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

0001062993-21-005797.txt : 20210621 0001062993-21-005797.hdr.sgml : 20210621 20210621061103 ACCESSION NUMBER: 0001062993-21-005797 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20210430 FILED AS OF DATE: 20210621 DATE AS OF CHANGE: 20210621 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: 211027149 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

April 2021

Commission File Number 0-26005

MICROMEM TECHNOLOGIES INC.

121 Richmond Street West, Suite 304, Toronto, ON M5H 2K1

[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shall be deemed a part of such registration statement from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished by Micromem Technologies Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934.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 17, 2021	Name: Joseph Fuda
	Title: Chief Executive Officer

Exhibit Index

Exhibit		Description

99.1		Unaudited Condensed Interim Consolidated Financial Statements for the period ended April 30, 2021
99.2		Management's Discussion and Analysis for the period ended April 30, 2021
99.3		Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
99.4		Form 52-109F2 Certification of Interim Filings Full Certificate - CFO

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

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended April 30, 2021 and 2020
(Expressed in United States Dollars)

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended April 30, 2021 and 2020
(Expressed in United States Dollars)




Contents

Notice to Shareholders	1

Unaudited Condensed Interim Consolidated Financial Statements:

Unaudited Condensed Interim Consolidated Statements of Financial Position	2

Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss	3

Unaudited Condensed Interim Consolidated Statements of Changes in Equity	4

Unaudited Condensed Interim Consolidated Statements of Cash Flows	5

Notes to the Unaudited Condensed Interim Consolidated Financial Statements	6

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Financial Statements

Notice of no auditor review of the condensed interim consolidated financial statements

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the condensed interim consolidated financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of Micromem Technologies Inc. (the "Company") have been prepared by and are the responsibility of the Company's management and approved by the Board of Directors.

The Company's independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada, for a review of condensed interim consolidated financial statements by an entity's auditor.

June 17, 2021

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Statements of Financial Position
As at April 30, 2021 and October 31, 2020
(Expressed in United States dollars)

	Notes		As at April 30, 2021			As at October 31, 2020

Assets
Current
Cash	18	$	178,592		$	191,479
Prepaid expenses and other receivables			29,301			25,421
Total current assets			207,893			216,900
Property and equipment	5		38,170			49,249
Patents	6		7,877			11,877
Total assets		$	253,940		$	278,026

Liabilities
Current
Trade payables and other liabilities	18(c)	$	480,270		$	767,949
Current lease liability	7		36,442			36,442
Convertible debentures	9,18		3,144,361			3,081,518
Derivative liabilities	9,18		3,860,186			533,562
Total current liabilities			7,521,259			4,419,471
Long-term lease liability	7		2,989			15,628
Long-term loan	8		48,015			30,269
Total liabilities			7,572,263			4,465,368

Shareholders' Deficiency	`
Share capital	10		86,407,009			85,463,642
Contributed surplus			28,111,113			27,810,586
Equity component of convertible debentures	9		23,952			23,952
Accumulated deficit			(121,860,397	)		(117,485,522	)

Total shareholders' deficiency			(7,318,323	)		(4,187,342	)
Total liabilities and shareholders' deficiency		$	253,940		$	278,026

Going concern	2
Contingencies	17
Subsequent events	21

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Approved on behalf of the Board of Directors:

"Joseph Fuda"		"Alex Dey"
Director		Director

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
For the three and six months ended April 30, 2021 and 2020
(Expressed in United States dollars)

			Three months ended April 30,						Six months ended April 30,
	Notes		2021			2020			2021			2020

Operating expenses
General and administrative	14(a)	$	48,436		$	32,414		$	65,801		$	55,684
Professional, other fees and salaries	14(b)		119,663			91,782			189,060			292,543
Recovery on settlement of AP balances			(255,767	)		-			(255,767	)		-
Stock-based compensation	11		-			-			297,726			-
Travel and entertainment			2,531			8,294			6,004			19,090
Amortization of property and equipment	5		6,911			6,926			13,796			13,864
Write-down of capital assets	5		474			-			474			-
Amortization of patents	6		2,000			2,123			4,000			4,123
Foreign exchange loss (gain)	18(a)		(145,058	)		(127,280	)		(9,607	)		(139,126	)
Total operating expenses			(220,810	)		14,259			311,487			246,178

Other expenses
Accretion expense	9		301,598			295,490			566,655			475,563
Interest expense on convertible debt	9		146,254			113,739			264,840			238,863
Other financing costs	7, 9		46,709			28,000			52,136			29,500
Loss (gain) on revaluation of derivative liabilities	9		2,825,809			(1,434,549	)		3,108,117			(282,425	)
Loss on conversion of convertible debentures	9		10,911			21,417			28,284			63,273
Loss (gain) on extinguishment of convertible debentures	9		44,103			(110,102	)		43,356			(116,675	)
Total other expenses			3,375,384			(1,086,005	)		4,063,388			408,099
Net (loss) income before income tax provision			(3,154,574	)		1,071,746			(4,374,875	)		(654,277	)
Income tax provision	13		-			-			-			-
Net (loss) income and comprehensive (loss) income		$	(3,154,574	)	$	1,071,746		$	(4,374,875	)	$	(654,277	)

Weighted average number of outstanding shares, basic and diluted	12		422,480,298			373,233,687			416,366,024			365,036,629
Basic and diluted (loss) income per share	12	$	(0.01	)	$	-		$	(0.01	)	$	-

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended April 30, 2021 and 2020
(Expressed in United States dollars)

	Notes	Number of shares		Share capital		Contributed surplus		Equity component of convertible debentures			Accumulated deficit			Total
Balance at November 1, 2020		402,552,453	$	85,463,642	$	27,810,586	$	23,952		$	(117,485,522	)	$	(4,187,342	)
Private placements of shares for cash	10	12,002,432		531,856		-		-			-			531,856
Convertible debentures converted into common shares	9	10,808,108		411,511		-		-			-			411,511
Expiry of convertible debenture conversion option	9	-		-		2,801		(2,801	)		-			-
Renewal of convertible debentures	9, 15	-		-		-		2,801			-			2,801
Issuance of stock options	11	-		-		297,726		-			-			297,726
Net loss		-		-		-		-			(4,374,875	)		(4,374,875	)
Balance at April 30, 2021		425,362,993	$	86,407,009	$	28,111,113	$	23,952		$	(121,860,397	)	$	(7,318,323	)

Balance at November 1, 2019		346,952,721	$	84,153,696	$	27,757,639	$	50,147		$	(116,240,129	)	$	(4,278,647	)
Private placements of shares for cash	10	9,643,397		389,814		-		-			-			389,814
Convertible debentures converted into common shares	9	20,073,453		464,186		-		-			-			464,186
Expiry of convertible debenture conversion option	9	-		-		10,331		(10,331	)		-			-
Renewal of convertible debentures	9	-		-		-		2,801			-			2,801
Shares issued on settlement of accounts payable		365,094		14,551		-		-			-			14,551
Net loss		-		-		-		-			(654,277	)		(654,277	)
Balance at April 30, 2020		377,034,665	$	85,022,247	$	27,767,970	$	42,617		$	(116,894,406	)	$	(4,061,571	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Micromem Technologies Inc.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the three and six months ended April 30, 2021 and 2020
(Expressed in United States dollars)

			Three months ended April 30,						Six months ended April 30,
	Notes		2021			2020			2021			2020
Operating activities
Net loss		$	(3,154,574	)	$	1,071,746		$	(4,374,875	)	$	(654,277	)
Items not affecting cash:
Amortization of property and equipment	5		6,911			6,926			13,796			13,864
Write-down of capital assets	5		474			-			474			-
Amortization of patents	6		2,000			2,123			4,000			4,123
Accretion expense	9, 15		301,598			295,490			566,655			475,563
Accrued interest on convertible debentures	9, 15		108,983			70,917			212,637			109,666
Shares issued on settlement of accounts payable			-			14,551			-			14,551
Stock-based compensation	11		-			-			297,726			-
Loss on conversion of convertible debentures	9		10,911			21,417			28,284			63,273
Loss (gain) on revaluation of derivative liabilities	9, 15		2,825,809			(1,434,549	)		3,108,117			(282,425	)
Loss (gain) on extinguishment of convertible debentures	9, 15		44,103			(110,102	)		43,356			(116,675	)
Foreign exchange loss (gain)	18		(120,938	)		(143,079	)		(3,875	)		(158,065	)
			25,277			(204,560	)		(103,705	)		(530,402	)
Net changes in non-cash working capital:
Decrease (increase) in prepaid expenses and other receivables			(10,555	)		8			(3,880	)		(12,531	)
Decrease in trade payables and other liabilities			(283,999	)		38,322			(287,679	)		(110,441	)
Cash flows used in operating activities			(269,277	)		(166,230	)		(395,264	)		(653,374	)

Investing activity
Purchase of property and equipment	5		(3,191	)		-			(3,191	)		-
Cash flows used in investing activity			(3,191	)		-			(3,191	)		-

Financing activities
Repayment of lease liability	7		19,061			(2,312	)		19,061			(11,423	)
Proceeds from long-term loan	8		860			28,454			17,747			28,454
Private placements of shares for cash	10		434,472			43,593			531,856			389,814
Proceeds from issuance of convertible debentures	15		281,000			90,000			324,000			430,177
Repayments of convertible debentures	9, 15		(337,665	)		(138,844	)		(507,096	)		(194,123	)
Cash flows provided by financing activities			397,729			20,891			385,568			642,899
Net change in cash			125,261			(145,339	)		(12,887	)		(10,475	)
Cash - beginning of period			53,331			180,920			191,479			46,056
Cash - end of period		$	178,592		$	35,581		$	178,592		$	35,581

Supplemental cash flow information
Interest paid (classified in operating activities)	9	$	37,271		$	42,822		$	52,203		$	129,197
Carrying amount of convertible debentures converted into common shares	9	$	97,901		$	115,801		$	411,511		$	400,913

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Micromem Technologies Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended April 30, 2021 and 2020
(Expressed in United States dollars, unless otherwise noted)

1. Reporting entity and nature of business

Micromem Technologies Inc. ("Micromem" or the "Company") is incorporated under the laws of the Province of Ontario, Canada. Micromem is a publicly traded company with its head office located at 121 Richmond Street West, Suite 304, Toronto, Ontario, Canada. The Company's common shares are currently listed on the Canadian Securities Exchange under the trading symbol "MRM" and on the Over the Counter Venture Market under the trading symbol "MMTIF".

