Micromem Technologies Inc. - Exhibit 99.4 - Filed by newsfilecorp.com
| MICROMEM TECHNOLOGIES INC. |
| MANAGEMENT’S DISCUSSION AND ANALYSIS |
| FOR THE 3 MONTHS ENDED JULY 31, 2012 |
| PREPARED AS OF SEPTEMBER 28, 2012 |
| |
INTRODUCTION
The following sets out the Management's Discussion and Analysis
("MD&A") of the financial position and result of operations for the 3 months
ended July 31, 2012 of Micromem Technologies Inc. (the "Company", "Micromem" or
"we"). The MD&A should be read in conjunction with the Company's audited
consolidated financial statements and accompanying notes for the year ended
October 31, 2011 which are prepared in accordance with International Financial
Reporting Standards (IFRS). All financial analysis, data and information set out
in this MD&A are unaudited. Additional information regarding the Company is
available on the SEDAR website at www.sedar.com.
Certain information provided by the Company in this MD&A
and in other documents publicly filed throughout the year that are not
recitation of historical facts may constitute forward-looking statements. The
words "may", "would", "could", "will", "likely", "estimate", "believe",
"expect", "forecast" and similar expressions are intended to identify
forward-looking statements.
Readers are cautioned that such statements are only predictions
and the actual events or results may differ materially. In evaluating such
forward-looking statements, readers should specifically consider the various
factors that could cause actual events or results to differ materially from
those indicated by such forward-looking statements.
FORWARD LOOKING STATEMENTS
This MD&A contains forward-looking statements and forward
looking information within the meaning of applicable Canadian securities
legislation (“forward looking statements”). Any statements that express or
involve discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions, potentials, future events or performance
(often, but not always, using words or phrases such as “believes”, “expects” or
“does not expect”, “is expected”, “anticipates” or “does not anticipate”, or
“intends” or stating that certain actions, events or results “may”, “could”,
“would”, “might” or “will” be taken or achieved) are not statements of
historical fact, but are “forward-looking statements”. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company, or
developments in the Company’s business or in its industry, to differ materially
from the anticipated results, performance, achievements or developments
expressed or implied by such forward-looking statements. Forward-looking
statements include disclosure regarding possible events, conditions or results
of operations that are based on assumptions about future conditions, courses of
action and consequences. Forward-looking statements may also include, without
limitation, any statement relating to future events, conditions or
circumstances. The Company cautions you not to place undue reliance upon any
such forward-looking statements, which speak only as of the date they are made.
Forward-looking statements relate to, among other things, the successful
commercialization of our technology, comments about potential future revenues,
joint development agreements and expectations of signed contracts with customers
etc. A variety of inherent risks, uncertainties and factors, many of which are
beyond the Company’s control, affect the operations, performance and results of the Company and its
business, and could cause actual results to differ materially from current
expectations of estimated or anticipated events or results. Some of these risks
and uncertainties include the risk of not securing required capital in future,
the risks of not successfully concluding agreements with potential partners on a
timely basis, the risks associated with commercializing and bringing to market
our technology. These risks are affected by numerous factors beyond the
Company's control: the existence of present and possible future government
regulation, the significant and increasing competition that exists in the
Company's business sector, uncertainty of revenues, markets and profitability,
as well as those other factors discussed in this MD&A report. This list is
not exhaustive of the factors that may affect any of the Company’s
forward-looking statements and reference should also be made to the Company’s
Annual Information Form (prepared and filed in the form of a Form 20-F Annual
Report pursuant to The Securities Exchange Act of 1934) for a description of
additional risk factors.
1
Although the Company has attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward–looking
statements. The Company does not undertake to update any forward-looking
statements that are incorporated by reference herein, except in accordance with
applicable securities law.
************************************************
2
| MICROMEM TECHNOLOGIES INC. |
| MANAGEMENT’S DISCUSSION AND ANALYSIS |
| FOR THE 3 MONTHS ENDED JULY 31, 2012 |
| PREPARED AS OF SEPTEMBER 28, 2012 |
| (Unless other indicated dollar amounts reported are
stated in U.S. dollars) |
| |
TABLE OF CONTENTS:
Refer also to attached Tables 1-4 as supplementary
information.
*************************
3
| MICROMEM TECHNOLOGIES INC. |
| MANAGEMENT’S DISCUSSION AND ANALYSIS |
| FOR THE 3 MONTHS ENDED JULY 31, 2012 |
| PREPARED AS
OF SEPTEMBER 28, 2012 |
1. OVERVIEW
Micromem Technologies Inc. (“Micromem” or “the Company”) is a
company that has developed proprietary MRAM technology for both memory and
sensor applications. The Company’s shares are traded on the NASDAQ over the
counter Bulletin Board (OTCBB) under the symbol MMTIF and on the CNSX under the
symbol MRM. In 2007, the Company incorporated Micromem Applied Sensor
Technologies Inc. (“MAST”) for the purpose of moving forward with the planned
commercialization of its technology.
Reference should be made to the MD&A documentation filed as
of October 31, 2011 for a chronology of the Company’s activities and
developments between 2005-2010 and for a review of the highlights for the fiscal
year ended October 31, 2011.
2. HIGHLIGHTS – 3 MONTHS ENDED July 31, 2012
During the quarter ended July 31, 2012:
| |
(a) |
The Company raised total financing of $828,762 through a
number of Unit private placement financings, from the exercise of common
share warrants and from the conversion of debt to common shares. |
| |
|
|
| |
(b) |
The Company issued several technical updates/releases on
the status of its various projects that are under development and on
certain product prototype testing that was completed
successfully. |
| |
|
|
| |
(c) |
The Company continues to develop and build a substantial
pipeline of development opportunities that it anticipates will translate
into additional development contracts in future licensing and sales
opportunities. |
| |
|
|
| |
(d) |
The Company has successfully completed its transition to
International Financials Reporting Standards (IFRS) reporting and is
filing the current quarter financial statements under these new reporting
standards. It has restated its previously reported financial information
for the relevant reporting periods in this report to conform with the IFRS
presentation. |
| |
|
|
| |
(e) |
The Company began the process of securing the sponsorship
of an investment banking firm to apply for listing on the TSX Venture
Exchange. |
| |
|
|
| |
(f) |
The Company relocated its head office in June 2012 to 121
Richmond Street West, Suite 304 located in downtown Toronto. It signed a
favorable 5 year lease for these premises. |
4
3. GOING CONCERN
These consolidated financial statements have been prepared on
the “going concern” basis, which presumes that the Company will be able to
realize its assets and discharge its liabilities in the normal course of
business for the foreseeable future.
