UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 20-F

|[ ] | REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF
|--- | ----------------------------------------------------------
|    | THE SECURITIES EXCHANGE ACT OF 1934                       
|    | or                                                        
|[x] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF          
|    | THE SECURITIES EXCHANGE ACT OF 1934                       
|    | or                                                        
|[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF      
|    | THE SECURITIES EXCHANGE ACT OF 1934                       

Commission File No. 0-26005
___________

MICROMEM TECHNOLOGIES INC.(Exact name of Registrant as specified in its charter)Ontario, Canada(Jurisdiction of incorporation or organization)

777 Bay Street, Suite 1910,
Toronto, Ontario M5G 2E4, Canada
Tel: (416) 364-6513
Fax: (416) 360-4034(Address of principal executive offices)

Securities registered or to be registered pursuant to Section
12(b) of the Act:

None

Securities registered or to be registered pursuant to Section
12(g) of the Act:Common Shares

Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:None

Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report48,732,187 Common Shares

Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days:       

                                                                                                                        Yes X         No

Indicate by check mark which financial statement item the
Registrant has elected to follow:    
                                                                                                                        Item 17X         Item 18



TABLE OF CONTENTS

|           | Part I                                                                      
|---------- | ----------------------------------------------------------------------------
|           |                                                                             
|           |                                                                             
|Item 1.    | Identity of Directors, Senior Management and Advisors                       
|Item 2.    | Offer Statistics and Expected Timetable                                     
|Item 3.    | Key Information                                                             
|Item 4.    | Information on the Company                                                  
|Item 5.    | Operating and Financial Review and Prospects                                
|Item 6.    | Directors, Senior Management and Employees                                  
|Item 7.    | Major Shareholders and Related Party Transactions                           
|Item 8.    | Financial Information                                                       
|Item 9.    | The Offer and Listing                                                       
|Item 10.   | Additional Information                                                      
|Item 11.   | Quantitative and Qualitative Disclosures about Market Risk                  
|Item 12.   | Description of Securities Other Than Equity Securities                      
|           |                                                                             
|           | Part II                                                                     
|           |                                                                             
|Item 13.   | Defaults, Dividend Arrearages and Delinquencies                             
|Item 14.   | Material Modifications to the Rights of Security Holders and Use of Proceeds
|Item 15.   | Controls and Procedures                                                     
|           |                                                                             
|           | Part III                                                                    
|           |                                                                             
|Item 16.   | Not Applicable                                                              
|Item 16A   | Audit Committee Financial Expert                                            
|Item 16B   | Code of Ethics                                                              
|Item 16C   | Principal Accountant Fees and Services                                      
|Item 17.   | Financial Statements                                                        
|Item 18.   | Exhibits                                                                    
|Signatures |                                                                             





PART I

INTRODUCTION

Abbreviations

Reference throughout this document to Micromem Technologies
Inc. ("Micromem") and/or its affiliates may be made through abbreviated forms of
their respective names. See "Item 4. Information on the Company - C.
Organizational Structure" for a summary of these abbreviated names.

Forward Looking and Cautionary Statements

This Form 20-F contains certain forward-looking statements.
These forward-looking statements are based on current expectations, estimates
and projections about the business of the Company and the industry in which the
Company operates, management's beliefs, and assumptions made by management.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks"
and "estimates," variations on such words and similar expressions are intended
to identify such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict. The Company's actual results could differ
materially from those expressed or forecasted in these forward-looking
statements as a result of certain factors, including those set forth under
"Description of Business" and elsewhere in this Form 20-F.

ITEM 1.         IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable

ITEM 2.         OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3.         KEY INFORMATION

A.        Selected Financial Data

The following table sets forth selected consolidated
financial data of the Company in Unites States dollars as of and for each of the
five fiscal years ended October 31, 2003. The selected consolidated financial
data has been derived from the audited consolidated financial statements of the
Company. All information contained in the following table should be read in
conjunction with the audited consolidated financial statements of the Company
and the notes thereto and "Item 5 - Operating and Financial Review and
Prospects", included elsewhere in this Form.

Selected balance sheet information



|Years ended October 31,              
|-------------------------------------
|                                     
|Working capital (deficiency)         
|Capital Assets                       
|Total Assets                         
|Shareholder's equity
    (deficiency)

1



Selected statement of operations and deficit information

|Years ended October 31,                                
|-------------------------------------------------------
|                                                       
|Interest &
    other income                            
|Research and development                               
|General and administrative
    expenses                
|Write-down of royalty rights                           
|Write-down of patents and
    trademarks               
|Loss (gain) on disposal of
    assets                  
|Loss before income taxes                               
|Provision for income taxes (recovery)                  
|Net loss                                               
|Loss per share-basic & diluted                         
|Weighted average number of basic
    and diluted shares

Reconciliation between Canadian GAAP and U.S. GAAP:

The Company's consolidated financial statements have been
prepared in accordance with Canadian GAAP which, in the case of the Company,
conform in all material respects with U.S. GAAP, except for those items
disclosed in note 16 to the notes to the Consolidated Financial Statements.

Currency and Exchange Rates

The financial statements of the Company are all expressed in
United States dollars. All other financial data appearing in this Form 20-F are
expressed in United States dollars ("US $"), with the exception of certain
limited cases when reference is made to instruments denominated in Canadian
dollars ("CDN $").

Transactions that were conducted in Canadian dollars or other
foreign currencies have been converted into United States dollars at the rate of
exchange prevailing at the date of such transactions, and assets and liabilities
denominated in Canadian dollars or other foreign currencies but expressed in
this Form 20-F in United States dollars have been converted into United States
dollars at the rate of exchange prevailing on the date of the applicable
financial statement.

The following table sets forth, for the periods indicated,
the high, low, end of period and average for period noon buying rates as
published by the Bank of Canada (the "Noon Buying Rate"), as expressed in the
amount of U.S. Dollars equal to one Canadian dollar.



|                   | 2003   | 2002   | 2001   | 2000   | 1999  
|------------------ | ------ | ------ | ------ | ------ | ------
|High for period    | 0.7738 | 0.6654 | 0.6711 | 0.6984 | 0.6916
|Low for period     | 0.6350 | 0.6179 | 0.6293 | 0.6527 | 0.6421
|End of period      | 0.7738 | 0.6339 | 0.6294 | 0.6568 | 0.6797
|Average for period | 0.7200 | 0.6368 | 0.6493 | 0.6779 | 0.6678



The following table sets forth, for each period indicated,
the high and low exchange rates for United States dollars expressed in Canadian
dollars on the last day of each month during such period, based on the Noon
Buying Rate.



|     | February 
    2004 | January 
    2004 | December 2003 | November 2003 | October
 2003 | September 
    2003
|---- | ------------------ | ----------------- | ------------- | ------------- | ------------- | -------------------
|High | 1.2692             | 1.2692            | 1.2924        | 1.2973        | 1.3038        | 1.3472             
|Low  | 1.3440             | 1.3339            | 1.3397        | 1.3359        | 1.3382        | 1.3877             





2



On March
19, 2004, the noon buying rate for one Canadian dollar as quoted by the Federal
Reserve Bank of New York (US
$1.00 = CDN $1.3310).

B.         Capitalization and Indebtedness

Not Applicable.

C.         Reasons for the Offer and Use of Proceeds

Not Applicable.

D.         Risk Factors

The Company and the Company's investors face a number of
significant risks, which are described below.



Going Concern



There is substantial doubt about the Company's ability to
continue as a going concern because of the substantial losses incurred in the
development stage. In addition the Company is still in the development stage and
it will be necessary to raise additional funds for the continuing development,
testing and commercial exploitation of its technologies. The sources of these
funds have not yet been identified and there can be no certainty that sources
will be available in the future. As such, the realization of the Company's
assets and discharge of its liabilities is subject to significant uncertainty.



The Company's ability to continue as a going concern is
dependent upon completing the development of its technology for a particular
application, achieving profitable operations, obtaining additional financing and
successfully bringing its technologies to the market. The outcome of these
matters cannot be predicted at this time. The consolidated financial statements
have been prepared on a going concern basis and do not include any adjustments
to the amounts and classifications of the assets and liabilities that might be
necessary should the Company be unable to continue in business.



The Company Currently Has No Operating Revenue



The Company has no revenues and it does not expect to
generate revenues in the near future. If the Company fails to enter into any
license agreements it will have no revenues and even if it enters into such
agreements the amount of the revenues it receives will depend on the terms it is
able to get from each licensee and the ability of each licensee to compete in
its particular market.



The Company's Technology is under Development



The Company's technology is currently under development and
is therefore not yet proven to be commercially viable. In order that the Company
may be able to procure revenue generating licensing arrangements, significant
development work remains to be completed.



Products Using the Technology Have Not Yet Been Manufactured



The Company's success depends on whether its technology can
be manufactured in large quantities at competitive prices. Failure to be able to
manufacture large quantities at competitive prices will seriously hurt the
Company's ability to generate revenues.



Competitors are seeking to develop Other Magnetic based
Memory Technologies

Most of the major producers of memory components and devices
are reported to be conducting research directed towards the development of other
non-volatile random access memory technologies. While information concerning
such research is difficult to obtain, reports indicate that very large sums of
money are being spent and that major companies such as IBM, Motorola and
Honeywell, that have enormous resources at their disposal, are involved.

3



The Company may be materially affected by aggressive
competitionas the memory and data storage industry is highly
competitive, and customers make their decisions based on a number of competitive
factors, including the following:

• Functionality

• Technology

• Performance

• Reliability

• System scalability

• Price

• Quality

• Product availability

• Customer service

• Brand recognition

The Company must address each of these factors effectively in
order to successfully compete. If the Company is unable to adapt its products
and services to changes in these competitive factors, it may never gain market
share.



Failure To Receive Continued Financing Will Cause the
Business to Suffer



Since the Company expects no revenues in the near future, the
Company will need additional financing to continue the research and development
and to successfully market the technology to potential licensees. While the
Company has had sufficient funds thus far to meet its requirements, there is no
assurance it will be able to continue to do so, and failure to raise sufficient
funds in the future will affect its ability to develop and market the
technology.



> Because Much of the Company's Success and Value Depends
>     On Its Ownership and Use of Intellectual Property, the Company's Failure to
>     Protect That Property Could Adversely Affect Its Future Growth and Success



The Company's success will depend on its ability to protect
its intellectual property. The Company relies primarily on patent, copyright,
trademark and trade secret laws, as well as nondisclosure agreements and other
methods to protect its proprietary technologies and processes. Despite its
efforts to protect its proprietary technologies and processes, unauthorized
parties may attempt to copy or otherwise obtain and use its products or
technology without authorization, develop similar technology independently or
design around its patents. Policing unauthorized use of the Company's products
is expensive and difficult, and the Company cannot be certain that the steps it
has taken will prevent misappropriation or infringement of its intellectual
property.



> Intellectual Property Claims Against the Company, No
>     Matter How Groundless, Could Cause Its Business To Suffer



The Company's future success and competitive position depend
in part on its ability to retain exclusive rights to its technology, including
any improvements that may be made on that technology from time to time by the
Company or on its behalf. While the technology is patented or subject to pending
patent applications in the U.S.A. and the Company knows of no challenge that has
been made either against the technology or against the Company's rights to it,
and has no reason to believe that any such challenge might be made or that the
grounds for any such challenge exist, if any intellectual property litigation
were to be commenced against the Company, no matter how groundless, the result
would be significant expense, adversely affecting further development, licensing
and sales, and diverting the efforts of its technical and management personnel
and, in the event of an adverse outcome, substantial damages and possible
restrictions on the further development licensing and use of the technology.



There is no assurance that any of the pending applications
will be issued as patents or that any issued patent will not be determined to be
invalid at a later date.



4



No Foreseeable Dividends



Micromem has never paid a dividend on its securities.
Micromem does not anticipate paying dividends in the foreseeable future.



Issuance of Additional Securities and Dilution



The board of directors of Micromem has the authority to issue
additional Common Shares or other securities of the Company without the prior
consent or vote of the Company's shareholders. The issuance of additional Common
Shares may have the effect of diluting the proportionate equity interest and
voting power of holders of Shares.



Dependence on Key Personnel



The senior managers and employees of the Company are
Salvatore Fuda, who serves as the Chairman and Joseph Fuda, who serves as the
Chief Executive Officer. Dr. Harry Ruda, and a number of researchers forming the
team that he oversees, are key technical personnel, engaged pursuant to research
collaboration agreements between the Company and the University of Toronto. The
Company's success will depend on its ability to retain certain of its senior
management and key technical personnel. It will also depend, to a large extent,
on its ability to attract and retain additional highly skilled personnel in the
future.



The Company may be materially affected by global economic and political
conditions

The Company's ability to generate revenue may be adversely
affected by the prevailing uncertainty of the global economy. The Company does
not currently anticipate any significant improvement in new technology spending
during 2004. During 2002 and 2003, the Company implemented various cost-saving
measures to help mitigate the adverse effects of the slowdown in the global
economy. The Company cannot provide any assurance that a prolonged economic
downturn, particularly as it affects the technology sector, will not have
additional adverse effects on the Company's financial condition, results of
operations, or our ability to generate revenue. Furthermore, the Company cannot
provide any assurance that our cost-saving measures will be successful or
sufficient to allow the Company to commence generating revenues in future
periods because revenues will be dependent, among other things, upon on
completion of the development of the Company's technologies and procuring of
revenue generating contracts.

The Company's financial condition and results of operations
could also be materially affected by unstable global political conditions.
Terrorist attacks or acts of war could significantly disrupt the Company's
operations and the operations of the Company's future customers, suppliers,
distributors, or resellers. The Company cannot predict the potential impact on
its financial condition or results of operations should such events occur.



> The Company may be materially affected by rapid technological change and
>     evolving industry standards

Short product life cycles are inherent in high-technology
industries due to rapid technological change and evolving industry standards.
The Company's future financial condition and results of operations depend on its
ability to respond effectively to these changes. The Company cannot provide any
assurance that it will be able to successfully develop, manufacture, and market
innovative new products or adapt its current products to new technologies or new
industry standards. In addition, customers may be reluctant to adopt new
technologies and standards, or they may prefer competing technologies and
standards. Because the technology market changes so rapidly it is difficult to
predict the rate adoption of its ferromagnetic memory technology.

5



The Company may be materially affected by risks associated with new product
development

New product research and development is complex and requires
the investigation and evaluation of multiple alternatives, as well as planning
the design and manufacture of those alternatives selected for further
development. Research and development efforts could be adversely affected by any
of the following:

• Hardware and software design flaws

• Product development delays

• Changes in data storage technology

• Changes in operating systems

• Changes in industry standards

Manufacturing new products involves integrating complex
designs and processes, coordinating with suppliers for parts and components, and
managing manufacturing capacities to accommodate forecasted demand. Failure to
obtain sufficient quantities of parts and components, as well as other
manufacturing delays or constraints, could adversely affect the timing of new
product introductions. The Company has experienced product development delays in
the past that adversely affected its financial position.

> The Company may be materially affected by the risks associated with
>     developing and protecting intellectual property

The Company depends on its ability to develop new
intellectual property that does not infringe on the rights of others. The
Company cannot provide any assurance that it will be able to continue to develop
such new intellectual property.

The Company relies on a combination of U.S. patent,
copyright, trademark, and trade secret laws to protect its intellectual property
rights. The Company enters into confidentiality agreements relating to its
intellectual property with its employees and consultants.

Due to financial constraints, the Company has determined not
to file patent and trademark registration applications with foreign governments;
this may expose us and our technologies to infringement in foreign
jurisdictions.

Despite all of the Company's efforts to protect its
intellectual property rights, unauthorized parties may attempt to copy or
otherwise obtain or use its intellectual property. Monitoring the unauthorized
use of the Company's intellectual property is difficult, particularly in foreign
countries. The Company cannot provide any assurance that it will be able to
adequately protect its intellectual property.

> The Company may be materially affected if it is unable to attract,
>     retain, and motivate key employees

The Company's future success depends in large part on its
ability to attract, retain, and motivate its key employees. The Company faces
significant competition for individuals who possess the skills required to
design, develop, manufacture, and market the Company's technologies. An
inability to successfully attract, retain, and motivate these employees in the
future could have an adverse effect on the Company's future financial condition
and results of operations.

Volatility of Common Share Price and Volume

Shareholders of Micromem may be unable to sell significant
numbers of common shares of Micromem on the NASD OTC-BB (where the common shares
are currently traded) without a significant reduction in the price of the
shares, if at all.

Furthermore, there can be no assurance that the Company will
be able to meet the listing requirements of, or achieve listing on, any other
stock exchange. The market price of the common shares of the Company may be
affected significantly by factors such as fluctuations in the Company's
operating results, announcements of technological innovations or new products by
the Company or its competitors, action by governmental agencies against the
Company or the industry in general, developments with respect to patents or
proprietary rights, public concern as to the safety of products developed by the
Company or others, the interest of investors, traders and others in public
companies such as the Company and general market conditions. In recent years,
the securities markets in the United States and Canada have experienced a high
level of price and volume volatility, and the market price of securities of many
companies, particularly small capitalization companies, have experienced
fluctuations which have not necessarily been related to the operating
performances, underlying asset values or prospects of such companies.

6



Foreign Exchange Risks

Because we have historically raised funding in U.S. dollars,
and our costs are denominated in Canadian dollars we may be subject to foreign
exchange risks. A decrease in the value of either of the U.S. dollar relative to
the Canadian dollar could affect our burn rates and potential profitability. We
do not currently hold forward exchange contracts or other hedging instruments to
exchange foreign currencies for U.S. dollars to offset currency rate
fluctuations.

Trading Activity in our Stock may be Reduced

Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks, like shares of our common stock, generally
are equity securities with a price of less than $5.00 (other than securities
registered on some national securities exchanges or quoted on Nasdaq). The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and,
if the broker-dealer is the sole market maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed control over the market, and monthly
account statements showing the market value of each penny stock held in the
customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.



ITEM 4.         INFORMATION ON THE COMPANY

A.         History and Development of the Company

Micromem is a corporation formed under the laws of the
Province of Ontario, Canada, with principal executive offices at 777 Bay Street,
Suite 1910, Toronto, Ontario M5G 2E4. Formerly known as AvantiCorp International
Inc., Micromem changed its name to Micromem Technologies Inc. on January 14,
1999. Micromem was incorporated under the laws of the Province of Ontario,
Canada, on October 21, 1985 as Mine Lake Minerals Inc. It subsequently changed
its name to Avanti Capital Corp. on June 23, 1988 and to AvantiCorp
International Inc. on April 30, 1992 before becoming Micromem Technologies Inc.
on January 14, 1999 in connection with its acquisition of Pageant International.

Purchase of Pageant Technologies Incorporated

On January 11, 1999, Micromem completed the acquisition of
100% of the capital stock of Pageant International, in exchange for 32,000,000
Common Shares and warrants for the purchase of an additional 1,000,000 Common
Shares (the "Warrants"), representing 88.94% of the outstanding Common Shares of
Micromem (89.24% assuming exercise of all the Warrants). The acquisition was
completed pursuant to an agreement, dated December 7, 1998, among Micromem, as
the purchaser, and Ataraxia Corp., as the vendor, and Pageant International. The
Warrants were exercisable at CDN $2.00 per share through January 11, 2000 and
thereafter at CDN $2.30 per share through January 12, 2001 on which date the
Warrants remaining unexercised expired. The total purchase price for the Pageant
International Common Stock was $30,000,000. The value of the Common Shares used
to pay the purchase price was determined through arm's length negotiations using
as a point of reference the price per Common Share of $1.16 on September 23,
1998 less an agreed upon discount.

7



The primary asset of Pageant International was an undivided
50% interest in patents, issued in the United States and Europe, with a
corresponding application in Japan, for nonvolatile random access memory
technology which was, at the time, called MAGRAM and which is, today, called
VEMRAMTM (the "VEMRAMTM
Patents"). The VEMRAMTM technology also includes
certain improvements to the VEMRAMTM Patents, many of
which are the subject of pending patent applications. The undivided 50% interest
in the VEMRAMTM Patents was originally conveyed to
Ataraxia Corp. by Estancia Limited, a company incorporated under the laws of the
Turks & Caicos Islands ("Estancia"), pursuant to a Joint Ownership and
Licensing Agreement dated September 17, 1997 (the "JointOwnership and
Licensing Agreement") which Ataraxia Corp. assigned to Pageant International on
October 22, 1997 with the written consent of Estancia. In addition to the
undivided 50% interest in the VEMRAMTM Patents, under
the Joint Ownership and Licensing Agreement Pageant International was granted an
exclusive worldwide license to develop, manufacture and sell the VEMRAMTM
technology. The Joint Ownership and Licensing Agreement requires Pageant
International to pay Estancia or its nominee a royalty of 40% of the gross
profits less expenses agreed by the parties for each technology license sold.
Additionally, Pageant International would be required to pay Estancia Limited
40% of any per unit royalty received by Pageant less properly documented
reasonable expenses directly related to the obtaining of those royalties and as
agreed by the parties in writing.



