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

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

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 report

46,700,937 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

|         | Page                                                          
|-------- | --------------------------------------------------------------
|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 | 33
|-------- | --------------------------------------------------- | --
|Item 14. | Rights of Security Holders and Use of Proceeds      | 33
|Item 15. | Controls and Procedures                             | 33



Part III

|Item 17.   | Financial Statements | 34
|---------- | -------------------- | --
|Item 18.   | Financial Statements | 65
|Item 19.   | Exhibits             | 65
|           |                      |   
|Signatures | 66                  



PART I

INTRODUCTION

Abbreviations

Reference throughout this document to Micromem Technologies Inc. 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, 2002. 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
"Management's Discussion and Analysis of Financial Condition and Results of
Operations, included elsewhere in this Form.

Selected balance sheet information



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

Selected statement of operations and deficit information

|                                                        | Years ended October 31,
|------------------------------------------------------- | -----------------------
|                                                        | 2002                   
|Interest & other income                                 | $    (165,892)         
|Research and development                                | 1,601,624              
|General and
    administrative expenses                 | 1,332,820              
|Write-down of royalty
    rights                        | 10,000,000             
|Loss before income taxes                                | 12,768,552             
|Provision for income taxes (recovery)                   | (35,537)               
|Net loss                                                | 12,733,015             
|Loss per share-basic & diluted                          | 0.27                   
|Weighted average number
    of basic and diluted shares | 46,396,799             

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 17 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.



2002
      2001
      2000
      1999
      1998High for period
      .6179
      .6293
      .6527
      .6421
      .6311Low for period
      .6654
      .6711
      .6984
      .6916
      .7122End of period
      .6339
      .6294
      .6568
      .6797
      .6481Average for period
      .6368
      .6493
      .6779
      .6678
      .6833










February 2003
      January 2003
      December 2002
      November 2002
      October 2002
      September 2002High
      1.4950
      1.5340
      1.5801
      1.5713
      1.5696
      1.5879Low
      1.4832
      1.5203
      1.5768
      1.5632
      1.5555
      1.5753






On March 3, 2003, the noon buying rate for one Canadian dollar as quoted by the
Bank of Canada was US $0.6736 (US $1.00 = CDN $1.4846).

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 state. In addition
the Company is still in the development state 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.



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












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.



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 Micromem without the prior consent or vote of
Micromem'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 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 slowdown
in the global economy as companies delayed their purchase decisions, reduced
their technology spending budgets, increased their purchase authorization
approval requirements, and reduced their capital expenditures by maximizing the
current capacities of their data storage equipment. The Company does not
currently anticipate any significant improvement in technology spending during
2003. During 2002, 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 will not have
additional adverse effects on the Company's financial condition, results of
operations, or our ability to generate revenue growth. Furthermore, the Company
cannot provide any assurance that our cost-saving measures will be successful or
sufficient to allow the Company to continue to generate improved operating
results in future periods.

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 aggressive competition

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.

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.

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.

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.

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 VEMRAMTM1 (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 "Joint
Ownership 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 VEMRAMTMtechnology. 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.

___________________________1VEMRAMTM 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.



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, rather than being increased to reflect a
significantly greater valuation.



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. 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.



Micromem has been 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 2");
and (ii) a memory design with the magnetic bit aligned vertically to the
substrate ("VEMRAMTM "). During the 2002 fiscal year, Micromem's Chief Operating
Officer oversaw an R&D team focused on the further development of the thin film
horizontal element magnetic devices and applications of this technology. The
inventor under the patent for the VEMRAMTM technology has been contracted to
assist Pageant USA in the development of the vertical element magnetic
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, used under license by
Micromem and other corporations affiliated with Micromem.



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 Devices include 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.



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).



In February 2002, Cypress Semiconductor Corp. formed a subsidiary to develop
magnetic RAM in association with NVE and has allocated $22 million in research
and development to bring a product to market.



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.



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 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.



Infrastructure Agreements with University of Toronto



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 $231,140
(CDN$360,000) in cash to fund the direct costs of MMF. The sum is payable to
University of Toronto as follows:

i.            $120,000 on
execution of agreement, which was paid on November 28, 2002;
            ii.          
$120,000 at end of the two months following the effective date; and
            iii.         
$120,000 at end of the four months following the effective date.

University of Toronto and MMO



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 (CDN) $272,000 of funding and the combined (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

FabTech Inc.



On
May 1, 2001, Pageant Technologies (USA) Inc., a wholly owned subsidiary of
Micromem, entered into a support services agreement ("Fabtech Agreement") with
Fabtech Inc. located in Lee's Summit, Missouri. Under the agreement, as amended
from time to time, during the 2002 fiscal year, FabTech provided access to its
equipment and facilities and assigned engineering and other technical staff to
work directly with Micromem's research and development team at FabTech's
facilities. The objective of the relationship was to facilitate the fabrication
of samples using Micromem's HEMRAMTM memory design. Pageant USA terminated the
Fabtech Agreement effective as of August 31, 2002.

Honeywell FM&T

On December 9, 1999, Pageant USA, a subsidiary of Micromem, entered into an
Agreement (the "DOE Agreement") with AlliedSignal Federal Manufacturing &
Technologies ("AlliedSignal") operating under contract with the US Department of
Energy ("DOE") to conduct an engineering evaluation of the Company's technology.
AlliedSignal was subsequently acquired by Honeywell, Inc., which assumed
responsibility for both performance of the DOE Agreement and management of the
DOE Facility through Honeywell Federal Manufacturing & Technologies ("Honeywell
FM&T"). The DOE Agreement was subsequently amended on July 10, 2000 to expand
the scope of work to be completed by Honeywell FM&T. Pursuant to the amended DOE
Agreement, Honeywell FM&T agreed that, in addition to providing an evaluation of
the technology, it would provide engineering and manufacturing services to
Pageant. The DOE Agreement terminated in August 2002.



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:

|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, will 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, will 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 has 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. In the event that one or both of the Trigger Events do not occur prior
to three years following the Closing Date, Pageant International shall be deemed
to have caused a proportionate interest in the Estancia Interests to be conveyed
to Estancia where the proportionate interest is calculated as the ratio of the
portion of the Purchase Price remaining unpaid at such date over $50.0 million.
In the event that Pageant International or Micromem default in the payment of
any portion or all of the Purchase Price when due, Pageant International shall
be deemed to have caused a proportionate interest in the Estancia Interests to
be conveyed to Estancia where the proportionate interest is calculated as the
ratio of the portion of the Purchase Price remaining due and unpaid at such date
over $50.0 million.



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.



The acquisition of the Estancia Interests under the Purchase Agreement could
result in additional payments of cash by Pageant International and additional
issuances of Common Shares by Micromem. The amount of cash, if any, to be paid
to Estancia and the number of Common Shares, if any, to be issued will depend
upon several factors including whether or not the Trigger Events occur prior to
three years following the Closing Date and the market price of Micromem's Common
Shares on the date of each Trigger Event. The table below sets forth the amount
of cash and the number of Common Shares of Micromem that will be required to be
paid and issued if both Trigger Events occur, prior to three years following the
Closing Date, based on assumed market prices of Micromem's Common Shares of
$4.00, $6.00 and $8.00 on both dates on which the Trigger Events occur. The data
presented in the table is also based upon the assumption that 25% of the portion
of the purchase price due upon each Trigger Event will be paid in cash and the
balance of 75% will be paid through the issuance of Common Shares. The actual
amounts of cash to be paid and the number of Common Shares to be issued may vary
significantly from the amounts and numbers set forth in the table below if one
or more of the Trigger Events does not occur prior to three years following the
Closing Date, if the market prices of Micromem's Common Shares on the dates of
the Trigger Events are different than those assumed in the table below or if the
percentage of the Purchase Price payable upon a Trigger Event which is paid in
the form of cash or shares varies from 25% and 75% respectively.





|Assumed
    Market
     Price | Date of Certificationor Licensing/Sale of VEMRAMä | Date of Licensing/SaleOf any Technology | Total    
|----------------------------- | ------------------------------------------------- | --------------------------------------- | ---------
|                              | #Shares                                           | Cash $                                  | # Shares 
|$4.00                         | 3,750,000                                         | 5,000,000                               | 3,750,000
|$6.00                         | 2,500,000                                         | 5,000,000                               | 2,500,000
|$8.00                         | 1,875,000                                         | 5,000,000                               | 1,875,000



____________________

3Percentage of Common Shares outstanding on a
fully diluted basis, based on 46,700,937 Common Shares outstanding on a fully
diluted basis as of October 31, 2002.

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.



