<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 20-F

           [ ] 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, 2002
                                       OR
           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

           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 - 13,209,427

           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 which financial statement item the registrant
           has elected to follow.

                            Item 17                  Item 18  X
                                   -----                    -----


                                      -1-
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                            <C>
PART I..........................................................................3
         ITEM 1. Identity of Directors, Senior Management and Advisers..........3
         ITEM 2. Offer Statistics and Expected Timetable........................3
         ITEM 3. Key Information................................................3
         ITEM 4. Information on the Company....................................14
         ITEM 5. Operating and Financial Review and Prospects..................19
         ITEM 6. Directors, Senior Management and Employees....................27
         ITEM 7. Major Shareholders and Related Party Transactions.............34
         ITEM 8. Consolidated Statements and Other Financial Information.......35
         ITEM 9. The Offer and Listing.........................................35
         ITEM 10. Additional Information.......................................37
         ITEM 11. Quantitative and Qualitative Disclosures About Market Risk...46
         ITEM 12. Description of Securities Other than Equity Securities.......46


PART II........................................................................46
         ITEM 13. Defaults, Dividend Arrearages and Deliquencies...............46
         ITEM 14. Material Modifications to the Rights of Security Holders
                  and Use Of Proceeds..........................................47


PART III.......................................................................47
         ITEM 17. Financial Statements.........................................47
         ITEM 18. Financial Statements.........................................47
         ITEM 19. Exhibits.....................................................66
</TABLE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 20-F includes forward-looking statements that
involve risks and uncertainties. These statements relate to future events or our
future financial performance. We use words like "believe", "anticipate",
"expect", "may", "project", "hope", "intend", "should", "plan", "estimate",
"potential", "continue", and similar expressions to help identify these
forward-looking statements. These statements are only predictions. Such
statements are intended to be subject to the safe harbor protections of the
Securities Act of 1933 and of the Securities Exchange Act of 1934. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of many factors. Such factors include, among others, the
matters described in Item 3 - "Risk Factors" and Item 5 - "Trend Information".
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date made. Except as required by
applicable laws, we do not intend to publish updates or revisions of any
forward-looking statement we make to reflect new information, future events or
otherwise.
                                     * * *

Nucleus, Nucleus Server, N:VECTOR and MPSO are registered trademarks of Sand
Technology Inc. and Nucleus Exploration Mart, Nucleus Exploration Warehouse,
Nucleus Virtual Database (VDB), NUCLEUS POWERED!, Nucleus E!, Nucleus Adviser,
Sand Analytic Server, Analytics @ the Speed of Business, and ClarityBlue are
trademarks of Sand Technology Inc. Other trademarks are the property of their
respective owners.


                                      -2-
<PAGE>

                                     PART I

ITEM 1            IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

                  Not Applicable


ITEM 2            OFFER STATISTICS AND EXPECTED TIMETABLE

                  Not Applicable


ITEM 3            KEY INFORMATION

A.  SELECTED FINANCIAL DATA

     Our audited consolidated financial statements for the 2002 fiscal year and
the notes relating to them (the "Financial Statements") which are included at
Item 18 are presented in accordance with Canadian generally accepted accounting
principles ("Canadian GAAP"). The monetary figures throughout this Annual Report
on Form 20-F are presented consistent with Canadian GAAP except where otherwise
indicated.

     The following data expressed in Canadian dollars are derived from the
Financial Statements that have been audited by Deloitte & Touche, our auditors.
The information set forth below is not necessarily indicative of the results of
future operations and should be read in conjunction with, and is qualified in
its entirety by, the Financial Statements appearing elsewhere in this Annual
Report on Form 20-F.

<TABLE>
<CAPTION>
                                             (Dollars in Thousands (000's) except for Per Share Data and Rates of Exchange)
                                                                         FISCAL YEAR ENDED
                                         -----------------------------------------------------------------------------------
                                            7/31/02           7/31/01        7/31/00            7/31/99          7/31/98
                                         ---------------    ------------   -------------     --------------   --------------
                                               CA               CA             CA                 CA               CA
<S>                                           <C>              <C>             <C>               <C>              <C>
Rates of exchange
   At period end -- US$                       $1.58            $1.53           $1.49             $1.51            $1.52
   Average for the period                     $1.57            $1.52           $1.47             $1.51            $1.43

Results of Operations
   Net Sales                                $13,922          $11,259          $6,895            $2,091           $3,088
   Research and Development Costs           ($4,888)         ($3,924)        ($4,006)          ($3,872)         ($2,080)
   Selling, General and Administrative
   Expenses                                ($16,589)        ($11,413)        ($6,668)          ($4,458)         ($2,923)
   Cost of Sales and Product Support        ($7,423)         ($5,068)        ($3,249)            ($345)           ($662)

Net Loss                                   ($14,812)         ($8,523)        ($2,867)          ($4,961)           ($907)

Financial Position
   Working Capital                           $7,562          $22,204          $4,475            $1,427           $6,000
   Total Assets                             $15,528          $29,932          $9,071            $8,273          $10,908
   Total Liabilities                         $5,584           $5,237          $2,522            $2,532             $262
   Shareholders Equity                       $9,944          $24,695          $6,549            $5,741          $10,647

Loss per Share                               ($1.12)          ($0.71)         ($0.32)           ($0.58)          ($0.11)
Weighted Average Number of Shares
outstanding during each period (000's)       13,186           12,079           8,919             8,523            8,520
</TABLE>


                                      -3-
<PAGE>

      The same data, presented in conformity with US GAAP, is shown below.

<TABLE>
<CAPTION>
                                            (Dollars in Thousands (000's) except for Per Share Data and Rates of Exchange)
                                                                      Fiscal Year Ended
                                  ------------------------------------------------------------------------------------------

                                      7/31/02           7/31/01            7/31/00           7/31/99            7/31/98
                                  ----------------  ------------------------------------------------------------------------
                                        CA                CA                 CA                 CA                CA
<S>                                    <C>                <C>                  <C>             <C>                 <C>
Rates of exchange
   At period end -- US$                $1.58              $1.53                $1.49           $1.51               $1.52
   Average for the period              $1.57              $1.52                $1.47           $1.51               $1.43

Results of Operations
   Net Sales                         $13,922            $11,259               $6,895          $2,091              $3,088
   Research and Development Costs    ($4,888)           ($3,924)             ($4,006)        ($3,872)            ($2,080)
   Selling, General and
   Administrative Expenses          ($16,589)          ($11,413)             ($6,668)        ($4,458)            ($2,923)
   Cost of Sales and Product
   Support                           ($7,423)           ($5,068)             ($3,249)          ($345)              ($662)

Net Loss                            ($14,812)           ($8,523)             ($2,867)        ($4,961)              ($907)

Financial Position
   Working Capital                    $7,562            $22,204               $4,475          $1,427              $6,000
   Total Assets                      $15,528            $29,932               $9,071          $8,273             $10,908
   Total Liabilities                  $5,584             $5,237               $2,522          $2,532                $262
   Shareholders Equity                $9,944            $24,695               $6,549          $5,741             $10,647

Loss per Share                        ($1.12)            ($0.71)              ($0.32)         ($0.58)             ($0.11)
Weighted Average Number of
Shares outstanding during each
period (000's)                        13,186             12,079                8,919           8,523               8,520
</TABLE>

EXCHANGE RATES

     Unless otherwise specified, all dollar amounts set forth in this Annual
Report on Form 20-F are expressed in Canadian dollars. Set forth below are the
high and low exchange rates for each month in the prior six months and the
average rates (average of the exchange rate on the last business day of each
month during the period) for the prior five fiscal years for the U.S. dollar
expressed in Canadian dollars, based on the noon buying rate in New York City
for cable transfers payable in Canadian dollars as certified for custom purposes
by the Federal Reserve Bank of New York:

Canadian Equivalent of U.S. $1.00

<TABLE>
<CAPTION>
Month Ended                 High                 Low
-----------                 ----                 ---
<S>                       <C>                  <C>
December 2002             $1.5800              $1.5478
November 2002             $1.5903              $1.5328
October 2002              $1.5945              $1.5607
September 2002            $1.5863              $1.5545
August 2002               $1.5963              $1.5523
July 2002                 $1.5880              $1.5190
</TABLE>


                                      -4-
<PAGE>

<TABLE>
<CAPTION>
                                                                       Year Ended July 31
                                                                       ------------------
                                               2002            2001           2000            1999             1998
                                               ----            ----           ----            ----             ----
<S>                                            <C>            <C>             <C>             <C>              <C>
Average                                        $1.57          $1.52           $1.47           $1.51            $1.43
</TABLE>

On January 28 , 2003, the exchange rate was CDN $1.5359 for U.S. $1.00.


B.  CAPITALIZATION AND INDEBTEDNESS

                  Not applicable.


C.  REASONS FOR THE OFFER AND USE OF PROCEEDS

                  Not applicable.


D.  RISK FACTORS

     In addition to the other information in this Annual Report on Form 20-F,
the following factors should be considered in evaluating Sand and our business.
The risks and uncertainties described below are not the only ones facing us.
Additional risks and uncertainties of which we are not presently aware or that
we currently consider immaterial, may also impair our business, our operating
results and financial condition.

RISKS ASSOCIATED WITH OUR FINANCIAL RESULTS

o    WE HAVE NOT BEEN PROFITABLE IN OUR LAST FIVE FISCAL YEARS AND WE HAVE SOLD
     SOME OF OUR LIQUID INVESTMENTS AND NON-CORE ASSETS TO FUND OUR BUSINESS
     OPERATIONS. WE MAY HAVE TO OBTAIN ADDITIONAL FINANCING TO FUND OUR FUTURE
     OPERATIONS.

     Because we have not been profitable in the past five years, we have had to
fund our losses through a combination of sales of our liquid investments and
non-core assets. We incurred losses of $906,722 in fiscal 1998, $4,960,964 in
fiscal 1999, $2,866,907 in fiscal 2000, $8,522,676 in fiscal 2001 and
$14,812,001 in the fiscal year ended July 31, 2002. We may continue to incur
losses in the near future and possibly longer. Our expenses materially increased
as we grew our direct sales force and built our marketing efforts to address
international and specific markets. If our efforts are not successful in
continuing to create additional revenues, we may be unable to achieve
profitability in the future. If we do not achieve profitability in the future,
we would have to obtain additional financing or sell additional assets to fund
our operations.

     We expect to continue to incur substantial operating expenses in the
foreseeable future and our operating results will be adversely affected if our
revenues do not


                                      -5-
<PAGE>

increase. We must, among other things, continue to develop market awareness and
acceptance of our products, increase the scope of our operations, respond to
competitive developments, continue to attract, retain and motivate qualified
personnel, and continue to commercialize products incorporating advanced
technologies. These efforts may prove more expensive than we currently
anticipate. We cannot assure you that we will be successful in addressing these
risks, and the failure to do so would have a material adverse effect on our
business, operating results and financial condition.

o    WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO RAISE ANY ADDITIONAL FUNDING
     NEEDED TO FINANCE OPERATIONS.

     Our cash reserves were $5,958,011 on July 31, 2002. Our cash reserves were
$18,488,707 on July 31, 2001, mainly as a result of a private placement in
November 2000 of 2,900,000 Class A common shares of Sand for net cash proceeds
of $24,327,273. On July 31, 2000, we had cash reserves of $2,387,112. If we do
not have sufficient capital to fund our operations, we may be forced to
discontinue product development, reduce our sales and marketing efforts or
forego attractive business opportunities. Any of these outcomes could adversely
impact our ability to respond to competitive pressures or prevent us from
conducting all or a portion of our planned operations. If our available cash and
existing sources of revenue are insufficient to fund our operations, we may need
to raise additional funds, and additional financing may not be available on
acceptable terms, if at all. If we issue additional equity securities to raise
funds, the ownership percentage of the current shareholders will be reduced.

o    OUR DIFFICULTY IN ACCURATELY FORECASTING OUR RESULTS FROM QUARTER TO
     QUARTER MAY AFFECT OUR CASH RESOURCES AND RESULT IN WIDE FLUCTUATIONS IN
     THE MARKET PRICE OF OUR STOCK.

     Our operating results have varied on a quarterly basis in the past and may
fluctuate significantly in the future as a result of a variety of factors
outside of our control. As a result, we may not be able to accurately predict
our necessary cash expenditures during each quarter or obtain timely financing
to cover any shortfalls. We also believe that period-to-period comparisons of
our operating results are not meaningful and that one should not rely on any
such comparisons as an indication of our future performance. In addition, it is
likely that in one or more future quarters, our operating results will fall
below the expectations of securities analysts and investors. In such event, the
trading price of our Class A common shares could be materially harmed. When the
market price of a company's stock drops significantly, shareholders often
institute securities class action lawsuits against that company. A lawsuit
against us could cause us to incur substantial costs and could divert the time
and attention of our management and other resources.

RISKS ASSOCIATED WITH OUR BUSINESS AND OPERATIONS

o    BECAUSE WE HAVE A LIMITED OPERATING HISTORY AS A DEVELOPER AND MARKETER OF
     SOFTWARE, IT MAY BE DIFFICULT FOR YOU TO EVALUATE OUR BUSINESS AND ITS
     PROSPECTS.

     Your evaluation of our business is more difficult because of our limited
operating history as a developer and marketer of software. Our prospects are
difficult to


                                      -6-
<PAGE>

predict and may change rapidly. You should consider the risks, expenses and
difficulties that we may encounter or incur as a company now operating in a new
and rapidly evolving market, including our substantial dependence on a single
line of products and our need to manage expanding operations. Our business
strategy may not be successful, and we may not successfully address these risks.

o    WE PLAN TO FURTHER DEVELOP OUR DIRECT SALES FORCE.

     Though we plan to sell our products through a distribution network of
value-added resellers, resellers and distributors located in the United States,
Canada, the United Kingdom and Germany, direct sales will still play a key role
in developing important reference accounts in new markets. Competition for sales
personnel qualified for these positions is intense despite the current economic
slowdown. Many of our competitors have substantially greater resources than we
do or have dedicated greater resources to hiring qualified sales personnel. In
addition, turnover among our sales force tends to slow sales efforts until
replacement personnel are recruited and trained. We may not be able to attract
and retain the sales and marketing personnel we desire, even after spending
significant resources to do so, and the failure to do so could have a material
adverse effect on our business, operating results and financial condition.

o    WE MUST CONTINUE TO MAINTAIN AND GROW OUR INDIRECT SALES CHANNELS.

     Our success in maintaining our indirect channels, value-added resellers,
resellers and distributors is important to our ability to achieve revenue growth
and improved operating margins on product sales. Despite the fact that we
continue to invest significant resources to develop our indirect channels, we
may not be able to continue to attract and retain additional companies in our
indirect channels that will be able to market our Sand Analytic Server and
Nucleus Product Suite effectively and will be qualified to provide timely and
cost-effective customer support and services. In addition, our agreements with
companies in our indirect channels do not restrict such companies from
distributing competing products, and in many cases, these agreements may be
terminated by either party without cause. We may not be able to successfully
expand our sales through indirect channels, and failure to do so could have a
material adverse effect on our business, operating results and financial
condition.

o    WE DEPEND ON KEY PERSONNEL.

     Our success depends to a significant degree upon the continued
contributions of our key management, engineering, sales and marketing personnel,
many of whom would be difficult to replace. We have an employment contract with
only one employee, Arthur G. Ritchie, our Chairman of the Board, President and
Chief Executive Officer. We maintain "key person" life insurance on two
employees, Arthur Ritchie and Duncan Painter; we do not believe the proceeds of
any such life insurance would adequately compensate us for their loss. We
believe that our future success will also depend in large part upon our ability
to attract and retain highly skilled managerial, engineering, sales and
marketing, and finance personnel. Competition for qualified personnel remains
intense despite the current economic slowdown, and there can be no assurance
that we will be successful in attracting and retaining such personnel. We have
in the past experienced difficulties in hiring highly


                                      -7-
<PAGE>

qualified sales and engineering personnel. The loss of the services of any of
our key personnel, the inability to attract or retain qualified personnel in the
future or delays in either hiring required personnel or the rate at which new
people become productive, particularly sales personnel and engineers, could have
a material adverse effect on our business, operating results and financial
condition.

o    OUR PRODUCT SALES CYCLE IS LENGTHY.

     The purchase of our products often requires significant, executive-level
investment and system design decisions by our customers. Sales take a long
time to conclude because we must provide a significant level of education
about the use and benefits of our products. We believe that many companies
are not yet fully aware of the benefits of enterprise-wide business
intelligence solutions, nor have such companies yet deployed business
intelligence solutions on an enterprise-wide basis. Accordingly, the sales
cycle associated with the purchase of our Sand Analytic Server, which
incorporates the patent-protected Nucleus database engine and other Nucleus
derived products (the "Nucleus Product Suite"), is typically three to nine
months in length. During this period, a potential sale is subject to a number
of significant risks over which we have little or no control, including
customers' budgeting constraints and internal acceptance review procedures
including, in some instances, approval by the board of directors of the
customer. Additionally, the sales cycle for our products in the United States
and Canada has historically been, and is expected to continue to be, shorter
than the sales cycle in the United Kingdom. Moreover, as we expand into
Germany and the rest of Europe, we expect that the sales cycle will also be
longer than it has been in the United Kingdom. Based in part upon, among
other things, our lengthy sales cycle, the timing of sales is difficult to
predict and our earnings and operating results could vary significantly from
quarter to quarter during the current fiscal year. Excessive delay in product
sales could have a material adverse effect on our business, operating results
and financial condition.

o    WE OPERATE IN A HIGHLY COMPETITIVE MARKET.