The Joint Ownership and Licensing Agreement also provided
that if Pageant International, as approved assignee of Ataraxia Corp., sold the
rights to the VEMRAMTM technology to a third party not
owned or controlled by it, it would have to pay Estancia 50% of the proceeds
from such transaction. This provision makes it clear that in the event of the
sale of all of the VEMRAMTM technology rights, 50% of
the proceeds would go to Estancia, reflecting its 50% undivided interest in the
technology, rather than 40% reflecting its royalty rights under the VEMRAMTM
License. Estancia is controlled by John Zammit. Mr. Zammit has no direct control
relationship with Micromem, and the management of Micromem is not aware that Mr.
Zammit has any indirect control relationship with Micromem or any control
relationship, direct or indirect, with Ataraxia Corp.

See "Item 4. Information on the Company - B. Business
Overview - Recent Developments - Agreement to Purchase Estancia Interests".

The acquisition of Pageant International was treated as a
reverse takeover for accounting purposes. A reverse takeover is deemed to have
occurred when a company uses so much of its voting stock to purchase another
company that the former stockholders of the acquired company could be said to
have ended up controlling the company doing the acquiring. In the case of the
purchase of Pageant International by Micromem, the two former shareholders of
Pageant International ended up with a greater number of voting shares than did
the pre-acquisition Micromem shareholders and therefore have been deemed to have
apparent control. The consolidated financial statements of Micromem are
presented as a continuation of the financial position and results of Pageant
International, even though Micromem remains the legal parent and Pageant
International remains the legal subsidiary. The primary consequence of the
application of this treatment to the acquisition is that the patent rights are
recorded at $100, the historical value at which they were carried on the Pageant
International balance sheet.

Agreement to Purchase Estancia Interests

On December 10, 2000, Micromem and Pageant International
entered into an agreement (the "Purchase Agreement") with Estancia Limited and
Richard M. Lienau ("Lienau") to purchase from Estancia and Lienau all interests
(the "Estancia Interests") in the VEMRAMTM Patents and
the VEMRAMTM technology and all other rights,
interests and entitlements held by Estancia and Lienau as set forth in the Joint
Ownership and Licensing Agreement. The Purchase Agreement is subject to all
required approvals from securities regulatory authorities.



Under the Purchase Agreement which closed on March 9, 2001,
Pageant International agreed to pay a purchase price of $50.0 million (the
"Purchase Price") to Estancia, as follows:

_________________________

1VEMRAMTM is a trade-mark of Memtech
International Inc., a Bahamas corporation whooly-owned by Micromem, and is used
under license by Micromem and other corporations affiliated with Micromem.

8



| | i.   | $10.0 million was paid on closing (after receipt of
        regulatory approvals), in the form of 2,007,831 common shares of
        Micromem (or $8.0 million worth of Micromem's common shares ("Micromem
        Shares") based on the close price on the closing date, being $3.98 per
        share) and $2.0 million in cash;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ii.  | $20.0 million, would be paid if and when either: (a)
        certification is received from Honeywell Federal Manufacturing &
        Technologies that fully integrated, randomly addressable memory matrices
        of VEMRAMTM technology have met certain
        stipulated performance standards, or (b) Micromem or any of its
        affiliates executes a definitive agreement for the sale or licensing of
        the VEMRAMTM technology to an arm's length
        third party for any commercial purposes other than testing or evaluation
        of the technology; payable in the form of cash and Micromem Shares to be
        determined by Pageant International provided that a minimum of 50% of
        the $20.0 million shall be paid in Micromem Shares valued at the close
        of trading on the date of such certification receipt, sale or licensing;
        and
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | iii. | $20.0 million, would be paid if and when Micromem or
        any of its affiliates executes a definitive agreement for the sale or
        licensing of any technology (including the VEMRAMTM Technology) owned by Micromem to an arm's length third party for any
        commercial purposes other than testing or evaluation of the technology;
        payable in the form of cash and Micromem Shares to be determined by
        Pageant International provided that a minimum of 50% of the $20.0
        million shall be paid in Micromem Shares valued at the close of trading
        on the date of execution of the license.                                                                                                                                                                                                                                                          



Notwithstanding the provisions triggering the two $20.0
million payments (the "Trigger Events"), Pageant International had the right to
pay any portion or all of the Purchase Price at any time following the Closing
Date through a combination of cash and a number of common shares of Micromem,
provided that a minimum of 50% of such payment shall be through the issuance of
common shares of Micromem.



At the closing of the Purchase Agreement, on March 9, 2001,
Estancia was required to and it did enter into a three year technology
development agreement with Pageant International for the provision of the
services of Richard Lienau in respect of the continued development of VEMRAMTM
technology (the "Technology DevelopmentAgreement"). The Technology
Development Agreement provides for fees to Estancia of $215,000 per annum and a
budget for the continued development of VEMRAMTM of up
to $500,000 per annum. Effective April 23, 2002, the Technology Development
Agreement was amended to extend the term of the agreement for an additional
eight months commencing March 9, 2004 through to November 9, 2004, and to
provide a reduction of the monthly fees payable to Estancia to $107,500 during
the periods from June 1 to December 2002, and during the extended period.



Pursuant to the Purchase Agreement, because one or both of
the Trigger Events did not occur prior to three years following the Closing
Date, on March 9, 2004, Pageant International was deemed to have conveyed a 40%
undivided interest in the VEMRAMTM Patents, and to
have granted a 32% gross profits royalty (as described below), to Estancia,
where the proportionate interest was calculated as the ratio of the portion of
the Purchase Price remaining unpaid (being $40.0 million) at such date over
$50.0 million. Consequently, Pageant International owns a 60% interest in the
VEMRAMTM Patents and would be required to pay Estancia
royalties equal to 32% of: (a) the gross profit, less expenses agreed to by the
parties, for each license of the VEMRAMTM Patents sold
or otherwise transferred by Pageant International; and (b) the amount of any
unit royalty received by Pageant International as a result of the license or
sale of the VEMRAMTM Patents less properly documented
reasonable expenses directly related to the obtaining of said royalties.
Accordingly, by virtue of the deemed assignment of the 40% undivided interest in
the VEMRAM Patents and grant of the 32% royalty to Estancia, Pageant
International's obligations to pay the amounts described in paragraphs (ii) and
(iii) above have been satisfied.



9







Changes to Board of Directors and Management

On January 11, 1999, immediately following the acquisition,
Stephen Fleming, who had been serving as President and Chief Executive Officer
of Pageant USA, was elected to Micromem's Board to join Salvatore Fuda and Ross
McGroarty, who had served as directors since 1992 and 1988, respectively. The
Board then elected Mr. Fuda as Chairman, Mr. Fleming as President and Chief
Executive Officer, and Mr. McGroarty, who had been serving as President, as
Executive Vice President and Secretary of Micromem. Subsequently, on March 18,
1999, Robert Patterson, who had been serving as Chairman of the Board and Vice
President of Corporate Development of Pageant USA, was elected President and
Chief Executive Officer of Micromem to replace Mr. Fleming. On November 15,
1999, Antonio Lopes was appointed Chief Financial Officer of Micromem. On June
15, 2000, Mr. McGroarty resigned as Executive Vice-President of Micromem.

At the annual meeting of shareholders of Micromem held on
June 29, 2000, the following individuals were elected as directors of Micromem:
Andrew Brandt, Stephen Fleming, Salvatore Fuda, Charles Harnick and George
Kennedy. The terms of all previously elected directors ended on such date. The
term of Mr. Lopes' employment as Micromem's Chief Financial Officer having ended
on June 5, 2000, Raj Viswanathan was appointed as Chief Financial Officer. The
term of Robert Patterson's employment as Micromem's President and Chief
Executive Officer having ended, Salvatore Fuda was reappointed as Chairman and
he was appointed as Chief Executive Officer on June 29, 2000. Also on June 29,
2000, Manoj Pundit was appointed as Executive Vice-President and General Counsel
of Micromem. On February 21, 2001, Dr. Dale Hensley was appointed as Chief
Operating Officer of Micromem and Pageant USA.

At the annual meeting of shareholders of Micromem held on
March 14, 2001, Andrew Brandt, Stephen Fleming, Salvatore Fuda, Charles Harnick,
George Kennedy, Manoj Pundit and David Sharpless were elected as directors of
Micromem.

At a meeting of the Board of Directors held on March 14,
2001, a resolution was passed appointing Dale Hensley as a director of Micromem.
At a meeting of the Board of Directors held on February 13, 2002, the Board
accepted the resignation of Salvatore Fuda as President and Chief Executive
Officer of Micromem due to health reasons. Salvatore Fuda continues to serve as
Chairman and Director of Micromem. In his place, the Board appointed Joseph Fuda
to serve as President and Chief Executive Officer. Mr. J. Fuda was also
appointed as a director. Messrs. Andrew Brandt, Stephen Fleming, Salvatore Fuda,
Charles Harnick, Dale Hensley, George Kennedy, Manoj Pundit, David Sharpless and
Stephen Van Fleet were elected as directors of Micromem at the annual meeting
held April 30, 2002.

Dr. Dale Hensley's employment as Chief Operating Officer was
terminated by Micromem and by Pageant USA effective as of September 24, 2002.
Raj Viswanathan resigned as Chief Financial Officer of Micromem on October 31,
2002 and as a director of Pageant USA on September 26, 2002. Dr. Hensley
resigned as a director of Pageant USA on September 26, 2002 and as a director of
Micromem effective October 9, 2002. Antonio Lopes was appointed as Chief
Financial Officer of Micromem with effect from November 1, 2002.

At the annual meeting of shareholders of Micromem held on
June 6, 2003, Salvatore Fuda, Stephen Fleming, Charles Harnick, George Kennedy,
Andrew Brandt, Manoj Pundit, Joseph Fuda, David Sharpless and Steven Van Fleet
were elected as directors of Micromem. The terms of all previously elected
directors ended on such date. Messrs. Salvatore Fuda, Joseph Fuda, Manoj Pundit
and Antonio Lopes continue to hold their respective offices, as described above,
at the date of this Form 20F.



B.         Business
Overview

> The Company is engaged in the development of memory
>     technologies having the characteristic of non-volatility, which is the
>     ability to retain information after power has been shut off.

The Company's Technology (as defined in the next paragraph
below) is based on ferromagnetism, which consists of microscopic magnetic
elements and Hall effect sensors deposited on a substrate of silicon or glass.
Each magnetic element stores one bit of data based on its ability to alternate
between states of magnetic polarization, which states are determined by a Hall
effect sensor normal to the magnetic field. The Company's Technology represents
"1"s and "0"s by the different polarization of magnets; for example, a magnet
oriented north/south is a "1" and a magnet oriented south/north is a "0". The
magnetic field strength and direction do not decay when power is switched off;
therefore, the memory is non-volatile.

10





In June 2002, the Company's management determined that its
research and development operations required restructuring due to financial
constraints, in order to continue the development of its magnetic non-volatile
memory technology. Accordingly, the Company commenced restructuring its
operations in July 2002 to achieve an orderly transition of its R&D program. As
part of this restructuring, Pageant USA closed its Lee's Summit, MO facility by
August 31, 2002 and Micromem downsized its head office in Toronto by end of the
fiscal year, October 31, 2002. Micromem and Pageant USA terminated Dr. Dale
Hensley as Chief Operating Officer effective as of September 24, 2002. Pageant
USA terminated all of its other employees by October 31, 2002. Dr. Hensley
resigned as a director of Micromem on October 9, 2002 and as a director of
Pageant USA on September 26, 2002. In September 2002, Pageant USA terminated its
agreement with Townsend Capital Inc. pursuant to which Pageant USA occupied the
offices, laboratory and clean room it had occupied at Summit Technology Campus,
Lee's Summit, Missouri.



Until August 2002, Micromem was pursuing the development of
its two unique memory technologies (collectively, the "Company's Technology"):
(i) a memory design with the magnetic bit aligned horizontally to the substrate
(known as "HEMRAMTM "); and (ii) a memory design with
the magnetic bit aligned vertically to the substrate ("VEMRAMTM
"). Commencing July 2002, Micromem outsourced its magnetic memory research and
development to the University of Toronto and Dr. Harry Ruda.



On October 24, 2002, Micromem entered into a 2-year research
collaboration agreement ("U of T Research Collaboration Agreement") with
Materials and Manufacturing Ontario ("MMO"), the University of Toronto, and Dr.
Harry Ruda, Chair Professor in Nanotechnology. Through the collaboration,
Micromem will continue its involvement in the research and development of
magnetic memory technology, which will be carried out by a highly skilled
research team headed and assembled by Dr. Ruda. Under the agreement, Micromem
and MMO will each provide $174,864 (CDN $272,000) of funding and the combined
$349,728 (CDN $544,000) will be used to cover the operating expenses of the
research collaboration over a term of two years. Under the agreement, Micromem
will maintain its ownership of its portfolio of patents and intellectual
property to date.

Micromem will have the first right to an exclusive and
perpetual worldwide sub-license for all uses of the technology developed under
the collaboration (except that the University may use the technology for
educational and research purposes). MMO will be entitled to receive a royalty on
Micromem's manufacturing revenues from the sale of products incorporating the
technology developed under the collaboration. A separate royalty will be
negotiated in the future on revenues to be generated by Micromem from
sub-licenses of the technology developed under the collaboration.

The research collaboration agreement contemplates a number of
milestones under a comprehensive research plan. The research will be carried out
from research facilities at the University of Toronto.

MMO is one of four Ontario Centres of Excellence (OCE)
established by the provincial government to promote commercial research
partnerships between universities and industry. The OCE program is funded by the
Ministry of Enterprise, Opportunity and Innovation; and is part of the
provincial government's $2 billion investment in Ontario's knowledge economy
making Ontario more competitive through innovation in science and technology



The Company has a portfolio of patents and patent
applications protecting the technologies that it is developing.



____________________

2HEMRAMTM is a trade-mark of Memtech
International Inc., a Bahamas corporation wholly-owned by Micromem, and is used
under license by Micromem and other corporations affiliated with Micromem.

11



Industry Background



The semiconductor memory industry is principally driven by
the requirements of the computing industry. The nature of the memory
manufacturing industry is that it is capital intensive, cyclical, rapidly
changing and depends significantly on patent protection.



The semiconductor industry is intensely competitive. Both
low-density and high-density nonvolatile memory products are manufactured and
marketed by major corporations possessing worldwide wafer manufacturing and
integrated circuit production facilities and by specialized product companies.



Company's Technology



The various characteristics of the Company's Technology can
be better understood by describing the three basic types of memory used by
present day computers, Random Access Memory (RAM), Read Only Memory (ROM), and
secondary storage devices such as floppy and hard disks. The three types of
memory are described below:

Random Access Memory (RAM)is memory that can be both
read and written randomly, which means that its storage locations can be
accessed in any order. Thus a computer using RAM can find and go directly to the
selected location rather than performing a sequential search. Semiconductor RAM
is usually the primary memory associated with the computer's central
processing unit (CPU), the computational unit of the computer responsible
for interpreting and executing instructions. However, RAM is volatile
which means that all stored information vanishes once the power supply is
removed and must be restored from a secondary storage device each time the power
is resumed.

Two typical examples of RAM are Dynamic Random Access Memory
and Static Random Access Memory. Dynamic Random Access Memory (DRAM) uses
integrated circuits containing capacitors to achieve significant storage
capacity and speed. DRAM can be written and read in the speed range of less than
100 nanoseconds. DRAM has a major drawback in that its capacitors lose their
charge over time and therefore information contained in DRAM must be continually
refreshed. Basically, this means that on average DRAM must stop operations every
16-30 milliseconds and restore all of the data it contains or the data will
disappear. During this refresh time, the processor has no access to the
information being refreshed. Static Random Access Memory (SRAM) differs
from DRAM in that it stores information in a logic circuit referred to as a
flip-flop, rather than in a capacitor. SRAM memory does not need to be refreshed
while the power is on, but also loses its information once the power is turned
off.

Read Only Memory (ROM), like RAM, can be read
randomly, but cannot be written randomly. Unlike RAM, however, it is
non-volatile and therefore does not lose its information when a computer's power
is cut off. ROM is typically employed to store vital program information
required during the first moments after a computer is powered on. It may be used
for such purposes as forcing system test routines, directing the processor to
input/output devices or for controlling access to certain computer subsystems
such as hard drives. EPROMs (erasable programmable read-only memory)
and EEPROMs (electrically erasable read-only memory) are read only
memories that can be erased and rewritten, but must be written "en masse,"
rather than at the individual word level. "Flash" memory is a form of EEPROM
that is widely used today in such devices as cell phones, modems and personal
digital assistants. The drawbacks to Flash memory are that write times are
slower, the number of read/write cycles are limited and the requirement for
significantly higher power than DRAM to store data.

Secondary Storage Devicesinclude Floppy Disks,
which are light and portable and are written and read by a motor driven
mechanical drive. They normally have a storage capacity in the low megabyte
range. Hard Disks far exceed floppy disks in storage capacity and have
become the standard for mass storage of data to be written and read by the
processor. Both Floppy Disks and Hard Disks are non-volatile and can be both
written and read. However, since they are serial (as opposed to parallel)
devices, they are considerably slower than RAM.

Micromem's horizontal element magnetic memory technology,
HEMRAMTM , involves producing hybrid memories based on
in-plane magnetization mechanism of horizontally oriented micron scale
ferromagnetic thin films that act as storage elements. An in-plane magnetization
generates a spatially inhomogeneous field profile with a narrow fringe field
normal to the substrate. This fringe field results in a measurable Hall voltage
across the probe terminals when a current flows through the sensor. Changing
current direction will lead to a reversed Hall voltage. This intrinsically
bipolar output forms the basis of nonvolatile storage, logic gate and field
sensing.

12



Micromem's vertical element magnetic memory technology,
VEMRAMTM , uses a novel hybrid Hall effect MRAM scheme
which utilizes out-of-plane magnetization induced by vertically oriented
high-aspect-ratio ferromagnetic posts. The VEMRAMTM
cell comprises two parts: a high-aspect-ratio ferromagnetic storage post or
"bit" (memory element) and a patterned high-mobility thin film Hall sensing
element (InAs or InSb) underneath the bit. The bit is vertically positioned or
normal to the probe surface, which is necessary to suppress so-called "N"
rotation, a tendency for the magnetic field in a ferromagnet to rotate away from
its set direction under the influence of an external perturbing magnetic field.
The memory bits and driving circuits can be directly constructed on a wafer
where Hall sensors have already been produced by direct implantation or by
epitaxial growth and patterned etching. In the writing operation, each bit is
coerced to change its magnetic states by the drive current flowing along the
surrounding single-turn electrical loop. When the drive current is reversed, the
remnant state switches from one state to the other to store a new binary number.
The reading process remains essentially the same as in the in-plane
magnetization arrangement.

Competition

The Company is aware of others conducting research and
development in the magnetic non-volatile memory area. These include IBM Research
(San Jose, California), Ovonyx, Inc. (Troy, Michigan), Hewlett-Packard (Palo
Alto, California), Honeywell (Plymouth, Minnesota) and Motorola (Phoenix,
Arizona).

The basic MRAM cell consists of one transistor and one
magnetic tunneling junction. Reading the cell involves passing a current through
the magnetic tunneling junction (MTJ) stack. Two main centers of MRAM research
are at IBM and Infineon. IBM and Infineon have alternative MRAM technologies
based on the giant magneto resistance (GMR) principle. GMR memory elements
consist of two ferromagnetic layers separated by a conductive nonmagnetic
interlayer. The electrical resistance is high in the absence of external
magnetic field; however, an applied external field forces the initially
anti-parallel magnetization in the coupled films into parallel alignment and the
resistance drops. The high or low resistance determines the data storage state.
MTJ cells have similar sandwiched structures but the interlayer is insulating
instead of conducting. In contrast to GMR structures in which the sense current
usually flows parallel to the layers, the current in MTJ flows perpendicularly
to the layers of the stack.

Neither the current stages of development of these companies'
non-volatile technologies nor their projected development completion dates are
known.

