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Filed by sedaredgar.com - SAND Technology Inc. Form 6-KUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. Dividend yield-Expected volatility90%Risk-free interest rate3.25%Expected life3 yearsThe remaining balance represents the fair value of theconversion option and the interest payable in shares in the amount of $446,027.This amount was recorded in a separate caption of shareholders deficiency asthe equity component of the convertible debentures.SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)8. SHARE CAPITALa) Authorized and issued2010 transactionsIn November 2009, the Corporation completed a non-brokeredprivate placement where the Corporation issued 785,715 units for US$0.70 perunit, for total proceeds of US$550,000 to investors, one of whom effectiveNovember 1, 2009, is the President and Chief Executive Officer.
Each unitconsists of two Class A common share and one share purchase warrant,exercisable at a price of US$0.50 per warrant.The fair value of the 785,715 warrants at the time they weregranted was estimated at $244,842. This amount was recorded in contributed surplus.The fair value of the warrants at the time they were granted were estimatedusing the Black-Scholes option pricing model with the following assumptions. Dividend yield-Expected volatility90%Risk-free interest rate4.40%Expected life3 yearsSAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)8.
Dividend yield-Expected volatility (a)90%Risk-free interest rate (a)4.0%Expected life (a)3 yearsVesting period3 yearsNumber of common shares granted but not yet issued407,500(a) Weighted average assumption d) Stock option plansThe Corporation has two stock option plans. The following tablesummarizes information about the Corporations stock options: January 31July 312010 2009 Number ofoptionsWeightedaverageexercise priceNumber ofoptionsWeightedaverageexercise price (000s) $US (000s) $ US Outstanding, beginning of period 551 0.98 556 1.03 Forfeited (35) 0 Expired (1) (5) 6.50 Outstanding, end ofperiod 515 0.97 551 0.98 Options exercisable,end of period 430 0.96 404 0.98 8. INCOME TAXESThere was no income tax accrued during the six month periodended January 31, 2010.SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)11. SEGMENTED INFORMATIONThe Corporation is considered to have only one reportablebusiness segment in two geographic areas. Both North America and Europe marketthe SAND/DNA Product suite.
The accounting policies of the geographic areas arethe same as described in the summary of accounting policies. The Corporationevaluates their performance based on income before income taxes. Sales for eacharea are based on the location of the third party customer. All intercompanytransactions between geographic areas have been eliminated.As at and for the three months ended January 31. North America Europe Total $ $ $ 2010 Revenue 303,803 1,620,448 1,924,251 Lossbefore income taxes (1,484,104) 1,456,153 (27,951) Identifiable assets 989,546 1,818,249 2,807,795 2009 Revenue 823,240 924,144 1,747,384 Loss before income taxes (133,672) 6,257 (127,415) Identifiable assets 1,251,077 954,277 2,205,354 As at and for the six months ended January 31.
North America Europe Total $ $ $ 2010 Revenue 932,374 3,477,342 4,409,716 Lossbefore income taxes (1,968,236) 2,371,575 403,339 Identifiable assets 989,546 1,818,249 2,807,795 2009 Revenue 1,251,392 1,719,920 2,971,312 Loss before income taxes (1,022,421) (94,844) (1,117,265) Identifiable assets 1,251,077 954,277 2,205,354 SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)12. CAPITAL MANAGEMENTThe Corporations capital management objectives are to ensurethe Corporations ability to continue as a going concern and to provide anadequate return to shareholders through the optimization of the debt and equitybalance. The Corporations capital is described to be due to a shareholder,convertible debentures less cash and shareholders equity. The Corporationmanages its capital structure and makes adjustments to it in the light of itsexpected business growth and changes in economic conditions. In order tomaintain or adjust the capital structure, the Corporation may return capital tothe shareholders, issue new shares or issue new debt. January 31July 312010 2009 $ $ Cash 398,797 1,065,572 Accounts Receivable 1,559,999 1,384,199 Unbilled Receivable 614,913 109,414 2,573,709 2,559,185 The Corporation minimizes its exposure to credit risk byplacing its cash with major banks.
