<Page>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 20-F/A

          [ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

          [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          For the fiscal year ended July 31, 2006

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                                       OR

           [ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

          Date of event requiring this shell company report...............

          Commission file number:  0-14884

                              SAND TECHNOLOGY INC.
              (FORMERLY SAND TECHNOLOGY SYSTEMS INTERNATIONAL INC.)
           (Exact name of the registrant as specified in its charter)

                                     CANADA
                         (Jurisdiction of Incorporation)

                          215 REDFERN AVENUE, SUITE 410
                        WESTMOUNT, QUEBEC, CANADA H3Z 3L5
                    (Address of principal executive offices)

                            TELEPHONE (514) 939-3477

          Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:

                              CLASS A COMMON SHARES

          Securities for which there is a reporting obligation pursuant to
          Section 15(d) of the Act:

                                      NONE

          Indicate the number of outstanding shares of each of the issuer's
          classes of capital or common stock as of the close of the period
          covered by the annual report.
                       CLASS A COMMON SHARES - 12,818,189

          Indicate by check mark if the registrant is a well-known seasoned
          issuer, as defined in Rule 405 of the Securities Act

                    Yes / /                    No /X/

                                        1
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          If this report is an annual or transition report, indicate by check
          mark if the registrant is not required to file reports pursuant to
          Section 13 or 15 (d) of the Securities Exchange Act of 1934.

                    Yes / /                    No /X/

          Indicate by check mark whether the registrant: (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the Securities
          Exchange Act of 1934 during the preceding 12 months (or for such
          shorter period that the registrant was required to file such reports),
          and (2) has been subject to such filing requirements for the past 90
          days.

                    Yes /X/                    No / /

          Indicate by check mark whether the registrant is a large accelerated
          filer, an accelerated filer, or a non-accelerated filer.

          Large accelerated filer / / Accelerated / / Non-accelerated filer /X/
                                      filer

          Indicate by check mark which financial statement item the registrant
          has selected to follow.

                    Item 17 / /                Item 18 /X/

          If this report is an annual report, indicate by check mark whether the
          registrant is a shell company.

                    Yes / /                    No /X/

                                        2
<Page>

                                INTRODUCTORY NOTE

This Form 20-F/A is being filed solely to include at page 4 of this document
the audit report of Deloitte & Touche, our former auditor, dated September
16, 2005 in Item 18 in response to a comment, and in compliance with the
request, of the Securities and Exchange Commission.

                                        3
<Page>

                                                           Deloitte & Touche LLP
                                                           1 Place Ville Marie
                                                           Suite 3000
[DELOITTE LOGO]                                            Montreal QC H3B 4T9
                                                           Canada

                                                           Tel: (514) 393-5194
                                                           Fax: (514) 390-4104
                                                           www.deloitte.ca

REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

To the Shareholders and Board of Directors of
Sand Technology Inc.

We have audited the consolidated balance sheet of Sand Technology Inc. as at
July 31, 2005 and the consolidated statements of operations, shareholders'
equity and cash flows for the years ended July 31, 2005 and 2004. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with Canadian generally accepted
auditing standards and auditing standards of the Public Company Accounting
Oversight Board in the United States of America. These standards require that
we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at July
31, 2005 and the results of its operations and its cash flows for the years
ended July 31, 2005 and 2004 in accordance with Canadian generally accepted
accounting principles.

The Corporation is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
Corporation's internal control over financial reporting. Accordingly, we
express no such opinion.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

September 16, 2005

COMMENTS BY INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS FOR U.S. READERS ON
CANADA-U.S. REPORTING DIFFERENCES

The standards of the Public Company Accounting Oversight Board (United States)
require the addition of an explanatory paragraph (following the opinion
paragraph) when there are changes in accounting principles that have been
implemented such as those described in Note 1 to the consolidated financial
statements of the Corporation. Our report to the Shareholders and Board of
Directors, dated September 16, 2005, is expressed in accordance with Canadian
reporting standards, which do not require a reference to such changes in
accounting principles in the report of independent registered Chartered
Accountants when the change is properly accounted for and adequately disclosed
in the financial statements.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

September 16, 2005

                                                        Member of
                                                        Deloitte Touche Tohmatsu
                                        4
<Page>

                              SAND TECHNOLOGY INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                                  JULY 31, 2006

Report of Independent Registered Chartered Accountants              6 - 7

Comments by Independent Registered Chartered Accountants
  for U.S. Readers on Canada-U.S. Reporting Differences                 8

Financial Statements
  Consolidated Balance Sheets                                           9
  Consolidated Operations                                              10
  Consolidated Shareholders' Equity                                    11
  Consolidated Cash Flows                                              12
  Notes to Consolidated Financial Statements                      13 - 31

                                        5
<Page>

REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

To the Shareholders and Board of Directors of
SAND Technology Inc.

We have audited the accompanying consolidated balance sheet of SAND Technology
Inc. and subsidiaries (the "Corporation") as at July 31, 2006 and the
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing
standards and standards of the Public Company Accounting Oversight Board (United
States). These standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Corporation is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Corporation's internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

                                        6
<Page>

In our opinion, consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Corporation as
at July 31, 2006 and the results of its operations and its cash flows for the
year then ended in accordance with Canadian generally accepted accounting
principles.

The financial statements as at July 31, 2005 and for the years ended July 31,
2005 and 2004 were audited by other auditors who expressed an opinion without
reservation on those statements in their report dated September 16, 2005.


/s/ Raymond Chabot Grant Thornton LLP
-------------------------------------
Independent Registered Chartered Accountants

Montreal
September 8, 2006

                                        7
<Page>

COMMENTS BY INDEPENDENT REGISTERED CHARTERED
ACCOUNTANTS FOR U.S. READERS ON CANADA-U.S.
REPORTING DIFFERENCES

The standards of the Public Company Accounting Oversight Board (United States)
require the addition of an explanatory paragraph (following the opinion
paragraphs) when there are changes in accounting principles that have been
implemented such as those described in Note 2 to the consolidated financial
statements as at July 31, 2006 and for the year then ended of SAND Technology
Inc. and subsidiaries (the "Corporation") and when the consolidated financial
statements are affected by conditions and events that cast substantial doubt on
the Corporation's ability to continue as a going concern, such as those
described in Note 1 to the consolidated financial statements of the Corporation.
Our report to the shareholders and Board of Directors, dated September 8, 2006,
is expressed in accordance with Canadian reporting standards, which do not
require a reference to such changes in accounting principles or such events and
conditions in the report of independent registered chartered accountants when
the changes or events and conditions are properly accounted for and adequately
disclosed in the financial statements.


