Micromem Technologies Inc (MMTIF) 6-K, filed Feb 25, 2020

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

February, 2020

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shall be deemed a part of such registration statement from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished by Micromem Technologies Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934.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: February 24, 2020	Name: Joseph Fuda
	Title: Chief Executive Officer

Exhibit Index

Exhibit	Description
99.1	Consolidated Financial Statements for the Years Ended October 31, 2019, 2018 and 2017
99.2	Management’s Discussion and Analysis for the Fiscal Year Ended October 31, 2019
99.3	Certification of Annual Filings - CEO
99.4	Certification of Annual Filings - CFO

Micromem Technologies Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Micromem Technologies Inc.

Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States Dollars)

Micromem Technologies Inc.

Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017(Expressed in United States Dollars)

Contents

Independent Auditors' Report	1
Consolidated Financial Statements:
Consolidated Statements of Financial Position	2
Consolidated Statements of Operations and Comprehensive Loss	3
Consolidated Statements of Changes in Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6-23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Micromem Technologies Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Micromem Technologies Inc.(the Company), which comprise the consolidated statements of financial position as at October 31, 2019 and 2018, and the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for each of the years in the three year period ended October 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of October 31, 2019 and 2018, and the results of its consolidated operations and its consolidated cash flows for each of the years in the three year period ended October 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2017.

Toronto, Ontario

February 24, 2020

Micromem Technologies Inc. Consolidated Statements of Financial Position As at October 31, 2019 and 2018 (Expressed in United States dollars)

	Notes		2019			2018
Assets
Current
Cash	19	$	46,056		$	206,832
Development costs receivable	7		-			81,841
Prepaid expenses and other receivables			14,751			16,731
Total current assets		$	60,807		$	305,404
Property and equipment			2,677			9,228
Patents	8		20,000			396,105
Total assets		$	83,484		$	710,737
Liabilities
Current
Trade payables and other liabilities	19(c)	$	997,632		$	1,007,220
Convertible debentures	9,19		2,599,074			2,476,571
Derivative liabilities	9,19		765,425			650,116
Total liabilities		$	4,362,131		$	4,133,907
Shareholders' Deficiency
Share capital	10		84,153,696			82,282,903
Contributed surplus			27,757,639			27,630,909
Equity component of convertible debentures	9		50,147			70,283
Accumulated deficit			(116,240,129	)		(113,407,265	)
Total shareholders' deficiency		$	(4,278,647	)	$	(3,423,170	)
Total liabilities and shareholders' deficiency		$	83,484		$	710,737
Going concern	2
Commitments	17
Contingencies	18
Subsequent events	22

The accompanying notes are an integral part of these consolidated financial statements

Approved on behalf of the Board of Directors:
"Joseph Fuda"	"Alex Dey"
Director	Director

Micromem Technologies Inc.

Consolidated Statements of Operations and Comprehensive Loss

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

	Notes		2019			2018			2017
Operating expenses
General and administration	14(a)	$	197,208		$	305,338		$	305,421
Professional, other fees and salaries	14(b)		441,981			747,280			1,433,113
Stock-based compensation	11		-			140,612			442,206
Development expense (recovery)	7		(41,546	)		(130,069	)		147,008
Travel and entertainment			52,568			101,496			118,261
Amortization of property and equipment			3,175			3,922			3,992
Amortization of patents	8		152,962			156,960			133,785
Impairment of patents	8		223,143			-			-
Foreign exchange loss (gain)	19(a)		(40,548	)		(117,779	)		343,210
Total operating expenses		$	988,943		$	1,207,760		$	2,926,996
Other expenses
Accretion expense	9		1,517,436			2,039,344			1,358,101
Interest expense	9		496,172			504,778			666,245
Financing costs	9		72,476			40,414			-
Gain on revaluation of derivative liabilities	9		(343,436	)		(1,094,718	)		(1,614,822	)
Loss on conversion of convertible debentures	9		101,919			63,852			1,009,680
Gain on extinguishment of convertible debentures	9		(646	)		(399,191	)		-
Total other expenses		$	1,843,921		$	1,154,479		$	1,419,204
Loss before income tax provision		$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Income tax provision	13		-			-			-
Net loss and comprehensive loss		$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Weighted average number of outstanding shares, basic and diluted	12		288,398,051			237,242,674			207,131,781
Basic and diluted loss per share	12	$	(0.01	)	$	(0.01	)	$	(0.02	)

The accompanying notes are an integral part of these consolidated financial statements

Micromem Technologies Inc. Consolidated Statements of Changes in Equity

For the years ended October 31, 2019, 2018 and 2017 (Expressed in United States dollars)

									Equity
									component of
		Number of					Contributed		convertible			Accumulated
	Notes	shares			Share capital		surplus		debentures			deficit			Total
Balance at November 1, 2016		204,388,569		$	75,855,139	$	26,918,470	$	23,075		$	(106,698,826	)	$	(3,902,142	)
Private placements of shares for cash	10	3,873,223			719,403		-		-			-			719,403
Shares issued on settlement of accounts payable		547,643			107,708		-		-			-			107,708
Stock-based compensation	11	-			-		442,206		-			-			442,206
Shares issued as settlement of wages		132,381			21,909		-		-			-			21,909
Convertible debentures converted into common shares		20,370,895			2,536,963		-		-			-			2,536,963
Reallocation from derivative liability for conversion		-			20,970		-		-			-			20,970
Treasury shares cancelled		(750,000	)		-		-		-			-			-
Loss on conversion of convertible debentures		-			936,102		-		38,975			-			975,077
Net loss		-			-		-		-			(4,346,200	)		(4,346,200	)
Balance at October 31, 2017		228,562,711		$	80,198,194	$	27,360,676	$	62,050		$	(111,045,026	)	$	(3,424,106	)
Private placements of shares for cash	10	14,739,272			866,200		-		-			-			866,200
Shares issued on settlement of accounts payable		79,765			13,379		-		-			-			13,379
Stock-based compensation	11	-			-		140,612		-			-			140,612
Convertible debentures converted into common shares	9	16,220,951			1,205,130		-		-			-			1,205,130
Expiry of convertible debenture conversion option		-			-		129,621		(129,621	)		-			-
Renewal of convertible debentures	15	-			-		-		137,854			-			137,854
Net loss		-			-		-		-			(2,362,239	)		(2,362,239	)
Balance at October 31, 2018		259,602,699		$	82,282,903	$	27,630,909	$	70,283		$	(113,407,265	)	$	(3,423,170	)
Private placements of shares for cash	10	4,961,059			212,968		-		-			-			212,968
Financing costs converted into common shares	9	350,000			21,000										21,000
Convertible debentures converted into common shares	9	82,038,963			1,636,825		-		-			-			1,636,825
Expiry of convertible debenture conversion option		-			-		126,730		(126,730	)		-			-
Renewal of convertible debentures	15	-			-		-		106,594			-			106,594
Net loss		-			-		-		-			(2,832,864	)		(2,832,864	)
Balance at October 31, 2019		346,952,721		$	84,153,696	$	27,757,639	$	50,147		$	(116,240,129	)	$	(4,278,647	)

The accompanying notes are an integral part of these consolidated financial statements

Micromem Technologies Inc. Consolidated Statements of Cash Flows

For the years ended October 31, 2019, 2018 and 2017 (Expressed in United States dollars)

	Notes		2019			2018			2017
Operating activities
Net loss		$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Items not affecting cash:
Stock-based compensation	11		-			140,612			442,206
Amortization of property and equipment			3,175			3,922			3,992
Amortization of patents	8		152,962			156,960			133,785
Impairment of patents	8		223,143			-			-
Bad debt expense			-			10,000			-
Accretion expense	9,15		1,517,436			2,039,344			1,358,101
Convertible debenture interest converted	9,15		63,409			47,435			-
Accrued interest on convertible debentures	15		164,243			125,328			666,245
Shares issued for financing costs	9		21,000			-			-
Gain on revaluation of derivative liabilities	9,15		(343,436	)		(1,094,718	)		(1,614,822	)
Loss on conversion of convertible debentures	9		101,919			63,852			1,009,680
Gain on extinguishment of convertible debentures	9,15		(646	)		(399,191	)		-
Loss on disposal of property and equipment			5,000			220			983
Foreign exchange gain	19(a)		(136,606	)		(87,033	)		-
			(1,061,265	)		(1,355,508	)		(2,346,030	)
Net changes in non-cash working capital:
Decrease (increase) in development costs receivable	7		81,841			324,016			(415,857	)
Decrease (increase) in prepaid expenses and other assets			1,980			33,582			(16,986	)
Increase (decrease) in trade payables and other liabilities			(4,993	)		(341,399	)		723,631
Cash flows used in operating activities			(982,437	)		(1,339,309	)		(2,055,242	)
Investing activities
Purchase of property and equipment			-			(3,548	)		(3,809	)
Patents	8		-			(121,603	)		(161,647	)
Cash flows used in investing activities			-			(125,151	)		(165,456	)
Financing activities
Private placements of shares for cash	10		212,968			866,200			719,403
Proceeds from issuance of convertible debentures	15		780,891			1,457,983			1,788,974
Repayments of convertible debentures	9,15		(172,198	)		(662,080	)		(581,618	)
Repayments from related parties			-			-			15,000
Cash flows provided by financing activities			821,661			1,662,103			1,941,759
Net change in cash			(160,776	)		197,643			(278,939	)
Cash - beginning of year			206,832			9,189			288,128
Cash - end of year		$	46,056		$	206,832		$	9,189
Supplemental cash flow information
Interest paid (classified in operating activities)	9	$	353,214		$	322,930		$	321,700
Income taxes paid	13	$	-		$	-		$	-
Shares issued on settlement of convertible debentures	9	$	1,636,825		$	1,205,130		$	2,536,963
Shares issued on settlement of accounts payable		$	-		$	13,379		$	107,708
Shares issued on settlement of wages		$	-		$	-		$	21,909

The accompanying notes are an integral part of these consolidated financial statements

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

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 October 31, 2019 and is devoting substantially all its efforts to securing commercial revenue opportunities.