The Company has applied for registration in respect of the trademark for HEMRAMTM
, VEMRAMTM and MICROMEMTM .



Inter-corporate Agreements



During the 2002 fiscal year, Pageant International, a wholly-owned subsidiary of
Micromem, was engaged in the development of the VEMRAMTM technology. Pursuant to
an agreement between Pageant International and Pageant USA, with effect from
January 11, 1999, Pageant International engaged Pageant USA to develop the
VEMRAMTM technology using some of the facilities, equipment and personnel of
Pageant USA as well as indirectly through outside laboratories and to enter into
contracts with third parties for the development of VEMRAMTM technology. Under
the said agreement, Pageant International was required to reimburse Pageant USA
in respect of all costs directly and indirectly incurred on the project plus a
six per cent mark-up.



Memtech International, another wholly owned subsidiary of Micromem, has been
established to develop non-volatile memory technology other than the VEMRAMTM
technology, known as HEMRAMTM . Pursuant to an agreement between Micromem and
Pageant USA, with effect from July 1, 2000, which agreement was assigned as of
August 30, 2000 by Micromem to Memtech International, Memtech International
engaged Pageant USA to develop Memtech International's technology using some of
the facilities, equipment and personnel of Pageant USA and to enter into
contracts with third parties for the development of Memtech International's
technology. Under that agreement, Memtech International was required to
reimburse Pageant USA in respect of all costs directly incurred on the project
plus a six per cent mark-up.

With the closure of Pageant USA's research and development operations as
described above, no further inter-corporate payments or reimbursements will be
required under the aforesaid inter-corporate agreements.

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. After the 2002 year end, Micromem Italy was
dissolved pursuant to the laws of Italy on December 27, 2002.



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.

D.        
 Facilities





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, 2002, 2001 2000, 1999 and 1998 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 17 to the Company's 2002
consolidated financial statements.



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,
|------------------------------ | ------------ | -----------------------
|                               |              | 2002                   
|Interest & other income        | $  (165,892) |                        
|Loss for the period            | 12,733,015   |                        
|Loss per share-basic & diluted | 0.27         |                        



Selected balance sheet information

(all amounts in United States dollars)

|                                  | Years ended October 31,
|--------------------------------- | -----------------------
|                                  |                        
|Working capital (deficiency)      | $  985,551             
|Capital Assets                    | 98,654                 
|Total Assets                      | 1,583,422              
|Shareholder's equity (deficiency) | 1,391,903              

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 37.9% 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
54.6% (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 CDN$272,000 (approximately $175,000) 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$136,000) 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.



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,
general administration expenses decreased by 13.9% from $403,178 in 2001 to
$347,256 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.



Fiscal 2001 Compared to Fiscal 2000



The Company had no operating revenue, its only activities being the development
of its memory technologies. Its only income during 2001 was $196,520 being
principally the interest it earned on excess funds held in short-term deposits.



Costs and expenses decreased 35.9% to $4,725,931 during 2001 from $7,374,587
during 2000.



The Company continued to focus its efforts in progressing the research and
development of its memory technologies by incurring $2,212,679 during 2001
(2000: $1,205,777) that is 84% higher than what was expended during 2000. Since
inception, the Company had expended a total of $3,923,744 as direct costs
relating to the research and development of its memory technologies by the end
of 2001. The Company had entered into a services agreement with Fabtech Inc., a
semi-conductor company, to support the further development of the Company's
technologies. In the last 4 months of 2001, the Company employed 5 additional
research engineers with varied skills and experience, to expand the development
efforts.



The share compensation costs of $754,125 (2000: $3,247,721), included in Wages
and Salaries, relate to options exercised by the Chairman that were granted
under his 2000 Employment and Option Agreement ("2000 Employment Agreement") and
the value of shares that are accrued under his new employment agreement ("2001
Agreement") that commenced on January 1, 2001 and that was approved at the
annual meeting of shareholders of the Company on March 14, 2001. The Chairman
exercised 714,686 options that were granted to him under the 2000 Employment
Agreement on January 17, 2001. The compensation cost under the 2000 Employment
Agreement for 2001 includes a credit of $677,420. An accrual of $1,431,545 has
been made for the value of shares that are accrued but not issued under the 2001
Agreement at October 31, 2001. The 2000 share compensation costs of $3,247,721
relate to compensation agreements the Company had with the Chairman and Mast
Holding (Bermuda) Ltd., a company controlled by the former President and Chief
Executive Officer of the Company.



Professional
fees decreased 57% to $473,653 in 2001 from $1,086,839 in 2000 reflecting
primarily legal and accounting fees incurred in 2000 related to the preparation
and filing of the Company's registration statement under US securities laws. The
reduction in professional fees is also attributable to the addition of a General
Counsel and a Chief Financial Officer to the management team.



Wages and salaries (excluding the share compensation costs) increased 41% to
$618,250 in 2001 from $440,578 in 2000 principally due to the hiring of
additional employees to meet the requirements of an expanding operation.



Amortization expenses increased in line with the increase in capital assets
acquired to help the progress of the research and development efforts, excluding
the one-time impairment loss of $140,000 recorded in 2000.



Micromem had a net loss of $4,559,625 for 2001 or $0.10 per share, a decrease of
38% over the net loss of $7,259,356 for 2000 or $0.19 per share.



Unaudited quarterly financial information

(all amounts in United States dollars)

|Quarter ended,      | October 31, | July 31, | April 31, | January 31, | October 31, | July 31,  | April 31, | January 31,
|------------------- | ----------- | -------- | --------- | ----------- | ----------- | --------- | --------- | -----------
|                    |             | 2002     |           |             | 2001        |          
|Total Revenue       | 57,743      | 27,931   | 66,547    | 13,671      | 49,147      | 39,643    | 57,020    | 50,710     
|Loss for the period | 10,423,341  | 628,603  | 797,439   | 883,632     | 501,722     | 1,343,816 | 1,351,559 | 1,362,528  
|Loss per share:     | 0.22        | 0.01     | 0.02      | 0.02        | 0.01        | 0.03      | 0.03      | 0.03       
|Basic and diluted   |             |          |           |             |             |           |           |            

Notes:

1. The decrease in the loss for the quarter ended October
  31, 2001 is principally due to the reversal of $677,420 in this quarter,
  relating to the 2000 compensation agreement with the Chairman, due to the
  decline in stock price between October 31, 2000 and the vesting date of
  January 2, 2001.

2. 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.



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.



Capital Resources



Micromem had no material commitments for capital expenditures as of October 31,
2002 or 2001. 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. If no further
payments toward the purchase price are 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.



Subsequent to the year end, 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, which, among other things,
will be used for research and development related to collaborations between the
University and Micromem. Micromem has committed to contribute $231,140 ($360,000
in Canadian funds) in 2003 pursuant to the agreement.



Change in accounting policy



Effective
November 1, 2001, the Company changed its accounting policy for patents and
trademarks to be recorded at cost less accumulated amortization which is
provided on a straight-line basis over ten years. In prior years, the Company
accounted for its patents and trademarks at cost and amortization was to
commence on an appropriate basis to charge off the cost over the future benefit,
not exceeding the legal life, when sales commence. There was no material impact
on prior years consolidated financial statements and accordingly, the
comparative consolidated financial statements have not been restated.



For the year ended October 31, 2002, the change in accounting policy resulted in
an increase in amortization expense and net loss by $31,338 and there was no
material impact on net loss per share.



Critical accounting policies



The preparation of the Company's consolidated financial statements is based on
the selection and application of critical accounting policies, some of which
require management to make significant 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 periods. Actual
results could differ from these estimates. The Company believes that the
following are some of the critical judgment areas in the application of its
accounting policies that currently affect the Company's financial condition and
results of operations.



The Company had royalty rights capitalized as an intangible asset on its balance
sheet. The determination of the recoverability of this amount and whether or not
this asset is impaired involves significant judgments. In assessing the
recoverability of this intangible assets, the Company considered whether the
recoverability of the asset was probable or imminent to assess the future
benefit, also considered the degree of certainty to justify carrying the
intangible asset forward. Notwithstanding the fact that management has not
abandoned the continued development of the technology and is working to pursue
the development through recent arrangements with the University of Toronto, and
management anticipated it will achieve commercialization, for accounting
purposes an impairment in the asset exists based on the significant uncertainty
that royalties would be payable to Estancia in the foreseeable future.
Accordingly, management has written down the balance of the royalty rights.