/s/ Raymond Chabot Grant Thornton LLP
-------------------------------------
Independent Registered Chartered Accountants


Montreal
September 8, 2006

                                        8
<Page>

SAND TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS
July 31, 2006
(In Canadian dollars)

<Table>
<Caption>
                                                                                    2006            2005
                                                                             -----------     -----------
                                                                                       $               $
<S>                                                                          <C>             <C>
ASSETS
Current assets
  Cash and cash equivalents                                                    1,412,548       5,615,912
  Accounts receivable                                                          1,486,287       1,561,613
  Prepaid expenses                                                                93,226         127,731
                                                                             -----------     -----------
                                                                               2,992,061       7,305,256
Capital assets (Note 3)                                                          231,367         296,735
Other assets (Note 4)                                                            221,693         332,540
                                                                             -----------     -----------
                                                                               3,445,121       7,934,531
                                                                             ===========     ===========

LIABILITIES
Current liabilities
  Accounts payable and accrued liabilities                                     1,140,343       1,485,597
  Deferred revenue                                                             1,231,094       1,447,992
                                                                             -----------     -----------
                                                                               2,371,437       2,933,589
Deferred credits                                                                 136,906         166,243
                                                                             -----------     -----------
                                                                               2,508,343       3,099,832
                                                                             -----------     -----------
Commitments (Note 8)

SHAREHOLDERS' EQUITY
Common stock (Note 5)
  Authorized
    Unlimited number of class "A" common shares, without par value
  Issued and outstanding
    12,818,189 class "A" common shares (12,818,189 in 2005)                   38,024,756      38,024,756
  Contributed surplus (Note 5b)                                                  103,000          74,000
Deficit                                                                      (37,190,978)    (33,264,057)
                                                                             -----------     -----------
                                                                                 936,778       4,834,699
                                                                             -----------     -----------
                                                                               3,445,121       7,934,531
                                                                             ===========     ===========
</Table>

The accompanying notes are an integral part of the consolidated financial
statements.

On behalf of the Board,

/s/ Arthur G. Ritchie                  /s/ Marc Malouin
-------------------------------------- -----------------------------------------
Arthur G. Ritchie, Director            Marc Malouin, Director

                                        9
<Page>

SAND TECHNOLOGY INC.
CONSOLIDATED OPERATIONS
Years ended July 31, 2006
(In Canadian dollars)

<Table>
<Caption>
                                                                                 2006            2005            2004
                                                                           ----------      ----------      ----------
                                                                                    $               $               $
<S>                                                                        <C>             <C>             <C>
REVENUE                                                                     5,477,485       6,096,033       5,349,214
                                                                           ----------      ----------      ----------
Operating expenses
  Cost of sales and product support                                         1,554,313       1,754,138       1,652,369
  Research and development, net (Note 6)                                    2,441,950       3,272,102       3,308,789
  Amortization of capital assets and other assets (Notes 3 and 4)             248,455         277,276         242,488
  Selling, general and administrative expenses                              5,220,443       8,317,831       7,604,541
                                                                           ----------      ----------      ----------
                                                                            9,465,161      13,621,347      12,808,187
                                                                           ----------      ----------      ----------
Loss from operations                                                       (3,987,676)     (7,525,314)     (7,458,973)
Interest income                                                                60,755         162,260         329,043
                                                                           ----------      ----------      ----------
NET LOSS                                                                   (3,926,921)     (7,363,054)     (7,129,930)
                                                                           ==========      ==========      ==========

Basic and diluted loss per share (Note 5)                                       (0.31)          (0.57)          (0.55)
                                                                           ==========      ==========      ==========

Basic and diluted weighted average number of common
shares outstanding                                                         12,818,189      12,860,438      13,079,649
                                                                           ==========      ==========      ==========
</Table>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       10
<Page>

SAND TECHNOLOGY INC.
CONSOLIDATED SHAREHOLDERS' EQUITY
Years ended July 31, 2006
(In Canadian dollars)

<Table>
<Caption>
                                                              Common stock
                                                          ---------------------------
                                                           Number of                       Contributed
                                                              shares           Amount          surplus          Deficit
                                                          ----------       ----------      -----------      -----------
                                                                                    $                $                $
<S>                                                       <C>              <C>                 <C>          <C>
Balance as at July 31, 2003                               13,164,327       39,051,564                       (19,369,906)
Net loss                                                                                                     (7,129,930)
Stock-based compensation (Note 5b)                                                              49,000
Share repurchase                                            (166,776)        (494,736)                          253,230
                                                          ----------       ----------      -----------      -----------
Balance as at July 31, 2004                               12,997,551       38,556,828           49,000      (26,246,606)
Net loss                                                                                                     (7,363,054)
Stock-based compensation (Note 5b)                                                              25,000
Share repurchase                                            (179,362)        (532,072)                          345,603
                                                          ----------       ----------      -----------      -----------
Balance as at July 31, 2005                               12,818,189       38,024,756           74,000      (33,264,057)
Net loss                                                                                                     (3,926,921)
Stock-based compensation (Note 5b)                                                              29,000
                                                          ----------       ----------      -----------      -----------
Balance as at July 31, 2006                               12,818,189       38,024,756          103,000      (37,190,978)
                                                          ==========       ==========      ===========      ===========
</Table>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       11
<Page>

SAND TECHNOLOGY INC.
CONSOLIDATED CASH FLOWS
Years ended July 31, 2006
(In Canadian dollars)

<Table>
<Caption>
                                                                                 2006            2005            2004
                                                                           ----------      ----------      ----------
                                                                                    $               $               $
<S>                                                                        <C>             <C>             <C>
OPERATING ACTIVITIES
Net loss                                                                   (3,926,921)     (7,363,054)     (7,129,930)
Non-cash items
  Amortization of capital assets and other assets                             248,455         277,276         242,488
  Stock-based compensation                                                     29,000          25,000          49,000
  Changes in working capital items
      Accounts receivable                                                      75,326         803,042         (23,787)
      Prepaid expenses                                                         34,505          60,949          14,651
      Accounts payable and accrued liabilities                               (345,254)       (395,516)     (1,098,530)
      Deferred revenue                                                       (216,898)       (106,793)        415,176
                                                                           ----------      ----------      ----------
Cash flows from operating activities                                       (4,101,787)     (6,699,096)     (7,530,932)
                                                                           ----------      ----------      ----------
INVESTING ACTIVITIES
Purchase of capital assets                                                    (72,240)        (70,578)        (58,642)
Balance of sale price receivable                                                                              588,483
Increase in other assets                                                                                     (471,100)
                                                                           ----------      ----------      ----------
Cash flows from investing activities                                          (72,240)        (70,578)         58,741
                                                                           ----------      ----------      ----------

FINANCING ACTIVITIES
Purchase of common shares                                                                    (186,469)       (241,506)
Deferred credits                                                              (29,337)        (29,338)        (29,336)
                                                                           ----------      ----------      ----------
Cash flows from financing activities                                          (29,337)       (215,807)       (270,842)
                                                                           ----------      ----------      ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                  (4,203,364)     (6,985,481)     (7,743,033)
Cash and cash equivalents, beginning of year                                5,615,912      12,601,393      20,344,426
                                                                           ----------      ----------      ----------
Cash and cash equivalents, end of year                                      1,412,548       5,615,912      12,601,393
                                                                           ==========      ==========      ==========
</Table>

There was no amount of interest paid and no income taxes paid during the
three-year period ended July 31, 2006.