The Company develops, based upon proprietary technology, customized sensor applications for companies (referred to as "Development Partners") operating internationally in various industry segments. The Company has not generated commercial revenues through April 30, 2021 and is devoting substantially all its efforts to securing commercial revenue opportunities.

2. Going concern

These unaudited condensed interim consolidated financial statements have been prepared with the assumption 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 conditions and events that cast significant doubt about the Company's ability to continue as a going concern and ultimately on the appropriateness of the use of the accounting principles applicable to a going concern. During the six months ended April 30, 2021, the Company reported a net loss and comprehensive loss of $4,374,875 (2020 - $654,277) and negative cash flow from operations of $395,264 (2020 - $653,374). The Company's working capital deficiency as at April 30, 2021 was $7,313,366 (October 31, 2020 - $4,202,571).

The Company's success depends on the profitable commercialization of its proprietary sensor technology. There is no assurance that the Company will be successful in the profitable commercialization of its technology. Based upon its current operating and financial plans, management of the Company believes that it will have sufficient access to financial resources to fund the Company's planned operations through fiscal 2021; however, the ability of the Company to continue as a going concern is dependent upon its ability to secure additional financing and/or to profitably commercialize its technology. These unaudited condensed interim consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The COVID-19 pandemic creates additional risk for the Company if there is a prolonged industry slowdown in those sectors where the Company currently operates including the oil and gas sectors in particular. To date, the impact of the pandemic has resulted in the layoff of Company staff as of March 27, 2020. The Company has encountered delays in the commercial plans for its technology with its primary customers. It secured a government backed loan of $60,000 CDN ($48,015 USD) (October 31, 2020 - $40,000 CDN, $30,269 USD) which matures in December 2025 (Note 8) and received government wage subsidies of $73,976 CDN ($58,188 USD) (2020 - $nil) (Note 14(b)(i)).

If the going concern assumption was not appropriate for these unaudited condensed interim consolidated financial statements then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses and the statement of financial position classifications used; in such cases, these adjustments would be material.

3. Basis of presentation

These unaudited condensed interim consolidated financial statements for the three and six months ended April 30, 2021 and 2020 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting. The accounting policies and methods of computation adopted in the preparation of the unaudited condensed interim consolidated financial statements are consistent with those followed in the preparation of the Company's audited annual consolidated financial statements for the year ended October 31, 2020. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

These unaudited condensed interim consolidated financial statements were authorized for issuance and release by the Company's Board of Directors on June 17, 2021.

3. Basis of presentation (continued)

(a) Basis of consolidation

These unaudited condensed interim consolidated financial statements include the accounts of Micromem Technologies Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. The Company applies the acquisition method to account for business combinations. Acquisition-related costs are expensed as incurred.

The Company's wholly-owned subsidiaries include:

(i) Micromem Applied Sensors Technology Inc. ("MAST") which was incorporated in November 2007 and is domiciled in Delaware, United States. MAST has previously had the primary responsibility for the exploitation of the Company's technologies in conjunction with various strategic partners and customers; MAST has been inactive since October 31, 2018.

(ii) 7070179 Canada Inc. which was 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)	Inactive subsidiaries	Domiciled in
	Memtech International Inc.	Bahamas
	Memtech International (USA) Inc., Pageant Technologies (USA) Inc.	United States
	Pageant Technologies Inc., Micromem Holdings (Barbados) Inc.	Barbados

(b) Basis of measurement

These unaudited condensed interim 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 measured at their fair value.

	These unaudited condensed interim consolidated financial statements are presented in United States dollars ("USD"), which is the functional currency of the Company and all of its subsidiaries.

(d)	Use of estimates and judgments

	The preparation of these unaudited condensed interim consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed interim consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates are reviewed periodically and adjustments are made as appropriate in the reporting period they become known. Items for which actual results may differ materially from these estimates are described as below;

	(i)	Fair value of options and conversion features

		The Company makes estimates and utilizes assumptions in determining the fair value for stock options and derivative liabilities based on the application of the Black-Scholes option pricing model or the binomial option pricing model, depending on the circumstances. These pricing models require management to make various assumptions and estimates that are susceptible to uncertainty, including the volatility of the share price, expected dividend yield, expected term, expected risk-free interest rate, and exercise price in the binomial option pricing model.

	(ii)	Useful lives and recoverability of long-lived assets

		Long-lived assets consist of property and equipment and patents. Amortization is dependent upon estimates of useful lives and impairment is dependent upon estimates of recoverable amounts. These are determined through the exercise of judgment and are dependent upon estimates that take into account factors such as economic and market conditions, frequency of use, anticipated changes in laws, and technological improvements.

3.	Basis of presentation (continued)

(d)	Use of estimates and judgments (continued)

	(iii)	Income taxes

		Income taxes and tax exposures recognized in the unaudited condensed interim consolidated financial statements reflect management's best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

		When the Company incurs losses for income tax purposes, it assesses the probability of taxable income being available in the future, based on budgeted forecasts. These forecasts are adjusted for certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate that sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

	(iv)	Going concern assumption

		The Company applies judgment in assessing whether material uncertainties exist that would cause doubt as to the whether the Company could continue as a going concern.

4.	New and revised standards and interpretations issued but not yet effective

	There were no pronouncements issued by the IASB or by IFRIC, of which we are aware that are mandatory for accounting commencing on or after November 1, 2020 which would have a significant impact on the Company.

5.	Property and equipment

		As at November 1,				Adjustment/			As at April 30,
		2020		Additions		Disposals			2021
Cost
Computers	$	32,040	$	3,191	$	(18,741	)	$	16,490
Right-of-use assets		74,307		-		-			74,307
		106,347							90,797
Accumulated amortization
Computers		30,077		286		(18,267	)		12,096
Right-of-use assets		27,021		13,510		-			40,531
		57,098							52,627
Net book value	$	49,249						$	38,170

Property and equipment (continued)

		As at November 1,				Adjustment/		As at April 30,
		2019		Additions		Disposals		2020
Cost
Computers	$	32,040	$	-	$	-	$	32,040
Right-of-use assets		74,307		-		-		74,307
		106,347						106,347
Accumulated amortization
Computers		29,363		354		-		29,717
Right-of-use assets		-		13,510		-		13,510
		29,363						43,227
Net book value	$	76,984					$	63,120

Patents


		As at November 1,				Adjustment/		As at April 30,
		2020		Additions		Disposals		2021
Cost	$	681,288	$	-	$	-	$	681,288
Accumulated amortization		669,411		4,000		-		673,411
Net book value	$	11,877					$	7,877

		As at November 1,				Adjustment/		As at April 30,
		2019		Additions		Disposals		2020
Cost	$	681,288	$	-	$	-	$	681,288
Accumulated amortization		661,288		4,123		-		665,411
Net book value	$	20,000					$	15,877

7.	Leases

(a)	Maturity analysis of lease obligations

	The following represents a maturity analysis of the Company's undiscounted contractual lease obligations as at April 30, 2021.

		CDN
Less than one year	$	48,060
Two to five years		8,010
	$	56,070

(b)	Supplemental disclosure

	For the three and six months ended April 30, 2021, the Company recognized $2,603 and $5,582 respectively of interest expense on lease obligations in the unaudited condensed interim consolidated statements of operations and comprehensive loss. The Company further recognized total cash outflow of $19,061 relating to leases in the six months ended April 30, 2021.

8.	Long-term loan

As at April 30, 2021, the Company has obtained a $60,000 CDN ($48,015 USD) (October 31, 2020 - $40,000 CDN, $30,269 USD) interest-free loan from the Government of Canada under the Canada Emergency Business Account ("CEBA") program to cover its operating costs. The term loan matures on December 31, 2025. Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of $20,000 CDN ($16,005 USD). Effective January 1, 2023, any outstanding balance on the term loan shall bear interest at a rate of 5% per annum. As the Company does not yet know whether they will be able to meet the terms of forgiveness, no amount has been recognized to income.

9.	Convertible debentures

The Company issues three types of convertible debentures: USD denominated convertible debentures with an equity component, Canadian dollar ("CDN") denominated convertible debentures with an embedded derivative due to variable consideration payable upon conversion caused by foreign exchange, and USD denominated convertible debentures with an embedded derivative caused by variable conversion prices.

During the three and six months ended April 30, 2021, the Company incurred $41,582 (2020 - $28,000 and $29,500 respectively) of financing costs which primarily consist of early repayment premiums and admininistrative fees, all of which were settled in cash. All loan principal amounts and conversion prices are expressed in original currency and all remaining dollar amounts are expressed in USD.