2. Going concern

These 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 year ended October 31, 2019, the Company reported a net loss and comprehensive loss of $2,832,864 (2018 - $2,362,239; 2017 - $4,346,200) and negative cash flow from operations of $982,437 (2018 - $1,339,309; 2017 - $2,055,242). The Company's working capital deficiency as at October 31, 2019 is $4,301,324 (2018 – $3,828,503).

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 2020; however, the ability of the Company to continue as a going concern is dependent upon its ability to secure additional financing and/or profitably commercialize its technology. These 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.

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

3. Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the IFRS Interpretations Committee ("IFRIC"). The Company applied, as of November 1, 2018, International Financial Reporting Standard ("IFRS") 9 Financial instruments. The nature and effect of those changes are disclosed in Note 5. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

These consolidated financial statements were authorized for issuance and release by the Company's Board of Directors on February 24, 2020.

(a) Basis of consolidation

These 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 traditionally had the primary responsibility for the exploitation of the Company's technologies in conjunction with various strategic partners and customers.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

3. Basis of presentation (continued)

(a) Basis of consolidation (continued)

(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 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 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 consolidated financial statements in conformity with IFRSs 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 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 in the following section.

(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.

(iii) Income taxes

Income taxes and tax exposures recognized in the 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.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

3. Basis of presentation (continued)

(d) Use of estimates and judgments (continued)

(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.

(v) Expected credit losses on financial assets

Determining an allowance for expected credit losses ("ECLs") for all debt financial assets not held at fair value through profit or loss requires management to make assumptions about the historical patterns for the probability of default, the timing of collection and the amount of incurred credit losses, which are adjusted based on management's judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than historical patterns suggest.

4. Summary of significant accounting policies

The principal accounting policies applied to the preparation of these consolidated financial statements are set out below:

(a) Foreign currency translation

These consolidated financial statements are presented in USD, which is the functional currency of the Company and all of its subsidiaries. At each reporting date, foreign currency denominated monetary assets and liabilities are translated at year-end exchange rates. Non- monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Income and expenses, and cash flows of foreign operations, are translated into USD using annual average exchange rates. Exchange differences arising from operating transactions are recorded in operating profit or loss for the period; exchange differences related to financing transactions are recognized in finance income or directly in equity.

(b) Financial instruments

The Company aggregates similar financial instruments into classes based on their nature and characteristics. All financial assets except those classified as fair value through profit or loss are reviewed at each reporting date to determine whether there is any indication of impairment. Financial assets are considered to be impaired when there is objective evidence that the estimated future cash flows of the investment have been affected as a result of one or more events that occurred after the initial recognition.

The Company's accounting policy for each class of financial instruments is as follows:

(i) Fair value through profit or loss

Financial instruments classified as fair value through profit or loss are reported at fair value at each reporting date, and any change in fair value is recognized in net income in the period during which the change occurs. In these consolidated financial statements, cash and derivative liabilities have been classified as fair value through profit or loss.

(ii) Loans and receivables and other financial liabilities

Financial instruments classified as loans and receivables and other financial liabilities are carried at amortized cost using the effective interest method. Transaction costs are included in the amount initially recognized. In these consolidated financial statements, development costs receivable have been classified as loans and receivables. Trade payables and other liabilities and convertible debentures have been classified as other financial liabilities.

The Company issues convertible debentures used as bridge loans, which can be converted into common shares at the option of the holder, into a fixed number of shares for a fixed amount of consideration, or into a fixed number of shares for a variable amount of consideration, or into a variable number of shares.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

4. Summary of significant accounting policies (continued)

(i) Initial recognition

Upon initial recognition, the Company determines whether the convertible debentures consist of liability and equity components, or if both components represent liabilities.

For convertible debentures which provide conversion into a fixed number of shares, the liability component is recognized initially at the fair value of a similar, non-convertible liability. The equity component is recognized as the difference between the fair value of the instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

For convertible debentures which provide conversion into a variable number of shares or into a fixed number of shares for a variable amount of consideration, the conversion option is accounted for as an embedded derivative, which is separated from the host contract. Upon initial recognition, the derivative liability is valued at fair value using a Black Scholes or a binomial pricing model. The carrying amount of the convertible debenture is recognized as the difference between the fair value of the instrument as a whole and the fair value of the derivative liability. Any directly attributable transaction costs allocated to the derivative liability are expensed in the period

(ii) Modifications and extinguishments

To the extent there are changes to the terms of outstanding convertible debentures, these changes may be recorded as a modification or an extinguishment. A substantial change in the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. A modification of the original financial liability is accounted for as an adjustment to the effective interest rate.

(d) Property and equipment

Property and equipment are recorded at cost and are amortized over their estimated useful lives at the following annual rates and methods:

	Method	Rate
Computers	Declining balance	30%
Furniture and equipment	Declining balance	30%

(e) Impairment of long-lived assets

The Company follows the guidelines prescribed in IAS 36 with respect to the measurement for impairment of assets. The carrying amounts of property and equipment and patents are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable. When the carrying amount exceeds the estimated recoverable amount, the assets are written down to their recoverable amount.

The recoverable amount of long-lived assets is the greater of fair value less costs to sell and value in use. Impairment losses are recognized in the consolidated statements of loss and comprehensive loss.

(f) Development costs

Research costs are expensed in the period incurred. Development costs are expensed as incurred unless they meet the criteria for capitalization. Expenditures during the development phase are capitalized if the Company can demonstrate each of the following criteria:

(i) the technical feasibility of completing the asset so that it will be available for use or sale, (ii) its intention to complete the asset and use or sell it, (iii) its ability to use or sell the asset, (iv) how the asset will generate probable future economic benefits, (v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset, and (vi) its ability to measure reliably the expenditure attributable to the asset during its development; otherwise, these costs are expensed as incurred. Payments received from development partners on projects are recorded to deferred development costs as a recovery of costs incurred.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

4. Summary of significant accounting policies (continued)

(g) Patents

Patents are recorded at cost and are amortized on a straight line basis over their estimated useful lives of 5 years.

(h) Stock-based compensation and other stock-based payments

Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized in net income over the vesting period. Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. When the value of goods or services received in exchange for the stock-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model. The cost recognized for all equity-settled stock-based payments are reflected in contributed surplus, until the instruments are exercised. Upon exercise, shares are issued from treasury and the amount previously reflected in contributed surplus along with any proceeds paid upon exercise, are credited

to share capital.

(i) Income taxes

The Company accounts for its income taxes using the deferred tax assets and liabilities method. Deferred income tax assets and liabilities are determined based on the difference between the carrying amount and the tax basis of the assets and liabilities. Any change in the net amount of deferred income tax assets and liabilities is included in profit or loss or equity. Deferred income tax assets and liabilities are determined based on enacted or substantively enacted tax rates and laws which are expected to apply to taxable profit for the years in which the assets and liabilities will be recovered or settled. Deferred income tax assets are recognized when it is probable they will be realized. Deferred tax assets and liabilities are not discounted.

(j) Provisions

Provision for risks and expenses are recognized for probable outflows of resources that can be estimated and that result from present obligations resulting from past events. In the case where a potential obligation resulting from past events exists, but where occurrence of the outflow of resources is not probable or the estimate is not reliable, these contingencies are disclosed. Provisions, if any, are measured based on management's best estimates of outcomes on the basis of facts known at the reporting date.

(k) Share capital

Share capital is presented at the fair value of the shares issued. Costs related to the issuance of shares are reported in equity, net of tax, as a deduction from the issuance proceeds.

(l) Earnings or loss per share

The Company presents basic and diluted earnings per share data for its common shares. Basic earnings per share is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, for the effects of all potentially dilutive common shares, which comprise stock options and convertible debentures.