     We now compete in the highly competitive computer software industry as a
result of bringing our original Nucleus product family and more recently the
Sand Analytic Server and Nucleus Product Suite to market. The market in which we
operate is still developing and is intensively competitive, highly fragmented,
and characterized by rapidly changing technology and evolving standards. Our
current and potential competitors offer a variety of software solutions and
generally fall within several categories:

-  vendors of business intelligence software such as Brio Technology, Inc.,
   Cognos, Business Objects, Crystal Decisions, SAP, Siebel and Hummingbird;

-  vendors offering alternative approaches to delivering analysis capabilities
   to users, such as MicroStrategy, Computer Associates, Hyperion Software and
   Actuate;

-  database vendors that offer products which operate specifically with their
   proprietary database, such as Microsoft, IBM, and Oracle Corporation:

-  portal software vendors, such as Plumtree, Viador and Portal Software; and


                                      -8-
<PAGE>

-  other companies that may in the future announce offerings of enterprise
   business intelligence solutions.

     Our competitive position in our market is uncertain, due principally to
the variety of current and potential competitors. We expect additional
competition as other established and emerging companies enter into the
business intelligence software market and new products and technologies are
introduced. Increased competition could result in price reductions, fewer
customer orders, reduced gross margins, longer sales cycles, and loss of
market share.

     Current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties,
thereby increasing the ability of their products to address the needs of our
prospective customers. Our current or future indirect channel partners may
establish cooperative relationships with our current or potential competitors
and limit our ability to sell products through particular distribution channels.
Such competition could have a material adverse effect on our ability to enter
into new licensing agreements, and maintenance and support renewals for existing
licensing agreements, with respect to our products. Competitive pressures could
also require us to reduce the price of our products.

     We compete primarily on the basis of product features, time to market, ease
of use, product performance, product quality, analytical capability, user
scalability, open architecture, customer support and price. While we believe we
presently compete favourably with respect to each of these factors, our market
is evolving at a rapid pace.

     We cannot assure you that we will be able to compete successfully against
current and future competitors, and the failure to do so could have a material
adverse effect on our business, operating results and financial condition.

o    AS WE EXPAND BEYOND NORTH AMERICA, WE WILL BE EXPOSED TO CERTAIN RISKS
     INHERENT IN DOING BUSINESS ON AN INTERNATIONAL LEVEL.

     Sales to customers outside of North America, including sales generated by
our U.K. subsidiary, represented 67%, 71% and 68% of our total revenue for
fiscal 2000, 2001 and 2002, respectively. We have sales offices in the United
Kingdom and Germany.

     A key component of our strategy is our planned expansion into additional
international markets. To facilitate this international expansion, we need to
localize our products for the additional foreign markets. If the revenues
generated by these expanded international operations do not offset the expense
of establishing and maintaining these foreign operations, there could be a
material adverse effect on our business, operating results and financial
condition. To date, we have only limited experience in developing localized
versions of our products and marketing and distributing our products
internationally. We cannot assure you that we will be able to successfully
localize, market, sell and deliver our products in these markets.

     There are also additional risks in doing business on an international
level, such as increased difficulty in controlling operating expenses,
unexpected changes in regulatory

                                      -9-
<PAGE>

requirements, tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, longer payment cycles, problems in collecting
accounts receivable, political instability, fluctuations in currency exchange
rates, seasonal reductions in business activity, and potentially adverse tax
consequences. These risks could adversely impact the success of our
international operations. We cannot assure you that one or more of these factors
will not have a material adverse effect on our future international operations
and, consequently, on our business, operating results and financial condition.

o    WE CURRENTLY DEPEND ON SALES OF THE SAND ANALYTIC SERVER AND THE NUCLEUS
     PRODUCT SUITE TO GENERATE MOST OF OUR REVENUE.

     We expect the sale of our Sand Analytic Server and Nucleus Product Suite to
constitute most of our revenue for the foreseeable future. If customers do not
purchase these products, we do not currently offer any other products or
services that would enable us to become profitable.

     The market for our products is characterized by rapidly changing
technology, evolving industry standards and customer requirements, emerging
competition, and frequent new product introductions. Our products incorporate a
number of advanced technologies, including a proprietary data analysis engine, a
distributed architecture, as well as Web access and delivery technology. We may
be required to change and improve our products in response to changes in
operating systems, applications, networking and connectivity software, computer
and communications hardware, programming tools and computer language technology.
As a result, the life cycle of our products is difficult to estimate. We attempt
to establish and maintain partner alliances with influential companies in a
variety of core technology areas to help us successfully respond to changing
technology, identify new product opportunities, or develop and bring new
products to market in a timely and cost-effective manner. Our failure to
establish such alliances could have a material adverse effect on our business,
operating results and financial condition.

     We have in the past experienced delays in software development and there
can be no assurance that we will not experience delays in connection with our
current or future product development activities. In particular, development
efforts in the UNIX server environment are complex, and we have in the past
encountered delays in developing products for this environment. Our failure, for
technological or other reasons, to develop and introduce new products and
product enhancements on a timely basis could have a material adverse effect on
our business, operating results and financial condition.

     In addition, we or our competitors may announce enhancements to existing
products, or new products that have the potential to supplant or provide lower
cost alternatives to our existing products. The introduction of such
enhancements or new products could render our existing products obsolete and
unmarketable. Furthermore, introduction by us of products with reliability,
quality or compatibility problems could result in reduced orders, delays in
collecting accounts receivable, and additional service costs. The failure to
introduce a new product or product enhancement on a timely basis could delay or
hinder market acceptance. Research and development efforts may require us to
expend significant capital and other resources. Any such event could have a
material adverse effect on our business, operating results and financial
condition.


                                      -10-
<PAGE>

o    WE DEPEND ON THE MARKET FOR ENTERPRISE BUSINESS INTELLIGENCE.

     We are focusing our selling efforts increasingly on larger, enterprise-wide
implementations of our Sand Analytic Server and our Nucleus Product Suite, and
we expect such sales to constitute an increasing portion of any future revenue
growth. To date, our selling efforts have resulted in limited enterprise-wide
implementations of our Sand Analytic Server and our Nucleus Product Suite. While
we have devoted resources to promoting market awareness of our products and the
needs our products address (including training our sales personnel and
demonstrating our products at industry conferences and trade shows), we cannot
assure you that these efforts will be sufficient to build market awareness of
the need for the enterprise-wide implementations for business intelligence or
acceptance of our products. Failure of a significant market for enterprise
business intelligence products to fully develop, or failure of enterprise-wide
implementations of our products to achieve broad market acceptance, would have a
material adverse effect on our business, operating results and financial
condition.

o    AS A RESULT OF THEIR COMPLEXITY, OUR PRODUCTS MAY CONTAIN UNDETECTED
     ERRORS, FAILURES OR VIRUSES AND WE MAY BE SUBJECT TO PRODUCT LIABILITY
     CLAIMS FOR SUCH DEFECTS.

     Despite our testing of new products and their use by current and potential
customers when first introduced or when new enhancements are released, we cannot
assure you that there will be no defects or errors in new products or
enhancements in our commercial shipments. Although we have not experienced
material adverse effects resulting from any such defects and errors to date, we
cannot assure you that defects and errors will not be found in new products or
enhancements, resulting in loss of revenues, delay in market acceptance or
damage to our reputation, which could have a material adverse effect upon our
business, operating results and financial condition. While our license
agreements with our customers typically contain provisions designed to limit our
exposure for potential claims based on errors or malfunctions of our products,
it is possible, however, that these provisions may not be effective under the
laws of certain jurisdictions. Although we have not experienced any product
liability claims to date, the sale and support of our products entails the risk
of such claims. Although we carry insurance against product liability risks, we
cannot assure you that such insurance would be adequate to cover a potential
claim. A product liability claim brought against us could have a material
adverse effect on our business, operating results and financial condition.

o    THERE IS LIMITED PROTECTION OF OUR PROPRIETARY RIGHTS.

     We currently rely primarily on a combination of copyright and trademark
laws, patents, trade secrets, confidentiality procedures and contractual
provisions to protect our proprietary rights. We seek to protect our software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. We currently have six United States
patents. We cannot assure you that our patents will not be invalidated,
circumvented or challenged, or that the rights granted under our patents will
provide competitive advantages to us. Others may develop technologies that are
similar or superior to our technology or design around any patent that may be
owned by us. Despite


                                      -11-
<PAGE>

our efforts to protect our proprietary rights, unauthorized parties may attempt
to copy aspects of our products or to obtain and use information that we regard
as proprietary. Policing unauthorized use of our products is difficult, and
while we are unable to determine the extent to which piracy of our software
products exists, we can expect software piracy to be a persistent problem. In
addition, the laws of some foreign countries do not protect our proprietary
rights as fully as do the laws of the United States and Canada. There can be no
assurance that our means of protecting our proprietary rights in North America
or abroad will be adequate. We have entered into source code escrow agreements
with a number of our customers and indirect channel partners requiring release
of source code under certain conditions. The provision of source code escrows
may increase the likelihood of misappropriation by third parties. Although we
are not currently aware of any claims asserted by third parties that we infringe
on their intellectual property, we expect that in the future software product
developers will increasingly be subject to infringement claims as the number of
products and competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. Any such claims, with or
without merit, could be time consuming to defend, result in costly litigation,
divert management's attention and resources, cause product shipment delays or
require us to enter into royalty or licensing agreements which may not be
available on terms acceptable to us, if at all. In the event of a successful
claim of product infringement against us and our failure or inability to license
the infringed or similar technology, our business, operating results and
financial condition would be materially adversely affected.

     Finally, in the future, we may rely upon certain software that we may
license from third parties, including software that may be integrated with our
internally-developed software and used in our products to perform key functions.
We cannot assure you that these third-party software licenses will be available
to us on terms acceptable to us or indeed that their suppliers will remain in
business. Our inability to obtain or maintain any such software licenses could
result in shipment delays or reductions until equivalent software could be
developed, identified, licensed and integrated, which could have a material
adverse effect on our business, operating results and financial condition.

RISKS WHICH MAY AFFECT THE VALUE OF OUR CLASS A COMMON SHARES

o    SHARES ELIGIBLE FOR FUTURE SALE.

     Sales of a substantial number of our Class A common shares in the public
market could adversely affect the market price for our Class A common shares.

     The exercise of existing outstanding warrants and options and the number of
Class A common shares available for future issuance may substantially dilute the
value of our Class A common shares.

     We are authorized to issue an unlimited number of Class A common shares,
of which 13,209,427 shares are outstanding as of November 1, 2002, and we
have reserved an additional 1,590,773 Class A common shares for future
issuance upon the exercise of the warrants and options identified below. The
issuance of these authorized or reserved shares could substantially dilute
the equity interest of our existing shareholders and could result in a
significant decrease to the market price of our Class A common shares. We have

                                      -12-
<PAGE>

issued warrants and granted options and rights to purchase 741,773 Class A
common shares upon the exercise of warrants at prices ranging from US$5.678 to
US$10 per share and 849,250 Class A common shares to directors, officers,
employees and consultants upon the exercise of options at prices ranging from
US$0.69 to US$7.31 per share.

o    THE PRICE OF OUR CLASS A COMMON SHARES HAS BEEN AND IS LIKELY TO CONTINUE
     TO BE VOLATILE.

     The trading price of our common shares has been and is likely to be
highly volatile. Our share price, which has ranged from a low of US$0.37 to a
high of US$1.84 during the past twelve months, could be subject to wide
fluctuations in response to a variety of factors, including actual or
anticipated variations in quarterly operating results, weakening economic
conditions, new products offered by us or our competitors, changes in
financial estimates by securities analysts and other events or factors that
may be beyond our control. In addition, the stock markets in general, and the
equity markets for software companies in particular, have over the past
months experienced extraordinary price and volume volatility and a
significant cumulative decline. Such volatility and decline have adversely
affected the stock prices for many companies irrespective of or
disproportionately to the operating performance of these companies. These
broad market and industry factors may materially and adversely further affect
the market price of our Class A common shares, regardless of our actual
operating performance.

o    OUR CLASS A COMMON SHARES MAY BE DELISTED FROM THE NASDAQ
     NATIONAL MARKET SYSTEM

     On January 29, 2003, we received notice of a determination by Nasdaq's
Listing Qualifications Staff that we have failed to comply with the minimum
bid price and stockholders' equity requirements for continued listing set
forth in Marketplace Rules 4450(a)(5) and 4450(a)(3) and that our Class A
common shares are therefore subject to delisting from the Nasdaq National
Market System. We intend to request a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff's determination. Such a request
would stay the delisting of the Class A common shares pending a decision by
the Nasdaq Panel. There can be no assurance that the Nasdaq Panel will grant
our request for continued listing on the National Market System. The
delisting of our Class A common shares from the National Market System may
result in a significantly less active market for those shares.

o    EXISTING STOCKHOLDERS WILL CONTINUE TO EXERCISE EFFECTIVE CONTROL OVER US.

     Our executive officers and directors, together with entities affiliated
with such individuals, beneficially own approximately 26% of our Class A common
shares. Arthur G. Ritchie, our Chairman of the Board, President and Chief
Executive Officer and a director of Sand, beneficially owns approximately 15.7%
of Sand's Class A common shares. Jerome Shattner, Executive Vice President,
beneficially owns 7.7% of our Class A common shares, while George Wicker,
President of Sand Technology Corporation, beneficially owns 2.1% of our Class A
common shares. These shareholders may, as a practical matter, continue to be


                                      -13-
<PAGE>

able to control the election of a majority of Sand's directors and the
determination of many corporate actions. This concentration of ownership could
have the effect of delaying or preventing a change in control of Sand.

o    OUR ABILITY TO ISSUE CLASS B SHARES COULD MAKE IT MORE DIFFICULT FOR A
     THIRD PARTY TO ACQUIRE US TO THE DETRIMENT OF HOLDERS OF CLASS A COMMON
     SHARES.

     Our articles of incorporation provide for an unlimited number of Class B
shares which, if ever they are issued, may make it difficult for a third party
to acquire control of us, even if a change in control would be beneficial to our
shareholders. Our board has the authority to attach special rights, including
voting or dividend rights, to the Class B shares. However, the voting rights of
a Class B share cannot exceed those of a Class A common share. Class B
shareholders who possess these rights could make it more difficult for a third
party to acquire our company.


ITEM 4.    INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY

     Sand Technology Inc. was incorporated on December 10, 1982 under the Canada
Business Corporations Act and carried on business under the name Sand Technology
Systems (Canada) Inc. until 1988. From 1988 until 1999, we used the name Sand
Technology Systems International Inc. On January 1, 2000, we changed our name to
Sand Technology Inc. The registered office of the Company and its principal
place of business is located at 215 Redfern Avenue, Suite 410, Westmount,
Quebec, Canada H3Z 3L5. Our telephone number is (514) 939-3477.

     Up to a few years ago, an important part of our business was the sale and
service of mainframe peripheral products manufactured by Hitachi, Ltd. of Japan,
through Hitachi Data Systems Inc. ("HDS Canada"). HDS Canada marketed a broad
range of information processing solutions, including enterprise servers, storage
subsystems, peripheral products and professional services. Sand was the legal
and beneficial owner of 40% of the issued and outstanding shares of HDS Canada;
Hitachi Data Systems Corporation ("HDSC") of Santa Clara, California was the
legal and beneficial owner of the remaining 60%. In August 1999, Sand sold its
40% interest in HDS Canada to HDSC for a cash consideration of approximately
$7,300,000 and withdrew from the mainframe computer market and the peripheral
hardware market.

     We have now fully shifted our focus to the design, development, marketing
and support of software products that enable users to retrieve information from
large amounts of data and to specialized systems integration services related to
those products. Our software products, collectively known as the Sand Analytic
Server, are designed to provide an efficient and cost-effective way to make
inquiries of large databases. The Sand Analytic Server, which incorporates the
patent-protected Nucleus database engine and other Nucleus derived products (the
"Nucleus Product Suite"), facilitates the use of data mining, data marts, data
warehouses, and on-line analytical processing, thereby enabling effective
e-commerce, CRM, SCM and other critical web-enabled systems. Our products permit
more


                                      -14-
<PAGE>

timely and accurate decision processing by desktop, workgroup, departmental and
enterprise computing systems, turning "business intelligence" into "customer
intelligence". Customers in Europe and North America use Sand's solutions for
both analytical and operational purposes, including, amongst others, CRM and CRM
analytics, Web analytics, and strategic planning.

     At the end of the 2002 fiscal year and subsequently, we further
consolidated the systems integration portion of our business, which had been
growing in importance over fiscal 2002. In order to actively pursue major
systems integration assignments in parallel with developing marketing
relationships with other major systems integrators whereby they would employ the
Sand Analytic Server in their initiatives, and to do so in a manner that was not
seen by potential systems integration partners as direct competition, we
rebranded our own systems integration division under the operating name
ClarityBlue. ClarityBlue will concentrate on developing a strong competitive
practice and associated intellectual property base on assignments utilizing the
Sand Analytic Server product. The product division, operating as Sand
Technology, will continue to develop and market the Sand Analytic Server and
associated products directly and through distribution undertakings.

     The Company has not made any material capital expenditures since the
beginning of the Company's last three financial years and has no material
capital commitments planned for the current fiscal year.

B.  BUSINESS OVERVIEW

     As a result of this shift in focus, we should be viewed as a company which
has redoubled its commitment to a rapidly evolving industry which seeks to
improve the business professional's ability to make timely, fact-based business
decisions. We will now be able to satisfy the needs of both organizations
looking for analytical technologies with which to build their own solutions and
organizations which prefer to have a solution custom-built and/or custom-managed
for them. Our revenues will continue to consist of license fees for software
products and fees for a range of associated services, including software
maintenance and support, training and system implementation consulting. It is
anticipated that, for at least the next year, the proportion of revenue from
service fees will continue to expand more rapidly than that related to software
licenses. Our plans to achieve profitability in the future will continue to
require us to devote substantial financial resources to grow our work force,
improve our infrastructure, continue the development, the marketing and the
distribution of our products, and generally support our expanding operations.