(a)	Current period information presented in the unaudited condensed interim consolidated financial statements

Convertible debentures outstanding as at April 30, 2021:

		USD		CDN		USD
		(equity		(embedded		(embedded
		component)		derivative)		derivative)		Total
Loan principal outstanding	$	938,139	$	2,039,706	$	564,600

Terms of loan
Annual stated interest rate		12% - 24%		12% - 24%		2% - 10%
Effective annual interest rate		24%		16% - 803%		24% - 5364%
Conversion price to common shares	$	0.03 - $0.07	$	0.05 - $0.08		(i) - (ii)
Remaining life (in months)		0 - 6		0 - 6		0 - 12

Unaudited condensed interim consolidated statement of financial position

Carrying value of loan principal	$	991,530	$	1,533,040	$	171,138	$	2,695,708
Interest payable		236,941		177,974		33,738		448,653
Convertible debentures	$	1,228,471	$	1,711,014	$	204,876	$	3,144,361

Derivative liabilities	$	-	$	3,503,281	$	356,905	$	3,860,186
Equity component of convertible debentures	$	23,952	$	-	$	-	$	23,952

9.	Convertible debentures (continued)

(a)	Current period information presented in the unaudited condensed interim consolidated financial statements (continued)

For the six months ended April 30, 2021:

		USD (equity component)		CDN (embedded derivative)			USD (embedded derivative)		Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense	$	13,947	$	419,135		$	133,573	$	566,655
Interest expense	$	132,197	$	114,335		$	18,308	$	264,840
Loss on revaluation of derivative liabilities	$	-	$	2,862,083		$	246,034	$	3,108,117
(Gain) loss on conversion of convertible debentures	$	-	$	(5,753	)	$	34,037	$	28,284
Loss (gain) on extinguishment of convertible debentures	$	55,100	$	(11,744	)	$	-	$	43,356

Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares	$	-	$	50,000		$	110,000
Amount of interest converted to common shares	$	30,200	$	159,942		$	2,580

Number of common shares issued on conversion of convertible debentures		1,118,519		7,119,774			2,569,815		10,808,108

Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash	$	205,100	$	31,090		$	218,770	$	454,960
Amount of interest repaid in cash	$	16,443	$	19,590		$	16,170	$	52,203

For the three months ended April 30, 2021:

		USD (equity component)		CDN (embedded derivative)			USD (embedded derivative)		Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense	$	7,050	$	249,624		$	44,924	$	301,598
Interest expense	$	81,848	$	56,734		$	7,672	$	146,254
Loss on revaluation of derivative liabilities	$	-	$	2,562,259		$	263,550	$	2,825,809
(Gain) loss on conversion of convertible debentures	$	-	$	(11,083	)	$	21,994	$	10,911
Loss (gain) on extinguishment of convertible debentures	$	55,100	$	(10,997	)	$	-	$	44,103

Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares	$	-	$	10,000		$	46,000
Amount of interest converted to common shares	$	-	$	3,625		$	1,520

Number of common shares issued on conversion of convertible debentures	$	-	$	141,680		$	1,147,826		1,289,506

Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash	$	55,100	$	11,659		$	218,770	$	285,529
Amount of interest repaid in cash	$	11,409	$	9,692		$	16,170	$	37,271

⁽ⁱ⁾	Conversion price defined as 75% multiplied by the average of the lowest 3 closing stock prices for the 10 trading days prior to conversion date.

⁽ⁱⁱ⁾	Conversion price defined as 75% multiplied by the lowest stock price for the 20 trading days prior to conversion date.

(b)	Comparative information presented in the unaudited condensed interim consolidated financial statements

9.	Convertible debentures (continued)

(a)	Current period information presented in the unaudited condensed interim consolidated financial statements (continued)

Convertible debentures outstanding as at October 31, 2020:
		USD (equity component)		CDN (embedded derivative)		USD (embedded derivative)		Total
Loan principal outstanding	$	1,096,200	$	2,129,705	$	514,770

Terms of loan
Annual stated interest rate		12% - 24%		12% - 24%		2% - 10%
Effective annual interest rate		24.00%		12% - 1270%		2573% - 20559%
Conversion price to common shares	$	0.03 - $0.07	$	0.05 - $0.14		^{(i) - (ii)}
Remaining life (in months)		1 - 9		0 - 6		0 - 12

Unaudited condensed interim consolidated statement of financial position
Carrying value of loan principal	$	1,083,375	$	1,403,787	$	165,620	$	2,652,782
Interest payable		151,387		243,170		34,179		428,736
Convertible debentures	$	1,234,762	$	1,646,957	$	199,799	$	3,081,518

Derivative liabilities	$	-	$	197,270	$	336,293	$	533,563
Equity component of convertible debentures	$	23,952	$	-	$	-	$	23,952

⁽ⁱ⁾	Conversion price defined as 75% multiplied by the average of the lowest 3 closing stock prices for the 10 trading days prior to conversion date.

⁽ⁱⁱ⁾	Conversion price defined as 75% multiplied by the lowest stock price for the 20 trading days prior to conversion date.

For the six months ended April 30, 2020:
		USD (equity component)		CDN (embedded derivative)			USD (embedded derivative)			Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense	$	24,007	$	294,585		$	156,971		$	475,563
Interest expense	$	97,167	$	117,669		$	24,027		$	238,863
Gain on revaluation of derivative liabilities	$	-	$	(167,303	)	$	(115,122	)	$	(282,425	)
Loss on conversion of convertible debentures	$	-	$	-		$	63,273		$	63,273
Gain on extinguishment of convertible debentures	$	-	$	(185	)	$	(116,490	)	$	(116,675	)

Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares	$	20,000	$	35,000		$	239,063
Amount of interest converted to common shares	$	447	$	1,167		$	11,514

Number of common shares issued on conversion of convertible debentures		511,175		731,440			18,830,838			20,073,453

Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash	$	-	$	86,123		$	80,000		$	166,123
Amount of interest repaid in cash	$	46,860	$	75,505		$	1,767		$	124,132

9.	Convertible debentures (continued)

(b)	Comparative information presented in the unaudited condensed interim consolidated financial statements (continued)

For the three months ended April 30, 2020:

		USD (equity component)		CDN (embedded derivative)			USD (embedded derivative)			Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense	$	11,329	$	170,576		$	113,585		$	295,490
Interest expense	$	48,360	$	49,946		$	15,433		$	113,739
Gain on revaluation of derivative liabilities	$	-	$	(1,259,550	)	$	(174,999	)	$	(1,434,549	)
Loss on conversion of convertible debentures	$	-	$	-		$	21,417		$	21,417
Loss (gain) on extinguishment of convertible debentures	$	-	$	6,388		$	(116,490	)	$	(110,102	)

Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares	$	-	$	-		$	120,063
Amount of interest converted to common shares	$	-	$	(27	)	$	1,318

Number of common shares issued on conversion of convertible debentures		-		-			4,145,688			4,145,688

Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash	$	-	$	30,844		$	80,000		$	110,844
Amount of interest repaid in cash	$	-	$	35,990		$	1,767		$	37,757

(c)

Fair value of derivative liabilities outstanding

The fair value of the derivative liabilities is determined in accordance with the Black-Scholes or binomial option-pricing models, depending on the circumstances. The underlying assumptions are as follows:

	As at April 30,	As at October 31,
	2021	2020
Share price	$0.14	$0.02
Exercise price	$0.03 - $0.11	$0.01 - $0.11
Volatility factor (based on historical volatility)	46% - 188%	100% - 187%
Risk free interest rate	0.11% - 0.20%	0.10% - 0.19%
Expected life of conversion features (in months)	0 - 12	0 - 12
Expected dividend yield	0%	0%
CDN to USD exchange rate (as applicable)	0.8003	0.7567
Call value	$0.04 - $0.09	$0.00 - $0.02

Volatility was estimated using the historical volatility of the Company's stock prices for common shares.

10.	Share capital

(a)	Authorized and outstanding shares

The Company has two classes of shares as follows:

	(i)	Special redeemable voting preference shares - 2,000,000 authorized, nil issued and outstanding.

	(ii)	Common shares without par value - an unlimited number authorized. The holders of the common shares are entitled to receive dividends which may be declared from time to time, and are entitled to one vote per share at shareholder meetings of the Company. All common shares are ranked equally with regards to the Company's residual assets.

(b)	Private placements

During the three months ended April 30, 2021, the Company completed 17 private placements (2020 - one private placement), pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $434,472 (2020 - $43,593) and issued a total of 8,460,209 (2020 - 9,643,397) common shares.

During the six months ended April 30, 2021, the Company completed 24 private placements (2020 - two private placements), pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $531,856 (2020 - $389,814) and issued a total of 12,002,432 (2020 - 9,643,397) common shares.

11.	Stock options

(a)	Stock option plan

Until September 8, 2020, under the Company's fixed stock option plan (the "Plan"), the Company could grant up to 18,840,000 shares of common stock to directors, officers, employees or consultants of the Company and its subsidiaries. The Company held its Annual General Meeting of Shareholders on September 8, 2020. The authorized limit for stock options in the Company's plan was increased from 18.84 million options to 27.5 million options at the meeting. The exercise price of each option is equal to or greater than the market price of the Company's shares on the date of grant unless otherwise permitted by applicable securities regulations. An option's maximum term under the Plan is 10 years. Stock options are fully vested upon issuance by the Company unless the Board of Directors stipulates otherwise by Directors' resolution.

On November 13, 2020, the Company granted a total of 6,500,000 stock options to directors, officers, employees and one external consultant. The options are exerciseable at $0.05 per share and have fully vested upon issuance. The options expire on November 13, 2025, if unexercised.

(b)	Summary of changes


	Number of options		Weighted average exercise price

Outstanding at November 1, 2020	2,200,000	$	0.10

Granted	6,500,000		0.05

Outstanding at April 30, 2021	8,700,000	$	0.06

Outstanding at November 1, 2019	5,730,000	$	0.25

Granted	-		-

Outstanding at April 30, 2020	5,730,000	$	0.25

11.	Stock options (continued)

(c)	Stock options outstanding at April 30, 2021

				Weighted average
					Remaining
		Number of		Exercise	contractual
Date of issue	Expiry date	options		price	life (years)

June 29, 2018	June 29, 2023	2,200,000		0.10	2.2
November 13, 2020	November 13, 2025	6,500,000		0.05	4.5
Outstanding and exercisable at April 30, 2021		8,700,000	$	0.06	3.9

(d)	Fair value of options issued

The fair value of the stock options issued has been determined in accordance with the Black Scholes option-pricing model. The underlying assumptions are as follows:

	Share price at grant date		$0.05
	Exercise price		$0.05
	Volatility factor		154%
	Risk free interest rate		0.40%
	Expected life of options in years		5
	Expected divided yield		0%
	Forfeiture rate		0%
	Weighted average Black Scholes value at grant date		0.0458

Volatility was estimated using the historical volatility of the Company's stock prices for its common shares.

The Company recorded an expense of $297,726 with respect to the issuance of these stock options in the six months ended April 30, 2021.

12.	Loss per share

Basic and diluted loss per share are calculated using the following numerators and denominators:

		Three months ended April 30,					Six months ended April 30,
Numerator		2021			2020		2021			2020
Net (loss) income attributable to common shareholders	$	(3,154,574	)	$	1,071,746	$	(4,374,875	)	$	(654,277	)
Net (loss) income used in computation of basic and diluted (loss) income per share	$	(3,154,574	)	$	1,071,746	$	(4,374,875	)	$	(654,277	)

Denominator
Weighted average number of common shares for computation of basic and diluted (loss) income per share		422,480,298			373,233,687		416,366,024			365,036,629

For the three and six months ended April 30, 2021 and 2020, all stock options and conversion features were anti-dilutive and, therefore, are excluded from the calculation of diluted (loss) income per share.

