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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549 </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman">FORM
      8-K</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report: August 1, 2006 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 20pt; FONT-FAMILY: Times New Roman"><u>SAN
      Holdings, Inc.</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
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            </td>
            <td valign="top" width="2%">&#160;</td>
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                </font></div>
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                or other jurisdiction of incorporation)</font></div>
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                File Number)</font></div>
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      Pyramid Court, Suite 130, Englewood, CO 80112</u></font></div>
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      of Principal Executive Offices) (Zip Code)</font></div>
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      660-3933</u></font></div>
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      telephone number, including area code</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br><br></div>
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      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
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      communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      material pursuant to Rule 14a-12 under
      the Exchange Act (17 CFR 240.14a-12) </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Wingdings">o</font>&#160;Pre-commencement
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      14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </font></div>
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      communications pursuant to Rule
      13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></div>
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      2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation
      or an Obligation under an Off-Balance Sheet Arrangement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      March
      2, 2006 (the &#8220;First Closing Date&#8221;), in the first of three closings of a private
      placement transaction exempt from registration under the Securities Act of
      1933,
      as amended (the &#8220;Private Placement&#8221;), SAN Holdings, Inc. (the &#8220;Company&#8221;) issued
      shares of the Company&#8217;s series A preferred stock, no par value per share
      (&#8220;Series A Preferred Stock&#8221;), initially convertible into 333,333 shares of the
      Company&#8217;s common stock, no par value per share (&#8220;Common Stock&#8221;), and warrants to
      purchase shares of the Company&#8217;s Common Stock, to several purchasers (the &#8220;March
      2006 Purchasers&#8221;). As part of the first closing of the Private Placement, the
      Company entered into the Registration Rights Agreement (&#8220;Registration Rights
      Agreement&#8221;), dated and effective as of February 28, 2006, among the Company and
      the March 2006 Purchasers, in which the Company agreed to prepare and file
      with
      the Securities and Exchange Commission (the &#8220;SEC&#8221;) a registration statement (the
&#8220;Registration Statement&#8221;) covering the resale of certain of the securities
      issued to the Purchasers within 150 calendar days of the Closing
      Date.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the terms of the Registration Rights Agreement, unless the Registration
      Statement was declared effective by the SEC within 150 calendar days of the
      First Closing Date, the Company is required to pay liquidated damages to the
      March 2006 Purchasers. As of August 1, 2006, the Company did not have an
      effective Registration Statement, and is therefore required to pay approximately
      $220,000 to the March 2006 Purchasers, which constitutes a payment of partial
      liquidated damages in the amount of 2.0% of the aggregate purchase price paid
      by
      the March 2006 Purchasers in the first closing of the Private Placement. The
      Company will be required to pay approximately an additional $220,000 in partial
      liquidated damages on each monthly anniversary thereafter until the Registration
      Statement has been declared effective by the SEC. If the Company fails to pay
      the partial liquidated damages to the March 2006 Purchasers within seven days
      after the date payable, the Company is also required to pay interest thereon
      at
      a rate of 12% per annum, accruing daily from the date such partial liquidated
      damages are due until such amounts, plus all interest thereon, are paid in
      full.
</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this Report to be signed on its behalf by the undersigned, hereunto
      duly authorized. </font></div>
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          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2"><font size="2">SAN HOLDINGS, INC.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/
              Robert C. Ogden</font></td>
          </tr>
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            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Robert
              C. Ogden, Chief Financial Officer and
              Secretary</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td>
            </td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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          <tr valign="top" bgcolor="#ffffff">
            <td>&#160;</td>
            <td colspan="2" width="0"><font size="2">Date: August 4,
              2006</font></td>
          </tr>

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{"company-data": {"conformed-name": "SAN HOLDINGS INC", "cik": "0000799097", "assigned-sic": "3572", "irs-number": "840907969", "state-of-incorporation": "CO", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-16423", "film-number": "061003579"}, "business-address": {"street1": "9800 MT PYRAMID COURT", "street2": "SUITE 130", "city": "ENGLEWOOD", "state": "CO", "zip": "80112", "phone": "3036603933"}, "mail-address": {"street1": "9800 MT PYRAMID COURT", "street2": "SUITE 130", "city": "ENGLEWOOD", "state": "CO", "zip": "80112"}, "former-company": [{"former-conformed-name": "CITADEL ENVIRONMENTAL GROUP INC", "date-changed": "19961129"}, {"former-conformed-name": "CITADEL ASSET MANAGEMENT LTD", "date-changed": "19920703"}]}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
      of
      Report: August 1, 2006
SAN
      Holdings, Inc.
(Exact
      name of registrant as specified in its charter)
Colorado
0-16423
84-0907969
(State
                or other jurisdiction of incorporation)
(Commission
                File Number)
(IRS
                Employer Identification Number)
9800
      Pyramid Court, Suite 130, Englewood, CO 80112
(Address
      of Principal Executive Offices) (Zip Code)
(303)
      660-3933
Registrant's
      telephone number, including area code
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under
      the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
      communications pursuant to Rule
      14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule
      13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
      2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation
      or an Obligation under an Off-Balance Sheet Arrangement.
On
      March
      2, 2006 (the "First Closing Date"), in the first of three closings of a private
      placement transaction exempt from registration under the Securities Act of
      1933,
      as amended (the "Private Placement"), SAN Holdings, Inc. (the "Company") issued
      shares of the Company's series A preferred stock, no par value per share
      ("Series A Preferred Stock"), initially convertible into 333,333 shares of the
      Company's common stock, no par value per share ("Common Stock"), and warrants to
      purchase shares of the Company's Common Stock, to several purchasers (the "March
      2006 Purchasers"). As part of the first closing of the Private Placement, the
      Company entered into the Registration Rights Agreement ("Registration Rights
      Agreement"), dated and effective as of February 28, 2006, among the Company and
      the March 2006 Purchasers, in which the Company agreed to prepare and file
      with
      the Securities and Exchange Commission (the "SEC") a registration statement (the
"Registration Statement") covering the resale of certain of the securities
      issued to the Purchasers within 150 calendar days of the Closing
      Date.
Pursuant
      to the terms of the Registration Rights Agreement, unless the Registration
      Statement was declared effective by the SEC within 150 calendar days of the
      First Closing Date, the Company is required to pay liquidated damages to the
      March 2006 Purchasers. As of August 1, 2006, the Company did not have an
      effective Registration Statement, and is therefore required to pay approximately
      $220,000 to the March 2006 Purchasers, which constitutes a payment of partial
      liquidated damages in the amount of 2.0% of the aggregate purchase price paid
      by
      the March 2006 Purchasers in the first closing of the Private Placement. The
      Company will be required to pay approximately an additional $220,000 in partial
      liquidated damages on each monthly anniversary thereafter until the Registration
      Statement has been declared effective by the SEC. If the Company fails to pay
      the partial liquidated damages to the March 2006 Purchasers within seven days
      after the date payable, the Company is also required to pay interest thereon
      at
      a rate of 12% per annum, accruing daily from the date such partial liquidated
      damages are due until such amounts, plus all interest thereon, are paid in
      full.
2
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this Report to be signed on its behalf by the undersigned, hereunto
      duly authorized.
SAN HOLDINGS, INC.
By:
/s/
              Robert C. Ogden
Robert
              C. Ogden, Chief Financial Officer and
              Secretary
Date: August 4,
              2006
3