PRODUCTS AND SERVICES

     We have developed a unique data storage and manipulation architecture,
known as the Sand Analytic Server, which allows ad hoc queries on large amounts
of data to be performed efficiently and cost-effectively. This development
represents a patented breakthrough in the storage and integration of data, and
in the speed and flexibility at which data can be analyzed. These technologies
are based on a new tokenized database engine designed to perform very
unstructured inquiries on large databases for the emerging "post

                                      -15-
<PAGE>

relational era". We provide high-performance scalable software solutions for
data mining, data marts, data warehouses and on-line analytical processing.

     The Sand Analytic Server can best be viewed as a platform-type technology
that enables organizations to maximize the business value of corporate
information through intuitive, interactive data access and analysis, resulting
in more informed business decisions. The Sand Analytic Server or the Nucleus
Product Suite is being used in the retail, finance, healthcare, transportation,
telecommunication, manufacturing, government and insurance sectors to support
strategic corporate initiatives including e-business, customer relationship
management, reporting, supply chain management, risk analysis and management,
product trend and profitability analysis, fraud detection, emerging markets,
competitive analysis and quality control.

     Our Sand Analytic Server incorporates a number of advanced technologies.
Its development has already required and will continue to require substantial
investment in research and development. For example, substantial work and
expenditures were required to develop the Intel-based Microsoft WIN/NT and
WIN/95 versions of Nucleus. In fiscal 1999, development work was completed on an
advanced version of the Nucleus Prototype Warehouse/Mart. The Nucleus Massively
Parallel Server Option (MPSO), a major architectural enhancement to the Nucleus
Product Suite, was made available in December 1999. During the fiscal year 2002,
great advancements were made in the ability to quickly and efficiently load
large volumes of data in the Sand Analytic Server and in the ability of the Sand
Analytic Server to support an even wider variety of applications by more
efficient interfacing with third-party applications and data extraction tools.

     Sales of the Company's products and services are not subject to seasonal
variations.

     Other than government regulations of general application, no government
body has specific authority to regulate the business of the Company.


MARKETING AND SALES

     We have offices in Iselin, New Jersey and Pasadena, California, through
Sand Technology Corporation ("Sand USA"), to provide for the marketing and
distribution of the Sand Analytic Server and our Nucleus Product Suite of
products in the United States.

     In 1999, we opened an office in England through Sand Technology (U.K.)
Limited ("Sand UK"), to provide for the marketing and distribution of our
Nucleus Product Suite of products in the United Kingdom and Europe. This office
is also the operating headquarters for the newly created ClarityBlue systems
integration division. In 2001, we opened an office in Dublin, Ireland through
Sand Technology Ireland Limited and in Hamburg, Germany through Sand Technology
Deutschland GmbH. Sales to customers outside North America, including sales
generated by our U.K. subsidiary, represented 67%, 71% and 68% of our total
revenue for fiscal 2000, 2001 and 2002, respectively.


                                      -16-
<PAGE>

     We have entered into  alliances or commercial relationships with, among
others, IBM, Microsoft, Oracle, KPMG, Ab Initio, Brio Technology, Business
Objects, Information Builders, Acta, Soza, Sema/Schlumberger, Equifax and
Protagona Worldwide. The United States General Services Administration (GSA)
has officially approved the addition of the Nucleus Product Suite to a GSA
Supply Schedule.

     We initially sold our products primarily through a distribution network of
value-added resellers, resellers and distributors located in the United States,
Canada and the United Kingdom. Direct sales now play a larger role, particularly
for the systems integration division. The Company's long-term direction for the
analytical infrastructure products is that they become a recognized
high-performance platform for advanced analytical applications, so while we will
continue to pioneer vertical and application markets through our own direct
sales efforts, our long term distribution strategy is to engage a network of
analytical solutions providers, both application vendors and systems
integrators, to incorporate the Sand Analytic Server as a key part of their
offering. Two notable examples are the announcement last year that Protagona
Worldwide would imbed the Sand infrastructure into a new analytical component of
its marketing services application, and our recent success in co-developing
a tax infometrics system with Accenture, an application which Accenture
is actively marketing to the State and Local Government market in the
United States.


COMPETITION

     We now compete in the highly competitive computer software industry as a
result of bringing our original Nucleus Product Suite and more recently, the
Sand Analytic Server, to market. The market in which we operate is still
developing and is intensively competitive, highly fragmented, and characterized
by rapidly changing technology and evolving standards. Our current and potential
competitors offer a variety of software solutions and generally fall within
several categories:

-  vendors of business intelligence software such as Brio Technology, Inc.,
   Cognos, Business Objects, Crystal Decisions, SAP, Siebel and Hummingbird;

-  vendors offering alternative approaches to delivering analysis capabilities
   to users, such as MicroStrategy, Computer Associates, Hyperion Software and
   Actuate;

-  database vendors that offer products which operate specifically with their
   proprietary database, such as Microsoft, IBM, and Oracle Corporation:

-  portal software vendors, such as Plumtree, Viador and Portal Software; and

-  other companies that may in the future announce offerings of enterprise
   business intelligence solutions.

     Our competitive position in our market is uncertain, due principally to the
variety of current and potential competitors and the emerging nature of the
market. We expect additional competition as other established and emerging
companies enter into the business intelligence software market and new products
and technologies are introduced.

                                      -17-
<PAGE>

Increased competition could result in price reductions, fewer customer orders,
reduced gross margins, longer sales cycles, and loss of market share.

     Current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties,
thereby increasing the ability of their products to address the needs of our
prospective customers. Our current or future indirect channel partners may
establish cooperative relationships with our current or potential competitors
and limit our ability to sell products through particular distribution channels.
Such competition could have a material adverse effect on our ability to enter
into new licensing agreements, and maintenance and support renewals for existing
licensing agreements, with respect to our products. Competitive pressures could
also require us to reduce the price of our products.

     We compete primarily on the basis of product features, time to market, ease
of use, product performance, product quality, analytical capability, user
scalability, open architecture, customer support and price. While we believe we
presently compete favourably with respect to each of these factors, our market
is evolving at a rapid pace.


PROPRIETARY RIGHTS

     In 1994, Sand acquired all the rights, title and interest in the Nucleus
Database Engine Subsystem. In addition to trademarks, trade names and other
proprietary rights, these interests included patents related to bit vector
compression and Boolean operation processing capability.

     In October 1997, Sand acquired the Advanced Technology Group of XDB
Systems, Inc. as well as the rights to the source code of Quantum Leap.
Quantum Leap was designed to provide a more flexible architecture for
customization and incorporation of new technology quickly and effectively using
small footprint engines.

     The Company has been issued six patents by the United States Patent Office
which provide protection for the Nucleus Product Suite.

     The Company has also filed applications in accordance with the Patent
Cooperation Treaty (the "PCT"). The PCT is a multilateral treaty that was
concluded in Washington in 1970 and entered into force in 1978. It is
administered by the International Bureau of the World Intellectual Property
Organization (the "WIPO"), headquartered in Geneva, Switzerland. The PCT
facilitates the obtaining of protection for inventions where such protection is
sought in any or all of the PCT contracting states. It provides for the filing
of one patent application (the "international application"), with effect in
several contracting states, instead of filing several separate national and/or
regional patent applications. At the present time, an international application
may include designation for regional patents in respect of contracting states
party to regional patent treaties. The PCT does not eliminate the necessity of
prosecuting the international application in the national phase of processing
before the national or regional offices, but it does facilitate such prosecution
in several important respects by virtue of the procedures carried out first on
all international applications during the international phase of processing
under the PCT. The formalities

                                      -18-
<PAGE>

check, the international search and (optionally) the international preliminary
examination carried out during the international phase, as well as the automatic
deferral of national processing which is entailed, give the applicant more time
and a better basis for deciding whether and in what countries to further pursue
the application.

     The Company holds registered trademarks and trademarks. Nucleus, Nucleus
Server, N:VECTOR and MPSO are registered trademarks of Sand Technology Inc. and
Nucleus Exploration Mart, Nucleus Exploration Warehouse, Nucleus Virtual
Database (VDB), NUCLEUS POWERED!, Nucleus E!, Nucleus Adviser, Sand Analytic
Server, Analytics @ the Speed of Business and ClarityBlue are trademarks of Sand
Technology Inc.


C.  ORGANIZATIONAL STRUCTURE

     Sand owns and controls the following active subsidiaries and Sand
Technology Ireland Limited owns 100% of the voting securities of Sand Technology
Deutschland GmbH:

<TABLE>
<CAPTION>
                                                                                            PERCENTAGE OF VOTING
                   SUBSIDIARY                    JURISDICTION OF INCORPORATION                SECURITIES HELD
                   ----------                    -----------------------------              --------------------
       <S>                                                 <C>                                      <C>
       Sand Technology Corporation                          Delaware                                100%
       Sand Technology (U.K) Limited                         England                                100%
       STSI Licensing, LLC                                 New Jersey                               100%
       Sand Technology Ireland Limited                       Ireland                                100%
</TABLE>


D.  PROPERTY, PLANTS AND EQUIPMENT

     As at July 31, 2002, we leased a total of approximately 19,746 square
feet of office space in five cities across North America and approximately
12,785 square feet in the United Kingdom and 1184 square feet in Germany. The
weighted average annualized cost per square foot of the space occupied is
$42.41 including real estate taxes and operating expenses. No lease extends
beyond March 31, 2011.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.  OPERATING RESULTS

     The following discussion should be read in conjunction with the
consolidated financial statements beginning at page F-1, the Cautionary
Statement Regarding Forward-Looking Statements above and the Risk Factors
described in Item 3 above.


                                      -19-
<PAGE>

     We periodically review our financial reporting and disclosure practices and
accounting policies to ensure that our financial reporting and disclosure system
provides accurate and transparent information relative to the current economic
and business environment. As part of the process, we have reviewed our
selection, application and communication of critical accounting policies and
financial disclosures. We note that we have determined that our critical
accounting policies relating to our core ongoing business activities are
primarily those that relate to revenue recognition. Other important accounting
policies are described in Note 1 to our consolidated financial statements.

REVENUE RECOGNITION

SOURCES OF REVENUE

     In the fiscal year ended July 31, 2002, our revenue was primarily derived
from the licensing of our products, the provision of related services, including
installation, integration, training and maintenance support, and our application
hosting services. We recognize revenue from our license agreements when all the
following conditions are met:

o    We have an executed license agreement with the customer;
o    We have delivered the software product to the customer;
o    The amount of the fees to be paid by the customer is fixed and
     determinable; and
o    Collection of these fees is deemed probable.

     Often, software license agreements are multiple-element arrangements since
they include related maintenance and implementation fees. In those cases where
implementation and maintenance fees are significant components, the entire
arrangement fee is allocated to each element based on the respective value of
license, maintenance and implementation.

PRODUCT REVENUE

     Currently, product revenue consists of the following:

o    Fixed License Fee - one-time license fee in exchange for a license with a
     perpetual term or a time limited term or for a fixed number of copies. We
     typically recognize the license fees in the period during which the
     contract is executed or shortly thereafter, provided that we have
     vendor-specific objective evidence of fair value and our revenue
     recognition criteria are met.

o    Reseller Arrangements - the reseller generally pays a non-refundable
     licensing fee for our software. We recognize revenue associated with a
     non-refundable license fee when we have met our revenue recognition
     criteria.

     We anticipate that future revenues will increasingly include solution sales
in addition to software and services models. The key distinguishing factors
between what we would consider to be a solutions sale and a software and
services sale are the comparable dollar values for services compared to software
and the nature of the services contracted, being increased customization of code
and more complex interfaces as opposed to simple

                                      -20-
<PAGE>

installation. In addition, we may maintain a large amount of risk related to the
success of our solutions sales agreements. These risks may be in the form of
significant commitments to refunds and/or penalties on the services and/or
license components should the system not perform according to expectations. For
all contracts we make a determination as to whether the service element is
essential to the functionality of the other elements of the arrangement. Where
the service element is essential or where the arrangement involves significant
customization or modification of the software, recognition of revenue will be
based on the percentage of completion method based either on inputs or on
outputs as dictated by the specific contracts. For those contracts, there will
likely be an increase in the time between when the contract is signed and when
we record the revenue. For fiscal 2002 our arrangements regarding sales of
software licenses did not include services that were essential to the
functionality of the solution as a whole.

     Sand reports the revenue on a gross basis only if it acts as the principal
in the transaction and assumes the risks and rewards of ownership, such as the
risk of loss for collection, delivery, and returns. In cases where these
conditions are not met, we record the revenue based on the net amount retained.

     Due to the down-turn in the economy, our customers have been and continue
to be reluctant to make large commitments in up-front license fees, and so, our
revenues from license and maintenance arrangements have been and are expected to
be lower until the economy recovers and our customers begin to increase their
levels of capital expenditures. The lack of a sufficient quantity of customer
transactions may make it difficult for us to allocate specific revenue amounts
to license sales of new products. As a result, we expect that in the future, for
such new product sales, we will be using the residual method to record revenues.
Under this method, for arrangements where we have undelivered elements which are
typically services and maintenance, we will record the remaining value of the
contract as license revenue after allocating full value to the undelivered
elements.

SERVICE REVENUE

IMPLEMENTATION AND CUSTOMER SERVICE FEES

     Revenue from implementation and customer services include fees for
implementation of our product offerings, consulting and training services. We
currently rely, and expect to continue to rely, upon a combination of our own
resources and third-party consulting organizations to deliver these services to
our customers. Customers are charged a fee based on time and expenses. Depending
on the circumstances of specific contracts, revenue from implementation and
customer service fees is recognized as the services are performed or as
contractual milestones and acceptance criteria are met.

MAINTENANCE FEES

     We receive revenue from maintaining and servicing our products for
customers. The maintenance fee is typically equal to a specified percentage of
the customer's license fee. If associated with the fixed-fee license model, the
maintenance revenues received will be recorded as deferred revenue and
recognized on a straight-line basis over the contract period.


                                      -21-
<PAGE>

For a more detailed description of revenue recognition policies, refer to note 1
of our consolidated financial statements.

RESULTS OF OPERATIONS

FISCAL 2002 COMPARED WITH FISCAL 2001

REVENUE

     Our sales in fiscal 2002 were $13,922,077, an increase of 24% from sales
of $11,258,528 in fiscal 2001.

     Our sales in fiscal 2002 in North America were $4,417,697, an increase
of 33% from sales of $3,313,856 in fiscal 2001. In Europe, sales in fiscal 2002
were $9,504,380, an increase of 20% from sales of $7,944,672 in fiscal 2001.

     The increase in sales is primarily due to increased market acceptance for
our Sand Analytic Server, increased selling activities resulting from a larger
and more effective sales force, an increase in the average size of our
significant transactions, an increase in the number of transactions and related
implementations, and an increased customer base demanding training, consulting,
implementation and support services.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses include salaries, commissions
and other personnel-related costs, the impact of foreign exchange gains and
losses, travel expenses, advertising programs and other promotional activities
associated with the selling and marketing of our Nucleus Product Suite. Selling,
general and administrative expenses increased by 45% to $16,589,255 for the
fiscal year ended July 31, 2002 from $11,413,368 for the fiscal year ended
July 31, 2001. The increase is primarily due to bad debt expense of $1,538,571
incurred in fiscal 2002 ($20,360 in fiscal 2001), increased costs associated
with building our solutions business in the United Kingdom and increased
marketing efforts to address international and specific markets. During fiscal
2003, Sand anticipates that selling, general and administrative expenses may
decline as a percentage of total revenues. Certain costs relating to system
architects who assist clients to implement systems have been reclassified as a
cost of sales and the cost of materials and equipment used in research and
development activities has been reclassified as research and development.

Research and Development Expenses

     Research and development expenses consist primarily of salaries and other
personnel-related costs of technical and engineering personnel associated with
our research and product development activities, including the enhancement and
localization of existing products, quality assurance, and testing. Research and
development expenses increased by 25% to $4,887,581 for the fiscal year ended
July 31, 2002 from $3,923,671 for the fiscal year ended July 31, 2001. As a
percentage of total revenues, research and development expenses remained
unchanged at 35%. The relatively constant amount devoted to research

                                      -22-
<PAGE>

and development expenses as a percentage of total revenues reflects the current
stage of development of the Sand Analytic Server. We believe that significant
investment for research and development is essential to maintain product and
technical leadership and expect that we will continue to commit substantial
resources to research and development in the future. However, for fiscal 2003 we
expect that research and development expenditures will decrease, both in
absolute dollars and as a percentage of total revenues. The cost of materials
and equipment used in research and development activities has been reclassified
from SG&A to research and development expenses.

Cost of Sales

     Cost of sales consists primarily of the costs related to the sale of
third-party software, including certain license fees and royalties, and costs
related to providing support services. Cost of sales increased by 46% to
$7,422,955 for the fiscal year ended July 31, 2002 from $5,068,489 for the
fiscal year ended July 31, 2001. This increase is primarily due to increased
costs associated with software licenses and salaries and other personnel-related
expenses incurred in providing support services in response to increased demand
for maintenance and support services. Cost of revenues from services may vary
due to the mix of services provided by Sand's personnel relative to services
provided by outside consultants and to varying levels of expenditures necessary
to build the service sector. Certain costs relating to system architects who
assist clients to implement systems have been reclassified from selling, general
and administrative expenses to cost of sales.