5. Adoption of new accounting pronouncements

(a) Amendments to IFRS 2 Share-based payments

IFRS 2 clarifies how to account for certain types of share-based payment transactions. The amendments provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, share-based payment transactions with a net settlement feature for withholding tax obligations, and a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. The effective date of these amendments is for annual periods beginning January 1, 2018. The Company has adopted these amendments as of the effective date and has assessed no significant changes as a result of the adoption of these amendments.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

5. Adoption of new accounting pronouncements (continued)

(b) IFRS 9 Financial instruments

IFRS 9 addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a new mixed measurement model having only two categories: amortized cost, and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income ("FVOCI"). The effective date of this standard is for annual periods beginning January 1, 2018. The Company has adopted this new standard as of its effective date on a retrospective basis with the exception of financial assets that were derecognized at the date of initial application, November 1, 2018. There was no significant impact on these consolidated financial statements as a result of the adoption of this new standard. The new classification and measurement of the Company's financial assets are as follows:

(i) Amortized cost

This category includes financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the solely principal and interest ("SPPI") criterion. Financial assets classified in this category are measured at amortized cost using the effective interest method.

(ii) Fair value through profit or loss ("FVTPL")

This category includes derivative instruments as well as quoted equity instruments which the Company has not irrevocably elected, at initial recognition or initial application date, to classify at FVOCI. This category would also include debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect and sell contractual cash flows. Financial assets in this category are recorded at fair value with changes recognized in profit or loss.

(iii) Impairment of financial assets

Critical to the determination of ECLs is the definition of default and the definition of a significant increase in credit risk. The definition of default is used in measuring the amount of ECLs and in the determination of whether the loss allowance is based on 12- month or lifetime ECLs. The Company considers the following as constituting an event of default: the borrower is past due more than 90 days on any material credit obligation, or the borrower is unlikely to pay its credit obligations to the Company in full. The Company monitors all financial assets that are subject to the impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk, the Company will measure the loss allowance based on lifetime rather than 12-month ECLs. In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Company compares the risk of a default on the financial asset at the current reporting date against the risk of a default that was anticipated when the financial asset was first recognized, adjusted for remaining maturity of the instrument.

The IFRS 9 requirements for the classification and measurement of financial liabilities are substantially unchanged from IAS 39 except for the removal of cost exception for derivative financial liabilities and changes in fair value as a result of entity's own credit risk now recognized in OCI. The Company has assessed no change in classification and measurement of financial liabilities.

The assessment of the Company's business models was made as of the date of initial application, November 1, 2018, and then applied retrospectively to those financial instruments that were not derecognized before November 1, 2018. There was no adjustment to opening accumulated deficit resulting from the retrospective application of IFRS 9 to these financial instruments.

	IFRS 9	IAS 39
Financial assets
Cash	Amortized cost	FVTPL
Development costs receivable	Amortized cost	Amortized cost
Other receivables	Amortized cost	Amortized cost
Financial liabilities
Trade payables and other liabilities	Amortized cost	Amortized cost
Convertible debentures	Amortized cost	Amortized cost
Derivative liabilities	FVTPL	FVTPL

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

5. Adoption of new accounting pronouncements (continued)

IFRS 15 replaces the previous guidance on revenue. This standard specifies how and when revenue should be recognized based on a five- step model, which is applied to all contracts with customers. The revenue recognition model has changed from one based on the transfer of risks and rewards of ownership to one based on the transfer of control. IFRS 15 became effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company has adopted this new standard as of its effective date, using the full retrospective method of adoption. The Company does not have any current contracts with customers and has assessed no changes to current and prior reporting periods as a result of the adoption of this new standard.

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

(a) IFRS 16 Leases

IFRS 16 replaces the previous guidance on leases. This standard provides a single recognition and measurement model to be applied by lessees to leases, with required recognition of assets and liabilities for most leases. This standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. The Company will adopt this new standard as of its effective date.

The Company has reviewed all of the Company's leasing arrangements as at October 31, 2019, in respect of the new lease standard. The standard will primarily affect the accounting of the Company's operating leases. At the reporting date, the Company has non-cancellable operating lease commitments of $132,165 CDN (Note 17). The Company intends to apply the simplified transition approach and will not restate comparative amounts to the year prior to adoption. The Company expects to approximately recognize net right-of-use assets of $74,307, current lease liabilities of $36,442, and non-current lease liabilities of $37,865. The Company does not expect any adjustment to opening accumulated deficit as at November 1, 2019. The Company expects that profit (loss) will decrease (increase) by approximately $4,374 for the year ended October 31, 2020 as a result of the application of IFRS 16.

(b) IFRIC 23 Uncertainty over income tax treatments

IFRIC 23 clarifies the application of recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. It specifically addresses whether an entity considers each tax treatment independently or collectively, the assumptions an entity makes about the examination of tax treatments by taxation authorities, how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, and how an entity considers changes in facts and circumstances. IFRIC 23 will be effective for the annual periods beginning on or after January 1, 2019, with earlier application permitted. The Company will adopt this interpretation as of its effective date. The Company has performed a preliminary analysis and has not assessed any significant impacts as a result of the adoption of this standard.

7. Development costs receivable

The Company incurs development costs, and recovers from its development partners, a portion of the costs it has incurred in accordance with meeting milestones as stipulated in development contracts. The remaining balances outstanding from its development partners are recorded as development costs receivable on the statement of financial position.

8. Patents

		November 1,				October 31,							October 31,
		2017		Additions		2018		Additions		Impairment			2019
Cost	$	782,828	$	121,603	$	904,431	$	-	$	(223,143	)	$	681,288
Accumulated amortization		351,366		156,960		508,326		152,962		-			661,288
Net book value	$	431,462			$	396,105						$	20,000

The Company holds several patents in the United States for its Multimodal Fluid Condition Sensor Platform. In prior years, the Company had negotiated with a major automotive company and a Tier 1 manufacturer for the development and commercial exploitation of this patented technology. In 2019, the Company discontinued provisional patent applications in international jurisdictions and determined that patents was impaired, its carrying amount was higher than its recoverable amount. The value in use, measured as the present value of the future cash flows expected to be derived from this asset class, has been estimated at a minimum of $20,000 at October 31, 2019. Accordingly, the Company has recorded an impairment reserve of $223,143 in the current fiscal year. The Company maintains that there remains significant potential value in its existing patents in terms of potential licensing agreements and royalty fees once it begins to exploit this asset class in the future.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

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 receivable upon conversion caused by foreign exchange, and USD denominated convertible debentures with an embedded derivative caused by variable conversion prices.

										Equity component of
		Convertible debentures				Derivative liabilities				convertible debentures
		2019		2018		2019		2018		2019		2018
(a)	$	2,511,514	$	2,419,877	$	204,366	$	151,918	$	50,147	$	70,283
(b)		87,560		56,694		561,059		498,198		-		-
	$	2,599,074	$	2,476,571	$	765,425	$	650,116	$	50,147	$	70,283

(a) USD denominated debentures with equity components and CDN denominated debentures with embedded derivatives

All loan principal amounts are expressed in original currency and all remaining dollar amounts expressed in USD. Convertible debentures outstanding as at October 31:

		(equity component)			CDN (embedded derivative)
		2019	2018		2019		2018
Loan Principal
Opening balance	$	931,000	730,000	$	2,234,294	$	2,392,860
Issuance during the year		-	231,000		165,266		1,035,800
Repayment or conversion		-	(30,000		(128,543		(1,194,366
Outstanding at year-end	$	931,000	931,000	$	2,271,017	$	2,234,294
Terms of Loan
Annual interest rate		12% - 24%	12% - 24%		12% - 24%		12% - 24%
Effective annual interest rate		24% - 36%	36% - 37%		13% - 645%		23% - 398%
Conversion price to common shares		0.04 - 0.07	0.04 - 0.21		0.05 - 0.15		0.05 - 0.15
Remaining life (in months)		1 - 6	0 - 7		0 - 12		0 - 7
Consolidated Statements of Financial Position
Carrying value of loan principal	$	906,993	894,838	$	1,464,416	$	1,428,616
Interest payable		18,661	15,100		121,444		81,323
Convertible debentures	$	925,654	909,938	$	1,585,860	$	1,509,939
Derivative liability	$	-	-	$	204,366	$	151,918
Equity component	$	50,147	70,283	$	-	$	-
Consolidated Statements of Operations and Comprehensive Loss
Accretion expense	$	118,749	110,469	$	914,780	$	1,652,007
Interest expense	$	191,001	168,052	$	229,673	$	284,908
Gain on revaluation of derivative liability	$	-	-	$	(846,401	$	(1,322,507
Loss on conversion of debentures	$	-	-	$	-	$	6,261
Loss (gain) on extinguishment	$	-	2,792	$	(2,865	$	(401,983
Consolidated Statements of Changes in Equity
Amount of principal converted to common shares	$	-	-	$	-	$	19,023
Amount of interest converted to common shares	$	-	-	$	-	$	60,634
Number of common shares issued on conversion of
convertible debentures		-	-		-		770,962
Consolidated Statements of Cash Flows
Amount of principal repaid in cash	$	-	30,000	$	96,598	$	632,080
Amount of interest repaid in cash	$	187,440	161,424	$	159,801	$	161,506

All values are in US Dollars.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

9. Convertible debentures (continued)

(b) USD denominated debentures with embedded derivatives

During the year ended October 31, 2019, the Company has incurred $72,476 (2018 - $40,414; 2017 - $nil) financing costs which primarily consist of early repayment premiums and admin fees relating to the convertible debentures, of which $21,000 (2018 - $nil; 2017 - $nil) was converted into common shares.