Micromem's technology is based on a variety of realizations
of low-cost hybrid Hall effect magnetic cells. Unlike GMR and MTJ, hybrid Hall
effect magnetic memory cells combine a ferromagnetic storage element and an
integrated Hall effect device to read information by sensing magnetization
polarities. For example, a high-mobility thin film Hall sensor (also called a
Hall cross due to four perpendicularly oriented leads connected to the sensor)
can be used as an excellent local magnetometer for measuring the strength of
field generated by ferromagnetic films or structures due to its high sensitivity
and tolerance of broad range of temperatures. This concept utilizes the
well-known Hall effect. When a current flows through a semiconductor in the
presence of a transverse magnetic field, the mobile charges drift in a direction
perpendicular to both the electric and magnetic fields because of the Lorentz
force. This gives rise to a transverse voltage difference called Hall voltage.
The reversed magnetic field also alters the polarity of the voltage, making the
Hall probe a suitable tool for recording binary information.



The Company will face intense competition when its
technologies are developed to a point at which they may be sold and/or licensed.
The Company will be required to introduce its technologies into a well developed
market and compete with major corporations who manufacture, sell and license
existing memory products such as DRAM, SRAM, EPROM, EEPROM and Flash memory. The
market for memory technologies is dominated by major corporations who have
established market segments for their memory technologies and products, and have
significantly greater financial and other resources which are required to
design, develop, manufacture, market, sell and license their products and
technologies. Many of these major corporations have worldwide wafer
manufacturing and integrated circuit production facilities.

13



The success of the Company's Technology will be determined by
the following factors for which it has not yet been tested or measured: (i) the
ability to build fully functional sub-micron scale devices for specific
applications; (ii) the ability of manufacturers to incorporate the technology
into existing manufacturing capabilities without significant retooling and
material costs; (iii) price competitiveness; and (iv) availability and costs of
raw materials.

After completion of the development of the company's
Technology, the ability of the Company to compete successfully will depend on
elements outside of its control, including the rate at which customers
incorporate the Company's Technology into their products, the success of such
customers in selling those products, the Company's protection of its
intellectual property, the number, nature and success of competitors and their
product introductions, and general market and economic conditions. In addition,
the Company's success will depend on its ability to develop, introduce, and
license or sell in a timely manner its technology or products incorporating its
technology and to compete effectively on the basis of factors such as speed,
density, die size and packaging.



Recent Developments



In December 2003, the Company completed Unit private
placements to two Canadian private investors pursuant to prospectus and
registration exemptions set forth in applicable securities laws. Under the
private placements, the Company received $33,000 as subscription proceeds for
the sale and issue of 300,000 Units. Each Unit consists of one Common Share and
one Series A Warrant. Each Series A Warrant entitles the holder to purchase one
Common Share and one Series B Warrant for $0.11 until expiry 12 months from the
date of issue. Each Series B Warrant entitles the holder to purchase one
additional Common Share for $0.11 until expiry 12 months from the date of issue.



In December 2003, the Company also completed a Unit private
placement to one Canadian private investor pursuant to prospectus and
registration exemptions set forth in applicable securities laws. Under the
private placement, the Company received $40,000 as subscription proceeds for the
sale and issue of 500,000 Units. Each Unit consists of one Common Share and one
Series A Warrant. Each Series A Warrant entitles the holder to purchase one
Common Share and one Series B Warrant for $0.08 until expiry 12 months from the
date of issue. Each Series B Warrant entitles the holder to purchase one
additional Common Share for $0.08 until expiry 12 months from the date of issue.



On November 12, 2003, the Company entered into a second
2-year research collaboration agreement ("Second U of T Research Agreement")
with Materials and Manufacturing Ontario ("MMO") and the University of Toronto.
Through the collaboration, the Company has continued its involvement in the
research and development of magnetic memory technology, carried out by a highly
skilled research team headed and assembled by Dr. Harry Ruda. Under the
agreement, which has a term of two years commencing on the date of the
agreement, the Company has committed to providing $56,130 (CDN $81,000) per year
in cash and $30,770 (CDN $44,400) per year of in kind contributions and MMO has
committed to providing $58,900 (CDN $85,000) in cash. The combined cash
contributions of the Company and MMO, $230,060 (CDN $332,000), will be used to
cover the operating expenses of the research collaboration over a term of two
years. MMO's funding of $117,800 (CDN $170,000) (or $58,900 (CDN $85,000) per
year) will be paid directly to the University of Toronto and therefore is not
reflected in the Company's financial statements. Under the agreement, the
Company maintains its ownership of its portfolio of patents and intellectual
property that was developed prior to or outside the scope of the agreement.



In August 2003, the Company completed Unit private placements
to two Canadian private investors pursuant to prospectus and registration
exemptions set forth in applicable securities laws. Under the private
placements, the Company received $162,500 as subscription proceeds for the sale
and issue of 2,031,250 Units. Each Unit consists of one Common Share and one
Series A Warrant. Each Series A Warrant entitles the holder to purchase one
Common Share and one Series B Warrant for $0.08 until expiry 12 months from the
date of issue. Each Series B Warrant entitles the holder to purchase one
additional Common Share for $0.08 until expiry 12 months from the date of issue.

14





On March 1, 2003, the Company entered into an Equipment
Transfer Agreement with the University of Toronto. Under the terms of this
agreement, the Company conveyed equipment having an estimated value of $200,000
(CDN $297,600) to the University for incorporation into the University's
magnetic memory facility for the research and development and fabrication of
magnetic memory.



On December 10, 2002, the Company entered into a
Collaborative Research Agreement with Communications and Information Technology
Ontario ("CITO"), the University of Toronto and Dr. Harry Ruda, Professor of
Physics at the University of Toronto. Under the terms of the agreement, over a
period of two years the Company is required to contribute $63,750 (CDN $92,000)
and $67,632 (CDN $97,600) of in-kind contribution and, CITO is required to
contribute $215,430 (CDN $308,000) for research into "High Density Magnetic
Memory Device Development". In consideration of such contribution, CITO shall
receive a royalty based on revenues received from the sale of products
incorporating intellectual property developed under this collaboration agreement
for the remaining life of patents issued in connection with such intellectual
property.



On November 1, 2002 ("effective date"), Micromem entered into
an Infrastructure Agreement with the University of Toronto, to fund the assembly
of a facility for research and development and fabrication of Magnetic Memory
("MMF"). Under the terms of the agreement, Micromem has committed to contribute
$249,463 (CDN $360,000) in cash to fund the direct costs of MMF. The sum is
payable to University of Toronto as follows:



> i.         $83,154 (CDN $120,000) on execution of agreement,
>         which was paid;
>         ii.        $83,154 (CDN $120,000) at end of the two months
>         following the effective date, which was paid; and
>         iii.       $83,155 (CDN $120,000) at end of the four months
>         following the effective date, which was paid.



Patents and Trademarks



The Company believes that protection of its intellectual
property is important to its ability to generate revenues from its technologies
in the future. The Company has both issued patents and pending patent
applications and also enters into confidentiality and other agreements with
third parties and its employees for protection of its intellectual property and
trade secrets. The Company intends to continue to actively pursue the protection
of its intellectual property. Management will determine from time to time the
jurisdictions where protection will be sought which determination will be based
on a number of factors including: state of development of the Company's
Technology; importance of a particular market for the Company's Technology;
costs of pursuing patent protection in a jurisdiction; and financial position of
the Company.



The Company's magnetic memory patent portfolio comprises two
series of patents and patent applications: (i) those covering VEMRAMTM
technology and related technologies and processes; and (ii) those covering
HEMRAMTM technology and related technologies and
processes.

Environmental Matters

The Company is subject to various environmental protection
regulations imposed by the government in the jurisdiction where it conducts its
development work. The Company is not aware of any current or pending
environmental protection laws or regulations that would have a material impact
on the Company's capital expenditure requirements or competitive position.

C.         Organizational Structure

Micromem has one wholly-owned subsidiary whose total assets
constitute more than 10% of the consolidated assets of Micromem for the most
recent fiscal year: Pageant Technologies Incorporated ("Pageant International"),
which was incorporated under the laws of the Turks & Caicos Islands and
continued to Barbados on May 25, 2001, in turn has a wholly-owned subsidiary,
Pageant Technologies (USA) Inc. ("Pageant USA"), a corporation incorporated in
the State of Utah, USA. Micromem has a second wholly-owned subsidiary, Memtech
International Inc. ("Memtech International"), incorporated under the laws of the
Bahamas, which in turn has a wholly-owned subsidiary, Memtech International
(USA) Inc. ("Memtech USA"), a corporation incorporated in the State of Delaware,
U.S.A. Micromem has a third wholly-owned subsidiary, Micromem Technologies B.V.,
("Micromem BV"), incorporated under the laws of the Netherlands on
January 16, 2001, which in turn had a subsidiary, Micromem Technologies S.p.A.,
("Micromem Italy"),a corporation incorporated under the laws of Republic
of Italy on January 25, 2001. Micromem Italy was dissolved pursuant to the laws
of Italy on December 27, 2002. Micromem BV was dissolved pursuant to the laws of
the Netherlands on August 11, 2003.

15



Pageant International and Pageant USA will be sometimes
jointly referred to in this Form 20F as "Pageant". Memtech International and
Memtech USA will be sometimes jointly referred to in this Form 20F as "Memtech".
Micromem BV and Micromem Italy will be sometimes jointly referred to in this
Form 20F as "Micromem Europe". Micromem, Pageant International, Pageant USA,
Memtech International, Memtech USA, Micromem BV and Micromem Italy will be
sometimes collectively referred to in this Form 20F as the "Company." The
following chart sets forth the corporate organizational structure at the date of
this Form 20F.

|Micromem
    Technologies Inc.
    (Ontario, Canada)                       
|---------------------------------------------------------------------------
|Pagent Technologies Inc.
    (Barbados)
    100% owned by Micromem         
|Pageant Technolgoes (USA) Inc.
    (Utah, U.S.A.)
    100% owned by Pageant





D.         Property Plants and Equipment

Micromem maintains its corporate headquarters in Toronto,
Ontario, Canada. The space occupied by Micromem consists of 3,987 square feet of
commercial office space and is occupied by Micromem pursuant to a lease that
expires December 29, 2005.



The research and development team headed by Dr. Harry Ruda
conduct their research and development at facilities at the University of
Toronto, which comprise both (i) equipment and tools and (ii) a new clean room
and laboratory space.



All facilities and equipment are owned by the University of
Toronto and are being made available to the research and development team under
Micromem's research collaboration agreements with the University of Toronto and
an infrastrucuture agreement between the University of Toronto and Micromem.

ITEM 5.             OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This discussion and analysis of financial condition and
results of operations for the years ended October 31, 2003, 2002, 2001 2000 and
1999 and should be read in conjunction with the consolidated financial
statements and related notes in this report, which are prepared in accordance
with Canadian generally accepted accounting principles (Canadian GAAP). These
principles differ in certain material respects from United States generally
accepted accounting principles (U.S. GAAP). The differences as they affect the
consolidated financial statements of the Company are described in Note 16 to the
Company's 2003 consolidated financial statements.

16





A.        Operating Results



The following table sets forth certain selected financial
information of the Company:



Selected statement of operations and deficit information

|                               | (all amounts in United States dollars)
|------------------------------ | --------------------------------------
|                               | Years ended October 31,               
|                               | 2003                                  
|Interest & other income        | $ (20,121)                            
|Loss for the period            | 1,449,965                             
|Loss per share-basic & diluted | 0.03                                  



Selected balance sheet information

|                                  | (all amounts in United States dollars)
|--------------------------------- | --------------------------------------
|                                  | Years ended October 31,               
|                                  | 2003                                  
|Working capital (deficiency)      | $ 100,670                             
|Capital Assets                    | 3,768                                 
|Total Assets                      | 350,138                               
|Shareholder's equity (deficiency) | 104,438                               

Fiscal 2003 Compared to Fiscal 2002

The Company had no operating revenue, its only activities
being the development of its memory technologies. Its only income during 2003
was $20,121 (2002: $165,892) being principally interest income.



Costs and expenses decreased 50% from $2,934,444 (excluding
the $10 million write down of royalty rights) in 2002 to $1,470,086 in 2003.



During the year, the Company expended $490,914 (2002:
$1,601,624) related to its efforts on research and development of its memory
technologies, representing 33.4% (2002: 54.6%) of total expenditures (excluding
the royalty rights write down). The research and development expenses primarily
consists of payments made under research agreements with the University of
Toronto, Dr. Ruda and the funding agencies (CITO and MMO), as further detailed
below.



The Company paid $87,432 (CDN $136,175) against its
commitment under the two year research collaboration agreement that it entered
into in October 2002.



Additionally, during 2003, the Company secured funding in
connection with the magnetic memory research program from Communications and
Information Technology Ontario (CITO). Under a Collaborative Research Agreement
among Micromem, CITO, the University of Toronto and Dr. Harry Ruda, in the first
year, CITO provided funding of $106,715 (CDN $154,000) and Micromem has
contributed $31,875 (CDN $46,000).



On March 1, 2003, Micromem entered into an agreement with the
University of Toronto whereby, Micromem contributed equipment and supplies with
an estimated value of $200,000. The equipment was previously used by Pageant
Technologies (USA) Inc., at Pageant's former Kansas City Missouri lab facility,
and had a book value of $58,302.

17





The Company has also continued its efforts to reduce
administrative expenses in all areas of operation. The Company continues to
control costs performed by outside service providers by performing the work
in-house. As a result of these efforts, general administration expenses
decreased by 47.2% to $176,361 in 2003 from $333,964 in 2002; travel and
entertainment decreased by 76.1% from $73,385 in 2002 to $17,508 in 2003.



Professional fees increased by 15.3% to $303,222 in 2003 from
$262,927 in 2002; which is reflected in Wages and salaries decrease of 80.0% to
$112,437 in 2003 from $562,532 in 2002 as a result of reduced employee levels.

Amortization of patents and trademarks commenced in 2002
amounting to an expense of $36,258 (2002: $31,338). During 2003, the Company
wrote off $130,839 relating to discontinued Patents and Trademark applications.
The Company also assessed the remaining patent and trademark applications
registered in the United States and Canada and has expense the residual net book
value of $168,981 to reflect the uncertain nature of future events. The Company
continues to actively pursue and protect its patents registered in the United
States.



Micromem had a net loss of $1,449,965 for 2003 or $0.03 loss
per share compared to a net loss of $12,733,015 or $0.27 per share for 2002. The
effect on loss per share of the royalty write down in 2002 was $0.22 per share.



Fiscal 2002 Compared to Fiscal 2001

The Company had no operating revenue, its only activities
being the development of its memory technologies. Its only income during 2002
was $165,892 (2001: $196,520) being principally the interest it earned on excess
funds deployed in short-term deposits and revenue generated through an
engineering services contract.



Costs and expenses have increased from $4,725,931 in 2001 to
$12,934,444 in 2002. The increase includes a $10,000,000 write down of royalty
rights, which, when excluded from costs and expenses would result in a decrease
of 42.2% of costs and expenses when compared to similar costs and expenses in
2001.



In March 2001, Micromem's wholly-owned subsidiary, Pageant
International, purchased a 40% gross profits royalty ("Estancia Royalty")
related to patents and patent applications for VEMRAMTM technology
("VEMRAM Patents") and the remaining 50% interest in the VEMRAMTM
Patents and all rights, entitlements and interests held by Estancia Limited and
Richard Lienau under the Joint Ownership and Licensing Agreement dated as of
September 17, 1997 pursuant to an asset purchase agreement (the "Asset Purchase
Agreement") among Micromem, Pageant International and Estancia Limited and
Richard Lienau for a purchase price of $10 million (which was paid at closing)
and a further maximum of $40 million to be paid upon certain stipulated
milestones being met. During the year, the Company decided to restructure its
operations by closing its research and development facility and adopted a plan
to continue its research and development program through a research
collaboration with the University of Toronto. Micromem determined that there was
significant uncertainty that any amounts would have become payable in respect of
the Estancia Royalty. Accordingly, it was determined that a write down of the
Estancia Royalty rights in the amount of $10,000,000 was appropriate under
current generally accepted accounting principles. Notwithstanding the write
down, Micromem is committed to continue its research and development of magnetic
memory technology through its research collaboration with the University of
Toronto.



During the year, the Company expended $1,601,624 (2001:
$2,212,679) related to its efforts on research and development of its memory
technologies, representing 57.9% (2001: 46.8%) of total expenditures (excluding
the royalty rights write down). During the fourth quarter of 2002, Micromem
entered into a two year research collaboration agreement whereby researchers at
the University of Toronto will undertake the research and development of
magnetic memory technology in collaboration with Micromem. Furthermore, Micromem
was successful in obtaining matching funds from Materials and Manufacturing
Ontario (MMO - a non profit organization) pursuant to a research collaboration
agreement among Micromem, the University of Toronto, Dr. Harry Ruda and MMO.
Over the two-year period, Micromem will provide $174,864 (CDN $272,250) with
matching contributions from the MMO towards the research and development to be
undertaken under the research collaboration. In the fourth quarter of 2002,
Micromem paid $87,432 (CDN $136,175) against its commitment. Micromem will have
the first right to an exclusive and perpetual worldwide sub-license for all uses
of the technology developed under the collaboration. MMO will be entitled to
receive a royalty on Micromem's manufacturing revenues from the sale of products
incorporating the technology developed under the collaboration.

18





The Company has also continued its efforts to reduce
administrative expenses in all areas of operation. The Company's facilities in
Lee's Summit have been closed and all employees at the facility were terminated.
The Company has also undertaken to control costs performed by outside service
providers by performing the work in-house. Furthermore, Micromem has downsized
its head office which will continue to reduce costs into the future. As a result
of these efforts, administration expenses decreased by 18.4% from $409,312 in
2001 to $333,964 in 2002; professional fees decreased by 44.5% from $473,653 in
2001 to $262,927 in 2002; travel and entertainment decreased by 64.3% from
$205,757 in 2001 to $73,385 in 2002.



Wages and salaries decreased 59.0% from $1,372,375 in 2001 to
$562,532 in 2002 as a result of decreasing employee levels (as discussed above)
and as a result of changes to the Chairman and CEO's 2001 employment agreement,
with effect from November 1, 2001. Effective February 13, 2002, Mr. Fuda
resigned as President and Chief Executive Officer of Micromem but continued as
Chairman and a director of Micromem and as a director of certain subsidiaries of
Micromem. Mr. Fuda's compensation was reduced, with effect from November 1,
2001, to $1.00 per year.



Amortization of patents and trademarks commenced in 2002
amounting to an expense of $31,338. Patents and trademarks will be amortized
over 10 years.



Amortization of capital assets decreased from $65,298 in 2001
to $40,635 in 2002 as a result of dispositions of assets due to downsizing.



Micromem had a net loss of $12,733,015 for 2002 or $0.27 loss
per share compared to a net loss of $4,559,625 in 2001 or $0.10 per share. The
effect on loss per share of the royalty write down in 2002 was $0.22 per share.



Unaudited quarterly financial information

|(all amounts in United States dollars)
|--------------------------------------
|Quarter ended,                        
|2003                                  
|Total Revenue                         
|Loss for the period                   
|Loss per share:
    Basic and diluted 

Notes:

1.     The increase in the loss for the quarter ended October
    31, 2002 is due to a $10,000,000 write down 
            of royalty rights, the effect of
    which is $0.22 per share.

B.         Liquidity and Capital Resources

Liquidity



The Company currently has no cash flow from operations and
will have none until it is in a position to either license or directly produce
and sell products utilizing its memory technologies.



Micromem currently has no lines of credit in place and must
obtain equity financing from investors and from persons who hold outstanding
options in order to meet its cash flow needs until it can generate revenues.

19





Micromem has granted to its directors, officers and other
employees a number of options to purchase shares at prices that are at or above
market price on the date of grant. None of the optionees has any obligation to
exercise his options and there can be no assurance that Micromem will realize
any funds.



During 2003, the Company raised $162,500 through private
placement of 2,031,250 shares to arms length third parties. Since year-end the
company raised a further $270,000 through equity private placements and exercise
of options, to fund its working capital requirements.



Capital Resources



Micromem had no material commitments for capital expenditures
as of October 31, 2003 or 2002. In March 2001, Micromem and its wholly owned
subsidiary, Pageant International, completed the Asset Purchase Agreement
described above. The total consideration payable in respect of the purchased
assets under the Asset Purchase Agreement is $50 million in the form of cash and
shares. Of this amount, $10 million was paid at closing through a cash payment
of $2.0 million and the issuance by Micromem of 2,007,831 common shares valued
at $3.98 per share. The balance of $40 million is payable in two equal amounts
of $20 million each upon achievement of certain stipulated milestones provided
that a minimum of 50% of each $20 million payment shall be in the form of shares
of Micromem. None of the stipulated milestones have been met and therefore no
amounts have been paid toward the balance of the $40 million purchase price.



As no further payments toward the purchase price were made to
Estancia under the Asset Purchase Agreement, Pageant is deemed to have conveyed
back a percentage of the VEMRAMTM Patents and to have granted a gross
profits royalty to Estancia Limited such that Pageant would remain holding a 60%
interest in the VEMRAMTM Patents and it would be required to pay a
32% gross profits royalty to Estancia Limited in respect of the VEMRAMTM
technology, as of March 9, 2004.



