Equibles

6-K

MICROMEM TECHNOLOGIES INC (MMTIF)

6-K 2020-09-25 For: 2020-09-25
View Original
Added on April 12, 2026

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 ofthe Securities Exchange Act of 1934

September 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shall be deemed a part of such registration statement from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished by Micromem Technologies Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934.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: September 25, 2020 Name: Joseph Fuda
Title:   Chief Executive Officer

Exhibit Index

Exhibit Description
99.1 Unaudited Condensed Interim Consolidated Financial Statements for the period ended July 31, 2020
99.2 Management's Discussion and Analysis for the period ended July 31, 2020
99.3 Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
99.4 Form 52-109F2 Certification of Interim Filings Full Certificate - CFO 
Micromem Technologies Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Financial Statements For the three and nine months ended July 31, 2020 and 2019

(Expressed in United States Dollars)

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2020 and 2019

(Expressed in United States Dollars)

Contents

Notice to Shareholders 1
Unaudited Condensed Interim Consolidated Financial Statements:
Unaudited Condensed Interim Consolidated Statements of Financial Position 2
Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss 3
Unaudited Condensed Interim Consolidated Statements of Changes in Equity 4
Unaudited Condensed Interim Consolidated Statements of Cash Flows 5
Notes to the Unaudited Condensed Interim Consolidated Financial Statements 6

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Financial Statements

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

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

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

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

September 25, 2020

1

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Statements of Financial Position As at July 31, 2020 and October 31, 2019

(Expressed in United States dollars)

As at As at
Notes July 31, 2020 October 31, 2019
Assets
Current
Cash 19 $ 22,374 $ 46,056
Prepaid expenses and other receivables 16,000 14,751
Total current assets 38,374 60,807
Property and equipment 6 56,187 2,677
Patents 7 13,877 20,000
Total assets $ 108,438 $ 83,484
Liabilities
Current
Trade payables and other liabilities 19(c) $ 925,359 $ 997,632
Current lease liability 8 36,442 -
Convertible debentures 10,19 2,625,785 2,599,074
Derivative liabilities 10,19 444,864 765,425
Total current liabilities 4,032,450 4,362,131
Long-term lease liability 8 20,997 -
Long-term loan 9 29,632 -
Total liabilities 4,083,079 4,362,131
Shareholders' Deficiency
Share capital 11 85,323,002 84,153,696
Contributed surplus 27,807,786 27,757,639
Equity component of convertible debentures 10 23,952 50,147
Accumulated deficit (117,129,381 ) (116,240,129 )
Total shareholders' deficiency (3,974,641 ) (4,278,647 )
Total liabilities and shareholders' deficiency $ 108,438 $ 83,484
Going concern 2
Contingencies 18
Subsequent events 22

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

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

2

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

For the three and nine months ended July 31, 2020 and 2019

(Expressed in United States dollars)

Three months ended July 31, Nine months ended July 31,
Notes 2020 2019 2020 2019
Operating expenses
General and administrative 15(a) $ 25,536 $ 42,410 $ 81,220 $ 153,956
Professional, other fees and salaries 15(b) 70,677 113,429 363,220 331,088
Development costs (recovery) - (3,920 ) - (38,286 )
Travel and entertainment 1,522 18,008 20,612 39,898
Amortization of property and equipment 6 6,933 792 20,797 2,381
Amortization of patents 7 2,000 188,113 6,123 265,075
Foreign exchange loss (gain) 19(a) 107,052 82,350 (32,074 ) 33,343
Total operating expenses 213,720 441,182 459,898 787,455
Other expenses (income)
Accretion expense 10 278,770 298,355 754,333 1,103,438
Convertible debt interest expense 10 113,886 220,229 347,685 473,919
Other interest expense 8 5,814 - 10,879 -
Financing costs 10 2,000 305 31,500 52,562
Gain on revaluation of derivative liabilities 10 (412,921 ) (417,239 ) (695,346 ) (735,242 )
Loss on conversion of convertible debentures 10 33,138 11,701 96,411 31,499
Loss (gain) on extinguishment of convertible 10 567 - (116,108 ) (707 )
Total other (income) expenses 21,254 113,351 429,354 925,469
Net income (loss) before income tax provision (234,974 ) (554,533 ) (889,252 ) (1,712,924 )
Income tax provision 14 - - - -
Net income (loss) and comprehensive income (loss) $ (234,974 ) $ (554,533 ) $ (889,252 ) $ (1,712,924 )
Weighted average number of outstanding shares, basic and diluted 13 382,143,781 287,720,884 370,780,636 277,543,200
Basic and diluted income (loss) per share 13 $ - $ - $ - $ (0.01 )

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

3

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

For the three and nine months ended July 31, 2020 and 2019

(Expressed in United States dollars)

Equity
component of
Number of Share Contributed convertible Accumulated
Notes shares capital surplus debentures deficit Total
Balance at November 1, 2019 346,952,721 $ 84,153,696 $ 27,757,639 $ 50,147 $ (116,240,129 ) $ (4,278,647 )
Private placements of shares for cash 11 9,643,397 389,814 - - - 389,814
Subscription for private placement 11. - 15,557 - - - 15,557
Convertible debentures converted into common shares 10 35,463,811 749,384 - - - 749,384
Expiry of convertible debenture conversion option 10 - - 50,147 (50,147 ) - -
Renewal of convertible debentures 10 - - - 23,952 - 23,952
Shares issued on settlement of accounts payable 365,094 14,551 - - - 14,551
Net loss - - - - (889,252 ) (889,252 )
Balance at July 31, 2020 392,425,023 $ 85,323,002 $ 27,807,786 $ 23,952 $ (117,129,381 ) $ (3,974,641 )
Balance at November 1, 2018 259,602,699 $ 82,282,903 $ 27,630,909 $ 70,283 $ (113,407,265 ) $ (3,423,170 )
Private placements of shares for cash 11 2,961,059 112,968 - - - 112,968
Financing costs converted into common shares 350,000 21,000 - - - 21,000
Convertible debentures converted into common shares 10 30,624,739 882,964 - - - 882,964
Expiry of convertible debenture conversion option 10 - - 91,952 (91,952 ) - -
Renewal of convertible debentures 10 - - - 85,646 - 85,646
Net loss - - - - (1,712,924 ) (1,712,924 )
Balance at July 31, 2019 293,538,497 $ 83,299,835 $ 27,722,861 $ 63,977 $ (115,120,189 ) $ (4,033,516 )

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

4

Micromem Technologies Inc.