13.	Income taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.

As at October 31, 2020, the Company has non-capital losses of approximately $31.1 million, $26.3 million in Canada and $4.8 million in other foreign jurisdictions, available to reduce future taxable income. Non-capital losses expire commencing in 2026. In addition, the Company has available capital loss carry forwards of approximately $1.3 million to reduce future taxable capital gains. Capital losses carry forward indefinitely.

As at April 30, 2021 and October 31, 2020, the Company assessed that it is not probable that sufficient taxable income will be available to use deferred income tax assets based on operating losses in prior years; therefore, there are no balances recognized in the unaudited condensed interim consolidated statements of financial position for such assets.

14.	Operating expenses

(a)	General and administration

	The components of general and administration expenses are as follows:

		Three months ended April 30,				Six months ended April 30,
		2021		2020		2021		2020
General and administration	$	30,144	$	2,393	$	34,023	$	5,860
Rent and occupancy		477		9,539		2,513		17,345
Office insurance		-		978		-		1,552
Investor relations, listing and filing fees		16,497		18,405		26,751		28,844
Telephone		1,318		1,099		2,514		2,083
	$	48,436	$	32,414	$	65,801	$	55,684

(b)

Professional, other fees and salaries

The components of professional, other fees and salaries expenses are as follows:

		Three months ended April 30,				Six months ended April 30,
		2021		2020		2021		2020
Professional fees	$	38,461	$	28,797	$	74,505	$	59,233
Consulting fees		30,380		22,875		48,900		137,800
Salaries and benefits		50,822		40,110		65,655		95,510
	$	119,663	$	91,782	$	189,060	$	292,543

	(i)	Wage Subsidy

		The Canada Emergency Wage Subsidy (CEWS) was announced by the Government of Canada on March 27, 2020. For the three and six months ended April 30, 2021, the Company recognized $40,656 CDN ($32,292 USD) and $73,976 CDN ($58,188 USD) respectively of wage subsidy under this program, which has been recorded as a reduction of salaries expenses in the unaudited condensed interim consolidated statements of operations and comprehensive loss. There was no wage subsidy recognized in the three and six months ended April 30, 2020. This program has been extended until September 2021.

15.	Supplemental cash flow information

The following provides a reconciliation of the cash flows from convertible debentures and derivative liabilities :

		Three months ended April 30,						Six months ended April 30,
		2021			2020			2021			2020
Balance - beginning of period	$	3,965,879		$	4,710,853		$	3,677,923		$	3,364,499
Cash flows from financing activities:
Proceeds from issuance of convertible debentures		281,000			90,000			324,000			430,177
Repayments of convertible debentures		(337,665	)		(138,844	)		(507,096	)		(194,123	)
Non-cash changes:
Accretion expense		301,598			295,490			566,655			475,563
Accrued interest on convertible debentures		108,983			70,917			212,637			109,666
Loss on revaluation of derivative liabilities		2,825,809			(1,434,549	)		3,108,117			(282,425	)
Loss (gain) on extinguishment of debt		44,103			(110,102	)		43,356			(116,675	)
Convertible debentures converted into common shares		(86,990	)		(115,801	)		(383,227	)		(400,913	)
Renewal of convertible debentures		(2,801	)		(2,801	)		(2,801	)		(10,331	)
Foreign exchange loss (gain)		(95,369	)		(140,259	)		(35,017	)		(150,534	)
Balance - end of period	$	7,004,547		$	3,224,903		$	7,004,547		$	3,224,903

16.	Key management compensation and related party transactions

The Company reports the following related party transactions:

(a)	Key management compensation

	Key management personnel are persons responsible for planning, directing and controlling activities of the Company, including officers and directors. Compensation paid or payable to these individuals (or companies controlled by such individuals) are summarized as follows:

		Three months ended April 30,					Six months ended April 30,
		2021		2020			2021		2020
Professional, other fees, and salaries	$	15,298	$	(6,769	)	$	26,590	$	-
Stock-based compensation		-		-			137,400		-
	$	15,298	$	(6,769	)	$	163,990	$	-

	During the six months ended April 30, 2021, the Company awarded 3 million stock options to key management as part of the total 6.5 million stock options issued. During the six months ended April 30, 2020, these parties were not awarded any options.

(b)	Trade payables and other liabilities

	At October 31, 2019, the Company reported $205,788 in trade payable and other liabilities, representing alleged outstanding wages and expenses payable to the former President of MAST, Mr. Steven Van Fleet. The alleged payables related to claims made by Mr. Van Fleet as amounts owing to him prior to his resignation as an officer and director of the Company on August 27th, 2018.

	As described in Note 17(b) below, the Company has reversed this reserve in the fiscal year ended October 31, 2020 based on the developments in this legal matter in 2020. The reasonable value of Mr. Van Fleet's claims against the Company as of April 30, 2021 and October 31, 2020 is $nil.

	As at April 30, 2021 and October 31, 2020, the Company reports $167,215 in trade payables and other liabilities owing to a company whose major shareholder was a former director of the Company and who has also previously served as its Chief Technology Officer. This individual was elected as a director on February 19, 2014 through September 8, 2020. The balance reported relates to alleged services provided in 2015; there have been no invoices submitted by this related party after October 31, 2015.

16.	Key management compensation and related party transactions (continued)

(c)	Convertible debentures

	In May 2019, the CEO of the Company provided for a short-term loan of $15,000 CDN ($11,450 USD). At October 31, 2019, $10,000 CDN ($7,582 USD) in loan principal was outstanding. In 2020, the remaining amount of loan principal was extinguished by participation of the CEO in the private placement which the Company completed at the time (Note 10(b)). The extinguishment of the debt for the shares received in the private placement resulted in an a loss on conversion of $14,000 CDN ($10,600 USD).

	In January 2018, the CEO of the Company provided for a convertible debenture of $150,000 CDN ($114,086 USD). As at April 30, 2021, $10,001 CDN ($8,141 USD)(October 31, 2020 - $10,001 CDN, $7,509 USD) in loan principal remains outstanding.

17.	Contingencies

(a)	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.

(b)	The Company has previously reported on:

	(i)	The lawsuit filed by Mr. Steven Van Fleet against Micromem and MAST seeking payment of $214,574 plus interest relating to alleged remuneration and expense reimbursements due to him prior to his resignation as an officer and director of Micromem and MAST on August 17, 2018.

	(ii)	The Company's response to the complaint whereby it denied the allegations in Mr. Van Fleet's claims and additionally its counterclaims again Mr. Van Fleet seeking damages of no less than 2.75 million and other remedies.

	Counsel for the parties agreed that Mr. Van Fleet's deposition would proceed on July 31, 2020. The day before the deposition, Mr. Van Fleet's counsel advised the Company's counsel that if Mr. Van Fleet were to appear at the deposition, he would invoke his Fifth Amendment right not to incriminate himself with respect to the Company's counterclaims, and that rather than doing so, Mr. Van Fleet had chosen not to appear for his deposition and would never appear for his deposition in the future.

	In light of this development, on September 25, 2020 the Company's counsel moved for default, asking the court to strike Mr. Van Fleet's claims and to enter a judgment in the Company's favor on its counterclaims. Mr. Van Fleet did not submit any opposition to the motion. Mr Van Fleet's counsel resigned in October 2020. The deadline for Mr Van Fleet to appeal the Company's motion was January 11, 2021; Mr Van Fleet did not appear nor was he represented by legal counsel in court on January 11th. Micromem's motion for dismissal is now uncontested and we are currently awaiting the court's decision on potential damages that Micromem may be awarded against Mr Van Fleet (Note 21(e)).

18.	Financial risk management

(a)	Currency risk

	Currency risk is the risk that the fair value of, or future cash flows from, the Company's financial instruments will significantly fluctuate due to changes in foreign exchange rates. The Company is exposed to currency risk to the extent that it incurs expenses and issues convertible debentures denominated in Canadian dollars (CDN). The Company manages currency risk by monitoring the Canadian position of these monetary financial instruments on a periodic basis throughout the course of the reporting period.

	As at April 30, 2021, balances that are denominated in CDN are as follows:

		CDN
Cash	$	97,729
Prepaid expenses and other receivables	$	36,614
Trade payables and other liabilities	$	276,201
Convertible debentures	$	2,138,083
Derivative liabilities	$	4,377,700

18.	Financial risk management

(a)	Currency risk (continued)

	A 10% strengthening of the US dollar against the CDN would decrease accumulated deficit by $484,347 as at April 30, 2021 (October 31, 2020 - decrease accumulated deficit by $169,114). A 10% weakening of the USD against the CDN would have the opposite effect of the same magnitude.

(b)	Interest rate risk

	Interest rate risk is the risk that the fair value of, or future cash flows from, the Company's financial instruments will significantly fluctuate due to changes in market interest rates. The Company is exposed to interest rate risk on its interest-bearing convertible debentures. This exposure is limited due to the short-term nature of the convertible debentures.

(c)	Liquidity risk

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's policy is to review liquidity resources and ensure that sufficient funds are available to meet financial obligations as they become due. Further, the Company's management is responsible for ensuring funds exist and are readily accessible to support business opportunities as they arise. With the exception of the long-term loan, all financial liabilities are due within 1 year as at April 30, 2021.

	(i)	Trade payables and other liabilities

The following represents an analysis of the maturity of trade payables and other liabilities:

		As at April 30,		As at October 31,
		2021		2020
Less than 30 days past billing date	$	313,055	$	252,413
31 to 90 days past billing date		-		25,683
Over 90 days past billing date		167,215		489,853
	$	480,270	$	767,949

		As at April 30, 2021, trade payables include $167,215 (October 31, 2020 - $367,418) of invoices which the Company has disputed and/or are stale-dated. The Company does not anticipate that it will be required to discharge such amounts.