The accompanying notes are an integral part of the consolidated financial
statements.

                                       12
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

1 - GOVERNING STATUTES AND NATURE OF OPERATIONS

SAND Technology Inc. and subsidiaries (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 Analytic Server and
the SAND Searchable Archive, are designed to provide an efficient and
cost-effective way for business users to make fast and easy inquiries of large
databases without the intervention of specialist information technology
professionals. The Corporation is considered to have only one reportable
business segment.

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 has
adopted a cost reduction plan to address this situation and is confident it will
obtain the necessary financing through public offerings or private placements.

The carrying amounts of assets, liabilities, revenues and expenses presented in
the financial statements and the balance sheet classification have not been
adjusted as it would be required if the going concern assumption were not
appropriate.

2 - ACCOUNTING POLICIES

ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with Canadian generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts recorded in the financial statements and
notes to financial statements. These estimates are based on management's best
knowledge of current events and actions that the Corporation may undertake in
the future. Actual results may differ from these estimates.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of SAND Technology
Inc. and its wholly-owned subsidiaries which are located in Germany, United
Kingdom, Ireland and United States. All intercompany transactions and balances
have been eliminated.

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.

                                       13
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

Revenue from the sale of software licence agreements is 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 (VSOE) 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. If
VSOE of all undelivered elements exists but evidence does not exist for one or
more delivered elements, then revenue is recognized using the residual method.
Under the residual method, the fair value of the undelivered elements is
deferred, and the remaining portion of the agreement fee related to the
delivered elements is recognized as revenue provided that all other revenue
recognition criteria are met. If evidence of fair value of one or more
undelivered elements cannot be established, revenue is deferred and recognized
ratably over the last undelivered element.

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 total 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 ratably over the term of the contract.

Revenues 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 performance of
services are classified as deferred revenue.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include unrestricted cash and highly liquid
investments purchased with an original maturity of three months or less.

                                       14
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

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>
<Caption>
                                                                         Periods
                                                                      ----------
 <S>                                                                  <C>
 Furniture and equipment                                                 5 years
 Computer equipment                                                      3 years
                                                                        Over the
                                                                      shorter of
                                                                       the lease
                                                                         term or
 Leasehold improvements                                                 10 years
</Table>

OTHER ASSETS

CONTRACT COSTS

Contract costs are comprised of an amount paid to a vendor upon the transfer of
a long-term service contract and is amortized ratably over the term of the
contract ending in 2008.

IMPAIRMENT OF LONG-LIVED ASSETS

Capital assets and intangible assets subject to amortization are tested for
recoverability when events or changes in circumstances indicate that their
carrying amount may not be recoverable. The carrying amount of a long-lived
asset is not recoverable when it exceeds the sum of the undiscounted cash flows
expected from its use and eventual disposal. In such a case, an impairment loss
equivalent to the excess of the carrying amount of a long-lived asset over its
fair value must be recognized.

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

The Corporation uses the liability method of accounting for income taxes. Under
this method, future income tax assets and liabilities are determined according
to differences between the carrying amounts and tax bases of assets and
liabilities. They are measured by applying enacted or substantively enacted tax
rates and laws at the date of the financial statements for the years in which
the temporary differences are expected to reverse. The Corporation records a
valuation allowance for future income tax assets if, based on available
information, it is more likely than not that some or all of the future income
tax assets will not be realized.

                                       15
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

DEFERRED CREDITS

Deferred credits include deferred lease inducements, which are amortized on a
straight-line basis over the term of the lease as a deduction of lease expense.

FOREIGN CURRENCY TRANSLATION

Revenue, expenses and acquisition of non-monetary assets denominated in foreign
currencies are translated into Canadian dollars at the exchange rate in effect
at the transaction date. Monetary assets and liabilities are translated at the
rate 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 the exchange rate in effect at the
balance sheet date. Non-monetary items are translated at the historical rate.
Revenue and expenses in foreign currency are translated at the average rate in
effect during the year, with the exception of revenue and expenses relating to
non-monetary assets and liabilities, which are translated at the historical
rate. Gains and losses are included in operations for the year.

LOSS PER SHARE

Per share computations are based on the weighted average number of shares
outstanding during the year. The dilutive effect of options is determined using
the treasury stock method.

STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS

The Corporation early-adopted the recommendations CICA Handbook section 3870,
STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS, on a prospective basis,
effective August 1, 2003, as permitted by the standard. The adoption of this
amendment resulted in stock-based compensation in the amount of $49,000 included
in selling, general and administrative expenses with a corresponding credit to
contributed surplus (see Note 5b).

Prior to August 1, 2003, the Corporation recorded no compensation cost on stock
options granted to employees (see Note 5b).

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 No. 14.

Certain agreements with 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.

                                       16
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

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.

In addition, the Corporation has provided warranties as part of the sale of its
subsidiary for claims against it related to conditions existing prior to the
sale.

ASSET RETIREMENT OBLIGATIONS

As of August 1, 2004, the Corporation adopted Handbook section 3110, ASSET
RETIREMENT OBLIGATIONS, which focuses on the recognition and measurement of
liabilities for obligations associated with the retirement of property, plant
and equipment when those obligations result from the acquisition, construction,
development or normal operation of the assets. The adoption of this
recommendation did not have an impact on the Corporation's consolidated
financial statements.

ADOPTION OF A NEW ACCOUNTING POLICY

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

The Accounting Guideline No. 15 (AcG-15), CONSOLIDATION OF VARIABLE INTEREST
ENTITIES, presents the views of the Accounting Standards Board on the
application of consolidation principles to certain entities that are subject to
control and on a basis other than ownership of voting interests. This guideline
is to be applied for years beginning on or after November 1, 2004. The adoption
of AcG-15 did not have an impact on the Corporation's results from operations or
financial position.

FINANCIAL INSTRUMENTS - DISCLOSURE AND PRESENTATION

The CICA issued revisions to section 3860 of the CICA Handbook, FINANCIAL
INSTRUMENTS - DISCLOSURE AND PRESENTATION. The revisions change the accounting
for certain financial instruments that have liability and equity
characteristics. These revisions come into effect for years beginning on or
after January 1, 2005. The Corporation does not have any instruments with these
characteristics at this time.

NON-MONETARY TRANSACTIONS

The CICA issued revisions to section 3831 of the CICA Handbook, NON-MONETARY
TRANSACTIONS. The revisions replace the current exception from measurement of a
non-monetary transaction at fair value for non-monetary exchanges which do not
represent the culmination of the earnings process, with an exception based on
whether the transaction has commercial substance. These revisions apply to all
non-monetary transactions initiated in periods beginning on or after January 1,
2006. The revisions did not have an impact on the Corporation's consolidated
financial statements.

