Micromem Technologies Inc.: Form 6-K - Filed by newsfilecorp.com

Stock Based

Compensation

Cash Compensation

0001062993-13-003258.txt : 20130701 0001062993-13-003258.hdr.sgml : 20130701 20130628175240 ACCESSION NUMBER: 0001062993-13-003258 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20130628 FILED AS OF DATE: 20130701 DATE AS OF CHANGE: 20130628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROMEM TECHNOLOGIES INC CENTRAL INDEX KEY: 0001085921 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 000000000 STATE OF INCORPORATION: A6 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26005 FILM NUMBER: 13942109 BUSINESS ADDRESS: STREET 1: 121 RICHMOND ST W STREET 2: SUITE 304 CITY: TORONTO STATE: A6 ZIP: M5H 2K1 BUSINESS PHONE: 416-364-6513 MAIL ADDRESS: STREET 1: 121 RICHMOND ST W STREET 2: SUITE 304 CITY: TORONTO STATE: A6 ZIP: M5H 2K1 6-K 1 form6k.htm FORM 6-K Micromem Technologies Inc.: Form 6-K - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

June, 2013

Commission File Number 0-26005

MICROMEM TECHNOLOGIES INC.

777 Bay Street, Suite 1910, Toronto, ON M5G 2C8

[Indicate by checkmark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F [X] Form 40-F [ ]

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]

Yes [ ] No [X]

[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with rule 12g3-2(b): N/A

This report on Form 6-K is hereby incorporated by reference in the registration statement on Form F-3 (Registration No. 333-134309) of Micromem Technologies Inc. and in the prospectus contained therein, and this report on Form 6-K shall be deemed a part of such registration statement from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished by Micromem Technologies Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MICROMEM TECHNOLOGIES INC.

	By: /s/ Joseph Fuda
Date: June 28, 2013	Name: Joseph Fuda
	Title: Chief Executive Officer

Exhibit Index

Exhibit
Number	Exhibit Description

99.1	Interim Financial Statements
99.2	Interim Management Discussion and Analysis
99.3	CEO Certification of Interim Filings
99.4	CFO Certification of Interim Filings

EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Micromem Technologies Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Condensed Interim Consolidated Financial Statements of

MICROMEM TECHNOLOGIES INC.

For the Three and Six Months Ended April 30, 2013 and 2012

(Unaudited – expressed in U.S.dollars)

MICROMEM TECHNOLOGIES INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

Section				Page
	A)	Condensed Interim Consolidated Financial Statements (unaudited)		3-6
	B)	Footnotes:
		1.	Reporting Entity and Nature of Business	7
		2.	Going Concern	8
		3.	Basis of Presentation	9
		4.	Summary of Significant Accounting Policies	10
		5.	New Standards and Interpretations Issued but not yet Adopted	10-12
		6.	Promissory Note Receivable	13
		7.	Deferred Development Costs	14
		8.	Intangible Assets and Patents	14
		9.	Share Capital, Stock Options and Loss per Share	15-16
		10.	Private Placements, Derivative Warrant Liability and Common Share Purchase Warrants	17-18
		11.	Bridge Loans	18-19
		12.	Contributed Surplus	20
		13.	Income Taxes	21
		14.	Expenses	22
		15.	Management Compensation and Related Party Transactions	23
		16.	Commitments	24
		17.	Contingencies	24
		18.	Financial Risk Management	25-27
		19.	Segmented Information	27
		20.	Subsequent Events	27

MICROMEM TECHNOLOGIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited, expressed in United States dollars)

		April 30,			October 31,
		2013			2012

Assets
Current assets:
Cash	$	220,532		$	245,029
Deposits and other receivables		126,950			46,062
Promissory note receivable (Note 6)		-			-
		347,482			291,091

Property and equipment, net		14,248			5,787
Deferred development costs (Note 7)		929,743			718,163
Intangible assets, net (Note 8)		106,437			116,113
Patents, net (Note 8)		66,535			49,124
	$	1,464,445		$	1,180,278

Liabilities and Shareholders' Equity (Deficiency)
Current liabilities:
Bridge loans (Note 11)	$	290,014		$	442,934
Accounts payable and accrued liabilities		420,625			579,830
Derivative warrant liability (Note 10)		614,150			1,061,544
	$	1,324,789		$	2,084,308
Shareholders' Equity (Deficiency)
Share capital: (Note 9)
Authorized: 2,000,000 special preference shares, redeemable, voting Unlimited common shares without par value
Issued and outstanding: 147,903,622 common shares (2012: 136,430,555)		$ 56,173,998			$ 54,728,239
Equity component of bridge loans		1,557			1,557
Contributed surplus (Note 12)		26,972,229			26,634,177
Deficit		(83,008,128	)		(82,268,003	)
		139,656			(904,030	)

	$	1,464,445		$	1,180,278

"Joseph Fuda" (Signed)
Joseph Fuda, Director

"David Sharpless" (Signed)
David Sharpless, Director

See accompanying notes.

MICROMEM TECHNOLOGIES INC.

CONDENSED INTERIM STATEMENTS OF CONSOLIDATED LOSS AND COMPREHENSIVE LOSS

(Unaudited, expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

		Three Months Ended April 30						Six Months Ended April 30
		2013			2012			2013			2012

Costs and expenses (income):
Administration	$	103,566		$	128,113		$	223,465			218,475
Professional, other fees and salaries (Note 14)		394,081			388,240			723,102			712,849
Stock based compensation (Note 9)		-			430,856			168,386			430,856
Research and development		33,928			11,091			103,332			11,477
Travel and entertainment		52,111			42,506			89,484			67,717
Amortization of property and equipment		1,300			1,103			2,073			2,206
Amortization of intangible assets and patents (Note 8)		4,838			4,838			9,676			9,676
Foreign exchange		1,548			5,331			418			(4,775	)
Loss from operations		591,372			1,012,078			1,319,936			1,448,481

Other expenses
(Gain) loss on revaluation of embedded derivatives		(41,265	)		-			(40,750	)		-
(Gain) loss on revaluations of derivative warrants liability (Note 10)		(533,095	)		1,837,757			(846,096	)		1,425,681

Net loss before income taxes		(17,012	)		(2,849,835	)		(433,090	)		(2,874,162	)

Income taxes (Note 18)		-			-			-			-
Net loss and comprehensive loss	$	(17,012	)	$	(2,849,835	)	$	(433,090	)	$	(2,874,162	)

Loss per share - basic and diluted		-		$	(0.02	)		-		$	(0.02	)

Weighted average number of shares		144,916,423			142,013,536			139,140,110			118,659,914

See accompanying notes.

MICROMEM TECHNOLOGIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

		Three Months Ended April 30						Six Months Ended April 30
		2013			2012			2013		2012

Cash flows from operating activities:
Net loss	$	(17,012	)	$	(2,849,835	)	$	(433,090	)	(2,874,162	)
Adjustments to reconcile loss for the period to net cash used in operating activities:
Amortization of patents and intangible assets		4,838			4,838			9,676		9,676
Amortization of property and equipment		1,300			1,103			2,073		2,206
Accretion expense		6,307			1,810			19,381		2,490
Stock based compensation		-			430,856			168,386		430,856
(Decrease) Increase in deposits and other receivables		4,329			(32,376	)		(80,888	)	(67,458	)
Decrease in accounts payable and accrued liabilities		(172,026	)		(462,026	)		(159,242	)	(413,191	)
Gain (loss) on revaluation of derivative warrant liability		(533,095	)		1,837,757			(846,096	)	1,425,681
(Gain) loss on revaluation of embedded derivatives		(41,265	)		-			(40,750	)	-
Net cash used in operating activities		(746,624	)		(1,067,873	)		(1,360,550	)	(1,483,902	)

Cash flows from investing activities:
Purchase of property and equipment		(10,495	)		-			(10,495	)	-
Patents		(22,490	)		-			(27,731	)	-
Deferred development costs		(44,839	)		219,437			(201,260	)	117,919
Net cash used in investing activities		(77,824	)		219,437			(239,486	)	117,919

Cash flows from financing activities:
Issue of common shares		941,902			630,809			1,686,925		845,287
Subscription received		-			-			20,167		-
Bridge loans advances		19,691			239,362			44,535		634,366
Bridge loan repayments		(159,017	)		(17,071	)		(176,088	)	(129,544	)
Net cash provided by financing activities		802,576			853,100			1,575,539		1,350,109

Increase (decrease) in cash		(21,872	)		4,664			(24,497	)	(15,874	)

Cash, beginning of period		242,404			23,524			245,029		44,062

Cash, end of period	$	220,532		$	28,188		$	220,532		28,188

See accompanying notes.