There are material uncertainties related to adverse conditions
and events that cast significant doubt about the Company’s ability to continue
as a going concern for a reasonable period of time in future. During the quarter
ended July 31, 2012, the Company reported a loss from operations of $586,312
(2011- loss from operations of $241,554). As of that date, the Company has an
accumulated deficit of $83,045,675 (2011: $77,215,372), a working capital
deficiency (for this purpose defined as current assets less current liabilities
excluding the reported derivative warrant liability) of $853,019 (2011:
$1,465,803)
The Company will focus its development effort on existing
projects in order to develop commercial applications for these projects and will
continue to raise financing for operations as outlined in the notes to the
financial statements at July 31, 2012.
It will be necessary for the Company to raise additional funds
for the continued development, testing and commercial exploitation of its
technologies. To date, the Company has raised financing through successive unit
private placements, through the exercise of common share stock options and
through the exercise of common share purchase warrants. It has also secured
periodic term loans.
In the ensuing fiscal year, the Company anticipates that (i) it
will realize initial revenues from commercialization efforts with current
strategic development partners, (ii) it will monitor the timing of incurring
additional expenses in keeping with its ongoing working capital position, and
(iii) it will continue to secure financing in the same manner in which it has
raised financing to date.
The consolidated financial statements have been prepared on a
going concern basis and do not include any adjustments to the amounts and
classifications of the assets and liabilities that might be necessary should the
Company be unable to continue in business. If the “going concern” assumption
were not appropriate for these consolidated financial statements then
adjustments would be necessary to the carrying value of assets and liabilities,
the reported expenses and the balance sheet classifications used. Such
adjustments may be material.
5
4. SELECT FINANCIAL INFORMATION AND
DISCLOSURES
(a) Financial Position at July 31,
2012:
The following table sets out select unaudited financial
information as at July 31, 2012 and for the 3 months then ended prepared under
IFRS reporting standards.
|
Quarter ended
July 31, 2012
(unaudited) |
Quarter ended
July 31, 2011
(unaudited) |
| Interest and other income |
- |
585 |
| Total expenses |
586,312 |
305,700 |
| Stock compensation expense |
- |
(64,146) |
| Loss from operations |
(586,312) |
(240,969) |
| Warranty liability |
75,736 |
- |
| Exchange gain (loss) |
3,497 |
4,379 |
| Income taxes |
|
(1,205) |
| Net comprehensive loss |
(507,079) |
(237,795) |
| Loss per share and diluted loss per share |
(0.00) |
(0.00) |
| Weighted average number of shares outstanding
|
125,684,658 |
104,877,124 |
| Total assets |
850,064 |
717,188 |
| Cash and cash equivalents |
15,481 |
32,248 |
| Working capital (excludes warrant liability)
|
(853,019) |
(1,465,803) |
| Shareholders equity (deficiency) |
(2,283,253) |
(831,363) |
At July 31, 2012 the Company has:
| |
a) |
10,105,000 stock options outstanding which expire, if
unexercised, between 2012- 2017. The average exercise price of these
options is $0.25 per option. |
| |
|
|
| |
b) |
26,589,041 common share purchase warrants which expire
throughout 2013 if unexercised. The average exercise price of these
warrants is $0.23. |
Refer also to Tables 1 and 2 which are appended to this
MD&A. Table 1 sets forth selected information from the consolidated
statements of operations and deficit for the fiscal years ending October 31,
2010-2011 and for the related quarterly information through July 31, 2012. Table
2 sets forth selected information from the consolidated balance sheets for the
fiscal years ending October 31, 2010-2011 and the related quarterly information
through July 31, 2012.
6
(b) Discussion of Operating Results:
The following table summarizes the Company’s operating results
for the 3 months ended July 31, 2012,2011 and 2010.
Discussion of operating
Results
| |
Quarters ended July 31, |
|
2012
($000) |
2011
($000) |
2010
($000) |
| Interest and other income |
- |
1 |
5 |
| General and administration |
181 |
85 |
95 |
| Professional fees and salaries |
353 |
298 |
374 |
| Stock-based compensation |
- |
(64)
|
- |
| Research |
1 |
(68)
|
- |
| Travel and entertainment |
40 |
33 |
36 |
| Foregn exchange (gain) loss |
5 |
(4) |
(1) |
| Amortization of property and equipment |
1 |
2 |
2 |
| Amortization of Intangible assets |
5 |
-
|
- |
| Impairment of deferred development costs |
- |
-
|
1437 |
| Interest and other income |
|
|
|
| Recovery of promissory note |
- |
(60)
|
- |
| Total expenses |
586 |
223 |
1943 |
| Warrant liability (recovery) |
(76) |
-
|
- |
| Exchange gain (loss) |
(3) |
15 |
- |
| Income taxes |
- |
1 |
- |
| Net comprehensive loss |
507 |
238 |
1,938 |
| Loss per share |
- |
-
|
(0.02) |
Interest and other income: The Company remains as a
pre-revenue company at July 31, 2012. It reported nil interest revenue in 2012
and a modest amount in 2011 relating to interest earned on outstanding cash
balances.
Promissory note: The promissory note from Unotron has
been fully reserved. In the quarter ended July 31, 2012, the Company booked and
reserved approximately $16,000 of interest charged on the outstanding balance
due (in 2011 it recovered $60,000 on the promissory note which it had fully
reserved at the prior year end). At July 31, 2012, the outstanding balance which
is fully reserved and which remains due from Unotron is $127,554. The Company
issued a demand notice to collect the outstanding balance and has received
judgment in its favor as of July 31, 2012. It continues to pursue collection of
the fully reserved balance. Subsequent to July 31, 2012, it received $30,000 of
payments on account from Unotron.
7
Warrant liability: The Company, under IFRS, has
calculated and reports a warrant liability charge of $(75,736) relating to the
common share purchase warrants issued in Canadian dollars during the quarter.
This is further discussed in Section 7 below.
Operating expenses: General and administration expenses
and professional fees and salaries have increased in the quarter ended July 31,
2012 versus the comparable period in 2011 as further detailed later in this
report. In 2011, the Company recorded a recovery of $64,146 relating to the
modification of warrants which was reflected in Q1 2011 as an expense instead of
as a charge to retained earnings.
Deferred development costs: The Company capitalized
$36,365 of deferred development costs in the quarter ended July 31, 2012
relating to various different projects. In the quarter ended April 30, 2012, it
reported a net recovery of $216,302 of costs previously capitalized. These
represented third party invoices originally recorded to deferred development
costs which were reversed in Q2. Accordingly, the Company reports a net recovery
of $81,554 of capitalized costs for the nine month period through July 31, 2012
(2011: expenditures of $206,694).