	(ii)	Convertible debentures and derivative liabilities

		The following represents an analysis of the maturity of the convertible debentures and derivative liabilities:

		As at April 30,				As at October 31,
		2021				2020
		Convertible debentures		Derivative liabilities		Convertible debentures		Derivative liabilities
Less than three months	$	1,921,090	$	1,220,374	$	1,335,853	$	149,827
Three to six months		1,223,133		2,343,979		806,477		190,055
Six to twelve months		138		295,833		939,188		193,680
	$	3,144,361	$	3,860,186	$	3,081,518	$	533,562

18.	Financial risk management (continued)

(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, development costs receivable, and other receivables. The maximum exposure to credit risk is the carrying value of these financial assets, which amounted to $197,686 as at April 30, 2021 (October 31, 2020 - $213,695). The Company reduces its credit risk by assessing the credit quality of counterparties, taking into account their financial position, past experience and other factors.

	(i)	Cash

		The Company held cash of $178,592 at April 30, 2021 (October 31, 2020 - $191,479). The cash is held with central banks and financial institution counterparties that are highly rated. The Company has assessed no significant change in credit risk, which was not recognized in these unaudited condensed interim consolidated financial statements.

19.	Fair value hierarchy

Assets and liabilities recorded at fair value in the unaudited condensed interim consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

	Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets and liabilities. There are no assets or liabilities in this category in these unaudited condensed interim consolidated financial statements.

	Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. In these unaudited condensed interim consolidated financial statements, derivative liabilities are included in this category.

	Level 3 - valuation techniques using the inputs for the asset or liability that are not based on observable market data. There are no assets or liabilities in this category in these unaudited condensed interim consolidated financial statements.

The Company's policy for determining when transfers between levels of fair value hierarchy occur is based on the date of the event or changes in circumstances that caused the transfer. During the three and six months ended April 30, 2021 and 2020, there were no transfers between levels.

20.	Capital risk management

The Company's objectives when managing capital are to (i) maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, (ii) ensure it has sufficient cash resources to further develop and market its technologies and (iii) maintain its ongoing operations. The Company defines its capital as its net assets, i.e. total assets less total liabilities. In order to secure the additional capital necessary to pursue these objectives, the Company may attempt to raise additional funds through the issuance of equity or convertible debentures or by securing strategic partners. The Company is not subject to externally imposed capital requirements and there has been no change with respect to the overall capital risk management strategy during the six months ended April 30, 2021.

21.	Subsequent events

Subsequent to April 30, 2021:

(a)	The Company repaid $52,000 USD of convertible debentures. It also converted $50,000 CDN of convertible debentures through the issuance of 625,000 common shares.

(b)	The Company repaid $25,000 USD of a short term loan.

(c)	The Company extended convertible debentures for six (6) months, that were within 3 months of maturity date at April 30, 2021.

(d)	The Company secured $99,600 USD in convertible debentures with a 12 month term and conversion features which become effective six months after initiation date.

(e)	On June 3, 2021, the Company attended a virtual hearing in the New York State courts with respect to its claim for damages relating to the litigation that it had with Mr Van Fleet. The Company is awaiting the court's decision regarding its damages award.

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, 2021

PREPARED AS OF JUNE 17, 2021

NOTICE TO READER

The Management's Discussion and Analysis ("MD&A") report for Micromem Technologies Inc. for the three months ending April 30, 2021, as attached, is dated as of June 17, 2021, consistent with the date of the Independent Registered Public Accounting Firm report and with the original 52-109 CEO and CFO certification filings related thereto.

/s/ Dan Amadori	/s/ Joseph Fuda
Dan Amadori, CFO	Joseph Fuda, CEO
June 17, 2021	June 17, 2021

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED APRIL 30, 2021
PREPARED AS OF JUNE 17, 2021

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 ending April 30, 2021, 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, 2020, which are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Additional information regarding the Company is available on the SEDAR website at www.sedar.com.

The Company's shares are traded on the OTCQB under the symbol MMTIF and on the Canadian Securities Exchange ("CSE") under the symbol MRM. In November 2007, the Company incorporated Micromem Applied Sensor Technologies Inc. ("MAST") for the purpose of moving forward with the planned commercialization of its technology.

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 number of inherent risks, uncertainties and factors 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 and the risks associated with commercializing and bringing to market our technology. These risks are affected by certain factors that are beyond the Company's control: the existence of present and possible future government regulation, competition that exists in the Company's business, 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 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.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

TABLE OF CONTENTS:

1.	OVERVIEW	5

2.	COMMENTARY ON CONVERTIBLE DEBENTURES	9

3.	PROJECT UPDATES	12

4.	DISCUSSION OF OPERATING RESULTS	13

5.	RISKS AND UNCERTAINTIES	20

6.	GOING CONCERN	22

7.	OTHER MATTERS	23

8.	SUBSEQUENT EVENTS	27

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

1. OVERVIEW

Micromem is a company that develops customized, proprietary sensor-based solutions for large multinational corporations. Previously it operated also through its wholly- owned subsidiary, Micromem Applied Sensor Technologies ("MAST"). Until August 2018, MAST was traditionally responsible for the development of market opportunities, maintaining customer relationships and the project management of the independent engineering subcontractors that it engaged once a client project was initiated. MAST has been inactive since October 2018. All such activity is now conducted directly in Micromem. Micromem and MAST are referred to interchangeably as "the Company" throughout this report.

In 2021, the Company has had positive new developments in its business initiatives. It also has experienced client driven delays due to the Covid - 19 pandemics in terms of its commercialization strategies for the technology applications that it continued to pursue. It continued to deal within very tight working capital constraints and was successful in raising additional capital in 2021 through to the date of this report.

Our litigation with Steve Van Fleet, who resigned as an officer and director of the Company on August 17, 2018, was resolved in the Company's favor in Q2 when the courts finally dismissed Mr Van Fleet's claims. Mr Van Fleet had not attended any scheduled discoveries and had not appeared at scheduled court dates. We presented our case for damages claims to the court on June 3^rd and are now awaiting the court's decision on the amount of damages to be awarded to the Company.

Financing:

In Q2 2021 the Company secured $434,472 of financing from private placements (2020: $43,593). Convertible debentures totaling $97,901 were converted into common shares (2020: $137,218).

The Company's convertible debt structure is complex with 3 broad categories of such debt: (i) $CDN denominated debt with fixed conversion prices; (ii) $US denominated debt with fixed conversion prices, and (iii) $US denominated debt with variable conversion prices. The term of the debt in each instance is typically between 4 months and 12 months. In 2021 the Company has repaid certain convertible loans at maturity when due as requested by the debenture holder or converted the debenture into common shares at the request of the debenture holder or extended the term of the debenture through negotiations with the debenture holder - in this latter case, certain terms of the loan - interest rate and/or conversion price - have, in some instances, been adjusted as part of the extension.

Under IFRS reporting, such loans require quarterly remeasurements. The application of the remeasurement methodology is very specific. This is more fully discussed in Section 2; in summary, there are several non-cash related income and expense charges that arise from such remeasurements. We recorded the following non-cash charges in the periods ending April 30, 2021 and 2020, none of which impact the Company's cash flows:

		2021		2020			Change
Accretion expense	$	297,471	$	295,490		$	1,981
Loss on conversion of convertible debentures		10,911		21,417			(10,506	)
Loss on revaluation of derivative liability		2,735,044		(1,434,549	)		4,169,593
Gain on extinguishment of convertible debentures		44,103		(110,102	)		154,205
Net expense	$	3,087,529	$	(1,227,744	)	$	4,315,273

Business Developments :

(a) Chevron:

Chevron continues to have interest in our interwell tracer technology. We anticipate that there will be continued opportunity to engage with Chevron in 2021 with the potential for Micromem to generate commercial sales to Chevron.

(b) Romgaz:

Our discussions with Romgaz have been continuous on a weekly basis throughout Q2 2021 and to date. The key go-forward points in these discussions, at the current date are as follows:

(i) We are anticipating an initial purchase order for several interwell tracer devices, similar to the technology that Chevron deployed in the California field trials referenced above. Romgaz has confirmed the terms of these initial purchase orders.

(ii) Micromem will be commissioned to conduct/lead a development program to enhance and expand the analytics capabilities of the existing technology with the end goal of delivering a comprehensive analytics solution to Romgaz for its specific performance requirements in its gas wells.

(iii) Micromem and Romgaz are pursuing discussions whereby the technology application developed in (ii) above will be manufactured on a commercial scale in Romania. It is expected that the technology that will be manufactured in Romania will be suitable for both oil and gas well applications.

(iv) The working relationship between Micromem and Romgaz is expected to expand to include the development of other technology applications where Micromem has been active over the past five years. A joint venture agreement between Micromem and Romgaz is in negotiation and we expect to execute the agreement in 2021.

(v) We expect to finalize these working arrangements and move forward with these initiatives in 2021. It is expected that Romgaz will provide the initial capital to launch this expanded working relationship.

Once we have launched the captive engineering / product development team in Toronto as referenced below, we intend to resume our dialogue with Repsol.

Micromem go forward plans for balance of 2021:

In anticipation of these developments with Romgaz , Micromem is planning for its business activity to include the following components:

(i) Continuance of its working relationship with the developer of the ARTRA 171 technology which Chevron has successfully tested in on site testing of operating oil wells and for which we anticipate Romgaz purchase orders in 2021.

(ii) We have developed our plans to establish a captive, engineering / product development team based in Toronto. In this context, we announced a working relationship with a Toronto-based engineering/manufacturing group ("Group") in the aftermath of the departure of Steve Van Fleet in August 2018. At that time, this Group provided technical guidance and assistance to Micromem as we navigated our discussions with Chevron, Repsol and Romgaz. As our plans to establish this Toronto- based resource develop further, we expect this Group to have a significant role as a strategic partner to Micromem.

(iii) As the Romgaz program is launched, we plan to add additional senior management to the Micromem team in the project management ,engineering and financial reporting areas of discipline .We will also look to recruit additional corporate directors to our Board.

COVID-19:

The impact to date on the Company of the COVID-19 pandemic is discussed below; we believe that we have taken the appropriate steps to maintain our business and to protect our 5 person staff to ensure their wellbeing:

(a) We closed the office in mid-March 2020, and it remains closed as of the date of this report. Our staff is working remotely from their homes.