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   | 67  | Chairman of the Board of
    Directors                               
|Joseph Fuda      | 42  | President, Chief Executive
    Officer and Director                  
|Manoj Pundit     | 38  | Executive Vice-President,
    General Counsel, Secretary and Director
|Andrew Brandt    | 64  | Director                                                             
|Stephen Fleming  | 53  | Director                                                             
|Charles Harnick  | 52  | Director                                                             
|George Kennedy   | 62  | Director                                                             
|David Sharpless  | 52  | Director                                                             
|Steven Van Fleet | 48  | Director                                                             
|Antonio Lopes    | 40  | Chief Financial Officer                                              



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 1995, 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 and has served as Senior Advisor for the Jeffery Group Ltd.,
a public affairs management firm since June 2000; 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 until1996, 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.

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 CFO of Micromem; since 1993, he has been CFO
of Federal White Cement; since 1997, he has been CFO of Ontex Resources Limited;
and since 1997, he has been CFO of Pifher Resources Inc. From 1994 to 1998, he
was CFO of Fortune Mineral 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 CompensationAwards
      PayoutsName and 
      Principal Position
      Year
      Salary 
      (US$)
      Bonus
       (US$)
      Other Annual Compensation (US$)
      Securities
       Under Options Granted (#)
      Restricted Shares or Restricted Share Units ($)
      Long Term Incentive Plan Payouts ($)
      All other 
      Compensation ($)Joseph Fuda
      Chief Executive Officer 1
      2002
      100,000
      -
      -
      -
      -
      -
      -Salvatore Fuda, Chairman
      Former Chief Executive
      Officer and President 1
      2002
      2001
      2000
      -          
      745,12522,463,9622
      -
      -
      -
      -
      -
      -
      -            
      
       1,714,6833250,0004
      -
      -
      -
      -
      -
      -
      -
      -
      -Manoj Pundit, Executive
      Vice President and General Counsel5
      2002
      2001
      2000
      162,066
      174,958
      49,583
      -           
      
      -            
      20,000
      -
      -
      -
      -            
      
      500,0006500,0007
      -
      -
      -
      -
      -
      -
      -
      -
      -Dale Hensley, Chief Operating Officer8
      2002
      2001
      2000
      216,577
      308,685
      -          
      -
      -
      -
      -
      -
      -
      -
      -            
      
      500,0009-            
      
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -Raj Viswanathan, Chief Financial Officer10
      2002
      2001
      2000
      111,583
      126,562
      58,700
      -
      -           
      
      6,600
      -
      -
      -
      -
      -            
      
      400,00011100,00012
      -
      -
      -
      -
      -
      -
      -
      -
      -Robert Patterson, Former
      President13
      2002
      2001
      2000
      -         
      
      -          
      783,75914
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -




























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)
      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 years ended October 31, 1999, October 31, 2000, and
      October 31, 2001.(3)
      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.(4)
      125,000 of these options vested on June 30,
      2000 and the remaining options vested on June 30, 2001. All of these
      options were cancelled after the 2002 fiscal year.(5)
      Mr. Pundit is employed as Executive
      Vice-President and General Counsel of the Corporation. For the fiscal year
      ended October 31, 2000, Mr. Pundit was an officer of the Corporation for
      approximately 3 1/2 months.(6)
      Vesting on take-over.(7)
      Pursuant to his employment agreement, Mr.
      Pundit was granted options for the purchase of up to 500,000 common
      shares, 200,000 of which vested on July 17, 2000, 200,000 of which vested
      on January 17, 2001 and the remaining 100,000 of which vested on July 17,
      2001. All of these options were cancelled after the 2002 fiscal year.(8)
      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.(9)
      250,000 of these options vested on March 1, 2001 and
      the remaining 250,000 options vested on March 1, 2002.(10)
      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.(11)
      150,000 of these options vested on June 30, 2001;
      250,000 would vest on take-over or change of control of the Company.(12)
      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.(13)
      Mr. Patterson was appointed President on
      March 10, 1999 and ceased to serve as President on June 29, 2000. For the
      fiscal years ended October 31, 1999 and October 31, 2000, Mr. Patterson
      was an officer of the Corporation for approximately 8 months and 4 months,
      respectively. The aggregate direct compensation paid or accrued on behalf of all other
  directors as a group during 2002 was $8,000. 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. No options were granted during 2002. As at the
  Company's fiscal year ended, October 31, 2002, 5,380,000 options were
  outstanding, of which 2,995,000 had vested and were exercisable, with exercise
  prices ranging between $2.20 and $7.06 per share. Subsequent to the year end
  all outstanding options were cancelled.  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 two 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 U of T
  Research Collaboration Agreement. At the beginning of the 2002 fiscal year, the Company had a total of 17
  employees in the following categories: (i) five management personnel
  (including the Chairman, President and C.E.O., a Chief Operating Officer, an
  Executive Vice-President and General Counsel, a Chief Financial Officer and a
  Manager-Strategic Alliances); (ii) five administrative personnel (including a
  shareholder communications person and support staff); and (iii) seven research
  engineers.   Micromem considers its relations with its employees to be good.  E.         Share
  Ownership Name
      Shares Owned
      Options Held
      Options Exercise Price
      Expiration DateJoseph Fuda
      -
      -
      -
      N/ASalvatore Fuda
      1,429,275
      -
      N/A
      N/AManoj Pundit
      2,478
      -
      -
      N/ADale Hensley
      -
      -
      N/A
      N/ARaj Viswanathan
      -
      -
      N/A
      N/ARobert Patterson
      -
      -
      N/A
      N/AITEM 7.           
  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  A.        Major Shareholders   Not
  Applicable. B.        Related Party Transactions During fiscal year ended October 31, 2002, the Company paid $23,846.93 to
  legal firms in which directors of the Company or subsidiaries are partners.   C.        Interests of Experts and
  Counsel Not Applicable.  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, 2002.

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 1999. 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.
  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
      
      LowLast six months:February 2003
      
      0.13
      
      0.09January 2003
      
      0.14
      
      0.09December 2002
      
      0.15
      
      0.09November 2002
      
      0.36
      
      0.13October 2002
      
      0.14
      
      0.05September 2002
      
      0.17
      
      0.05Last eight quarters:Q4 2002
      
      0.17
      
      0.05Q3 2002
      
      0.60
      
      0.11Q2 2002
      
      1.21
      
      0.43Q1 2002
      
      2.50
      
      0.83Q4 2001
      
      3.20
      
      1.46Q3 2001
      
      3.58
      
      1.55Q2 2001
      
      4.50
      
      2.03Q1 2001
      
      5.28
      
      1.69Last four years:2002
      
      2.50
      
      
      0.052001
      
      5.28
      
      
      1.462000
      
      25.12
      
      
      2.501999
      
      8.44
      
      
      1.56  On February 28, 2003, the last reported sale price for the common shares on
  the NASD OTC Bulletin Board was $0.093.


  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 electd
  at the last annual meeting of shareholders.
  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 46,700,937 shares were issued and
  outstanding as of October 31, 2002, and 2,000,000 special, redeemable, voting
  preference shares ("Special Shares"), none of which were outstanding, as of
  October 31, 2002.
  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.

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.
      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
      (Cdn.) $272,000 of funding and the combined (Cdn.) $544,000 will be used
      to cover the operating expenses of the research collaboration over a term
      of two years;2.
      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;3.
      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;4.
      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 $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.


  
  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.

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.

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.


  
  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.comthat 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

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
  (a)            Disclosure controls and procedures.The Company's Chief Executive Officer
  and Chief Financial Officer have evaluated the effectiveness of its disclosure
  controls and procedures within the 90 days prior to the date of filing of this
  Annual Report on Form 20-F. Based upon such review, the Chief Executive
  Officer and Chief Financial Officer have concluded that the Company has in
  place appropriate controls and procedures designed to ensure that information
  required to be disclosed by the Company in the reports it files or submits
  under the Securities Exchange Act of 1934, as amended, and the rules
  thereunder, is recorded, processed, summarized and reported within the time
  periods specified in the SEC's rules and forms.
  (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 17.           
  FINANCIAL STATEMENTS
  The financial statements required by Item 17 appear commencing on the next
  page: Consolidated Financial Statements 
            (Expressed in United States dollars)MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)October 31, 2002  AUDITORS' REPORT  To the Shareholders of
  Micromem Technologies Inc. We have audited the consolidated balance sheet of Micromem
  Technologies Inc. (a Development Stage Company) as at October 31, 2002 and the
  consolidated statements of operations and deficit, cash flows and
  shareholders' equity for the year ended October 31, 2002 and for the
  cumulative period from September 3, 1997 to October 31, 2002. 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 audit.