Convertible debentures outstanding as at October 31:

			(i)						(ii)
		2019			2018			2019			2018
Loan Principal
Opening balance	$	213,600		$	-		$	101,250		$	-
Issuance during the year		563,600			278,600			307,250			142,750
Conversion		(397,600	)		(65,000	)		(287,500	)		(41,500	)
Repayment		(75,600	)		-			-			-
Outstanding at year-end	$	304,000		$	213,600		$	121,000		$	101,250
Terms of Loan
Annual interest rate		4%			12%			10%			10%
Effective annual interest rate		139% - 5044%			4380% - 4932%			4338% - 5368%			3873% - 5658%
Conversion price to common shares		(i)			(i)			(ii)			(ii)
Remaining life (in months)		6 - 11			4 - 12			3 - 12			6 - 8
Consolidated Statements of Financial Position
Carrying value of loan principal	$	39,993		$	772		$	23,429		$	262
Interest payable		10,953			12,973			13,185			4,238
Convertible debentures	$	50,946		$	13,745		$	36,614		$	4,500
Derivative liability	$	370,759		$	190,274		$	190,300		$	89,328
Consolidated Statements of Operations and Comprehensive Loss
Accretion expense	$	57,111		$	2,496		$	165,753		$	264
Interest expense	$	27,053		$	11,769		$	21,916		$	4,670
Loss on revaluation of derivative liability	$	196,842		$	8,690		$	294,673		$	16,332
Loss on conversion of debentures	$	49,738		$	3,652		$	52,181		$	10,513
Loss on extinguishment	$	2,219		$	-		$	-		$	-
Consolidated Statements of Changes in Equity
Amount of principal converted to common shares	$	397,600		$	65,000		$	287,500		$	41,500
Amount of interest converted to common shares	$	23,100		$	-		$	21,969		$	6,400
Number of common shares issued on conversion of convertible debentures		29,106,847			2,456,707			33,421,726			982,921
											-
Consolidated Statements of Cash Flow
Amount of principal repaid in cash	$	75,600		$	-		$	-		$	-
Amount of interest repaid in cash	$	5,973		$	-		$	-		$	-

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

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

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

9. Convertible debentures (continued)

(b) USD denominated debentures with embedded derivatives (continued)

Convertible debentures outstanding as at October 31:

								(iv)
		2019		2018			2019			2018
Loan Principal
Opening balance	$	-	$	100,200		$	308,000		$	343,000
Issuance during the year		-		175,800			-			308,000
Conversion		-		(276,000	)		(308,000	)		(343,000	)
Outstanding at year-end	$	-	$	-		$	-		$	308,000
Terms of Loan
Annual interest rate		n/a		12%			5%			5%
Effective annual interest rate		n/a		264% - 6002%			5234%			160% - 5242%
Conversion price to common shares		(iii)		(iii)			(iv)			(iv)
Remaining life (in months)		n/a		n/a			n/a			1 - 5
Consolidated Statements of Financial Position
Carrying value of loan principal	$	-	$	-		$	-		$	26,755
Interest payable		-		-			-			11,694
Convertible debentures	$	-	$	-		$	-		$	38,449
Derivative liability	$	-	$	-		$	-		$	218,596
Consolidated Statements of Operations and Comprehensive Loss
Accretion expense	$	-	$	61,453		$	261,042		$	212,655
Interest expense	$	-	$	14,816		$	22,443		$	20,563
Loss (gain) on revaluation of derivative liability	$	-	$	19,375		$	11,451		$	183,392
Loss on conversion of debentures	$	-	$	43,426		$	-		$	-
Loss on extinguishment	$	-	$	-		$	-		$	-
Consolidated Statements of Changes in Equity
Amount of principal converted to common shares	$	-	$	276,000		$	308,000		$	343,000
Amount of interest converted to common shares	$	-	$	10,145		$	18,339		$	12,554
Number of common shares issued on conversion of convertible debentures		-		6,076,094			19,510,390			5,934,267

(iii) Conversion price defined as 80% multiplied by lowest 3 closing stock prices for the 10 trading days prior to conversion date.

(iv) Conversion price defined as 75% multiplied by lowest stock price for the 15 trading days prior to conversion date.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

9. Convertible debentures (continued)

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:

	2019	2018
Share price	$0.02	$0.03
Exercise price	$0.01 - $0.11	$0.02 - $0.11
Volatility factor (based on historical volatility)	173% - 321%	168% - 297%
Risk free interest rate	1.67% - 1.69%	1.74% - 2.22%
Expected life of conversion features (in months)	0 - 12	0 - 12
Expected dividend yield	0%	0%
CDN to USD exchange rate (as applicable)	0.7582	0.7609
Call value	$0.00 - $0.02	$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

(i) In 2019, the Company completed four private placements with investors consisting of common shares with no warrants, pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $212,968 and issued a total of 4,961,059 common shares.

(ii) In 2018, the Company completed thirty-three private placements with investors consisting of common shares with no warrants, pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $866,200 and issued a total of 14,739,272 common shares.

(iii) In 2017, the Company completed twenty-four private placements with investors consisting of common shares, with no warrants, pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $719,403 and issued a total of 3,873,223 common shares.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

11. Stock options

(a) Stock option plan

The Company has a fixed stock option plan. Under the Company's stock option plan (the "Plan"), the Company may grant options for up to 18,840,000 shares of common stock to directors, officers, employees or consultants of the Company and its subsidiaries. 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.

(b) Summary of changes

	Number of			Weighted average
	options			exercise price
Outstanding at November 1, 2017	6,595,000		$	0.37
Granted ^(i)^	2,200,000			0.10
Expired	(2,545,000	)		0.34
Outstanding at October 31, 2018
	6,250,000		$	0.29
Expired	(520,000	)		0.34
Outstanding at October 31, 2019	5,730,000		$	0.25

(i) The fair value of the options granted was determined in accordance with the Black Scholes option-pricing model. The underlying assumptions are as follows:

	2018
Share price	$0.09
Exercise price	$0.10
Volatility factor (based on historical volatility)	95%
Risk free interest rate	2.07%
Expected life of conversion features (in months)	60
Expected dividend yield	0%
Forfeiture rate	0%

All options vest immediately upon issuance. There were no options issued to directors and officers during the year ended October 31, 2019 (2018 - 700,000; 2017 - 2,500,000) nor employees (2018 - 1,500,000; 2017 - 390,000).

				Weighted average
					Remaining
		Number of			contractual life
Date of issue	Expiry Date	options		Exercise price	(years)
June 4, 2015	June 4, 2020	300,000	$	0.49	0.6
August 20, 2015	August 20, 2020	940,000		0.46	0.8
September 30, 2015	September 30, 2020	250,000		0.40	0.9
December 30, 2016	December 30, 2021	2,040,000		0.25	2.2
June 29, 2018	June 29, 2023	2,200,000		0.10	3.7
Outstanding and exercisable at October 31, 2019		5,730,000	$	0.25	2.4

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

12. Loss per share

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

Numerator		2019			2018			2017
Loss attributable to common shareholders	$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Loss used in computation of basic and diluted loss per	$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Denominator		2019			2018			2017
Weighted average number of common shares for computation of basic and diluted loss per share		288,398,051			237,242,674			207,131,781

For the year ended October 31, 2019, 2018 and 2017, all stock options and conversion options were anti-dilutive and, therefore, are excluded from the calculation of diluted loss per share.

13. Income taxes

(a) The Company has non-capital losses of approximately $30.5 million available to reduce future taxable income, the benefit of which has not been recognized in these consolidated financial statements. At October 31, 2019, the tax losses expire as follows:

		Canada		Other foreign		Total
2026	$	1,824,942	$	-	$	1,824,942
2027		1,534,633		-		1,534,633
2028				-		-
2029		1,572,795		452,762		2,025,557
2030		2,122,111		1,880,897		4,003,008
2031		1,278,506		18,526		1,297,032
2032		1,416,917		325,793		1,742,710
2033		1,717,443		157,463		1,874,906
2034		2,484,557		679,089		3,163,646
2035		2,807,765		570,901		3,378,666
2036		3,295,071		441,019		3,736,090
2037		2,637,800		232,719		2,870,519
2038		1,783,250		-		1,783,250
2039		1,224,688		5,254		1,229,942
	$	25,700,478	$	4,764,423	$	30,464,901

(b) In addition, the Company has available capital loss carry forwards of approximately $1.3 million to reduce future taxable capital gains, the benefit of which has not been recognized in these consolidated financial statements. Capital losses carry forward indefinitely.