(b) We have utilized the Canada Employment Wage Subsidy("CEWS") program from the Canadian Federal Government to support our payroll obligations in 2020 and to date in 2021- the program extends until September 2021. Additionally, we have utilized the Canada Emergency Business Account ("CEBA") loan program and have secured a $40,000 CDN term loan which is as described in our consolidated financial statements. An additional $20,000 of CEBA term loan financing under this program was secured in December 2020.Finally, we have received approximately $21,000 in rental support payments since September 2020 under the provisions of the Canada Emergency Rent Subsidy("CERS") program.

We believe that we are in full compliance with the terms of these government subsidies Furthermore, we have considered the recent reporting guidelines for such government assistance and we believe that we have complied in all material respects with the prescribed accounting and reporting guidelines.

(d) All business-related travel was suspended as of March 2020.

(e) While our progress in our initiatives with Chevron , Romgaz and Repsol have been delayed , we anticipate that these will all be pursued in fiscal 2021.

There remains substantial uncertainty as to the duration of the pandemic. If the pandemic continues for an extended period of time in 2021, there may be additional repercussions to the Company's ongoing business which could be significant.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

2. COMMENTARY ON CONVERTIBLE DEBENTURES:

This section of the report is intended to provide readers with additional information as to the nature of the reporting requirements, procedures, and impact of the convertible debt financings that the Company has completed. The objective is to facilitate the reader's understanding of this complex aspect of the Company's financial statements.

Q2 overview:

The Company reports a non-cash expense of $2,735,044 relating to the revaluation of derivatives in Q2 2021 ( a non cash gain $1,434,549 relating to the revaluation of derivatives in Q2 2020). The significant swing in the quarterly non-cash expense in Q2 is attributable to the volatility of the Company's share price during the quarter ended April 30, 2021. The Company's closing share price at October 31, 2020, was $0.03 per share ; it was $0.05 per share at January 31 , 2021, the quarter end date when the derivative liability was last remeasured under IFRS guidelines. The Company's share price rose to $0.19 during Q2 and closed at $0.15 per share on April 30, 2021. This increased volatility in share price significantly impacts the periodic Black Scholes and binomial measurements of the derivative liabilities - at October 31 , 2020 the derivative liability was reported as $533,562; at January 31, 2021 it was reported as $1,254,250; at April 30, 2021, it is $3,860,186. We believe that it is important to recognize that the revaluation of derivative liabilities on a quarterly basis , as reported in accordance with IFRS, results in a non-cash expense or income amount; the derivative liability that is reported at each quarter end is not a cash obligation of the Company to be discharged in future periods.

(1) Overview: convertible debenture reporting

(a) We are required under IFRS reporting standards to measure the components of our convertible debt including the debt, the derivative liability, and the equity component of the face value of the debt, as appropriate, upon execution of the loan agreement with the investor.

(b) The measurement methodology that we employ is in accordance with prescribed guidelines under IFRS and International Accounting Guidelines. This methodology is either a Black Scholes pricing model or a binomial distribution measurement model, depending on which model is more suitable in each case. That determination is based on a subjective assessment by the Company.

(c) When we secure a convertible debenture from an investor, the terms which are finalized through negotiation with the investor will vary on a case-by-case basis in terms of the following aspects:

(i) Term (typically 2 months to 12 months).

(ii) Interest rate (typically 1 to 2% per month but, in some cases, between 5% - 10% per annum).

(iii) Conversion price (which may be fixed at initiation date or fixed after 6 months based on a formulaic calculation, denominated in Canadian dollars or U.S. Dollars, the latter being the functional currency of the Company and its subsidiaries).

(iv) The option for the Company to prepay the loan during the entire term of the loan or within an initial period of the term of the loan (typically up to 6 months).

(d) At maturity date of the debenture, the debenture holder may agree to extend the term of the loan for an additional period of time, either on the same basic terms as already exist or on renegotiated terms.

(2) Accounting measurements and periodic reporting of convertible debentures:

(a) To the extent that there is a derivative liability that arises in the initial measurement (1(a) above), we are required to revalue the derivative liability at each quarter end using prescribed Black Scholes or binomial methodology. Then, on a quarterly basis, we are required to report this gain or loss on the revaluation in our quarterly consolidated statement of income.

(b) To the extent that the face value of the loan - which is due at the maturity date - is greater than the amount that is assigned to the loan component of the total amount at inception of the loan (1(a) above), then this difference must be accreted over the term of the loan. Typically, the loan term is from 2 months to 12 months. Thus, over the term of the loan, we are required to report this accretion amount as an expense in our quarterly consolidated statement of income.

(c) To the extent that a loan is converted into common shares by the debenture holder, we will close out the loan at that point, record remaining accretion expense up to the date of conversion, remeasure the derivative liability to nil and calculate a net gain or loss on conversion of the loan. The net gain or loss is reported in our consolidated statement of income.

(3) Impact on financial reporting:

The realities and complexities of this prescribed accounting treatment gives rise to complicated disclosures in our financial statements and footnotes:

(a) We report substantial accretion expense in our audited financial statements.

(b) Over time, barring significant volatility in the share price, we generally report a gain on the settlement of the derivative liabilities. However, the quarterly revaluations of the derivative liabilities result in significant interim fluctuations.

(c) The calculated effective interest rate on debt can be substantial. To illustrate, (for example) if the reported value of the debt is a small fraction of the face value at inception and it must be accreted to face value over the term (for example 2 months) then the effective rate of interest will be substantial representing the rate that would be required to step up the reported value to the face value in the short period of the term of the loan.

The actual interest expense on our convertible debentures which is interest paid to the debenture holders, is at a coupon rate ranging between 1% and 2% per month. The effective rate referenced above is an accounting measurement metric, not a payable obligation.

It is important , when reviewing our unaudited interim condensed consolidated financial statements, to bear in mind the following:

a) Accretion expense is a non- cash item.

b) Gain or loss on revaluation of derivatives in a non -cash item.

c) Gain or loss on extinguishment of debentures is a non -cash item.

d) Gain or loss on conversion of debentures to common shares is a non -cash item.

(4) Additional Comments:

The Company notes the following:

a) We have had to resort to convertible debentures financing as a primary means of securing financing over the past several years in order to continue our operations.

b) The use of convertible debentures has served to increase our outstanding number of shares over the past few years.

c) We expect that we will deemphasize this source of financing in future and that the Company will resume more conventional private placement financings in future as it pursues its current business opportunities.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

3. PROJECT UPDATES:

Since the resignation of Mr. Van Fleet in August 2018, the Company has worked diligently to establish a renewed dialogue with its active strategic partners. Its management has engaged with Chevron and Repsol as well as with its engineering and design subcontractors. It has forged a new business relationship with Romgaz, based in Romania and has engaged with additional engineering manufacturing and marketing resources to provide it with specialized expertise. The Company's CEO and CFO, under the guidance of the active board members, have assumed these responsibilities.

Update of Product Development Activity at April 30, 2021

The current status of our active development projects is as reported below:

Chevron: Refer to the Chevron commentary provided in the Overview section on page 6 of this MD&A document.

Repsol: We have previously reported on our initial activity with this Spanish energy conglomerate in our 2019 report. We intend to resume our dialogue in 2021.

Romgaz: Romgaz is the state-controlled gas company in Romania. We initiated a dialogue with the senior management team at Romgaz in May 2019. The opportunity developed as a result of the progress that we had experienced with our Chevron initiative which, by that point, had advanced to the onsite pilot program referenced above. We continued our initial discussions with Romgaz thereafter and, in October 2019, we announced that the Company had executed a letter of intent ("LOI") with Romgaz which afforded the Company the opportunity to sell the ARTRA technology units to Romgaz and to develop a robust analytics solution for the technology.

For the developments with Romgaz in Q1 2021, refer to the Romgaz commentary provided in the Overview section on pages 6-7 of this MD&A document.

Other Developments:

We have previously reported that the Company is engaged in dialogue with an established Toronto-based private company that has engineering and manufacturing capabilities and commercial revenues . As outlined in the Overview section of this MD&A document on page 7 of this MD&A document under the caption of Micromem go forward plans for balance of 2021, we are anticipating that a formal working arrangement will be negotiated with this Toronto-based group in 2021.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

4. DISCUSSION OF OPERATING RESULTS:

(a) Financial Position as at April 30, 2021:

	April 30, 2021		October 31, 2020
	(US $000)		(US $000)
Assets:
Cash	179		191
Prepaid expenses and other receivables	29		25
	208		217
Property and equipment, net	38		49
Patents, net	8		12
	254		278

Liabilities:
Accounts payable and accrued liabilities	481		768
Current lease liability	36		36
Convertible debentures	3,046		3,082
Derivative liability	3,860		534
	7,423		4,419

Long-term lease liability	3		16
Long-term lease loan	48		30
	7,474		4,465

Shareholders' Equity:
Share capital	86,407		85,464
Contributed surplus	28,111		27,811
Equity component of bridge loans	24		24
Deficit	(121,762	)	(117,486	)
	(7,220	)	(4,187	)
	254		278

Commentary:

	1.	The Company's working capital deficiency is $7,214,669 at April 30, 2021 (at October 31,2020: deficiency of $4,202,571). The increase in the working capital deficiency in Q2 2021 is explained by the increase in the derivative liabilities, which are a non- cash obligation as outlined in Section 2 of this report. During the period ending April 30, 2021, derivative liabilities increased by $3,326,624 to $3,860,186 from the October 31, 2020, balance of $533,562. Additionally, the Company continues to report a total of $167,215 ( October 31, 2020: $367,418) of stale dated / disputed accounts payable balances which it does not anticipate that it will be required to discharge. If these balances are omitted from the working capital measurement, the Company's working capital deficiency is $3,208,268 at April 30, 2021 (at October 31, 2020: working capital deficiency of $3,301,591). Virtually all of this deficiency is comprised of the convertible debentures which are reported as current liabilities. In practice, the Company has to date been successful in extending or converting the convertible debentures as these debentures mature.

	2.	In 2019 the Company evaluated its patent portfolio and its go forward strategy for its intellectual property portfolio. It decided that it would suspend its provisional patent filings in jurisdictions outside the United States where it has been issued several patents. For financial reporting purposes, the Company recorded an impairment reserve of $223,143 in 2019 and it reflects an amortized value of $7,877 as its patent assets at April 30, 2021. The Company believes that its patents remain as a valuable asset to be exploited in future through the pursuit of licensing agreements with potential strategic partners.