  
  We conducted our audit 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, 2002 and the results of its operations and its cash
  flows for the year then ended and for the cumulative period from September
  3,1997 to October 31, 2002 in accordance with Canadian generally accepted
  accounting principles.






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






  
  The 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 December 20, 1999 and
  November 16, 2001. Toronto, Canada,
      January 27, 2003.
      /s/ Ernst & Young LLPChartered 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 January 27, 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,
      January 27, 2003.
      /s/ Ernst & Young LLPChartered Accountants


MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)

> Consolidated Balance Sheet
>   (Expressed in United States dollars)[see note 2 –going concern]
>   
>   As at October 31



2002
        
        
        2001AssetsCurrent assets:Cash and cash equivalents
        $
        983,939
        
        $
        3,556,517Deposits and other receivables (note 5)
        
        193,131
        
        
        228,1431,177,070
        
        
        3,784,660Capital assets (note 6)
        
        98,654
        
        
        336,839Patents and trademarks (note 7)
        
        307,698
        
        
        332,971Royalty rights (note 4 and 11)
        
        –
        
        
        10,000,000$
        1,583,422
        
        $
        14,454,470Liabilities and Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities (note 8)
        $
        191,519
        
        $
        329,552Shareholders' equity:Share capital (note 9):Authorized:2,000,000 special preference shares, redeemable, votingUnlimited common shares without par valueIssued and outstanding:46,700,937 common shares (2001 - 45,935,349)
        
        31,073,787
        
        
        29,642,242Contributed surplus (note 10)
        
        578,891
        
        
        2,010,436Deficit accumulated during the development stage
        
        (30,260,775)
        
        
        (17,527,760)1,391,903
        
        
        14,124,918Commitments and contingencies (notes 4, 14, 15 and 18)$
        1,583,422
        
        $
        14,454,470


See accompanying notes to consolidated financial statements.

On behalf of the Board:

|"Joseph Fuda" (signed)     |  | Director
|-------------------------- |  | --------
|                           |  |         
|"Charles Harnick" (signed) |  | Director





MICROMEM TECHNOLOGIES INC.
(A DEVELOPMENT STAGE COMPANY)

Consolidated Statements of Operations and Deficit

(Expressed in United States dollars)

Years ended October 31



|                                             |   |            |   |            |   |            |   | Period from  |  
|-------------------------------------------- | - | ---------- | - | ---------- | - | ---------- | - | ------------ | -
|                                             |   |            |   |            |   |            |   | September 3, |  
|                                             |   |            |   |            |   |            |   | 1997 to      |  
|                                             |   |            |   |            |   |            |   | October 31,  |  
|                                             |   | 2002       |   | 2001       |   | 2000       |   | 2002         |  
|                                             |   |            |   |            |   |            |   |              |  
|Revenue:                                     |   |            |   |            |   |            |   |              |  
|Interest and other
    income                | $ | 165,892    | $ | 185,590    | $ | 140,231    | $ | 495,587      |  
|Costs and expenses
    (income):             |   |            |   |            |   |            |   |              |  
|Administration                               |   | 347,256    |   | 403,178    |   | 610,173    |   | 1,822,982    |  
|Professional fees                            |   | 262,927    |   | 473,653    |   | 1,086,839  |   | 2,394,373    |  
|Wages and salaries
    (note 9(b))           |   | 562,532    |   | 1,372,375  |   | 3,688,299  |   | 9,225,174    |  
|Research and
    development                 |   | 1,601,624  |   | 2,212,679  |   | 1,205,777  |   | 5,525,368    |  
|Travel and
    entertainment                 |   | 73,385     |   | 205,757    |   | 255,385    |   | 972,458      |  
|Operating leases                             |   | –          |   | –          |   | 81,689     |   | 109,412      |  
|Loss on sale of
    investment               |   | –          |   | –          |   | –          |   | 54,606       |  
|Write-down of
    investment                 |   | –          |   | –          |   | –          |   | 61,020       |  
|Write-down of
    royalty rights (note 11)   |   | 10,000,000 |   | –          |   | –          |   | 10,000,000   |  
|Amortization of
    patents and trademarks   |   | 31,338     |   | –          |   | –          |   | 31,338       |  
|Amortization of
    capital assets           |   | 40,635     |   | 65,298     |   | 180,928    |   | 299,210      |  
|Fees to related
    parties (note 13(b))     |   | –          |   | –          |   | 186,000    |   | 186,000      |  
|Interest expense                             |   | –          |   | –          |   | 71,781     |   | 75,027       |  
|Unrealized foreign
    exchange loss (gain)  |   | 14,747     |   | (7,009     | ) | 7,716      |   | (9,353       | )
|                                             |   | 12,934,444 |   | 4,725,931  |   | 7,374,587  |   | 30,747,615   |  
|Loss before other income and income taxes    |   | 12,768,552 |   | 4,540,341  |   | 7,234,356  |   | 30,252,028   |  
|Other income                                 |   | –          |   | (10,930    | ) | –          |   | (10,930      | )
|Loss before income
    taxes                 |   | 12,768,552 |   | 4,529,411  |   | 7,234,356  |   | 30,241,098   |  
|Provision for
    (recovery of) income taxes |   |            |   |            |   |            |   |              |  
|Current (note 12)                            |   | (35,537)   |   | 30,214     |   | 25,000     |   | 19,677       |  
|Net loss for the
    period                  |   | 12,733,015 |   | 4,559,625  |   | 7,259,356  |   | 30,260,775   |  
|Deficit accumulated
    during the           |   |            |   |            |   |            |   |              |  
|development stage,
    beginning of period   |   | 17,527,760 |   | 12,968,135 |   | 5,708,779  |   | –            |  
|Deficit accumulated
    during the           |   |            |   |            |   |            |   |              |  
|development stage,
    end of period         | $ | 30,260,775 | $ | 17,527,760 | $ | 12,968,135 | $ | 30,260,775   |  
|                                             |   |            |   |            |   |            |   |              |  
|Loss per share -
    basic and diluted       | $ | 0.27       | $ | 0.10       | $ | 0.19       | $ | 0.65         |  
|                                             |   |            |   |            |   |            |   |              |  
|                                             |   |            |   |            |   |            |   |              |  
|Weighted average
    number of basic and     |   |            |   |            |   |            |   |              |  
|diluted shares
    outstanding               |   | 46,396,799 |   | 44,163,669 |   | 38,763,920 |   | 46,396,799   |  



See accompanying notes to consolidated financial statements.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)

Consolidated Statement of Cash Flows

(Expressed in United States dollars)

Years ended October 31

|                                                                                                     |   |             |   |             |   |            |   | Period from  |  
|---------------------------------------------------------------------------------------------------- | - | ----------- | - | ----------- | - | ---------- | - | ------------ | -
|                                                                                                     |   |             |   |             |   |            |   | September 3, |  
|                                                                                                     |   |             |   |             |   |            |   | 1997 to      |  
|                                                                                                     |   |             |   |             |   |            |   | October 31,  |  
|                                                                                                     |   | 2002        |   | 2001        |   | 2000       |   | 2002         |  
|                                                                                                     |   |             |   |             |   |            |   |              |  
|Cash flows from
    operating activities:                                                            |   |             |   |             |   |            |   |              |  
|Net loss for the
    period                                                                          | $ | (12,733,015 | ) | $(4,559,625 | ) | (7,259,356 | ) | $(30,260,775 | )
|Adjustments to reconcile loss for the period to 
        