(c) 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. Significant components of the Company's deferred tax assets and liabilities are as follows:

		2019			2018			2017
Non-capital losses and other	$	8,073,286		$	7,698,859		$	7,277,434
Capital losses		175,090			175,090			350,180
Property, equipment, patents and deferred costs		1,668,632			1,567,228			1,598,394
	$	9,917,008		$	9,441,177		$	9,226,008
Deferred tax asset not recognized		(9,917,008	)		(9,441,177	)		(9,226,008	)
	$	-		$	-		$	-

As at October 31, 2019 and 2018, the Company assessed that it is not probable that sufficient taxable profit will be available to use deferred income tax assets based on operating losses in prior years; therefore, there are no balances carried in the consolidated statements of financial position for such assets.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

13. Income taxes (continued)

(d) The reconciliation of income tax attributed to continuing operations computed at the statutory tax rates to income tax expense is as follows:

		2019			2018			2017
Loss before income taxes	$	(2,832,864	)	$	(2,362,239	)	$	(4,346,200	)
Statutory tax rate		26.50%			26.50%			26.50%
Expected income tax recovery	$	(750,709	)	$	(625,993	)	$	(1,151,743	)
Non-deductible expenses and other items		270,610			182,056			413,499
Effect of exchange rate on deferred tax assets carried forward		4,269			225,846			424,023
Effect of higher tax rates in foreign jurisdiction		-			-			163,651
Change in deferred tax assets not recognized		475,830			218,091			150,570
	$	-		$	-		$	-

14. Operating expenses

(a) General and administration

The components of general and administration expenses are as follows:

		2019		2018		2017
General and administrative	$	56,720	$	63,936	$	98,187
Rent and occupancy		64,647		70,674		72,725
Office insurance		26,812		117,615		54,023
Investor relations, listing and filing fees		49,029		53,113		80,486
	$	197,208	$	305,338	$	305,421

(b) Professional, other fees and salaries

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

		2019		2018		2017
Professional fees	$	157,354	$	165,685	$	224,139
Consulting fees		53,845		316,815		813,735
Salaries and benefits		230,782		264,780		395,239
	$	441,981	$	747,280	$	1,433,113

15. Supplemental cash flow information

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

		2019			2018
Balance - beginning of year	$	3,126,687		$	2,978,751
Cash flows from financing activities:
Proceeds from issuance of convertible debentures		780,891			1,457,983
Repayments of convertible debentures		(172,198	)		(662,080	)
Non-cash changes:
Increase in loan principal ^(i)^		60,000			-
Accretion expense		1,517,436			2,039,344
Accrued interest on convertible debentures		164,243			125,328
Gain on revaluation of derivative liabilities		(343,436	)		(1,094,718	)
Gain on extinguishment of debt		(646	)		(399,191	)
Convertible debentures converted into common shares		(1,636,825	)		(1,093,842	)
Renewal of convertible debentures		(106,594	)		(137,854	)
Foreign exchange gain		(25,059	)		(87,034	)
Balance - end of year	$	3,364,499		$	3,126,687

(i) In accordance with the convertible debenture agreements, additional consideration was provided as of the conversion date, based on the stipulated conversion price.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

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:

		2019		2018		2017
Professional, other fees, and salaries	$	4,684	$	235,297	$	667,724
Stock-based compensation		-		44,740		382,531
	$	4,684	$	280,037	$	1,050,255

In 2019, these parties were not awarded any options (2018 - 700,000 options at an exercise price of $0.10; 2017 - 1,950,000 options at an exercise price of $0.25).

(b) Trade payables and other liabilities

As at October 31, 2019 and 2018, the Company reports in trade payables and other liabilities a balance owing to the former President of MAST of $193,174 which represents alleged outstanding wages payable, see Note 18(b).

As at October 31, 2019 and 2018, the Company reports $167,000 in trade payables and other liabilities owing to a company whose major shareholder is a 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. The balance reported relates to alleged services provided in 2015; there have been no invoices submitted by this related party after October 31, 2015.

In May 2019, the CEO of the Company subscribed 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 remains outstanding.

In January 2018, the CEO of the Company subscribed for a convertible debenture of $150,000 CDN ($114,138 USD). At October 31, 2019, $52,319 CDN ($39,756 USD)(October 31, 2018 - $ 100,862 CDN, $76,713 USD) in loan principal remains outstanding.

17. Commitments

The Company has extended the lease for its 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:

		CDN
Less than one year	$	48,060
Two to five years		84,105
	$	132,165

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

18. Contingencies

(a) The Company has agreed to indemnify its directors and officers and certain of its employees in accordance with the Company's bylaws. The Company maintains insurance policies that may provide coverage against certain claims.

(b) On October 7, 2018, the former President of MAST, Inc. (a wholly-owned subsidiary), Mr. Steven Van Fleet, filed a lawsuit against Micromem and MAST in New York State Supreme Court, Dutchess County. In the action, Mr. Van Fleet is 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. The Company answered the complaint on December 7, 2018 by denying the material allegations in Mr. Van Fleet's claims. In addition, the Company interposed 7 counterclaims against Mr. Van Fleet seeking, among other things: (i) damages of not less than $2.75 million, (ii) specific performance to compel Mr. Van Fleet to comply with his contractual obligations which were required for the period of time that he served as an officer and director through to his resignation date; (iii) repayment of certain salary and expenses paid to Mr. Van Fleet; (iv) a direction for Mr. Van Fleet to turn over all Company property in his possession or control; (v) an accounting to determine all money and property belonging to the Company and/or MAST. On January 24, 2019, the Company amended its original answer and counterclaims to include, among other things, a demand for additional damages based on new information that had come to light. On February 8, 2019, Mr. Van Fleet, through his counsel, replied to and denied the material allegations in Micromem's counterclaims. The Company reports an accrual of $205,788 at October 31, 2019 with respect to alleged remuneration and expense reimbursements claimed by Mr. Van Fleet but, nonetheless, has denied the allegations in Mr. Van Fleet's claims. The matter is currently at the pre-trial stage, pending discoveries and remains as a contingency at February 24, 2020.

19. 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. 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 October 31, 2019, balances that are denominated in CDN are as follows:

		2019			2018
Cash (bank indebtedness)	$	(3,188	)	$	99,139
Trade payables and other liabilities	$	387,766		$	318,172
Convertible debentures	$	2,010,940		$	1,877,487
Derivative liabilities	$	207,161		$	199,650

A 10% strengthening of the USD against the CDN would decrease accumulated deficit by $126,371 as at October 31, 2019 (2018 - decrease accumulated deficit by $158,836). A 10% weakening of the USD against the CDN would have had 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.

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. The Company's funding is provided in the form of capital raised through the issuance of shares on conversion of convertible debentures. All financial liabilities are due within 1 year as at October 31, 2019.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

19. Financial risk management (continued)

(i) Trade payables

The following represents an analysis of the maturity of trade payables:

		2019		2018
Less than 30 days past billing date	$	18,201	$	87,356
31 to 90 days past billing date		13,259		12,837
Over 90 days past billing date		781,230		740,131
	$	812,690	$	840,324

As at October 31, 2019, trade payables include $540,000 (2018 - $334,000) 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:

		2019				2018
		Convertible		Derivative		Convertible		Derivative
		debentures		liability		debentures		liability
Less than three months	$	754,799	$	75,528	$	862,686	$	90,142
Three to six months		1,168,349		71,326		1,346,315		382,309
Six to twelve months		675,926		618,571		267,570		177,665
	$	2,599,074	$	765,425	$	2,476,571	$	650,116

(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 $46,056 as at October 31, 2019 (2018 - $288,673). The Company reduces its credit risk by assessing the credit quality of counterparties, taking into account their financial position, past experience and other factors.

The Company held cash of $46,056 at October 31, 2019 (2018 - $206,832). 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 and an insignificant loss allowance, which was not recognized in these consolidated financial statements.

20. Fair value hierarchy

Assets and liabilities recorded at fair value in the 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 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 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 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 year ended October 31, 2019 and 2018, there were no transfers between levels.

Micromem Technologies Inc.

Notes to Consolidated Financial Statements

For the years ended October 31, 2019, 2018 and 2017

(Expressed in United States dollars)

21. 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 (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 year ended October 31, 2019.

22. Subsequent events

Subsequent to October 31, 2019:

(a) The Company secured, in aggregate, $411,891 in convertible debentures with terms of 6 to 12 months. These loans have conversion features which become effective six months after initiation date.

(b) The Company repaid $122,764 CDN and $80,000 USD in convertible debentures and $179,370 in convertible debentures were converted into 15,927,765 common shares.

(c) The Company extended convertible debentures that were within 4 months of maturity date from October 31, 2019. Extension terms ranged from 2 months to 6 months.