                                       17
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

FUTURE ACCOUNTING CHANGES

FINANCIAL INSTRUMENTS - RECOGNITION AND MEASUREMENT

The CICA issued CICA Handbook section 3855, FINANCIAL INSTRUMENTS - RECOGNITION
AND MEASUREMENT. The section is effective for annual and interim periods
beginning on or after October 1, 2006. It describes the standards for
recognizing and measuring financial assets, financial liabilities and
non-financial derivatives. This section requires that i) all financial assets be
measured at fair value, with some exceptions such as loans and investments that
are classified as held-to-maturity, ii) all financial liabilities be measured at
fair value when they are derivatives or classified as held for trading purposes
(other financial liabilities are measured at their carrying value), and iii) all
derivative financial instruments be measured at fair value, even when they are
part of a hedging relationship. The Corporation is currently evaluating the
impact of this section on the consolidated financial statements.

HEDGES

The CICA recently issued CICA Handbook section 3865, HEDGES. The section is
effective for annual and interim periods beginning on or after October 1, 2006.
It describes when and how hedge accounting may be applied. Hedging is an
activity used by a company to change an exposure to one or more risks by
creating an offset between changes in the fair value of a hedged item and a
hedging item, changes in the cash flows attributable to a hedged item and a
hedging item, or changes resulting from a risk exposure relating to a hedged
item and a hedging item. Hedge accounting changes the normal basis for recording
the gains, losses, revenues and expenses associated with a hedged item or a
hedging item in a company's statement of operations. It ensures that all
offsetting gains, losses, revenues and expenses are recorded in the same period.
The Corporation is currently evaluating the impact of this section on the
consolidated financial statements.

COMPREHENSIVE INCOME

The CICA recently issued CICA Handbook section 1530, COMPREHENSIVE INCOME. The
section is effective for annual and interim periods beginning on or after
October 1, 2006. It describes how to report and disclose comprehensive income
and its components.

Comprehensive income is the change in a company's net assets that results from
transactions, events and circumstances from sources other than the company's
shareholders. It includes items that would be excluded from net earnings, such
as changes in the currency translation adjustment relating to self-sustaining
foreign operations, the unrealized gains or losses on available-for-sale
investments and the additional minimum liability for pension obligations.

The CICA also made changes to CICA Handbook section 3250, SURPLUS, and reissued
it as section 3251, EQUITY. The section is also effective for years beginning on
or after October 1, 2006. The changes in how to report and disclose equity and
changes in equity are consistent with the new requirements of section 1530,
COMPREHENSIVE INCOME.

                                       18
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

2 - ACCOUNTING POLICIES (CONTINUED)

Adopting these sections on August 1, 2007 will require the Corporation to begin
reporting, to the extent that they are relevant, the following items in the
consolidated financial statements:

- Comprehensive income and its components;
- Accumulated other comprehensive income and its components.

ACCOUNTING CHANGES

The CICA issued revisions to section 1506 of the CICA Handbook, ACCOUNTING
CHANGES. The revisions established criteria for changing accounting policies,
together with the accounting treatment and disclosure of changes in accounting
policies and estimates, and correction of errors. The revisions are effective
for annual and interim periods statements relating to years beginning on or
after January 1, 2007.

The Corporation is currently evaluating the impact of this section on the
consolidated financial statements.

3 - CAPITAL ASSETS

<Table>
<Caption>
                                                                                                          2006
                                                                ----------------------------------------------
                                                                                   ACCUMULATED
                                                                     COST         AMORTIZATION             NET
                                                                ---------         ------------         -------
                                                                        $                    $               $
 <S>                                                            <C>                    <C>             <C>
 Furniture and equipment                                          320,113              320,002             111
 Computer equipment                                               587,571              485,540         102,031
 Leasehold improvements                                           287,610              158,385         129,225
                                                                ---------         ------------         -------
                                                                1,195,294              963,927         231,367
                                                                =========         ============         =======

<Caption>
                                                                                                          2005
                                                                ----------------------------------------------
                                                                                  Accumulated
                                                                     Cost         amortization             Net
                                                                ---------         ------------         -------
                                                                        $                    $               $
 <S>                                                            <C>                    <C>             <C>
 Furniture and equipment                                          320,113              317,189           2,924
 Computer equipment                                               515,331              380,173         135,158
 Leasehold improvements                                           287,610              128,957         158,653
                                                                ---------         ------------         -------
                                                                1,123,054              826,319         296,735
                                                                =========         ============         =======
</Table>

Amortization expense of capital assets amounted to $137,608 in 2006 ($166,248 in
2005).

4 - OTHER ASSETS

<Table>
<Caption>
                                                                                                          2006
                                                                ----------------------------------------------
                                                                                   ACCUMULATED
                                                                     COST         AMORTIZATION             NET
                                                                ---------         ------------         -------
                                                                        $                    $               $
 <S>                                                              <C>                  <C>             <C>
 Contract costs                                                   471,100              249,407         221,693
                                                                =========         ============         =======
</Table>

                                       19
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

4 - OTHER ASSETS (CONTINUED)

<Table>
<Caption>
                                                                                                          2005
                                                                ----------------------------------------------
                                                                                   Accumulated
                                                                     Cost         amortization             Net
                                                                ---------         ------------         -------
                                                                        $                    $               $
 <S>                                                              <C>                  <C>             <C>
 Contract costs                                                   471,100              138,560         332,540
                                                                =========         ============         =======
</Table>

Amortization expense of contract costs amounted to $110,847 in 2006 ($110,848 in
2005).

5 - COMMON STOCK

A) AUTHORIZED

2005 TRANSACTIONS

The Corporation repurchased 276,038 class "A" common shares for $316,307 under
the program adopted on December 17, 2003, including 179,362 class "A" common
shares for $186,469 from August 1, 2004 to December 22, 2004.

2004 TRANSACTIONS

During the year, the Corporation repurchased 70,100 class "A" common shares for
$111,668 under the program adopted on October 15, 2002. On December 17, 2003,
the Corporation announced that its Board of Directors had authorized a share
repurchase program under which it may repurchase up to a maximum of 654,710 of
its outstanding class "A" common shares from December 22, 2003 to December 22,
2004. The Corporation repurchased 96,676 class "A" common shares for $129,838
under this program from December 22, 2003 to July 31, 2004.

B) STOCK OPTION PLANS

The Corporation has two stock option plans. Under the 1996 Stock Incentive Plan,
the Corporation may grant options to its regular full-time employees and those
of its subsidiaries up to a maximum of 1,100,000 common shares. Under the 1996
Stock Option Plan, the Corporation may grant options to its regular full-time
employees and non-employee directors and those of its subsidiaries 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 Corporation's shares on the OTC
BB on the day prior to the date of grant. Options vest equally over a five-year
period and the options' maximum term is 10 years.