MICROMEM TECHNOLOGIES INC.

Consolidated Statements of Changes in Shareholders' Equity

(Unaudited, expressed in United States dollars)

	Number of		Share capital			Contributed			Equity		Deficit			Total
	Shares
			(Note 9	)		(Note 12	)
Balance as at November 01, 2011	116,149,718	$	51,777,822		$	25,984,368		$	-	$	(79,169,566	)	$	(1,407,376	)

Private placement of units for cash	4,183,614		678,973			-			-		-			678,973
Financing costs	-		(12,956	)					-		-			(12,956	)
Stock based compensation	-		-			430,856			-		-			430,856
Warrants issued on private placements	-		(171,480	)		171,480			-		-			-
Warrants extended	-		-			254,460			-		(37,200	)		217,260
Warrants exercised	1,270,000		179,270			-			-		-			179,270
Reclassed for warrants exercised	-		74,116			(74,116	)		-		-			-
Equity portion of bridge loan	-		-			558			2,659		-			3,217
Reclassified to warrant liability	-		4,522			(67,466	)							(62,944	)
Net loss and comprehensive loss	-		-			-			-		(2,874,162	)		(2,874,162	)
Balance at April 30, 2012	121,603,332		52,530,267			26,700,140			2,659		(82,080,928	)		(2,847,862	)

Balance at November 01, 2012	136,430,555		54,728,239			26,634,177			1,557		(82,268,003	)		(904,030	)
														-
Private placement of units for cash	7,325,821		1,169,182			-			-		-			1,169,182
Financing costs	-		(22,960	)		-			-		-			(22,960	)
Stock based compensation	-		-			168,386			-		-			168,386
Warrants issued on private placement	-		(380,346	)		110,345			-		-			(270,001	)
Warrants extended	-		-			106,996			-		(307,035	)		(200,039	)
Warrants exercised	4,147,246		560,870			-			-		-			560,870
Fair value of warrants exercised	-		119,013			(47,675	)		-		-			71,338
Net loss and comprehensive loss	-		-			-			-		(433,090	)		(433,090	)
Balance at April 30, 2013	147,903,622	$	56,173,998		$	26,972,229		$	1,557	$	(83,008,128	)	$	139,656

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

1.	REPORTING ENTITY AND NATURE OF BUSINESS

	Micromem Technologies Inc. (“Micromem” or the “Company”) is a corporation incorporated under the laws of the Province of Ontario, Canada. The principal business address of the Company is 121 Richmond Street West, Suite 304, Toronto, Ontario, Canada.

	The Company currently operates as a developer of magnetic sensor technology and applications of this technology. The Company has not generated revenue through April 301, 2013 and is devoting substantially all of its efforts to the development of its technologies.

	These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries:

	(i)	Micromem Applied Sensors Technology, Inc. (“MAST”) incorporated in November 2007 and domiciled in Delaware, United States. MAST has the primary responsibility for the further development of the Company’s technologies in conjunction with various strategic development partners.

	(ii)	7070179 Canada Inc., incorporated in October 2008 under the Canada Business Corporations Act in Ontario, Canada. The Company has assigned to this entity its rights, title and interests in certain patents which it previously held, directly in exchange for common shares of this entity.

	(iii)	Memtech International Inc., Bahamas; Memtech International (USA) Inc., Delaware, United States; Pageant Technologies (USA) Inc., United States; Pageant Technologies Inc., Barbados; and Micromem Holdings (Barbados) Inc., Barbados. All of these entities are inactive.

	These condensed consolidated financial statements were authorized for issuance and release by the Company’s Board of Directors on June 28, 2013.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

2.	GOING CONCERN

	These condensed consolidated financial statements have been prepared on the “going concern” basis in accordance with International Financial Reporting Standards (“IFRS”), 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 six months ending April 30, 2013, the Company reported a net loss and comprehensive loss of $433,090 (2012: $2,874,162) a working capital deficiency (current assets less current liabilities excluding derivative warrant liability) of $363,157 and negative cash flow from operations of $1,360,550 (2012: 1,483,902).

	The Company continues to focus its development efforts on existing projects in order to develop commercial applications for these projects. 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 bridge loans.

	The condensed consolidated financial statements 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 condensed 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.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

3.	BASIS OF PRESENTATION

	a)	Statement of compliance:

		These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting.

	b)	Basis of measurement:

		The condensed consolidated financial statements have been prepared on the historical cost basis, except for financial instruments designated at fair value through profit and loss, which are stated at their fair value.

	c)	Functional and presentation currency:

		These condensed consolidated financial statements are presented in United States dollars (“U.S. dollars”), which is also the Company’s functional currency.

	d)	Use of estimates and judgments:

		The preparation of the condensed consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

		Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

4.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	These condensed consolidated financial statements follow the same accounting policies and methods of application as set out in the audited consolidated financial statements for the year ended October 31, 2012. These statements should be read in conjunction with the audited consolidated financial statements for the year ended October 31, 2012.

5.	NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET ADOPTED

	Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or International Financial Reporting Interpretations Committee (“IFRIC”) that are mandatory for future accounting periods. The standards impacted that are applicable to the Company are as follows:

	a)	IFRS 9 – Financial Instruments, was issued in November 2009 and contained requirements for financial assets. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39, Financial Instruments – Recognition and Measurement, for debt instruments with a new mixed measurement model having only two categories:

			Amortized cost and

			Fair value through profit and loss

		IFRS 9 also replaces the models for measuring equity instruments, and such instruments are either recognized at fair value through earnings or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends, to the extent not clearly representing a return of investment, are recognized in earnings; however, other gains and losses (including impairments) associated with such instruments remain in accumulated other comprehensive income indefinitely.

		Requirements for financial liabilities were added in October 2010 and largely carried forward existing requirements in IAS 39, Financial Instruments – Recognition and Measurement, except that fair value changes due to credit risk for liabilities designated at fair value through profit or loss would generally be recorded in other comprehensive income.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

5.	NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET ADOPTED (Cont’d)

		This standard is required to be applied for accounting periods beginning on or after January 1, 2015, with earlier adoption permitted.

	b)	IFRS 10 – Condensed consolidated financial Statements, requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain live entertainment from its activities. IFRS 10 replaces SIC-12, Consolidation – Special Purpose Entities and parts of IAS 27, Consolidated and Separate Financial Statements.

		This standard is required to be applied for annual periods beginning on or after January 1, 2013, with earlier adoption permitted.

	c)	IFRS 11 – Joint Arrangements, requires a venture to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures and SIC- 13, Jointly Controlled Entities—Nonmonetary Contributions by Venturers.

		This standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted.

	d)	IFRS 12 – Disclosure of Interests in Other Entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities.

		This standard is required to be applied for annual periods beginning on or after January 1, 2013, with early adoption permitted.

IFRS 13 – Fair Value Measurement, is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent disclosures.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

5.	NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET ADOPTED (Cont’d)

		This standard is required to be applied for annual periods beginning on or after January 1, 2013, with earlier adoption permitted.

	f)	In addition, there have been amendments to existing standards including IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. IAS 27 addresses accounting for subsidiaries, jointly controlled entities and associates in non - condensed consolidated financial statements. IAS 28 has been amended to include joint ventures in its scope and to address the changes in IFRS 10 to IFRS 12.

		This standard is required to be applied for annual periods beginning on or after January 1, 2013, with earlier adoption permitted provided that IFRS 10, IFRS 11 and IFRS 12 are adopted at the same time.