Current projects under development: An update on
projects previously reported in our MD&A documentation and in our periodic
press releases is as follows:
Progress on Current Contracts in House
| |
1. |
Nanoparticle Concentration Application: We
received a formal change of scope from our client, a major international
oil company, expanding our work scope from initially requiring us to only
detect magnetic nanoparticles at extremely low concentrations in oil, to
now requiring us to detect and measure the actual concentration in the
stream. The revised beta version of our product development is in final
test and will be shipped to the client in Q412. There is a revenue
milestone payment attached to this delivery. |
| |
|
|
| |
2. |
NEMT Aerial Exploration Platform: All
field-testing on the proof of concept was completed this summer. We are
now in the process of formal commercialization of this application and
have begun discussion with a third party, outside of NEMT, who will
license and market the product development for MAST. |
| |
|
|
| |
3. |
Breast Aware Technology: We are in the
process of consummating a product commercialization and production
agreement with a European country that will roll this product out to
various regional constituents. |
| |
|
|
| |
4. |
Oil Condition Sensor: We received a formal
purchase order from a major automotive company to demonstrate our MEMS
based sensor platform capable of measuring automotive oil condition along
with oil pan level. Our engine oil loop lab bench setup has been assembled
and our client will be receiving process data during October. Once the
client approves our prototype sensor, our plans are to design, fabricate a
MEMS chip that will fit within an oil pan plug on. |
8
| |
5. |
GSI Westwind: Our prototype product
development contract is complete. We have released our product to routine
production and will begin delivering volume based within 8
weeks. |
Business development Updates
| |
1. |
Proposal Pipeline: Our new business
proposal pipeline remains robust and is growing in value. It is currently
at $75.8 M USD. |
| |
|
|
| |
2. |
Oil Exploration Company: We are negotiating
with a global oil exploration company for the development and
productization of a cement integrity sensor. This nano-sized sensor will
be pumped with cement into the bore annulus of undersea oil wells and will
be used to report for many years on the integrity of the cement lining of
the oil well. This project is scheduled to kick off in late
Q412. |
| |
|
|
| |
3. |
Global Power Distribution Company: We are
in the final stage of negotiation with a multi-national high power
transmission and distribution company. We are providing a customized
sensor platform that will be used to detect imminent failure of a section
of transmission line as a result of line sagging. MAST has demonstrated to
the client our patented orthogonal Time Domain Reflectometry sensor
platform that can detect line sagging as small as 10 cm on 1-4 km line
segments. We expect to begin work in late Q412. |
| |
|
|
| |
4. |
Japanese High Performance Urban Infrastructure and
Environmental Products Company: We have been selected for the
final round of technology evaluation for being able to power residences
wirelessly. Our solution leverages our patented sensor base and will help
to significantly reduce the cost of home construction. |
| |
|
|
| |
5. |
Miniature Hall Sensors: We are in the final
stages of technology evaluation for a global manufacturer that has a
requirement for extremely small Hall sensors. MAST’s Hal sensor is already
smaller than their requirement. We have led the competitive testing so far
through the evaluation. A decision to move forward is expected in 2012.
Annual production volume is estimated to begin at 8-10 million
units. |
| |
|
|
| |
6. |
World Leader in Industrial Automation Equipment and
Electronic Component Business: MAST has been chosen to produce a
prototype of what will be the world’s smallest current sensor device. This
MAST product will ultimately be designed and manufactured in a MEMS format
and will have the capability to communicate remotely. Work is anticipated
to begin in Q412. |
| |
|
|
| |
7. |
Remote Medical Monitoring of Aged Patients:
MAST submitted a proposal to a global medical company for
innovative ideas on how to monitor our aging population, particularly
those that are suffering from some form of medical condition. Our proposal
has made it through the first 2 of 3 rounds of technology evaluation. This
work is scheduled to begin in Q113. |
| |
|
|
| |
8. |
Global Pharmaceutical Company: Our
technology has been selected for final evaluation with this company. We
proposed an extremely accurate weighing system that is capable of
accurately measuring 500 nanograms and making over
1 million routine measurements per year. The contract is
scheduled to close in Q412. |
9
| |
9. |
DARPA: MAST submitted a design and build
proposal to the US government for a Non-invasive electromagnetic
encephalogram. This would be a wearable that veterans who have prosthetics
would wear. The intent is to capture the brain wave and use them to
effectively manipulate the prosthetics. |
| |
|
|
| |
10. |
Department of Defense: MAST’s technology
was selected by the DOD for standoff sensor that can detect disturbed
ground. The contract has been put on hold pending the US election and a
determination of available funds as a result of budget
sequestration. |
| |
|
|
| |
11. |
Major Global Automotive Manufacturer: MAST
submitted a technology proposal for improvements in driver visibility
during periods of rain, fog and other bad weather. Our proposal for using
UV LIDAR with a combination sonar and radar was selected for final round
technology evaluation. This project is scheduled to begin in March
2013. |
Management has satisfied itself that the projects to which
deferred development costs are reported meet the criteria for deferral and
management expects that it will realize future revenues against each of these
projects sufficient to justify the recurring values reported.
A summary of the continuity of the projects under development
and the costs incurred by project for the quarters ended July 31, 2011 and 2012
are as presented below.