Operations

     Losses from operations were higher for the fiscal year ended July 31, 2002,
reaching an amount of $14,812,001, as compared to a loss of $8,522,676 for the
fiscal year ended July 31, 2001, an increase of 74%. Substantial expenditures
were incurred in bringing our Sand Analytic Server to market and in further
establishing the infrastructure associated with our direct sales force and to
the support of our products. There can be no assurance that we will be
profitable on a quarterly or annual basis in the future. Future operating
results will depend on many factors, including the demand for our products, the
level of product and price competition, our success in selling our Sand Analytic
Server and establishing our direct sales force and distribution channels, the
state of the market for our products and general economic conditions.

FISCAL 2001 COMPARED WITH FISCAL 2000

Revenue

     Sales in fiscal 2001 were $11,258,528, an increase of 63% from sales of
$6,895,016 in fiscal 2000. A net loss of $8,522,676 was incurred in fiscal 2001
as compared to a net loss of $2,866,907 in fiscal 2000, an increase of 197%.

     The increase in sales was due to an increase in software license revenue,
an increase in customer service contracts and a growing support and maintenance
base. We believe that the increase during fiscal 2001 was due to the expansion
of our direct sales and

                                      -23-
<PAGE>

marketing capabilities in North America and Europe which helped bring about
broader acceptance of our Nucleus Product Suite.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased by 71% to
$11,413,368 for the fiscal year ended July 31, 2001 from $6,667,973 for the
fiscal year ended July 31, 2000. The increase is primarily due to increased
costs associated with building our direct sales force and increased marketing
efforts to address international and specific markets. Certain costs relating to
system architects who assist clients to implement systems have been reclassified
as a cost of sales and the cost of materials and equipment used in research and
development activities has been reclassified as research and development.

Research and Development Expenses

     Research and development expenses decreased by 2% to $3,923,671 for the
fiscal year ended July 31, 2001 from $4,005,576 for the fiscal year ended July
31, 2000. As a percentage of total revenues, research and development expenses
decreased to 35% for the fiscal year 2001 from 58% for the fiscal year 2000. The
stable dollar amount devoted to research and development expenses reflected the
then-current stage of development of the Nucleus Product Suite. The cost of
materials and equipment used in research and development activities has been
reclassified from SG&A to research and development expenses.

Cost of Sales

     Cost of sales increased by 56% to $5,068,489 for the fiscal year ended
July 31, 2001 from $3,248,748 for the fiscal year ended July 31, 2000. This
increase was primarily due to increased costs associated with software licenses
and salaries and other personnel-related expenses incurred in providing
professional services, including consulting and customer support. Certain costs
relating to system architects who assist clients to implement systems have been
reclassified from selling, general and administrative expenses to cost of sales.

Operations

     Losses from operations were higher for the fiscal year ended July 31, 2001,
reaching an amount of $8,522,676, an increase of 23%, as compared to a loss of
$6,942,713 for the fiscal year ended July 31, 2000. Substantial expenditures
were incurred to bring our Nucleus products to market and to establish the
infrastructure associated with our direct sales force and to support our
products.


B.  Liquidity and Capital Resources

     Cash and investments at July 31, 2002 were $5,958,011. Moreover, a
subsidiary of Sand negotiated a line of credit of approximately $1,200,000
(Pound Sterling

                                      -24-
<PAGE>

500,000) with a commercial bank. No draw downs have been made on this line of
credit. We believe that we have sufficient internal resources available to
fund our expected working capital requirements through fiscal 2003.

     We are not subject to material market risk exposures, except for risks
related to interest rate fluctuations and foreign currency exchange rates.

     Our exposure to market rate risk for changes in interest rates relates
primarily to our investment portfolio. We have not used derivative financial
instruments in our investment portfolio. We invest in high quality issuers and
limit the amount of our credit exposure with any one issuer. We are averse to
principal loss and ensure the safety and preservation of our invested funds by
limiting default, market and reinvestment risk. Other than the line of credit
available to a subsidiary of Sand (on which no draw downs have been made), we do
not make use of a bank line of credit and do not have any long term debt.

     Our international sales are generally denominated and collected in foreign
currencies. We have not historically undertaken foreign exchange hedging
transactions to cover the potential foreign currency exposure. In fiscal 2002,
we incurred a gain on foreign currency translations from our foreign
subsidiaries in an amount of $1,236,480

     On October 15, 2002, the Company announced an open market share repurchase
program under which it may repurchase, up to a maximum of 692,345 of its
outstanding Class A common shares from October 23, 2002 to October 23, 2003. As
at December 31, 2002, a total of 10,700 Class A common shares had been
repurchased at an average price of US$0.82 per share.

     The impact of inflation has not been material to the business of the
Company over the past five years.

     The Company has no material capital commitments for the current fiscal
year.


C.  RESEARCH AND DEVELOPMENT

     Our strategy emphasizes developing and introducing on a timely and
cost-effective basis products that offer functionality and performance equal to
or better than competitive product offerings. We believe that our future success
depends upon our ability to develop and market products which meet changing user
needs, and to successfully anticipate or respond to changes in technology and
standards on a cost-effective and timely basis.

     Research and development expenses consist primarily of salaries and other
personnel-related costs of technical and engineering personnel associated with
our research and product development activities, including the enhancement and
localization of existing products, quality assurance, and testing. Research and
development expenses increased by 25% to $4,887,581 for the fiscal year ended
July 31, 2002 from $3,923,671 for the fiscal year ended July 31, 2001. As a
percentage of total revenues, research and development expenses remained
unchanged at 35%. The relatively constant amount devoted to

                                      -25-
<PAGE>

research and development expenses as a percentage of total revenues reflects the
current stage of development of the Sand Analytic Server. We believe that
significant investment for research and development is essential to maintain
product and technical leadership and expect that we will continue to commit
substantial resources to research and development in the future. However, for
fiscal 2003 we expect that research and development expenditures will decrease,
both in absolute dollars and as a percentage of total revenues. The cost of
materials and equipment used in research and development activities has been
reclassified from SG&A to research and development expenses.


D. TREND INFORMATION

     At the end of the 2002 fiscal year and subsequently, we further
consolidated the systems integration portion of our business, which had been
growing in importance over fiscal 2002. In order to actively pursue major
systems integration assignments in parallel with developing marketing
relationships with other major systems integrators whereby they would employ the
Sand Analytic Server in their initiatives, and to do so in a manner that was not
seen by potential systems integration partners as direct competition, we
rebranded our own systems integration division under the operating name
ClarityBlue. ClarityBlue concentrates on developing a strong competitive
practice and associated intellectual property base on assignments utilizing the
Sand Analytic Server product. The product division, operating as Sand
Technology, will continue to develop and market the Nucleus Product Suite and
the Sand Analytic Server directly and through distribution undertakings.

     As a result of this shift in focus, we should be viewed as a company
which has redoubled its commitment to a rapidly evolving industry which seeks
to improve the business professional's ability to make timely, fact-based
business decisions. We will now be able to satisfy the needs of both
organizations looking for analytical technologies with which to build their
own solutions and organizations which prefer to have a solution custom-built
and/or custom-managed for them. Our revenues will continue to consist of
license fees for software products and fees for a range of associated
services, including software maintenance and support, training and system
implementation consulting. It is anticipated that, for at least the next
year, the proportion of revenue from service fees will continue to expand
more rapidly than that related to software licenses. The state of the order
book and costs and selling prices do not present any significant trend since
the latest financial year. Our plans to achieve profitability in the future
will continue to require us to devote substantial financial resources to grow
our work force, improve our infrastructure, continue the development and the
marketing and distribution of our products, and generally support our
expanding operations.

     The purchase of our Sand Analytic Server product often requires significant
executive-level investment and system design decisions by our customers. Our
product sales cycle is therefore lengthy and the timing of sales is difficult to
predict. This situation is expected to continue to prevail. We believe that
quarterly period-to-period comparisons of our operating results are not
meaningful and one should not rely on such comparisons as an indication of our
future performance.

     We are not aware of any other trends, uncertainties, demands, commitments
or events which are reasonably likely to have a material effect upon our net
sales or

                                      -26-
<PAGE>

revenues, income from continuing operations, profitability, liquidity, liquidity
or capital resources.


E. DISCLOSURE CONTROLS

     As required by Rule 13a-15 under the Exchange Act, within the 90 days
prior to the filing date of this report, we carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures. This evaluation was carried out under the supervision and with
the participation of our management, including our Chief Executive Officer
and our then Chief Financial Officer. Based upon that evaluation, our Chief
Executive Officer and our then Chief Financial Officer concluded that our
disclosure controls and procedures are effective. There have been no
significant changes in our internal controls or in other factors, which could
significantly affect internal controls subsequent to the date we carried out
our evaluation.

ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  DIRECTORS AND SENIOR MANAGEMENT

     The following table sets forth information as of January 28, 2003
concerning the directors and executive officers of the Company:

<TABLE>
<CAPTION>
                                                                                           CLASS A COMMON SHARES
                                                                                           BENEFICIALLY OWNED OR
                                                                                           OVER WHICH CONTROL OR
           NAME                  PRINCIPAL OCCUPATION             DIRECTOR SINCE          DIRECTION IS EXERCISED
           ----                  --------------------             --------------          ----------------------
<S>                         <C>                                         <C>                         <C>
  Arthur G. Ritchie         Director, Chairman of the Board,            1983                        2,074,138
                            President and Chief Executive
                            Officer of Sand

  Steve Dennison            Director, Commercial                        2002                          5,000
                            Director of Transportation and
                            Logistics of Lynx Express

  Josephine Munroe          Director, Consultant                        1990                          3,000

  Douglas S. Pryde          Director, Barrister and Solicitor           2001                           ---

  Jerome Shattner           Director, Executive                         2000                      1,023,000
                            Vice-President

  Martin Shindler           Director, Accountant and                    1987                          2,140
                            Business Consultant

  George Wicker             Director, Executive Vice President          1996                        274,950

</TABLE>


                                      -27-
<PAGE>

<TABLE>
<CAPTION>
                                                                                           CLASS A COMMON SHARES
                                                                                           BENEFICIALLY OWNED OR
                                                                                           OVER WHICH CONTROL OR
           NAME                  PRINCIPAL OCCUPATION             DIRECTOR SINCE          DIRECTION IS EXERCISED
           ----                  --------------------             --------------          ----------------------
<S>                         <C>                                         <C>                         <C>
  Gilles Therrien           Vice-President, Finance and                 ---                         ---
                            Administration  and Chief
                            Financial Officer, of Sand

  Robert Acquaviva          Director of Technical Support               ---                         ---
                            Operations, Sand Technology Corporation

  Michael McCool            Chief Scientist for Nucleus, Sand           ---                         ---

  Duncan Painter            President, Sand                             ---                          16.780
                            Technology (U.K.) Limited

  Georges Dube              Corporate Secretary, Sand                   ---                          19,000
</TABLE>


     Arthur Ritchie has been a director and Chief Executive Officer of Sand
since he co-founded the Company in 1983. Prior to the inception of Sand, he was
one of four principals of LGS Data Processing Consultants Inc., a Canadian
information processing consulting firm. Prior to 1979, he was employed by IBM in
South Africa, Europe and Canada, in successive capacities as a systems
engineering professional and in a variety of management and marketing roles.

     Steve Dennison has been Commercial Director of Lynx Express Limited, one of
the United Kingdom's largest transportation companies, since 1999. During the
four previous years, he was Finance Director and Corporate Secretary for Red
Star Parcels Limited. From 1988 to 1993, Mr. Dennison who is a qualified
Chartered Accountant, was with KPMG most recently as Corporate Finance Manager.
He holds a Bsc (Hons) in Management Science from the University of Manchester.

     Josephine Munroe has been employed as an independent consultant by several
large Canadian corporations where she worked closely with their special projects
departments. From September 1989 to March 1995, she was with Lancaster Financial
Limited, a leading merger and acquisitions firm. She is currently employed by an
affiliate of a major Canadian chartered bank.

     Douglas Pryde practiced law with the firm of Lavery, de Billy and its
predecessor firms from 1965 to 2001.

     Jerome Shattner was a co-founder of Sand and was an executive with Sand in
the early 1980s until Sand formed a joint venture in Canada with National
Advanced Systems in 1987. Mr. Shattner was President of the joint venture, NAS
Canada Inc. (which was renamed Hitachi Data Systems Inc.) from 1987 to 1999.
Prior to the inception of Sand, he was one of the four principals of LGS Data
Processing Consultants Inc., a Canadian information processing consulting firm.
Prior to 1979, he was employed by IBM in Canada in a variety of management and
marketing roles.


                                      -28-
<PAGE>

     Martin Shindler has since 1964 been the president of a firm of accountants
and business consultants located in Florida.

     George Wicker held executive level positions in general management, program
management and finance with Lockheed Martin Corporation and its predecessor
corporations during a thirty-two year career. Mr. Wicker holds a B.A. in
Political Sciences, an MBA in Financial Management from the University of Santa
Clara and a Juris Doctor degree from Pepperdine University.

     Gilles Therrien is the former Vice-President, Finance and Administration of
M3i Systems Inc., a software company formerly majority-owned by Hydro-Quebec.
Following the sale of M3i Systems Inc., Mr. Therrien held the position of
Treasurer of the purchaser, Cognicase Inc., in addition to his position at
M3i Systems Inc. Mr. Therrien is a member of the Canadian Institute of Chartered
Accountants and he served for many years as an Audit Professional with
accounting firms, including Deloitte & Touche, following his studies in
Management and Public Accountancy at McGill University in Montreal.

     Robert Acquaviva has over 29 years experience as a computer engineer,
including hardware and software. He has been Director of Technical Support of
Sand Technology Corporation since 1992 prior to which he was Director of
Operations. From 1970 to 1985, he held a number of engineering positions with
increasing responsibilities with Control Data Corporation.

     Michael McCool has been Chief Scientist of Sand since 1993 where he has
been charged with the successful commercialization of a software-only version of
Nucleus. From 1987 to 1992, he was a Senior Systems Architect with Nucleus
International Corporation. In prior years, he was a software engineer (SMTS)
with Teledyne Controls (1986-1987), a systems analyst/programmer with Optical
Research Associates (1984-1986) and an embedded systems programmer with Applied
Research Laboratories (1982-1984).

     Duncan Painter was Solution Sales and Delivery European Director of Hitachi
Data Systems Limited from 1994 to 1999 and prior to that he worked for the
largest UK electronics retailer in a senior management role within its
IT department.

     Georges Dube is currently and has been a Partner of Lavery, de Billy, a law
firm, for more than ten years. Mr. Dube served as a director of Sand from 1996
to 2001.

     During the year and in the ordinary course of business, we consulted and
continue to consult with Lavery, de Billy.

     There are no family relationships between any director or executive
officer and any other director or executive officer other than between
Martin Shindler and Jerome Shattner who are uncle and nephew.

     There is no arrangement or understanding between any director or executive
officer and any other person pursuant to which the director was elected or the
executive officer was appointed.


                                      -29-
<PAGE>

B.  COMPENSATION

     For the fiscal year ended July 31, 2002, the aggregate cash remuneration
including salaries and bonuses paid by Sand to eight (8) executive officers for
services rendered in all capacities to the Company and its subsidiaries during
all or part of the fiscal year as applicable, was $1,353,713.

     For the fiscal year ended July 31, 2002 each director, other than those
directors who are salaried executive officers of Sand, was paid a basic annual
retainer of $5,000 for serving as a director plus an additional amount of
$1,500 per year for serving as a member of a standing committee of the Board of
Directors.

     The aggregate value of other compensation did not exceed the lesser of
$10,000 times the number of executive officers or ten percent (10%) of the cash
compensation paid to such executive officers.

     No amounts have been set aside or accrued by the Company or its
subsidiaries to provide pension, retirement or similar benefits to its directors
or executive officers.

Employment Agreement

     Arthur G. Ritchie, Chairman of the Board, President and Chief Executive
Officer and a Director of Sand, entered into an employment agreement ("the
Agreement") with Sand upon the expiry of his previous employment agreement on
December 31, 1993. The Agreement, effective January 1, 1994 was for an initial
term of five (5) years and is automatically extended for additional periods of
twelve (12) months each unless Sand or Mr. Ritchie shall have given the other a
notice of termination of the Agreement not less than three (3) months prior to
the end of its term. In the event the employment of Mr. Ritchie (i) is
terminated by Sand for any reason other than for Cause (as defined in the
Agreement) or death or (ii) is terminated by Mr. Ritchie for Good Reason (as
defined in the Agreement), Mr. Ritchie will be entitled to receive, among other
things, a lump sum payment equivalent to two (2) times the sum of his then
current annual base salary and the amount of the bonuses received by him in the
immediate past year and Mr. Ritchie shall continue for a period of two (2) years
to participate in all benefit plans and programs of Sand to the extent such
participation is possible, and, if such continued participation is barred, to
receive amounts equal to the out-of-pocket costs of participation in plans and
programs providing substantially similar benefits. On January 1, 2003, the
employment of Mr. Ritchie was automatically extended to December 31, 2003 on
terms similar to those in the Agreement.

Employee Compensation Plan

     The Company has an informal employee compensation plan, which also applies
to Management, pursuant to which, if employees fulfill stated goals with respect
to sales revenue, new account penetration, profit contribution and other
criteria, their incomes will increase proportionately above the guaranteed base
until the specified target income is earned or exceeded. The informal employee
compensation plan is not based upon a

                                      -30-
<PAGE>

mathematical formula in the case of Management, but is rather subject to
individual negotiation.