    net cash used in operating activities: |   |             |   |             |   |            |   |              |  
|Loss (gain) on
    sale of investment                                                                |   | –           |   | (4,796      | ) | –          |   | 49,810       |  
|Write-down of
    investment                                                                         |   | –           |   | –           |   | –          |   | 61,020       |  
|Loss (gain) on
    sale of assets                                                                    |   | 13,292      |   | (6,134      | ) | –          |   | 7,158        |  
|Write-down of
    royalty rights                                                                     |   | 10,000,000  |   | –           |   | –          |   | 10,000,000   |  
|Amortization of
    patents                                                                          |   |             |   |             |   |            |   |              |  
|and trademarks                                                                                       |   | 31,338      |   | –           |   | –          |   | 31,338       |  
|Amortization of
    capital assets                                                                   |   | 170,710     |   | 200,519     |   | 230,927    |   | 484,430      |  
|Share
    compensation expense                                                                       |   | –           |   | 754,125     |   | 3,247,721  |   | 7,285,696    |  
|Non-cash wages
    and salaries                                                                      |   | –           |   | 34,000      |   | –          |   | 34,000       |  
|Change in
    non-cash working capital items,                                                        |   |             |   |             |   |            |   |              |  
|net of effects
    from reverse takeover:                                                            |   |             |   |             |   |            |   |              |  
|Decrease
    (increase) in deposits                                                                  |   |             |   |             |   |            |   |              |  
|and other
    receivables                                                                            |   | 35,012      |   | 64,142      |   | (276,565   | ) | (184,534     | )
|Increase
    (decrease) in accounts                                                                  |   |             |   |             |   |            |   |              |  
|payable and
    accrued liabilities                                                                  |   | (138,033    | ) | (139,199    | ) | 71,579     |   | 85,475       |  
|Net cash used in
    operating activities                                                            |   | (2,620,696  | ) | (3,656,968  | ) | (3,985,694 | ) | (12,406,382  | )
|                                                                                                     |   |             |   |             |   |            |   |              |  
|Cash flows from
    investing activities:                                                            |   |             |   |             |   |            |   |              |  
|Sale of
    available-for-sale investment                                                            |   | –           |   | 27,000      |   | –          |   | 260,641      |  
|Capital assets,
    net                                                                              |   | 54,183      |   | (150,099    | ) | (556,955   | ) | (590,242     | )
|Patents and
    trademarks                                                                           |   | (6,065      | ) | (127,652    | ) | (205,219   | ) | (339,036     | )
|Royalty rights                                                                                       |   | –           |   | (2,000,000  | ) | –          |   | (2,000,000   | )
|Advance to
    related party                                                                         |   | –           |   | –           |   | 362,046    |   | –            |  
|Net cash
    provided by (used in)                                                                   |   |             |   |             |   |            |   |              |  
|investing
    activities                                                                             |   | 48,118      |   | (2,250,751  | ) | (400,128   | ) | (2,668,637   | )
|                                                                                                     |   |             |   |             |   |            |   |              |  
|Cash flows from
    financing activities:                                                            |   |             |   |             |   |            |   |              |  
|Issue of common
    shares                                                                           |   | –           |   | 8,221,379   |   | 5,574,716  |   | 15,478,233   |  
|Net proceeds
    from shareholder loan                                                               |   | –           |   | –           |   | –          |   | 544,891      |  
|Loan proceeds
    from Avanticorp                                                                    |   | –           |   | –           |   | –          |   | 112,031      |  
|Rights issue
    costs                                                                               |   | –           |   | –           |   | (76,197    | ) | (76,197      | )
|Net cash
    provided by financing activities                                                        |   | –           |   | 8,221,379   |   | 5,498,519  |   | 16,058,958   |  
|                                                                                                     |   |             |   |             |   |            |   |              |  
|Increase
    (decrease) in cash                                                                      |   |             |   |             |   |            |   |              |  
|and cash
    equivalents                                                                             |   | (2,572,578  | ) | 2,313,660   |   | 1,112,697  |   | 983,939      |  
|Cash and cash
    equivalents,                                                                       |   |             |   |             |   |            |   |              |  
|beginning of period                                                                                  |   | 3,556,517   |   | 1,242,857   |   | 130,160    |   | –            |  
|Cash and cash equivalents,                                                                           |   |             |   |             |   |            |   |              |  
|end of period                                                                                        | $ | 983,939     | $ | 3,556,517   | $ | 1,242,857  | $ | 983,939      |  
|                                                                                                     |   |             |   |             |   |            |   |              |  
|Supplemental cash flow information:                                                                  |   |             |   |             |   |            |   |              |  
|Interest paid                                                                                        | $ | 1,960       | $ | –           | $ | 71,781     | $ | 76,987       |  
|Income taxes paid                                                                                    |   | 11,508      |   | 46,021      |   | 9,193      |   | 66,722       |  



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Consolidated Statement of Cash Flows (continued)

(Expressed in United States dollars)

Years ended October 31, 2002



Supplemental information on non-cash investing activities:

The following transactions are considered to be non-cash
  transactions and have been excluded from the consolidated statement 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
  (2000 - $4,206,447) were issued pursuant to compensation agreements.

See accompanying notes to consolidated financial statements.



Consolidated Statement of
  Shareholders' Equity
  (Expressed in United States
  dollars)

|                                                         |            |   |            |   |             |   |              |   | Deficit     |  
|-------------------------------------------------------- | ---------- | - | ---------- | - | ----------- | - | ------------ | - | ----------- | -
|                                                         |            |   |            |   |             |   |              |   | Accumulated |  
|                                                         |            |   |            |   |             |   | Deferred     |   | during      |  
|                                                         | Number of  |   | Share      |   | Contributed |   | share        |   | development |  
|                                                         | shares     |   | Capital    |   | surplus     |   | compensation |   | 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 10)                  | –          |   | –          |   | 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 13(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                                | –          |   |            |   |             |   |              |   | (7259,356   | )
|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 the 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 13(a))             | –          |   |            |   | (453,219    | ) | 453,219      |   |             |  
|Stock-based
    compensation (note 9 (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 13 (a))     | –          |   | 1,581,242  |   | (1,581,242) |   |              |   |             |  
|Adjustment-share
    compensation                        |            |   |            |   |             |   |              |   |             |  
|Expenses (note 13 (a))                                   | –          |   | –          |   | (677,420)   |   | –            |   | –           |  
|Common shares issued
    pursuant to compensation        |            |   |            |   |             |   |              |   |             |  
|agreement, January 23, 2001 (note 13 (a))                | 11,192     |   | 66,461     |   | –           |   | –            |   | –           |  
|Private placement of
    common shares for               |            |   |            |   |             |   |              |   |             |  
|cash, March 13, 2001                                     | 2,000,000  |   | 4,000,000  |   | –           |   | –            |   | –           |  
|Common shares issued
    under the asset purchase        |            |   |            |   |             |   |              |   |             |  
|agreement to Estancia Limited, March 14, 2001            | 2,007,831  |   | 8,000,000  |   | –           |   | 1,431,545    |   | –           |  
|Compensation shares
    due but not issued (note 13 (a)) | –          |   | –          |   | –           |   | –            |   | –           |  
|Net loss for the
    year                                |            |   |            |   |             |   |              |   | (4,559,625  | )
|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 13 (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 |  
|                                                        

MICROMEM TECHNOLOGIES INC.
(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars)  October 31, 2002 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, 2002, 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 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. MICROMEM TECHNOLOGIES INC.
(A DEVELOPMENT STAGE COMPANY) Notes to Consolidated Financial Statements

(Expressed
in United States dollars)



October 31, 20023.     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 17 to the
consolidated financial statements. The
most significant accounting policies are as follows:

(a) Principles of consolidation

These consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries, Memtech
International Inc., Memtech International (USA) Inc., Micromem Technologies
B.V., Micromem Technologies S.p.A., Pageant Technologies Inc. and Pageant
Technologies (U.S.A.) Inc. All
significant intercompany balances and transactions have been eliminated upon
consolidation.

(b) Basis of presentation:
  On January 11, 1999, the Company issued 32,000,000 common shares
and 1,000,000 warrants to acquire all of the issued and outstanding shares of
Pageant. On that date, the total number
of the Company shares outstanding was 3,980,643 shares. As a result of this transaction, the
shareholders of Pageant owned 88.9% of the outstanding common shares of the
Company and, accordingly, the purchase of Pageant was accounted for as a
reverse takeover transaction.

Application of reverse takeover accounting results in the following:

(i)  the consolidated financial
statements of the combined entity are issued under the name of the legal
parent, Micromem, but are considered a continuation of the financial statements
of Pageant, the legal subsidiary;

(ii)  as Pageant is deemed to be
the acquirer for accounting purposes, its assets and liabilities are included in
the consolidated financial statements at their historical carrying values;

    (iii)   
the
comparative financial statements for the period from September 3, 1997 to
October 31, 1998 are those of Pageant;
  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars) October 31, 2002 3.     Summary of significant accounting
policies (continued): (iv) control of the assets and operations of the
Company is deemed to be acquired by Pageant effective January 11,
1999. For purposes of this transaction,
the deemed consideration is $549,140 ascribed to the net assets of the Company
outstanding immediately prior to the business combination; and

(v)  Pageant became a wholly-owned subsidiary of
the Company. For accounting purposes, at
January 11, 1999, the outstanding shares of the Company, the continuing
consolidated entity, consisted of the number of Micromem Shares issued to that
date with an assigned value equal to the share capital of the continuing
consolidated entity at that date as computed below.