| |
|
|
|
|
|
|
|
Impairment |
|
|
|
|
| Projects |
|
10/31/2010 |
|
|
Additions |
|
|
reserve |
|
|
7/31/2011 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Project A |
$ |
1 |
|
|
- |
|
$ |
- |
|
$ |
1 |
|
| Project B |
|
1 |
|
|
- |
|
|
- |
|
|
1 |
|
| Project C |
|
1 |
|
|
17,721 |
|
|
- |
|
|
17,722 |
|
| Project D |
|
1 |
|
|
- |
|
|
- |
|
|
1 |
|
| Project E |
|
146,604 |
|
|
22,564 |
|
|
- |
|
|
169,168 |
|
| Project F |
|
1 |
|
|
- |
|
|
- |
|
|
1 |
|
| Project G |
|
1 |
|
|
141,200 |
|
|
- |
|
|
141,201 |
|
| Project H |
|
1 |
|
|
- |
|
|
- |
|
|
1 |
|
| Project I |
|
74,908 |
|
|
46,429 |
|
|
- |
|
|
121,337 |
|
| Project J |
|
1 |
|
|
- |
|
|
- |
|
|
1 |
|
| Project K |
|
1 |
|
|
202 |
|
|
- |
|
|
203 |
|
| Project L |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
$ |
221,521 |
|
$ |
228,116 |
|
$ |
- |
|
$ |
449,637 |
|
10
| |
|
|
|
|
Net |
|
|
|
|
| |
|
|
|
|
Additions/ |
|
|
|
|
| Projects |
|
10/31/2011 |
|
|
Recoveries |
|
|
7/31/2012 |
|
| |
|
|
|
|
|
|
|
|
|
| Project A |
$ |
1 |
|
$ |
- |
|
$ |
1 |
|
| Project B |
|
1 |
|
|
- |
|
|
1 |
|
| Project C |
|
15,001 |
|
|
867 |
|
|
15,868 |
|
| Project D |
|
1 |
|
|
- |
|
|
1 |
|
| Project E |
|
176,604 |
|
|
3,270 |
|
|
179,874 |
|
| Project F |
|
1 |
|
|
- |
|
|
1 |
|
| Project G |
|
141,201 |
|
|
(141,200 |
) |
|
1 |
|
| Project H |
|
1 |
|
|
- |
|
|
1 |
|
| Project I |
|
296,633 |
|
|
27,988 |
|
|
324,621 |
|
| Project J |
|
1 |
|
|
- |
|
|
1 |
|
| Project K |
|
17,161 |
|
|
23,882 |
|
|
41,043 |
|
| Project L |
|
- |
|
|
13,044 |
|
|
13,044 |
|
| |
|
|
|
|
|
|
|
|
|
| |
$ |
646,606 |
|
$ |
(72,149 |
) |
$ |
574,457 |
|
Quarterly general and administrative related expenses
compare as follows ($000)
| |
2012 |
2011 |
2010 |
| Investor relations |
- |
- |
- |
| Reserve, doubtful accounts |
6 |
(4) |
- |
| Telephone |
2 |
3 |
5 |
| Insurance |
16 |
20 |
22 |
| Rent |
16 |
- |
- |
| Interest |
33 |
28 |
29 |
| Exchange gain/loss |
- |
- |
5 |
| MAST |
9 |
8 |
9 |
| Sponsorship |
73 |
- |
- |
| Moving expenses |
8 |
- |
- |
| All other |
18 |
30 |
25 |
| |
181 |
85 |
95 |
In the quarter ended July 31, 2012, the Company initiated the
process of applying for a TSX Venture Exchange listing. It incurred
approximately $73,000 in sponsorship related costs in the quarter.
11
Quarterly professional, other fees and salaries related
expenses compare as follows($000)
| |
2012 |
2011 |
2010 |
| Audit and related services |
42 |
32 |
32 |
| Legal -patent |
- |
- |
- |
| Legal -other |
7 |
1 |
2 |
| President, MAST |
58 |
45 |
- |
| Salaries and benefits |
108 |
91 |
132 |
| Management fees |
113 |
119 |
110 |
| Other |
25 |
10 |
33 |
| |
353 |
298 |
309 |
In the quarter ended July 31, 2012 the Company paid the
President of MAST an additional $13,241 of compensation beyond the minimum
amounts stipulated in the compensation plan in effect (refer to section 14). In
2010, his compensation was reported in deferred development costs.
Quarterly Travel related expenses compare as follows
($000)
| |
2012 |
2011 |
2010 |
| Travel: |
|
|
|
|
|
|
|
|
| Airfare |
19 |
23 |
15 |
| Hotel |
7 |
4 |
6 |
| Meals |
9 |
2 |
3 |
| Transportation |
5 |
4 |
12 |
|
|
|
|
|
| |
40 |
33 |
36 |
12
C) Unaudited Quarterly Financial Information -
Summary
Unaudited Quarterly Financial
Information - Summary
Three months ended
(unaudited) |
Interest and
other income
$ |
Expenses
|
Loss in
period $ |
Loss per
share $ |
| April 30, 2010 |
5,009 |
531,769 |
(526,760) |
(0.01) |
| July 31, 2010 |
5,000 |
1,942,819 |
(1,937,819) |
(0.02) |
| October 31, 2010 |
7,778 |
1,811,661 |
(1,803,883) |
(0.02) |
| January 31, 2011 |
339 |
580,107 |
(579,768) |
(0.01) |
| April 30, 2011 |
39 |
507,264 |
(507,225) |
(0.01) |
| July 31, 2011 |
585 |
241,554 |
(237,795) |
- |
| October 31, 2011 |
- |
1,248,756 |
(683,021) |
(0.01) |
| January 31, 2012 |
- |
444,303 |
(24,327) |
- |
| April 30, 2012 |
- |
1,014,520 |
(2,849,835) |
(0.02) |
| July 31, 2012 |
- |
586,312 |
(507,079) |
- |
Refer also to Tables 1 and 2 for summarized quarterly
information.
5. LIQUIDITY AND CAPITAL RESOURCES
Liquidity:
Table 3 provides a summary of the financing that was
raised during the 2009-2011 fiscal years and for the current year to date
through July 31, 2012.
We currently have no cash flow from operations and will have
none until we are in a position to either license or directly produce and sell
products utilizing our technologies. As at July 31, 2012, our working capital
deficiency (excluding derivative warrant liability) was $853,019 (2011:
$1,465,803).
We currently have no lines of credit in place. We must obtain
financing from new investors or from investors who currently hold outstanding
options and warrants in order to meet our cash flow needs until we generate
revenues.
We have granted to our directors, officers and other employees
options to purchase shares at prices that are at or above market price on the
date of grant. A summary of the outstanding options and warrants is provided in
Table 4.
Capital Resources:
We have no commitments for capital expenditures as of July 31,
2012.
13
6. RISKS AND UNCERTAINTIES OVERVIEW
There are a number of material risks which may individually or
in the aggregate effect the long-term commercial success of the Company, both
known and unknown. An investment in the Company should be considered highly
speculative due to the nature of the Company’s activities and its current stage
of development:
Stage of Development of Technology:
The Company has made significant strides in developing its
prototype products over the past several years in its attempt to commercialize
its products with its various strategic development partners. Nonetheless, the
Company at this stage has not completed such efforts to the point that it has
product available for sale and their remains uncertainties as to the Company’s
ultimate ability to complete the development of a product that is saleable.
Customers’ Willingness to Purchase:
We have entered into multiple joint development agreements
whereby our prototype products are being subjected to rigorous testing by our
partners. We have not as yet received unequivocal and firm purchase orders for
our product. Some of the joint development partners that we are dealing with are
private companies and there is a potential risk of those companies having to
secure all of their requisite financing to support their orders and their
working capital requirement.
Patent Portfolio:
The Company has spent a considerable amount of time, effort and
incurred significant costs with respect to the maintenance and development of
our intellectual property portfolio. However, given the nature of IP
development, the Company is subject to continuing risks that our patents could
be successfully challenged, that our patent pending files may not ultimately be
granted full patent status. While we continue to make specific efforts to
broaden our IP claims, this is an ongoing process and requires continued effort
and vigilance. The Company does not have extensive in-house resources so as to
manage its IP portfolio in this environment and has traditionally relied heavily
on its patent attorneys for these services. In October 2010, the Company’s
working relationship with its patent attorneys, Morgan Lewis, was discontinued.
The Company has secured an alternative service provider. In the fourth quarter
of 2011, the Company wrote-down the value of patent asset by $129,033 which
relates to older technology which the Company has no immediate plans to further
develop.