Critical accounting policies



The Corporation's financial statements are prepared in conformity with Canadian
generally accepted accounting principles, which require management to make estimates and assumptions which can affect the reported
balances. In determining estimates of net recoverable amounts and net realizable
values, or whether there has been a permanent impairment in value, for, pre-paid
and deposits, pre-development costs and capital assets, patent rights and other
assets, the Corporation relies on assumptions regarding applicable industry
performance and prospects, as well as general business and economic conditions
that prevail and are expected to prevail. Assumptions underlying asset
valuations are limited by the availability of reliable comparable data and the
uncertainty of predictions concerning future events.

By nature, asset valuations are subjective and do not
necessarily result in precise determinations. Should the underlying assumptions
change, the estimated net recoverable amounts and net realizable values may
change by a material amount. The Corporation's significant accounting policies
are set forth in Note 3 to its consolidated financial statements, which should
be read in conjunction with management's discussion of the Corporation's
critical accounting policies and estimates set forth below.

Commitments and Contingencies

The Corporation's activities are subject to various
governmental laws and regulations relating to corporations, copyrights,
trademarks and patents. These regulations are continually changing. The
Corporation believes its activities comply in all material respects with all
applicable laws and regulations.

Translation of Foreign Currencies

Accounts recorded in foreign currency have been converted to
United States dollars as follows:

•        Current assets and current liabilities at exchange
        rates at the end of the year;

•        Other assets at historical rates; and

•        Revenue and expenses are translated at rates of
        exchange prevailing at the transaction dates.

•        Gains and losses resulting from the fluctuation of
        foreign exchange rates are included in the determination of income.



20



Pre-development costs

The Corporation is in the development stage. Research costs
are expensed in the period incurred. Development expenses are expensed as
incurred unless they meet the criteria for deferral and amortization under
Canadian GAAP.



Research and Development; Patents and Licenses



The Company's research and development activities have been
related primarily to research and development of a magnetic random access memory
device, and have been funded  through research collaboration agreements
between Micromem and MMO and between Micromem and Communications and Information
Technology Ontario. Research and development expenses for the year ended October
31, 2003 were $490,914 for the year ended October 31, 2002, were $1,601,624 and
for the year ended October 31, 2001 were $2,212,679.

Trend Information

The digital memory industry and, more broadly, the
semiconductor industry has historically been characterized by wide fluctuations
in demand for, and supply of, semiconductors and memory technologies. In some
cases, industry downturns have lasted more than a year.

Prior experience has shown that restructuring of operations,
resulting in significant restructuring charges, may become necessary if an
industry downturn persists.

Due to improved prospects for the economy of the United
States and of other parts of the world, many industries may be considering
increasing technology purchases and investments. However, the impact of this
potential improvement in the economy on us is difficult to predict, as any
prospects for revenues is dependent upon the successful completion of the
Company's technology development and the incorporation of any technology that
may be developed by us or pursuant to our research collaborations with the
University of Toronto in the future into new products and their introduction
into the market place.

Off-Balance Sheet Arrangements

We are not party to any material off-balance sheet
arrangements. In addition, we have no unconsolidated special purpose financing
or partnership entities that are likely to create material contingent
obligations.

ITEM 6.         DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.         Directors and Executive Officers

The Directors, Executive Officers and other key personal of
Micromem as at March 1, 2003 are set forth below:

|Name             | Age | Position                                                             
|---------------- | --- | ---------------------------------------------------------------------
|                 |     |                                                                      
|Salvatore Fuda   | 68  | Chairman of the Board of
    Directors                               
|Joseph Fuda      | 43  | President, Chief Executive
    Officer and Director                  
|Manoj Pundit     | 39  | Executive Vice-President,
    General Counsel, Secretary and Director
|Andrew Brandt    | 65  | Director                                                             
|Stephen Fleming  | 54  | Director                                                             
|Charles Harnick  | 53  | Director                                                             
|George Kennedy   | 63  | Director                                                             
|David Sharpless  | 53  | Director                                                             
|Steven Van Fleet | 49  | Director                                                             
|Antonio Lopes    | 41  | Chief Financial Officer                                              

21



Salvatore Fuda is and has served as Chairman of the Board
of Micromem since January 11, 1999 and a Director of Micromem since 1992. He
served as President and Chief Executive Officer from June 2000 through to
February 13, 2002. From 1992 to January 11, 1999 he also served as Secretary of
Micromem. He served as President and Chief Executive Officer of Ontex Resources
Limited (TSE) from 1986 to December 1998 and as Chairman of the Board of Ontex
Resources Limited since that date. He is and has served as Chairman and director
of Pifher Resources Inc. (TSX Venture Exchange) since June, 2002. He is the
father of Joseph Fuda.

Joseph Fuda is and has been President, Chief Executive
Officer and Director since February 13, 2002. Prior thereto he served as
Manager, Strategic Alliances for Micromem since February 2001. Prior thereto, he
served as a consultant to Micromem since November 2000. Prior thereto he served
as a Vice-President and a Director of IPO Capital Corp since April 1999. Mr. J.
Fuda has served as a director of Micromem since February 13, 2002. He is the son
of Salvatore Fuda.

Manoj Pundit is and has served as Micromem's Executive
  Vice President and General Counsel since July 2000 and joined the Board of
  Directors in March 2001. He has also been a partner, since December 1996, at
  Chitiz Pathak LLP, a Toronto law firm serving clients in the securities and
  investment industries, including issuers and dealers on a full range of
  securities transactions. Mr. Pundit holds a LL.M. in Taxation from Osgoode
  Hall Law school and a LL.B. and B.Sc. (Math) from the University of Alberta.
  Mr. Pundit has served as a director of Micromem since March 2001.

Andrew Brandt is and has been Chairman and Chief
Executive Officer of the Liquor Control Board of Ontario ("LCBO") since February
1991. The LCBO is the largest single purchaser of alcohol beverage products in
the world with annual sales exceeding two billion dollars Canadian. Prior to his
appointment to the LCBO, Mr. Brandt served as Leader of the Ontario Progressive
Conservative Party from 1987 to 1990. He has previously served as the Minister
of Industry and Trade, Minister of Environment and Mayor of Sarnia, Ontario. Mr.
Brandt has served as a director of Micromem since June 2000

Stephen B. Fleming is and has served as Managing Director
of Kismet Limited since June 2001; prior thereto he served as Managing Director
of Barefoot Enterprises since April 1999; prior thereto, he served as President
of Pageant Technologies (USA) Inc. from July 1997 to April 1999; prior thereto,
Mr. Fleming was Executive Vice-President of International Ion from August 1994
to April 1997. Previously, Mr. Fleming was responsible for planning MCI's
wireless data products, intelligent network and frame relay international
initiatives, and served as director of engineering for international business
development for Telecom U.S.A. Mr. Fleming has worked with numerous emerging
technology companies in consulting and management capacities. Mr. Fleming has
served as a director of Micromem since January 1999.

Charles Harnick is a founder and a director (since
January 2004) of Suasion Public Affairs Management Inc., a public affairs
management firm; he is also President and Chief Executive Officer of Ontex
Resources Limited (TSE) and has
served in such capacities since March, 2000. Mr. Harnick has been a practicing
lawyer with Sutts, Strosberg LLP since December 2001. He was the
Attorney-General of Ontario from June 1995 to June 1999. Mr. Harnick has served
as a director of Micromem since June 2000.

George A. Kennedy is and has served as managing partner
of Source International (an international consulting firm in the Metropolitan
Washington D.C. area) since March 1997. In 2001, he was Director for Planning
and International Development for iGate Inc., a broadband technology company in
Louisville, KY. From 1993 until 1996, Mr. Kennedy served as U.S. Consul General
in Toronto, Canada, and prior thereto he held senior positions with the US
Departments of State and Commerce in Washington D.C. Currently, he is an
Executive Editor of the Black Business Journal of Houston, TX. Mr. Kennedy has
served as a director of Micromem since June 2000.

David Sharpless is Chairman, Maverick Inc., a family
investment corporation. From 2000 to September 2001, he was President,
International of CIT's Vendor Technology Finance unit. In this capacity, he was
responsible for CIT's international vendor finance business, covering CIT's
operations in Canada, Europe, Latin America, Asia Pacific, Australasia. Prior
thereto, Mr. Sharpless was Newcourt Credit Group Inc.'s Deputy Chairman and was
responsible for international operations for Newcourt Financial. David is a
graduate of Osgoode Hall Law School and is a member of the bar of Ontario. Mr.
Sharpless has served as a director of Micromem since March 2001.

22



Steven Van Fleet is and has been Program Director for the
Silent Commerce/Smart Packaging Initiative at International Paper Company since
November 1999. From January 1999 to November 1999, he was Program Director for
Process and Product Uniformity and from March 1996 to December 1998 he was the
Director for Control Systems Development at International Paper in Cincinnati,
Ohio. He is also presently on the Board of Overseers for the Massachusetts
Institute of Technology Auto ID Center.

Antonio Lopes is currently the Chief Financial Officer of
several companies. Since November 1, 2002, he has been Chief Financial Officer
of Micromem; since 1993, he has been Chief Financial Officer of Federal White
Cement; since 1997, he has been Chief Financial Officer of Ontex Resources
Limited; and since 1997, he has been Chief Financial Officer of Pifher Resources
Inc. From 1994 to 1998, he was Chief Financial Officer of Fortune Minerals
Limited. From 1989 to 1993, he was a staff accountant at Ernst &Young LLP. Mr.
Lopes is a Chartered Accountant and holds an MBA from the University of Toronto.

There are no arrangements or understandings between any
director and any other person pursuant to which the director was selected as a
director or executive officer. Each director holds office until the next annual
meeting of shareholders or until his or her successor is elected or appointed,
unless his or her office is earlier vacated according to the provisions of the
by-laws of the Micromem or the Business Corporations Act (Ontario).

Other than a father/son relationship between Salvatore Fuda
(father) and Joseph Fuda (son), there is no family relationship between any
director or executive officer and any other director or executive officer.

B.         Compensation

|                                                                                | Annual Compensation    | Long-Term Compensation    |              
|------------------------------------------------------------------------------- | ---------------------- | ------------------------- | -------------
|                                                                                |                        |                           |              
|Name and
    Principal Position                                                 | Year                   | Salary 
    (US$)         | Bonus (US$)  
|                                                                                |                        |                           |              
|Joseph Fuda
    Chief Executive
    Officer 1                                   | 2003
    2002
    2001 | -
    100,000
    -       | -            
|Salvatore Fuda,
    Chairman
    Former Chief Executive Officer and President 1 | 2003
    2002
    2001 | -
    -
    745,1253      | -
    -
    -
|Manoj Pundit,
    Executive Vice President and General Counsel5                 | 2003
    2002
    2001 | -
    162,066
    194,881 | -
    -
    -
|Andrew Brandt
    Director                                                      | 2003
    2002
    2001 | -
    -
    -             | -
    -
    -
|Stephen Fleming
    Director                                                    | 2003
    2002
    2001 | -
    -
    -             | -            
|Charles Harnick
    Director                                                    | 2003
    2002
    2001 | -
    -
    -             | -            
|George A Kennedy
    Director                                                   | 2003
    2002
    2001 | -
    -
    -             | -            

23



|David Sharpless
    Director                        | 2003
    2002
    2001 | -
    -
    -             | -             | -             | 400,000 2
    
    500,000 6
    
    - | -             | -             | -                     
|--------------------------------------------------- | ---------------------- | ------------------------- | ------------- | ------------- | --------------------------------------- | ------------- | ------------- | ----------------------
|Steven Van Fleet
    Director                       | 2003
    2002
    2001 | -
    -
    -             | -             | -             | 300,000 2
    -
    -                   | -             | -             | -                     
|Antonio Lopes
    Chief Financial Officer           | 2003
    2002
    2001 | -
    -
    -             | -             | -             | 300,000 2
    -
    -                   | -             | -             | 20,789
    1,590
    -
|Dale Hensley
    Former Chief Operating Officer7    | 2003
    2002
    2001 | -
    216,577
    308,685 | -
    -
    - | -
    -
    - | -
    500,0008
    
    -               | -
    -
    - | -
    -
    - | -
    -
    -         
|Raj Viswanathan
    Former Chief Financial Officer9 | 2003
    2002
    2001 | -
    111,583
    126,562 | -
    -
    - | -
    -
    - | -
    400,00010
    
    100,00011      | -
    -
    - | -
    -
    - | -
    -
    -         

Notes:

|(1) | Salvatore Fuda has served as Chairman since January 11,
    1999. He served as President and Chief Executive Officer from June 2000
    through to February 13, 2002. Joseph Fuda was appointed Chief Executive
    Officer on February 13, 2002. All of Joseph Fuda's options were cancelled
    after the 2002 fiscal year end.                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Each option entitles the holder to purchase one common
    share of Micromem at $0.10 prior to expiry and is fully vested.                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Salvatore Fuda (or companies controlled by him) was a
    party to consulting and employment agreements with the Corporation pursuant
    to which Mr. Fuda received, as compensation, a number of common shares based
    on formulas prescribed by those agreements. The dollar value represents the
    value of the shares accrued due to Mr. Fuda at the end of the fiscal year
    ended October 31, 2001.

24



|(4)  | 1.0 million at $3.125 vesting January 31, 2002 and
    714,683 options at $0.10 vesting January 3, 2001 and expiring January 2,
    2002.                                                                                                                                    
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                              
|(5)  | Mr. Pundit serves as Executive Vice-President and General
    Counsel of the Corporation.                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                              
|(6)  | These options were tendered back to Micromem and
    cancelled on November 1, 2002.                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                              
|(7)  | Dr. Hensley was employed as Chief Operating Officer from
    February 21, 2001 to September 24, 2002. For the fiscal years ended October
    31, 2001 and 2002, Dr. Hensley was an officer of the Corporation for
    approximately eight months and 11 months, respectively.
|     |                                                                                                                                                                                                                                                                              
|(8)  | 250,000 of these options vested on March 1, 2001 and the
    remaining 250,000 options vested on March 1, 2002. These options were
    tendered back to Micromem and cancelled on November 1, 2002.                                                                          
|     |                                                                                                                                                                                                                                                                              
|(9)  | Mr. Viswanathan was employed as Chief Financial Officer
    between June 5, 2000 and October 31, 2002. For the fiscal year ended October
    31, 2000, Mr. Viswanathan was an officer of the Corporation for
    approximately five months.                                  
|     |                                                                                                                                                                                                                                                                              
|(10) | 150,000 of these options vested on June 30, 2001; 250,000
    would vest on take-over or change of control of the Company. These options
    were tendered back to Micromem and cancelled on November 1, 2002.                                                               
|     |                                                                                                                                                                                                                                                                              
|(11) | The vesting terms of these options were revised so that
    20,000 vested on June 29, 2000 and remaining 80,000 vested on August 31,
    2001. These options were tendered back to Micromem and cancelled on November
    1, 2002.                                           



The aggregate direct compensation paid or accrued on behalf
of all other directors as a group during 2003 was $1,940. This amount includes
directors' fees and expenses for non-employee directors. None of the
non-employee directors have agreements with Micromem that provide for benefits
upon termination of service.

Micromem has adopted a stock option plan. Options are offered
to directors, executive officers and employees to purchase Common Shares at an
exercise price equal to or above the market price for the Common shares at the
date that the options are granted. 5,300,000 options were granted during 2003.
As at the Company's fiscal year ended, October 31, 2003, 5,300,000 options were
outstanding, of which 5,300,000 had vested and were exercisable, with exercise
price of $0.10 per share.

C.         Board Practices

Committees of the Board

Audit Committee

The board of directors has appointed an Audit Committee
consisting of three independent directors. The members of the Audit Committee
are Andrew Brandt, Charles Harnick and David Sharpless. The Audit Committee is
responsible for the integrity of the Micromem's internal accounting and control
systems. The committee receives and reviews the financial statements of Micromem
and makes recommendations thereon to the Board prior to its approval by the full
Board. The Audit Committee communicates directly with Micromem's external
auditors in order to discuss audit and related matters whenever appropriate.

Compensation Committee

Micromem does not have a Compensation Committee. Micromem's
executive compensation program is administered by the board of directors and
meets on compensation matters as and when required.

D.         Employees

The company has seven officers and employees of which four
are in a management capacity, none are in a R&D capacity and three are in an
administrative capacity. This includes a Chairman, a Chief Executive Officer and
President, an Executive Vice-President and General Counsel and a Chief Financial
Officer, and three support staff, all of whom work from Micromem's executive
offices in Toronto, Canada. All research and development is carried out by Dr.
Harry Ruda and a research team employed by the University of Toronto under the
research collaboration agreements between Micromem and the University of
Toronto.

25



Micromem considers its relations with its employees to be
good.



E.        Share Ownership

|Name                                                                    | Shares Owned | Options Held | Options Exercise Price | Expiration Date
|----------------------------------------------------------------------- | ------------ | ------------ | ---------------------- | ---------------
|Joseph Fuda
    Chief
    Executive Officer and Director                | 850,000      | -            | -                      | -              
|Salvatore Fuda
    Chairman and Director                                | 2,455,2921   | -            | -                      | -              
|Manoj Pundit
    Executive Vice-President, General Counsel and Director | 2,478        | 850,000      | $0.10                  | 7/1/2008       
|Andrew Brandt
    Director                                              | 3,000        | 400,000      | $0.10                  | 7/1/2008       
|Stephen Fleming
    Director                                            | -            | 300,000      | $0.10                  | 7/1/2008       
|Charles Harnick
    Director                                            | 800          | 400,000      | $0.10                  | 7/1/2008       
|George A. Kennedy
    Director                                          | -            | 300,000      | $0.10                  | 7/1/2008       
|David Sharpless
    Director                                            | -            | 400,000      | $0.10                  | 7/1/2008       
|Steven Van Fleet
    Director                                           | -            | 300,000      | $0.10                  | 7/1/2008       
|Antonio Lopes
    Chief Financial Officer                               | -            | 300,000      | $0.10                  | 7/1/2008       

Notes:

1.     These shares are held by a corporation wholly owned by a trust
    established for the benefit of members
        of Salvatore Fuda's family.

ITEM 7.         MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.        Major Shareholders

> There are no shareholders who hold a number of common shares of Micromem
>     that is greater than 5% of the common shares outstanding.

B.        Related Party Transactions

> During fiscal year ended October 31, 2003, the Company
>     paid $14,012.95 to a law firm in which Manoj Pundit, a director and officer
>     of the Company or its subsidiaries is a partner.

26





C.        Interests of Experts and Counsel

> Manoj Pundit, a partner of Chitiz Pathak LLP, who serves
>     as legal counsel to the Company, holds 2,478 common shares of Micromem and
>     850,000 options of Micromem, each option entitling him to purchase one
>     common share of Micromem at $0.10.



ITEM 8.         FINANCIAL INFORMATION

A.         Consolidated Statements

See "Item 17 - Financial Statements."

Dividend Policy

Micromem has never paid a dividend on its securities.
Micromem does not anticipate paying dividends in the foreseeable future.

Significant Changes

Except as otherwise disclosed in this report, there has been
no significant change in Micromem's financial position since October 31, 2003.

B.        Legal Proceedings

The Company's subsidiary, Pageant Technologies (USA) Inc.
("Pageant USA"), has been named as a defendant in legal actions relating to
tenant improvements on a leased property, including an action claiming dues of
approximately $880,000 alleging breach of contract under a construction contract
entered into by Clear Blue Laboratories, Inc. ("Clear Blue"). The landlord of
the property is also claiming damages from Pageant USA. Pageant USA assigned its
rights under the lease to Clear Blue, however, Pageant USA is allegedly
obligated to pay the lease payments should the assignee default under the
contract. The landlord is claiming damages of approximately $887,000.

ITEM 9.         THE OFFER AND LISTING

The table below sets forth the high and low sales prices for
Common Shares in U.S. Dollars as reported since 2000. Micromem's fiscal year
ends October 31. The Common Shares are not traded in Canada.

Micromem's common shares are traded in the United States and
are quoted on the NASD's OTC Bulletin Board. The common shares are quoted under
the symbol MMTIF.OB.