(d) The Company secured private placements with investors consisting of common shares with no warrants pursuant to prospectus and registrations set forth in applicable securities law. It realized net proceeds of $402,161 and issued a total of 10,008,491 common shares.

Micromem Technologies Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

NOTICE TO READER

The Management's Discussion and Analysis ("MD&A") report for Micromem Technologies Inc. for the fiscal year October 31, 2019, as attached, is dated as of February 24, 2020, 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 <br>Dan Amadori, CFO <br>February 24, 2020	/s/ Joseph Fuda <br>Joseph Fuda, CEO <br>February 24, 2020

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

INTRODUCTION

The following sets out the Management's Discussion and Analysis ("MD&A") of the financial position and result of operations for the fiscal year ending October 31, 2019 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, 2019 and 2018 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 FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

TABLE OF CONTENTS:

1. OVERVIEW
2. COMMENTARY ON CONVERTIBLE DEBENTURES
3. PROJECT UPDATES
4. DISCUSSION OF OPERATING RESULTS
5. RISKS AND UNCERTAINTIES
6. GOING CONCERN
7. OTHER MATTERS
8. SUBSEQUENT EVENTS

MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

1. OVERVIEW

Micromem is a company that develops customized, proprietary sensor-based solutions for large multinational corporations. It operates also through its wholly owned subsidiary, Micromem Applied Sensor Technologies (“MAST”). MAST has traditionally been responsible for the development of market opportunities, maintaining customer relationships and the project management of the independent engineering subcontractors that it engages once a client project has been initiated. Micromem and MAST are referred to interchangeably as “the Company” throughout this report.

In 2019 the Company had positive new developments in its business initiatives. It also experienced client driven delays in terms of its commercialization strategies for the technology applications that it continues to pursue. It continued to deal within very tight working capital constraints but has been successful in raising additional capital in 2019 and 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, continues.

Financing:

In 2019 the Company secured $212,968 of financing from private placements (2018: $866,200),

and received proceeds of $780,891 (2018: $1,457,983) from the issuance of convertible debentures. It issued 82,038,962 common shares relating to the conversion by debenture holders of their debentures totaling $1,636,825 during the year (2018: issued 16,220,951 common shares relating to conversion of debentures totaling $1,093,842).

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 2019 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 fiscal years ending October 31, 2019 and 2018 none of which impact the Company’s cash flows:

		2019			2018
Accretion expense	$	1,517,436		$	2,039,344
Loss on conversion of debentures		101,919			63,852
(Gain) loss on revaluation of derivatives		(343,436	)		(1,094,718	)
(Gain) loss on extinguishment of debentures		(646	)		(399,191	)
Net expense	$	1,275,273		$	609,287

Business Developments in 2019:

(a) Chevron: In March 2019, we advanced the Chevron project to onsite field trials of the ARTRA technology. These in field trials have served to validate the technology. Chevron continues to test samples from these trials with ongoing successful results. We anticipate positive developments with respect to commercialization of this technology with Chevron as they have advised on their intent to commercialize.

(b) Romgaz: We engaged in discussions with Romgaz in mid-2019 with respect to the ARTRA technology. Romgaz and Chevron have discussed the results of the Chevron field trials in November – December 2019. Romgaz has communicated that it is proceeding with purchase orders to acquire initial units of the ARTRA technology and to have the Company develop a fully integrated software analytics solution for Romgaz use and application. Pending the completion of these two initial undertakings, Romgaz has communicated their commitment to commercializing the technology with manufacturing to be completed in Romania.

(c) Repsol S.A.: We have negotiated a draft final contract with Repsol relating to the RT Lube Analyzer technology. The Company intends to proceed with this project in 2020.

(d) Other: In 2019 the Company evaluated other potential opportunities and participated in a number of technical trade shows across North America.

Regulatory:

In 2019, Ontario Securities Commission (“OSC”) initiated a Continuous Disclosure Review on the Company’s periodic filings. This is an ongoing OSC practice in the normal course, the previous OSC review was initiated in 2016.

The Company provided its commentaries and responses to the OSC over a period of five months. Ultimately, the OSC concluded its review; there was no requirement to revise any of the Company’s previous filings.

The Company met with representatives of the CSE in mid-2019 to apprise the CSE of the Company’s ongoing developments and go forward plans.

The Company has met all of its periodic Canadian and US based filing requirements on a timely basis in 2019.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

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.

(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.

a) 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.

b) 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 it’s 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).

c) 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 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 liability.

(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 as high (in these reported financials) as 6000% 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.

It is essential, when reviewing our audited consolidated statements, to bear in mind the following:

a) Accretion expense is a non- cash item.

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

c) Loss or gain on extinguishment of debentures is a non -cash item.

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

(4) Additional Comments:

The Company notes the following:

i) 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.

ii) 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.

iii)The use of convertible debentures has served to increase our outstanding number of shares over the past few years. The Company plans to deemphasize or eliminate this complex and expensive source of financing in future as it develops and grows its business and is better able to secure more conventional, lower cost financing.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

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 its active board members, have assumed these responsibilities.

Update of Product Development Activity at October 31, 2019

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

Chevron: In 2019 we continued to engage with Chevron personnel and with our engineering subcontractor, Entanglement Technologies Inc. (“Entanglement”). We met with the Chevron team members in their Houston offices on seven occasions to continue our dialogue and measure our go forward path. We also met directly with Entanglement on three occasions for these purposes.

The field testing of the onsite pilot program was coordinated between Chevron, Entanglement and the Company and commenced in March 2019 at a California-based oil well site operated by Chevron. The initial on site testing was conducted over a period of approximately 6 weeks. Thereafter sample testing from the onsite well continued in both the Entanglement and Chevron laboratories.

Chevron has advised that the results of the testing that has been completed to date have met with their expectations and requirements and that the performance of the technology in the onsite pilot and in the subsequent lab sample testing has been validated.

We are advised by Chevron that they will adopt the technology as required in future and that they have earmarked funding for commercial units in their 2020 fiscal year budget. To date, Chevron has not released commercial orders for the technology.

In 2019, under the terms of the preexisting Joint Development Agreement with Chevron, they paid $77,597 relating to the cost reimbursements that the Company invoiced for the ongoing pilot tests.

Repsol S.A. (“Repsol”): We have previously reported on our initial activity with this Spanish energy conglomerate in our 2018 report. The developments with Repsol in 2019 are as presented below:

a) In Q1 2019 we submitted a proposed letter of intent (“Repsol LOI”) to the Repsol engineering team with whom we have engaged since September 2018. The Repsol LOI was intended to reset the go forward product development parameters, marketing efforts and cost sharing arrangements for this project between the Company and Repsol. The original Repsol purchase order submitted in 2017 was suspended as part of these current discussions with Repsol.

b) In mid-2019, we began negotiations with the Repsol team towards a final development contract. The discussions remain open at the date of this report.

The underlying technology for the Repsol initiative has been referenced in our 2018 report as the RT Lube Analyzer. The initial development completed on this technology between 2016-2018 was undertaken by the Company and its engineering subcontractor, SBM Microsystems. In 2019 we moved the project to an engineering and manufacturing entity in Toronto Canada.

The Company intends to proceed with this project in 2020 pending finalization of the final development contract. A visit to the Repsol offices in Spain is intended for this purpose in calendar 2020.

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. The key conditions to progressing this LOI were twofold:

a) Romgaz would continue with their due diligence on the ARTRA technology, and

b) Manufacturing of the commercial units in future would be completed, with the Company’s input, in Romania.

Discussions and negotiations with Romgaz continued after the execution of the LOI. These discussions involved Chevron whom the Company introduced to Romgaz as part of the Romgaz due diligence process.

In December 2019 Romgaz put forward a series of questions to Chevron relating to the Chevron experience with the ARTRA technology and the testing that Chevron had conducted in 2019. The dialogue that the Company coordinated between Romgaz and Chevron was very positive and the specifics of those discussions were approved by both parties and posted to the Micromem website on December 20, 2019.

The Company is now anticipating a series of purchase orders from Romgaz with respect to:

a. The purchase of initial units of the existing ARTRA technology for training and education purposes, and,

b. A proposal by Micromem to deliver a comprehensive analytics solution to Romgaz for the technology, and,

c. Pending satisfactory completion of b. above, a purchase order for commercial orders for the technology which is to be manufactured in Romania.

Based on the above sequence of events, the Company anticipates that it will report commercial revenues related to Romgaz in 2020.

Other Developments:

a) In last year’s report, we discussed the Company’s participation in March 2018 in a conference in Dubai .Mr. Van Fleet represented the Company at the conference; subsequently he prepared a significant number of proposals for various companies in North America and abroad with respect to the ARTRA technology which was showcased at the Dubai conference.