	3.	Trade payables and other liabilities total $480,270 (Oct 31: $767,949) consisting of accounts payable of $15,135 ( Oct 31: $65,457 ) , accrued liabilities of $121,934 ( Oct 31: $132,640), non-convertible loans of $92,024 ( Oct 31: $71,981), wages and source deductions payable of $ 83,962 (Oct 31: $56,128) and stale-dated or disputed payables of $167,215 ( Oct 31: $441,743).

	4.	In Q2 2021 the Company secured $434,472 of financing from private placements (2020: $43,593) and convertible debentures totaling $97,901 were converted into common shares (2020: $137,216).

The balance reported as bridge loans at April 30, 2021, is $3,045,664 (at October 31,2020: $3,081,518) and the related derivative liability balance is $3,860,186 (at October 31,2020: $533,562). The Company reports accretion expense on these debentures of $297,471 (2020: $295,490), a loss on the conversion of bridge loans to share capital of $10,911 (2020: $21,417), a loss on the revaluation of the underlying derivative liabilities of $2,735,044 (2020: gain of $1,434,549) and a loss on extinguishment of convertible debentures of $44,103 (2020: gain of $110,102). Management generally employs a Black Scholes valuation model to remeasure the derivative liabilities at each quarter end; however, for certain of the loan transactions contracted for, it uses a binomial measurement model.

Management acknowledges that the cost of financing to the Company is significant; interest on the bridge loans is substantial. In Q2 2021 we reported $146,254 of interest expense (2020: $113,739).

(b) Operating Results:

The following table summarizes the Company's operating results for the three months ended April 31, 2021, and 2020:

	Quarter ended April 30,
	2021 ($000)	2020 ($000)
Administration	48	32
Professional fees and salaries	120	92
Recovery on settlement of AP balances	(256)	-
Stock-based compensation	-	-
Travel and entertainment	3	8
Amortization of property and equipment	7	7
Amortization of patents	2	2
Foreign exchange loss (gain)	(148)	(127)
Accretion expense	297	295
Interest expense Convertible debt	146	114
Other financing costs	47	28
Loss on revaluation of derivatives liabilities	2,735	(1,435)
Loss on conversion of convertible debentures	11	21
(Gain) on extinguishment of convertible debentures	44	(110)
Net expenses	3,056	(1,072)
Net comprehensive income (loss)	(3,056)	1,072
Income (loss per share)	-	-

Discussion of Operating Results

Q2 2021 Compared to Q2 2020.

1. Administration costs were $48,436 in 2021 versus $32,414 in 2020. These costs include rent and occupancy costs of $477 (2020: $9,539, the Company reported sublet income for a portion of its office space in 2021 and 2020); office insurance costs of $nil (2020: $978; the Company did not renew its D&O insurance coverage in 2021 and 2020), investor relations, listings, filing and other fees of $30,997 (2020: $18,405), other general and administrative expenses of $16,963 (2020: $3,492).

2. The Company was successful in eliminating a total of $293,767 of stale - dated and disputed accounts payable balances in Q2 for payment of $38,000; accordingly, it reports a recovery of $255,767 on the settlement of these balances in Q2. Since October 2020, the Company has eliminated a total of $473,000 of stale-dated and disputed accounts payable for payment of $38,000. At April 30, 2021, it continues to report a stale-dated and disputed accounts payable balance of $167,215 which it expects to eliminate from its accounts payable balance reported before October 31, 2021 for nominal ,if any, consideration .

3. Professional and other fees and salaries costs were $119,663 in 2021 versus $91,782 in 2020. The components of these total costs include legal and audit related expenses of $38,461 (2020: $28,797), 3^rd party consulting fees of $30,380 (2020: $22,875), staff salaries and benefits of $50,822 (2020: $40,110).

4. The CFO has received compensation of $7,149 in 2021 ( 2020: nil). The CEO of the Company has received $26,590 in 2021 which amount is reported in staff salaries and benefits; he received $9,124 in 2020.

5. Prior to the onset of the COVID-19 pandemic in January 2020, the Company entered into an agreement with a New York- based advisory group ("Advisor") whereby the Advisor would assist the Company in securing mid to long term institutional financing from different US -based financial groups. The Company paid the Advisor a fee of $100,000 in January 2020 representing all fees and expenses due under the agreement.

The project was to extend for 6-9 months and was timed to coincide with the developments that we anticipated to occur with Romgaz by September 2020.With the advent of COVID-19 in March 2020, the Romgaz project was delayed, and we were unsuccessful in securing any institutional financing through the Advisor during the period of their mandate. The Company reported the $100,000 fee as part of the total 3^rd party consulting fees of $114,925 incurred in 2020.

6. In November 2020, the Company granted 6.5 million common stock options to directors, officers, employees and to one external consultant; the related expense of $297,726 was calculated using the Black Scholes option-pricing model. In Q2 2021, no stock options grants were awarded.

7. Travel and entertainment expenses were $2,531 in Q2 2021 ($8,294 in Q2 2020). Post March 2020, only minimal corporate travel expenses have been incurred

8. Interest expense was $146,254 in Q2 2021 versus $113,739 in Q2 2020. This represents the actual interest expense obligations incurred by the Company based on the stated interest rates on the convertible debenture notes.

9. Amortization expense was $8,911 in Q2 2021 consisting of $2,000 relating to patents and $6,911 relating to Capital Assets (Q2 2020: $9,049) consisting of $2,123 relating to patents and $6,926 relating to Capital Assets).

10. The Company reports a non-cash expense of $2,735,044 relating to the revaluation of derivatives in Q2 2021 ( a non cash gain $1,434,549 relating to the revaluation of derivatives in Q2 2020). The significant swing in the quarterly non-cash expense in Q2 is attributable to the volatility of the Company's share price during the quarter ended April 30, 2021. The Company's closing share price at October 31, 2020, was $0.03 per share ; it was $0.05 per share at January 31 , 2021, the quarter end date when the derivative liability was last remeasured under IFRS guidelines. The Company's share price rose to $0.19 during Q2 and closed at $0.15 per share on April 30, 2021. This increased volatility in share price significantly impacts the periodic Black Scholes and binomial measurements of the derivative liabilities - at October 31 , 2020 the derivative liability was reported as $533,562; at January 31, 2021 it was reported as $1,254, 250; at April 30, 2021, it is $3,860,186. We believe that it is important to recognize that the revaluation of derivative liabilities on a quarterly basis , as reported in accordance with IFRS, results in a non-cash expense or income amount; the derivative liability that is reported at each quarter end is not a cash obligation of the Company to be discharged in future periods.

11. The gain on foreign exchange reported in Q2 2021 was $148,863 versus a gain of $127,280 in Q2 2020. This included the exchange adjustment relating to the translation of $CDN denominated transactions during the year and to Canadian denominated assets and liabilities at fiscal quarter end. It also included the foreign exchange relating to the initiation, renewal, conversion, and repayment of convertible debentures transactions during the period. The Company reports its financial statements in $USD which is its functional currency. The $CDN appreciated relative to the $USD between October 31, 2020, and April 30, 2021.

( c ) Unaudited Quarterly Financial Information - Summary

Three months ended (unaudited)	Revenues $	Expenses $	Income (loss) in period $		Loss per share $
July 31, 2019	-	554,533	(554,533	)	-
October 31, 2019	-	1,119,940	(1,119,940	)	-
January 31, 2020	-	1,726,023	(1,726,023	)	-
April 30, 2020	-	(1,071,746)	1,071,746		-
July 31, 2020	-	234,946	(234,946	)	-
October 31, 2020	-	356,170	(356,170	)
January 31,2021	-	1,220,301	(1,220,301	)	-
April 30,2021 ⁽¹⁾	-	3,055,877	(3,055,877	)	-

(1) The reported loss of $3,055,877 in the quarter ended April 30, 2021, includes net non-cash charges totaling $3,087,529 relating to the convertible debentures. Excluding these non-cash charges, the gain for the quarter ended April 30, 2021, would be $31,652.

Three months ended (unaudited)	Working capital (deficiency)		Capital assets at NBV	Other Assets	Total Assets	Shareholders' equity (deficit)
July 31, 2019	(4,189,540	)	6,847	149,177	189,025	(4,033,516	)
October 31, 2019	(4,301,324	)	2,677	20,000	83,484	(4,278,647	)
January 31, 2020	(5,387,954	)	70,046	18,000	296,256	(5,331,481	)
April 30, 2020	(4,140,569	)	63,120	15,877	141,860	(4,061,572	)
July 31, 2020	(3,994,076	)	56,187	13,877	108,438	(3,974,641	)
October 31, 2020	(4,202,571	)	49,249	11,877	278,026	(4,187,342	)
January 31, 2021	(4,694,513	)	42,364	9,877	124,318	(4,698,923	)
2021-04-30 ⁽¹⁾	(7,214,669	)	38,170	7,877	253,940	(7,219,626	)

(1) The working capital deficiency as reported includes $3,806,186 of non-cash expenses relating to derivative liabilities and a stale - dated disputed trade payable of $167,215. Excluding these amounts , the working capital deficiency would be $3,187,269.

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

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

5. RISKS AND UNCERTAINTIES

There are a number of risks which may individually or in the aggregate affect the long-term commercial success of the Company, both known and unknown. An investment in the Company should be considered 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 strides in advancing its technology and in developing a product portfolio and in engaging customers in joint development projects. There remains the risk that the Company must successfully complete development work on these products to have available commercially viable products which can be licensed or sold.

Customers' Willingness to Purchase:

We have entered into joint development agreements whereby our prototype products have been subjected to rigorous testing by our partners. We expect to be successful in completing remaining development work on our product portfolio. If we are successful in doing so, our partners will then have to decide the extent to which they will adopt our technology for future use for their applications. The future revenue streams for the Company are dependent upon the rate of adoption by our customers and their willingness to do so.

Patent Portfolio:

The Company has spent time and effort and incurred significant costs with respect to the maintenance and development of our intellectual property portfolio. In 2019, we decided to abandon certain provisional patent filings in international jurisdictions which we believe does not impact on the core patent technology that the Company maintains. Given the nature of IP development, the Company is subject to continuing risks that our patents could be successfully challenged and that our patent pending files may not ultimately be granted full patent status. While we continue to make 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 Company must continue to source financing in order to continue to support its business initiatives.