Management considers these major banks to beat low risk of loss.SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)13. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES, ANDFINANCIAL RISKS (Continued)The credit risk exposure through the Corporations accountsreceivable is mitigated by selling software licenses, maintenance and consultingfor invoicing with short credit terms. Software maintenance contracts aregenerally fully paid at the inception of service. In the normal course ofoperations, the Corporation evaluates the financial condition of its customers.For the six months ended January 31, 2010, the Corporation generatedapproximately 39% of its revenue from three customers in Europe. An amount of$1,115,610 was outstanding from those customers as at January 31, 2010. (For thesix months ended January 31, 2009, two customers one in Europe and the otherin North America, represented 22% of the revenue; $481,713 was outstanding as atJanuary 31, 2009.) Overall, management assesses the Corporations credit risk tobe low.c) Currency riskCurrency risk is the risk that the value of a financialinstrument will fluctuate due to changes in foreign exchange rates. Roth vacuum technology pdf.
TheCorporation operates internationally and is exposed to risk from changes inforeign currency rates. The Corporation does not hold any financial instrumentsthat mitigate this risk. Management minimizes this risk by paying theexpenditures incurred in the local operations using the monies received in thelocal currency.The Corporation is mainly exposed to fluctuations in the U.S.dollar, the Pound Sterling and the Euro. The following table details theCorporations sensitivity to a 31% strengthening of the U.S.
Dollar, a 36%strengthening of the Pound Sterling and a 21% strengthening of the Euro on netearnings and comprehensive income against the Canadian dollar. The sensitivityanalysis includes foreign currency denominated monetary items and adjusts theirtranslation at period end for the changes described above. For a weakening ofthe U.S.
Dollar, the Pound Sterling and the Euro by the same percentages againstthe Canadian dollar, there would be an equal and opposite impact on net loss andcomprehensive loss. The sensitivity analysis was based on the fluctuations inforeign currency rate over the last 3 years. As such, management assess theCorporations currency risk to be high. US DollarImpact UK PoundSterlingImpact EuroImpact Net income and comprehensive income 1,938,341 542,138 288,115 SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)13. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES, ANDFINANCIAL RISKS (Continued)As at January 31, 2010, the Corporation had the followingmonetary assets and liabilities denominated in foreign currencies included inits financial statements: January 31, 2010 July31, 2009 Current Current Current Current assets liabilities assets liabilities U.S.
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Dollars 308,462 185,218 295,654 209,832 Pounds Sterling 821,120 283,781 992,216 866,932 Euros 966,589 487,451 453,058 818,172 d) Liquidity riskLiquidity risk is the risk that the Corporation is not able tomeet its financial obligations as they fall due or can do so only at excessivecost. The Corporation manages this risk by regularly evaluating its liquidresources to fund its current and long-term obligations in a cost-effectivemanner.The Corporations exposure to liquidity risk is mitigatedthrough its continued ability to sell software licenses, services and softwaremaintenance contracts and the prompt collection of accounts receivable.
TheCorporation controls its liquidity risk by managing its cash and cash flowsusing budgets and cash estimates.The table below summarizes the Corporations financialliabilities and their due dates. Carrying Due within Due within 1 - Amount of 1 year 3 years Liability $ $ $ Accounts payable and accrued liabilities 1,206,932 1,206,932 - Due to a shareholder 1,485,010 708,894 776,116 Convertible Debentures 405,860 - - As at January 31, 2010, there has been no significant change tothe maturities of financial liabilities as such based on Note 2, managementassesses the Corporations liquidity risk to be high.SAND Technology Inc.Notes to Consolidated Financial StatementsAs at January 31, 2010 and 2009(in Canadian dollars, unless otherwise noted)(unaudited)13. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES, ANDFINANCIAL RISKS (Continued)Fair valueFair value is the amount that willing parties would accept toexchange a financial instrument based on the current market for instruments withthe same risk, principal and remaining maturity.