The following table sets forth information regarding the high
and low prices of the common shares for the periods specified in U.S. dollars.





|Period               |  | High  |  | Low 
|-------------------- |  | ----- |  | ----
|Last six
    months: |  |       |  |     
|February 2004        |  | 0.32  |  | 0.18
|January 2004         |  | 0.56  |  | 0.17
|December 2003        |  | 0.23  |  | 0.15
|November 2003        |  | 0.22  |  | 0.13
|October 2003         |  | 0.18  |  | 0.08
|September 2003       |  | 0.22  |  | 0.13
|Last eight quarters: |  |       |  |     
|Q4 2003              |  | 0.23  |  | 0.05
|Q3 2003              |  | 0.26  |  | 0.11
|Q2 2003              |  | 0.31  |  | 0.43
|Q1 2003              |  | 0.36  |  | 0.83
|Q4 2002              |  | 0.17  |  | 1.46
|Q3 2002              |  | 0.60  |  | 1.55
|Q2 2002              |  | 1.21  |  | 2.03
|Q1 2002              |  | 2.50  |  | 1.69
|Last four
    years: |  |       |  |     
|2003                 |  | 0.31  |  | 0.05
|2002                 |  | 1.77  |  | 0.05
|2001                 |  | 5.28  |  | 1.28
|2000                 |  | 25.13 |  | 1.69





27



On March 12, 2004, the last reported sale price for the
common shares on the NASD OTC Bulletin Board was $0.23.



ITEM 10.         ADDITIONAL INFORMATION

A.         Share Capital

Not Applicable

B.         Memorandum and Articles of Association

Articles of Incorporation

Incorporation Details and Objects of Micromem

Micromem was incorporated under the laws of the Province of
Ontario, Canada, on October 21, 1985 as Mine Lake Minerals Inc. It subsequently
changed its name to Avanti Capital Corp. by filing Articles of Amendment on June
23, 1988 and to AvantiCorp International Inc. on April 30, 1992 before becoming
Micromem Technologies Inc. on January 14, 1999. The Articles of Incorporation of
Micromem provide that there are no restrictions on the nature of the business to
be carried on by Micromem.

Summary of Directors Powers and Authorities

The rights, duties, powers and authorities of the Board of
Directors of Micromem are set out in the Articles of Incorporation (the
"Articles") and by-laws (the "By-Laws") of Micromem and the statutory provisions
of the Business Corporations Act (Ontario) ("OBCA"). The following is a
selected summary of the Articles, By-Laws and applicable provisions of the OBCA
as they relate to selected rights, duties, powers and authorities of the Board
of Directors of Micromem.

The Articles of Micromem provide for a minimum of three and a
maximum of 12 directors. The OBCA prescribes that an offering corporation must
have a minimum of three directors, a majority of whom are Canadian residents and
at least one third of whom are not officers or employees of Micromem or its
affiliates. The Board of Directors may, between annual shareholders meetings,
appoint one or more additional directors to serve until the next annual
shareholders meeting provided that the number of directors so added may not
exceed by one-third (1/3) the number of directors required to have been elected
at the last annual meeting of shareholders.

28



The Chairman of the Board of Directors or any one
director may call a meeting upon the provision of forty-eight hours notice to
each director in the manner prescribed in the By-Laws. Any such notice shall
include the items of business to be considered at the meeting. A majority of the
directors constitute a quorum provided that half of those directors present are
Canadian residents. Business cannot be transacted without a quorum. A quorum of
directors may vote on any matter of business properly brought before the meeting
provided that where a director is a party to a material contract or proposed
material contract or has a material interest in the matter to be considered,
such director must disclose his or her interest at the earliest possible date,
request the conflict be noted in the minutes of the meeting, and with a few
limited exceptions enumerated in the By-Laws, refrain from voting on the matter
in which the director has a material interest. There is no limitation on the
Board of Directors to vote on matters of their remuneration provided such
remuneration is disclosed in the financial statements and annual shareholder
proxy materials.

The Board of Directors has broad borrowing powers and may,
without authorization from the shareholders, (a) borrow money on the credit of
Micromem; (b) issue, re-issue, sell or pledge debt obligations of Micromem; (c)
subject to restrictions respecting financial assistance prescribed in the OBCA,
give a guarantee on behalf ofMicromem to secure the performance of an
obligation of any person; and (d) mortgage, hypothecate, pledge or otherwise
create a security interest in all or any property of Micromem, owned or
subsequently acquired, to secure any obligation of Micromem.

A person is qualified to be or stand for election as a
director provided such person is at least 18 years of age, is not a bankrupt and
is not found to be of unsound mind by a court in Canada or elsewhere. There is
no requirement for a director to hold shares of Micromem.

Securities of Micromem

The authorized capital of Micromem consists of an unlimited
number of common shares "Common Shares"), of which 48,732,187 shares were issued
and outstanding as of October 31, 2003, and 2,000,000 special, redeemable,
voting preference shares ("Special Shares"), none of which were outstanding, as
of October 31, 2003.

Holders of Common Shares will be entitled to receive notice
of, attend and vote at all meetings of the shareholders of Micromem. Each Common
Share carries one vote at such meetings. In the event of the voluntary or
involuntary liquidation, dissolution or winding-up of Micromem, after payment of
all outstanding debts, the remaining assets of Micromem available for
distribution will be distributed to the holders of Common Shares. Dividends may
be declared and paid on the Common Shares in such amounts and at such times as
the directors shall determine in their discretion in accordance with the OBCA.
There are no pre-emptive rights, conversion rights, redemption provisions or
sinking fund provisions attaching to the Common Shares. Common Shares are not
liable to further calls or to assessment by Micromem; provided, however, that
pursuant to the provisions of the OBCA, Micromem has a lien on any Common Share
registered in the name of a shareholder or the shareholder's legal
representative for a debt owed by the shareholder to Micromem.

Holders of Special Shares are entitled to receive notice of,
attend and vote at all meetings of the shareholders of Micromem. Each Special
Share carries one vote at such meetings. In the event of the voluntary or
involuntary liquidation, dissolution or winding-up of Micromem, after payment of
all outstanding debts, the holders of the Special Shares shall be entitled to
receive, before any distribution of any part of the assets of Micromem among the
holders of any other shares, the amount paid up on the Special Shares. The
Special Shares are redeemable at the option of Micromem for the amount paid up
on the shares. Dividends may not be declared or paid on the Special Shares and
transfer of the Special Shares is restricted without the approval of the
Directors of Micromem and the prior written consent of the Ontario Securities
Commission. The number of Special Shares that may be issued and outstanding at
any time is limited to 500,000. There are no pre-emptive rights, conversion
rights or sinking fund provisions attaching to the Special Shares. Special
Shares are not liable to further calls or to assessment by Micromem; provided,
however, that pursuant to the provisions of the OBCA, Micromem has a lien on any
Special Share registered in the name of a shareholder or the shareholder's legal
representative for a debt owed by the shareholder to Micromem.

29



Rights and Privileges of Shareholders

Only the registered holders of common shares and special
preference shares on the record date are entitled to receive notice of and vote
at annual and special meetings of shareholders. Where the items of business
affect the rights of shareholders other than common shareholders, a special
majority of two-thirds of the votes cast by the affected shareholders at the
meeting called for such purpose is required to approve the item of business.
Beneficial holders of common shares and special preference shares are also
entitled to receive proxy materials in respect of meetings of shareholders in
accordance with Canadian Securities Administrators National Instrument 54-101,
provided that such proxies are limited in scope to instructing the registered
shareholder (usually a brokerage house) on how to vote on behalf of the
beneficial shareholder. There are no restrictions on the number of shares that
may be held by non-residents other than restrictions set out in the Investment Canada Act (Canada). See "Additional Information - D. Exchange
Controls".

There are no provisions in the By-laws regarding public
disclosure of individual shareholdings. Notwithstanding this, applicable
Canadian securities legislation requires certain public disclosure of persons
owning or acquiring common shares in excess of 10% of a corporation's issued and
outstanding share capital.

C.         Material Contracts

| | 1. | Equipment Transfer Agreement dated March 1, 2003, between
    Micromem and the Governing Council of the University of Toronto, pursuant to
    which the Company conveyed equipment having an estimated value of $200,000
    (CDN $297,600) to the University for incorporation into the University's
    magnetic memory facility for the research and development and fabrication of
    magnetic memory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Collaborative Research Agreement dated December 10, 2002,
    among Micromem, Communications and Information Technology Ontario ("CITO"),
    the University of Toronto and Dr. Harry Ruda, Professor of Physics at the
    University of Toronto, pursuant to which (i) over a period of two years
    Micromem is required to contribute $63,750 (CDN $92,000) and $67,632 (CDN
    $97,600) of in-kind contribution and, CITO is required to contribute
    $215,430 (CDN $308,000) for research into "High Density Magnetic Memory
    Device Development"; and (ii) in consideration of such contribution, CITO
    shall receive a royalty based on revenues received from the sale of products
    incorporating intellectual property developed under this collaboration
    agreement for the remaining life of patents issued in connection with such
    intellectual property.                                                                                                                                                                                                                                                                                                                                                           
| | 3. | Research Collaboration Agreement, dated October 24, 2002,
    among Micromem, Materials and Manufacturing Ontario ("MMO"), the University
    of Toronto and Dr. Harry Ruda, Chair Professor in Nanotechnology, pursuant
    to which: (i) Micromem has engaged the University of Toronto to conduct
    research and development of magnetic memory technology; and (ii) Micromem
    and MMO will each provide $174,864 (CDN $272,000) of funding and the
    combined $349,728 (CDN $544,000) will be used to cover the operating
    expenses of the research collaboration over a term of two years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 4. | A second 2-year research collaboration agreement ("Second
    U of T Research Agreement") dated November 12, 2003, among Materials and
    Manufacturing Ontario ("MMO") and the University of Toronto, pursuant to
    which (i) through the collaboration, Micromem has continued its involvement
    in the research and development of magnetic memory technology, carried out
    by a highly skilled research team; (ii) Micromem has committed to providing
    $56,130 (CDN $81,000) per year in cash and $30,770 (CDN $44,400) per year of
    in kind contributions and MMO has committed to providing $58,900 (CDN
    $85,000) in cash; (iii) the combined cash contributions of the Company and
    MMO, $230,060 (CDN $332,000), will be used to cover the operating expenses
    of the research collaboration over a term of two years; (iv) MMO's funding
    of $117,800 (CDN $170,000) (or $58,900 (CDN $85,000) per year) will be paid
    directly to the University of Toronto and therefore is not reflected in
    Micromem's financial statements; and (v) Micromem maintains its ownership of
    its portfolio of patents and intellectual property that was developed prior
    to or outside the scope of the agreement.
| | 5. | Asset Purchase Agreement, dated December 10, 2000, among
    Micromem, Pageant International, Estancia Limited and Richard M. Lienau ("Lienau"),
    pursuant to which: (i) Pageant International purchased from Estancia Limited
    and Lienau all interests in the VEMRAMTM Patents
    and the VEMRAMTM technology and all other rights,
    interests and entitlements held by Estancia and Lienau as set forth in the
    Joint Ownership and Licensing Agreement and a termination of such agreement;
    and (ii) Micromem is required to pay to Estancia Limited a purchase price of
    $50 million, of which $10 million was paid in cash and shares at closing and
    the balance of $40 million being payable in cash and shares upon certain
    stipulated milestones being achieved;                                                                                                                                                                                                                                                                                                                                                                                                                                                  

30



| | 6. | Technology Development Agreement, dated March 9, 2001, as
    amended on April 23, 2002, among Pageant International, Estancia Limited and
    Richard Lienau, pursuant to which: (i) Estancia Limited and Richard Lienau
    are required to provide services to Pageant International in respect of the
    continued development of VEMRAMTM technology; and
    (ii) Pageant International is required to pay monthly fees to Estancia
    Limited at the rate of $215,000 per annum over a term of three years and
    eight months, except that the fees payable during the period from June 1 to
    December 2002 and during the period from March 9, 2004 through to November
    9, 2004 will be at a rate of $107,000 per annum;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 7. | Infrastructure Agreement between Micromem and the
    University of Toronto, dated November 1, 2002, pursuant to which Micromem
    agreed to provide funding to the University of Toronto in the amount of
    $249,463 (CDN $360,000) for the assembly of a magnetic memory facility to be
    used for research collaborations between Micromem and the University of
    Toronto.                                                                                                                                                                                                                                                                                                                                                     

D.         Exchange Controls

As of the date hereof, the Company is aware of no
governmental laws, decrees or regulations in Canada that restrict the export or
import of capital, including, but not limited to, foreign exchange controls, or
that affect the remittance of dividends or other payments to nonresident holders
of Common Shares.

The Company is aware of no limitations under the laws of
Canada or the Province of Ontario, or in the charter or any other constituent
documents of Micromem on the right of nonresidents of Canada or persons who are
not Canadian citizens to hold and/or vote the Common Shares of Micromem.

E.         Taxation

Certain Canadian Income Tax Consequences

This discussion under this heading summarizes the .principal
Canadian federal income tax consequences of acquiring, holding and disposing of
common stock of Micromem for a shareholder of Micromem who is not a resident of
Canada but is a resident of the United States and who will acquire and hold a
share of common stock of Micromem as capital property for the purposes of the
Income Tax Canada (Canada) (the "Canadian Tax Act"). This summary does not apply
to a shareholder who carries on business in Canada through a permanent
establishment situated in Canada or performs independent personal services in
Canada through a fixed base in Canada if the shareholders of Micromem is
effectively connected with such permanent establishment or fixed base. This
summary is based on the provisions of the Canadian Tax Act and the regulations
thereunder and on an understanding of the administrative practices of Canada
Customs & Revenue Agency, and takes into account all specific proposals to amend
the Canadian Tax Act or regulations made by the Minister of Finance of Canada s
of the date hereof. It has been assumed that there will be no other relevant
amendments of any governing law although no assurance can be given in this
respect. This discussion is general only and is not a substitute for independent
advice from a shareholder's own Canadian and US tax advisors.



The provisions of the Canadian Tax Act are subject to income
tax treaties to which Canada is a party, including the Canada- United States
Income Tax Convention (1980), as amended (the "Convention").



Dividends on Common Shares and Other Income



Under the Canadian Tax Act, a non-resident of Canada is
generally subject to Canadian withholding tax at the rate of 25 percent on
dividends paid or deemed to have been paid to him or her by a corporation
resident in Canada. Micromem is responsible for withholding of tax at the
source. The Convention limits the rate to 15 percent if the shareholder is a
resident of the United States and the dividends are beneficially owned by and paid to such shareholder, and to 5 percent if the
shareholder is also a corporation that beneficially owns at least 10 percent of
the voting stock of the payor corporation.

31





The amount of a stock dividend (for tax purposes) would
generally be equal to the amount by which the paid up or stated capital of
Micromem and increased by reason of the payment of such dividend. Micromem will
furnish additional tax information to shareholders in the event of such a
dividend. Interest paid or deemed to be paid on Micromem's debt securities held
by non-Canadian residents may also be subject to Canadian withholding tax,
depending upon the terms and provisions of such securities and any applicable
tax treaty.



The Convention generally exempts from Canadian income tax
dividends paid to a religious, scientific, literary, educational or charitable
organization or to an organization constituted and operated exclusively to
administer a pension, retirement or employee benefit fund or plan, if the
organization is a resident of the United States and is exempt from income tax
under the laws of the United States.



Dispositions of Common Shares



Under the Canadian Tax Act, a non-resident of Canada is
subject to Canadian tax on taxable capital gains, and may deduct allowable
capital losses, realized on a disposition of "taxable Canadian property". Shares
of common stock of Micromem will constitute taxable Canadian property of a
shareholder at a particular time if the shareholder used the shares in carrying
on business in Canada, or if at any time in the five years immediately preceding
the disposition 25 percent or more of the issued shares of any class or series
in the capital stock of Micromem belonged to one or more persons in a group
comprising the shareholder and persons with whom the shareholder and persons
with whom the shareholder did not deal at "arm's length and in certain other
circumstances.



The Convention relieves United States residents from
liability for Canadian tax on capital gains derived on a disposition of shares
unless:



> the value of the shares is derived principally from "real
>     property" in Canada, including the right to explore for or exploit natural
>     resources and rights to amounts computed by reference to production, the
>     shareholder was resident in Canada for 120 months during any period of 20
>     consecutive years preceding, a and at anytime during the 10 years
>     immediately preceding, the disposition and the shares were owned by them
>     when they ceased to be resident in Canada, or the shares formed part of the
>     business property of a "permanent establishment" that the holder has or had
>     in Canada within the 12 months preceding the disposition.

Certain United States Federal Income Tax Consequences

The following is a general discussion of certain possible
United States federal income tax consequences, under current law, generally
applicable to a US Holder (as defined below) of the Company's common shares.
This discussion does not address all potentially relevant federal income tax
matters (including but not limited to alternative minimum tax considerations)
and it does not address consequences peculiar to persons subject to special
provisions of federal income tax law, such as those described below as excluded
from the definition of a US Holder. In addition, this discussion does not cover
any state, local or foreign tax consequences. See "Certain Canadian Income
Tax Consequences" above.

The following discussion is based upon the sections of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
published Internal Revenue Service ("IRS") rulings, published administrative
positions of the IRS and court decisions that are currently applicable, any or
all of which could be materially and adversely changed, possibly on a
retroactive basis, at any time. This discussion does not consider the potential
effects, both adverse and beneficial, of any recently proposed legislation
which, if enacted, could be applied, possibly on a retroactive basis, at any
time. This discussion is for general information only and it is not intended to
be, nor should it be construed to be, legal or tax advice to any holder or
prospective holder of the Company's common shares and no opinion or
representation with respect to tax consequences to any such holder or
prospective holders is made.

Accordingly, holders and prospective holders of the Company's
common shares should consult their own tax advisors about the federal, state,
local, and foreign tax consequences of purchasing, owning and disposing of the
Company's common shares.

32



US Holders

As used herein, a "US Holder" means a holder of the Company's
common shares who is a citizen or individual resident (as defined under U.S. tax
laws) of the United States, or, generally a corporation limited liability
company, or a partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, or a trust whose income
is taxable in the United States irrespective of source. This summary does not
address the tax consequences to, and a US Holder does not include, persons
subject to special provisions of federal income tax law, such as tax-exempt
organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a "functional
currency" other than the US dollar, shareholders who hold common stock as part
of a "straddle", hedging or a conversion transaction and shareholders who
acquired their stock through the exercise of employee stock options or otherwise
as compensation for services. This discussion is limited to US Holders who hold
the common shares as capital assets. This discussion does not address the
consequences to a person or entity holding an interest in a US Holder or the
consequence to a person of the ownership, exercise or disposition of any
warrants, options or other rights to acquire common shares.

Distributions on Common Shares

Subject to the discussion below at "Other Considerations", US
Holders receiving dividend distributions (including but not limited to
constructive dividends) with respect to the Company's common shares generally
are required to include in gross income for United States federal income tax
purposes the gross amount of such distributions equal to the US dollar value of
each dividends on the date of receipt (based on the exchange rate on such date)
to the extent that the Company has current or accumulated earnings and profits,
without reduction for any Canadian income tax withheld from such distributions.
Such Canadian tax withheld may be credited, subject to certain limitations,
against the US Holder's United States federal income tax liability or,
alternatively, may be deducted in computing the US Holder's United States
federal taxable income by those who itemize deductions. (See more detailed
discussion at "Foreign Tax Credit" below.) To the extent that
distributions exceed current or accumulated earnings and profits of the Company,
they will be treated first as a return of capital up to the US Holder's adjusted
basis in the common shares and thereafter as gain from the sale or exchange of
the common shares. Preferential tax rates for long-term capital gains are
applicable to a US Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a US Holder
which is a corporation.

In the case of foreign currency received as a dividend that
is not converted by the recipient into US dollars on the date of the receipt, a
US Holder will have a tax basis in the foreign currency equal to its US dollar
value on the date of receipt. Generally, any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including an
exchange for US dollars, will be ordinary income or loss.

Dividends paid on the Company's common shares will not
generally be eligible for the dividends received deduction provided to
corporations receiving dividends from certain United States corporations. A US
Holder which is a corporation may, under certain circumstances, be entitled to a
70 per cent deduction of the United States source portion of dividends received
from the Company (unless the Company qualifies as a "foreign personal holding
company" or a "passive foreign investment company," as defined below) if such US
Holder owns common shares representing at least 10 per cent of the voting power
and value of the Company. The availability of this deduction is subject to
several complex limitations which are beyond the scope of this discussion.

Foreign Tax Credit

A US Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of the Company's common shares
may be entitled, at the option of the US Holder, to either a deduction or a tax
credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income tax on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayer's income subject to tax. This election is made on a year-by-year basis
and generally applies to all foreign taxes paid by (or withheld from) the US
Holder during that year. There are significant and complex limitations which
apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the US Holder's United States income
tax liability that the US Holder's foreign source income bears to his/her or its
worldwide income. In the determination of the application of this limitation,
the various items of income and deduction must be classified into foreign and
domestic sources. Complex rules govern this classification process. In addition,
this limitation is calculated separately with respect to specific classes of
income such as "passive income," "high withholding tax interest," "financial
services income," "shipping income," and certain other classifications of
income. The availability of the foreign tax credit and the application of the
limitations on the credit are fact specific, and holders and prospective holders
of the Company's common shares should consult their own tax advisors regarding
their own circumstances.