Competitors:

The Company is subject to competition from other entities that may 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 a difficult transition process.

Lawsuit:

The Company, since 2018, has been engaged in a lawsuit with Mr. Steven Van Fleet who, until his resignation on August 17, 2018, served as a director of the Company and as the President of the Company's wholly - owned subsidiary, MAST. This matter has now been decided in the courts and Mr Van Fleet's claims have been dismissed . The Company is awaiting the court ruling on damages to be awarded to the Company. There is no certainty of collection of any such funds once the Company has been awarded such damages.

Foreign Currency Exposure:

The Company expects to sell its products and license technologies in the United States, in Canada and abroad. It has raised financing in both $CDN and $USD. The Company has not hedged its foreign currency exposure. Foreign currency fluctuations present an ongoing risk to the business.

COVID-19 Pandemic:

The impact on the Company of the COVID-19 pandemic during the 2020 fiscal year and in the 6 months ending April 30, 2021, has been outlined earlier in this report, including the steps that management has taken in an attempt to maintain our operations. There remains substantial uncertainty as to the duration of the pandemic. If the pandemic continues for an extended period of time in 2021, there may be repercussions to the Company's ongoing business which could be significant.

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

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

6. 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 conditions and events that cast significant doubt about the Company's ability to continue as a going concern for a reasonable period in future. During the three months ended April 30, 2021, the Company reported a net loss and comprehensive loss of $3,055,877 (2020: $1,071,746) and negative cash flow from operations of $321,413 (2020: $166,230). The Company's working capital deficiency as at April 31, 2021, is $7,214,669 (October 31,2020 - $4,202,571).

The Company's future success depends on the profitable commercialization of its proprietary sensor technology. There is no assurance that the Company will be successful in the profitable commercialization of its technology. Based upon its current operating and financial plans, management of the Company believes that it will have sufficient access to financial resources to fund the Company's planned operations through fiscal 2021 and beyond; however, the ability of the Company to continue as a going concern is dependent on its ability to secure additional financing and/or to profitably commercialize its technology. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The COVID 19 pandemic has had a significant impact of the Company's operations through April 30, 2021, as discussed in the body of this MD&A document. There remains considerable uncertainty at this date as to the duration of the pandemic. If the pandemic continues for an extended period of time in 2021, there may be repercussions to the Company's ongoing business which could be significant.

If the "going concern" assumption was 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; in such cases, these adjustments would be material.

**********

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

7. OTHER MATTERS

(a) Critical Accounting Policies

The accounting policies the Company believes are critical to the financial reporting process include foreign currency translation, financial instruments, compound and hybrid financial instruments, derivative liabilities, the conversion features of the bridge loans, patents, impairment of long-lived assets, patents, deferred development costs, revenue recognition, stock-based compensation, and income taxes. These critical accounting policies are set forth in Note 4 to our consolidated financial statements as of October 31, 2020, and as updated in Note 4 to our unaudited condensed consolidated financial statements as of April 30,2021.

We believe that we are in full compliance with the terms of the government subsidies that the company has received as outlined on page 8 of this MD&A document Furthermore, we have considered the recent reporting guidelines for such government assistance and we believe that we have complied in all material respects with the prescribed accounting and reporting guidelines.

(b)

Legal matters: lawsuit vs Steven Van Fleet

The Company has previously reported on:

(i) The lawsuit filed by Mr. Van Fleet against Micromem and MAST seeking payment of $214,574 plus interest relating to alleged remuneration and expense reimbursements due to him prior to his resignation as an officer and director of Micromem and MAST on August 17, 2018.

(ii) The Company's response to the complaint whereby it denied the allegations in Mr. Van Fleet's claims and additionally its counterclaims against Mr. Van Fleet seeking damages of no less than $2.75 million and other remedies.

Counsel for the parties agreed that Mr. Van Fleet's deposition would proceed on July 31, 2020. The day before the deposition, Mr. Van Fleet's counsel advised the Company's counsel that if Mr. Van Fleet were to appear at the deposition, he would invoke his Fifth Amendment right not to incriminate himself with respect to the Company's counterclaims, and that rather than doing so, Mr. Van Fleet had chosen not to appear for his deposition and would never appear for his deposition in the future.

In light of this development, on September 25, 2020, the Company's counsel moved for default, asking the court to strike Mr. Van Fleet's claims and to enter a judgment in the Company's favor on its counterclaims. Mr. Van Fleet did not submit any opposition to the motion. Mr Van Fleet's counsel resigned in October 2020.

The deadline for Mr. Van Fleet to appeal the Company's motion was January 11, 2021; Mr Van Fleet did not appear nor was he represented by legal counsel in court on January 11^th. Micromem's motion for dismissal was thus uncontested and we are currently awaiting the court's decision on potential damages that Micromem may be awarded against Mr Van Fleet.

At October 31, 2020, and at April 30, 2021, the Company reports a nil amount as the value of Mr. Van Fleet's claims. The Company appeared in court on June 3^rd, 2021 to present its claim for damages. While the Company may obtain judgement for damages, we cannot yet predict the amount of damages that will be awarded. We have not recorded in our unaudited consolidated financial statements any amount of recovery for damages as at April 30, 2021.

(c) Contingencies and Commitments

The Company may be subject to litigation, claims and governmental and regulatory proceedings arising in the ordinary course of business. In such cases, the Company accrues a loss contingency for these matters when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. There are no such accruals reflected in the Company's accounts at April 30, 2021.

The Company has extended its lease for premises through July 2022. The lease term is for 5 years and stipulates base monthly rental expenses of $4,005 CDN. Lease commitments are as follows - commitments less than one year of $48,060 CDN, years 2-5: $8,010 CDN. The Company has had some relief provided through the CERS program as referenced on page 8 of this MD&A document.

(d)

Off-Balance Sheet Arrangements

At April 30, 2021, 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.

(e) Share Capital

At April 30, 2021, the Company reports 425,362,993 common shares outstanding (2020: 377,034,665). Additionally, the Company has 8,700,000 stock options outstanding with a weighted average exercise price of $0.06 per share (2020: 5,730,000 options outstanding with a weighted average exercise price of $0.25 per share).

(f) Management and Board of Directors

At our Annual Meeting of Shareholders held on September 8, 2020, Joseph Fuda, Oliver Nepomuceno, and Alex Dey were re-elected to serve on our Board of Directors; Brian Von Herzen was not put forward for reelection to the Board. Joseph Fuda and Dan Amadori continue to serve as officers of the Company.

Our management team and directors, along with their Q1 2021 remuneration, is presented as below:

Position	Q2 2021 remuneration
	Cash	Options	Total

President, Director	26,590	68,700	95,290
Director	-	22,900	22,900
Director	-	22,900	22,900
CFO	7,149	68,700	75,849

(g) Transactions with Related Parties

The Company reports the following related party transactions:

Key management compensation:

Key management personnel are persons responsible for planning, directing, and controlling activities of the Company, including officers and directors. Compensation paid or payable to these individuals (or companies controlled by such individuals) is summarized as:

		2021		2020

Professional, other fees and salaries	$	33,738	$	2,355

Stock based compensation		137,400		-

	$	171,138	$	2,355

In 2021 Q2, these parties were awarded a total of 3,000,000 options at an exercise price of $0.05 (2020 - $nil). In 2020 a total of 1.3 million common stock options, which were previously awarded to key management, were cancelled.

Trade payables and other liabilities:

As at April 30, 2021, and October 31, 2020 the Company includes $167,215 in trade payables owing to a company whose major shareholder was a director of the Company from February 2014 through September 2020 and who has also previously served as its Chief Technology Officer. The balance reported relates to alleged services provided in 2015; there have been no invoices submitted by this related party after October 31, 2015. The Company maintains that no amount is payable to by the Company.

Convertible debentures:

In May 2019, an officer of the Company provided a short-term loan of $15,000 CDN ($11,450 USD). At October 31, 2019, $10,000 CDN ($7,582 USD) in loan principal remains outstanding. In 2020, the remaining amount of loan principal was extinguished by participation of the CEO in the private placement which the Company completed at the time. The extinguishment of the debt for the shares received in the private placement resulted in a loss on conversion of $14,000 CDN ($10,600 USD).

In January 2018, an officer of the Company provided a convertible debenture of $150,000 CDN ($114,086 USD). At April 30, 2021 $10,001 CDN ($8,141 USD) remains outstanding (October 31, 2019, $52,319 CDN ($39,756 USD); October 31, 2018 - $ 100,862 CDN, $76,713 USD).

(h)

Liquidity and Capital Resources

Liquidity:

We currently report negative cash flow from operations. This result will only change once we are generating sufficient revenue from either license fees, royalties or the sale of products utilizing our technology.

We currently have no lines of credit in place. We must continue to obtain financing from investors or from clients in support of our development projects.

We have granted to our directors, officers, and employee's options to purchase shares at prices that are at or above market price on the date of grant. At January 31, 2021, there are 8,700,000 common stock options outstanding at an average exercise price of $0.06 per share.

Capital Resources: We have no commitments for capital expenditures as of April 30, 2021.

**********

MICROMEM TECHNOLOGIES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED APRIL 30, 2021

PREPARED AS OF JUNE 17, 2021

8. SUBSEQUENT EVENTS

Subsequent to April 30, 2021:

(a) The Company repaid $52,000 USD of convertible debentures. It also converted $50,000 CDN of convertible debentures through the issuance of 625,000 common shares.

(b) The Company repaid $25,000 USD of a short term loan.

(c) The Company extended convertible debentures for six (6) months, that were within 3 months of maturity date at April 30, 2021.

(d) The Company secured $99,600 USD in convertible debentures with a 12 month term and conversion features which become effective six months after initiation date.

(e) On June 3, 2021, the Company attended a virtual hearing in the New York State courts with respect to its claim for damages relating to the litigation that it had with Mr Van Fleet. The Company is awaiting the court's decision regarding its damages award.

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

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, 2021.

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, 2020 to April 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: June 17, 2021

/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, 2021.

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

5.2 not applicable

5.3 not applicable

Date: June 17, 2021

/s/ Dan Amadori

___________________________________________

Dan Amadori

Chief Financial Officer

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