                                       20
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

5 - COMMON STOCK (CONTINUED)

Activity in the stock option plans for 2006, 2005 and 2004 was as follows:

<Table>
<Caption>
                                                                  2006                           2005                          2004
                                            --------------------------     --------------------------   ---------------------------
                                                              WEIGHTED                       Weighted                     Weighted
                                            NUMBER OF          AVERAGE     Number of          average   Number of          average
                                              OPTIONS   EXERCISE PRICE       options   exercise price     options   exercise price
                                            ---------   --------------     ---------   --------------   ---------   --------------
                                               (000S)              $US        (000s)              $US      (000s)              $US
<S>                                             <C>               <C>          <C>               <C>        <C>               <C>
Outstanding, beginning of year                  1,121             2.10         1,478             2.15       1,247             2.41
Granted                                           133             1.00           163             1.00         261             1.16
                                            ---------                      ---------                    ---------
                                                1,254                          1,641                        1,508
Forfeited                                         213             3.95           520             1.89          30             4.58
                                            ---------                      ---------                    ---------
Outstanding, end of year                        1,041             1.59         1,121             2.10       1,478             2.15
                                            =========                      =========                    =========

Options exercisable, end of year                  609             1.84           622             2.61         592             2.83
                                            =========                      =========                    =========
</Table>

                                       21
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

5 - COMMON STOCK (CONTINUED)

The following table summarizes significant ranges of exercise prices of
outstanding options held by directors, officers and employees as of July 31,
2006:

<Table>
<Caption>
                                                                   Options outstanding             Options exercisable
                                       -----------------------------------------------   -----------------------------
                                                          Weighted
                                                           average            Weighted                        Weighted
                                       Number of    remaining life             average   Number of             average
Range of exercise prices                 options           (years)      exercise price     options      exercise price
------------------------               ---------    --------------      --------------   ---------      --------------
                                          (000s)                a)                 US$      (000s)                 US$
<S>                                        <C>                <C>                 <C>          <C>                <C>
Less than US$1.00                            160                                  0.69         160                0.69
US$1.00 to US$1.49                           716              7.27                1.02         306                1.04
US$3.00 to US$3.99                            20                                  3.37          20                3.37
US$4.00 to US$4.99                            30              1.49                4.63          30                4.63
US$5.00 to US$5.99                           105              5.49                5.07          83                5.09
US$6.00 to US$6.99                            10              3.06                6.28          10                6.28
                                       ---------                                         ---------
                                           1,041              5.62                1.59         609                1.84
                                       =========                                         =========
</Table>

a)   After the end of the 2006 fiscal year, the Corporation has extended the
     term of both the Stock Incentive Plan and the Stock Option Plan for an
     additional 10 years. Moreover, the Corporation has extended the term of the
     outstanding options as of July 8, 2006, under both plans, by an additional
     10 years.

The following table presents the weighted average assumptions used to determine
the stock-based compensation expense included in selling, general and
administrative expenses for the years ended July 31, 2006, 2005 and 2004, using
the Black-Scholes option-pricing model:

<Table>
<Caption>
                                                                                  2006              2005              2004
                                                                               -------           -------          --------
<S>                                                                            <C>               <C>              <C>
Compensation cost                                                              $29,000           $25,000          $ 49,000
Fair value                                                                     $31,350           $92,170          $247,607
Dividend yield                                                                       -                 -                 -
Expected volatility                                                                90%               90%               52%
Risk-free interest rate                                                           3.5%              3.3%              4.4%
Expected life                                                                  7 YEARS           7 years           7 years
Number of options granted                                                      133,000           162,500           261,000
</Table>

                                       22
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

5 - COMMON STOCK (CONTINUED)

For stock options granted to employees during 2003, had the Corporation
determined compensation cost based on the fair value of the stock options at
grant dates consistently with the method recommended under CICA Handbook section
3870, the Corporation's earnings would have been reported at the pro-forma
amounts indicated below:

<Table>
<Caption>
                                                                                   2006               2005              2004
                                                                             ----------         ----------        ----------
                                                                                      $                  $                 $
<S>                                                                          <C>                <C>               <C>
Net loss, as reported                                                        (3,926,921)        (7,363,054)       (7,129,930)
Fair value of stock-based compensation                                          (56,796)          (103,603)          (93,686)
                                                                             ----------         ----------        ----------
Pro-forma net loss                                                           (3,983,717)        (7,466,657)       (7,223,616)
                                                                             ==========         ==========        ==========
Pro-forma basic and diluted loss per share                                        (0.31)             (0.58)            (0.55)
                                                                             ==========         ==========        ==========
</Table>

The fair value of stock options granted during 2003 was estimated using the
Black-Scholes option pricing model using the following weighted average
assumptions:

<Table>
<S>                                                                                                                 <C>
Dividend yield                                                                                                           -
Expected volatility                                                                                                     87%
Risk-free interest rate                                                                                                4.8%
Expected life                                                                                                       7 years
</Table>

C)  LOSS PER SHARE

Options described above were not included in the diluted loss per share
calculation because the Corporation incurred a loss, and inclusion would have
created an anti-dilutive effect.

6 - RESEARCH AND DEVELOPMENT

The net amounts of research and development expenses presented in the
consolidated statements of operations have been determined as follows:

<Table>
<Caption>
                                                                                   2006               2005              2004
                                                                              ---------          ---------         ---------
                                                                                      $                  $                 $
<S>                                                                           <C>                <C>               <C>
Research and development expenses                                             2,541,950          3,472,102         3,679,285
Government assistance
    Investment tax credits                                                     (100,000)          (200,000)         (370,496)
                                                                              ---------          ---------         ---------
                                                                              2,441,950          3,272,102         3,308,789
                                                                              =========          =========         =========
</Table>

Investment tax credits in accounts receivable as at July 31, 2006 amounted to
$100,000. There were no amounts receivable as at July 31, 2005.

                                       23
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

7 - INCOME TAXES

The reconciliation of income taxes at Canadian statutory rates with the reported
income taxes is as follows:

<Table>
<Caption>
                                                                                    2006               2005              2004
                                                                              ----------         ----------        ----------
                                                                                       $                  $                 $
 <S>                                                                          <C>                <C>               <C>
 Income tax recovery at Canadian statutory rates                              (1,257,000)        (2,368,000)       (2,266,000)
 Non-recording of benefit from losses carried forward                         (1,257,000)        (2,368,000)       (2,266,000)
                                                                              ----------         ----------        ----------
                                                                                       -                  -                 -
                                                                              ==========         ==========        ==========
</Table>

The significant components of the Corporation's future income tax assets and
liabilities are as follows:

<Table>
<Caption>
                                                                                                       2006              2005
                                                                                                -----------       -----------
                                                                                                          $                 $
 <S>                                                                                            <C>               <C>
 Future tax assets
     Losses carried forward                                                                      15,000,000        14,908,000
     Capital assets                                                                                 150,000           142,000
     Research and development                                                                     3,400,000         3,400,000
                                                                                                -----------       -----------
                                                                                                 18,550,000        18,450,000
 Future tax liabilities
     Investment tax credits                                                                          64,000            64,000
                                                                                                -----------       -----------
                                                                                                 18,486,000        18,386,000
 Less: valuation allowance                                                                      (18,486,000)      (18,386,000)
                                                                                                -----------       -----------
 Net future income taxes                                                                                  -                 -
                                                                                                ===========       ===========
</Table>

The Corporation has non-capital losses carried forward to reduce future taxable
income for Canadian federal and provincial tax purposes as well as American,
British and German tax purposes of approximately $14,000,000 and $12,000,000,
US$21,000,000, POUND 700,000 and EURO 3,800,000, respectively, expiring at
various dates to 2020. In addition, the Corporation has research and development
expenditures carried forward of approximately $10,000,000, which can be used to
reduce taxable income at any time in the future, and investment tax credits of
approximately $2,500,000, which can be applied against future federal income
taxes payable, expiring at various dates to 2016. The benefits of these items
have not been recognized in the financial statements.