Unaudited Condensed Interim Consolidated Statements of Cash Flows For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars)

Three months ended July 31, Nine months ended July 31,
Notes 2020 2019 2020 2019
Operating activities
Net income (loss) $ (234,974 ) $ (554,533 ) $ (889,252 ) $ (1,712,924 )
Items not affecting cash:
Amortization of patents 7 2,000 188,113 6,123 265,075
Amortization of property and equipment 6 6,933 792 20,797 2,381
Accretion expense 10,16 278,770 298,355 754,333 1,103,438
Accrued interest on convertible debentures 10,16 98,579 140,313 208,246 215,250
Loss on conversion of convertible debentures 10 33,138 11,701 96,411 31,499
Gain on revaluation of derivative liabilities 10,16 (412,921 ) (417,239 ) (695,346 ) (735,242 )
Loss (gain) on extinguishment of convertible debentures 10,16 567 - (116,108 ) (707 )
Shares issued for financing costs 10,16 - - - 21,000
Shares issued on settlement of accounts payable - - 14,551 -
Foreign exchange loss (gain) 19 126,315 75,187 (31,750 ) 36,762
(101,593 ) (257,311 ) (631,995 ) (773,468 )
Net changes in non-cash working capital:
Decrease in development costs receivable - - - 81,841
Decrease (increase) in prepaid expenses and other receivables 11,282 20,632 (1,249 ) (5,042 )
Increase (decrease) in trade payables and other liabilities 38,168 120,629 (72,273 ) 75,108
Cash flows used in operating activities (52,143 ) (116,050 ) (705,517 ) (621,561 )
Investing activity
Patents 7 - (10,932 ) - (18,147 )
Cash flows used in investing activity - (10,932 ) - (18,147 )
Financing activities
Repayment of lease liability 8 - - (11,423 ) -
Proceeds from long-term debt 9 1,178 - 29,632 -
Private placements of shares for cash 11 - 10,000 389,814 112,968
Proceeds from issuance of convertible debentures 16 - 125,278 430,177 501,799
Repayments of convertible debentures 16 22,201 - (171,922 ) (170,663 )
Cash flows provided by financing activities 38,936 135,278 681,835 444,104
Net change in cash (13,207 ) 8,296 (23,682 ) (195,604 )
Cash - beginning of period 35,581 2,932 46,056 206,832
Cash - end of period $ 22,374 $ 11,228 $ 22,374 $ 11,228
Supplemental cash flow information
Interest paid (classified in operating activities) 8,10 $ 15,307 $ 79,916 $ 139,439 $ 258,669
Carrying amount of convertible debentures converted into common shares 16 $ 252,060 $ 294,367 $ 652,973 $ 851,465

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

5

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

1. Reporting entity and nature of business

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

The Company develops, based upon proprietary technology, customized sensor applications for companies (referred to as “development partners”) operating internationally in various industry segments. The Company has not generated commercial revenues through July 31, 2020 and is devoting substantially all its efforts to securing commercial revenue opportunities.

2. Going concern

These unaudited condensed interim consolidated financial statements have been prepared with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

There are material uncertainties related to conditions and events that cast significant doubt about the Company's ability to continue as a going concern and ultimately on the appropriateness of the use of the accounting principles applicable to a going concern. During the nine months ended July 31, 2020, the Company reported a net loss and comprehensive loss of $904,089 (2019 - $1,712,924) and negative cash flow from operations of $705,517 (2019 - $621,561). The Company's working capital deficiency as at July 31, 2020 was $3,994,076 (October 31, 2019 – $4,301,324).

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 unaudited condensed interim consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The COVID-19 pandemic creates additional risk for the Company if there is a prolonged industry slowdown in those sectors where the Company currently operates including the oil and gas sectors in particular. To date, the impact of the pandemic has resulted in the layoff of Company staff as of March 27, 2020. The Company has encountered delays in the commercial status plans of its technology with its primary customers. It secured a government backed loan of $40,000 CDN ($29,632 USD) which matures in December 2025 (Note 9) and received a government wage subsidy of $36,111 CDN ($26,751 USD) (Note 15(b)(i)).

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

3. Basis of presentation

These unaudited condensed interim consolidated financial statements for the three and nine months ended July 31, 2020 and 2019 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim financial reporting. The accounting policies and methods of computation adopted in the preparation of the unaudited condensed interim consolidated financial statements are consistent with those followed in the preparation of the Company's audited annual consolidated financial statements for the year ended October 31, 2019. The Company applied, as of November 1, 2019, International Financial Reporting Standard ("IFRS") 16 Leases and IFRS Interpretations Committee ("IFRIC") 23 Uncertainty over income tax treatments. As required by IAS 34, the nature and effect of those changes are disclosed in Note 4. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

These unaudited condensed interim consolidated financial statements were authorized for issuance and release by the Company's Board of Directors on September 25, 2020.

6

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

3. Basis of presentation (continued)

(a) Basis of consolidation

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

The Company's wholly-owned subsidiaries include:

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

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

(iii) Inactive subsidiaries Domiciled in
Memtech International Inc. Bahamas
Memtech International (USA) Inc., Pageant Technologies (USA) Inc. United States
Pageant Technologies Inc., Micromem Holdings (Barbados) Inc. Barbados

(b) Basis of measurement

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

(c) Functional and presentation currency

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

(d) Use of estimates and judgments

The preparation of these unaudited condensed interim consolidated financial statements in conformity with 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 unaudited condensed interim consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates are reviewed periodically and adjustments are made as appropriate in the reporting period they become known. Items for which actual results may differ materially from these estimates are described 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.

7

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

3. Basis of presentation (continued)

(d) Use of estimates and judgments (continued)

(iii) Income taxes

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

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

(iv) Going concern assumption

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

(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. Adoption of new accounting pronouncements

(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 has adopted this new standard as of its effective date, in accordance with the transitional provisions specified in IFRS 16. The Company has applied the following practical expedients:

(i) The Company applied the simplified transition approach and did not restate comparative information. As a result, the Company recognized the cumulative effect of initially applying IFRS 16 as an adjustment to the accumulated deficit as at November 1, 2019.

(ii) The Company elected to apply IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 - Determining whether an arrangement contains a lease, were not reassessed for whether there is a lease. The Company applied the definition of a lease under IFRS 16 to contracts entered into or changed on or after November 1, 2019.

(iii) The present value of remaining minimum lease payments is capitalized as an asset and offsetting lease liability recognized. As the interest rate implicit in the lease cannot be readily determined, management applied the Company's incremental borrowing rate (based on recent non-convertible debentures) of 24% per annum as the discount rate.

8

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

4. Adoption of new accounting pronouncements (continued)

(a) IFRS 16 Leases (continued)

In accordance with the practical expedients applied, the Company has recognized lease liabilities and right-of-use assets at the date of initial application for leases previously classified as operating leases in accordance with IAS 17. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value.