The Company is currently assessing the impact of the above standards.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

6.	PROMISSORY NOTE RECEIVABLE

	In April 2009, the Company advanced $200,000 to a private company incorporated in New Jersey and a strategic development partner of the Company. The Company and the private Company executed a promissory note with respect to the $200,000 advance stipulating the following terms and conditions:

	a)	Maturity date of September 30, 2010.

	b)	Interest payable on a quarterly basis in arrears calculated from August 1, 2009 at a rate of 10%. In July 2011, the interest rate on the promissory note increased to 18%.

	c)	Secured by a first priority security interest over all of the assets of the private company.

	At October 31, 2012 the balance outstanding was $101,853 and this amount has been fully reserved. The Company served notice to the private company that it was demanding payments under the terms of the promissory note and the security agreement and has received judgment in its favor during the year ended October 31, 2012. The Company continues to pursue collection of this fully reserved note. The outstanding balance of principal and interest at April 30, 2013 is $111,384 which is fully reserved.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

7.	DEFERRED DEVELOPMENT COSTS

The breakdown of development costs that have been capitalized is as follows:

Cost

At November 1, 2011	$	646,606
Additions		71,557
Year ended October 31, 2012	$	718,163

At November 1, 2012	$	718,163
Additions		211,580
Six months ended April 30 2013	$	929,743

8.	INTANGIBLE ASSETS AND PATENTS

	Intangible assets comprise the costs which the Company has capitalized relating to the technical expertise and know-how that the Company has developed with respect to the commercialization efforts relating to its sensor technology. In 2011, the Company determined that it had sufficiently advanced its expertise and product knowledge relating to the general commercialization efforts for its sensor technology in multiple industry vertical applications. It anticipates that it will realize commercial economic benefits from the exploitation of these intangible assets in future.

	There were no additions to intangible assets during the period ending April 30, 2013 (2012-nil).

	The Company reported additions of $27,731 to patents during the period ended April 30, 2013 (2012-$nil).

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

9.	SHARE CAPITAL, STOCK OPTIONS AND LOSS PER SHARE

	a)	Share Capital

		Authorized and outstanding:

		The Company has two classes of shares as follows:

		i)	Special redeemable voting preference shares, 2,000,000 authorized, none are issued and outstanding.

		ii)	Common shares without par value – an unlimited number authorized.

	Number of		Amount
	Shares		$

Balance at October 31, 2011	116,149,718	$	51,774,555

Private placement of units for cash (Note 15)	6,344,899		1,040,899
Warrants exercised	12,075,858		1,499,713
Warrants issued on private placements (Note 15)	-		(356,364	)
Fair value of warrants exercised	-		558,993
Share issued on conversion of bridge loans (Note 16)	1,860,080		226,900
Financing costs	-		(16,457	)
Balance at October 31, 2012	136,430,555	$	54,728,239

Private placement of units for cash (Note 15)	7,325,821		1,169,182
Warrants exercised	4,147,246		560,870
Warrants issued on private placements (Note 15)	-		(380,346	)
Fair value of warrants exercised	-		119,013
Financing costs	-		(22,960	)
Balance at April 30, 2013	147,903,622	$	56,173,998

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

9.	SHARE CAPITAL, STOCK OPTIONS AND LOSS PER SHARE (Cont’)

	b)	Stock Options

		A summary of the status of the Company’s fixed stock option plan through April 30, 2013 and changes during the periods is as follows:

	Options		Weighted average
	(000	)	exercise price
Outstanding, November 01, 2011	11,175		0.47
Granted	2,000		0.35
Expired	(540	)	(44	)
Forfeited	(2,720	)	(1.20	)
Outstanding, October 31, 2012	9,915		0.24
Granted	1,090		0.30
Expired	(610	)	0.40
Outstanding, April 30, 2013	10,395		0.24

During the six month ended April 30, 2013 the Company issued a total of 1,090,000 (2012 – 2,000,000) stock options to officers, directors and employees. The Company has the following stock options outstanding at April 30, 2013:

Date of issue	# Issued	Strike Price	Expiry Date

April 5, 2011	125,000	0.35	April 5, 2016
October 31, 2011	7,275,000	0.20	October 31, 2016
April 10, 2012	1,905,000	0.35	April 10, 2017
January 22, 2013	1,090,000	0.30	January 22, 2018
	10,395,000

For the six months ended April 30, 2013 the Company recorded a total expense of $168,386 (2012: $430,856) with respect to the issuance of these options, calculated in accordance with the Black Scholes option-pricing model.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

10.	PRIVATE PLACEMENTS, DERIVATIVE WARRANT LIABILITY AND COMMON SHARE PURCHASE WARRANTS

	a)	Private Placements

		In the six months ended April 30, 2013 the Company completed private placement financings pursuant to prospectus and registration exemptions set forth in applicable securities law:

		Six Months
		April 30,2013		April 30,2012

Common shares issued		7,325,821		4,183,614
Warrants issued		7,325,821		4,183,614
Proceeds realized	$	1,169,182	$	678,973

In the six months ended April 30, 2013 the Company realized proceeds of $560,870 from the exercise of 4,147,246 common share purchase warrants. (2012 - $179,270 proceeds from exercise of 1,270,000 common share purchase warrants).

Derivative Warrant Liability

The following summarizes the change in derivative warrant liability:

		April 30,			October 31,
		2013			2012
Balance, beginning of period	$	1,061,544		$	1,178,691
Fair value assigned in warrants in units issuances		270,001			289,367
Fair value assigned in warrants extended		200,039			963,896
Fair value assigned to warrants issued on settlements of debt		-			306,061
Fair value transferred to share capital for warrants exercised		(71,338	)		(348,948	)
(Gain) loss on revaluation of warrants		(846,096	)		(1,327,523	)
	$	614,150		$	1,061,544

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

10.

PRIVATE PLACEMENTS, DERIVATIVE WARRANT LIABILITY AND COMMON SHARE PURCHASE WARRANTS (Cont’d)

	c)	Share Purchase Warrants

		A summary of the outstanding common share purchase warrants and the changes during the period is as follows:

				Weighted
				average exercise		Proceeds
	Warrants			price		Realized

Balance outstanding at October 31,2011	26,672,637		$	0.23		-
Exercised	(12,075,858	)		(0.12	)	1,499,713
Expired	(3,108,792	)		(0.15	)	-
Granted	8,204,981			0.19		-
Balance outstanding at October 31, 2012	19,692,968		$	0.23		-
Exercised	(4,147,246	)		(0.14	)	560,431
Expired	(85,000	)		(0.15	)	-
Granted	7,325,821			0.21		-
Balance at April 30, 2013	22,786,543		$	0.28		-

11.	BRIDGE LOANS

	(a)	On December 2, 2011, the Company secured $285,000 CDN of bridge loans from a group of arm’s length investors with maturities of six months. The loans are unsecured, bear interest at a rate of 2% per month (effective interest rate – 26%) and are convertible at the holder’s option at $0.12 USD per unit. Each unit upon conversion includes one common share and one common share purchase warrant with a one year expiry and an exercise price of $0.12 USD. The term of the loan was extended on a month to month basis in July 2012.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

11.	BRIDGE LOANS (Cont’d)

	(b)	On September 4, 2012, the Company secured $125,000 CDN of bridge loans from a group of arm’s length investors with maturities of six months. The loans are unsecured, bear interest at a rate of 2% per month (effective interest rate – 26%) and are convertible at the holders’ option at $0.18 CDN per share. Each unit, upon conversion, includes one common share and one common share purchase warrant with a one year expiry and an exercise price of $0.22 CDN. This bridge loan was repaid during the quarter ending April 30, 2013.