33



Disposition of Common Shares

Subject to the discussion below at "Other Considerations", a
US Holder will generally recognize gain or loss upon the sale or other
disposition of common shares equal to the difference, if any, between (i) the
amount of cash plus the fair market value of any property received, and (ii) the
shareholder's tax basis in the Company's common shares. This gain or loss will
be capital gain or loss if the common shares are a capital asset in the hands of
the US Holder (and if the stock is not "Section 306 Stock"), which will be a
long-term capital gain or loss if the common shares of the Company are held for
more than one year and which may be entitled to a preferential tax rate.
Deductions for net capital losses generally may be carried over to be used in
later tax years until such net capital loss is thereby exhausted. For US Holders
which are corporations (other than corporations subject to Subchapter S of the
Code), generally an unused net capital loss may be carried back three years from
the loss year and carried forward five years from the loss year to be offset
against capital gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this
discussion may not describe the United States federal income tax consequences
resulting from the holding and disposition of common shares:

Foreign Personal Holding Company

If at any time during a taxable year more than 50 per cent of
the total combined voting power or the total value of the Company's outstanding
shares is owned, directly or indirectly (including by attribution), by five or
fewer individuals who are citizens or residents of the United States and 60 per
cent or more of the Company's gross income for such year (50 per cent in
subsequent years) was derived from certain passive sources (e.g., dividends,
interests, rents, royalties, etc.), the Company may be treated as a "foreign
personal holding company." In that event, US Holders that hold common shares
would be required to include in gross income for such year their allocable
portions of the Company's taxable income to the extent the Company does not
actually distribute such income.

Foreign Investment Company

If 50 per cent or more of the combined voting power or total
value of the Company's outstanding common shares are held, directly or
indirectly (including through attribution), by citizens or residents of the
United States, United States domestic partnerships or corporations, or estates
or trusts other than foreign estates or trusts (as defined by Code Section
7701(a) (31)), the Company is found to be engaged primarily in the business of
investing, reinvesting, or trading in securities, commodities, or any interest
therein, and certain other conditions are met, the Company may be treated as a
"foreign investment company" as defined in Section 1246 of the Code, causing all
or part of any gain realized by a US Holder selling or exchanging common shares
to be treated as ordinary income rather than capital gain.

Passive Foreign Investment Company

As a foreign corporation with US Holders, the Company could
potentially be treated as a passive foreign investment company ("PFIC"), as
defined in Section 1297 of the Code, depending upon the percentage of the
Company's income which is passive, or the percentage of the Company's assets
which is producing passive income. Generally, on certain distributions and on
disposition, US Holders owning common shares of a PFIC are subject to a special
tax regime imposing the highest U.S. ordinary income tax rate plus an interest
charge based on the value of deferral of tax for the period during which the
common shares of the PFIC are owned. However, if the US Holder makes a timely
election to treat a PFIC as a qualified electing fund ("QEF") with respect to
such shareholder's interest therein, the above-described rules generally will
not apply. Instead, the electing US Holder would include annually in gross
income his/her or its pro rata share of the PFIC's ordinary earnings and net
capital gain regardless of whether such income or gain was actually distributed.
A US Holder making a QEF election can, however, under certain circumstances
elect to defer the payment of United States federal income tax on such income
inclusions subject to an interest charge on the amount of deferred taxes.
Special rules apply to US Holders who own their interests in a PFIC through
intermediate entities or persons. In addition, subject to certain limitations,
US Holders owning (actually or constructively) marketable stock in a PFIC will
be permitted to elect to mark that stock to market annually, rather than be
subject to the tax regime described above. Amounts included in or deducted from
income under this alternative (and actual gains and losses realized upon
disposition, subject to certain limitations) will be treated as ordinary gains
or losses.

34



The Company has not determined whether it is or has been a
PFIC in earlier years. US Holders of the Company's common shares should consult
with their own tax advisor concerning the possible application of the PFIC
provisions in their circumstances.

Controlled Foreign Corporation

If more than 50 per cent of the voting power of all classes
of stock or the total value of the stock of the Company is owned, directly or
indirectly (including through attribution), by citizens or residents of the
United States, United States domestic partnerships and corporations or estates
or trusts other than foreign estates or trusts, each of whom own 10 per cent or
more of the total combined voting power of all classes of stock of the Company
("United States Shareholder"), the Company is a "controlled foreign
corporation". This classification generally results in the inclusion of certain
income of a CFC in the US Shareholders' US income as a deemed dividend. In
addition, under Section 1248 of the Code, gain from the sale or exchange of
stock by a holder of common shares who is or was a United States Shareholder at
any time during the five year period ending with the sale or exchange may be
treated as ordinary dividend income.

F.         Dividends and Paying
Agents

Not Applicable

G.         Statement by Experts

Not Applicable

H.         Documents on Display

Micromem files the documents referred
to herein and other information with the SEC, the Ontario Securities Commission
("OSC") and the Alberta Securities Commission ("ASC"). You may inspect and copy
such material at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the SEC's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and the Woolworth Building, 233 Broadway, New York, New York 10279. You may also
obtain copies of such material from the SEC at prescribed rates by writing to
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.

The SEC maintains an Internet website at


www.sec.gov that contains reports, proxy
statements, information statements and other material that are filed through the
SEC's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system.
Documents filed with the OSC and the ASC can be accessed through an Internet
website at www.sedar.com that contains reports, proxy
statements, information statements and other material that are filed through the
System for Electronic Document Analysis and Retrieval ("SEDAR").

Information about Micromem is also available on its website
at www.micromeminc.com. Such information on its website is not part of this Form
20-F.

I.         Subsidiary Information

Not Applicable

35



ITEM 11.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM 12.         DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable

PART II

ITEM 13.         DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable

ITEM 14.         MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
        USE OF PROCEEDS

Not Applicable

ITEM 15.         CONTROLS AND PROCEDURES



(b) Internal controls. Since the date of the
evaluation described above, there have not been any significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls.



PART III

Item 16.

Not applicable

Item 16A. Audit Committee Financial Expert



Our Board of Directors has determined that a member of our Board of
Directors, David Sharpless, is an audit committee financial expert.



Item 16B. Code of Ethics

We have adopted a code of ethics to impose certain policies relating to
ethical conduct on all of our directors and employees, including our chief
executive officer, chief financial officer, principal accounting officer and
persons performing similar functions.

36



Item 16C. Principal Accountant Fees and Services

The following table presents fees for professional audit services rendered by
our auditors for the audit of our consolidated annual financial statements for
the years ended October 31, 2003 and 2002, and fees billed for other services
rendered by our auditors including our offerings of securities and tax services:

|           | 2003    | 2002   
|---------- | ------- | -------
|Audit Fees | $46,359 | $53,143



PART III

ITEM 17.         FINANCIAL STATEMENTS

The financial statements required by Item 17 appear commencing on the next
page.

37







| | Consolidated Financial
    Statements
    (Expressed in United States dollars)
| | ------------------------------------------------------------------------------
| |                                                                               
| | MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)                       
| |                                                                               
| | October 31, 2003                                                              







AUDITORS' REPORT



To the Shareholders ofMicromem Technologies Inc.



We have audited the consolidated balance sheets of Micromem Technologies Inc. (a Development Stage Company) as at October 31,
2003 and 2002 and the consolidated statements of operations and deficit, cash
flows and shareholders' equity for the years then ended and for the period from
November 1, 2001 to October 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.



We conducted our audits in accordance with Canadian and
United States generally accepted auditing standards. Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements
present fairly, in all material respects, the financial position of the Company
as at October 31, 2003 and 2002 and the results of its operations and its cash
flows for the years then ended and for the period from November 1, 2001 to
October 31, 2003 in accordance with Canadian generally accepted accounting
principles.



As discussed in note 3(f) to the consolidated financial
statements, during 2002 the Company changed its method of accounting for patents
and trademarks.

The consolidated financial statements as at October 31, 2001
and for the year then ended and for the cumulative period from September 3, 1997
to October 31, 2001 were audited by other auditors who expressed opinions
without reservation on those statements in their reports dated November 16, 2001
and December 20, 1999.



Toronto, Canada, 
December 5, 2003 [except as to note 4,                                                
"Ernst & Young LLP"
which is as of March 9, 2004].                                                              
Chartered Accountants





COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE





In the United States, reporting standards for auditors
require the addition of an explanatory paragraph (following the opinion
paragraph) when the financial statements are affected by conditions and events
that cast substantial doubt on the Company's ability to continue as a going
concern, such as those described in note 2 to the consolidated financial
statements. Our report to the shareholders dated December 5, 2003 is expressed
in accordance with Canadian reporting standards which do not permit a reference
to such events and conditions in the auditors' report when these are adequately
disclosed in the consolidated financial statements.





Toronto, Canada,





kpmg

| | KPMG
    LLP                 |             |               
| | ---------------------------- | ----------- | --------------
| | Chartered Accountants        | Telephone   | (416) 777-8500
| | Commerce Court West          | Telefax     | (416) 777-8818
| | PO Box 31 Stn Commerce Court | www.kpmg.ca
| | Suite 3300                   |             |               
| | Toronto ON M5L 1B2           |             |               

AUDITORS' REPORT TO THE SHAREHOLDERS

We
have audited the consolidated balance sheets of Micromem Technologies Inc. (a
Development Stage Company) as at October 31, 2001 and 2000 and the consolidated
statements of operations and deficit, cash flows and shareholders' equity for
the years ended October 31, 2001, 2000 and 1999 and for the cumulative period
from September 3, 1997 to October 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The cumulative
statements of operations and deficit, cash flows and shareholders' equity for
the period from September 3, 1997 to October 31, 2001 include amounts for the
period from September 3, 1997 to October 31, 1998 which were audited by other
auditors whose report has been furnished to us, and our opinion on the
cumulative statements, insofar as it relates to the amounts included for the
period September 3, 1997 through October 31, 1998 is based solely on the report
of the other auditors. 
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, based on our audits and the report of other auditors, these
consolidated financial statements present fairly, in all material respects, the
financial position of the Company as at October 31, 2001, 2000 and the results
of its operations and its cash flows for the years ended October 31, 2001, 2000
and 1999 and for the cumulative period from September 3, 1997 to October 31,
2001 in accordance with Canadian generally accepted accounting principles. 
Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles accepted in the United States. Application
of accounting principles generally accepted in the United States would have
affected results of operations for each of the years in the three-year period
ended October 31, 2001 and shareholders' equity as at October 31, 2001 and 2000
to the extent summarized in note 16 to the consolidated financial statements. 

The cumulative period from September 3, 1997 to October 31, 1998 were audited by
another firm of chartered accountants who expressed an opinion without
reservation on those statements in their report dated December 20, 1999./s/ KPMG LLP Chartered AccountantsToronto, Canada
November 16, 2001





|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)                                     |                                                                 |         |              |          
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------- | ------------ | ---------
|                                                                                            |                                                                 |         |              |          
|Consolidated Balance Sheets(Expressed in United States dollars)(see note 2 - going concern)
|As at October 31                                                                            |                                                                 |         |              |          
|                                                                                           
|                                                                                            |                                                                 |         | 2003         |          
|                                                                                           
|Assets                                                                                      |                                                                 |         |              |          
|Current assets:                                                                             |                                                                 |         |              |          
|                                                                                            | Cash and cash equivalents                                       | $       | 79,233       | $        
|                                                                                            | Term deposits                                                   |         | 219,930      |          
|                                                                                            | Deposits and other receivables (notes 5, 13(a)(1) and 13(a)(3)) |         | 47,207       |          
|                                                                                            |                                                                 |         | 346,370      |          
|Capital assets (note 6)                                                                     |                                                                 | 3,768   |              | 98,654   
|Patents and trademarks (note 7)                                                             |                                                                 | -       |              | 307,698  
|                                                                                            | $                                                               | 350,138 |              | 1,583,422
|                                                                                            |                                                                 |         |              |          
|Liabilities and Shareholders'
    Equity                                                    |                                                                 |         |              |          
|Current liabilities:                                                                        |                                                                 |         |              |          
|                                                                                            | Accounts payable and accrued liabilities (note 13(b))           | $       | 245,700      | $        
|                                                                                            |                                                                 |         |              |          
|Shareholders' equity:                                                                       |                                                                 |         |              |          
|                                                                                            | Share capital (note 8):                                         |         |              |          
|                                                                                            | Authorized:                                                     |         |              |          
|                                                                                            | 2,000,000 special preference
    shares, redeemable, voting     |         |              |          
|                                                                                            | Unlimited common shares without
    par value                   |         |              |          
|                                                                                            | Issed and outstanding:                                          |         |              |          
|                                                                                            | 48,732,187 common shares (2002 -
    46,700,937)                |         | 31,236,287   |          
|                                                                                            | Contributed surplus (note 9)                                    |         | 578,891      |          
|                                                                                            | Deficit accumulated during the development stage                |         | (31,710,740) |          
|                                                                                            |                                                                 |         | 104,438      |          
|Commitments and contingencies (notes 4, 13, 14 and 17)                                      |                                                                 |         |              |          
|                                                                                            | $                                                               | 350,138 | $            | 1,583,422

See accompanying notes to consolidated financial statements.

On behalf of the Board:

"Joseph Fuda" (signed) 
Director

"Manoj Pundit" (signed) 
Director



4



|MICROMEM
    TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                               |                                                   |           |            |            |            |          
|----------------------------------------------------------------------------------------- | ------------------------------------------------- | --------- | ---------- | ---------- | ---------- | ---------
|                                                                                          |                                                   |           |            |            |            |          
|Consolidated
    Statements of Operations and Deficit(Expressed in United States dollars)
|Years ended
    October 31                                                               
|                                                                                          |                                                   |           |            |            |            |          
|                                                                                          |                                                   |           |            |            |            |          
|                                                                                          | 2003                                              |           | 2002       |            | 2001       |          
|Revenue:                                                                                  |                                                   |           |            |            |            |          
|                                                                                          | Interest and other
    income                     | 20,121    | $          | 165,892    | $          | 196,520  
|Costs and expenses
    (income):                                                          |                                                   |           |            |            |            |          
|                                                                                          | Administration                                    | 176,361   |            | 333,964    |            | 409,312  
|                                                                                          | Professional fees                                 | 303,222   |            | 262,927    |            | 473,653  
|                                                                                          | Wages and salaries
    (note 8(b))                | 112,437   |            | 562,532    |            | 1,372,375
|                                                                                          | Research and
    development (notes 6 and 13)     | 490,914   |            | 1,601,624  |            | 2,212,679
|                                                                                          | Travel and
    entertainment                      | 17,508    |            | 73,385     |            | 205,757  
|                                                                                          | Operating leases                                  | -         |            | -          |            | -        
|                                                                                          | Loss on sale of
    investment                    | -         |            | -          |            | -        
|                                                                                          | Write-down of
    investment                      | -         |            | -          |            | -        
|                                                                                          | Write-down of
    royalty rights (note 10)        | -         |            | 10,000,000 |            | -        
|                                                                                          | Write-down of
    patents and trademarks (note 7) | 299,820   |            | -          |            | -        
|                                                                                          | Amortization of
    patents and trademarks        | 36,258    |            | 31,338     |            | -        
|                                                                                          | Loss (gain) on
    disposal of capital assets     | 58,302    |            | 13,292     |            | (6,134)  
|                                                                                          | Amortization of
    capital assets                | 36,921    |            | 40,635     |            | 65,298   
|                                                                                          | Fees to related
    parties (note 12(b))          | -         |            | -          |            | -        
|                                                                                          | Interest expense                                  | -         |            | -          |            | -        
|                                                                                          | Unrealized foreign
    exchange loss (gain)       | (61,657)  |            | 14,747     |            | (7,009)  
|                                                                                          |                                                   | 1,470,086 |            | 12,934,444 |            | 4,725,931
|Loss before income
    taxes                                                              | 1,449,965                                         |           | 12,768,552 |            | 4,529,411  |          
|Provision for
    (recovery of) income taxes                                              |                                                   |           |            |            |            |          
|Current (note 11)                                                                         | -                                                 |           | (35,537)   |            | 30,214     |          
|Net loss for the
    period                                                               | 1,449,965                                         |           | 12,733,015 |            | 4,559,625  |          
|Deficit
    accumulated during the                                                        |                                                   |           |            |            |            |          
|development stage, beginning of period                                                    | 30,260,775                                        |           | 17,527,760 |            | 12,968,135 |          
|Deficit
    accumulated during the                                                        |                                                   |           |            |            |            |          
|development stage, end of period                                                          | 31,710,740                                        | $         | 30,260,775 | $          | 17,527,760 | $        
|Loss per share -
    basic and diluted (note 8(c))                                        | 0.03                                              | $         | 0.27       | $          | 0.10       | $        
|Weighted average
    number of basic and                                                  |                                                   |           |            |            |            |          
|diluted common shares outstanding                                                         | 47,061,810                                        |           | 46,396,799 |            | 44,163,669 |          

See accompanying notes to consolidated financial statements.

5



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                   |                                                                                                    |           |             |             |              |            
|------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------- | ----------- | ----------- | ------------ | -----------
|                                                                          |                                                                                                    |           |             |             |              |            
|Consolidated Statements of Cash Flows(Expressed in United States dollars)
|Years ended October 31                                                   
|                                                                          |                                                                                                    |           |             |             |              |            
|                                                                          |                                                                                                    |           |             |             |              |            
|                                                                          | 2003                                                                                               |           | 2002        |             | 2001         |            
|Cash flows from
    operating activities:                                 |                                                                                                    |           |             |             |              |            
|                                                                          | Net loss for the period                                                                            | $         | (1,449,965) | $           | (12,733,015) | $          
|                                                                          | Adjustments to
    reconcile net loss for
  the period to net cash used in
  operating activities: |           |             |             |              |            
|                                                                          | Loss (gain) on sale of investment                                                                  | -         |             | -           |              | (4,796)    
|                                                                          | Write-down of investment                                                                           | -         |             | -           |              | -          
|                                                                          | Loss (gain) on disposal of capital
    assets                                                      | 58,302    |             | 13,292      |              | (6,134)    
|                                                                          | Write-down of royalty rights                                                                       | -         |             | 10,000,000  |              | -          
|                                                                          | Write-down of patents and
    trademarks                                                           | 299,820   |             | -           |              | -          
|                                                                          | Amortization of patents and
    trademarks                                                         | 36,258    |             | 31,338      |              | -          
|                                                                          | Amortization of capital assets                                                                     | 36,921    |             | 170,710     |              | 200,519    
|                                                                          | Share compensation expense                                                                         | -         |             | -           |              | 754,125    
|                                                                          | Non-cash wages and salaries                                                                        | -         |             | -           |              | 34,000     
|                                                                          | Change in
    non-cash working capital items,
  net of effects from reverse takeover:              |           |             |             |              |            
|                                                                          | Decrease (increase) in deposits
  and other receivables                                            | 145,924   |             | 35,012      |              | 64,142     
|                                                                          | Increase (decrease) in accounts
  payable and accrued liabilities                                  | 54,181    |             | (138,033)   |              | (139,199)  
|                                                                          | Net cash used in operating activities                                                              | (818,559) |             | (2,620,696) |              | (3,656,968)
|Cash flows from
    investing activities:                                 |                                                                                                    |           |             |             |              |            
|                                                                          | Sale of
    available-for-sale investment                                                          | -         |             | -           |              | 27,000     
|                                                                          | Term deposits                                                                                      | (219,930) |             | -           |              | -          
|                                                                          | Purchase of
    capital assets                                                                     | (2,025)   |             | (28,580)    |              | (200,076)  
|                                                                          | Proceeds on
    disposal of capital assets                                                         | 1,688     |             | 82,763      |              | 49,977     
|                                                                          | Patents and
    trademarks                                                                         | (28,380)  |             | (6,065)     |              | (127,652)  
|                                                                          | Royalty rights                                                                                     | -         |             | -           |              | (2,000,000)
|                                                                          | Net cash provided by (used in)
  investing activities                                              | (248,647) |             | 48,118      |              | (2,250,751)
|Cash flows from
    financing activities:                                 |                                                                                                    |           |             |             |              |            
|                                                                          | Issue of common
    shares                                                                         | 162,500   |             | -           |              | 8,221,379  
|                                                                          | Net proceeds from
    shareholder loan                                                             | -         |             | -           |              | -          
|                                                                          | Loan proceeds
    from Avanticorp International Inc.                                               | -         |             | -           |              | -          
|                                                                          | Rights issue costs                                                                                 | -         |             | -           |              | -          
|                                                                          | Net cash provided by financing activities                                                          | 162,500   |             | -           |              | 8,221,379  
|Increase
    (decrease) in cash
  and cash equivalents                    | (904,706)                                                                                          |           | (2,572,578) |             | 2,313,660    |            
|Cash and cash equivalents, beginning of period                            | 983,939                                                                                            |           | 3,556,517   |             | 1,242,857    |            
|Cash and cash equivalents, end of period                                  | $                                                                                                  | 79,233    | $           | 983,939     | $            | 3,556,517  
|Supplemental cash
    flow information:                                   |                                                                                                    |           |             |             |              |            
|                                                                          | Interest paid                                                                                      | $         | -           | $           | 1,960        | $          
|                                                                          | Income taxes paid                                                                                  | -         |             | 11,508      |              | 46,021     

6



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)

Consolidated Statements of Cash Flows (continued)

|Years ended October 31, 2003
|----------------------------

Supplemental information on non-cash investing activities:

The following transactions are considered to be non-cash
  transactions and have been excluded from the consolidated statements of cash
  flows:

During fiscal 2001, the Company issued 2,007,831 common
  shares, being the equivalent of $8,000,000, in respect of closing of the asset
  purchase agreement as described in note 4.