1996 STOCK INCENTIVE PLAN

     On July 8, 1996, the board of directors adopted the 1996 Stock Incentive
Plan (the "Incentive Plan") pursuant to which the beneficiaries selected by a
committee of the board of directors may be granted options to subscribe for
Common Shares. The Incentive Plan was confirmed, approved and ratified by the
shareholders of the Corporation at the Annual and Special Meeting of the
shareholders held on December 17, 1996. On November 9, 1999, by resolution, the
directors of the Corporation amended the Incentive Plan to increase the maximum
aggregate number of options to purchase Common Shares which may be granted under
the Incentive Plan. This resolution of the directors was confirmed, approved and
ratified by the shareholders of the Corporation at the Annual and Special
Meeting of the shareholders held on December 17, 1999. The total number of
Common Shares of the Corporation authorized for grants of options is
1,100,000 (as adjusted to reflect the share subdivision on a two-for-one basis
on December 31, 1996) subject to adjustment to take into account changes in the
capital structure of the Corporation.

     The Incentive Plan is administered by a committee (the "Committee")
consisting of not less than two (2) members of the board of directors each of
whom is a "disinterested person" as defined under the UNITED STATES SECURITIES
AND EXCHANGE ACT OF 1934 and an "outside director" as defined in the UNITED
STATES INTERNAL REVENUE CODE. The Incentive Plan permits the granting of
incentive stock options on terms designed to gain certain advantages under
United States Federal income tax law.

     The term and number of Common Shares covered by each option, as well as the
permitted frequency of exercise of such options, are determined by the Committee
at the time the options are granted to the recipients. The number of Common
Shares which may be subject to option in favour of a single recipient may not
exceed 5% of the outstanding Common Shares of the Corporation. An option is to
be exercised within a period of ten (10) years after the date on which the
option is granted. The exercise price of each option for Common Shares is not
less than the closing price of the Common Shares on the Nasdaq National Market
System on the trading day prior to the day the option is granted or, if there
was no transaction on that day, the average of the bid and ask prices on that
day, less any discount as decided by the board of directors within the extent
permitted by the applicable regulatory provisions. Options granted under the
Incentive Plan may not be assigned or pledged. No financial assistance is
available to recipients in connection with the exercise of an option. The
Corporation may terminate the Incentive Plan at any time, subject to vested
rights.

     During the fiscal year ended July 31, 2002, the Committee granted options
to purchase an aggregate of 20,000 Common Shares to one officer and an aggregate
of 208,500 Common Shares to 13 employees at exercise prices which vary from
US$1.20 to US$5.00 per share which were not less than the respective closing
prices of the Common Shares on The Nasdaq National Market System on the day
prior to each grant. 566,750 options were cancelled. No options were exercised.


                                      -31-
<PAGE>

     During the period August 1, 2002 to January 20, 2003, the Committee granted
options to purchase an aggregate of 403,500 Common Shares to 19 employees at
exercise prices which vary from US$1 to US$5 per share which were not less than
the respective closing prices of the Common Shares on The Nasdaq National Market
System on the day prior to each grant. 17,500 options were cancelled.

     As at January 20, 2003, 740,000 options had been granted and remained
outstanding under the Incentive Plan and 336,000 options remained available for
grant.

1996 STOCK OPTION PLAN

     On July 8, 1996, the board of directors adopted the 1996 Stock Option Plan
(the "Option Plan") pursuant to which the beneficiaries selected by a committee
of the board of directors may be granted options to subscribe for Common Shares.
The Option Plan was confirmed, approved and ratified by the shareholders of the
Corporation at the Annual and Special Meeting of the shareholders held on
December 17, 1996. On November 9, 1999, by resolution, the directors of the
Corporation amended the Option Plan to increase the maximum aggregate number of
options to purchase Common Shares which may be granted under the Option Plan.
This resolution of the directors was confirmed, approved and ratified by the
shareholders of the Corporation at the Annual and Special Meeting of the
shareholders held on December 17, 1999. The total number of Common Shares of the
Corporation authorized for grants of options is 900,000 (as adjusted to reflect
the share subdivision on a two-for-one basis on December 31, 1996), subject to
adjustment to take into account changes in the capital structure of the
Corporation.

     The Plan is administered by a committee (the "Committee") consisting of not
less than two (2) members of the board of directors each of whom is a
"disinterested person" as defined under the UNITED STATES SECURITIES AND
EXCHANGE ACT OF 1934 and an "outside director" as defined in the UNITED STATES
INTERNAL REVENUE CODE.

     The term and number of Common Shares covered by each option, as well as the
permitted frequency of exercise of such options, are determined by the Committee
at the time the options are granted to the recipients. The number of Common
Shares which may be subject to option in favour of a single recipient may not
exceed 5% of the outstanding Common Shares of the Corporation. An option is to
be exercised within a period of ten (10) years after the date on which the
option is granted. The exercise price of each option for Common Shares is not
less than the price of the Common Shares as determined by the Committee within
the extent permitted by the applicable regulatory provisions. Options granted
under the Option Plan may not be assigned or pledged. No financial assistance is
available to recipients in connection with the exercise of an option. Options
which expire or are terminated or surrendered or unexercised are thereafter
available for the granting of other options. The Corporation may terminate the
Option Plan at any time subject to vested rights.

     During the fiscal year ended July 31, 2002, the Committee granted options
to purchase an aggregate of 104,000 Common Shares to 27 employees at exercise
prices which vary from US$1.25 to US$5.00 per share which were not less than the
respective closing prices of the Common Shares on The Nasdaq National Market
System on the day

                                      -32-
<PAGE>

prior to each grant. 249,750 options were cancelled. One employee exercised
options as to 56,000 Common Shares at US$0.67 per share.

     During the period August 1, 2002 to January 20, 2003, the Committee
granted options to purchase an aggregate of 112,500 Common Shares to three
employees and one officer at exercise prices which vary from of US$1 to US$5
per share which was not less than the closing price of the Common Shares on
The Nasdaq National Market System on the day prior to the grant. 92,250
options were cancelled.

     As at January 20, 2003, 508,500 options had been granted and remained
outstanding under the Option Plan and 215,500 options remained available for
grant.


C.  BOARD PRACTICES

     Directors of the Company hold office until the close of the next annual
meeting of shareholders and until their successors are elected and qualified or
until their earlier resignation or removal. The CANADA BUSINESS CORPORATIONS ACT
(the "CBCA") requires that twenty-five percent (25%) of the members of the Board
of Directors must be resident Canadians. In addition, the Board may not transact
business at a meeting unless one-quarter of the directors participating in the
meeting are Canadian residents. Officers serve at the pleasure of the Board of
Directors, subject to the terms of employment agreements, if any, and applicable
employment laws.

     The Audit Committee is responsible for the engagement of the Company's
independent auditors and reviews the scope and timing of their audit services
and any other services they are asked to perform, their report on the Company's
financial statements following completion of the audit and the Company's
policies and procedures with respect to internal accounting and financial
controls. This committee is comprised of three directors, all of whom are
outside and unrelated directors. The current members of the Audit Committee are
Josephine Munroe, Douglas S. Pryde and Steve Dennison.

     Josephine Munroe and Martin Shindler comprise the Option Committee which
administers the 1996 Stock Incentive Plan and the 1996 Stock Option Plan which
are described under the heading "Compensation".

     The Company does not have a Compensation Committee or a Remuneration
Committee.


                                      -33-
<PAGE>

D.  EMPLOYEES

     On July 31, 2002, the Company had 111 employees, including 48 full-time
employees with Sand, and 19 full-time employees with Sand USA, 37 full-time
employees with Sand UK and 7 full-time employees with Sand Germany. Moreover,
the Company had three part-time employees, one with Sand, one with Sand USA and
one with Sand UK. No employee of the Company is represented by a labour union or
is covered by a collective bargaining agreement.

     Since inception, the Company has not suffered any disruptions as a result
of labour problems or employee disputes. The increase in the number of employees
reflects the growth of our business and the development of our direct sales
force.

E.  SHARE OWNERSHIP

     Information as to the share ownership of the directors and executive
officers of the Company is found under Item 6 - "Directors, Senior Management
and Employees" under "Directors and Senior Management" and under "Compensation"
- "1996 Stock Incentive Plan" and "1996 Stock Option Plan".


ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.  MAJOR SHAREHOLDERS

     The following are the only persons who, to our knowledge, beneficially own
or exercise control or direction over shares carrying more than five (5%)
percent of the votes attached to Class A Common Shares of the Company at
January 27 , 2003:

<TABLE>
<CAPTION>
                                APPROXIMATE NUMBER OF CLASS                PERCENTAGE OF CLASS A
                                 A SHARES OWNED, CONTROLLED                 COMMON SHARES OWNED,
                                         OR DIRECTED                       CONTROLLED OR DIRECTED
                            -------------------------------------     --------------------------------
<S>                                      <C>                                      <C>
Arthur G. Ritchie                        2,074,138                                15.7 %
Jerome Shattner                          1,023,000                                 7.7%
</TABLE>

     The total number of Class A Common Shares owned, controlled or directed by
the officers and directors of Sand as a group, to our knowledge, is 3,418,008,
or approximately 26%, at January 27 , 2003.

     The voting rights of the Class A Common Shares held by the persons
identified or referred to above are the same as the voting rights of the Class A
Common Shares held by all other shareholders.

     To our knowledge, as of January 15, 2003, 9,449,152 Class A Common Shares
were held of record by 412 persons whose registered addresses were in the United
States. Many of our Class A Common Shares are held in the name of
intermediaries.


                                      -34-
<PAGE>

     Except as set forth above, to our knowledge, the Company is not directly or
indirectly owned or controlled by another corporation, by any foreign government
or by any other national or legal person severally or jointly.

     There are no known contractual arrangements which may result in a change of
control of the Company at a subsequent date.


B.  RELATED PARTY TRANSACTIONS

     Sand maintains directors' and officers' liability insurance which, subject
to the provisions and exclusions contained in the policy, protects the directors
and officers, as such, against any claims made during the term of their office
against any of them for a wrongful act, provided they acted honestly and in good
faith with a view to the best interests of Sand. The policy provides coverage
with a limit of US$5,000,000 per loss per policy period, subject to a corporate
reimbursement deductible of US$250,000 per loss. The current annual premium is
paid entirely by Sand and amounts to approximately US$100,000. To the extent
permitted by law, Sand has entered into an indemnification agreement with each
of its directors and senior officers.


C.  INTERESTS OF EXPERTS AND COUNSEL

           Not applicable.


ITEM 8.    CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     The Consolidated Financial Statements of the Company are included in this
Annual Report on Form 20-F beginning on page 48.


ITEM 9.    THE OFFER AND LISTING

A.  OFFER AND LISTING DETAILS

     The following table presents the closing high and low sales prices of our
Class A Common Shares stated in United States dollars as reported by NASDAQ for
the following periods:


                                      -35-
<PAGE>

<TABLE>
<CAPTION>
Month Ended                                       U.S. $
-----------                                       ------
                                       High                    Low
                                       ----                    ---
<S>                                   <C>                     <C>
To January 17, 2003                   $0.94                   $0.61
December 2002                         $0.951                  $0.58
November 2002                         $1.069                  $0.75
October 2002                          $0.92                   $0.53
September 2002                        $1.08                   $0.91
August 2002                           $1.30                   $0.80
July 2002                             $1.27                   $0.89

Quarter Ended                                     U.S. $
-------------                                     ------
                                       High                    Low
                                       ----                    ---
October 30, 2002                      $1.30                   $0.53
July 31, 2002                         $1.40                   $0.89
April 30, 2002                        $1.708                  $1.03
January 31, 2002                      $1.79                   $1.05
October 30, 2001                      $4.27                   $1.25
July 31, 2001                         $4.90                   $3.01
April 30, 2001                        $5.75                   $2.969
January 31, 2001                      $7.75                   $4.688
October 30, 2000                      $5.375                  $3.50

Fiscal Year Ended July 31                         U.S. $
-------------------------                         ------
                                       High                    Low
                                       ----                    ---
2002                                  $4.27                   $0.89
2001                                  $7.75                   $2.969
2000                                  $9.875                  $3.375
1999                                  $8.25                   $4.125
1998                                  $12.00                  $3.375
</TABLE>


C.  MARKETS

     Our Class A Common Shares are listed on the Nasdaq National Market and
trade under the symbol SNDT. There is no non-United States trading market for
our Class A Common Shares.


                                      -36-
<PAGE>

ITEM 10.   ADDITIONAL INFORMATION


A.  SHARE CAPITAL

           Not applicable.


B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

     Sand was incorporated on December 10, 1982 under the provisions of the
CANADA BUSINESS CORPORATION ACT (the "CBCA"). The Articles of the Company place
no restrictions upon the Company's objects and purposes.

     Given the amendments to the CBCA in November 2001 and given that the
By-laws of the Corporation had first been adopted in 1983, the board of
directors determined that it was both timely and in the best interests of the
Company and its shareholders to adopt new By-laws. On November 4, 2002, the
board of directors adopted the new By-laws of the Corporation. The new By-laws
were confirmed by the shareholders at the annual meeting of shareholders held on
December 17, 2002.

     The notable changes in the new By-laws from the previous By-laws are as
follows:

o    the new By-laws provide greater flexibility by permitting that the
     registered office of the Corporation shall be in the province or territory
     of Canada specified in the Articles, as opposed to the specific place in
     such province or territory specified in the Articles;

o    the new By-laws provide greater flexibility by reducing the Canadian
     residency requirements of directors of the Corporation from a majority of
     directors to at least 25% of the directors;

o    the new By-laws change the duties of the board of directors from managing
     the business and affairs of the Corporation to managing or supervising the
     management of the business and affairs of the Corporation;

o    the new By-laws eliminate the requirement that a majority of any members of
     a committee of the board of directors be resident Canadians;

o    the new By-laws provide greater flexibility with respect to where the
     Corporation can hold meetings of shareholders;

o    the new By-laws reflect the amendment to the CBCA relating to the time
     periods required for notice of meetings of shareholders and relating to the
     record date for notice of meetings of shareholders and for dividends;

o    the new By-laws provide detailed provisions regarding determination of a
     record date for voting at meetings of shareholders;

o    the new By-laws provide greater flexibility by permitting that meetings of
     shareholders may be held by means of an electronic communications facility;
     and


                                      -37-
<PAGE>

o    the new By-laws provide greater flexibility by permitting that the
     Corporation may, subject to the consent of the applicable addressee,
     provide certain notices or documents to shareholders or directors by means
     of electronic delivery.

DIRECTORS' POWERS

     Pursuant to the Articles and the By-laws of the Company and the
requirements of the CBCA, the board of directors must consist of not fewer than
three (3) and not more than eleven (11) directors. A majority of the number of
directors appointed constitutes a quorum at any meeting of directors, provided,
however, that no business may be transacted at a meeting of directors unless at
least one-quarter of the directors present are resident Canadians.

     There is no provision in the By-laws that imposes a requirement in respect
of a director's power to vote on a proposal, arrangement or contract in which
the director is materially interested. The CBCA provides that a director must
disclose to the Company, in writing or by requesting to have it entered in the
minutes of meetings of directors or of meetings of committees of directors, the
nature and extent of any interest that he or she has in a material contract or
material transaction, whether made or proposed, with the Company, if the
director (a) is a party to the contract or transaction; (b) is a director, or an
individual acting in a similar capacity of a party to the contract or
transaction; or (c) has a material interest in a party to the contract or
transaction.

     The By-laws of the Company state that the directors may fix the
remuneration of the directors and that the directors shall be paid such
remuneration for their services as the board may from time to time determine.
The directors are also entitled to be reimbursed for travel and other expenses
properly incurred by them in attending meetings of the board or any committee of
the board of directors. Nothing in the By-laws precludes any director from
serving the Company in any other capacity and receiving remuneration for such
services.

     The Articles of the Company state that without limiting the borrowing
powers of the Company as set forth in the CBCA, the board may from time to time
on behalf of the Company without authorization of the shareholders (a) borrow
money upon the credit of the Company; (b) issue, reissue, sell or pledge debt
obligations of the Company; (c) to the extent permitted by the CBCA, give a
guarantee on behalf of the Company to secure performance of an obligation of any
person; and (d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any property of the Company owned or subsequently acquired to
secure any obligation of the Company.

     The directors may, by resolution, make, amend or repeal any By-laws that
regulate the business or affairs of the Company. Any resolution making, amending
or repealing any By-laws of the Company must be submitted to the next following
shareholders meeting for ratification by the shareholders who may by ordinary
resolution confirm, reject or amend the By-law, amendment or repeal.

     The powers of the directors set forth in the Articles of the Company may be
amended by special resolution. A special resolution is a resolution passed by a
majority of

                                      -38-
<PAGE>

not less than two-thirds (2/3) of the votes cast by shareholders of
the Company who being entitled to do so, vote in person or by proxy at an annual
or special meeting of shareholders of the Company. Under the CBCA, an ordinary
resolution of shareholders requires approval by a majority of the votes cast at
a meeting of shareholders, present in person or represented by proxy.

ELECTION AND QUALIFICATIONS OF DIRECTORS

     The directors of the Company stand for election at the annual meeting of
shareholders and there are no staggered terms. There is no cumulative voting for
directors of the Company. There is no provision in the Articles or By-laws that
imposes a requirement for retirement or non-retirement of directors.

     There is no provision in the Company's Articles or By-laws that a director
be required to hold a share in the capital of the Company as a qualification for
his office, but he must be qualified to become or act as a director as required
by the CBCA. The CBCA provides that no person is qualified to act as a director
if that person is less than 18 years of age; is a person who has been found to
be a person of unsound mind by a court in Canada; a person who is not an
individual; or is a person who has the status of bankrupt.

     The CBCA provides that a director of a Company may be removed if the
shareholders by ordinary resolution at a special meeting vote to remove a
director or directors from office.