The outstanding bridge loans at October 31, 2012 are summarized as follows:

	Loan		Loan		Total

Principal	284,514		81,194		365,708
Embedded derivative	-		44,850		44,850
Interest Accrued	62,403		4,816		67,219
Interest Paid	(56,903	)	-		(56,903	)
Accretion Expense	1,557		26,161		27,718
Gain on revaluation of embedded derivative	-		(4,101	)	(4,101	)
Equity Portion of Bridge Loan - Conversion Feature	(1,557	)	-		(1,557	)
Carrying value @ October 31, 2012	290,014		152,920		442,934

The outstanding bridge loans at April 30, 2013 are summarized as follows:

	Loan		Total


Principal	284,514		284,514
Embedded derivative	-		-
Interest Accrued	96,545		96,545
Interest Paid	(91,045	)	(91,045	)
Accretion Expense	1,557		1,557
Gain on revaluation of embedded derivative	-		-
Equity Portion of Bridge Loan - Conversion Feature	(1,557	)	(1,557	)
Carrying value @ April 30, 2013	290,014		290,014

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

12.

CONTRIBUTED SURPLUS

Balance outstanding at November 1, 2011	25,986,276

Stock based compensation expense relating to stock options issued Note 14)	430,856
Common share purchase warrants
(a) Issued	66,997
(b) Extended	358,983
Fair value of warrants exercised	(208,935	)
Balance at October 31, 2012	26,634,177

Stock based compensation expense relating to stock options issued (Note 14)	168,386
Common share purchase warrants
(a) Issued	110,345
(b) Extended	106,996
Fair value of warrants exercised	(47,675	)
Balance at April 30, 2013	26,972,229

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

13.	INCOME TAXES

	(a)	The Company has non-capital losses of approximately $20.0 million available to reduce future taxable income, the benefit of which has not been recognized in these consolidated financial statements. As of October 31, 2012 the tax losses expire as follows:

				Other
		Canada		foreign		Total
2014	$	978,133	$	-	$	978,133
2015		3,212,751		-		3,212,751
2022		-		7,301		7,301
2023		-		9,667		9,667
2025		-		14,471		14,471
2026		2,403,497		5,254		2,408,751
2027		2,021,152		3,459		2,024,611
2028		10,483		55,519		66,002
2029		2,067,331		463,610		2,530,941
2030		2,794,877		1,471,700		4,266,577
2031		1,683,826		421,724		2,105,550
2032		1,991,469		382,177		2,373,646

	$	17,163,519	$	2,834,882	$	19,998,401

In addition the Company has available capital loss carry forwards of approximately $1.7 million to reduce future taxable capital gains, the benefit of which has not been recognized in these consolidated financial statements. These losses carry forward indefinitely.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

14.

EXPENSES

Administration

The components of year to date general and administration expenses are as follows ($000):

	2013	2012
General and administrative	36	26
Rent and occupancy cost	46	69
Interest expense	44	49
Accretion expense	19	2
Office insurance	31	34
Telephone	11	9
Investor relations, listing and filling fees	36	29
	223	218

Professional, other fees and salaries

The components of year to date professional, other fees and salaries expenses are as follows ($000):

	2013	2012
Professional fees	123	103
Consulting fees	433	418
Salaries and benefits	167	192
	723	713

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

15.	MANAGEMENT COMPENSATION AND RELATED PARTY TRANSACTIONS

	(a)	Chairman:

		In January 2011, the Board of Directors extended the Chairman’s contract on a month to month basis reflecting annual compensation amount of $150,000 CDN.

		In the six months ending April 30, 2013 the Chairman was awarded a total of 75,000 options at a strike price of $.30 per share (2012: 110,000).

		The total compensation paid to the Chairman during the period ended April 30 is summarized as follows:

	(b)	Management and consulting fees:

		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 total compensation paid to such parties during the period ended April 30, as follows.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

16.

COMMITMENTS

(a)

License Agreement:

Reference should be made to the License Agreement disclosures in the audited consolidated financial statements as of October 31, 2012. The license was executed in 2005 between the Company and the University of Toronto and the Ontario Centres of Excellence. The Company is committed to royalties of up to $1 million based on future revenues that it may receive relating to certain technology that was developed by the Company in conjunction with the University of Toronto. To date, the Company reports nil revenues and no liability under the license agreement.

(b)

Operating Leases:

The Company secured new leased premises in June 2012. The lease term is for 5 years and stipulates base monthly rental expenses of $3,800 CDN. Lease commitments for this premise are as follows:

Less than 1 year	$	47,000
2-5 years		153,200
More than 5 years		-
	$	200,200

17.	CONTINGENCIES

	The Company has agreed to indemnify its directors and officers and certain of its employees in accordance with the Company’s by-laws. The Company maintains insurance policies that may provide coverage against certain claims.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

18.	FINANCIAL RISK MANAGEMENT

	(a)	Financial Risk Management

		The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including foreign exchange risk and interest rate risk) and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out under policies approved by the Board of Directors. Management is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

	(b)	Market Risk:

		i.	Foreign Exchange Risk:

			The Company currently incurs expenses in Canadian dollars. The total monetary financial instruments are in a net liabilities position. Management monitors the Canadian net liability position on a periodic basis throughout the course of the year and adjusts the total net monetary liability balance accordingly.

			The condensed consolidated financial statements include balances that are denominated in Canadian dollars as follows:

		2013		2012

Cash and cash equivalents	$	122,780	$	4,708
Deposits and other receivables		127,902		98,585
Accounts payable and accrued liabilities		213,483		430,402
Bridge loan		-		352,436

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

18.	FINANCIAL RISK MANAGEMENT (Cont’d)

	(b)	Market Risk: (Cont’d)

		ii.	Foreign Exchange Risk:

			A 10% strengthening of the US dollar against the Canadian dollar would have increased the net equity by approximately $3,000 (2012 – approximately $71,000) due to a reduction in the value of net liability balance. A 10% weakening of the US dollar against the Canadian dollar would have had the equal but opposite effect.

		iii.	Interest Rate Risk:

			Cash flow interest rate risk is the risk that the future cash flow of a financial instrument will fluctuate because of changes in market interest rates.

			Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company’s cash and promissory note receivable earn interest at market rates. The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. Fluctuations in market rates of interest may have an impact on the Company’s results of operations.

			The Company is exposed to interest price risk on its interest bearing bridge loans as the interest rate is fixed.

	(c)	Liquidity Risk:

		Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due.

		The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. Senior management is actively involved in the review and approval of planned expenditures.

		All financial liabilities are due within 1 year from the balance sheet at April 30, 2013.

MICROMEM TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

For the three and six months ended April 30, 2013 and 2012

18.	FINANCIAL RISK MANAGEMENT (Cont’d)

	(d)	Credit Risk:

		Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash and cash equivalents, deposit and other receivables. The carrying amount of financial assets represents maximum credit exposure.

		As at April 30, 2013, the Company reports a working capital deficiency of $363,157 (measured as current assets less current liabilities excluding the derivative warrant liability) and has certain financial commitments (Notes 16 and 17), the majority of which are due within one year. It must continue to raise financing in order to meet its current obligations.

19.	SEGMENTED INFORMATION

	There is one operating segment of the business being the development and commercialization efforts with respect to the Company's proprietary memory and sensor applications. Currently, the predominant market segment that the Company is pursuing is the North American market for such technology.

20.	SUBSEQUENT EVENTS

The Company reports the following as subsequent events:

The Company issued 2,126,603 common shares via unit private placements and received proceeds of $172,000US ($169,570.98CDN) . Each unit consisted of one common share at an average price of $0.16 per share and one common share purchase warrant at an average strike price of $0.21 per warrant. The common share purchase warrants issued expire in 12 months from the date of issuance.

**************************************

EX-99.2 3 exhibit99-2.htm EXHIBIT 99.2 Micromem Technologies Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2013

PREPARED AS OF JUNE 28, 2013

INTRODUCTION

The following sets out the Management's Discussion and Analysis ("MD&A") of the financial position and result of operations for the three months ended April 30, 2013 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 fiscal years ending October 31, 2012 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.

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.

