORMATION
The Corporation is considered to have only one business segment.
The Corporation has two geographic reportable segments. Both the North
American and European segments market the SAND Analytical Server and the
SAND Searchable Archive. The accounting policies of the segments are the
same as described in the summary of significant accounting policies. The
Company evaluates segment performance based on earnings before taxes.
Sales for each segment are based on the location of the third party
customer. All intercompany transactions between segments have been
eliminated.
21
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
8. SEGMENTED INFORMATION (CONTINUED)
As at and for the three months ended January 31,
<Table>
<Caption>
North America Europe
--------------------------------------------------------------------
2008
Net sales 530,646 888,875
(Loss) before income taxes (226,188) (265,155)
Identifiable assets 1,112,731 998,438
2007
Net sales 337,751 1,523,907
(Loss) earnings before income taxes (639,601) 150,506
Identifiable assets 1,177,840 1,989,943
</Table>
As at and for the six months ended January 31,
<Table>
<Caption>
North America Europe
--------------------------------------------------------------------
2008
Net sales 1,240,315 1,964,131
Loss before income taxes (1,303,024) 506,761
Identifiable assets 1,112,731 998,438
2007
Net sales 928,523 2,403,542
(Loss) before income taxes (1,522,187) 196,560
Identifiable assets 1,177,840 1,989,943
</Table>
22
<Page>
SAND TECHNOLOGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN CANADIAN DOLLARS)
(UNAUDITED)
9. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
As at January 31, 2008, the estimated fair market value of cash and cash
equivalents, accounts receivable, loan and accounts payable and accrued
liabilities is equal to the book value, given the short-term nature of
these items.
CREDIT RISK
The Corporation's exposure to credit risk as of January 31, 2008, is
equal to the carrying amount of its financial assets.
CONCENTRATION OF CREDIT RISK
Credit risk concentration with respect to trade receivables is limited
due to the relatively large size of the Corporation's customers.
CURRENCY RISK
The Corporation operates internationally and is exposed to market risk
principally from changes in foreign currency rates. The Corporation does
not hold any financial instruments that mitigate this risk.
10. CHANGES IN NON-CASH OPERATING WORKING CAPITAL ITEMS
<Table>
<Caption>
THREE MONTHS Three months SIX MONTHS Six months
ENDED ended ENDED ended
JANUARY 31, January 31, JANUARY 31, January 31,
2008 2007 2008 2007
-----------------------------------------------------------------------------------
$ $ $ $
Accounts receivable 26,476 (1,205,012) (85,103) (736,132)
Prepaid expenses 33,936 (102,443) (29,224) (127,516)
Deferred revenue 54,220 327,975 80,977 119,157
Accounts payable and
accrued liabilities 144,471 1,083,928 75,836 943,800
-----------------------------------------------------------------------------------
Changes in non-cash
operating working
capital items 259,103 104,448 42,486 199,309
===================================================================================
</Table>
11. COMPARATIVE FIGURES
Certain figures for prior periods have been reclassified in order to
conform to the presentation adopted in the current period.
23
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 6-K to be signed on its behalf by
the undersigned, thereunto duly authorized.
SAND TECHNOLOGY INC.
May 6, 2008 /s/ Arthur G. Ritchie
---------------------------------------
Arthur G. Ritchie
Chairman of the Board, President
and Chief Executive Officer
24