MEETINGS

     The CBCA provides that the Company must hold an annual meeting of its
shareholders not later than 15 months after holding the last preceding annual
meeting but no later than 6 months after the end of the Company's preceding
financial year. The Company must give notice of any meeting to its shareholders
entitled to receive notice not more than 60 days prior to and not less than
35 days before the meeting. The CBCA requires the directors of a company to
provide with the notice of a general meeting a form of proxy for use by every
member entitled to vote at such meeting as well as an information circular
containing prescribed information regarding the matters to be dealt with and the
conduct of the meeting.

     Under the CBCA, the directors of the Company may call a meeting of
shareholders and one or more shareholders holding not less than 5% of the issued
voting shares of the Company may give notice to the directors requiring them to
call and hold a meeting.

LIMITATIONS ON OWNERSHIP OF SECURITIES

     Except as described below under "Exchange Controls," there are no
limitations on the right to own securities imposed by foreign law to the
Company's knowledge or by the Articles of the Company.


                                      -39-
<PAGE>

CHANGE IN CONTROL OF COMPANY

     There are no provisions in the Company's Articles or By-laws would have the
effect of delaying, deferring, or preventing a change in control of the Company
and that would operate only with respect to a merger, acquisition or corporate
restructuring of the Company or its subsidiaries.

OWNERSHIP THRESHOLD

     There are no provisions in the Articles or By-laws governing the ownership
threshold above which shareholder ownership must be disclosed.

DESCRIPTION OF SHARE CAPITAL

     The authorized share capital of the Company consists of an unlimited number
of Class A Common Shares, all without par value, and, an unlimited number of
Class B Shares, issuable in series, all without par value.

Class A Common Shares

     The Class A Common Shares of the Corporation have the following rights,
privileges, restrictions and conditions:

           Dividends. Subject to the prior rights of the holders of the Class B
           Shares and any other shares ranking senior to the Class A Common
           Shares with respect to priority in the payment of dividends, the
           holders of Class A Common Shares are entitled to receive dividends
           and the Corporation must pay dividends thereon, as and when declared
           by the Board of Directors of the Corporation out of moneys properly
           applicable to the payment of dividends, in such amount and in such
           form as the Board of Directors of the Corporation may from time to
           time determine and all dividends which the Board of Directors of the
           Corporation may declare on the Class A Common Shares must be declared
           and paid in equal amounts per share on all Class A Common Shares at
           the time outstanding.

           Dissolution. In the event of the dissolution, liquidation or
           winding-up of the Corporation, whether voluntary or involuntary, or
           any other distribution of assets of the Corporation among its
           shareholders for the purpose of winding-up its affairs, subject to
           the prior rights of the holders of the Class B Shares and any other
           shares ranking senior to the Class A Common Shares with respect to
           priority in the distribution of assets upon dissolution, liquidation,
           winding-up or distribution for the purpose of winding-up, the holders
           of the Class A Common Shares are entitled to receive the remaining
           property and assets of the Corporation.


                                      -40-
<PAGE>

           Voting Rights. The holders of the Class A Common Shares are entitled
           to receive notice of and to attend all meetings of the shareholders
           of the Corporation and have one vote for each Class A Common Share
           held at all meetings of the shareholders of the Corporation, except
           meetings at which only holders of another specified class or series
           of shares of the Corporation are entitled to vote separately as a
           class or series.

     There are no redemption or sinking fund provisions relating to the Class A
Common Shares and the Class A Common Shares are fully paid and non-assessable.

Class B Shares

     The Class B Shares, as a class, have the following rights, privileges,
restrictions and conditions:

           Directors' Authority to Issue in One or More Series. The Board of
           Directors of the Corporation may issue the Class B Shares at any time
           and from time to time in one or more series. Before the first shares
           of a particular series are issued, the Board of Directors of the
           Corporation must fix the limited or unlimited number of shares in
           such series and must determine, subject to the limitations set out in
           the articles, the designation, rights, privileges, restrictions and
           conditions to be attached to the shares of such series including,
           without limitation, the rate or rates, amount or method or methods of
           calculation of dividends thereon, the time and place of payment of
           dividends, whether cumulative or non-cumulative or partially
           cumulative and whether such rate, amount or method of calculation
           shall be subject to change or adjustment in the future, the currency
           or currencies of payment of dividends, the consideration and the
           terms and conditions of any purchase for cancellation, retraction or
           redemption rights (if any) (but in no event shall the voting rights
           attributable to a Class B Share exceed those attributable to a Class
           A Common Share), the conversion or exchange rights attached thereto
           (if any), the voting rights attached thereto (if any), and the terms
           and conditions of any share purchase plan or sinking fund with
           respect thereto. Before the issue of the first shares of a series,
           the Board of Directors of the Corporation shall send to the Director
           (as defined in the CANADA BUSINESS CORPORATIONS ACT) articles of
           amendment containing a description of such series including the
           designation, rights, privileges, restrictions and conditions
           determined by the Board of Directors of the Corporation.

           Ranking of Class B Shares. No rights, privileges, restrictions or
           conditions attached to a series of Class B Shares may confer upon a
           series a priority in respect of dividends or return of capital over
           any other series of Class B Shares then outstanding. The Class B
           Shares are entitled to priority over the common shares of the
           Corporation and over any other shares of the Corporation ranking
           junior to the Class B Shares with respect to priority in the payment
           of dividends and the distribution of assets in the event of the
           liquidation, dissolution or winding-up of the Corporation, whether
           voluntary or involuntary, or any other distribution of the assets of
           the Corporation among its

                                      -41-
<PAGE>

           shareholders for the purpose of winding-up its affairs. If any
           cumulative dividends or amounts payable on a return of capital in
           respect of a series of Class B Shares are not paid in full, the Class
           B Shares of all series must participate rateably in respect of such
           dividends, including accumulations, if any, in accordance with the
           sums that would be payable on such shares if all such dividends were
           declared and paid in full, and in respect of any repayment of capital
           in accordance with the sums that would be payable on such repayment
           of capital if all sums so payable were paid in full; provided
           however, that in the event of there being insufficient assets to
           satisfy in full all such claims to dividends and return of capital,
           the claims of the holders of the Class B Shares with respect to
           repayment of capital must first be paid and satisfied and any assets
           remaining thereafter must be applied towards the payment and
           satisfaction of claims in respect of dividends. The Class B Shares of
           any series may also be given such other preferences over the common
           shares and over any other shares ranking junior to the Class B Shares
           as may be determined in the case of such series of Class B Shares.

           Voting Rights. Except as otherwise required by law or in accordance
           with any voting rights which may from time to time be attached to any
           series of Class B Shares, the holders of the Class B Shares as a
           class are not entitled as such to receive notice of, to attend or to
           vote at any meeting of the shareholders of the Corporation.

           Approval of Holders of Class B Shares. The rights, privileges,
           restrictions and conditions attaching to the Class B Shares as a
           class may be added to, changed or removed but only with the approval
           of the holders of the Class B Shares given as hereinafter specified.

     The approval of the holders of Class B Shares to add to, change or remove
any right, privilege, restriction or condition attaching to the Class B Shares
as a class or to any other matter requiring the consent of the holders of the
Class B Shares as a class may be given in such manner as may then be required by
law, subject to a minimum requirement that such approval shall be given by
resolution passed by the affirmative vote of at least two-thirds of the votes
cast at a meeting of the holders of Class B Shares duly called for that purpose.
The formalities to be observed in respect of the giving of notice of any such
meeting or any adjourned meeting and the conduct thereof shall be those from
time to time required by the CANADA BUSINESS CORPORATIONS ACT (as from time to
time amended, varied or replaced) and prescribed in the by-laws of the
Corporation with respect to meetings of shareholders. On every poll taken at a
meeting of holders of Class B Shares as a class, each holder entitled to vote
thereat shall have one vote in respect of each Class B Share held by him.

Change of Rights of Shareholders

     The CBCA requires the consent by special resolution of a majority of not
less than two-thirds (2/3) of the votes cast by the shareholders entitled to
vote in order to change the rights of holders of shares, including the
designation of all or any shares, and any

                                      -42-
<PAGE>

addition, change or removal of rights, privileges, restrictions and conditions,
including rights to accrued dividends, in respect of all or any shares, whether
issued or unissued.


C.  MATERIAL CONTRACTS

     The Company is not a party to any material contracts entered into in the
past two years outside the ordinary course of business.


D.  EXCHANGE CONTROLS

     There are no governmental laws, decrees, or regulations in Canada relating
to restrictions on the export or import of capital, or affecting the remittance
of interest, dividends, or other payments to non-resident holders on the
Company's Class A Common Shares, other than withholding tax requirements. Any
remittances of dividends to United States residents are subject to a 15%
withholding tax (5% if the shareholder is a corporation owning at least 10% of
the outstanding voting shares of the Company) pursuant to Article X of the
reciprocal tax treaty between Canada and the United States. See "Item 10 -
Additional Information - E - Taxation".

     To the knowledge of the Company, except as provided in the INVESTMENT
CANADA ACT (the "Act") enacted on June 20, 1985, as amended, as further amended
by the NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) IMPLEMENTATION ACT (Canada)
and the WORLD TRADE ORGANIZATION (WTO) AGREEMENT IMPLEMENTATION ACT, there are
no limitations specific to the rights of non-Canadians to hold or vote the
common shares of the Company under the laws of Canada or the Province of Quebec
or in the charter documents of the Company.

     Management of the Company considers that the following general summary
fairly describes those provisions of the Act pertinent to an investment by an
American investor in the Company.

     The Act requires a non-Canadian making an investment which would result in
the acquisition of control of a Canadian business, the gross value of the assets
of which exceed certain threshold levels or the business activity of which is
related to Canada's cultural heritage or national identity, to either notify, or
file an application for review with the Director of Investments, Industry Canada
who administers provisions of the Act. Under the Act, control of a corporation
is deemed to be acquired through the acquisition of a majority of the voting
shares of a corporation, and is presumed to be acquired where one-third or more,
but less than a majority of the voting shares of a corporation are acquired,
unless it can be established that the Company is not controlled in fact through
the ownership of voting shares.

     The notification procedure involves a brief statement of information about
the investment on a prescribed form which is required to be filed with
Investment Canada by the investor at any time up to 30 days following
implementation of the investment. It is intended that investments requiring only
notification will proceed without government intervention

                                      -43-
<PAGE>

unless the investment is in a specific type of business activity related to
Canada's cultural heritage and national identity.

     If an investment is reviewable under the Act, an application for review in
the form prescribed is required to be filed with Investment Canada prior to the
investment taking place and the investment may not be implemented until the
review has been completed and the Minister responsible for Investment Canada is
satisfied that the investment is likely to be of net benefit to Canada. If the
Minister is not satisfied that the investment is likely to be of net benefit to
Canada, the non-Canadian must not implement the investment or, if the investment
has been implemented, may be required to divest himself of control of the
business that is the subject of the investment.


E.  TAXATION

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     The following summary of certain Canadian federal income tax considerations
generally applicable in respect of the Company's Class A Common Shares reflects
the Company's opinion. The tax consequences to any particular holder of Class A
Common Shares will vary according to the status of that holder as an individual,
trust, corporation or member of a partnership, the jurisdiction in which that
holder is subject to taxation, the place where that holder is resident and,
generally, according to that holder's particular circumstances. This summary is
applicable only to holders who are resident in the United States, have never
been resident in Canada for tax purposes, deal at arm's length with the Company,
hold their Class A Common Shares as capital property and who will not use or
hold the Class A Common Shares in carrying on business in Canada.

     This summary is based upon the provisions of the Income Tax Act of Canada
and the regulations thereunder (collectively, the "Tax Act", or "ITA") and the
Canada-United States Tax Convention as amended by the Protocols thereto (the
"Tax Convention") as at the date of this Form 20-F and the current publicly
known administrative practices of the Canada Customs and Revenue Agency. This
summary does not take into account Canadian provincial income tax
considerations.

     This summary is not exhaustive of all possible income tax considerations
pertaining to the Class A Common Shares. It is not intended as legal or tax
advice to any particular holder of Class A Common Shares and should not be so
construed. Each holder should consult his own tax advisor with respect to the
income tax consequences applicable to him in his own particular circumstances.

DISPOSITION OF CLASS A COMMON SHARES

     Under the Tax Act, a gain from the disposition of Common Shares by a
non-resident of Canada will generally not be subject to Canadian tax, provided
the shareholder (and/or persons who do not deal at arm's length with the
shareholder) have not held a "substantial interest" in the Company (25% or more
of the shares of any class of the Company's share capital) at any time in the
five years preceding the disposition. Even if a

                                      -44-
<PAGE>

gain would have been taxable under the Tax Act, generally, the Tax Convention
will exempt from Canadian taxation any capital gain realized by a resident of
the United States, provided that the value of the Class A Common Shares is not
derived principally from real property situated in Canada. It is likely that
this exemption would apply to the Class A Common Shares of the Company.

     Where a holder disposes of Class A Common Shares to the Company (unless the
Company acquired the common shares in the open market in the manner in which
shares would normally be purchased by any member of the public), this will
result under the Tax Act in a deemed dividend to the holder equal to the amount
by which the consideration paid by the Company exceeds the paid-up capital of
such shares. The amount of such dividend will be subject to withholding tax as
described below.

DIVIDENDS

     In the case of any dividends paid to non-residents of Canada, the Canadian
tax is withheld by the Company, which remits only the net amount of such
dividend to the shareholder. By virtue of Article X of the Tax Convention, the
rate of tax on dividends paid to residents of the United States is generally
limited to 15% of the gross dividend (or 5% in the case or certain corporate
shareholders owning shares of the Company enabling the shareholder to at least
10% of the Company's voting shares). In the event the provisions of the Tax
Convention are not applicable, the rate of Canadian withholding tax imposed on
non-residents according to the Tax Act is 25% of the gross dividend.


F.  DIVIDENDS AND PAYING AGENTS

           Not applicable.


G.  STATEMENTS BY EXPERTS

           Not applicable.


H.  DOCUMENTS ON DISPLAY

     We file annual reports and other information with the SEC. You may read and
copy any of these documents at the SEC's Public Reference Room at 450 Fifth
Street NW, Washington, D.C. 20549. You may obtain information on the operation
of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC
maintains an internet site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. The address of that site is http://www.sec.gov.


                                      -45-
<PAGE>

I.  SUBSIDIARY INFORMATION

           Not applicable.


ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are not subject to material market risk exposures, except for risks
related to interest rate fluctuations and foreign currency exchange rates.

     Our exposure to market rate risk for changes in interest rates relates
primarily to our investment portfolio. We have not used derivative financial
instruments in our investment portfolio. We invest in high quality issuers
and limit the amount of our credit exposure with any one issuer. We are
averse to principal loss and ensure the safety and preservation of our
invested funds by limiting default, market and reinvestment risk. A
subsidiary of Sand negotiated a line of credit of approximately
$1,200,000 (Pound Sterling 500,000) with a commercial bank. No draw
downs have been made on this line of credit. Otherwise, we do not make
use of a bank line of credit and we do not have any long term debt.

     Although we currently earn revenues and incur expenses in United States
dollars, British pounds, Euros and Canadian dollars, exchange rates for these
and other local currencies in countries where we may operate in the future may
fluctuate in relation to the Canadian dollar and such fluctuations may have an
adverse effect on our earnings or assets when United States dollars, British
pounds, Euros or local currencies are exchanged for Canadian dollars. We have
not entered into forward foreign exchange contracts. To date, losses and gains
resulting from the translation of revenue and expenses denominated in Untied
States dollars or British pounds into Canadian dollars have been included in our
results of operations.


ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

           Not applicable.


                                     PART II


ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

           None.


                                      -46-
<PAGE>

ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
           AND USE OF PROCEEDS

           None.



                                    PART III


ITEM 17.   FINANCIAL STATEMENTS

           Not Applicable.


ITEM 18.   FINANCIAL STATEMENTS

     The Consolidated Financial Statements of the Company are included in this
Annual Report on Form 20-F beginning on page 48.


                                      -47-
<PAGE>

                             CONSOLIDATED FINANCIAL STATEMENTS OF
                             SAND TECHNOLOGY INC.
                             JULY 31, 2002, 2001 AND 2000


                                       -48-
<PAGE>


Deloitte & Touche LLP
Assurance and Advisory Services
1 Place Ville-Marie
Suite 3000
Montreal QC H3B 4T9
Canada

Tel.: (514) 393-7115
Fax: (514) 390-4111
www.deloitte.ca

[DELOITTE & TOUCHE LOGO]

AUDITORS' REPORT

To the Shareholders of Sand
Technology Inc.

We have audited the consolidated balance sheets of Sand Technology Inc. as at
July 31, 2002 and 2001 and the consolidated statements of operations,
shareholders' equity and cash flows for each of the three years ended July 31,
2002, 2001 and 2000. 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.

With respect to the consolidated financial statements for each of the years in
the two-year period ended July 31, 2002, we conducted our audits in accordance
with Canadian generally accepted auditing standards and auditing standards
generally accepted in the United States of America. With respect to the
financial statements for the year ended July 31, 2000, we conducted our audit in
accordance with Canadian generally accepted auditing standards. 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, 2002
and 2001 and the results of its operations and its cash flows for each of the
three years ended July 31, 2002, 2001 and 2000 in accordance with Canadian
generally accepted accounting principles.