During fiscal 2001, common shares having a value $1,647,703
  were issued pursuant to compensation agreements.

See accompanying notes to consolidated financial statements.

7



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                             |  |  |  |  |  | 
|----------------------------------------------------------------------------------- |  |  |  |  |  | 
|Consolidated Statements of Shareholders' Equity(Expressed in United States dollars)

|                                                                                                       | Number of shares |   | Share capital |   | Contributed surplus |   | Deferred
     share compensation |   | Deficit accumulated during development stage
|------------------------------------------------------------------------------------------------------ | ---------------- | - | ------------- | - | ------------------- | - | -------------------------------- | - | --------------------------------------------
|Micromem share capital,
    October 31, 1998                                                           | 3,490,643        | $ | -             | $ | -                   | $ | -                                | $ | -                                           
|Exercise of director's stock
    options                                                               | 490,000          |   | -             |   | -                   |   | -                                |   | -                                           
|Pageant share capital,
    October 31, 1998                                                            | -                |   | 1             |   | -                   |   | -                                |   | -                                           
|Net loss for the year                                                                                  | -                |   | -             |   | -                   |   | -                                |   | (500,992)                                   
|Common shares of Pageant, 
  December 4,1998                                                           | -                |   | 4,999         |   | -                   |   | -                                |   | -                                           
|Assigned fair value of net assets 
  (note 3(b)(iv))                                                   | 32,000,000       |   | 549,140       |   | -                   |   | -                                |   | -                                           
|Micromem share capital, 
  September 11, 1999                                                          | 35,980,643       |   | 554,140       |   | -                   |   | -                                |   | (500,992)                                   
|Exercise of common share
    purchase 
  warrants for cash                                             | 120,676          |   | 164,053       |   | -                   |   | -                                |   | -                                           
|Private placement of common
    shares for
  cash, May 17, 1999                                        | 350,000          |   | 1,050,000     |   | -                   |   | -                                |   | -                                           
|Shareholder loan forgiven
    (note 9)                                                                 | -                |   | -             |   | 544,891             |   | -                                |   | -                                           
|Exercise of stock options for
    cash                                                                 | 100,000          |   | 300,000       |   | -                   |   | -                                |   | -                                           
|Net loss for the year                                                                                  | -                |   | -             |   | -                   |   | -                                |   | (5,207,787)                                 
|Balance, October 31, 1999                                                                              | 36,551,319       |   | 2,068,193     |   | 544,891             |   | -                                |   | (5,708,779)                                 
|Exercise of common share
    purchase warrants
  for cash                                              | 182,087          |   | 274,717       |   | -                   |   | -                                |   | -                                           
|Exercise of stock options for
    cash                                                                 | 100,000          |   | 300,000       |   | -                   |   | -                                |   | -                                           
|Deferred share compensation
    (note 12(a))                                                           | -                |   | -             |   | 2,711,881           |   | (453,219)                        |   | -                                           
|Private placement of common
    shares for
  cash, February 10, 2000                                   | 2,000,000        |   | 5,000,000     |   | -                   |   | -                                |   | -                                           
|Common shares issued pursuant
    to
  compensation agreements, 
  March 15, 2000                      | 901,110          |   | 4,206,447     |   | -                   |   | -                                |   | -                                           
|Net loss for the year                                                                                  | -                |   | -             |   | -                   |   | -                                |   | (7,259,356)                                 
|Balance, October 31, 2000                                                                              | 39,734,516       |   | 11,849,357    |   | 3,256,772           |   | (453,219)                        |   | (12,968,135)                                
|Exercise of common share
    purchase
   warrants for cash                                             | 362,450          |   | 554,655       |   | -                   |   | -                                |   | -                                           
|Common shares issued under
    rights
  offering, November 20, 2000                                    | 304,674          |   | 1,119,058     |   | -                   |   | -                                |   | -                                           
|Exercise of stock options for
    cash                                                                 | 800,000          |   | 2,400,000     |   | -                   |   | -                                |   | -                                           
|Deferred share compensation
    (note 12(a))                                                           | -                |   | -             |   | (453,219)           |   | 453,219                          |   | -                                           
|Stock-based compensation
    (note 8(b))                                                               | -                |   | -             |   | 34,000              |   | -                                |   | -                                           
|Exercise of director's stock
    options
  for cash, January 17, 2001                                  | 714,686          |   | 71,469        |   | -                   |   | -                                |   | -                                           
|Common shares issued pursuant
    
  to compensatory stock options,
  at January 17, 2001 (note 12(a)) | -                |   | 1,581,242     |   | (1,581,242)         |   | -                                |   | -                                           
|Adjustment-share compensation
  Expenses (note 12(a))                                                  | -                |   | -             |   | (677,420)           |   | -                                |   | -                                           
|Common shares issued pursuant
    
  to compensation agreement,
  January 23, 2001 (note 12(a))        | 11,192           |   | 66,461        |   | -                   |   | -                                |   | -                                           
|Private placement of common
    shares for
  cash, March 12, 2001                                      | 2,000,000        |   | 4,000,000     |   | -                   |   | -                                |   | -                                           
|Common shares issued under
    asset 
  purchase agreement to Estancia 
  Limited, March 14, 2001      | 2,007,831        |   | 8,000,000     |   | -                   |   | -                                |   | -                                           
|Compensation shares due but
    not issued
  (note 12(a))                                              | -                |   | -             |   | 1,431,545           |   | -                                |   | -                                           
|Net loss for the year                                                                                  | -                |   | -             |   | -                   |   | -                                |   | (4,559,625)                                 
|Balance, October 31, 2001                                                                              | 45,935,349       | $ | 29,642,242    | $ | 2,010,436           | $ | -                                | $ | (17,527,760)                                

8



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                                             |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|                                                                                                    |  |  |  |  |  | 
|Consolidated Statements of Shareholders' Equity
    (continued)(Expressed in United States dollars)
|As at October 31                                                                                   

|                                                                                    | Number of shares |   | Share capital |   | Contributed surplus |   | Deferred
     share compensation |   | Deficit accumulated during development stage
|----------------------------------------------------------------------------------- | ---------------- | - | ------------- | - | ------------------- | - | -------------------------------- | - | --------------------------------------------
|Balance, October 31, 2001                                                           | 45,935,349       | $ | 29,642,242    | $ | 2,010,436           | $ | -                                | $ | (17,527,760)                                
|Shares issued pursuant to
    compensatory
  agreement, March 26, 2002 (note 12(a)) | 765,588          |   | 1,431,545     |   | (1,431,545)         |   | -                                |   | -                                           
|Net loss for the year                                                               | -                |   | -             |   | -                   |   | -                                |   | (12,733,015)                                
|Balance, October 31, 2002                                                           | 46,700,937       |   | 31,073,787    |   | 578,891             |   | -                                |   | (30,260,775)                                
|Private placement of common
    shares for
  cash, August 13, 2003 (note 8(d))      | 2,031,250        |   | 162,500       |   | -                   |   | -                                |   | -                                           
|Net loss for the year                                                               | -                |   | -             |   | -                   |   | -                                |   | (1,449,965)                                 
|Balance, October 31, 2003                                                           | 48,732,187       | $ | 31,236,287    | $ | 578,891             | $ | -                                | $ | (31,710,740)                                

See accompanying notes to consolidated financial statements.

9



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              
|                                                                              

|1. | Nature of business:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Micromem Technologies Inc.
    ("Micromem" or the "Company") is a corporation incorporated under the laws
    of the Province of Ontario, Canada. By Articles of Amendment dated
    January 14, 1999, the Company changed its name from Avanticorp International
    Inc. to Micromem Technologies Inc. On January 11, 1999, the Company acquired
    all the outstanding shares of Pageant Technologies Inc. ("Pageant"), a
    company subsisting under the laws of Barbados. This acquisition, as
    described in note 3(b), was recorded as a reverse takeover under Canadian
    generally accepted accounting principles ("Canadian GAAP").                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company currently
    operates in a single segment as a developer of non-volatile magnetic memory
    technology. To October 31, 2003, the Company has not generated significant
    revenue and is devoting substantially all its efforts to the development of
    its technologies. Accordingly, for financial reporting purposes, the Company
    is a development stage enterprise and, through its wholly-owned
    subsidiaries, is engaged in the development and testing of its non-volatile
    memory technologies.                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | Going concern:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These 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.                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company has incurred
    substantial losses in its development stage and is still in the development
    stage. It will be necessary to raise additional funds for the continuing
    development, testing and commercial exploitation of its technologies. The
    sources of these funds have not yet been identified and there can be no
    certainty that sources will be available in the future.                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company's ability to
    continue as a going concern is in substantial doubt and it is dependent upon
    completing the development of its technology for a particular application,
    achieving profitable operations, obtaining additional financing, and
    successfully bringing its technologies to the market. The outcome of these
    matters cannot be predicted at this time. The consolidated financial
    statements have been prepared on a going concern basis and do not include
    any adjustments to the amounts and classifications of the assets and
    liabilities that might be necessary should the Company be unable to continue
    in business.

10



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|3. | Summary of significant
    accounting policies:                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | These
    consolidated financial statements have been prepared in accordance with
    Canadian GAAP and are stated in United States dollars. These principles are
    also in conformity in all material respects with United States generally
    accepted accounting principles ("U.S. GAAP") except as described in note 16
    to the consolidated financial statements. The most significant accounting
    policies are as follows:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                          

11



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|3. | Summary of significant
    accounting policies (continued):                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                              
|   | The transaction was accounted
    for by the purchase method with the results of operations included in the
    consolidated financial statements from the date of acquisition. Details of
    the Company's net assets acquired and the assigned fair value of net assets
    at acquisition are as follows:

| | Cash                              | $ 168,084
| | --------------------------------- | ---------
| | Non-cash current assets           | 115,629  
| | Investments                       | 371,471  
| |                                   | 655,184  
| | Less current liabilities          | 106,044  
| | Assigned fair value of net assets | $ 549,140

| | (c) | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The preparation of consolidated financial statements in
    conformity with Canadian GAAP requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities, the
    disclosure of contingent assets and liabilities at the date of the
    consolidated financial statements and the reported amounts of revenue and
    expenses during the reporting period. Actual results could differ from those
    estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (d) | Cash and cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Cash and cash equivalents consist of all bank accounts
    and all highly liquid investments with original maturities of three months
    or less at the date of purchase.                                                                                                                                                                                                                                                                                              

12



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|3. | Summary of significant accounting policies (continued):
|-- | -------------------------------------------------------
|   |                                                        
|   | (e)                                                    
|   |                                                        
|   |                                                        
|   | (f)                                                    
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   | (g)                                                    
|   |                                                        
|   |                                                        

13



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|3. | Summary of significant accounting policies (continued):
|-- | -------------------------------------------------------
|   |                                                        
|   | (h)                                                    
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   |                                                        
|   | (i)                                                    
|   |                                                        
|   |                                                        
|   |                                                        
|   | (j)                                                    
|   |                                                        
|   |                                                        

14



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|3. | Summary of significant accounting policies (continued):                                      
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              
|   |                                                                                              
|   |                                                                                              
|4. | Acquisition of royalty rights and remaining interest in
    technology from Estancia Limited:
|   |                                                                                              
|   |                                                                                              
|   |                                                                                              
|   | (a)                                                                                          
|   |                                                                                              
|   | (b)                                                                                          

15



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|4. | Acquisition of royalty rights and remaining interest
    in technology from Estancia Limited (continued):                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                    
|   | (c)                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                    
|   | On March 9, 2004, the third anniversary of the closing
    date, the requirements set out in terms (b) and (c) above were not met and
    the Company's obligation to pay these amounts terminated. The Company thus
    has to revert to Estancia:
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                    

|5. | Deposits and other
    receivables: |          |          
|-- | ----------------------------------- | -------- | ---------
|   |                                     |          |          
|   |                                     | 2003     | 2002     
|   | Sales tax recoverable               | $ 7,152  | $ 11,048 
|   | Deposits (notes 13(a))              | 14,536   | 131,305  
|   | Other receivables                   | 25,519   | 50,778   
|   |                                     | $ 47,207 | $ 193,131

16



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|6. | Capital assets:                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | - | ------------------------ | - | -------- | - | ------
|   |                                                                                                                                                                                                                                                                                                                                                |   | 2002    |   | Additions                |   | Disposal |   | 2003  
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | Cost:                                                                                                                                                                                                                                                                                                                                          |   |         |   |                          |   |          |   |       
|   | Furniture and fixtures                                                                                                                                                                                                                                                                                                                         | $ | 17,432  | $ | -                        | $ | 17,432   | $ | -     
|   | Computers and equipment                                                                                                                                                                                                                                                                                                                        |   | 207,153 |   | 2,025                    |   | 172,397  |   | 36,781
|   |                                                                                                                                                                                                                                                                                                                                                | $ | 224,585 | $ | 2,025                    | $ | 189,829  | $ | 36,781
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   |                                                                                                                                                                                                                                                                                                                                                |   | 2002    |   | Amortization
    expense |   | Disposal |   | 2003  
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | Accumulated amortization:                                                                                                                                                                                                                                                                                                                      |   |         |   |                          |   |          |   |       
|   | Furniture and fixtures                                                                                                                                                                                                                                                                                                                         | $ | 13,601  | $ | 3,831                    | $ | 17,432   | $ | -     
|   | Computers and equipment                                                                                                                                                                                                                                                                                                                        |   | 112,330 |   | 32,567                   |   | 111,884  |   | 33,013
|   |                                                                                                                                                                                                                                                                                                                                                | $ | 125,931 | $ | 36,398                   | $ | 129,316  | $ | 33,013
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   | 2003     |   | 2002  
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | Net book value:                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | Furniture and fixtures                                                                                                                                                                                                                                                                                                                         |   |         |   |                          | $ | -        | $ | 3,831 
|   | Computers and equipment                                                                                                                                                                                                                                                                                                                        |   |         |   |                          | $ | 3,768    |   | 94,823
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          | $ | 3,768    | $ | 98,654
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | Included in research
    and development expense is nil (2002 - $130,075, 2001 - $135,221) of
    amortization expense.                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                |   |         |   |                          |   |          |   |       
|   | During fiscal 2003,
    the Company contributed equipment and supplies with a net book value of
    $58,302 under the "Equipment Transfer Agreement" with the University of
    Toronto ("U of T")(note 13a(4)). The net book value of the contributed
    equipment has been charged to the period as a research and development
    expense.

17



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|7. | Patents and trademarks:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |         |   |                          |   |               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | - | ------------------------ | - | --------------
|   | As at October 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Cost    |   | Accumulated amortization |   | Net book value
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |   |                          |   |               
|   | Patents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $ | -       | $ | -                        | $ | -             
|   | Trademarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | -       |   | -                        |   | -             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $ | -       | $ | -                        | $ | -             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |   |                          |   |               
|   | As at October 31, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Cost    |   | Accumulatd amortization  |   | Net book value
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |   |                          |   |               
|   | Patents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $ | 292,939 | $ | 26,918                   | $ | 266,021       
|   | Trademarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 46,097  |   | 4,420                    |   | 41,677        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $ | 339,036 | $ | 31,338                   | $ | 307,698       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |   |                          |   |               
|   | The Company, through
    its subsidiaries, has other pending patent applications relating to its
    memory technologies and the costs relating to legal and filing fees are
    capitalized as patents. The Company has applied to register the trademarks
    MAGRAMTM, VEMRAMTM, MicromemTM and HEMRAMTM
    in Canada and United States.                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |   |                          |   |               
|   | The Company
    discontinued a number of patent and trademark applications, primarily
    outside the United States. Net book value of $130,839 relating to these
    applications have been written off during fiscal 2003. The Company has also
    assessed the remaining amounts for patents and trademarks applications
    registered in Canada and United States and has expensed the residual net
    book value of $168,981 to reflect the uncertain nature of future events. The
    Company continues to actively pursue and protect its patents and trademarks
    registered in Canada and the United States.

18



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|8. | Share capital:
|-- | --------------
|   |               
|   | (a)           
|   |               
|   |               
|   |               
|   |               
|   | (b)           
|   |               
|   |               
|   |               
|   |               



| |  |                                                                  | 2003                | 2002 | 2001                           
| |  | ---------------------------------------------------------------- | ------------------- | ---- | -------------------------------
| |  |                                                                  | Shares in thousands |      | Weighted average exercise price
| |  | Outstanding,
    beginning of year                               | 5,380               | $    | 4.27                           
| |  | Granted                                                          | 5,300               |      | 0.10                           
| |  | Forfeited/expired/cancelled                                      | (5,380)             |      | 4.27                           
| |  | Exercised                                                        | -                   | -    | -                              
| |  | Outstanding, end of year                                         | 5,300               | $    | 0.10                           
| |  | Options exercisable at year end                                  | 5,300               | $    | -                              
| |  | Weighted average fair value of
  options granted during the year | -                   | $    | 0.06                           

19



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|8. | Share capital
    (continued):                                                                                                                                                                                                                                                                                                                                                           |                     |                                                                       |                     |                                      |                    |  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | --------------------------------------------------------------------- | ------------------- | ------------------------------------ | ------------------ | -
|   |                                                                                                                                                                                                                                                                                                                                                                                          |                     |                                                                       |                     |                                      |                    |  
|   | The following
    table summarizes information about fixed stock options outstanding as at
    October 31, 2003:                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                          | Options outstanding |                                                                       | Options exercisable
|   | Actual exercise price                                                                                                                                                                                                                                                                                                                                                                    | Number outstanding  | Weighted 
    average 
    remaining contractual 
    life (in years) |                     | Weighted average exercise 
    price | Number exercisable |  
|   |                                                                                                                                                                                                                                                                                                                                                                                          |                     |                                                                       |                     |                                      |                    |  
|$  | 0.10                                                                                                                                                                                                                                                                                                                                                                                     | 5,300,000           | 4.67 years                                                            | $                   | 0.10                                 | 5,300,000          | $
|   |                                                                                                                                                                                                                                                                                                                                                                                          |                     |                                                                       |                     |                                      |                    |  
|   | Included in wages and salaries is an amount of nil (2002
    - nil, 2001 - $34,000) related to stock-based compensation on options
    granted to a consultant of the Company.                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          |                     |                                                                       |                     |                                      |                    |  
|   | The Company does not
    recognize compensation expense for stock options granted to employees that
    are exercisable at fair market value at the date of the grant. The table
    below presents pro forma net loss as if stock options granted to employees
    had been determined on the fair value-based method. The table includes all
    stock options granted by the Company.

| |                                     |   | 2003      |   | 2002       |   | 2001      |   | Period from
    September 3,
    1997 to
    October 31,
    2003
| | ----------------------------------- | - | --------- | - | ---------- | - | --------- | - | -----------------------------------------------------------------
| |                                     |   |           |   |            |   |           |   |                                                                  
| | Loss applicable to
  common shares: |   |           |   |            |   |           |   |                                                                  
| | Reported                            | $ | 1,449,965 | $ | 12,733,015 | $ | 4,559,625 | $ | 31,710,740                                                       
| | Compensation expense                |   | 318,000   |   | 1,832,500  |   | 4,627,752 |   | 16,459,509                                                       
| | Pro forma                           | $ | 1,767,965 | $ | 14,565,515 | $ | 9,187,377 | $ | 48,170,249                                                       



20



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|8. | Share capital (continued):                                                                                                                                                                                                         |   |      |   |        |   |      |   |                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---- | - | ------ | - | ---- | - | -----------------------------------------------------------------
|   |                                                                                                                                                                                                                                    |   | 2003 |   | 2002   |   | 2001 |   | Period from
    September 3,
    1997 to
    October 31,
    2003
|   | Basic and fully diluted
  loss per share:                                                                                                                                                                                          |   |      |   |        |   |      |   |                                                                  
|   | Reported                                                                                                                                                                                                                           | $ | 0.03 | $ | 0.27   | $ | 0.10 | $ | 0.75                                                             
|   | Pro forma                                                                                                                                                                                                                          |   | 0.03 |   | 0.31   |   | 0.21 |   | 1.13                                                             
|   |                                                                                                                                                                                                                                    |   |      |   |        |   |      |   |                                                                  
|   | There were no options granted during 2002. The fair values of all options
    granted during 2003 and 2001 were estimated as of the date of grant using
    the Black-Scholes option pricing model with the following assumptions:
|   |                                                                                                                                                                                                                                    |   |      |   |        |   |      |   |                                                                  
|   |                                                                                                                                                                                                                                    |   |      |   | 2003   |   | 2002 |   | 2001                                                             
|   |                                                                                                                                                                                                                                    |   |      |   |        |   |      |   |                                                                  
|   | Dividend yield                                                                                                                                                                                                                     |   |      |   | -      |   | -    |   | -                                                                
|   | Expected volatility                                                                                                                                                                                                                |   |      |   | 1.57%  |   | -    |   | 100%                                                             
|   | Risk-free interest rate                                                                                                                                                                                                            |   |      |   | 2.22%  |   | -    |   | 3.97%-5.52%                                                      
|   | Expected option life                                                                                                                                                                                                               |   |      |   | 1 year |   | -    |   | 2-3 years                                                        

21





|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|   |                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. | Share capital (continued):                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                     
|   | (c)                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   | (d)                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                     
|9. | Contributed surplus:                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                     
|   | Ataraxia Corp., the former parent company of Pageant,
    forgave $544,891 of indebtedness it was owed during fiscal 1999. This
    forgiven debt was treated as contributed surplus, a separate component of
    shareholders' equity, as this balance was between related parties.

