[ ]    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
___________

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

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

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

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

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 17 X      Item 18     

            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.

            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.

            Not Applicable

            Not Applicable

             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

Selected statement of operations and deficit information

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.

            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).

            Not Applicable.

            Not Applicable.

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

            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 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 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.

          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.

           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.

            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.

            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.

            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.

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

            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.

            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'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 memory and data storage industry is highly competitive, and customers make their decisions based on a number of competitive factors, including the following:

            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.

            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.

            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:

            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 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'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.

            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.

            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.

            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 VEMRAM™ ¹ (the "VEMRAM™ Patents"). The VEMRAM™ technology also includes certain improvements to the VEMRAM™ Patents, many of which are the subject of pending patent applications. The undivided 50% interest in the VEMRAM™ 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 VEMRAM™ Patents, under the Joint Ownership and Licensing Agreement Pageant International was granted an exclusive worldwide license to develop, manufacture and sell the VEMRAM™technology. The Joint Ownership and Licensing Agreement requires Pageant International to pay Estancia or its nominee a royalty of 40% of the gross profits less expenses agreed by the parties for each technology license sold. Additionally, Pageant International would be required to pay Estancia Limited 40% of any per unit royalty received by Pageant less properly documented reasonable expenses directly related to the obtaining of those royalties and as agreed by the parties in writing.

            The Joint Ownership and Licensing Agreement also provided that if Pageant International, as approved assignee of Ataraxia Corp., sold the rights to the VEMRAM™ 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 VEMRAM™ 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 VEMRAM™ 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.

            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.

            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 "HEMRAM™ ² "); and (ii) a memory design with the magnetic bit aligned vertically to the substrate ("VEMRAM™ "). 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 VEMRAM™ 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.

² HEMRAM™ 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.

            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.

             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, HEMRAM™ , 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, VEMRAM™, uses a novel hybrid Hall effect MRAM scheme which utilizes out-of-plane magnetization induced by vertically oriented high-aspect-ratio ferromagnetic posts. The VEMRAM™ 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.

            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.

            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.

           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.

           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

            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 HEMRAM™ memory design. Pageant USA terminated the Fabtech Agreement effective as of August 31, 2002.

            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.

            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 VEMRAM™ Patents and the VEMRAM™ 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:

             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 VEMRAM™ technology (the "Technology Development Agreement"). The Technology Development Agreement provides for fees to Estancia of $215,000 per annum and a budget for the continued development of VEMRAM™ 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.

³ Percentage 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 VEMRAM™ technology and related technologies and processes; and (ii) those covering HEMRAM™ technology and related technologies and processes.

            The Company has applied for registration in respect of the trademark for HEMRAM™ , VEMRAM™ and MICROMEM™ .

            During the 2002 fiscal year, Pageant International, a wholly-owned subsidiary of Micromem, was engaged in the development of the VEMRAM™ 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 VEMRAM™ 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 VEMRAM™ 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 VEMRAM™ technology, known as HEMRAM™ . 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.

            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.

          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.

            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.

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

Selected statement of operations and deficit information

          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 VEMRAM™ technology ("VEMRAM Patents") and the remaining 50% interest in the VEMRAM™ 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.

            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

            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.

            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 VEMRAM™ Patents and to have granted a gross profits royalty to Estancia Limited such that Pageant would remain holding a 60% interest in the VEMRAM™ Patents and it would be required to pay a 32% gross profits royalty to Estancia Limited in respect of the VEMRAM™ 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.

            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.

            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.

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

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

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

            Manoj Pundit is and has served as Micromem's Executive Vice President and General Counsel since July 2000 and joined the Board of Directors in March 2001. He has also been a partner, since December 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.