************************************************

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2013

PREPARED AS OF JUNE 28, 2013

(Unless other indicated dollar amounts reported are stated in U.S. dollars)

TABLE OF CONTENTS:

1.	Corporate History
2.	Overview of quarter ending April 30, 2013
3.	Results of operations and Financial Positions (alternative presentation)
4.	Going Concern
5.	Select Financial Information and Disclosures
	a.	Financial Position at April 30, 2013
	b.	Discussion of Operating Results
	c.	Unaudited Quarterly Financial Information
6.	Liquidity and Capital Resources
7.	Risks and Uncertainties Overview
8.	Critical Accounting Policies
9.	Financial Instruments
10.	Commitments and Contingencies
11.	Disclosure Controls/Internal Controls
12.	Off Balance Sheet Arrangements
13.	Transactions with Related Parties
14.	Share Capital
15.	Management and Board of Directors
16.	Subsequent Events

Refer also to attached Tables 1-4 as supplementary information.

*************************

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2013

PREPARED AS OF JUNE 28, 2013

1. CORPORATE HISTORY

Micromem Technologies Inc. (“Micromem” or “the Company”) is a development stage 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 Canadian National Stock Exchange (“CNSX”) under the symbol MRM. In 2008, the Company incorporated Micromem Applied Sensor Technologies Inc. (“MAST”) for the purpose of moving forward with the planned commercialization of its technology.

MAST was formed in response to a contract with BAE System in Nashua New Hampshire. BAE System's interest was in the potential to utilize Micromem’s MRAM in a radiation-hardened environment for military applications, where the initial contract with BAE Systems was to use the patented Micromem MRAM to design and manufacture a memory cell from a GaAs foundry. During this work it was determined that the Hall sensor, which was integral to the MRAM design, had several performance characteristics that by itself, as a product, would potentially create value for MAST.

A decision was taken to internally develop, at our own cost, proof of concepts for products that we had identified through our marketing to have potential market value. These included a magnetic gold sensor for drilling plug analysis, an oil condition sensor for automotive use and an oil/gas aerial exploration platform. Provisional patents were created on this work.

A potential revenue-generating opportunity emerged in August 2010 when Lux Research contacted us on behalf of their client, a world leader in oil production. They were looking for companies that could create extremely small foot print magnetic sensor solutions for down hole use in production oil fields. MAST was subsequently engaged by this client to develop and deliver a sensor platform for detecting 4 nanometer magnetic particles in a flowing oil stream at a concentration less than 1 ppb. Subsequent press releases on this contract created positive interest in MAST and another second potential revenue generating opportunity came in 2011 from GSI Westwind, a supplier for high speed air bearing motors. MAST replaced the incumbent Hall sensor supplier and delivered a unique circuit board form factor that incorporated the smallest Hall sensor in the world.

In 2011 MAST became aware of the Ninesigma Open Innovation model. Ninesigma's core services connect innovation-seeking companies to the best solutions, capabilities and partners around the world. MAST's relationship with Ninesigma has provided us common ground access to the Global Fortune 1000 companies and has resulted in a robust sales proposal pipeline and the first time in the Company's history an ability to forecast revenue.

To date Micromem has funded all research and development. It is expected that future development will be client funded. The priority at MAST is to provide customers with unparalleled sensor based platform solutions that address their difficult business problems. A recent study by NineSigma states that less than 3% of the Fortune 1000 global companies admit that they have sufficient in house talent and knowledge to be able to take advantage of technologies that can help them improve their business. Our sensor platform solutions address three primary areas of creating value for our clients:

Using a MEMS and/or Nano scale pallet, we are able to combine disparate sensor modalities into a common, integrated solution that brings the exact tools in play in solving the target issue. Competitive solutions tend to force fit less than optimum sensor combinations in an effort to sell standard offerings.
Although our solutions are custom designed for each client, our processes leading to the solution are automated and the end result is a cost effective solution with a high return on investment for our clients.
Our Open Innovation approach to solving client problems allows us to bring together already proven sensor technologies in different market spaces allowing us to apply them in new applications in new markets. This significantly reduces the time to revenue generation by both MAST and our client and it reduces risk of project failure.

MAST intends to purse specific, definable, market segments with a multi-tiered, multi-channel approach. We expect to leverage our technologies with licensing agreements in certain key areas and a direct sales and distribution strategy in other areas using established distributors. Our sales and revenue plan includes looking to foreign markets through established distributors or strategic partners.

To finance its initiatives, the Company has relied on private placement financings, the exercise of stock options, common share purchase warrants and bridge loans. In total, the Company secured approximately $11.5 million of financing for its operations between 2009 – 2012.

2. OVERVIEW OF QUARTER ENDING APRIL 2013.

	(a)	The Company raised total financing of $985,029, through a number of Unit private placement financings, from the exercise of common share warrants and from the issuance of bridge loans.

	(b)	The Company issued 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 continues the process of securing the sponsorship of an investment banking firm to apply for listing on the TSX Venture Exchange.

	(e)	The Company’s significant current project initiatives include the following:

GSI Westwind: Commercial production is expected to begin in 2013. First articles of production have been tested and approved by our client. We plan to aggressively market our speed control circuit board design to other high precision motor suppliers once this initial order has been secured.

Oil Sensor: Client testing of our proof of concept at their facility has been completed. A multi-year exclusive product delivery proposal has been submitted for client approval. These discussions continue and our expectation is that we will secure client orders in the 2^ndhalf of 2013.

International Energy Company: The Company has worked with this customer since 2011 and has developed sophisticated sensor measuring technology for use in oil and gas wells. The beta version of this product is ready for shipping to the client’s facility. The plan is to complete the field trials at the client’s facilities in the second half of 2013 and then begin deployment of our product onto field well sites.

Offshore Exploration/Gas and Oil Well Monitoring: The Company has engaged two large international energy companies in 2012 in discussions and negotiations for use of its sensor technology for diagnostic/control and monitoring systems prototype units. The Company expects to advance these discussions towards development prototypes in 2013 with the expectation of commercial revenues in 2014.

Early Breast Cancer Detection: The Company successfully demonstrated our product line in Europe in 2012 and continues to pursue negotiations of a franchising model for which we anticipate will bring cost effective services to women of all ages for early indication of breast cancer. If these negotiations are completed successfully, we anticipate commercial revenues be realized by late 2013 or early 2014.

Medical Nano-Weighing Application: The Company is currently negotiating with a medical production facility to design and build a weighing platform capable of measuring less than 500 nanograms of product within 1 second. This is adjunct technology that the Company developed on our oil sensor platform project. This is a potential revenue opportunity in the 2^ndhalf of 2013.

Early Detection of Incipient Failure in High Voltage Transmission Lines: The Company has developed a low cost platform that can be pervasively deployed over a company’s high voltage transmission network and will utilize cutting edge technology to alert potential failure of sagging voltage lines before the failure occurs. This is a potential revenue opportunity in the 2^ndhalf of 2013.

Robust Business Development Proposal Pipeline: The Company currently has an active business development proposal backlog of $71M USD. Many of the proposals have made the clients’ short list and one on one discussion under Non-Disclosure Agreements are underway.

3. RESULTS OF OPERATIONS AND FINANCIAL POSITION (ALTERNATIVE PRESENTATION)

Presented below is certain highlighted financial information from the financial statements including net loss adjusted for non cash expenses reported in the statement of operations, working capital adjusted for the non cash derivative warrant liability reported in the statement of financial position and a summary of cash raised in the period.

This information as presented should not be construed as a substitute for the financial statements which are presented in accordance with IFRS.