Since Mr. Van Fleet’s resignation in August 2018, we have pursed many of the proposals submitted by Mr. Van Fleet to these prospective customers. As of this date, there have been no commercial opportunities identified by the Company in these follow up efforts which the Company has undertaken.

b) In last year’s report we indicated that the Company was engaged in dialogue with an established private company that has engineering and manufacturing capabilities and commercial revenues in North America. In 2019 we actively pursued those discussions and those discussions continue at the date of this report. In addition, we have been provided guidance in terms of product development and commercial roll out strategies. We anticipate that a formal working relationship may materialize in 2020.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

4. DISCUSSION OF OPERATING RESULTS:

(a) Financial Position as at October 31, 2019:

	October 31, 2019	October 31, 2018
	('000)	('000)
Cash	46	207
Deposits and other receivables	15	99
	61	306
Property and equipment, net	3	9
Patents, net	20	396
	84	711
Bridge loans	2,599	2,477
Accounts payable and accrued liabilities	997	1,007
Derivative liability	766	650
	4,362	4,134
Shareholders' Equity
Share capital	84,154	82,283
Equity component of bridge loans	50	70
Contributed surplus	27,758	27,631
Deficit	(116,240	(113,407
	(4,278	(3,423
	84	711

All values are in US Dollars.

Commentary:

The Company’s working capital deficiency is ($4,301,324) at October 31, 2019 (2018: deficiency of $3,828,503)

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 has recorded an impairment reserve of $223,143 in 2019 and reflects a value of $20,000 as its patent asset at October 31, 2019 The Company believes that its patents are a valuable asset to be exploited in future through the pursuit of licensing agreements with potential strategic partners.

The Company continued to secure additional financing in 2019 through convertible bridge loans. Given the terms of the bridge loans, the Company has measured, as appropriate, the prescribed accounting treatment for these bridge loans and the related derivatives. These loans were typically of a short-term nature and, in many cases, renewed on multiple occasions; the related financial reporting has become progressively more complex .Refer to Section 3 of this report for additional commentary.

The balance reported as bridge loans at October 31, 2019 is $2,599,074 (2018: $2,476,571) and the related derivative liability balance is $765,425 (2018: $650,116). The Company reports accretion expense on these debentures of $1,517,436 (2018: $2,039,344), a loss on the conversion of bridge loans to share capital of $101,919 (2018:63,852), a gain on the revaluation of the underlying derivative liabilities of $343,436 (2018: $1,094,718) and a gain on extinguishment of convertible debentures of $646 (2018:$399,191). Management generally employs a Black Scholes valuation model, although for certain of the loan transactions contracted for, it uses a binomial measurement model for those specific loans.

Management acknowledges that the cost of financing to the Company is significant; interest on the bridge loans is substantial. In 2019 we reported $496,172 of interest expense (2018: $504,778).

During the 2019 and 2018 fiscal years, the Company secured funding from various sources, the significant components include:

			2019		2018
i)	Private placements of shares for cash consideration	$	212,968	$	866,200
ii)	Bridge loan financing		780,891		1,457,983
iii)	Bridge loan settlements for share consideration		1,636,825		1,205,130
iv)	Cost reimbursement provided by development partners		77,597		738,983
		$	2,708,281	$	4,268,296

5. Operating Results:

The following table summarizes the Company’s operating results for the years ended October 31, 2019 and 2018:

Discussion of Operating Results

	Years ended October 31,
	2019<br>($000)	2018<br>($000)
Administration	197	306
Interest expense	497	505
Accretion expense	1,518	2,039
Financing costs	72	40
Professional fees and salaries	442	747
Stock-based compensation	-	141
Development expense (recovery)	(42)	(130)
Travel and entertainment	52	101
Foreign exchange loss (gain)	(41)	(118)
Amortization of property and equipment	3	4
Amortization of patents	153	157
Impairment of patents	224	-
Loss on conversion of debentures	102	64
(Gain) loss on revaluation of derivatives	(343)	(1,095)
(Gain) loss on extinguishment of debt	(1)	(399)
Net expenses	2,833	2,362
Net comprehensive income (loss)	(2,833)	(2,362)
Income (loss per share)	(0.01)	(0.01)

Fiscal 2019 Compared to Fiscal 2018

a) Administration costs were $197,208 in 2019 versus $305,338 in 2018. These costs include: rent and occupancy costs of $64,647 (2018: $70,674, the Company reported sublet income for a portion of its office space in 2019); office insurance costs of $26,812 (2018: $117,615; the Company did not renew its D&O insurance coverage in 2019 which accounts for the difference); investor relations, listings and filing fees of $49,029 (2018: $53,113); and other general and administrative expenses of $56,720 (2018: $63,936).

b) Professional and other fees and salaries costs were $441,981 in 2019 versus $747,280 in 2018.The components of these total costs included legal and audit related expenses of $157,354(2018:$165,685) 3^rd^party consulting fees of $53,845 (2018: $316,815), staff salaries and benefits of $230,782 (2018: $264.780); there were nil fees paid to the CFO (2018: $49,220) and nil fees paid to Steve Van Fleet (2018; expense of $186,059)The Company has disputed fees charged by Mr. Van Fleet in 2018 – refer also to Section 7(c) of this report).

The CFO has received no compensation from the Company since March 2018. The CEO of the Company has received $4,682 of salary in 2019 which amount is reports in staff salaries and benefits; he received no compensation in 2018. These reductions in expenses were part of a broad effort to reduce the Company’s operating expenses after the resignation of Mr. Van Fleet in August 2018.

c) Travel and entertainment expenses were $52,568 in 2019 ($101, 496 in 2018; including travel expenses reported by Mr. Van Fleet between November 2017 – August 2018 prior to his resignation). We limited travel expenses in 2019 as part of the broad effort to reduce the Company’s operating expenses.

d) Development cost recoveries represent development costs incurred less costs reimbursed by our development partners which are paid at milestone dates under our joint development contracts. We received a net recovery of $41,546 (2018: $130,069). The Company incurred development costs on its Chevron contract in 2019 and 2018; it also incurred development costs relating to Repsol in 2018.

e) There were no stock options grants awarded in 2019. In 2018 the Company granted 2.2 million options to directors, officers, employees, and consultants; the related expense of $140,612 was calculated using the Black Scholes option-pricing model.

f) Interest expense was $496,172 in 2019 versus $504,778 in 2018. This represents the actual interest expense obligations incurred by the Company based on the stated interest rates on the convertible debenture notes.

g) Amortization expense was $156,137 in 2019 consisting of $152,962 relating to patents and $3,175 relating to Capital Assets (2018: $160,882 consisting of $156,960 relating to patents and $3,922 relating to Capital Assets). In 2019 the Company recorded an impairment reserve of $223,143 on its patent portfolio based on its assessment of the net present value of the portfolio as of October 31, 2019. (2018: nil)

h) Financing costs were $72,476 in 2019 versus $40,414 in 2018. These expenses relate to costs associated with the convertible debenture financings which the Company completed in 2019 and 2018. The Company utilized convertible debenture financing to a greater extent in 2019.

i) The gain on foreign exchange reported in 2019 was $40,548 versus $117,779 in 2018. This included the exchange relating to the translation of $CDN denominated transactions during the year and to Canadian denominated assets and liabilities at fiscal quarter and year ends. It also included the foreign exchange relating to the initiation, renewal, conversion and repayment of convertible debentures transactions during the fiscal years. The Canadian dollar has declined from 0.7905 at October 31, 2017 to 0.7601 at October 31, 2018 to 0.7509 at October 31, 2019 relative to the US dollar. We relied to a greater extent on $CDN denominated convertible debenture financing in 2018 giving rise to a larger exchange gain in 2018 versus 2019.

j) The other expenses reported relate to the convertible debentures. These expenses are all non-cash expenses and compare as follows:

	2019	2018	Changes
Accretion expense	$ 1,517,436	$ 2,039,344	$ 521,908
Loss on conversion of debentures	101,919	63,852	(38,067)
(Gain) loss on revaluation of derivatives	(343,436)	(1,094,718)	(751,282)
(Gain) loss on extinguishment of debentures	(646)	(399,191)	(398,545)
Net expense	$ 1,275,273	$ 609,287	$ (665,986)

In 2019, the renewal terms at maturity date of the debentures which were renewed were typically for a shorter duration. This gave rise to generally lower accretion expense recorded over the term of the renewed debentures and lower offsetting gains reported on the revalued derivatives and the gains on extinguishment of such debt at renewal date; typically these variables move in opposite directions.