The transaction
was accounted for by the purchase method with the results of operations
included in the financial statements from the date of acquisition. Details of the Company’s net assets acquired
and the assigned fair values of net assets at acquisition are as follows:  Cash
    $
    168,084Non-cash current assets
    
    115,629Investments
    
    371,471655,184Less current liabilities
    
    106,044Assigned 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.  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars) October 31, 2002 3.     Summary
of significant accounting policies (continued): (e) Capital
assets: Capital assets
are recorded at cost less accumulated amortization. Amortization is provided on capital assets on
a straight-line basis for a period of up to three years. Capital assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. When
circumstances dictate, an impairment loss is calculated as equal to the excess
of the carrying value of the assets over their undiscounted estimated future
net cash flow. (f)  Patents
and trademarks: Effective
November 1, 2001, the Company changed its accounting policy for patents and
trademarks to be recorded at cost less accumulated amortization which is
provided on a straight-line basis over ten years. In prior years the
Company accounted for its patents and trademarks at cost and amortization was
to commence on an appropriate basis to charge off the cost over the future benefit,
not exceeding the legal life, when sales commence. There was no material impact on prior years
consolidated financial statements and accordingly, the comparative consolidated
financial statements have not been restated.

For the year ended October 31, 2002, the change in accounting
policy resulted in an increase in amortization expense and net loss by $31,338
and there was no material impact on net loss per share.

Patents and
trademarks are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. When circumstances dictate, an impairment
loss is calculated as equal to the excess of the carrying value of the assets
over their undiscounted estimated future net cash flow. (g) Research and development expenses: 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. The Company has determined that no
development costs have met these criteria at the financial reporting date.  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars)  October 31, 2002  3.     Summary
of significant accounting policies (continued): (h)      Stock-based compensation:

  The Company has a stock-based compensation plan, which is
described in note 9. Stock-based compensation is recognized by the intrinsic
value method, whereby compensation is recorded to the extent that the exercise
price is not based on the market value of the Company’s common shares at the
date of grant. Any compensatory benefit
recorded is recognized initially as deferred compensation in the consolidated
statements of shareholders’ equity, and then charged against income over the
contractual or vesting period.

(i)       Income
taxes:

  The Company accounts for income taxes by the asset and liability
method. Under the asset and liability
method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Future tax assets and liabilities
are measured using substantively enacted tax rates and laws that are expected
to apply when the asset is realized or the liability settled. To the extent that it is not considered to be
more likely than not that a future income tax asset will be realized, a
valuation allowance is provided.

(j)       Foreign currency translation:

  The functional
currency of the Company is the United States dollar. The Company's wholly-owned
subsidiaries are integrated foreign operations and therefore, the Company uses
the temporal method whereby monetary assets and liabilities are translated into
Canadian dollars using the rate of exchange at the consolidated balance sheet
dates. Non-monetary assets and
liabilities are translated at historical rates. 
Revenue and expenses are translated at rates of exchange prevailing at
the transaction dates. Gains or losses
resulting from translation are included in the determination of net loss for
the period.  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars)  October 31, 2002 3.      Summary of significant accounting
policies (continued): The Company's monetary assets and liabilities denominated in
foreign currencies are translated into United States dollars at the exchange
rate in effect at the consolidated balance sheet dates. Non-monetary assets and liabilities that are
denominated in currencies other than United States dollars are translated into
United States dollars using the historical rate of exchange in effect on the
date the transaction occurred. Revenue
and expense items are translated at the exchange rate in effect at the date of
the transaction. Resulting exchange
gains or losses are included in net loss for the period.  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to Consolidated
Financial Statements (Expressed in United States
dollars)  October 31, 2002 4.       Acquisition
of royalty rights and remaining interest in technology from Estancia Limited On December 9, 2000, the Company and
its subsidiary, Pageant, entered into an Asset Purchase Agreement (the
“Agreement”) with Estancia Limited (“Estancia”) and Richard Lienau (“Lienau”) to purchase the
remaining 50% interests in the patents which the Company did not own, and a 40%
gross profit royalty (“Estancia Royalty”), in respect of certain ferromagnetic memory technology known as VEMRAM
(previously known as MAGRAM) and covered by U.S. Patent #5,295,097 and the
related patent applications (the “VEMRAM Patents”) described in the agreement
and all rights (the “VEMRAM Technology”) held by Estancia and Lienau under the
Joint Ownership and Licensing Agreement dated September 17, 1997 among
Estancia, Lienau and Pageant. Under the terms of the Agreement:

(i)   the Company would be required to pay a
maximum purchase price of $50,000,000 to Estancia as follows:

(a)     $10,000,000 was
paid on closing (after receipt of regulatory approvals), in the form of
$8,000,000 in common shares of the Company (“Micromem Shares”) (based on the
close price on the closing date) and $2,000,000 in cash;

(b)     $20,000,000 if and
when either (i) certification is received from Honeywell Federal Manufacturing
& Technologies (“Honeywell”) and that fully integrated, randomly
addressable memory matrices of the Technology have met certain stipulated
performance standards, or (ii) the Company or any of its affiliates executes a
definitive agreement for the sale or licensing of the 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 provided that a minimum of 50% of the $20,000,000 shall
be paid in Micromem Shares valued at the close of trading on the date of
receipt of such certification, sale or licensing; and

(c)     $20,000,000 if and
when the Company or any of its affiliates executes a definitive agreement for
the sale or licensing with respect to any technology (including the Technology)
owned by the Company 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 provided that a minimum of 50%
of the $20,000,000 shall be paid in Micromem Shares valued at the close of
trading on the date of execution of such sale or licensing.  MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)  Notes to
Consolidated Financial Statements (Expressed in United States
dollars)  October 31, 2002   4.       Acquisition
of royalty rights and remaining interest in technology from Estancia Limited Limited (continued): (ii)  In
the event that the amounts contemplated by 4(i)(b) and/or (c) above are not
payable to Estancia by the third anniversary date of the closing date and
provided that Estancia and Lienau are not in material breach of the terms and
conditions of this agreement, Micromem shall be deemed to have conveyed and
agreed, as of such date, and there shall automatically revert, without further
action and notwithstanding any recordation requirements, to Estancia:

  (a)  an
undivided interest equal to 50% of the percentage determined by dividing (i)
the remaining unpaid amount due pursuant to 4(i)(b) and/or (c) above by (ii)
$50,000,000 (the “Final Payment Percentage Balance”) in the VEMRAM Patents; and

(b)  an
undivided interest (“Royalty”) equal to 40% of the Final Payment Percentage
Balance in:

(1)   the gross profit, less expenses
agreed to by the parties, for each license of the VEMRAM Patents sold or
otherwise transferred by Pageant; and

(2)   the amount of all royalties received
by Pageant as a result of the license or sale of the VEMRAM Patents less
reasonable expenses directly related to obtaining of said royalties.

Estancia has a first charge security interest against the assets
of Pageant’s wholly-owned subsidiary which holds a 40% interest in the VEMRAM
Patents and a 32% interest in the Royalty.

The Company paid $2,000,000 in cash and issued 2,007,831 shares,
being the equivalent of $8,000,000, the first installment payable under the
terms described above, on approval by its shareholders in the annual
shareholder meeting held on March 14, 2001. The amount of $10,000,000 paid in the form of
cash and shares, has been recorded as royalty rights in these consolidated
financial statements. During fiscal
2002, the amount was written-down to nil (note 11).

The
consideration noted in note 4(i)(b) and (c) above will be recorded when the
milestones triggering the Company’s obligations to pay said consideration, as
described in the agreement, have been achieved.




MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated
Financial Statements

(Expressed in United
States dollars)



| | October 31, 2002
| | ----------------

5.      Deposits and other receivables:

> 2002
>       
>       2001Sales tax recoverable
>       $
>       11,048
>       $
>       7,613Deposits (notes 14(a))
>       
>       131,305
>       
>       161,138Other receivables
>       $
>       50,778
>       
>       59,392$
>       193,131
>       $
>       228,143



> 6.      Capital assets:
>   2001
>       
>       Additions
>       
>       Disposal
>       
>       2002Cost:
>       $
>       48,968
>       $
>       –
>       $
>       31,536
>       $
>       17,432Furniture and fixtures
>       
>       508,109
>       
>       28,580
>       
>       329,536
>       
>       207,153Computers and equipment
>       $
>       557,077
>       $
>       28,580
>       $
>       361,072
>       $
>       224,585
>   2002
>       
>       2001Net book value:
>       $
>       3,831
>       $
>       31,945Furniture and fixtures
>       
>       94,823
>       
>       94,823Computers and equipment
>       $
>       98,654
>       $
>       336,839

> Included in research and development expenses is $130,075 (2001
> - $135,221, 2000 - $49,999) of amortization expense.  Amortization expense
> recognized on computers and equipment for the year ended October 31, 2002
> includes an impairment loss of nil (2001 - nil, 2000 - $140,000).

MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated
Financial Statements

(Expressed in United
States dollars)



| | October 31, 2002
| | ----------------

7.      Patents and trademarks:

Accumulated
      
      net bookAs at October 31, 2002
      
      cost
      
      amortization
      
      valuePatents
      $
      292,939
      $
      26,918
      $
      266,021Trademarks
      
      46,097
      
      4,420
      
      41,677$
      339,036
      $
      31,338
      $
      307,698  Accumulated
      
      net bookAs at October 31, 2001
      
      cost
      
      amortization
      
      valuePatents
      $
      286,014
      $
      –
      $
      286,014Trademarks
      
      46,957
      
      –
      
      46,957$
      332,971
      $
      –
      $
      332,971





> 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 a number of
> countries.

8.      Accounts payable and accrued
liabilities:



|                         |   | 2002    |   | 2001   
|------------------------ | - | ------- | - | -------
|                         |   |         |   |        
|Trade and other payables | $ | 191,519 | $ | 325,359
|                         |   |         |   |        
|Payroll                  | $ | –       | $ | 4,193  



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

9.      Share
capital:

(a) Authorized:

> 2,000,000 special preference shares,
> redeemable, voting.  Unlimited common shares without par value.

(b)  Stock option plans:

> The Company has a fixed stock option
> plan. Under the Company’s Stock Option Plan (the “Plan”), the Company may grant
> options for up to 13,000,000 shares of common stock to directors, officers,
> employees or consultants of the Company and its subsidiaries.  Under the
> Plan, the exercise price of each option is equal to or greater than the market
> price of the Company's shares on the date of grant unless otherwise permitted by
> applicable securities regulations.  An option's maximum term under the Plan
> is 10 years.    Prior to fiscal 1999, the Company did not have a
> stock option plan.
> A summary of the status of the
> Company's fixed stock option plan as at October 31, 2002, 2001 and 2000 and
> changes during the years ending on those dates is as follows:
>   
>   2002
>         2001
>         2000Weighted
>         
>         
>         Weighted
>         
>         
>         Weightedaverage
>         
>         
>         average
>         
>         
>         averageShares in
>         exercise
>         Shares in
>         exercise
>         Shares in
>         exercisethousands
>         price
>         thousands
>         price
>         thousands
>         priceOutstanding, beginning of
>         year
>         $
>         7,370
>         
>         $
>         4.80
>         3,550
>         
>         $
>         6.00
>         900
>         
>         $
>         3.00Granted
>         
>         –
>         
>         
>         –
>         6,560
>         
>         
>         4.19
>         2,750
>         
>         
>         6.87Forfeited/expired
>         
>         (1,990
>         
>         
>         6.23
>         (1,940
>         )
>         
>         5.65
>         –
>         
>         
>         –Exercised
>         
>         –
>         
>         
>         –
>         -800
>         
>         
>         3.00
>         (100
>         )
>         
>         3.00Outstanding, end of year
>         $
>         5,380
>         
>         $
>         4.27
>         7,370
>         
>         $
>         4.8
>         3,550
>         
>         $
>         6.00Options exercisable at
>         year end
>         
>         2,995
>         
>         
>         
>         3,130
>         
>         
>         
>         2,225Weighted average fair value ofoptions granted during the year
>         
>         
>         
>         
>         –
>         
>         
>         $
>         1.84
>         
>         
>         $
>         3.89

MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated
Financial Statements

(Expressed in United
States dollars)



| | October 31, 2002
| | ----------------

9.        
Share capital (continued):

> The following table summarizes information about fixed stock
> options outstanding as at October 31, 2002:
>   
>   Options
>         outstanding
>         
>         Options
>         exercisableWeightedaverage
>         
>         Weighted
>         
>         
>         WeightedActual
>         
>         remaining
>         
>         average
>         
>         
>         averageexercise
>         Number
>         contractual
>         
>         exercise
>         Number
>         
>         exerciseprice
>         outstanding
>         life (in
>         years)
>         
>         price
>         exercisable
>         
>         price$
>         2.20
>         60,000
>         0.42
>         $
>         2.20
>         60,000
>         $
>         2.203.125
>         1,000,000
>         0.25
>         
>         3.125
>         1,000,000
>         
>         3.1253.1875
>         500,000
>         0.31
>         
>         3.1875
>         500,000
>         
>         3.18753.19
>         2,285,000
>         3.04
>         
>         3.19
>         –
>         
>         3.197.06
>         1,535,000
>         2.34
>         
>         7.06
>         1,435,000
>         
>         7.065,380,000
>         
>         
>         
>         2,995,000
> Included in wages and salaries is an amount of  nil (2001 - $34,000, 2000 - nil)
> related to stock-based compensation on options granted to a consultant of the
> Company.
> (c)     Loss per share
> Basic loss per share is calculated by
> dividing net loss [the numerator] by the weighted average number of common
> shares outstanding [the denominator] during the period.Diluted
> loss per share reflects the dilution that would occur if outstanding stock
> options and share purchase warrants were exercised or converted into common
> shares using the treasury stock method and are calculated by dividing net loss
> applicable to common shares by the sum of the weighted average number of common
> shares outstanding and all additional common shares that would have been
> outstanding if potentially dilutive common shares had been issued.
> The inclusion of the Company's stock
> options and share purchase warrants in the computation of diluted loss per share
> would have an anti-dilutive effect on loss per share and are therefore excluded
> from the computation.  Consequently, there is no difference between basic
> loss per share and diluted loss per share.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)

| | October 31, 2002
| | ----------------

10.     Contributed surplus:

> Ataraxia Corp., the former parent
> company of Pageant, forgave $544,891 of indebtedness it was owed during fiscal
> year 1999.  This forgiven debt was treated as contributed surplus, a
> separate component of shareholders' deficiency, as this balance was between
> related parties.

11.    
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 14 (a).  No major costs were
> associated with this restructuring.  The Company is still at 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 the statements of operations and deficit.

12.     Income
taxes:

> The Company has non-capital losses of
> approximately $4,905,000 available to reduce future taxable income, the benefit
> of which has not been recognized in these accounts.  The tax losses expire
> as follows:
>   Other2002
>         
>         Canada
>         
>         foreign
>         
>         Total2006
>         $
>         268,000
>         $
>         –
>         $
>         268,0002007
>         
>         1,632,000
>         
>         108,000
>         
>         1,740,0002008
>         
>         1,363,000
>         
>         –
>         
>         1,363,0002009
>         
>         1,063,000
>         
>         –
>         
>         1,063,0002010
>         
>         –
>         
>         265,000
>         
>         265,0002011
>         
>         –
>         
>         206,000
>         
>         206,000Total assets
>         $
>         4,326,000
>         $
>         579,000
>         $
>         4,905,000

MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

12.     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:
>   
>   2002Unused
>         capital losses
>         $
>         14,563Unused
>         non-capital losses
>         
>         1,348,467Alternative minimum tax credit
>         
>         142,091Research
>         and development credit
>         
>         118,720Financing
>         charges
>         
>         30,020Tax basis
>         of capital assets in excess of carrying value
>         
>         58,084Total
>         future tax assets
>         $
>         1,711,945Valuation
>         allowance
>         
>         (1,711,945
>         )Net
>         future tax asset
>         $
>         –
>     
>     
>     2001Unused
>         capital losses
>         $
>         370,443Unused
>         non-capital losses
>         
>         1,568.130Alternative minimum tax credit
>         
>         119,475Research
>         and development credit
>         
>         98,867Financing
>         charges
>         
>         48,161Total
>         future tax assets
>         $
>         2,205,076Valuation
>         allowance
>         
>         (2,205,076
>         )Net
>         future tax asset
>         $
>         –

MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------



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





13.     Management
compensation and related party transactions:

> [a]  The
> Company has previously entered into the following stock based management
> compensation  arrangements:
>   (i)
>       
>       Effective
> November 1, 2001, the Company has terminated Chairman's      compensation agreement
> described in note 13(a)(ii) below and the  Chairman’s compensation was
> reduced to $1.00 per year.(ii)
>       
>       On January 1, 2001, the Company entered into a new
>       employment agreement with the Chairman for a period of five years. 
>       Under the terms of this agreement, the Chairman has been retained to
>       provide certain management services to the Company and its subsidiaries.
>       The Company has agreed to issue, under the Agreement, a number of fully
>       paid and non-assessable common shares of the Company equal to 0.5% per
>       quarter of the number of common shares outstanding on the last day of
>       March, June, September and December of each year throughout the term of
>       the agreement.  An amount of $1,431,545 had been accrued for the
>       value of shares, that had been earned but not issued as compensation
>       expense for the year ended October 31, 2001 and treated as contributed
>       surplus within shareholders’ equity. On March 26, 2002, the Company issued
>       765,589 shares relating to compensation for the period ended October 31,
>       2001, valued at $1,431,545.

MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

13.       
Management compensation and related party transactions (continued):

> (iii)
>         
>         On January 2, 2000, the Company entered into an
> Employee and Option Agreement with the Chairman of Micromem which was approved by the shareholders at a meeting held on
> June 29, 2000.
> 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 will 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. 
During fiscal 2000, The Company paid $186,000 to legal firms in which directors
of subsidiaries are partners.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

14.        Commitments:

(a)  Research Collaboration Agreement

> On October 24, 2002, Micromem entered
> into a two year Research Collaboration Agreement with Materials and
> Manufacturing Ontario (“MMO”), a not-for-profit organization funded by the
> provincial government, University of Toronto (“U of T”) and a Researcher
> employed by the U of T, to fund the research on Magnetic Structure development
> for Hall effect memory devices.
> Under the terms of the agreement, the
> Company has committed to contribute $87,432 (Cdn.$136,000) and $18,000 (Cdn.$28,000)
> in cash and in-kind contribution, respectively, per year to fund the research.
> As at October 31, 2002, the Company has contributed $87,432 in cash against this
> commitment which has been included in deposits and other receivables as at year
> end.
> In addition, Micromem will have
> sublicensing rights for the use of any new technology developed (“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.

(b) Technology development agreement

> On March 14, 2001, the Company’s
> subsidiary, Pageant, entered into a three year Technology Development agreement
> with Estancia and Lienau to continue the development of the MAGRAM Technology. 
> Under the terms of the agreement, Pageant has committed to pay Estancia $215,000
> per year, payable on a monthly basis in arrears, and committed to incur
> expenditures in connection with the MAGRAM 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 8-month period and to reduce the amount payable to
Estancia under this agreement to $107,000 per year, payable monthly in arrears
for the period commencing on June 1, 2002 through December 31, 2002 and for the
extended period from March 9, 2004 through to November 9, 2004.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

(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:

> 2003
>         $
>         93,5002004
>         
>         93,5002005
>         
>         93,5002006
>         
>         15,500296,000

15.    
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 $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 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.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

16.     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 financial statements include
> balances/transactions that are denominated in foreign currencies as follows:
>   
>   Canadian Dollar
>       
>       EuroAssets
>       $
>       172,356
>       €
>       111,201Liabilities
>       
>       59,233
>       
>       97,972Income
>       
>       –
>       
>       792Expenses
>       
>       1,109,510
>       
>       122,203

17.     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 ("APB") 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.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)

| | October 31, 2002
| | ----------------

17.       Reconciliation between Canadian GAAP and U.S. GAAP (continued):

For the purposes of
reporting under U.S. GAAP, companies are required under SFAS 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
follows:

Period fromSeptember 3,1997 toOctober 31,2002
        
        2001
        
        2000
        
        2002Loss applicable tocommon shares:Reported
        $
        12,733,015
        $
        4,559,625
        $
        7,259,356
        $
        30,260,775Pro forma
        
        14,565,515
        
        9,187,377
        
        14,640,604
        
        46,402,284Basic and fully dilutedloss per share:Reported
        $
        0.27
        $
        0.10
        $
        0.19
        $
        0.65Pro forma
        
        0.31
        
        0.21
        
        0.38
        
        1.00


There were no options granted during
2002.  The fair values of all options granted during 2001 and 2000 were
estimated as of the date of grant using the black-Scholes option pricing model
with the following assumptions:

> 2002
>       2001
>       2000Dividend yield
>       –
>       –%
>       –%Expected volatility
>       –
>       100%
>       100%Risk-free interest rate
>       –
>       3.97% - 5.52%
>       4.87% - 6.36%Expected option life
>       –
>       2 - 3 years
>       1 - 4 years

The effects of the
pro forma disclosures are not likely to be representative of the effects on
reported net income for future years, because options vest over several years
and additional awards may be made in future years.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

(b)     Statement of comprehensive income (loss):

> Comprehensive income (loss) includes
> all changes in equity during the periods presented except shareholder
> transactions.  For the periods presented, accumulated other comprehensive
> loss comprises the Company's change in unrealized gain on investment.
> For the purpose of reporting under U.S.
> GAAP the components of comprehensive income and total comprehensive income are
> reported in the statement of changes in shareholders equity, below the net loss
> in the statement of operations and in a separate statement of comprehensive
> income as follows:
> 
> Period fromSeptember 3,1997 toOctober 31,2002
>       
>       2001
>       
>       2000
>       
>       
>       2002Net loss
>       $
>       12,733,015
>       $
>       4,559,625
>       $
>       7,259,356
>       
>       
>       30,260,775Change in unrealizedgain on investment
>       
>       –
>       
>       –
>       
>       (13,796
>       )
>       
>       (13,796
>       )Comprehensive loss
>       $
>       12,733,015
>       $
>       4,559,625
>       $
>       7,245,560
>       
>       $
>       30,246,979

As the investment was classified as
available-for-sale, the unrealized gain was treated as part of the statement of
comprehensive income.



MICROMEM TECHNOLOGIES INC.(A DEVELOPMENT STAGE COMPANY)



Notes to Consolidated Financial Statements

(Expressed in United States dollars)



| | October 31, 2002
| | ----------------

18.       
Subsequent event:

On November 1, 2002 [“effective date”], Micromem has entered into an
Infrastructure Agreement with the U of T, to fund the assembly of a facility for
research and development and fabrication of Magnetic Memory (“MMF”).  The U
of T has agreed to use the MMF in connection with, among other things, research
to be conducted pursuant to collaborations between Micromem and the U of T.

Under the terms of the agreement, Micromem has committed to contribute $231,140
(Cdn.$360,000) in cash to fund the direct costs of MMF.  The sum is payable
to U of T as follows:



| | [i]   | $77,047 (Cdn. $120,000) on execution of agreement, which was paid on November 28, 2002;
| | ----- | ---------------------------------------------------------------------------------------
| |       |                                                                                        
| | [ii]  | $77,047 (Cdn. $120,000) at end of the two months following the effective date;
and     
| |       |                                                                                        
| | [iii] | $77,047 (Cdn. $120,000) at end of the four months following the effective date.        



ITEM 18               
FINANCIAL STATEMENTS

Not Applicable

ITEM 19.              
EXHIBITS

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

| | Exhibit No. 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. 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                                                 
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 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;                                                        
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 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. 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;                                                                                                                                                    
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 6* | Research Collaboration Agreement among Micromem Technologies Inc., the
University of Toronto, Dr. Harry Ruda and Materials and Manufacturing Ontario
dated October 24, 2002 (referred to in this Annual Report at Item 4.B – Business
Overview – Recent Developments);                                                                                           
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 7  | Asset Purchase Agreement among Micromem Technologies Inc., Pageant Technologies
Incorporated, Estancia Limited and Richard Lienau dated December 10, 2000
(referred to in this Annual Report at Item 4.B – Business Overview – Recent
Developments), (Incorporated herein by reference to the Company’s Form 40-F
filed with the Commission on February 2, 2001);
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 8  | Technology Development Agreement among Pageant
    Technologies Incorporated, Estancia Limited and Richard Lienau dated March 9, 2001 (referred to in this
Annual Report at Item 4.B – Business Overview – Recent Developments),
(Incorporated herein by reference to the Company’s Form 40-F filed with the
Commission on February 2, 2001);                    
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | Exhibit No. 9  | Infrastructure Agreement between Micromem Technologies Inc. and the University
of Toronto dated November 1, 2002 (referred to in this Annual Report at Item 4.
B - Business Overview - Recent Developments);                                                                                                                                                     
| |                |                                                                                                                                                                                                                                                                                                                                                                  
| | *              | Portions of this exhibit have been omitted pursuant
to a request for confidential treatment.                                                                                                                                                                                                                                                                     



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:"Joseph Fuda" (signed)
> Name:            
> Joseph Fuda
> Title:              
> Chief Executive Officer
> 
>           By:"Antonio
> Lopes" (signed)
> Name:            
> Antonio Lopes
> Title:              
> Chief Financial Officer

Dated:   March 20,
  2003.


[1]
    VEMRAMä 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.
 [2]
    HEMRAMä is a trade-mark of Memtech International Inc., a Bahamas corporation
    wholly-owned by Micromem, used under license by Micromem and other
    corporations affiliated with Micromem.