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These estimates are affected byassumptions made about the amount and timing of estimated future cash flows,discount rates and terms of the contract. Revenue - Total and VariationQ2-10Q2-09Revenue Revenue$1,924,251$1,747,384 Variation year-over-yearincrease (decrease) in revenue10%23%Compared to the second quarter of fiscal 2009, there was asmall increase in our revenues for the second quarter of fiscal 2010.
Therevenue growth is mostly due to higher sales of software licenses in Europe tonew and existing customers.The Corporation has two geographical segments. Both NorthAmerican and European segments market SAND/DNA Product Suite. The followingtable provides a summary of the revenue growth by geographical segments for thethree-month periods ended January 31, 2010 and 2009. NorthAmericaEuropeRevenue - Segment and VariationQ2-10Q2-09Q2-10Q2-09Revenue Revenue$303,803$823,240$1,620,448$924,144 Variation year-over-yearincrease (decrease) in revenue(63%)55%75%4%In North America, our second quarter sales of fiscal 2010 were63% lower than in the second quarter of fiscal 2009. The decrease is due to thereduction in software and consulting sales; in Q2-09, there were software salesto two new customers and consulting sales to an existing customer but in Q2-10there were no software and consulting sales.In Europe, our second quarter sales of fiscal 2010 were 75%higher than in the second quarter of fiscal 2009. The increase is due to thehigher sales of software licenses to two new customers and three existingcustomers.
In the same quarter last year, there were smaller software sales totwo existing customers.Managements Discussion and Analysis Operating ExpensesThe following table provides a summary of the operatingexpenses for the three-month periods ended January 31, 2010 and 2009. Net Income (Loss) - Total and VariationQ2-10Q2-09Netincome (loss) Net income (loss)($27,951)($127,415) Variationyear-over-year increase (decrease) in net loss(78%)(74%)Our net loss was $27,951 in the second quarter of fiscal 2010,a decrease of 78% from net loss of $127,415 in the second quarter of fiscal2009. The decrease is mostly due to the overall increase in sales.Managements Discussion and Analysis The following table provides a summary of net loss bygeographical segments for the three-month periods ended January 31, 2010 and2009. NorthAmericaEuropeNet earnings (loss) - Segment and VariationQ2-10Q2-09Q2-10Q2-09Profitability Net earnings (loss)($1,484,104)($133,672)$1,456,153$6,257 Variation year-over-yearincrease (decrease) in net earnings(loss)1010%(41%)23172%(102%) a) North AmericaIn North America, there was an increase in net loss by a largeamount in the second quarter of fiscal 2010, compared to the second quarter offiscal 2009. $20012,501Transactions with Related PartiesEffective November 1, 2009, Arthur G.
Ritchie, President andChief Executive Officer retired. As a result of his retirement, his loanagreements (described below) have been ratified and consolidated (RepaymentAgreement) such that the amounts owing to him will be repaid in equalinstalments over 3 years. The loan will continue to bear interest at 15% perannum and will be paid on a semi-annual basis. As well, an amendment was made tothe inter-creditor priority agreement, whereby the parties agreed that the sumsowing under the debentures will be paid by the Corporation to debenture holdersand the trustee pari passu to the sums owing by the Corporation to theprincipal shareholder. So for every $1 paid to the debenture holders, theCorporation shall remit $1 to the principal shareholder. As at January 31, 2010,an amount of $1,485,010 is outstanding.Managements Discussion and AnalysisPrior to November 1, 2009There were three types of loans that were due to the principalshareholder who was also the President and the Chief Executive Officer until hisretirement effective November 1 st, 2009.i.Under the 2009 loan agreement, a maximum of $250,000 offunds was available. The loan bore interest at 15% and it was payable onthe last business day of each calendar month.ii.Under the 2008 loan agreement, maximum of $400,000 offunds was available.
The loan bore interest at 15% and it was payable onthe last business day of each calendar month.iii.The 2007 loan originated from amounts owed by the Companyto the shareholder by virtue of his employment contracts. The loan boreinterest at 15% and it was payable on the last business day of eachcalendar month.