Financing:
The Company has successfully raised funding over the past
several years to continue to support its development initiatives and fund the
Company’s corporate structure and overheads. The financing environment for early
stage technology companies remains challenging and there is no certainty that
the Company will be able to continue to raise financing as it has in the past to
continue to support its business initiatives.
14
Competitors:
The Company is subject to competition from other larger
entities who have greater financial resources and more in-house technical
expertise.
Management Structure:
The Company is highly dependent on the services of a small
number of senior management team members. If one of these individuals were
unavailable, the Company could encounter difficult transition processes.
Foreign Currency Exposure:
The Company expects to sell its products and license
technologies in the United States, in Canada and abroad. The Company has not
hedged its foreign currency exposure, which has not been significant to date. In
future, foreign currency fluctuations could present a risk to the business.
7. CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are set forth in Note 4 to
our consolidated financial statements and should be read in conjunction with
management’s discussion of the Company’s critical accounting policies and
estimates as set forth below.
IFRS:
IFRS reporting has been adopted effective November 1, 2010.
The accounting policies disclosed in Note 4 have been applied
in preparing the financial statements for the quarter ended July 31, 2012, the
comparative information presented in these financial statements as at October
31, 2011 and for the year then ended, as at April 30, 2012 and for the three
months ended and in the preparation of the opening IFRS statement of financial
position at November 1, 2010 (the Company’s date of transition).
In preparing the opening IFRS statement of financial position,
the Company has adjusted amounts reported previously in financial statements
prepared in accordance with previous Canadian GAAP. These adjustments relate
to:
| |
(a) |
The accounting and measurement of warrant liability with
respect to common share purchase warrants issued in conjunction with Unit
private placement financings which the Company has secured, which are
denominated in Canadian dollars. |
| |
|
|
| |
(b) |
The accounting and measurement of the conversion feature
of the bridge loans which the Company has secured. |
| |
|
|
| |
(c) |
The presentation of foreign currency transaction
adjustments with respect to those entities included in the consolidated
financial statements where the functional currency for such entities is
different from the Company’s reporting currency. In these cases, the foreign
currency translation adjustment is reported in Other Comprehensive Income
(“OCI”). |
15
The illustration of how the transition from previous Canadian
GAAP to IFRS has affected the Company’s financial position, financial
performance and cash flows is set out in Note 6 to the financial statements as
of July 31, 2012.
Compound Financial Instruments:
Compound financial instruments issued by the Company comprise
convertible notes that can be converted to share capital at the option of the
holder and the number of shares to be issued does not vary with changes in their
fair value.
The liability component of a compound financial instrument is
recognized initially at the fair value of a similar liability that does not have
an equity conversion option. The equity component is recognized initially as the
difference between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts. Subsequent to initial recognition,
the liability component of a compound financial instrument is measured at
amortized cost using the effective interest rate method. The equity component of
a compound financial instrument is not remeasured subsequent to initial
recognition.
Interest, dividends, losses and gains relating to the financial
liability are recognized in profit or loss except for borrowing costs on
qualifying assets which are added to asset cost. Distributions to the equity
holders are recognized in equity, net of any tax effect.
Comprehensive Income:
Comprehensive income consists of net income and OCI.
Comprehensive income is defined as the change in equity from transactions and
other events from non-owner sources. OCI refers to items recognized in
comprehensive income but that are excluded from net income calculated in
accordance with generally accepted accounting principles.
Foreign Currency Translation:
The functional and reporting currency of the Company’s
wholly-owned foreign subsidiaries is the United States dollar. These entities
are integrated foreign operations. Monetary assets and liabilities are
translated into United States dollars at the rate of exchange in effect at the
consolidated balance sheet dates and non-monetary assets and liabilities are
translated at historical rates. Income and expenses are translated using the
three month average rate of exchange per quarter, which rate approximates the
rate of exchange prevailing at the transaction dates. Gains or losses resulting
from translation are included in the determination of net loss for the period.
The functional currency of Micromem and of its wholly-owned
subsidiary, 7070159 Canada Inc. is the Canadian dollar. The Company translates
monetary assets and liabilities at the rate of exchange in effect at the end of
date of the reporting period and non-monetary assets and liabilities at
historical rates. Exchange gains and losses which arise on the settlement of
foreign currency denominated transactions and foreign currency differences
arising on translation are recognized in OCI.
16
Research and Development Expenses:
Research costs are expensed in the period incurred. Development
expenses are expensed as incurred unless they meet the criteria for deferral and
amortization under IFRS which is the translation of research findings or other
knowledge into a plan for the technology prior to commercial production or use.
Patents:
Patents are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. When
circumstances dictate, an impairment loss is calculated as equal to the excess
of the carrying value of the assets over their undiscounted estimated future net
cash flow. The Company amortizes based on our estimated useful life for patents
of 5 years. In the quarter ended October 31, 2011, the Company wrote-down the
value of its patents by $129,033 which relates to older technology which the
Company has no immediate plans to further develop.
Intangible Assets:
Intangible assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. When circumstances dictate, an impairment loss is calculated as
equal to the excess of the carrying value of the assets over their undiscounted
estimated future net cash flow. During the fiscal year ended October 31, 2011,
the Company determined that it met the criteria for capitalizing development
costs related to the general sensor technology the Company is pursuing and
reports $120,951 of such costs as intangible assets at July 31, 2012.
Amortization is provided on a 7 year straight-line basis.
Stock-Based Compensation:
Stock-based compensation is recognized using the fair value
method. Under this method, the Black Scholes option-pricing model is used to
determine periodic stock option expense. Any compensatory benefit recorded is
recognized initially as deferred share compensation in the consolidated
statements of shareholders’ equity and then charged against income over the
contractual or vesting period.
As stock options are exercised, the Company records a charge to
contributed surplus and a credit to share capital. The amount reported in each
case is based on the original expense recorded when the related options were
granted.
Unit Private Placements:
Until October 31, 2011, the Company had adopted the relative
fair value approach in accounts for the value assigned to the common shares and
the warrants which it had made available in the Unit private placement
financings that it secured, calculated in accordance with the Black Scholes
option pricing model.
17
Under IFRS:
| |
(i) |
The Company has adopted the residual value approach in
accounting for the value assigned to the common shares and the warrants
included in the Unit private placements. |
| |
|
|
| |
(ii) |
For Unit private placements which are denominated in a
currency other than the US dollar reporting currency, the Company measures
the value of the warrant and reports this value as warrant liability in
the consolidated statement of financial position. |
Income Taxes:
The Company accounts for income taxes by the asset and
liability method. Under the asset and liability method, future tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Future tax assets and
liabilities are measured using substantively enacted tax rates and laws that are
expected to apply when the asset is realized or the liability settled. To the
extent that it is estimated that a future income tax asset will not be realized,
a valuation allowance is provided.