	Adjusted net loss ⁽¹⁾

	Three months ended				Six months ended
	April 30				April 30
	2013		2012		2013		2012

Net loss as reported	(17,012	)	(2,849,835	)	(433,090	)	(2,874,162	)

Adjusted for:
(gain)/ loss on revaluations	(574,360	)	1,837,757		(886,846	)	1,425,681
Foreign exchange	1,548		5,331		418		(4,775	)
Amortization	6,138		5,941		11,749		11,882
Accretion expense	6,307		1,810		19,381		2,490
Stock based compensation	-		430,856		168,386		430,856

Adjusted net loss	(577,379	)	(568,140	)	(1,120,002	)	(1,008,028	)

	Adjusted working capital ⁽²⁾

	April 30		January 31		October 31
	2013		2013		2012

Cash	220,532		242,404		245,029
Deposits and other receivables	126,950		131,279		46,062
	347,482		373,683		291,091

Bridge loans	285,000		410,000		410,000
Adjusted accounts payable and accruals	290,625		462,615		399,830
	575,625		872,615		809,830
Adjusted working capital	(228,143	)	(498,932	)	(518,739	)

Working capital as reported in financial statements	(977,307	)	(1,665,021	)	(1,793,217	)

Cash raised during the period ending ⁽³⁾
April 30		January 31			October 31
2013		2013			2012
(3 mos)		(3 mos	)		(12 mos	)

$ 985,029	$	745,023		$	2,767,512

Commentary:
(1)	Adjusted net loss: Under IFRS, the outstanding Canadian denominated warrants are reported as a derivative warrant liability in the statement of financial position. At the end of each reporting period this liability is revalued based on an application of the Black Scholes pricing model. This quarter end revaluation gives rise to a revaluation gain or loss which is reported in the statement of operations. In this presentation these revaluations are eliminated. Additionally the cost related to the issuance of stock options (during each quarter where stock options have been awarded) is calculated in accordance with the Black Scholes option pricing model and this is not a cash cost of compensation expense. Finally, in this presentation, other non cash expenses reported in the statement of operation are eliminated. The adjusted net loss as reported presents the net cash loss on operations in the period reported. This illustrates that the net cash loss per month at the current level of operating activity has averaged approximately $180,000 per month over the past two fiscal years, or an actual average cash utilized of approximately $2 million per annum.

(2)	Adjusted working capital: has been calculated by eliminating the derivative warrant liability on outstanding Canadian denominated warrants as reported at the end of each reporting period; these are not liabilities that require repayment in cash.

	These outstanding warrants will either be exercised or not prior to their expiration date. In Table 4 to this MD&A it is illustrated that if the total number of warrants outstanding at April 30, 2013 are in fact exercised, the Company would issue an additional 22,786,543 common shares and relay proceeds of approximately $6.2 million.

	in this presentation, the outstanding bridge loans are reported at the cash cost of redeeming these loans; the embedded derivative calculation and the accrued accretion expense both of which are non cash entries, have been eliminated.

	Finally, in this presentation, certain accruals of approximately $125,000 relating to expenses which the Company has provided for but does not expect that these will create any current liability at each quarter end have been eliminated in this presentation. These would more likely be longer term liabilities.

	The adjusted net working capital positions as presented illustrates that the Company's net working capital deficiency has been reduced over time as the Company has successfully raised additional cash and it has paid down its outstanding obligations. The conventional working capital calculations drawn from the financial statements as presented include a significant amount of non cash liabilities (the derivative warrant liabilities) which do not require cash repayment.

(3)	Cash raised: The cash raised by the Company in each reporting period includes proceeds from private placements, the exercise of common share purchase warrants and from bridge loans secured. This information is highlighted in Table 3 to this MD&A presentation.

	This illustrates that the Company has been successful in raising financing for its continued operations and its commitments to project development activities over past reporting periods.

4. GOING CONCERN

The 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 April 30, 2013, the Company reported a loss from operations of $591,372 (2012- loss from operations of $1,012,078). As of that date, the Company has an accumulated deficit of $83,008,128 (2012: $82,538,596), a working capital deficiency (for this purpose defined as current assets less current liabilities excluding the reported derivative warrant liability) of $363,157 (2012: $1,086,547).

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 consolidated financial statements as at April 30, 2013.

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 bridge loans.

In the ensuing calendar 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. SELECT FINANCIAL INFORMATION AND DISCLOSURES

(a) Financial Position as at April 30, 2013:

The following table sets out select unaudited financial information as at April 30, 2013 and 2012 prepared under IFRS reporting standards.

	Quarter ended April 30, 2013 (unaudited)	Quarter ended April 30, 2012 (unaudited)
Interest and other income	-	-
Total expenses	591,372	581,222
Stock compensation expense	-	430,856
Loss from operations	591,372	1,012,078
(Gain) loss on revaluation of embedded derivatives	(41,265)	-
(Gain) loss on revaluation of derivative warrant liability	(533,095)	1,837,757
Income taxes	-	-
Net comprehensive loss	17,012	2,849,835
Loss per share and diluted loss per share	-	(0.02)
Weighted average number of shares outstanding	144,916,423	142,013,536
Total assets	1,464,445	828,130
Cash	220,532	28,188
Working capital (excludes derivative warrant liability)	363,157	1,086,547
Shareholders equity (deficiency)	139,656	(3,126,710)

At April 30, 2013 the Company has:

	a)	10,395,000 stock options outstanding which expire, if unexercised, between 2012- 2018. The average exercise price of these options is $0.24 per option.

	b)	22,786,543 common share purchase warrants which expire between 2013 -2014 if unexercised. The average exercise price of these warrants is $0.27.

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, 2010-2012 and for the related quarterly information through April 30, 2013. Table 2 sets forth selected information from the consolidated balance sheets for the fiscal years ending October 31, 2010-2012 and the related quarterly information through April 30, 2013.

(b) Discussion of Operating Results:

The following table summarizes the Company’s operating results for the three months ended April 30, 2013 and 2012:

	Quarter ended April 30,
	2013 ($000)	2012 ($000)
Administration	104	128
Professional fees and salaries	394	388
Stock-based compensation	-	431
Research and development	34	11
Travel and entertainment	52	43
Foreign exchange loss (gain)	2	5
Amortization of property and equipment	1	1
Amortization of intangible assets and patents	5	5
Total expenses	591	1,012
(Gain) loss on revaluation of embedded derivatives	(41)	-
(Gain) loss on revaluation of derivative warrant liability	(533)	1,838
Income taxes	-	-
Net comprehensive loss	17	2,850
Loss per share	-	(0.02)

Promissory note: The promissory note from Unotron has been fully reserved. In the six month ended April 30, 2013, the Company booked and reserved $9,531 of interest charged on the outstanding balance due. At April 30, 2013, the outstanding balance which is fully reserved and which remains due from Unotron is $111,384.

Warrant liability: The Company, under IFRS, has calculated and reports a warrant liability gain of $533,095 relating to the revaluation of the common share purchase warrants issued in Canadian dollars outstanding at quarter-end, (2012: loss of $1,837.757) . This is further discussed in Section 7 below.

Deferred development costs: The Company capitalized $44,839 of deferred development costs in the quarter ended April 30, 2013 relating to various different projects (2012-$9,988).

Patents: The Company capitalized $22,490 of costs associated with patents in the quarter ended April 30, 2013 (2012 - nil).

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 recover the carrying values reported.

A summary of the continuity of the projects under development and the costs incurred by project for the six months ended April 30, 2012 and 2013 are as presented below.

				Net Additions/
Projects		10/31/2011		Recoveries			4/30/2012

Project A	$	1		-		$	1
Project B		1		-			1
Project C		15,001		(7,067	)		7,934
Project D		1		-			1
Project E		473,238		20,452			493,690
Project F		1		-			1
Project G		141,201		(141,200	)		1
Project H		1		-			1
Project J		1		-			1
Project K		17,160		8,438			25,598
Project L		-		7,729			7,729
	$	646,606	$	(111,648	)	$	534,958

				Net Additions/
Projects		10/31/2012		Recoveries			4/30/2013

Project A	$	1	$	-		$	1
Project B		1		-			1
Project C		69,903		(52,742	)		17,161
Project D		1					1
Project E		546,697		32,145			578,842
Project F		1					1
Project G		1					1
Project H		1					1
Project J		1					1
Project K		55,215		20,981			76,196
Project L		23,410		154,792			178,202
Project M		22,930		54,867			77,797
Project N				1,538			1,538
	$	718,162	$	211,581		$	929,743

General and administrative expense compare as:

	2013	2012
General and administrative/other Rent and occupancy cost Interest expense Accretion expense Office insurance Telephone Investor relations, listing and filling fees	18 23 20 6 15 6 15	18 35 34 2 16 5 18
	103	128

Professional, other fees and salaries related expenses compare as:

	2013	2012
Professional fees Consulting fees Salaries and benefits	84 231 79	52 242 94
	394	388

Professional and other fees and salaries totaled $394, 081 in 2013 (2012: $388,240). The Company reports the following costs in this cost category: audit related fees of $61,659 (2012: $38,824), legal expenses of $22,756 (2012: $13,117), management fees of $112,933 paid to the Chairman, the CEO and the CFO (2012: $115,970), staff salaries and benefits of $79,008 (2012: $93,614), and consulting fees of $117,724 (2012: $126,713). The increase in consulting fees has several components: the Company paid fees of $52,048 to 3^rdparty advisors who assisted the Company in investor relations in 2013 (2012: 20,169); it paid the President of MAST a total of $57,820 in 2013 (in 2012, $100,494); assistance in conversion to IFRS reporting of $7,856 in 2013 (2012: 6,051);

Travel related expenses compare as follows ($000)

	2013	2012
Travel: Airfare Hotel Meals Transportation	17 9 20 6	16 6 16 5
	52	43

Travel and entertainment costs increased to $52,111 in 2013 from $42,516 in 2012. The Company incurred higher travel related costs associated with increased activity in its various projects.