C. Unaudited Quarterly Financial Information – Summary

Three months ended<br>(unaudited)	Revenues	Expenses	Income<br>(loss) in<br>period	Loss per<br>share
	$	$	$	$
January 31, 2018	-	2,291,691	(2,291,691)	(0.01)
April 30, 2018	-	(207,605)	207,605	-
July 31, 2018	-	(22,711)	22,711	-
October 31, 2018	-	331,264	(331,264)	-
January 31, 2019	-	1,110,303	(1,110,303)	-
April 30, 2019	-	48,088	(48,088)	-
July 31, 2019	-	554,533	(554,533)	-
October 31, 2019	-	1,119,940	(1,119,940)	-

Three months ended<br>(unaudited)	Working<br>capital<br>(deficiency)	Capital<br>assets at NBV	Other Assets	Total Assets	Shareholders'<br>equity (deficit)
	$	$	$	$	$
January 31, 2018	(3,619,741)	8,968	451,454	566,763	(5,382,493)
April 30, 2018	(3,551,233)	8,117	438,725	597,983	(4,805,909)
July 31, 2018	(3,639,419)	7,275	427,179	605,309	(4,088,047)
October 31, 2018	(3,828,503)	9,228	396,105	710,737	(3,423,170)
January 31, 2019	(4,488,643)	8,434	364,296	473,177	(4,115,813)
April 30, 2019	(4,158,247)	7,639	326,358	379,334	(3,824,250)
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)

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

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 are being 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 it decided to abandon certain provisional patent filings in international jurisdictions which it believes 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 specific efforts to broaden our IP claims, this is an ongoing process and requires continued effort and vigilance. The Company does not have extensive in-house resources so as to manage its IP portfolio in this environment and has traditionally relied heavily on its patent attorneys for these services.

Financing:

The Company has successfully raised funding over the past several years to continue to support its development initiatives and fund the Company’s corporate structure and overheads. The 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.

Outstanding Lawsuit:

The Company is 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, Inc. This matter is discussed further in Section 7 (c) - Contingencies – in this report. The outcome of this lawsuit has not been determined at this stage.

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.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

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 of time in future. During the year ended October 31, 2019 the Company reported a net loss and comprehensive loss of $2,832,864 (2018 - $2,362,239; 2017 - $4,346,200) and negative cash flow from operations of $982,437 (2018 - $1,339,309; 2017 - $2,055,242). The Company’s working capital deficiency as at October 31, 2019 is $4,301,324 (2018 – $3,828,503).

The Company’s future success depends on the profitable commercialization of its proprietary magnetic 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 2020 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.

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.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

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, conversion features of bridge loans, patents, impairment of long-term assets, 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, 2019.

(b) Commitments:

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: $84,105 CDN.

(c) Contingencies:

Legal Matters:

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.

On October 7, 2018, the former President of MAST, Mr. Steven Van Fleet, filed a lawsuit against Micromem and MAST in New York State Supreme Court, Dutchess County. In the action, Mr. Van Fleet is 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. The Company answered the complaint December 7, 2018 by denying the material allegations in Mr. Van Fleet’s claims. In addition, the Company interposed 7 counterclaims against Mr. Van Fleet seeking, among other things: (i) damages of not less than $2.75 million, (ii) specific performance to compel Mr. Van Fleet to comply with his contractual obligations which were required for the period of time that he served as an officer and director through to his resignation date; (iii) repayment of certain salary and expenses paid to Mr. Van Fleet; (iv) a direction for Mr. Van Fleet to turn over all Company property in his possession or control; and (v) an accounting to determine all money and property belonging to the Company and/or MAST. On January 24, 2019, the Company amended its original answer and counterclaims to include, among other things, a demand for additional damages. On February 8, 2019 Mr. Van Fleet, through his counsel, replied to and denied the material allegations in Micromem’s counterclaims. The Company reports an accrual of $205,788 at October 31, 2019 with respect to alleged remuneration and expense reimbursements claimed by Mr. Van Fleet but, nonetheless, has denied the allegations in Mr. Van Fleet’s claims. The matter is currently at the pretrial stage pending discoveries; this matter remains as a contingency at February 24, 2020.

In addition to the above, 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.

(d) Off-Balance Sheet Arrangements:

At October 31, 2019, 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 October 31, 2019 the Company reports 346,952,721 common shares outstanding (2018: 259,602,699). Additionally, the Company has 5,730,000 stock options outstanding with a weighted average exercise price of $0.25 per share (2018: 6,250,000 options outstanding with a weighted average exercise price of $0.29 per share).

(f) Management and Board of Directors

At our last Annual Meeting of Shareholders held on July 21, 2017, Joseph Fuda, David Sharpless, Steven Van Fleet, Oliver Nepomuceno, Larry Blue, Alex Dey, and Brian Von Herzen were re- elected to serve on our Board of Directors. Joseph Fuda and Dan Amadori continue to serve as officers of the Company. Steven Van Fleet resigned as an officer and director of the Company on August 17, 2018. As of October 31, 2018 the Company is engaged in a lawsuit with Mr. Van Fleet, as outlined in Section 7(c) above.

David Sharpless resigned as a director of the Company on March 30, 2018, after 18 years of service, to pursue other business interests. Mr. Sharpless served as Chair of the Audit Committee until his resignation; he was replaced by Mr. Alex Dey who assumed the role of Chair of the Audit Committee at that time.

Larry Blue resigned as a director of the Company on September 30, 2017, after 12 years of service to the Company, to pursue other business interests.

Our management team and directors, along with their 2019 remuneration, is presented as below:

Individual	Position	2019 remuneration
		Cash	Options	Total
Joseph Fuda	President, Director	4,684	-	4,684
Oliver Nepomuceno	Director	-	-	-
Alex Dey	Director	-	-	-
Brian Von Herzen	Director	-	-	-
Dan Amadori	CFO	-	-	-

(g) Transactions with Related Parties

The Company reports the following related party transactions:

(a) Key management compensation

		2019		2018		2017
Professional, other fees and salaries	$	4,684	$	235,297	$	667,725
Stock based compensation		-		44,740		382,531
	$	4,684	$	280,037	$	1,050,256

In 2019, these parties were awarded a total of $nil options (2018 - 700,000 options at an exercise price of $0.10; 2017 1,950,000 options at exercise price of $0.25).

(b) Trade payables and other liabilities

At October 31, 2019 and 2018 the Company reports in trade payables a balance owing to the former President of MAST of $193,174 which amount represents alleged outstanding wages payable, see Note 18(b) to the consolidated financial statements.

As at October 31, 2019 and 2018 the Company includes $167,000 in trade payables owing to a company whose major shareholder is a 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. The balance reported relates to alleged services provided in 2015; there have been no invoices submitted by this related party after October 31, 2015.

(d) Convertible debentures

In May 2019, an officer of the Company subscribed 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 remains outstanding.

In January 2018, an officer of the Company subscribed for a convertible debenture of $150,000 CDN ($114,138 USD). At October 31, 2019, $52,319 CDN ($39,756 USD) (October 31, 2018 - $ 100,862 CDN, $76,713 USD) in loan principal remains outstanding.

(g) 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. In 2019 and subsequent to the end of the fiscal year, the Company continued to raise additional financing.

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 employees options to purchase shares at prices that are at or above market price on the date of grant. At October 31, 2019 there are 5,730,000 options outstanding at an average exercise price of $0.25 per share.

Capital Resources: We have no commitments for capital expenditures as of October 31, 2019.

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MICROMEM TECHNOLOGIES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2019

PREPARED AS OF FEBRUARY 24, 2020

8. SUBSEQUENT EVENTS

Subsequent to October 31, 2019:

1) The Company secured, in aggregate, $411,891 in convertible debentures with terms of 6 to 12 months. These loans have conversion features which become effective after initiation date.

2) The Company repaid $122,764 CDN and $80,000 USD in convertible debentures and $179,370 of convertible debentures were converted into 15,927,765 common shares.

3) The Company extended convertible debentures that were within 4 months of maturity date from October 31, 2019. Extension terms ranged from 2 to 6 months.

4) The Company secured private placements with investors consisting of common shares with no warrants pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company realizing net proceeds of $402,161 and issued a total of 10,008,491 common shares.

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Micromem Technologies Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

FORM 52-109F1

    **CERTIFICATION OF ANNUAL FILINGS**

    **FULL CERTIFICATE**

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

Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Micromem Technologies Inc. (the "issuer") for the financial year ended October 31, 2019.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual filings.
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.
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 financial year end

(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 framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

5.2 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

Evaluation: The issuer's other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A.

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) for each material weakness relating to operation existing at the financial year end

(A) a description of the material weakness;

(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on August 1, 2019 and ended on October 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

Date: February 24, 2020

/s/ Joseph Fuda

Joseph Fuda

Chief Executive Officer

Micromem Technologies Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

FORM 52-109F1

    **CERTIFICATION OF ANNUAL FILINGS**

    **FULL CERTIFICATE**

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

Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Micromem Technologies Inc. (the "issuer") for the financial year ended October 31, 2019.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual filings.
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.
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 financial year end

(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 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

Evaluation: The issuer's other certifying officer(s) and I have

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A.

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) for each material weakness relating to operation existing at the financial year end

(A) a description of the material weakness;

(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on August 1, 2019 and ended on October 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

Date: February 24, 2020

/s/ Dan Amadori

Dan Amadori

Chief Financial Officer

Micromem Technologies Inc 6-K, filed Feb 25, 2020

About this 6-K