The change in accounting policy had the following impact on the statement of financial position:

As at November 1, 2019
Previously Impacts from
stated adoption Restated
Impact of IFRS 16 on statement of financial position
Right-of-use asset Note 6 - 74,307 74,307
Current lease liability Note 8 - 36,442 36,442
Non-current lease liability Note 8 - 37,865 37,865

The following is the Company's policy for accounting for lease contracts in accordance with IFRS 16:

At the inception of a contract, the Company assesses whether a contract is, or contains a lease. A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use assets are adjusted for impairment losses, if any. The estimated useful lives and recoverable amounts of right-of-use assets are determined on the same basis as those of property and equipment. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(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 became effective for the annual periods beginning on or after January 1, 2019, with earlier application permitted. The Company has adopted this interpretation as of its effective date and assessed no significant impact as a result of the adoption of this interpretation.

9

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

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

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2020. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

(a) IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 1 and IAS 8 were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020, with earlier adoption 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 these amendments.

6. Property and equipment

As at As at
November 1, July 31,
2019 Additions 2020
Cost
Computers $ 32,040 $ - $ 32,040
Right-of-use assets Note 4(a) 74,307 - 74,307
$ 106,347 $ 106,347
Accumulated amortization
Computers $ 29,363 $ 532 $ 29,895
Right-of-use assets Note 4(a) - 20,266 20,266
$ 29,363 $ 50,160
Net book value $ 76,984 $ 56,187

7. Patents

As at As at
November 1, July 31,
2019 Additions 2020
Cost $ 681,288 $ - $ 681,288
Accumulated amortization 661,288 6,123 667,411
Net book value $ 20,000 $ 13,877

10

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

8. Leases

(a) Maturity analysis of lease obligations

The following represents a maturity analysis of the Company's undiscounted principal amount of contractual lease obligations as at July 31, 2020.

CDN
Less than one year $ 48,060
Two to five years 44,055
$ 92,115

(b) Supplemental disclosure

For the three and nine months ended July 31, 2020, the Company recognized $3,595 and $10,187 respectively of interest expense on lease obligations in the unaudited condensed interim consolidated statements of operations and comprehensive loss. The Company further recognized total cash outflow of $NIL and $11,423 relating to leases.

9. Long-term loan

On April 15, 2020, the Company obtained a $40,000 CDN ($29,632 USD) interest-free loan from the Government of Canada under the Canada Emergency Business Account ("CEBA") program to cover its operating costs. The term loan matures on December 31, 2025. Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of $10,000. Effective January 1, 2023, any outstanding balance on the term loan shall bear interest at a rate of 5% per annum.

10. Convertible debentures

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

During the three and nine months ended July 31, 2020, the Company expensed $2,000 and $31,500, respectively (2019 - $305 and $52,562), in financing costs which primarily consist of early repayment premiums and administrative fees relating to the convertible debentures. During the nine months ended July 31, 2020, $3,500 (2019 - $21,000) of total financing costs were settled in the Company's common shares. All loan principal amounts and conversion prices are expressed in original currency and all remaining dollar amounts are expressed in USD.

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

Convertible debentures outstanding as at July 31, 2020:

(i) - (ii)
CDN USD
(equity (embedded (embedded
component) derivative) derivative)
Loan principal outstanding $ 931,000 2,134,706 451,208
Terms of loan
Annual stated interest rate 12% - 24% 12% - 24% 4% - 24%
Effective annual interest rate 24% - 36% 12% - 1270% 4114% - 20559%
Conversion price to common shares 0.04 - 0.07 0.05 - 0.14
Remaining life (in months) 0 - 9 0 - 9 0 - 12

All values are in US Dollars.

Unaudited condensed interim consolidated statement of financial position Total
Carrying value of loan principal 913,271 $ 1,207,287 $ 148,569 $ 2,269,127
Interest payable 109,852 199,919 46,887 356,658
Convertible debentures $ 1,023,123 $ 1,407,206 $ 195,456 $ 2,625,785
Derivative liabilities - $ 137,979 $ 306,885 $ 444,864
Equity component of convertible debentures 23,952 $ - $ - $ 23,952

11

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

10. Convertible debentures (continued)

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

For the nine months ended July 31, 2020:
CDN
(equity (embedded (embedded
component) derivative) derivative) Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense $ 30,230 415,864 $ 308,239 $ 754,333
Interest expense $ 145,527 163,446 $ 38,712 $ 347,685
Gain on revaluation of derivative liabilities $ - (526,028 ) $ (169,318 $ (695,346 )
Loss on conversion of convertible debentures $ - - $ 96,411 $ 96,411
Gain on extinguishment of convertible debentures $ - 382 $ (116,490 $ (116,108 )
Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares $ 20,000 35,000 $ 454,563 $ 509,563
Amount of interest converted to common shares $ 447 1,161 $ 14,196 $ 15,804
Number of common shares issued on conversion of convertible
debentures 511,175 731,440 34,221,196 35,463,811
Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash $ - 89,922 $ 80,000 $ 169,922
Amount of interest repaid in cash $ 53,889 83,783 $ 1,767 $ 139,439

All values are in US Dollars.

For the three months ended July 31, 2020:
CDN
(equity (embedded (embedded
component) derivative) derivative) Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense $ 6,223 121,279 $ 151,268 $ 278,770
Interest expense $ 48,360 50,841 $ 14,685 $ 113,886
Gain on revaluation of derivative liabilities $ - (358,725 ) $ (54,196 $ (412,921 )
Loss on conversion of convertible debentures $ - - $ 33,138 $ 33,138
Loss (gain) on extinguishment of convertible debentures $ - 567 $ - $ 567
Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares $ - - $ 215,500 $ 215,500
Amount of interest converted to common shares $ - (6 ) $ 2,682 $ 2,676
Number of common shares issued on conversion of convertible
debentures - - 15,390,358 $ 15,390,358
Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash $ - 3,799 $ - $ 3,799
Amount of interest repaid in cash $ 7,029 8,278 $ - $ 15,307

All values are in US Dollars.

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

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

12

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

10. Convertible debentures (continued)

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

Convertible debentures outstanding as at October 31, 2019:
CDN USD
(equity (embedded (embedded
component) derivative) derivative)
Loan principal outstanding $ 931,000 2,271,017 425,000
Terms of loan
Annual stated interest rate 12% - 24% 12% - 24% 4% - 10%
Effective annual interest rate 24% - 36% 13% - 645% 139% - 5368%
Conversion price to common shares 0.04 - 0.07 0.05 - 0.15
Remaining life (in months) 1 - 6 0 - 12 3 - 12

All values are in US Dollars.