[Deloitte & Touche LLP]



Chartered Accountants
September 20, 2002 (except for Note 13 which is as of October 18, 2002)

[Deloitte
Touche
Tohmatsu]


                                       -49-
<PAGE>

SAND TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS
AS AT JULY 31, 2002 AND 2001 (IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>

                                                          2002               2001
                                                          ----               ----
                                                           $                   $
<S>                                                    <C>                <C>
ASSETS
Current assets
   Cash and cash equivalents                           5,958,011          18,488,707
   Accounts receivable                                 6,316,918           8,415,870
   Inventories                                           205,290              44,783
   Prepaid expenses                                      565,546             391,488
   Loan bearing interest at 8%                           100,000             100,000
                                                      ----------          ----------
                                                      13,145,765          27,440,848

Capital assets (Note 2)                                2,336,603           1,506,303
Acquired technology (Note 3)                              45,430             985,133
                                                      ----------          ----------
                                                      15,527,798          29,932,284
                                                      ==========          ==========

LIABILITIES
Current liabilities
   Accounts payable and accrued liabilities            3,511,032           3,401,650
   Deferred revenue                                    2,073,154           1,835,260
                                                      ----------          ----------
                                                       5,584,186           5,236,910
                                                      ----------          ----------

COMMITMENTS (Note 8)

SHAREHOLDERS' EQUITY
   Common stock (Note 4)
      Authorized
         An unlimited number of Class "A" common shares,
            without par value
         Issued and outstanding
            13,209,427 common shares
               (13,153,427 in 2001)                   39,185,351          39,125,112
Deficit                                              (29,241,739)        (14,429,738)
                                                      ----------          ----------
                                                       9,943,612          24,695,374
                                                      ----------          ----------
                                                      15,527,798          29,932,284
                                                      ==========          ==========
</TABLE>

              See notes to the consolidated financial statements.

                                       -50-
<PAGE>


SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31, 2002, 2001 AND 2000 (IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
                                                          2002                 2001                2000
                                                          ----                 ----                ----
                                                           $                    $                   $

<S>                                                    <C>                  <C>                 <C>
NET SALES                                              13,922,077           11,258,528          6,895,016
Cost of sales and product support                      (7,422,955)          (5,068,489)        (3,248,748)
Research and development costs                         (4,887,581)          (3,923,671)        (4,005,576)
Selling, general and administrative expenses          (16,589,255)         (11,413,368)        (6,667,973)
Net interest and profit on sales of investments           165,713              624,324             84,568
                                                       ----------           ----------         ----------
Loss from operations                                  (14,812,001)          (8,522,676)        (6,942,713)

Profit on sale of affiliated company (Note 5)                   -                    -          3,792,296
Equity earnings of affiliated company (Note 5)                  -                    -            283,510
                                                       ----------           ----------          ---------
NET LOSS                                              (14,812,001)          (8,522,676)        (2,866,907)
                                                       ==========           ==========          =========
Loss per share                                              (1.12)               (0.71)             (0.32)
                                                       ==========           ==========          =========

Weighted average number of
shares outstanding                                     13,186,194           12,079,359          8,919,211
                                                       ==========           ==========          =========
</TABLE>


APPROVED BY THE BOARD OF DIRECTORS



(s) Arthur G. Ritchie                           (s) Douglas S. Pryde
ARTHUR G. RITCHIE, DIRECTOR                     DOUGLAS S. PRYDE, DIRECTOR


              See notes to the consolidated financial statements.

                                       -51-
<PAGE>


SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JULY 31, 2002, 2001 AND 2000 (IN CANADIAN DOLLARS)


<TABLE>
<CAPTION>
                                                           Common stock                     Retained
                                  Exchange          -----------------------------           earnings
                                    rate             Shares               Amount            (deficit)
                                  --------         ----------           ---------          ----------
                                    US$                                  $                 $


<S>                                <C>             <C>                  <C>               <C>
BALANCE, JULY 31, 1999              0.66            8,528,206            8,781,335         (3,040,155)

Net loss                                                    -                    -         (2,866,907)

Exercise of stock options           0.68              520,000              335,130                  -

Private placement                   0.68              315,789            1,885,723                  -

Balance of purchase price
   exchanged for shares                               263,150            1,453,560                  -
                                   ------          ----------           ----------         ----------
BALANCE, JULY 31, 2000              0.68            9,627,145           12,455,748        (5,907,062)

Net loss                                                    -                    -        (8,522,676)

Exercise of stock options           0.66               40,000               77,608                 -

Common share equity line            0.66              586,282            2,264,483                 -

Private placement                   0.66            2,900,000           24,327,273                 -
                                   ------          ----------           ----------         ----------
BALANCE, JULY 31, 2001              0.65           13,153,427           39,125,112        (14,429,738)

Net loss                                                    -                    -        (14,812,001)

Exercise of stock options           0.64               56,000               60,239                 -
                                   ------          ----------           ----------         ----------
BALANCE, JULY 31, 2002              0.63           13,209,427           39,185,351        (29,241,739)
                                   ======          ==========           ==========         ==========
</TABLE>

              See notes to the consolidated financial statements.

                                       -52-
<PAGE>


SAND TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 2002, 2001 AND 2000 (IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
                                                          2002              2001               2000
                                                          ----              ----               ----
                                                           $                 $                  $
<S>                                                     <C>               <C>                <C>
OPERATING ACTIVITIES
   Net loss                                             (14,812,001)     (8,522,676)       (2,866,907)
   Items not affecting cash
      Depreciation of equipment                             556,006         211,418            94,704
      Amortization of acquired technology                   948,981         948,981           948,981
      Equity earnings of affiliated company
         (Note 5)                                                 -               -          (283,510)
      Profit on sale of affiliated company                        -               -        (3,792,296)
   Changes in non-cash operating
      working capital items (Note 12)                     1,873,769      (2,563,799)       (2,269,251)
                                                         ----------      ----------         ---------
                                                        (11,433,245)     (9,926,076)       (8,168,279)
                                                         ----------      ----------         ---------

INVESTING ACTIVITIES
   Proceeds on sale of affiliated company                         -               -         7,295,476
   Purchase of technology                                    (9,278)              -                 -
   Purchase of equipment                                 (1,386,306)     (1,577,617)          (53,352)
                                                         ----------      ----------         ---------
                                                         (1,395,584)     (1,577,617)        7,242,124
                                                         ----------      ----------         ---------

FINANCING ACTIVITIES
   Issue of common shares                                    60,239      26,669,364         2,220,853
   Deferred revenue                                         237,894       1,453,224           382,036
   Repayment of balance of purchase price                         -        (517,300)         (299,140)
                                                         ----------      ----------         ---------
                                                            298,133      27,605,288         2,303,749
                                                         ----------      ----------         ---------

Increase (decrease) in cash and cash equivalents        (12,530,696)     16,101,595         1,377,594
Cash and cash equivalents, beginning of year             18,488,707       2,387,112         1,009,518
                                                         ----------      ----------         ---------
CASH AND CASH EQUIVALENTS, END OF YEAR                    5,958,011      18,488,707         2,387,112
                                                         ==========      ==========         =========
</TABLE>

There were no interest or income taxes paid during the three-year period ended
July 31 2002.

               See notes to the consolidated financial statements.

                                       -53-
<PAGE>


The Corporation is involved in research and development to bring to market its
Sand Analytic Server products and associated Nucleus data base products. The
Corporation is also developing proprietary systems integration methodologies and
supporting products related to the analysis of customer data. The Corporation is
considered to have only one business segment. The Corporation changed its name
from Sand Technology Systems International Inc. on December 17, 1999.

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     SIGNIFICANT ACCOUNTING POLICIES

     The Corporation follows Canadian generally accepted accounting principles
     in the preparation of its financial statements. This requires management to
     make estimates and assumptions that affect the reported amounts of assets
     and liabilities and the disclosure of contingent assets and liabilities at
     the date of the financial statements, and the reported amounts of revenue
     and expenses during the reporting period. Actual results could differ from
     those estimates.

     BASIS OF CONSOLIDATION

     The consolidated financial statements include the accounts of the
     Corporation and its wholly-owned subsidiaries, Sand Technology Corp., Sand
     Technology (U.K.) Ltd., STSI Licensing, LLC, Sand Technology Ireland
     Limited and Sand Technology Deutschland GmbH. All significant intercompany
     transactions and balances have been eliminated.

     REVENUE RECOGNITION

     The Corporation's revenue is earned from licences of off-the-shelf software
     which does not require customization. This revenue is recognized once
     remaining obligations under the sales agreements are considered
     insignificant.

     Revenue from product support contracts is recognized over the life of the
     contract. Incremental costs directly attributable to the acquisition of
     product support contracts are deferred and expensed in the period the
     related revenue is recognized.

     Revenue from education, consulting, and other services is recognized at the
     time such services are rendered.

     CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include highly liquid investments having maturity
     dates of up to three months when purchased and are valued at cost, which
     approximates their fair value.

     INVENTORIES

     Inventories include finished products which are valued at the lower of
     average cost and net realizable value.

                                       -54-
<PAGE>


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     INVESTMENT

     The investment in the affiliated company was accounted for by the equity
     method whereby the share of earnings or losses attributable to the period
     following the date of acquisition was included in operations. All
     significant unrealized intercompany profits have been eliminated.

     CAPITAL ASSETS

     Capital assets are recorded at cost and are amortized over their estimated
     useful lives at the following rates:

          Furniture and equipment                5 year straight-line
          Computer equipment                     3 year straight-line
          Leasehold improvements         lesser of straight-line over
                                        term of lease and useful life

     ACQUIRED TECHNOLOGY

     The Corporation records its acquired technology at cost and depreciates
     such assets over their estimated useful lives using the straight-line
     method at an annual rate of 20%.

     DEFERRED REVENUE

     Deferred revenue represents unearned income associated with support
     agreements, software license revenue where significant vendor obligations
     remain.

     INCOME TAXES

     In fiscal 2001, the Corporation implemented the recommendations of CICA
     Handbook section 3465, Accounting for Income Taxes. Under the new
     recommendations, the liability method of tax allocation is used in
     accounting for income taxes. Under this method, future tax benefits and
     obligations are determined based on differences between the financial
     reporting and tax bases of assets and liabilities, and measured using the
     substantially enacted tax rates and laws that will be in effect when
     differences are expected to reverse. Future tax assets, if any, are
     recognized only to the extent that, in the opinion of management, it is
     more likely than not that the future income tax assets will be realized.

     Prior to the adoption of the new recommendations, income tax expense would
     have been determined using the deferral method of tax allocation. There is
     no material impact on the financial statements resulting from this change.

                                       -55-
<PAGE>

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     FOREIGN EXCHANGE TRANSLATION

     Revenues and expenses denominated in foreign currencies are translated into
     Canadian dollars at rates prevailing on the transaction dates. Monetary
     assets and liabilities are translated at year-end rates. Non-monetary
     assets and liabilities are translated at historical exchange rates.

     The accounts of the subsidiaries included in the consolidated financial
     statements are translated into Canadian dollars using the temporal method.
     Under this method, monetary items are translated at exchange rates in
     effect at the balance sheet dates; non-monetary items are translated at
     historical exchange rates. Revenues and expenses are translated at average
     exchange rates for the year, with the exception of depreciation of assets
     which is translated at the same historical exchange rates as the related
     assets. Translation losses and gains are included in operations.

     EARNINGS PER SHARE

     Per share computations are based on the weighted average number of shares
     outstanding during the year.

     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 in the period the funds are received.

2.   CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                          2002                                      2001
                                      -------------------------------------------------           --------
                                                       Accumulated            Net Book            Net Book
                                        Cost           Depreciation            Value               Value
                                     -----------       ------------          ----------          ---------
                                         $                  $                    $                   $
<S>                                     <C>               <C>                    <C>                 <C>
Furniture and equipment                 790,170           281,606               508,564            559,809
Computer equipment                    1,290,570           273,437             1,017,133            370,611
Leasehold improvements                  957,670           146,764               810,906            575,883
                                     -----------       ------------          ----------          ---------
                                      3,038,410           701,807             2,336,603          1,506,303
                                     ===========       ============          ==========          =========
</TABLE>

                                       -56-
<PAGE>


3.   ACQUIRED TECHNOLOGY
<TABLE>
<CAPTION>
                                                          2002                                      2001
                                      -------------------------------------------------           --------
                                                       Accumulated            Net Book            Net Book
                                        Cost           Depreciation            Value               Value
                                     -----------       ------------          ----------          ---------
                                         $                  $                    $                   $
<S>                                     <C>               <C>                    <C>                 <C>
Product source codes                  3,002,317          2,956,887              45,430             985,133
                                     ===========       ============          ==========          =========
</TABLE>

4.   COMMON STOCK

     AUTHORIZED

     Unlimited number of Class "A" common shares without par value.

     SHARE ISSUANCES

     During the year ended July 31, 2000, 440,000 common shares were issued
     under the Share Option Plan for proceeds of $159,698, 16,000 common shares
     were issued under the 1996 Stock Incentive Plan for proceeds of $112,693
     and 64,000 common shares were issued under the 1996 Stock Option Plan for
     proceeds of $62,740.

     On June 1, 2000, the Corporation completed a private placement involving
     the issuance of 315,789 common shares for net cash proceeds of $1,885,723.
     Under the terms of the agreement, the shares were sold for a purchase price
     of US$4.75 per share. The Corporation also issued 65,217 warrants which may
     be exercised from time to time during the period beginning June 1, 2000 and
     ending on May 31, 2003 at an exercise price of US$10.00 per share.

     On July 31, 2000, the Corporation agreed to satisfy $1,453,560 of its
     obligations resulting from the acquisition of the Nucleus rights by issuing
     263,150 shares of common stock (Note 5).

     On June 1, 2000, the Corporation entered into a Common Share Purchase
     Agreement ("CSPA") allowing the Corporation to access up to US$30,000,000
     through a common share equity line. Pursuant to the CSPA, the Corporation
     may, at its option, issue and sell to the purchaser up to US$30,000,000 of
     the Corporation's common shares over a period of 12 months at a discount of
     10% from the average daily price of the common stock. The Corporation also
     issued 364,556 warrants which may be exercised from time to time over the
     period of 12 months at an exercise price of US$5.6781 per share.

     During the year ended July 31, 2001, the Corporation issued 586,282 common
     shares through its common share equity line for net cash proceeds of
     $2,264,483.

     In November 2000, the Corporation completed a private placement involving
     the issuance of 2,900,000 common shares for net cash proceeds of
     $24,327,273. Under the terms of the agreement, the shares were sold for a
     purchase price of US$6.00 per share. The Corporation also issued

                                       -57-
<PAGE>

4.   COMMON STOCK (CONTINUED)

     SHARE ISSUANCES (CONTINUED)

     312,000 warrants which may be exercised from time to time during the period
     beginning November 22, 2000 and ending on November 22, 2002 at an exercise
     price of US$6.00 per share.

     During the year, ended July 31, 2001, 40,000 common shares were issued
     under the 1996 Stock Incentive Plan for proceeds of $77,608.

     During fiscal 2002, 56,000 Class "A" common shares were issued pursuant to
     the 1996 Stock Option Plan for proceeds of $60,239.

     SHARE REPURCHASE PROGRAM

     On October 10, 2001, the Corporation announced an open market share
     repurchase program under which it may repurchase, up to a maximum of
     659,160 of its outstanding Class A Common Shares from October 15, 2001 to
     October 15, 2002.

     STOCK OPTION PLANS

     The Company has two stock option plans. Under the 1996 Stock Incentive
     Plan, the Company may grant options to its regular full-time employees and
     those of its subsidiaries for up to a maximum of 1,100,000 common shares.
     Under the 1996 Stock Option Plan, the Company may grant options to its
     regular full-time employees and non-employee directors and those of its
     subsidiaries for up to a maximum of 900,000 common shares. Under both
     plans, the exercise price of each option is not less than the market price
     of the Company's shares on the Nasdaq National Market System on the day
     prior to the date of grant, options vest ratably over a five year period
     and option's maximum term is 10 years.

                                       -58-
<PAGE>

4.   COMMON STOCK (CONTINUED)

     STOCK OPTION PLANS (CONTINUED)

     Activity in the stock option plans for fiscal 2002, 2001 and 2000 was as
     follows:

<TABLE>
<CAPTION>
                                          2002                          2001                     2000
                                ------------------------      -----------------------     ------------------
                                               WEIGHTED                    Weighted                 Weighted
                                               AVERAGE                     average                   average
                                OPTIONS        EXERCISE       Options      exercise      Options    exercise
                                 (000)          PRICE          (000)        price         (000)      price
                                --------      ---------       --------      ---------    --------  ---------
                                   #             $US             #           $US            #         $US
     <S>                         <C>            <C>            <C>          <C>           <C>        <C>
     Outstanding,
     Beginning of year           1,389           4.53           958           4.15        1,251        4.08
        Granted                    333           3.20           515           5.02          271        5.32
        Exercised                   56           0.67            40           1.27           80        1.49
        Forfeited                  817           5.30            44           5.06          484        5.06


     Outstanding,
        end of year                849           3.52         1,389           4.53          958        4.15
     Options exercisable
        at year end                324                          247                         177
</TABLE>

     The following table summarizes significant ranges of outstanding options
     held by directors, officers, and employees as of July 31, 2002:

<TABLE>
<CAPTION>
                                                    Options outstanding                   Options exercisable
                                            ------------------------------------       -----------------------
                                                       Weighted
                                                       average         Weighted                      Weighted
                                                       remaining        average                       average
                                            Options      life           exercise        Options      exercise
     Range of exercise prices ($US)          (000)      (years)          price           (000)         price
                                            --------  -----------      ---------       ---------    ----------
                                               #                           $               #             $
<S>  <C>                                        <C>        <C>             <C>             <C>          <C>
     < 1.00                                    160         3.97            0.69           160           0.69
     1.00 to 1.99                              159         9.56            1.23             -              -
     3.00 to 3.99                               20         3.97            3.38            20           3.38
     4.00 to 4.99                               48         5.45            4.40            38           4.40
     5.00 to 5.99                              424         8.49            5.07            87           5.19
     6.00 to 6.99                               32         7.11            6.38            15           6.38
     7.00 to 7.99                                6         6.54            7.13             4           7.13
                                            --------  -----------      ---------       ---------    ----------
                                               849         7.50            3.52           324           2.84
                                            ========  ===========      =========       =========    ==========
</TABLE>

                                       -59-
<Page>


5.   INVESTMENT IN AFFILIATED COMPANY

     HITACHI DATA SYSTEMS INC.