C) Unaudited Quarterly Financial Information - Summary

Three months ended (unaudited)	Interest and other income $	Expenses $	Loss in period $	Loss per share $
July 31, 2011	585	241,554	(237,795)	-
October 31, 2011	-	1,274,785	(1,854,751)	(0.02)
January 31, 2012	-	436,403	(24,327)	-
April 30, 2012	-	1,012,078	(2,849,835)	(0.02)
July 31, 2012	-	586,312	(507,079)	-
October 31, 2012	-	928,292	1,606,176	0.01
January 31, 2013		728,564	(416,078)	0.01
April 30, 2013	-	591,372	(17,012)	-

Refer also to Tables 1 and 2 for summarized quarterly information.

6. LIQUIDITY AND CAPITAL RESOURCES

Liquidity:

Table 3 provides a summary of the financing that was raised during the 2010, 2011 and 2012 fiscal years and for the current year through April 30, 2013.

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 April 30, 2013, our working capital deficiency (excluding derivative warrant liability) was $363,157 (2012: $1,086,547).

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 employee’s 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 April 30, 2013.

7. 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 or 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.

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.

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.

8. CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are set forth in Note 4 to our consolidated financial statements as of October 31, 2012 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 have been applied in preparing the consolidated financial statements for the quarter ended April 30, 2013 and the comparative information presented as at and for the quarter ended April 30, 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, if the conversion feature of the convertible note is in US dollars, 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 premeasured 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.

Hybrid Financial Instruments:

Financial instruments with embedded derivative liabilities are accounted for as hybrid financial instruments. The Company has hybrid financial instruments when the embedded derivative conversion option right of the convertible notes gives the right to the holder to convert into a common share in Canadian dollars (“CDN”).

An embedded derivative is a feature within a contract, such that the cash flows associated with that feature behave in a similar fashion to a stand-alone derivative. An embedded derivative is separated from its host contract and accounted for as a derivative only when three criteria are satisfied:

- When the economic risks and characteristics of the embedded derivatives are not closely related to those of the host contract;
- A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
- The entire instrument is not measured at fair value with changes in fair value recognized in the income statement.

Subsequent to initial recognition, the embedded derivative component is re-measured each reporting period using the Black Scholes option-pricing model with the change in fair value recognized in statement of loss and comprehensive loss.

Derivative Liability:

The Company’s derivative financial instruments consist of derivative liabilities in relation to its share purchase warrants and the conversion feature on its bridge loans.

	i)	Derivative Warrant Liability:

		The Company issues share purchase warrants in conjunction with private placements for the purchase of common shares of the Company. A number of these share purchase warrants were issued with an exercise price in CDN, rather than USD (the reporting and functional currency of the Company). Such share purchase warrants are considered to be derivative instruments and the Company is required to re-measure the fair value of these at each reporting date. The fair value of these CDN share purchase warrants are re-measured at each financial position date using the Black Scholes option-pricing model using the exchange rates at the financial position date and measured over their remaining life. Adjustments to the fair value of the derivative warrant liability as at the financial position date are recorded in the statement of loss and comprehensive loss as (gain) loss on revaluation of derivative warrant liability. Share purchase warrants that have expired or have been forfeited are adjusted to the statement of loss and comprehensive loss as (gain) loss on revaluation of derivative warrant liability.

		Consideration received upon the exercise of warrants is credited to share capital and the related amount is transferred from contributed surplus (USD warrants) or derivative warrant liability to share capital (CDN warrants).

	ii)	Conversion Feature of Bridge Loans

		The conversion feature on the bridge loans allows the holder of the option to convert the outstanding principal and interest from time to time to common equity. The Company, using the Black Scholes option-pricing model, accounts for bridge loans as follows:

	(i)	At date of origination the bifurcation of the total balance of the loan as debt and equity is calculated. If the conversion feature of the bridge loan is in CDN there is no equity component, resulting in an embedded derivative. Accretion expense is recorded over the term of the loan.

	(ii)	The total loan proceeds are allocated between the bridge loans and the related embedded derivative based on their relative fair value. The embedded derivative conversion feature is included under the bridge loans in the statement of financial position.

	(iii)	The conversion feature is revalued at the end of the reporting period and any adjustment is reflected in the statement of loss and comprehensive loss if the conversion feature is in CDN.

Foreign Currency Translation:

IFRS requires that the functional currency of each entity in the consolidated entity be determined separately in accordance with specific indicators and should be measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). As a result of an assessment of the primary indicators, management assessed the functional currency of the Company and its subsidiaries to be U.S. dollar (“USD”). The consolidated financial statements of the Company are prepared and presented using the USD.

Foreign currency transactions denominated in other than U.S. dollars are translated into the functional currency on the following basis:

i) Monetary assets and liabilities are translated at the rates of exchange prevailing at the statement of financial position date.

ii) Non-monetary assets and liabilities that are measured at historical cost are translated using the exchange rate at the date of the transaction.

iii) Income and expenses for each income statement line item presented are translated at average exchange rates during the quarter in which they are recognized.

Exchange differences resulting from the settlement of foreign currency transactions are recognized directly in the consolidated statement of loss and comprehensive loss in the period in which incurred.

Stock-Based Compensation:

The Company applies the fair value based method of accounting for all stock based payments to employees and non-employees and all direct awards of stock. For non-employees, stock based payments are measured at the fair value of the services received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable. Stock based compensation is charged to operations over the vesting period and the offset is credited to contribute surplus.

Consideration received upon the exercise of stock options is credited to share capital and the related amount is transferred from contributed surplus.

The fair value of stock options and warrants is determined by the Black Scholes option-pricing model with assumptions for risk free interest rates, dividend yields, volatility factors of the expected market price of the Company’s common shares and an expected life of the option or warrant issued. A forfeiture rate is estimated on the grant date and is adjusted to reflect the actual number as options that vest. In the event that vested stock options expire, previously recognized stock based compensation is not reversed. In the event that stock options are forfeited, previously recognized stock based compensation associated with the unvested portion of the stock options forfeited is reversed. The fair value of direct awards of stock is determined by the quoted market price of the Company’s stock.

9. 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.

10. 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 and Contingencies:

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.

11. DISCLOSURE CONTROLS / INTERNAL CONTROLS

The Company was not classified as accelerated filer in 2011 or in 2012 and did not complete an external audit on its internal controls in those years. 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.

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.

12. 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.

13. TRANSACTIONS WITH RELATED PARTIES

The Company reports the following related party transactions:

(a) Chairman:

The total compensation paid to the Chairman during the quarter ended April 30 is summarized as follows:

(b) Management and consulting fees:

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 total compensation paid to such parties during the quarter ending April 30, 2013 and 2012 is as follows.