Unaudited condensed interim consolidated statement of financial position Total
Carrying value of loan principal $ 906,993 $ 1,464,416 $ 63,422 $ 2,434,831
Interest payable 18,661 121,444 24,138 164,243
Convertible debentures $ 925,654 $ 1,585,860 $ 87,560 $ 2,599,074
Derivative liabilities $ - $ 204,366 $ 561,059 $ 765,425
Equity component of convertible debentures $ 50,147 $ - $ - $ 50,147

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

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

For the nine months ended July 31, 2019:
CDN
(equity (embedded (embedded
component) derivative) derivative) Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense $ 94,410 650,009 $ 359,019 $ 1,103,438
Interest expense $ 156,399 257,218 $ 60,302 $ 473,919
Gain (loss) on revaluation of derivative liabilities $ - (734,162 ) $ (1,080 $ (735,242 )
Loss on conversion $ - - $ 31,499 $ 31,499
Gain (loss) on extinguishment of convertible debentures $ - (2,926 ) $ 2,219 $ (707 )
Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares $ - - $ 555,980 $ 555,980
Amount of interest converted to common shares $ - - $ 29,373 $ 29,373
Number of common shares issued on conversion of convertible
debentures - - 30,624,739 30,624,739
Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash $ - 95,063 $ 75,600 $ 170,663
Amount of interest repaid in cash $ 138,580 114,116 $ 5,973 $ 258,669

All values are in US Dollars.

13

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

10. Convertible debentures (continued)

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

For the three months ended July 31, 2019:
CDN
(equity (embedded (embedded
component) derivative) derivative) Total
Unaudited condensed interim consolidated statement of operations and comprehensive loss
Accretion expense $ 30,837 224,431 $ 43,087 $ 298,355
Interest expense $ 59,275 145,744 $ 15,210 $ 220,229
Gain on revaluation of derivative liabilities $ - (327,164 ) $ (90,075 $ (417,239 )
Loss on conversion of convertible debentures $ - - $ 11,701 $ 11,701
Gain on extinguishment of convertible debentures $ - - $ - $ -
Unaudited condensed interim consolidated statement of changes in equity
Amount of principal converted to common shares $ - - $ 225,000 $ 225,000
Amount of interest converted to common shares $ - - $ 10,406 $ 10,406
Number of common shares issued on conversion of convertible
debentures - - 12,193,523 12,193,523
Unaudited condensed interim consolidated statement of cash flows
Amount of principal repaid in cash $ - - $ - $ -
Amount of interest repaid in cash $ 44,860 35,056 $ - $ 79,916

All values are in US Dollars.

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

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

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

(c) Fair value of derivative liabilities outstanding

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

As at
July 31,
2020
Share price $0.02 0.02
Exercise price $0.01 - $0.10 0.02 - 0.11
Volatility factor (based on historical volatility) 130% - 228% 173% - 321%
Risk free interest rate 0.17% - 0.22% 1.67% - 1.69%
Expected life of conversion features (in months) 0 - 12 0 - 12
Expected dividend yield 0% 0%
CDN to USD exchange rate (as applicable) 0.7408 0.7582
Call value $0.00 - $0.02 0.00 - 0.02

All values are in US Dollars.

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

14

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

11. Share capital

(a) Authorized and outstanding shares

The Company has two classes of shares as follows:

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

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

(b) Private placements

During the three months ended July 31, 2020, the Company did not complete any private placements.

During the three months ended July 31, 2019, the Company completed one private placement, pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $10,000 and issued a total of 270,270 common shares.

During the nine months ended July 31, 2020, the Company completed two private placements (2019 - four private placements), pursuant to prospectus and registration exemptions set forth in applicable securities law. The Company received net proceeds of $389,814 (2019 - $112,968) and issued a total of 9,643,397 (2019 - 2,961,059) common shares.

12. 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

Weighted
Number of average
options exercise price
Outstanding at November 1, 2019 5,730,000 $ 0.25
Granted - -
Expired (300,000 ) 0.49
Outstanding at July 31, 2020 5,430,000 $ 0.23
Outstanding at November 1, 2018 6,250,000 $ 0.29
Granted - -
Expired (520,000 ) 0.80
Outstanding at July 31, 2019 5,730,000 $ 0.25

15

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

12. Stock options (continued)

(c) Stock options outstanding at July 31, 2020

Weighted average
Remaining
Number of contractual life
Date of issue Expiry date options Exercise price (years)
August 20, 2015 August 20, 2020 940,000 $ 0.46 0.1
September 30, 2015 September 30, 2020 250,000 0.40 0.2
December 30, 2016 December 30, 2021 2,040,000 0.25 1.4
June 29, 2018 June 29, 2023 2,200,000 0.10 2.9
Outstanding and exercisable at July 31, 2020 5,430,000 $ 0.23 1.7

13. Earnings (loss) per share

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

Three months ended July 31, Nine months ended July 31,
Numerator 2020 2019 2020 2019
Net income (loss) attributable to common shareholders $ (234,974 ) $ (554,533 ) $ (889,252 ) $ (1,712,924 )
Net income (loss) used in computation of basic and diluted income (loss) per share $ (234,974 ) $ (554,533 ) $ (889,252 ) $ (1,712,924 )
Denominator
Weighted average number of common shares for computation of basic and diluted income (loss) per share 382,143,781 287,720,884 370,780,636 277,543,200

For the three and nine months ended July 31, 2020 and 2019, all stock options and conversion features were anti-dilutive and, therefore, are excluded from the calculation of diluted income (loss) per share.

14. Income taxes

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

As at October 31, 2019, the Company has non-capital losses of approximately $30.5 million, $25.7 million in Canada and $4.8 million in other foreign jurisdictions, available to reduce future taxable income. Non-capital losses expire commencing in 2026. In addition, the Company has available capital loss carry forwards of approximately $1.3 million to reduce future taxable capital gains. Capital losses carry forward indefinitely.

As at July 31, 2020 and October 31, 2019, 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 recognized in the unaudited condensed interim consolidated statements of financial position for such assets.

16

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

15. Operating expenses

(a) General and administrative

The components of general and administrative expenses are as follows:

Three months ended July 31, Nine months ended July 31,
2020 2019 2020 2019
General and administrative $ (895 ) $ 13,375 $ 4,965 $ 35,197
Rent and occupancy 14,117 17,492 31,462 48,952
Office insurance 472 205 2,024 26,606
Investor relations, listing and filing fees 10,805 10,461 39,649 39,806
Telephone 1,037 877 3,120 3,395
$ 25,536 $ 42,410 $ 81,220 $ 153,956

(b) Professional, other fees and salaries

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

Three months ended July 31, Nine months ended July 31,
2020 2019 2020 2019
Professional fees $ 38,927 $ 42,213 $ 98,160 $ 113,347
Consulting fees 9,217 14,855 147,017 41,834
Salaries and benefits 22,533 56,361 118,043 175,907
$ 70,677 $ 113,429 $ 363,220 $ 331,088

(i) Wage subsidy

The Canada Emergency Wage Subsidy (CEWS) was announced by the Government of Canada on March 27, 2020 to enable companies negatively impacted by COVID-19 to re-hire workers. Under this program, qualifying businesses can receive up to 75% of their employees’ wages, with employers being encouraged to provide the remaining 25%.