     On August 20, 1999, the Corporation sold its 40% investment in Hitachi Data
     Systems Inc. to Hitachi Data Systems Corporation of Santa Clara for
     $7,295,476 in cash.

     The audited financial statements of Hitachi Data Systems Inc., the results
     of operations for the 20-day period ended August 20, 1999 and the
     four-month period ended July 31, 1999, and the carrying value of the
     related investment, accounted for under the equity method, are summarized
     below:

<TABLE>
<CAPTION>
                                                                              March 31,
                                                                                1999
                                                                             ----------
                                                                                  $
<S>                                                                           <C>
Financial position
   Current assets                                                            17,309,867
   Current liabilities                                                       12,120,456
                                                                             ----------

Working capital                                                               5,189,411
Other assets                                                                  6,476,403
                                                                             ----------
                                                                             11,665,814
Other liabilities                                                             4,291,312
                                                                             ----------

Equity                                                                        7,374,502
                                                                             ==========

Results of operations
   Revenue                                                                   51,130,495
   Operating expenses and income taxes                                       48,506,953
                                                                             ----------

Net earnings                                                                  2,623,542
                                                                             ==========
Dividends paid                                                                4,000,000
                                                                             ==========
</TABLE>


<TABLE>
<CAPTION>
                                              20-day period                4-month period
                                                  ended                        ended
                                                August 20,                   July 31,
                                                   1999                         1999
                                              -------------                --------------
                                                                                  $
<S>                                              <C>                         <C>
Results of operations
   Revenue                                       4,372,657                   14,619,371
   Operating expenses and income taxes           3,663,882                   13,944,698
                                              -------------                -------------
Net earnings                                       708,775                      674,673
                                              =============                =============
</TABLE>

<TABLE>
<CAPTION>
                                                                               July 31,
                                                                                 2000
                                                                            ------------
                                                                                   $
<S>                                                                           <C>
Equity earnings for the year                                                    283,510
                                                                            ============
</TABLE>

                                       -60-
<PAGE>

6.   BALANCE OF PURCHASE PRICE

     The balance of purchase price resulted from the acquisition of the Nucleus
     rights. This balance of purchase price was non-interest bearing, repayable
     with annual principal repayments from 2001 to 2004 and reimbursable under
     certain conditions.

     On July 31, 2001 the agreement was modified and the Corporation committed
     to settle the balance of purchase price as follows:

          -    cash in the amount of US$ 350,038 (Can$ 517,300) payable by
               November 15, 2000; and

          -    263,150 shares of common stock issued as of July 31, 2000.

7.   INCOME TAXES

     The Corporation and its subsidiaries have non-capital losses carried
     forward for income tax purposes amounting to approximately $27,181,000
     which may be utilized to reduce taxable income of future years and which
     expire as follows:

                                           $

               2005                         13,000
               2006                        222,000
               2008                      1,321,000
               2009                      2,174,000
               2011                         92,000
               2012                        523,000
               2013                      1,958,000
               2014                      3,563,000
               2015                      3,641,000
               2016                      4,429,000
               2017                      5,945,000
               INDEFINITE                3,300,000

     The Corporation has research and experimental development expenses
     estimated at $8,300,000 for federal tax purposes and $2,378,000 for
     provincial tax purposes which can be carried forward indefinitely against
     its taxable income.

     The Corporation also has non-refundable investment tax credits amounting to
     $2,501,000, which it can apply against its future federal income tax
     payable. This can be carried forward over the next ten years.

     No recognition has been given in the financial statements with regard to
     the potential future tax benefits resulting from the availability of any of
     these items.

                                       -61-
<PAGE>

8.   COMMITMENTS

     LEASE COMMITMENTS

     Minimum lease payments for office premises under non-cancellable operating
     leases for the next five years are as follows:

                                             $

               2003                        565,000
               2004                        418,000
               2005                        376,000
               2006                        376,000
               2007                        376,000

9.   RELATED PARTY TRANSACTION

     One of the Corporation's directors was also the president of Nucleus
     International Corporation, the Company from which the Corporation acquired
     the Nucleus rights.

     The Corporation believes that the related party transaction described above
     was on terms as fair to the Corporation as could have been obtained from
     unaffiliated third parties

10.  SEGMENTED INFORMATION

     The Corporation is considered to have only one business segment.

     The Corporation has two geographic reportable segments commencing with the
     2000 fiscal year. Both the North American and European segments distribute
     a full range of Nucleus Exploration series products, including the Nucleus
     Exploration Mart/Warehouse and the Nucleus Prototype Mart/Warehouse. The
     accounting policies of the segments are the same as described in the
     summary of significant accounting policies. The Company evaluates segment
     performance based on 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>
                                    North America                 Europe
                                    -------------              ------------
<S>                                 <C>                        <C>
2002
Net sales                             4,417,697                  9,504,380
Loss before taxes                   (10,927,783)                (3,884,218)
Identifiable assets                   5,797,886                  9,729,912
                                    -------------              ------------

2001
Net sales                             3,313,856                  7,944,672
Income (loss) before taxes           (8,930,339)                   407,663
Identifiable assets                  21,869,267                  8,063,017
                                    -------------              ------------

2000
Net sales                             2,265,340                  4,629,676
Income (loss) before taxes           (3,352,230)                   485,323
Identifiable assets                   5,639,068                  3,431,693
                                    -------------              ------------
</TABLE>


                                       -62-
<PAGE>

11.  FINANCIAL INSTRUMENTS

     FAIR VALUE

     At July 31, 2002, the estimated fair market value of cash and cash
     equivalents, accounts receivable, loan and accounts payable and accrued
     liabilities is equal to the book value, given the short-term nature of
     these items.

     Short-term investments are recorded at the lower of cost and market value.

     The Corporation does not hold or issue financial instruments for trading
     purposes.

     CREDIT RISK

     Credit risk concentration with respect to trade receivables is limited due
     to the Corporation's large client base.

12.  CHANGES IN NON-CASH OPERATING
     WORKING CAPITAL ITEMS

<TABLE>
<CAPTION>
                                           2002               2001               2000
                                        ----------         ----------         ---------
                                            $                  $                  $
<S>                                      <C>                <C>                <C>
Accounts receivable                     2,098,952          (4,064,082)       (3,536,093)
Due from affiliated company                     -                   -             4,537
Inventories                              (160,507)             (1,683)            4,042
Prepaid expenses                         (174,058)           (276,945)         (102,396)
Accounts payable and
   accrued liabilities                     109,382          1,778,911         1,360,659
                                        ----------         ----------         ---------
Changes in non-cash operating
working capital items                    1,873,769         (2,563,799)       (2,269,251)
                                        ----------         ----------         ---------
                                        ----------         ----------         ---------
</TABLE>


13.  SUBSEQUENT EVENT

     On October 15, 2002, the Corporation announced that its Board of Directors
     has authorized a share repurchase program under which it may repurchase up
     to a maximum of 692,345 of its outstanding Class A common shares from
     October 23, 2002 to October 23, 2003.

14.  COMPARATIVE FIGURES

     Certain figures for prior years have been reclassified in order to conform
     to the presentation adopted in the current year.

                                       -63-
<PAGE>

15.  RECONCILIATION OF CANADIAN AND UNITED STATES
     GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

     The Corporation does not have material differences between Canadian and
     U.S. generally accepted accounting principles.

     COMPREHENSIVE INCOME

     The Corporation has adopted SFAS 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 130. Accordingly,
     a separate statement of comprehensive income has not been presented.

     STOCK-BASED COMPENSATION

     The Corporation accounts for its stock compensation using the intrinsic
     value method prescribed by the Accounting Principles Board Opinion No. 25,
     Accounting for Stock Issued to Employees. U.S. GAAP requires companies that
     follow this method make pro forma disclosures of net income and earnings
     per share, as if the fair value based methodology prescribed by FAS No.
     123, Accounting for Stock Based Compensation, had been applied.

     The Corporation's Share Option Plan, 1996 Stock Option Plan and 1996 Stock
     Incentive Plan govern the granting of options to purchase common shares of
     the corporation to eligible full-time employees, directors and officers of
     the corporation. The purpose of the plans is to advance the interests of
     the corporation and its shareholders by providing to the grantees a
     performance incentive for the continued and improved service with the
     corporation. Options are granted at a price not less than the closing price
     of the corporation's shares on the last trading day immediately before the
     grant. Options granted generally expire in ten years from the date of grant
     and vest at a rate of 20% per annum on the anniversary date of the grant.

     The following table presents net earnings and earnings 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,
     in accordance with FAS 123.

<TABLE>
<CAPTION>
                                              July 31, 2002        July 31, 2001        July 31, 2000
                                                    $                    $                    $
                                              -------------        -------------        -------------
     <S>                                       <C>                  <C>                  <C>
     Net (loss) reported                       (14,812,001)         (8,522,676)           (2,866,907)
     Pro forma compensation benefit
     (expense)                                     301,420            (875,375)              165,293
     Pro forma net (loss)                      (14,510,581)         (9,398,051)           (2,701,614)
     Pro forma basic (loss) per share                (1.10)             (0.778)               (0.303)
                                              -------------        -------------        -------------
</TABLE>


     The Corporation recognized compensation benefit of $301,420 in 2002
     ($165,293 in 2000). The benefit resulted from the reversal of previously
     recorded stock compensation expense on the forfeiture of unexercised
     options. The benefit is reconciled as follows: (1) stock compensation
     expense $597,381 in 2002 ($451,711 in 2000) for employee based stock option
     plans in accordance with FAS 123 and (2) reversal of previously recorded
     stock compensation expense on the forfeiture of unexercised option of
     $898,801 in 2002 ($617,004 in 2000).

                                       -64-
<PAGE>

15.  RECONCILIATION OF CANADIAN AND UNITED STATES
     GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

     FAS 123 requires that pro forma compensation expense be recognized over the
     vesting 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 made for fiscal years 2000,
     1999 and 1998:

<TABLE>
<CAPTION>
                                              July 31, 2002        July 31, 2001        July 31, 2000
                                                    $                    $                    $
                                              -------------        -------------        -------------
     <S>                                            <C>                  <C>                  <C>
     Risk-free interest rate                        4.75%                4.93%               5.90%
     Dividend yield                                    0%                   0%                  0%
     Volatility factor of the expected
     market price of the
     Corporation's common stock                       89%                  81%                 97%
    Term to maturity                              7 years              7 years             7 years
</TABLE>


     NEW STANDARDS

     In October 2001, the FASB issued SFAS No. 144 "Accounting for the
     Impairment or Disposal of Long-Lived Assets" which resolves significant
     implementation issues related to FASB Statement No. 121, Accounting for the
     Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
     Of, and supersedes the accounting and reporting provisions of APB Opinion
     No. 30, Reporting the Results of Operations - Reporting the Effects of
     Disposal of a Segment of a Business, and Extraordinary, Unusual and
     Infrequently Occurring Events and Transactions, for the disposal of a
     business segment. SFAS 144 is effective for fiscal years beginning after
     December 15, 2001, and interim periods within those fiscal years, with
     early application encouraged. The impact of adoption of SFAS 144 on Sand's
     financial position and results of operations is not expected to be
     material.

     In July 2002, the FASB issued SFAS 146, which addresses significant issues
     regarding the recognition, measurement, and reporting of costs that are
     associated with exit and disposal activities, including restructuring
     activities that are currently accounted for pursuant to the guidance that
     the Emerging Issues Task Force ("EITF") has set forth in EITF Issue No.
     94-3," Liability Recognition for Certain Employee Termination Benefits and
     Other Costs to Exit an Activity (Including Certain Costs Incurred in a
     Restructuring)." SFAS 146 revises the accounting for certain lease
     termination costs and employee termination benefits, which are generally
     recognized in connection with restructuring activities.

                                       -65-
<PAGE>

ITEM 19.   EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS

           <S>             <C>
           3.1*            Articles of Incorporation, as amended on December 20,
                           1996 and December 31, 1996

           3.2**           Amendment to Articles of Incorporation dated January
                           1, 2000.

           3.3             By-Laws approved, confirmed and ratified by the
                           shareholders on December 17, 2002.

           10.1***         Sand Technology Systems International Inc. 1996 Stock
                           Option Plan

           10.2****        Sand Technology Systems International Inc. 1998 Stock
                           Option Plan

           10.3**          Common Share Purchase Agreement dated May 26, 2000
                           between Registrant and Sundowner Investments Limited

           10.4**          Registration Rights Agreement dated May 26, 2000
                           between Registrant and Sundowner Investments Limited

           10.5**          Common Shares and Warrants Purchase Agreement dated
                           May 24, 2000 between the Registrant and AMRO
                           International, S.A.

           10.6**          Amendment to Common Share Purchase Agreement dated
                           June 26, 2000 between the Registrant and Sundowner
                           Investments Limited

           10.7*****       Agreement dated July 31, 2000 between the Registrant
                           and Nucleus International Corporation

           10.8******      Heads of Agreement dated November 6, 2000 between the
                           Registrant, Ladenburg Thalmann & Co. Inc., Sundowner
                           Investments Limited and AMRO International S.A.

           10.9******      Purchase Agreement dated November 22, 2000 with
                           Sprott Securities Inc.

           10.10******     Escrow Agreement dated November 22, 2000 among the
                           Registrant, Sprott Securities and Aird & Berlis

           10.11******     Escrow Agreement dated November 28, 2000 among the
                           Registrant, Sprott Securities and Aird & Berlis

           11.1            Statement detailing computation of per share earnings
</TABLE>


                                      -66-
<PAGE>

<TABLE>
<CAPTION>
EXHIBITS (cont'd)

           <S>             <C>
           21.1            Subsidiaries

           23              Consent of Deloitte & Touche

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

           99.2            Certification of Periodic Financial Report Pursuant
                           to Section 906 of the Sarbanes-Oxley Act of 2002,
                           U.S.C. Section 1350
-----------------------------
</TABLE>

*          Incorporated by reference from the Registrant's Form 20-F Annual
           Report for the fiscal year ending July 31, 1996.

**         Incorporated by reference from Amendment No. 1 to the Registrant's
           Form F-2 Registration Statement (333-12216) filed on August 18, 2000.

***        Incorporated by reference from the Registrant's Form S-8 Registration
           Statement (333-7462).

****       Incorporated by reference from the Registrant's Form S-8 Registration
           Statement (333-8538).

*****      Incorporated by reference from the Registrant's Form 20-F Annual
           Report for the fiscal year ending July 31, 2000.

******     Incorporated by reference from the Registrant's Form F-3 Registration
           Statement (333-51014).


                                      -67-
<PAGE>

                                   SIGNATURES


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



                                            SAND TECHNOLOGY INC.





                                            /s/ Arthur G. Ritchie
                                            ------------------------------
January 29 , 2003                           Arthur G. Ritchie
                                            Chairman of the Board,
                                            President and Chief Executive
                                            Officer


                                      -68-
<PAGE>

                                 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 of Sand Technology Inc.;

2)   Based on my knowledge, this annual report does not contain any untrue
     statements 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 annual report;

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

4)   Sand Technology Inc.'s other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for Sand Technology Inc. and have:

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

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5)   Sand Technology Inc.'s other certifying officers and I have disclosed,
     based on our most recent evaluation, to the registrant's auditors and the
     audit committee of registrant's board of directors (or persons performing
     the equivalent function):

     a)  All significant deficiencies in the design or operation of internal
         controls which could adversely affect Sand Technology Inc.'s ability to
         record, process, summarize and report financial data and have
         identified for Sand Technology Inc.'s auditors any material weaknesses
         in internal controls; and


                                      -69-
<PAGE>

     b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in Sand Technology Inc.'s
         internal controls; and

6)   Sand Technology Inc.'s other certifying officers and I have indicated in
     this annual report whether or not there were significant changes in
     internal controls or in other factors that could significantly affect
     internal controls subsequent to the date of our most recent evaluation,
     including any corrective actions with regard to significant deficiencies
     and material weaknesses.

January 29, 2003.


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


                                      -70-
<PAGE>

                                 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 of Sand Technology Inc.;

2)   Based on my knowledge, this annual report does not contain any untrue
     statements 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 annual report;

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

4)   Sand Technology Inc.'s other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for Sand Technology Inc. and have:

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

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5)   Sand Technology Inc.'s other certifying officers and I have disclosed,
     based on our most recent evaluation, to the registrant's auditors and the
     audit committee of registrant's board of directors (or persons performing
     the equivalent function):

     a)  All significant deficiencies in the design or operation of internal
         controls which could adversely affect Sand Technology Inc.'s ability to
         record, process, summarize and report financial data and have
         identified for Sand Technology Inc.'s auditors any material weaknesses
         in internal controls; and

     b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in Sand Technology Inc.'s
         internal controls; and


                                      -71-
<PAGE>

6)   Sand Technology Inc.'s other certifying officers and I have indicated in
     this annual report whether or not there were significant changes in
     internal controls or in other factors that could significantly affect
     internal controls subsequent to the date of our most recent evaluation,
     including any corrective actions with regard to significant deficiencies
     and material weaknesses.

January 29, 2003.


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


                                      -72-