14. SHARE CAPITAL

At April 30, 2013 the Company reports 147,903,622 common shares outstanding (2012: 121,603,332). Additionally, the Company has 10,395,000 stock options outstanding with a weighted average exercise price of $.24 per share (2012: 10,105,000 options outstanding with a weighted average exercise price of $0.25 per share) and a total of 22,786,543 outstanding warrants to acquire common shares with a weighted average exercise price of $.27 per share (2012: 29,586,251 outstanding warrants with a weighted average exercise price of $.22 per share).

15. MANAGEMENT AND BOARD OF DIRECTORS

At our Annual Meeting of Shareholders held on Friday, November 16^th, 2012, Salvatore Fuda, Andrew Brandt, Joseph Fuda, David Sharpless, Steven Van Fleet, Oliver Nepomuceno, Larry Blue and Alex Dey were reelected to serve on our Board of Directors. Messrs. Salvatore Fuda, Joseph Fuda, Dan Amadori and Steven Van Fleet continue to serve as officers of the Company.

Our management team and directors, along with their 2013 remuneration in the six months ended is presented as below:

Individual	Position	2013 remuneration
		Cash	Options	Total

Salvatore Fuda	Chairman, Director	74,504	11,586	86,089
Joseph Fuda	President, Director	86,170		86,170
Steven Van Fleet	President, MAST Inc., Director	115,640	11,586	127,226
David Sharpless	Director	-	11,586	11,586
Andrew Brandt	Director	-	11,586	11,586
Oliver Nepomuceno	Director	-	11,586	11,586
Larry Blue	Director	-	11,586	11,586
Alex dey	Director	-	11,586	11,586
Dan Amadori	CFO	74,504	11,586	86,090

16. SUBSEQUENT EVENTS

The Company reports the following as subsequent events:

Table 1

Micromem Technologies Inc
Management Discussion and Analysis
Annual and Quarterly financial information
April 30, 2013
($US)

ending October	other income	Net Loss		(basic and fully
2012	-	(1,775,065	)	- 0.01
2011	963	(2,599,771	)	(0.03	)
2010	22,886	(4,577,400	)	(0.05	)

Quarter ending
April 30, 2013	-	(17,012	)	(0.00	)
January 31, 2013	-	(416,078	)	(0.00	)
October 31, 2012	-	1,606,176		0.01
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	-	(1,854,751	)	(0.02	)
July 31, 2011	585	(237,795	)	-

Table 2

Micromem Technologies Inc
Management Discussion and Analysis
Selected Balance Sheet Information
April 30,2013
($US)

Fiscal year ending	Working		Capital	Other	Total Assets	Shareholders
October 31, 2012	(731,673	)	5,787	883,400	1,180,278	(904,030	)
2011	(1,060,487	)	10,201	819,749	906,346	(1,409,228	)
2010	(1,459,460	)	16,686	423,548	568,336	(1,087,433	)


Quarter ending
April 30, 2013	(363,157	)	14,248	1,102,715	1,464,445	136,656
January 31, 2013	(683,227	)	5,014	1,040,224	1,418,921	(619,783	)
October 31, 2012	(731,673	)	5,787	883,400	1,180,278	(904,030	)
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	(1,362,635	)	9,098	916,429	1,016,467	(1,345,129	)
October 31, 2011	(1,060,487	)	10,201	819,749	906,346	(1,409,228	)
July 31, 2011	(1,465,803	)	11,800	622,640	717,188	(831,363	)

Table 3

Micromem Technologies Inc
Management Discussion and Analysis
Summary of financing raised by Company
April 30,2013

Date of financing	2010			2011

	Shares	Price / share	$	Shares	Price / share	$

Private placements
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

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


	5,941,508		2,071,050	20,825,207		2,478,681

	2012			2013

	Shares	Price / share	$	Shares	Price / share	$

Private placements
January 31, 2012	2,005,022	0.107	214,478
April 30, 2012	2,178,592	0.213	464,495
July 31, 2012	708,333	0.210	148,510
October 31, 2012	1,452,952	0.147	213,416

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
October 31, 2012	6,292,813	0.119	746,516

Conversion of bridge loan
July 31, 2012	1,120,000	0.098	109,825
October 31, 2012	740,080	0.158	117,075

Private placements
January 31, 2013				1,967,117	0.161	316,373
April 30, 2013				5,358,704	0.159	852,809

Exercise of warrants
January 31, 2013				3,393,912	0.126	428,650
April 30, 2013				753,334	0.176	132,220
	20,280,837		2,767,512	11,473,067		1,597,832

Micromem Technologies Inc
Management Discussion and Analysis
April 30,2013

Outstanding options		Strike price		Expiry date


	1,090,000	0.30		January 22, 2018
	125,000	0.35		April 5, 2016
	7,275,000	0.20		October 31, 2016
	1,905,000	0.35		April 10, 2017
10,395,000		0.24

Total proceeds if all options exercised:			$	2,492,500

Outstanding Warrants

	83,333	0.3000		April 18, 2013
	208,333	0.3000		May 11, 2013
	1,120,000	0.1200		July 12, 2013
	500,000	0.2500		July 13, 2013
	186,667	0.1500		August 6, 2013
	553,413	0.2000		August 9, 2013
	200,000	0.2800		August 30, 2013
	728,572	0.1700		September 12, 2013
	1,666,667	0.1528		September 16, 2013
	1,325,000	0.2400		October 15, 2013
	724,380	0.1800		October 29, 2013
	500,000	0.2000		November 5, 2013
	123,276	0.7500		November 11, 2013
	429,686	0.8000		November 14, 2013
	765,188	0.4100		November 25, 2013
	400,000	0.1900		November 30, 2013
	600,000	0.7600		December 14, 2013
	339,838	0.4500		December 15, 2013
	815,000	0.5600		December 16, 2013
	20,000	0.2000		December 17, 2013
	300,000	0.2000		December 20, 2013
	250,000	0.2000		January 4, 2014
	750,000	0.2000		January 11, 2014
	312,500	0.3900		January 12, 2014
	25,000	0.5500		January 15, 2014
	300,000	0.5500		January 16, 2014
	312,500	0.4000		January 22, 2014
	1,967,117	0.2150		January 24, 2014
	325,000	0.2000		January 31, 2014
	111,111	0.5600		February 1, 2014
	88,236	0.2000		February 8, 2014
	142,858	0.4400		February 10, 2014
	133,333	0.5600		February 12, 2014
	770,832	0.3000		February 27, 2014
	291,666	0.3000		March 13, 2014
	58,333	0.3000		March 23, 2014
	799,904	0.2150		February 1, 2014
	312,500	0.2000		February 15, 2014
	722,500	0.2100		March 19, 2014
	1,968,750	0.2000		March 19, 2014
	617,550	0.2100		April 10, 2014
	937,500	0.2100		April 30, 2014
22,786,543		0.27

Total proceeds if all warrants exercised:			$	6,197,467

EX-99.3 4 exhibit99-3.htm EXHIBIT 99.3 Micromem Technologies Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Joseph Fuda, President and Chief Executive Officer of Micromem Technologies Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together the interim filings) of Micromem Technologies Inc., (the issuer) for the interim period ended April 30, 2013.

2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)	Designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

	(i)	Material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

	(ii)	Information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)	Designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1	Control of framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations of the Treadway Commission or “COSO”. The Company is utilizing the guidance for smaller public companies published by COSO.

5.2	not applicable

5.3	not applicable

6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on November 1, 2012 and ended on April 30, 2013 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: June 28, 2013

/s/ Joseph Fuda
Joseph Fuda
President and Chief Executive Officer

EX-99.4 5 exhibit99-4.htm EXHIBIT 99.4 Micromem Technologies Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Dan Amadori, Chief Financial Officer of Micromem Technologies Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together the interim filings) of Micromem Technologies Inc., (the issuer) for the interim period ended April 30, 2013.

2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)	Designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

	(i)	Material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

	(ii)	Information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)	Designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1	Control of framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations of the Treadway Commission or “COSO”. The Company is utilizing the guidance for smaller public companies published by COSO.

5.2	not applicable

5.3	not applicable

6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on November 1, 2012 and ended on April 30, 2013 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: June 28, 2013

/s/ Dan Amadori
Dan Amadori
Chief Financial Officer