For the three months ended July 31, 2020, the Company recognized $36,111 CDN ($26,751 USD) of wage subsidy under this program, which has been recorded as a reduction of salaries expenses in the unaudited condensed interim consolidated statements of operations and comprehensive loss. This program has been extended until November 21, 2020.

16. Supplemental cash flow information

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

Three months ended July 31, Nine months ended July 31,
2020 2019 2020 2019
Balance - beginning of period $ 3,224,903 $ 3,241,885 $ 3,364,499 $ 3,126,687
Cash flows from financing activities:
Proceeds from issuance of
convertible debentures - 125,278 430,177 501,799
Repayments of convertible debentures 22,201 - (171,922 ) (170,663 )
Non-cash changes:
Accretion expense 278,770 298,355 754,333 1,103,438
Accrued interest on convertible debentures 98,580 140,313 208,246 215,250
Gain on revaluation of derivative liabilities (412,921 ) (417,239 ) (695,346 ) (735,242 )
Loss (gain) on extinguishment of debt 567 - (116,108 ) (707 )
Convertible debentures converted into
common shares (252,060 ) (294,367 ) (652,973 ) (851,465 )
Renewal of convertible debentures (39,816 ) (35,505 ) (50,147 ) (91,952 )
Foreign exchange loss (gain) 150,424 81,493 (110 ) 43,068
Balance - end of period $ 3,070,649 $ 3,140,213 $ 3,070,649 $ 3,140,213

17

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

17. 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. During the nine months ended July 31, 2020 and 2019, there was no compensation paid or payable to these individuals (or companies controlled by such individuals).

During the nine months ended July 31, 2020 and 2019, these parties were not awarded any options.

(b) Trade payables and other liabilities

As at July 31, 2020 and October 31, 2019, 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 July 31, 2020 and October 31, 2019, the Company reports $167,000 in trade payables and other liabilities owing to a company whose major shareholder has been 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 through September 8, 2020 (Note 22). The balance reported relates to alleged services provided in 2015; there have been no invoices submitted by this related party after October 31, 2015.

(c) Convertible debentures

In May 2019, the CEO of the Company subscribed for a short-term loan of $15,000 CDN ($11,450 USD). At July 31, 2020, the loan principal was fully repaid (October 31, 2019 - $10,000 CDN, $7,582 USD).

In January 2018, the CEO of the Company subscribed for a convertible debenture of $150,000 CDN ($114,086 USD). At July 31, 2020, $15,001 CDN ($11,191 USD)(October 31, 2019 - $52,319 CDN, $39,756 USD) in loan principal remains outstanding.

18. Contingencies

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

(b) 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 September 25, 2020.

18

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

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 CDN. The Company manages currency risk by monitoring the Canadian position of these monetary financial instruments on a periodic basis throughout the course of the reporting period.

As at July 31, 2020, balances that are denominated in Canadian dollars are as follows:

CDN
Cash $ 10,050
Prepaid expenses and other receivables $ 21,599
Trade payables and other liabilities $ 108,950
Convertible debentures $ 1,899,587
Derivative liabilities $ 186,258
Long-term loan $ 40,000

A 10% strengthening of the US dollar against the CDN would decrease accumulated deficit by $163,261 as at July 31, 2020 (October 31, 2019 - decrease accumulated deficit by $126,371). 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.

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's policy is to review liquidity resources and ensure that sufficient funds are available to meet financial obligations as they become due. Further, the Company's management is responsible for ensuring funds exist and are readily accessible to support business opportunities as they arise. The Company's funding is provided in the form of capital raised through the issuance of shares on conversion of convertible debentures. With the exception of the long-term loan, all financial liabilities are due within 1 year as at July 31, 2020.

(i) Trade payables

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

As at <br>July 31, As at <br>October 31,
2020 2019
Less than 30 days past billing date $ 33,748 $ 18,201
31 to 90 days past billing date 5,824 13,259
Over 90 days past billing date 735,955 781,230
$ 775,528 $ 812,690

As at July 31, 2020, trade payables include $540,000 (October 31, 2019 - $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.

19

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

19. Financial risk management (continued)

(c) Liquidity risk (continued)

(ii) Convertible debentures and derivative liabilities

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

As at July 31, As at October 31,
2020 2019
Convertible Derivative Convertible Derivative
debentures liabilities debentures liabilities
Less than three months $ 1,757,317 $ 66,378 $ 754,799 $ 75,528
Three to six months 549,360 120,637 1,168,349 71,326
Six to twelve months 319,108 257,849 675,926 618,571
$ 2,625,785 $ 444,864 $ 2,599,074 $ 765,425

(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 $35,701 as at July 31, 2020 (October 31, 2019 - $49,236).

Cash of $22,374 as at July 31, 2020 (October 31, 2019 - $46,056) 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 unaudited condensed interim consolidated financial statements.

20. Fair value hierarchy

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

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

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

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

The Company's policy for determining when transfers between levels of fair value hierarchy occur is based on the date of the event or changes in circumstances that caused the transfer. During the three and nine months ended July 31, 2020 and 2019, there were no transfers between levels.

20

Micromem Technologies Inc.<br><br> <br>Notes to Unaudited Condensed Interim Consolidated Financial Statements<br><br> <br>For the three and nine months ended July 31, 2020 and 2019 (Expressed in United States dollars, unless otherwise noted)

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 three and nine months ended July 31, 2020.

22. Subsequent events

Subsequent to July 31, 2020:

(a) 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 $47,376 and issued a total of 1,353,597 common shares.

(b) The Company repaid $5,000 CDN in convertible debentures, and $71,375 in convertible debentures were converted into 5,471,203 common shares.

(c) The Company extended convertible debentures that were within 3 months of maturity date from July 31, 2020. Extension terms ranged from 3 months to 6 months.

(d) The Company secured $38,000 in convertible debentures with a 12 month term and conversion features which become effective six months after initiation date.

(e) The Company cancelled 2,040,000 stock options with a weighted average exercise price of $0.25 per share.

(f) The Company held its Annual General Meeting of Shareholders on September 8, 2020. Joseph Fuda, Alex Dey and Oliver Nepomuceno were re-elected to serve as directors at the meeting. The authorized limit for stock options in the Company's plan was increased from 18.84 million options to 27.5 million options at the meeting.