8. FINANCIAL INSTRUMENTS
It is management's opinion that the Company is not exposed to
significant interest rate and credit risks arising from financial instruments
and that the fair value of financial instruments approximates the carrying
value.
Fair values: The Company's financial instruments
include: cash and cash equivalents, other receivables and accounts payable and
accrued liabilities, the fair values of which approximate their carrying values
due to their short-term maturity.
Credit risk: Financial instruments, which subject the
Company to potential credit risk, consist of other receivables. The Company does
not require collateral or other security for accounts receivable. The Company
estimates its provision for uncollectible amounts based on an analysis of the
specific amount and the debtor's payment history and prospects.
Foreign exchange: The Company completes transactions
denominated in Canadian and in United States dollars and, as such, is exposed to
fluctuations in foreign exchange rates. The Company does not use derivative
instruments to reduce its exposure to foreign currency risk.
18
9. COMMITMENTS AND CONTINGENCIES
Operating Leases:
The Company entered into a new five year lease in June, 2012 at
a base monthly cost of approximately $3,800.
Legal Matters:
There are currently no outstanding legal matters to which the
Company is a party. We have agreed to indemnify our directors and officers and
certain of our employees in accordance with our by-laws. We maintain insurance
policies that may provide coverage against certain claims.
Royalties:
The Company has obligations under the terms of the License
Agreement signed with University of Toronto in June 2005. The total obligation
could be $1 million tied to future product revenues.
Senior Management:
In 2005, we entered into an employment agreement with the
Chairman of the Board of Directors, Salvatore Fuda, for a period from January 1,
2005 through December 31, 2009, which contract was extended to December 31,
2010. Under the terms of the agreement, the Chairman was retained to provide
certain management services to the Company. The contract stipulated a minimum
annual compensation amount of $150,000 Canadian funds ($143,877 U.S. funds at
average exchange rates). In January 2011, the Board of Directors extended the
Chairman’s contract on a month-month-basis at an annual rate of $150,000
Canadian funds.
In May 2008, the Company entered into two year employment
agreements with the President and the CFO and a three year agreement with the
President of the Company’s subsidiary, MAST Inc. These agreements have now
expired and the Company has continued these on a month-to-month basis since
expiry date. These agreements stipulated monthly obligations as below:
| President |
$13,333 |
Canadian Funds |
| Chief Financial Officer |
$12,500 |
Canadian Funds |
| President – MAST |
$15,000 |
U.S. Funds |
10. DISCLOSURE CONTROLS / INTERNAL CONTROLS
The Company is not classified as accelerated filer in 2011 or
in 2012 and did not complete an external audit on its internal controls in 2011.
It filed its last audit report on internal controls in 2010.
Management and the Board of Directors, primarily through the
Audit Committee, have instituted review procedures on all of our periodic
filings. We have established a disclosure committee consisting of independent directors. A
charter for the disclosure committee and a policy has been developed and has
been ratified by our Board of Directors. We engage legal counsel, as required,
to provide guidance and commentary on our press releases.
19
Management has concluded that our disclosure controls and
procedures meet required standards. These disclosure controls and procedures are
designed to provide reasonable assurance that information required to be
disclosed in its various reports are recorded, processed, summarized and
reported accurately. In spite of its evaluation, management does recognize that
any controls and procedures, no matter how well designed and operated, can only
provide reasonable assurance and not absolute assurance of achieving the desired
control objectives.
11. OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet financial commitments and
does not anticipate entering into any contracts of such nature other than the
addition of new operating leases for equipment and premises as may be required
in the normal course of business.
12. TRANSACTIONS WITH RELATED PARTIES
The Company reports the following related party transactions:
(a) Compensation paid:
Included in professional fees as
reported are management and consulting fees paid or payable to individuals (or
companies controlled by such individuals) who served as officers and directors
of the Company. The compensation paid to such parties during the quarter ending
July 31st is as outlined above.
(b) Accounts receivable, payable and accruals:
At July 31, 2012 the Company reports
the following accounts receivable and payable balances with related parties:
| • Payable to Company's Chairman under terms of
employment contract: |
$37,392 |
| • Payable to officer under the terms of
employment contracts (1): |
$113,189
|
| (1) |
The Company assigned the Unotron promissory note to this
officer of the Company during 2011. |
20
13. SHARE CAPITAL
At July 31, 2012 the Company reports 127,944,710 common shares
outstanding (2011: 106,454,556). Additionally, the Company has 10,105,000 stock
options outstanding with a weighted average exercise price of $..25 per share
(2011: 4,075,000 options outstanding with a weighted average exercise price of
$1.11 per share) and a total of 26,589,039 outstanding warrants to acquire
common shares with a weighted average exercise price of $.23 per share (2011:
16,977,475 outstanding warrants with a weighted average exercise price of $.28
per share).
14. MANAGEMENT AND BOARD OF DIRECTORS
Our management team and directors, along with their 2012
remuneration in the quarter is presented as below:
Individual |
Position
|
Q3 2012 remuneration |
| Cash |
Option |
Total |
| |
|
|
| Salvatore Fuda (1)
|
Chairman, Director |
36,838 |
- |
36,838 |
| Joseph Fuda (2)
|
President, Director |
39,294 |
- |
39,294 |
| Steven Van Fleet
(3) |
President, MAST Inc., Director |
57,820 |
- |
57,820 |
| Andrew Brandt |
Director |
- |
- |
- |
| David Sharpless
|
Director |
- |
- |
- |
| Larry Blue |
Director |
- |
- |
- |
| Oliver Nepomuceno
|
Director |
- |
- |
- |
| Alex Dey |
Director |
- |
- |
- |
| Dan Amadori (2)
|
CFO
|
36,838 |
- |
36,838 |
| |
(1) |
contract was extended after December, 2010 on a month to
month basis. |
| |
(2) |
contract was extended on a month to month basis in May
2010. |
| |
(3) |
contract was extended on a month-to-month basis in May
2011. |
21
15. SUBSEQUENT EVENTS
The Company reports the following as subsequent events:
| a) |
Its secured unit private placement financing of $102,000.