                                       24
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

8 - COMMITMENTS

The Corporation is committed under operating leases for a total amount of
$1,368,898. The minimum payments due in each of the forthcoming years are as
follows:

<Table>
<Caption>
                                                                                                                           $
                                                                                                                   ---------
<S>                                                                                                                <C>
2007                                                                                                                 382,665
2008                                                                                                                 308,136
2009                                                                                                                 270,907
2010                                                                                                                 244,314
2011                                                                                                                 162,876
                                                                                                                   ---------
                                                                                                                   1,368,898
                                                                                                                   =========
</Table>

9 - SEGMENTED INFORMATION

The Corporation is considered to have only one business segment.

The Corporation has two reportable geographic 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 Corporation evaluates
segment performance based on income before taxes. Sales for each segment are
based on the location of the third party customer. All intercompany transactions
between segments have been eliminated.

<Table>
<Caption>
                                                                                 Canada             Europe             Total
                                                                             ----------         ----------        ----------
                                                                                      $                  $                 $
<S>                                                                          <C>                <C>               <C>
2006
    Revenue                                                                   1,634,977          3,842,508         5,477,485
    Loss before income taxes                                                 (3,924,363)            (2,558)       (3,926,921)
    Identifiable assets                                                       1,630,133          1,814,988         3,445,121
2005
    Revenue                                                                   2,899,252          3,196,781         6,096,033
    Loss before income taxes                                                 (5,965,661)        (1,397,393)       (7,363,054)
    Identifiable assets                                                       6,538,484          1,396,047         7,934,531
2004
    Revenue                                                                   1,503,184          3,846,030         5,349,214
    Loss before income taxes                                                 (6,799,588)          (330,342)       (7,129,930)
    Identifiable assets                                                      12,077,507          3,913,194        15,990,701
</Table>

10 - SIGNIFICANT CUSTOMERS

For the year ended July 31, 2006, the Corporation generated approximately 10% of
its revenue from one customer (20% from one customer in 2005 and 36% from two
customers in 2004).

                                       25
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

11 - FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the short-term financial assets and liabilities approximates
their carrying amount given that they will mature shortly.

CREDIT RISK

The Corporation's exposure to credit risk as of July 31, 2006 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. As at July 31, 2006,
two customers represented 27% and 28% (three customers represented 55% in 2005)
of accounts receivable.

CURRENCY RISK

The Corporation operates internationally and is exposed to market risk
principally due to changes in foreign currency rates. The Corporation does not
hold any financial instruments that mitigate this risk.

As at July 31, 2006 and 2005, the Corporation's current assets (liabilities)
denominated in foreign currencies are as follows:

<Table>
<Caption>
                                                                                  2006                            2005
                                                           ---------------------------       -------------------------
                                                             CURRENT           CURRENT       Current           Current
                                                              ASSETS       LIABILITIES        assets       liabilities
                                                           ---------       -----------       -------       -----------
                                                                   $                 $             $                 $
<S>                                                        <C>                 <C>           <C>               <C>
U.S. dollars                                                 115,133           226,494       614,563           488,362
Pounds sterling                                            1,379,555           912,955       943,625           907,427
Euros                                                        489,476           307,795       164,321           238,445
</Table>

                                       26
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

12 - RECONCILIATION OF RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO U.S. GAAP AND OTHER SUPPLEMENTARY
     U.S. GAAP DISCLOSURES

Differences between Canadian and U.S. GAAP are not material in the Corporation's
consolidated financial statements with the exception of the following:

STOCK-BASED COMPENSATION

In December 2004, the FASB issued SFAS No. 123 (R), SHARE-BASED PAYMENT, which
is a revision of SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123
(R) requires all share-based payments to employees, including grants of employee
stock options, to be valued at fair value on the date of grant and to be
expensed over the applicable vesting period. Effective August 1, 2005, the
Corporation adopted SFAS No. 123 (R) using the modified prospective transition
method. Under this transition method, stock-based compensation is recognized for
all stock-based awards granted on or after August 1, 2005. In addition,
companies must also recognize compensation expense related to any awards that
are not fully vested as of August 1, 2005. Compensation expense for the unvested
awards are measured based on the fair value of the awards previously calculated
in accordance with the provisions of SFAS No. 123.

The impact of adopting SFAS No. 123 (R) was to increase the stock-based
compensation expense by $37,519 and increase net loss by the same amount in
2006.

The following table provides a reconciliation of the net loss and the
contributed surplus and deficit under Canadian GAAP to U.S. GAAP:

<Table>
<Caption>
                                                                                                                            $
                                                                                                                  -----------
 <S>                                                                                                              <C>
 Net loss in accordance with Canadian GAAP                                                                         (3,926,921)
 Additional compensation expense under SFAS No. 123 (R)                                                              (198,191)
                                                                                                                  -----------
 Net loss in accordance with U.S. GAAP                                                                             (4,125,112)
                                                                                                                  ===========

 Basic and diluted loss per share, U.S. GAAP                                                                           (0.32)
                                                                                                                  ===========

 Contributed surplus in accordance with Canadian GAAP                                                                 103,000
 Additional compensation expense under SFAS No. 123 (R)                                                               198,191
                                                                                                                  -----------
 Contributed surplus in accordance with U.S. GAAP                                                                     301,191
                                                                                                                  ===========

 Deficit in accordance with Canadian GAAP                                                                         (37,190,978)
 Additional compensation expense under SFAS No. 123 (R)                                                              (198,191)
                                                                                                                  -----------
 Deficit in accordance with U.S. GAAP                                                                             (37,389,169)
                                                                                                                  ===========
</Table>

The following items present other supplementary disclosures required under U.S.
GAAP.

Accounts receivable are net of allowance for doubtful accounts of nil ($18,909
in 2005).

                                       27
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

12 - RECONCILIATION OF RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO U.S. GAAP AND OTHER SUPPLEMENTARY
     U.S. GAAP DISCLOSURES (CONTINUED)

Accounts payable and accrued liabilities are comprised of the following:

<Table>
<Caption>
                                                                                     2006         2005
                                                                                ---------    ---------
                                                                                        $            $
 <S>                                                                            <C>          <C>
 Trade accounts                                                                   471,492      594,026
 Accrued payroll payable and related expenses                                     533,992      844,095
 Other                                                                            134,859       47,476
                                                                                ---------    ---------
                                                                                1,140,343    1,485,597
                                                                                =========    =========
</Table>

The amortization expense of contract costs for the next years will be $110,848
for 2007 and $110,845 for 2008.