21

Micromem Technologies Inc.: Exhibit 99.2 - Filed by newsfilecorp.com
MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

NOTICE TO READER

The Management's Discussion and Analysis ("MD&A") report for Micromem Technologies Inc. for the three months ending July 31, 2020, as attached, is dated as of September 25, 2020, consistent with the 52-109F1R CEO and CFO certification filings related thereto.

/s/ Dan Amadori /s/ Joseph Fuda
Dan Amadori, CFO Joseph Fuda, CEO
September 25, 2020 September 25, 2020
MICROMEM TECHNOLOGIES INC.
---
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

INTRODUCTION

The following sets out the Management's Discussion and Analysis ("MD&A") of the financial position and result of operations for the three months ending July 31, 2020 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 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. The Company incorporated Micromem Applied Sensor Technologies Inc. ("MAST") as a wholly - owned subsidiary 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, 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, the potential impact of health related pandemics on overall market conditions, as well as those other factors discussed in this MD&A report. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements and reference should also be made to the Company's Annual Information Form (prepared and filed in the form of a Form 20-F Annual Report pursuant to The Securities Exchange Act of 1934) for a description of risk factors.

Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities law.

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

1. OVERVIEW

Micromem is a company that develops customized, proprietary sensor-based solutions for large multinational corporations. It has a 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.

Financing:

In summary, the Company secured the following financing during this reporting period:

In Q3 2020 the Company secured $nil of financing from private placement subscriptions (2019: $10,000), and $nil(2019: $125,278) from the issuance of convertible debentures.

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. 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 - may be 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 period ending July 31, 2020 and 2019:

2020 2019 Changes
Accretion expense $ 278,770 $ 298,355 $ (19,585 )
Loss on conversion of debentures 33,138 11,701 $ 21,437
Gain on revaluation of derivatives (412,921 ) (417,239 ) 4,318
(Gain) loss on extinguishment of debentures 567 - $ 567
Net expense (income) $ (100,446 ) $ (107,183 ) $ 6,737

There is no impact on the Company's cash flow for these non-cash charges.

Business Development:

(a) Chevron:

We have maintained a dialogue with Chevron personnel during Q3; our most recent communication was via phone call in mid September.  Chevron has previously completed their test sampling from the live trials which commenced in 2019.  Our technology performed as anticipated in the live trials.  Chevron continues to pursue certain enhanced oil recovery projects outside of North America.  Despite the downturn in the energy sector to date in 2020, we continue to anticipate positive developments with respect to commercial sales of the ARTRA technology to Chevron.  Given the disruptions resulting from the COVID 19 pandemic, the timing for such commercialization will be delayed and cannot, at this stage, be reasonably determined.

(b) Romgaz:

We continue our regular weekly dialogue with Romgaz.  The COVID 19 pandemic has resulted in delays with respect to the execution of initial purchase orders by Romgaz, as referenced in our MD&A report last issued on June 25, 2020.  We are organizing our team members who will participate in the go forward Romgaz discussions over the balance of the 2020 fiscal year.  We anticipate that initial purchase orders will be received from Romgaz before October 31, 2020 and that the initial interactions and planning with the Romgaz team will take place within that timeframe.

(c) Repsol S.A.:

We have had minimal dialogue with Repsol in 2020.We negotiated a draft contract with Repsol in 2019 which has not been finalized at this date. We intend to resume these discussions in 2021.

(d) Other:

In January - February 2020, we engaged in discussions with two large companies, each engaged in the oil well tracer services business.  Each have expressed interest in the ARTRA technology and in the work that we have completed with Chevron and are pursuing with Romgaz. We expect to pursue these discussions further once the Romgaz opportunity is underway.

We continue our discussions with Entanglement Technologies Inc. ("Entanglement") with respect to their participation in our go forward activity with Chevron, Romgaz and other potential opportunities.  Entanglement has developed the ARTRA technology to date working with Micromem. A Memorandum of Understanding between Micromem and Entanglement is currently being finalized  which addresses our go forward working relationship.

Covid -19:

The impact on the Company of the COVID 19 pandemic during Q3, 2020 is discussed below; we have taken the appropriate steps to maintain our business and to protect our 5 person staff to ensure their wellbeing:

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

b. We have reduced employee's salaries by 35% and the Company is utilizing the Canada Employment Wage Subsidy program from the Federal government.

c. We have utilized the Canadian Federal government small business loan program and secured $40,000 CDN term loan which is as described in our consolidated financial statements.

d. We are in regular phone and electronic contact with our key service providers, subcontractors and customers.

e. All business-related travel has been suspended as of March 10, 2020.

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

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 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 measurement  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 with respect to the following:

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

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

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

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  established  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 statements 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 statements 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 consolidated financial statements.

(b) Over time, subject to  the  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 the Q3 financial statements) as 20,559% representing the rate that would be required  to step up the  reported value to the face value over  the short period of the term of the loan. The actual interest expense on our convertible debentures which is interest paid to the debenture holders, is at a coupon rate ranging between 1% and 2% per month. The effective rate referenced above is an accounting measurement metric, not a payable obligation.

It is essential, when reviewing our 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:

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

(b) 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.

(5) Activity in the quarter ending July 31, 2020:

The activity in the quarter ended July 31, 2020 with respect to our convertible debt obligations included:

(a) We converted five US denominated loans totaling $215,500 in to common shares In so doing we issued a total of 15,390,358 common shares.

(b) We partially repaid one Canadian loan totaling $5,000 CDN ($3,704 USD).

(c) We secured one additional US denominated debenture totaling $64,000  with a 12 month term and one Canadian denominated loan for $7,052 with a  3  month term.

Of particular note in Q3 is a large (non-cash) gain on revaluation of derivative liabilities in the amount of $412,921 (2019: $417,239). The basis for this large non-cash gain is explained as follows:

(a) There is a revaluation of the derivative liability at each quarter end using either Black Scholes or binomial pricing models.

(b) There has been less volatility in the Company's share price in Q3 versus Q2; the daily closing price of the shares has decreased over the quarter.  Price volatility directly impacts revaluation.

(c) The Company renewed and extended a number of short-term convertible debentures in Q3 at the maturity date of these loans. In closing out the derivative liability reported for each of these loans, the elimination of the derivative liability is recorded as a gain on revaluation at that time when the derivative liability is reset to nil and then reestablished for the newly renewed loans.

(d) The loss of $1,152,124 on revaluation of derivative liabilities reported in Q1 2020  was a non-cash charge as was  the gain on revaluation  of $1,434,549 reported in Q2 2020 and the gain on revaluation of $412,921 reported in Q3 2020.The net year to date gain on revaluation  is $695,346; again, this  is a non - cash  item. Our experience over the past 4 years is that the initial quarterly loss is typically recovered in subsequent quarters as the loan term expires or when the debt is converted or repaid.

