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.

(c) Functional and presentation currency


 

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  

5.

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  

6.

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.