Under U.S. GAAP, research and development investment tax credits (see Note 6)
would be classified as a reduction of the income tax expense instead of a
reduction of the related research and development expenses.

Under Canadian GAAP, future income taxes are calculated based on enacted or
substantially enacted tax rates applicable to future years. Under U.S. GAAP,
only enacted rates are used in the calculation of future income taxes. This
difference in GAAP did not result in a difference in the financial position,
results of operations or cash flows of the Corporation for the years presented.

COMPREHENSIVE INCOME

The Corporation has adopted Statement of Financial Accounting Standards (SFAS)
No. 130, REPORTING COMPREHENSIVE INCOME. There are no material differences
between the Corporation's net loss as reported and its comprehensive income as
defined by SFAS No. 130. Accordingly, a separate statement of comprehensive
income has not been presented.

STOCK-BASED COMPENSATION

The Corporation accounts for its stock-based compensation for options granted
prior to August 1, 2003 using the intrinsic value method prescribed by the
Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. U.S. GAAP required companies that follow this method to make
pro-forma disclosures of net income and earnings per share, as if the fair value
based methodology prescribed by SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, had been applied for the periods presented. For options granted as
of August 1, 2003, the Corporation has adopted the fair value method, on a
prospective basis.

                                       28
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

12 - RECONCILIATION OF RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO U.S. GAAP AND OTHER SUPPLEMENTARY
     U.S. GAAP DISCLOSURES (CONTINUED)

The following table presents net loss and net loss per share in accordance with
U.S. GAAP on a pro-forma basis, giving effect to the pro-forma compensation
expense relating to stock options granted to employees after July 1, 1994 and
prior to August 1, 2003, in accordance with SFAS No. 123.

<Table>
<Caption>
                                                                                     2005         2004
                                                                               ----------   ----------
                                                                                        $            $
<S>                                                                            <C>          <C>
Net loss, as reported                                                          (7,363,054)  (7,129,930)
Pro-forma expense                                                                (460,948)    (615,749)
                                                                               ----------   ----------
Pro-forma net loss                                                             (7,824,002)  (7,745,679)
                                                                               ==========   ==========

Pro-forma basic and diluted loss per share                                          (0.61)       (0.59)
                                                                               ==========   ==========
</Table>

SFAS No. 123 requires that the pro-forma compensation expense be recognized over
the service period based on the fair value of options granted to employees. The
pro-forma compensation expense presented above has been estimated using the
Black-Scholes option pricing model. In order to perform the calculation, the
following weighted average assumptions were used for fiscal year 2003:

<Table>
 <S>                                                                                             <C>
 Risk-free interest rate                                                                            4.8%
 Dividend yield                                                                                       -
 Volatility factor of the expected market price of the Corporation's common stock                    87%
 Expected life                                                                                   7 years
</Table>

ADOPTION OF NEW ACCOUNTING POLICIES

INVENTORY COSTS - AN AMENDMENT OF ACCOUNTING RESEARCH BULLETIN

In November 2004, the FASB issued SFAS No. 151, INVENTORY COSTS - AN AMENDMENT
OF ACCOUNTING RESEARCH BULLETIN (ARB) NO. 43, CHAPTER 4. The provisions of SFAS
No. 151 will be effective beginning in the first quarter of fiscal 2006. The
adoption of SFAS No. 151 did not have an impact on the Corporation's
consolidated financial statements.

ACCOUNTING FOR CONDITIONAL ASSET RETIREMENT OBLIGATIONS - AN INTERPRETATION OF
FASB STATEMENT NO. 143

In March 2005, the FASB issued FIN 47, ACCOUNTING FOR CONDITIONAL ASSET
RETIREMENT OBLIGATIONS - AN INTERPRETATION OF FASB STATEMENT NO. 143 (FIN 47),
which required an entity to recognize a liability for the fair value of a
conditional asset retirement obligation when incurred if the liability's fair
value can be reasonably estimated. FIN 47 is effective for fiscal years ending
after December 15, 2005 and is required to be adopted by the Corporation in the
first quarter of fiscal 2006. The adoption of FIN 47 did not have an impact on
the Corporation's consolidated financial statements.

                                       29
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

12 - RECONCILIATION OF RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO U.S. GAAP AND OTHER SUPPLEMENTARY
     U.S. GAAP DISCLOSURES (CONTINUED)

In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF NON-MONETARY ASSETS
- AN AMENDMENT OF APB OPINION NO. 29. This standard eliminates the exception
from fair value measurement for non-monetary exchanges of similar productive
assets. The standard is applicable for fiscal periods beginning after June 15,
2005. The adoption of SFAS No. 153 did not have an impact on the Corporation's
consolidated financial statements.

RECENT PRONOUNCEMENTS

In May 2005, the FASB issued SFAS No. 154, ACCOUNTING CHANGES AND ERROR
CORRECTIONS, which replaces Accounting Principles Board Opinion No. 20,
ACCOUNTING CHANGES, AND SFAS NO. 3, REPORTING ACCOUNTING CHANGES IN INTERIM
FINANCIAL STATEMENTS - AN AMENDMENT OF APB OPINION NO. 28. SFAS No. 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest practicable
date, as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS No. 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005 and is required to be adopted by the Corporation in the
first quarter of fiscal 2007. The Corporation is currently evaluating the effect
that the adoption of SFAS No. 154 will have on its consolidated results of
operations and financial condition but does not expect it to have a material
impact.

In June 2006, the FASB issued FIN 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
- AN INTERPRETATION OF FASB STATEMENT NO. 109. FIN 48 clarifies SFAS No. 109,
ACCOUNTING FOR INCOME TAXES, to indicate a criterion that an individual tax
position would have to meet for some or all of the benefit of that position to
be recognized in an entity's financial statement. FIN 48 is effective for fiscal
year beginning after December 15, 2006. The Corporation is currently evaluating
the effect that the adoption of FIN 48 will have on its consolidated results of
operations and financial condition.

In September 2006, in an effort to increase consistency and comparability in
fair value measurements, the FASB recently issued SFAS No.157, FAIR VALUE
MEASUREMENT, which defines fair value, establishes guidelines for measuring fair
value and expands disclosures regarding fair value measurements. SFAS No. 157
does not require any new instruments to be recognized at fair value. SFAS No.
157 is effective for financial statements issued for fiscal year beginning after
November 15, 2007. The Corporation is currently evaluating the effect that the
adoption of SFAS No. 157 will have on its consolidated results.