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

3.  PROJECT UPDATES:

Since the resignation of Mr. Van Fleet in August 2018, the Company has worked diligently to establish an improved dialogue with its active strategic partners.  Its management has engaged with Chevron and Repsol as well as with its engineering and design subcontractors.  We have 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 July 31, 2020

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

(a) Chevron:

We have maintained a dialogue with Chevron personnel during Q3; our most recent communication was via phone call in mid September.  Chevron has previously completed their test sampling from the live trials which commenced in 2019.  Our technology performed as anticipated in the live trials.  Chevron continues to pursue certain enhanced oil recovery projects outside of North America.  Despite the downturn in the energy sector to date in 2020, we continue to anticipate positive developments with respect to commercial sales of the ARTRA technology to Chevron.  Given the disruptions resulting from the COVID 19 pandemic, the timing for such commercialization will be delayed and cannot, at this stage, be reasonably determined.

(b) Romgaz:

We continue our regular weekly dialogue with Romgaz.  The COVID 19 pandemic has resulted in delays with respect to the execution of initial purchase orders by Romgaz, as referenced in our MD&A report last issued on  June 25, 2020.  We are organizing our team members who will participate in the go forward Romgaz discussions over the balance of the 2020 fiscal year.  We anticipate that initial purchase orders will be received from Romgaz before October 31, 2020 and that the initial interactions and planning with the Romgaz team will take place within that timeframe.

(c) Repsol S.A.

We have had minimal dialogue with Repsol in 2020.We negotiated a draft contract with Repsol in 2019 which has not been finalized at this date. We intend to resume these discussions in 2021.

(d) Other:

In January - February 2020, we engaged in discussions with two large companies, each engaged in the oil well tracer services business.  Each have expressed interest in the ARTRA technology and in the work that we have completed with Chevron and are pursuing with Romgaz. We expect to pursue these discussions further once the Romgaz opportunity is underway.

We continue our discussions with Entanglement Technologies Inc. ("Entanglement") with respect to their participation in our go forward activity with Chevron, Romgaz and other potential opportunities.  Entanglement has developed the ARTRA technology to date working with Micromem. A Memorandum of Understanding between Micromem and Entanglement is currently being drafted which addresses our go forward working relationship.

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

4.  DISCUSSION OF OPERATING RESULTS:

(a)  Financial Position as at July 31, 2020:

July 31, 2020 October 31, 2019
('000) ('000)
Assets
Current
Cash 22 46
Prepaid expenses and other receivables 16 15
Total current assets 38 61
Property and equipment, net 56 3
Patents, net 14 20
Total assets 108 84
Liabilities
Current
Accounts payable and accrued liabilities 925 998
Current lease liability 36 -
Convertible debentures 2,626 2,599
Derivative liability 445 765
Total current liabilities 4,032 4,362
Long-term lease liability 21 -
Long-term loan 30 -
Total liabilities 4,083 4,362
Shareholders' Deficiency
Share capital 85,338 84,154
Contributed surplus 27,808 27,758
Equity component of convertible debentures 24 50
Accumulated deficit (117,144 (116,240
Total shareholders' deficiency (3,975 (4,278
Total liabilities and shareholders' deficiency 108 84

All values are in US Dollars.

Commentary:

1. The Company's working capital deficiency is $3,994,076 at July 31, 2020 (at October 31,2019: deficiency of $4,301,324).
2. At October 31, 2019 the Company decided to suspend its provisional patent filings in jurisdictions outside the United States where it has been issued several patents.  It recorded an impairment reserve of $223,143 at October 31, 2019.  There were no patent related expenditures in the 3 months ended July 31, 2020; the Company recorded $2,000 of amortization expense in the period ended July 31, 2020.  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.
3. The Company continued to secure additional financing in 2020 through convertible bridge loans.  Refer to the detailed commentary in Section 2 of this MD&A document.
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The balance reported as bridge loans at July 31, 2020 is $2,625,785 (at October 31, 2019: $2,599,074) and the related derivative liability balance is $444,864 (at October 31, 2019: $765,425). For the three months ended  July 31, 2020, the  Company reports accretion expense on these debentures of $278,770 (2019: $298,355), a loss on the conversion of bridge loans to share capital of $33,138 (2019: $11,701), a gain on the revaluation of the underlying derivative liabilities of $412,921 (2019: $417,239) and a loss on extinguishment of convertible debentures loss of $567 (2019: nil). Management primarily employs a Black Scholes valuation model for measurement purposes; for certain of the loan transactions that is has contracted for, it uses a binomial measurement model. Management acknowledges that:
a. The accounting for these transactions creates complexities in our financial reporting.
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b. The judgements utilized are based on specific assumptions which, if changed, would generate different results. The significant point to note is that these charges as noted above are non-cash charges with no impact on the Company's cash flow.
c. The cost of financing to the Company is significant; interest on the bridge loans is substantial. In Q3 2020 we reported $113,886  of interest expense (2019: $220,229).
  1. Operating Results: The following table summarizes the Company's operating results for the three months ended July 31, 2020 and 2019:

Discussion of Operating Results

Quarter ended July 31,
2020<br>($000) 2019<br>($000)
General and administration 26 42
Professional fees and salaries 71 113
Development costs (recovery) - (4)
Travel and entertainment 2 18
Amortization of property and equipment 7 1
Amortization of patents 2 188
Foreign exchange loss (gain) 107 82
Accretion expense 279 298
Interest expense 120 220
Financing costs 2 -
Gain on revaluation of derivatives (413) (418)
Loss on conversion of debentures 33 12
Gain on extinguishment of convertible debentures 1 -
Net expenses 235 554
Net comprehensive income (loss) (235) (554)
Income (loss per share) - -

Commentary:

In addition to the commentary above regarding the impact of the bridge loans on the Company's operating results, we note the following.

(a) General and Administration costs include $14,117 of rent (2019: $17,492), the Company has sublet a portion of its premises; $472 of office insurance (2019: $205), the Company canceled its D&O insurance in 2019; $10,805 of investor relations and filing fees (2019: $10,461); and $142 of other expenses (2019: $14,252).

Professional fees and salaries totaled $70,677 (2019: $113,429).  The components include fees relating to legal and audit related services of $38,927 (2019: $42,213) and consulting fees of $9,217 ( 2019:$14,855).

Salaries and benefits of $22,533 (2019: $56,361).  The CEO and CFO currently receive minimal or no compensation for services provided.  No compensation is being paid to the Company's directors.