A total of 728,572 units including one common share at $0.14 per share and
one common share purchase warrant at $0.17 per share were issued as
consideration. The warrants have a twelve month term from issue
date. |
| |
|
| b) |
A total of 937,813 previously issued warrants at a strike
price of $0.14 per share were exercised and the Company realized proceeds
of $136,378. |
| |
|
| c) |
A total of 7,284,655 outstanding warrants were extended
for a twelve month period. The strike price of the warrants exceeded the
market price of the shares at the extension date, and ranged in price from
$0.19 to $0.80 per share. |
| |
|
| d) |
The Company recovered $30,000 from Unotron as partial
payment against its outstanding note receivable from
Unotron. |
22
Table 1
Micromem Technologies Inc
Management Discussion and
Analysis
July 31, 2012 |
| Fiscal year |
|
|
|
|
|
|
|
|
|
| ending October |
|
Interest and |
|
|
|
|
|
Loss per share (basic |
|
| 31 |
|
other income |
|
|
Net
Loss |
|
|
and
fully diluted) |
|
| 2011 |
|
963 |
|
|
(3,139,279 |
) |
|
(0.03 |
) |
| 2010 |
|
22,886 |
|
|
(4,674,861 |
) |
|
(0.05 |
) |
| |
|
|
|
|
|
|
|
|
|
| Quarter ending |
|
|
|
|
|
|
|
|
|
| July 31, 2012 |
|
- |
|
|
(507,079 |
) |
|
(0.00 |
) |
| April 30, 2012 |
|
- |
|
|
(2,849,835 |
) |
|
(0.02 |
) |
| January 31, 2012 |
|
- |
|
|
24,327 |
|
|
0.00 |
|
| October 31, 2011 |
|
- |
|
|
(1,248,756 |
) |
|
(0.01 |
) |
| July 31, 2011 |
|
585 |
|
|
(237,795 |
) |
|
- |
|
| April 30, 2011 |
|
39 |
|
|
(507,225 |
) |
|
(0.01 |
) |
| January 31, 2011 |
|
339 |
|
|
(541,040 |
) |
|
(0.01 |
) |
| October 31, 2010 |
|
17,886 |
|
|
(2,737,042 |
) |
|
(0.02 |
) |
| July 31, 2010 |
|
5,000 |
|
|
(1,937,819 |
) |
|
(0.02 |
)
|
23
Table 2
Micromem Technologies Inc
Management Discussion and
Analysis July 31, 2012
Selected Balance Sheet Information (all amounts
in United States dollars) |
| Fiscal year |
|
Working |
|
|
Capital |
|
|
|
|
|
|
|
|
Shareholders |
|
| ending October |
|
capital |
|
|
asssets |
|
|
Other |
|
|
Total |
|
|
equity |
|
| 31 |
|
(deficiency) |
|
|
at NBV |
|
|
Assets |
|
|
Assets |
|
|
(deficit) |
|
| 2011 |
|
(2,298,916 |
) |
|
10,201 |
|
|
819,749 |
|
|
906,346 |
|
|
(1,468,966 |
) |
| 2010 |
|
(1,459,460 |
) |
|
16,686 |
|
|
423,548 |
|
|
568,336 |
|
|
(1,019,226 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| July 31, 2012 |
|
(853,019 |
) |
|
6,892 |
|
|
705,677 |
|
|
850,064 |
|
|
(2,283,253 |
) |
| April 30, 2012 |
|
(1,086,547 |
) |
|
7,995 |
|
|
692,155 |
|
|
828,130 |
|
|
(3,126,710 |
) |
| January 31, 2012 |
|
(2,270,655 |
) |
|
9,098 |
|
|
916,429 |
|
|
1,016,467 |
|
|
(1,345,129 |
) |
| October 31, 2011 |
|
(1,047,228 |
) |
|
10,201 |
|
|
819,749 |
|
|
906,346 |
|
|
(217,278 |
) |
| July 31, 2011 |
|
(1,465,803 |
) |
|
11,800 |
|
|
622,640 |
|
|
717,188 |
|
|
(831,363 |
) |
| April 30, 2011 |
|
(1,986,534 |
) |
|
13,451 |
|
|
584,470 |
|
|
723,762 |
|
|
(1,388,613 |
) |
| January 31, 2011 |
|
(1,429,020 |
) |
|
15,102 |
|
|
415,945 |
|
|
592,430 |
|
|
(997,973 |
) |
| October 31, 2010 |
|
(1,459,460 |
) |
|
16,686 |
|
|
423,548 |
|
|
568,336 |
|
|
(1,019,226 |
) |
| July 31, 2010 |
|
(1,131,126 |
) |
|
18,808 |
|
|
1,596,876 |
|
|
1,984,874 |
|
|
484,558 |
|
24
Table 3
Micromem Technologies Inc
Management Discussion and
Analysis
July 31, 2012 |
Summary of financing raised by Company
| Date of
financing |
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Shares |
|
|
Price
/ share |
|
|
$ |
|
|
Shares |
|
|
Price
/ share |
|
|
$ |
|
| Exercise of options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 2009 |
|
32,801 |
|
|
0.74 |
|
|
24,417 |
|
|
|
|
|
|
|
|
|
|
| April 2009 |
|
631,000 |
|
|
0.64 |
|
|
403,500 |
|
|
|
|
|
|
|
|
|
|
| July 2009 |
|
889,000 |
|
|
0.57 |
|
|
504,500 |
|
|
|
|
|
|
|
|
|
|
| August 2009 |
|
100,000 |
|
|
0.60 |
|
|
60,000 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercise of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| July 2009 |
|
200,000 |
|
|
1.17 |
|
|
234,000 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Private placements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 2009 |
|
336,053 |
|
|
0.58 |
|
|
194,465 |
|
|
|
|
|
|
|
|
|
|
| April 2009 |
|
2,777,878 |
|
|
0.58 |
|
|
1,620,397 |
|
|
|
|
|
|
|
|
|
|
| July 2009 |
|
779,604 |
|
|
0.98 |
|
|
763,980 |
|
|
|
|
|
|
|
|
|
|
| October 2009 |
|
500,000 |
|
|
0.76 |
|
|
380,000 |
|
|
|
|
|
|
|
|
|
|
| January 2010 |
|
|
|
|
|
|
|
|
|
|
2,204,276 |
|
|
0.476 |
|
|
1,049,062 |
|
| April 2010 |
|
|
|
|
|
|
|
|
|
|
289,899 |
|
|
0.448 |
|
|
130,000 |
|
| July 2010 |
|
|
|
|
|
|
|
|
|
|
1,730,026 |
|
|
0.321 |
|
|
556,078 |
|
| October 2010 |
|
|
|
|
|
|
|
|
|
|
1,717,307 |
|
|
0.196 |
|
|
335,910 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