                                       30
<Page>

SAND TECHNOLOGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2006
(In Canadian dollars)

12 - RECONCILIATION OF RESULTS REPORTED IN ACCORDANCE WITH CANADIAN GENERALLY
     ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO U.S. GAAP AND OTHER SUPPLEMENTARY
     U.S. GAAP DISCLOSURES (CONTINUED)

In September 2006, the SEC released Staff Accounting Bulletin (SAB) 108,
CONSIDERING THE EFFECTS OF PRIOR YEAR MISSTATEMENTS WHEN QUANTIFYING
MISSTATEMENTS IN CURRENT YEAR FINANCIAL STATEMENTS. SAB 108 expresses the SEC
staff's views on the process of quantifying potential financial statement
misstatements. In general, entities have used two common approaches to quantify
errors. The SEC staff believes that registrants should quantify errors using
both a balance sheet and an income statement approach (a "dual approach"). Thus
entities must adjust the financial statements when either approach results in
quantifying a misstatement that is deemed material after considering all
relevant quantitative and qualitative factors. SAB 108 is effective for fiscal
years ending after November 15, 2006. The adoption of the SAB 108 will not have
any impact on the Corporation's consolidated financial statements.

                                       31
<Page>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F/A and that it has duly caused and authorized the undersigned to
sign this Report on Form 20-F/A on its behalf.


                                        SAND TECHNOLOGY INC.

                                        /s/ Arthur G. Ritchie
                                        -----------------------
June 11, 2007                           Arthur G. Ritchie
                                        Chairman of the Board,
                                        President and Chief Executive
                                        Officer

                                       32
<Page>

                                                                 EXHIBIT 12.1
                                 CERTIFICATIONS

I, Arthur G. Ritchie, Chairman, President and Chief Executive Officer of Sand
Technology Inc., certify that:

1)   I have reviewed this annual report on Form 20-F/A of Sand Technology Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3)   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Company as of, and for, the periods presented in this report;

4)   The Company's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

          a)   designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               Company, including its consolidated subsidiaries, is made known
               to us by others within those entities, particularly during the
               period in which this report is being prepared;

          b)   deleted

          c)   evaluated the effectiveness of the Company's disclosure controls
               and procedures and presented in this report our conclusions about
               the effectiveness of the disclosure controls and procedures, as
               of the end of the period covered by this report based on such
               evaluation; and

          d)   disclosed in this report any change in the Company's internal
               control over financial reporting that occurred during the period
               covered by this annual report that has materially affected, or is
               reasonably likely to materially affect, the Company's internal
               control over financial reporting; and

5)   The Company's other certifying officers and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     Company's auditors and the audit committee of the Company's board of
     directors (or persons performing the equivalent functions):

                                       33
<Page>

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal controls over financial reporting
               which are reasonably likely to adversely affect the Company's
               ability to record, process, summarize and report financial
               information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the Company's
               internal control over financial reporting.


June 11, 2007


                                     /s/  Arthur Ritchie
                                          Chairman of the Board,
                                          President and Chief Executive Officer

                                       34
<Page>
                                                                 EXHIBIT 12.2
                                 CERTIFICATIONS

I, Gilles Therrien, Vice-President, Finance and Administration, and Chief
Financial Officer of Sand Technology Inc., certify that:

1)   I have reviewed this annual report on Form 20-F/A of Sand Technology Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3)   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Company as of, and for, the periods presented in this report;

4)   The Company's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

          a)   designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               Company, including its consolidated subsidiaries, is made known
               to us by others within those entities, particularly during the
               period in which this report is being prepared;

          b)   deleted

          c)   evaluated the effectiveness of the Company's disclosure controls
               and procedures and presented in this report our conclusions about
               the effectiveness of the disclosure controls and procedures, as
               of the end of the period covered by this report based on such
               evaluation; and

          d)   disclosed in this report any change in the Company's internal
               control over financial reporting that occurred during the period
               covered by this annual report that has materially affected, or is
               reasonably likely to materially affect, the Company's internal
               control over financial reporting; and

5)   The Company's other certifying officers and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     Company's auditors and the audit committee of the Company's board of
     directors (or persons performing the equivalent functions):

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal controls over financial reporting
               which are reasonably

                                       35
<Page>

               likely to adversely affect the Company's ability to record,
               process, summarize and report financial information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the Company's
               internal control over financial reporting.

June 11, 2007


                                 /s/  Gilles Therrien
                                      Vice-President, Finance and Administration
                                      and Chief Financial Officer

                                       36
<Page>
                                                                 EXHIBIT 13.1

                                  CERTIFICATION
                                       of
                            Periodic Financial Report
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
                                  Section 1350

I, Arthur G. Ritchie, Chairman of the Board, President and Chief Executive
Officer of Sand Technology Inc., hereby certify that the Report on Form 20-F/A
relative to the Fiscal Year ended July 31, 2006 fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that the information contained in the periodic report fairly presents, in
all material respects, the financial condition and results of operations of Sand
Technology Inc.

Date:  June 11, 2007


                                 /s/  Arthur G. Ritchie
                                      Chairman of the Board,
                                      President and Chief Executive Officer


This certification is made solely for the purposes of 18 U.S.C. Section 1350,
subject to the knowledge standard set forth therein, and not for any other
purpose. It is not being filed as part of the Annual Report or as a separate
disclosure document.

                                       37
<Page>
                                                                 EXHIBIT 13.2

                                  CERTIFICATION
                                       of
                            Periodic Financial Report
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
                                  Section 1350

I, Gilles Therrien, Vice-President, Finance and Administration, and Chief
Financial Officer of Sand Technology Inc., hereby certify that the Report on
Form 20-F/A relative to the Fiscal Year ended July 31, 2006 fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 and that the information contained in the periodic report fairly presents,
in all material respects, the financial condition and results of operations of
Sand Technology Inc.


Date:  June 11, 2007

                                 /s/  Gilles Therrien
                                      Vice-President, Finance and Administration
                                      and Chief Financial Officer


This certification is made solely for the purposes of 18 U.S.C. Section 1350,
subject to the knowledge standard set forth therein, and not for any other
purpose. It is not being filed as part of the Annual Report or as a separate
disclosure document.

                                       38

<Page>
                                                                 EXHIBIT 15.1

CONSENT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

We consent to the incorporation by reference, in Registration Statements No.
333-8538 and No. 333-7462 on Form S-8, in Registration Statement No.
333-12216 on Form F-2 and Registration Statement No. 333-51014 on Form F-3 of
our report dated September 16, 2005 on the consolidated financial statements
of Sand Technology Inc. (the "Company"), appearing in this Annual Report on
Form 20-F/A of the Company, for the year ended July 31, 2006. We also consent
to incorporation by reference in the aforementioned Registration Statements
of our Comments by Independent Auditors for U.S. Readers on Canada-U.S.
Reporting Differences dated September 16, 2005 appearing in this Annual
Report on Form 20-F/A of the Company for the year ended July 31, 2006.


                                 /s/  Deloitte & Touche LLP
                                      Independent Registered Chartered
                                       Accountants

June 11, 2007
Montreal, Quebec
                                       39