C. Unaudited Quarterly Financial Information - Summary

Three months ended<br><br> <br>(unaudited) Revenues Expenses Income<br>(loss) in<br>period Loss per<br>share
$ $ $ $
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) -
January 31, 2020 - 1,726,023 (1,726,023) -
April 30, 2020 - (1,071,746) 1,071,746 -
July 31, 2020 - 234,974 (234,974)
Three months ended<br>(unaudited) Working<br>capital<br>(deficiency) Capital<br>assets at NBV Other Assets Total Assets Shareholders'<br>equity (deficit)
--- --- --- --- --- ---
$ $ $ $ $
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)
January 31, 2020 (5,387,954) 70,046 18,000 296,256 (5,331,481)
April 30, 2020 (4,140,569) 63,120 15,877 141,860 (4,061,572)
July 31, 2020 (3,994,076) 56,187 13,877 108,438 (3,974,641)

(1) The net income reported for the quarter ended July 31, 2020 includes non-cash related expenses with respect to accretion expense of $278,770 (2019: $298,355), a  gain on revaluation of derivative liabilities of $412,921 (2019: $417,239),  a loss on conversion of convertible debentures of $33,138 ( 2019:$11,701). The non-cash component of the income reported in Q3 totaled $100,446.

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 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. 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. 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.

COVID 19 Pandemic:

We reference the Company's current efforts with respect to how it is dealing with the current pandemic to protect its business and its staff as reported in Section 1 of this report.  There is substantial uncertainty as to the duration of the pandemic.  If the pandemic continues for an extended period of time, there  may  be repercussions to the Company's ongoing business which would be significant.

MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 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 three months ended July 31, 2020 the Company reported a net loss  and comprehensive loss of $234,974 (2019 - net loss and comprehensive loss of $554,533) and negative cash flow from operations of $52,143 (2019 - $116,050).  The Company's working capital deficiency as at July 31, 2020 is $3,994,076 (October 31,2019 - $4,301,324).

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

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MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 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, stock-based compensation and income taxes.  These critical accounting policies are set forth in Note 4 to our audited consolidated financial statements as of October 31, 2019 and as updated in Note 4 to our consolidated financial statements as of July 31, 2020.

**(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: $44,055 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, Inc. (the Company's wholly-owned subsidiary), Mr. Steven Van Fleet, filed a lawsuit against Micromem and MAST in New York State Supreme Court, Duchess 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; (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 has come to light. On February 8, 2019 Mr. Van Fleet, through his counsel, replied to and denied the material allegations in Microrem's counterclaims. The Company reports an accrual of $205,788 at January 31, 2020 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. Mr Van Fleet failed to appear at a  deposition which was  scheduled for July 18, 2020 .  This matter is currently at the pre-trial stage and remains as a contingency at September 25, 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 July 31, 2020, the Company has no off-balance sheet financial commitments and does not anticipate entering any contracts of such nature.

(e) Share Capital ****

At July 31, 2020 the Company reports 392,425,023 common shares outstanding (2019: 293,538,497). Additionally, the Company has 5,430,000 stock options outstanding with a weighted average exercise price of $0.23 per share (2019: 5,730,000 options outstanding with a weighted average exercise price of $0.25 per share) (Note 8).

(f)  Management and Board of Directors ****

There have been no changes during the three months ended July 31, 2020 to the acting officers and directors whom are engaged with the Company (Note 8).

Our management team and directors, along with their year to date remuneration, is presented as below

Individual Position 2020 remuneration
Cash Options Total
Joseph Fuda President, Director 9,124 - 9,124
Oliver Nepomuceno Director - - -
Alex Dey Director - - -
Brian Von Herzen Director - - -
Dan Amadori CFO - - -

(g) **** Transactions with Related Parties ****

Trade payables and other liabilities:

As at July 31, 2020 and October 31,2019 the Company reports in trade payables and other liabilities, a balance owing to the former President of MAST of $193,174 which amount represents alleged outstanding wages payable; refer to Section 7(c) - Contingencies, as above.

As at July 31, 2020 and October 31, 2019 the Company includes $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 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.

The Company has disputed these amounts payable and  believes that it has no obligations payable  to  these individuals.

Convertible debentures

In May 2019, the CEO of the Company subscribed for a short-term loan of $15,000 CDN ($11,450 USD). At July 31, 2020, the loan principal was fully repaid (outstanding at October 31, 2019 - $10,000CDN; $7,582 USD).

In January 2018, the CEO of the Company provided a convertible debenture of $150,000 CDN ($114,138 USD). At July 31, 2020 $15,001 CDN ($11,191 USD) (October 31,2019 - $52,319 CDN, 39,756 USD) in loan principal remains outstanding.

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 2020, 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 employee's options to purchase shares at prices that are at or above market price on the date of grant. At July 31, 2020 there are 5,430,000 options outstanding at an average exercise price of $0.23 per share

Capital Resources: We have no commitments for capital expenditures as of July 31, 2020.

**********

MICROMEM TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED JULY 31, 2020<br><br> <br>PREPARED AS OF SEPTEMBER 25, 2020

8. SUBSEQUENT EVENTS

Subsequent to July 31, 2020:

(a) 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 $47,376 and issued a total of 1,353,597 common shares.

(b) The Company repaid $5,000 of convertible debentures and $71,375 of convertible debentures were converted into 5,471,203 common shares.

(c) The Company extended convertible debentures that were within 3 months of maturity      date from July 31, 2020. Extension terms ranged from three to six months.

(d) The Company secured $38,000 in convertible debentures with a 12 month term and conversion features which are effective six months after initiation date.

(e) The Company cancelled 2,040,000 stock options with a weighted average  exercise price of $0.25 per share.

(f) The Company held its Annual General Meeting of Shareholders on September 8, 2020. Joseph Fuda, Alex Dey and Oliver Nepomuceno were reelected to serve as directors at the meeting. The authorized limit for stock options in the Company's plan was increased from 18.84 million to 27.5 million options at the meeting.

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

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

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

  1. Review:  I have reviewed the interim financial report and interim MD&A (together the "interim filings") of Micromem Technologies Inc., (the Issuer) for the interim period ended July 31, 2020.

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

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

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

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

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

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

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

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

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

5.2 not applicable

5.3 not applicable

  1. Reporting changes in ICFR:  The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on November 1, 2019 to July 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date:  September 25, 2020

/s/ Joseph Fuda

___________________________________________

Joseph Fuda

President and Chief Executive Officer

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

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

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

  1. Review:  I have reviewed the interim financial report and interim MD&A (together the "interim filings") of Micromem Technologies Inc., (the issuer) for the interim period ended July 31, 2020.

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

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

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

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

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

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

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

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

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

5.2 not applicable

5.3 not applicable

  1. Reporting changes in ICFR:  The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on November 1, 2019 to July 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date:  September 25, 2020

/s/ Dan Amadori

___________________________________________

Dan Amadori

Chief Financial Officer

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