6,246,336 |
|
|
|
|
|
4,185,259 |
|
|
5,941,508 |
|
|
|
|
|
2,071,050 |
|
| |
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Shares |
|
|
Price
/ share |
|
|
$ |
|
|
Shares |
|
|
Price
/ share |
|
|
$ |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Private placements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 31, 2011 |
|
2,525,000 |
|
|
0.199 |
|
|
503,140 |
|
|
|
|
|
|
|
|
|
|
| April 30, 2011 |
|
250,000 |
|
|
0.120 |
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
| July 31, 2011 |
|
8,355,045 |
|
|
0.112 |
|
|
932,554 |
|
|
|
|
|
|
|
|
|
|
| October 31, 2011 |
|
9,695,162 |
|
|
0.104 |
|
|
1,012,987 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Private placements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 31, 2012 |
|
|
|
|
|
|
|
|
|
|
2,005,022 |
|
|
0.107 |
|
|
214,478 |
|
| April 30, 2012 |
|
|
|
|
|
|
|
|
|
|
2,178,592 |
|
|
0.207 |
|
|
451,539 |
|
| July 31, 2012 |
|
|
|
|
|
|
|
|
|
|
708,333 |
|
|
0.210 |
|
|
148,510 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercise of warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January 31, 2012 |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
| April 30, 2012 |
|
|
|
|
|
|
|
|
|
|
1,270,000 |
|
|
0.141 |
|
|
179,270 |
|
| July 31, 2012 |
|
|
|
|
|
|
|
|
|
|
4,513,045 |
|
|
0.127 |
|
|
573,927 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Conversion of bridge loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| July 31, 2012 |
|
|
|
|
|
|
|
|
|
|
1,120,000 |
|
|
0.098 |
|
|
109,825 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
20,825,207 |
|
|
|
|
|
2,478,681 |
|
|
11,794,992 |
|
|
|
|
|
1,677,549 |
|
25
Table 4
Micromem Technologies Inc
Management Discussion and
Analysis
July 31, 2012 |
| Outstanding
options |
|
Strike price |
|
|
Expiry date |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 190,000 |
|
0.60 |
|
|
10/25/12 |
|
| 315,000 |
|
0.55 |
|
|
12/20/12 |
|
| 125,000 |
|
0.35 |
|
|
04/05/16 |
|
| 2,000,000 |
|
0.35 |
|
|
04/10/17 |
|
| 7,475,000 |
|
0.20 |
|
|
10/31/16 |
|
| 10,105,000
|
|
0.25 |
|
|
|
|
| |
|
|
|
|
|
|
| Total proceeds if all options exercised: |
|
|
|
$ |
2,526,000 |
|
| Outstanding
Warrants |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 123,276 |
|
0.7500 |
|
|
11/11/2012 |
|
| 600,000 |
|
0.7600 |
|
|
12/14/2012 |
|
| 772,000 |
|
0.5600 |
|
|
12/14/2012 |
|
| 43,000 |
|
0.5500 |
|
|
12/14/2012 |
|
| 25,000 |
|
0.5500 |
|
|
1/15/2013 |
|
| 300,000 |
|
0.5500 |
|
|
1/26/2013 |
|
| 111,111 |
|
0.5600 |
|
|
2/1/2013 |
|
| 133,333 |
|
0.5600 |
|
|
2/12/2013 |
|
| 429,686 |
|
1.2000 |
|
|
5/14/2012 |
|
| 765,188 |
|
0.4100 |
|
|
11/25/2012 |
|
| 339,838 |
|
0.4500 |
|
|
12/15/2012 |
|
| 312,500 |
|
0.3900 |
|
|
1/12/2013 |
|
| 312,500 |
|
0.4000 |
|
|
1/12/2013 |
|
| 200,000 |
|
0.2800 |
|
|
8/30/2012 |
|
| 1,325,000 |
|
0.2400 |
|
|
10/15/2012 |
|
| 500,000 |
|
0.2000 |
|
|
11/5/2012 |
|
| 400,000 |
|
0.1900 |
|
|
11/30/2012 |
|
| 300,000 |
|
0.2000 |
|
|
12/20/2012 |
|
| 250,000 |
|
0.2000 |
|
|
1/4/2013 |
|
| 750,000 |
|
0.2000 |
|
|
1/11/2013 |
|
| 325,000 |
|
0.2000 |
|
|
1/31/2013 |
|
| 95,000 |
|
0.1500 |
|
|
4/27/2013 |
|
| 1,861,500 |
|
0.1250 |
|
|
5/4/2012 |
|
| 290,000 |
|
0.1600 |
|
|
5/30/2012 |
|
| 298,000 |
|
0.2096 |
|
|
7/18/2012 |
|
| 792,938 |
|
0.2076 |
|
|
8/3/2012 |
|
| 75,000 |
|
0.1600 |
|
|
8/5/2012 |
|
| 1,666,667 |
|
0.1528 |
|
|
8/16/2012 |
|
| 1,275,000 |
|
0.1212 |
|
|
9/12/2012 |
|
| 150,000 |
|
0.1174 |
|
|
9/29/2012 |
|
| 250,000 |
|
0.1200 |
|
|
9/29/2012 |
|
| 200,000 |
|
0.1174 |
|
|
9/29/2012 |
|
| 5,118,890 |
|
0.1100 |
|
|
10/21/2012 |
|
| 166,667 |
|
0.1485 |
|
|
10/26/2012 |
|
| 1,135,022 |
|
0.1473 |
|
|
11/4/2012 |
|
| 20,000 |
|
0.2000 |
|
|
12/17/2012 |
|
| 100,000 |
|
0.1200 |
|
|
12/23/2012 |
|
| 770,000 |
|
0.1188 |
|
|
1/23/2013 |
|
| 58,824 |
|
0.2000 |
|
|
2/8/2013 |
|
| 29,412 |
|
0.2000 |
|
|
2/8/2013 |
|
| 142,858 |
|
0.4400 |
|
|
2/10/2013 |
|
| 600,000 |
|
0.1800 |
|
|
2/15/2013 |
|
| 66,667 |
|
0.1800 |
|
|
2/15/2013 |
|
| 208,333 |
|
0.3000 |
|
|
2/27/2013 |
|
| 83,333 |
|
0.3000 |
|
|
3/13/2013 |
|
| 208,333 |
|
0.3000 |
|
|
3/13/2013 |
|
| 58,333 |
|
0.3000 |
|
|
3/13/2013 |
|
| 83,333 |
|
0.3000 |
|
|
4/8/2013 |
|
| 41,667 |
|
0.1500 |
|
|
2/3/2013 |
|
| 35,000 |
|
0.1500 |
|
|
2/3/2013 |
|
| 145,833 |
|
0.3000 |
|
|
2/27/2013 |
|
| 208,333 |
|
0.3000 |
|
|
2/27/2013 |
|
| 208,333 |
|
0.3000 |
|
|
2/27/2013 |
|
| 208,333 |
|
0.3000 |
|
|
5/11/2013 |
|
| 1,120,000 |
|
0.1200 |
|
|
7/12/2013 |
|
| 500,000 |
|
0.2500 |
|
|
7/13/2013 |
|
| 26,589,041 |
|
0.23 |
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Total proceeds if all warrants exercised: |
|
|
|
$ |
6,092,285 |
|
26