22



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|10. | Restructuring and
    write-down of royalty rights:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | On July 29, 2002, the Company
    restructured its operations by closing its research and development facility
    and adopted a plan to focus its current resources to outsource its research
    and development activities as described in note 13(a). No major costs were
    associated with this restructuring. The Company is still in the research and
    development stage. The development of this technology is contingent upon
    raising additional funds. Currently there is no assurance that Micromem will
    be able to raise such funds.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As a result of the
    restructuring, the Company determined that there was significant uncertainty
    that any amounts that would have been payable to Estancia in the foreseeable
    future in respect of the Estancia Royalty (that was purchased by Pageant
    under the Asset Purchase Agreement). Accordingly the Estancia Royalty rights
    acquired in the amount of $10,000,000 were written off in fiscal 2002.                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|11. | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has non-capital
    losses of approximately $6,031,000 available to reduce future taxable
    income, the benefit of which has not been recognized in these consolidated
    financial statements. As at October 31, 2003, the tax losses expire as
    follows:                                                                                                                                                                                                                                                                                 



| |              |   | Canada    |   | Other
    foreign |   | Total    
| | ------------ | - | --------- | - | ----------------- | - | ---------
| |              |   |           |   |                   |   |          
| | 2006         | $ | 268,000   | $ | -                 | $ | 268,000  
| | 2007         |   | 1,632,000 |   | -                 |   | 1,632,000
| | 2008         |   | 1,363,000 |   | -                 |   | 1,363,000
| | 2009         |   | 1,063,000 |   | -                 |   | 1,063,000
| | 2010         |   | 1,143,000 |   | 265,.000          |   | 1,408,000
| | 2011         |   | -         |   | 206,000           |   | 206,000  
| | 2012         |   | -         |   | 21,000            |   | 21,000   
| | 2023         |   | -         |   | 70,000            |   | 70,000   
| | Total assets | $ | 5,469,000 | $ | 562,000           | $ | 6,031,000

23



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|11. | Income taxes (continued):                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                        
|    | Future income taxes reflect
    the net tax effect of temporary differences between the carrying amount of
    assets and liabilities for financial reporting purposes and the amounts used
    for income tax purposes. Significant components of the Company's future tax
    assets and liabilities as at October 31 are as follows:





| |                                                             |   |            
| | ----------------------------------------------------------- | - | -----------
| | 2003                                                        |   |            
| |                                                             |   |            
| | Unused capital losses                                       | $ | 47,566     
| | Unused non-capital losses                                   |   | 1,975,066  
| | Alternative minimum tax credit                              |   | 142,091    
| | Research and development credit                             |   | 118,720    
| | Tax basis of capital assets in excess of
    carrying value |   | 109,789    
| | Total future tax assets                                     | $ | 2,393,302  
| | Valuation allowance                                         |   | (2,393,302)
| | Net future tax asset                                        | $ | -          
| |                                                             |   |            
| |                                                             |   |            
| | 2002                                                        |   |            
| | Unused capital losses                                       | $ | 14,563     
| | Unused non-capital losses                                   |   | 1,348,467  
| | Alternative minimum tax credit                              |   | 142,091    
| | Research and development credit                             |   | 118,720    
| | Financing charges                                           |   | 30,020     
| | Tax basis of capital assets in excess of
    carrying value |   | 58,084     
| | Total future tax assets                                     |   | 1,711,945  
| | Valuation allowance                                         |   | (1,711,945)
| | Net future tax asset                                        | $ | -          

24



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|11. | Income taxes (continued):                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                        
|    | The reconciliation of income
    tax attributable to continuing operations computed at the statutory tax
    rates to income tax expense is as follows:



| |                                                         |   | 2003        |   | 2002        
| | ------------------------------------------------------- | - | ----------- | - | ------------
| |                                                         |   |             |   |             
| | Consolidated accounting loss before income
    taxes    | $ | (1,449,965) | $ | (12,768,552)
| | Statutory rates                                         |   | 38%         |   | 39%         
| |                                                         |   |             |   |             
| | Expected income tax recovery                            |   | (550,987)   |   | (4,979,735) 
| | Permanent differences, write-down of royalty
    rights |   | -           |   | 3,650,000   
| | Tax
    benefit not recognized                          |   | 550,987     |   | 1,294,198   
| |                                                         | $ | -           | $ | (35,537)    

|    |                                                            
|--- | -----------------------------------------------------------
|12. | Management compensation and related party
    transactions:
|    | (a)                                                        
|    |                                                            
|    |                                                            
|    |                                                            
|    |                                                            
|    |                                                            
|    |                                                            

25



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |                                                                         |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12. | Management compensation and related party transactions
    (continued):
|    |                                                                         |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                         |      | As remuneration for the
    services to be rendered by the Chairman during the period from January 2,
    2000 to January 2, 2001, the Company granted the Chairman an irrevocable
    option to acquire from the Company a number of fully paid and non-assessable
    common shares of the Company equal to 1.75% of the number of common shares
    of the Company that would be outstanding on the close of business on
    January 2, 2001, at a price of $0.10 per incentive share.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                         |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                         |      | Pursuant to this agreement,
    deferred share compensation for the Chairman for the period from January 2,
    2000 to January 2, 2001 in the amount of $2,711,881, representing an
    estimate of the intrinsic value of the options to be granted on January 2,
    2001, was recorded as contributed surplus within shareholders' equity. Of
    this amount, $2,258,592 was recorded as compensation expense in the year
    ended October 31, 2000. On January 17, 2001, the Chairman exercised his
    options and 714,686 common shares of the Company were issued with an
    aggregate value of $1,581,242, which was recorded as share capital. The
    difference between the actual value of the shares and the estimate recorded
    in 2000 of $677,420 was recorded as a recovery of compensation expense in
    the year ended October 31, 2001.
|    |                                                                         |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                         | (iv) | On January 29, 1999 and
    March 10, 1999, the Company entered into two consulting agreements with the
    Chairman and a company controlled by the former President, respectively.
    Consideration for services rendered by the Chairman and the former President
    were settled by issue of common shares. The Company issued 454,292 shares to
    the Chairman and 448,452 shares to a company controlled by the former
    President during fiscal 2000. The balance of 11,192 shares ($66,461) due to
    a company controlled by the former President were issued in fiscal 2001.                                                                                                                                                                                                                                                                     
|    |                                                                         |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | (b)                                                                     |      | In the normal course of
    business, the Company enters into transactions with companies under common
    control. Such items are measured at agreed upon exchange amounts and
    included in the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

26



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|13. | Commitments:
|--- | ------------
|    |             
|    | (a)         
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             
|    |             

27



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |                          |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------ | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13. | Commitments (continued):
|    |                          |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                          | 3. | Communications and
    Information Technology Ontario:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                          |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                          |    | On December 10, 2002,
    Micromem entered into a two year Collaborative Research Agreement with
    Communications and Information Technology Ontario ("CITO"). Under a
    Collaborative Research Agreement among Micromem, CITO, U of T and Dr. Harry
    Ruda. For the first year, CITO provided funding of $106,715 (equivalent to
    Cdn.$154,000) and Micromem contributed $31,875 (equivalent to Cdn.$46,000),
    of which $13,281 has been included in deposits and other receivables as at
    year end. For the second year, CITO would commit to provide funding of a
    further $107,715 (equivalent to Cdn.$154,000) and Micromem would commit to
    provide funding of a further $31,875 (equivalent to Cdn.$46,000). Micromem
    has further provided $67,632 (equivalent to Cdn.$97,600) of in-kind
    contributions to the research collaboration.
|    |                          |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                          | 4. | Equipment Transfer Agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                          |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                          |    | On March 1, 2003, Micromen
    entered into an agreement with U of T whereby Micromem has contributed
    equipment and supplies with an estimated value of $200,000 (note 6). The
    equipment was previously used by Pageant Technologies (U.S.A.) Inc. at
    Pageant's former Kansas City, Missouri lab facility until its closure in
    August 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

28



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13. | Commitments (continued):
|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (b)                      | Technology development
    agreement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                          | On March 14, 2001, the
    Company's subsidiary, Pageant, entered into a three-year technology
    development agreement with EstanciaandLienau to continue the development of
    the Technology. Under the terms of the agreement, Pageant committed to pay
    Estancia $215,000 per year, payable on a monthly basis in arrears, and
    committed to incur expenditures in connection with the development expenses
    of up to a maximum of $500,000 per agreement year.                                                                         
|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                          | On April 23, 2002, the
    technology development agreement was amended to extend its term for an
    additional eight-month period and to reduce the amount payable to Estancia
    under the agreement to $107,000 per year, payable monthly in arrears for the
    period commencing June 1, 2002 through December 31, 2002 and for the
    extended period from March 9, 2004 through November 9, 2004. An amount of
    $143,333 (2002 - $35,833) relating to dues under the agreement is included
    in accounts payable and accrued liabilities.
|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (c)                      | Operating leases:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                          | The Company has operating
    lease commitments which expire in 2006 in respect of its head office. The
    future minimum annual lease payments are approximately as follows:                                                                                                                                                                                                                                                                                                                                                                          



| |  |      |   |        
| |  | ---- | - | -------
| |  | 2004 | $ | 93,500 
| |  | 2005 |   | 93,500 
| |  | 2006 |   | 15,500 
| |  |      | $ | 202,500

29



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|14. |  | Contingencies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  | Pageant Technologies (U.S.A.) Inc. has been named as a
    defendant in legal actions relating to tenant improvements on a leased
    property, including an action claiming dues of approximately $887,000
    alleging breach of contract under a construction contract entered into by
    Clear Blue Laboratories, Inc. ("Clear Blue"). The landlord of the leased
    property is also claiming damages from Pageant Technologies (U.S.A.) Inc..
    Pageant Technologies (U.S.A.) Inc. assigned its rights under the lease to
    Clear Blue, however, Pageant Technologies (U.S.A.) Inc. is allegedly
    obligated to pay the lease payments should the assignee default under the
    contract. The landlord is claiming damages of approximately $887,000.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  | The outcome of these actions is uncertain and Pageant
    Technologies (U.S.A.) Inc. is vigorously defending all actions in which it
    is named as a defendant. It is, therefore, not possible to provide an
    estimate of the financial effects, if any, of the actions. No losses related
    to these actions have been accrued in these consolidated financial
    statements. It is possible that the outcome of these claims could represent
    a material amount.                                                                                                                                                                                                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  | In the normal course of business, the Company and its
    subsidiaries are involved in various legal actions. In management's opinion,
    the ultimate disposition of these actions, individually or in aggregate,
    will not have a material adverse effect on the financial condition of the
    Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|15. |  | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Fair values                                                                                                                                         
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | The fair values for all
    financial assets and liabilities are considered to approximate their
    carrying values due to their short-term nature.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Foreign items                                                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | The consolidated financial
    statements include balances/transactions that are denominated in foreign
    currencies as follows:                  



| |  |  | Canadian Dollar
| |  |  | ---------------
| |  |  | Assets         
| |  |  | Liabilities    
| |  |  | Revenue        
| |  |  | Expenses       

30



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16. |     | Reconciliation between
    Canadian GAAP and U.S. GAAP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |     | The Company's consolidated
    financial statements have been prepared in accordance with Canadian GAAP
    which, in the case of the Company, conform in all material respects with
    U.S. GAAP except as follows:                                                                                                                                                                                                                                                                                                                                                              
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (a) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |     | The Company has chosen to
    account for employee stock-based compensation using the intrinsic value
    method prescribed in Accounting Principles Board Opinion No. 25, Accounting
    for Stock Issued to Employees. Under this method, compensation expense is
    recorded if the market value exceeds the exercise price at the date of
    grant. The compensation expense, if any, is recognized at the date of option
    grants or when the option shares are earned, when future performance is
    required, in the consolidated statements of operations and deficit.
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |     | For the purposes of reporting
    under U.S. GAAP, companies are required under Statement of Financial
    Accounting Standards No. 123 to calculate and disclose, on a pro formabasis, the compensation expense related to the fair value of the stock
    options granted during the year in the notes to the consolidated financial
    statements. Accordingly, for the purpose of reporting under U.S. GAAP, the
    Company's net loss applicable to common shares and loss per common share
    would be increased to the pro formaamounts as disclosed in note
    8(b).   
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (b) | Consolidated statement of
    comprehensive income (loss):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |     | Comprehensive income (loss)
    includes all changes in equity during the periods presented except
    shareholder transactions. For the purpose of reporting under U.S. GAAP, the
    components of comprehensive income and total comprehensive income are
    reported in the consolidated statements of changes in shareholders' equity,
    below net loss in the consolidated statements of operations and deficit and
    in a separate consolidated statement of comprehensive income. For the
    periods presented, accumulated other comprehensive loss equals net loss.

31



|MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STATE COMPANY)                        |  |  |  |  |  | 
|------------------------------------------------------------------------------ |  |  |  |  |  | 
|                                                                               |  |  |  |  |  | 
|Notes to Consolidated Financial Statements(Expressed in United States dollars)
|October 31, 2003                                                              

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|17. | Subsequent event:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On November 12, 2003,
    Micromem entered into a second research collaboration agreement with MMO and
    the U of T for research and development associated with magnetic memory
    devices. Under the second agreement, in the first year and upon renewal in
    the second year, MMO will grant $58,900 (equivalent to Cdn.$85,000) in cash
    funding and Micromem will contribute $56,130 (equivalent to Cdn.$81,000) in
    cash funding and additionally will make $30,770 (equivalent to Cdn.$44,400)
    of in-kind contributions, all towards the research collaboration, each year.                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In addition, Micromem will
    have sublicensing rights for the use of any new technology developed under
    this research with an annual royalty payable in perpetuity to MMO based on a
    percentage of revenues from the sale of products incorporating the
    Technology developed.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In December 2003, the Company
    completed Unit private placements to two Canadian private investors pursuant
    to prospectus and registration exemptions set forth in applicable securities
    laws. Under the private placements, the Company received $33,000 as
    subscription proceeds for the sale and issue of 300,000 Units. Each Unit
    consists of one Common Share and one Series A Warrant. Each Series A Warrant
    entitles the holder to purchase one Common Share and one Series B Warrant
    for $0.11 until expiry 12 months from the date of issue. Each Series B
    Warrant entitles the holder to purchase one additional Common Share for
    $0.11 until expiry 12 months from the date of issue.    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In December 2003, the Company
    also completed a Unit private placement to one Canadian private investor
    pursuant to prospectus and registration exemptions set forth in applicable
    securities laws. Under the private placement, the Company received $40,000
    as subscription proceeds for the sale and issue of 500,000 Units. Each Unit
    consists of one Common Share and one Series A Warrant. Each Series A Warrant
    entitles the holder to purchase one Common Share and one Series B Warrant
    for $0.08 until expiry 12 months from the date of issue. Each Series B
    Warrant entitles the holder to purchase one additional Common Share for
    $0.08 until expiry 12 months from the date of issue.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Subsequent to the year-end,
    the Company issued 2,850,000 common shares for gross proceeds of $270,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|18. | Comparative consolidated
    financial statements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The comparative consolidated
    financial statements have been reclassified from statements previously
    presented to conform to the presentation of the 2003 financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

32



ITEM 18.         EXHIBITS

The following exhibits are filed as part of this registration statement and
attached hereto:

|Exhibit No. 1.1                                                                                               | Articles of Incorporation of Micromem Technologies Inc. and amendments thereto in effect as of
            January 11, 2000, (Incorporated herein by reference to the Company's
            Form 20-F/A filed with the Commission on January 11, 2000).                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 1.2                                                                                               | Articles of Amendment of Micromem
            Technologies Inc. dated as of October 17, 2001 amending the Articles
            of Micromem Technologies Inc. to increase the number of directors to
            a minimum of three and a maximum of ten and to authorize the
            directors to set the number of directors within the minimum and
            maximum (Incorporated herein by reference to the Company's Form 20-F
            filed with the Commission on March 20, 2003).
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 1.3                                                                                               | Articles of Amendment of Micromem
            Technologies Inc. dated as of June 24, 2002 amending the Articles of
            Micromem Technologies Inc. to increase the number of directors to a
            minimum of 3 and a maximum of 12 and to authorize the directors to
            set the number of directors within the minimum and maximum
            (Incorporated herein by reference to the Company's Form 20-F filed
            with the Commission on March 20, 2003);        
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 1.4                                                                                               | By-Laws of Micromem Technologies
            Inc. in effect as of January 11, 2002, (Incorporated herein by
            reference to the Company's Form 20-F/A filed with the Commission on
            January 11, 2000);                                                                                                                                                                                                                                                                         
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 1.5                                                                                               | Amendment to the By-Laws of Micromem Technologies Inc. approved by shareholders on June 29,
            2000, deleting the requirement from the By-Laws that the President
            shall be appointed from amongst the directors (Incorporated herein
            by reference to the Company's Form 20-F filed with the Commission on
            March 20, 2003);                                                                                                                            
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 4.1                                                                                               | Stock Option Plan of Micromem
            Technologies Inc. dated February 14, 2001 (Incorporated herein by
            reference to the Company's Form S-8 filed with the Commission on
            January 27, 2004).                                                                                                                                                                                                                                                                            
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 4.2                                                                                               | Equipment Transfer Agreement dated
            March 1, 2003, between Micromem and the Governing Council of the
            University of Toronto, referred to in this annual report at Item
            10.C - material contracts.                                                                                                                                                                                                                                                                
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 4.3*                                                                                              | Collaborative Research Agreement
            dated December 10, 2002, among Micromem, Communications and
            Information Technology Ontario ("CITO"), the University of Toronto
            and Dr. Harry Ruda, Professor of Physics at the University of
            Toronto, referred to in this annual report at Item 10.C - material
            contracts.                                                                                                                            
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 4.4*                                                                                              | A second 2-year research
            collaboration agreement ("Second U of T Research Agreement") dated
            November 12, 2003, among Materials and Manufacturing Ontario ("MMO")
            and the University of Toronto referred to in this annual report at
            Item 10.C - material contracts.                                                                                                                                                                                
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 12.1                                                                                              | Officers Certification pursuant to
            Section 302 of the Sarbanes Oxley Act, 2002.                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No.
    12.2                                                                                          | Officers Certification pursuant to
            Section 302 of the Sarbanes Oxley Act, 2002.                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No. 13.1                                                                                              | Officers Certification pursuant to
            Section 906 of the Sarbanes Oxley Act, 2002.                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit No.
    13.2                                                                                          | Officers Certification pursuant to
            Section 906 of the Sarbanes Oxley Act, 2002.                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Exhibit 14.1                                                                                                  | Consent of Auditor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                             
|*Portions of this exhibit have been omitted
                pursuant to a request for confidential treatment.

71



SIGNATURES

Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

| | MICROMEM TECHNOLOGIES INC.
| | --------------------------
| | By:                       
| |                           
| |                           
| | By:                       
| |                           
| |                           

Dated: March 19, 2004

72