Micromem: Upsizing for Growth

For many investors, holding a position in Micromem Technologies Inc. (CSE: MRM, OTCQB: MMTIF) is like holding a hot potato. As longtime Micromem followers know, the company has benefited greatly over the past few years from an extremely constrained supply situation in the memory markets, leading to a sharp increase in memory prices that has allowed Micromem to multiply its net income by factors of two to three in each quarter. Rational investors keep thinking these boom times can't last forever, and they hesitate to stay at the poker table after winning too many consecutive hands - but after announcing an upsized private placement, Micromem has continued to defy investors' fears in a move that shows the company's commitment to growth and expansion.

Micromem Technologies Inc. recently announced that it has increased the size of its previously announced non-brokered private placement from up to $375,000 to up to $405,000. The Company plans to place up to 8,100,000 units at a price of C$0.05 per unit, with each unit being comprised of one common share and one warrant exercisable at C$0.05 per share for a period of three years following the issuance date. The other terms of the Private Placement remain unchanged from the news release issued by Micromem on December 13, 2024.



I wrote in a prior article that I believe Micromem to be headed to the ~$0.10 levels within the next year. With the new information coming out of this upsized private placement, investors have even more reason to believe that the memory cycle will not, in fact, slide over a cliff - as Micromem pointed out in a recent investor day presentation, the NAND and DRAM markets are actually projected to see supply growth balanced against demand growth, resulting in stable prices. While this was merely an optimistic management forecast a few weeks back, it has now been more justified by actual results in Micromem's third quarter.

The most important data point emerging from Micromem's upsized private placement, in my opinion, is the increased funding that the company will have at its disposal. This additional capital will allow Micromem to continue investing in its core competencies and maintain its competitive edge in the market. The funds raised can also be used to support the company's growth and expansion plans, including investing in new technologies, hiring additional talent, or expanding its customer base.



Micromem's recent announcement of the upsized private placement shows tremendous continued strength and commitment to growth. The Company's ability to raise additional funds demonstrates its strong financial position and the confidence that investors have in its future prospects.

The key theme is clear: Micromem's fundamentals support the view that the business is stabilizing, driven by supply/demand balance in the memory markets as well as diversification in product sales and end-customer demand. Over time, this should convince investors to award Micromem a more normalized valuation (implying a multiples expansion) instead of the low, cyclically-adjusted P/E at which it is currently trading.

Micromem's upsized private placement shows that the company is committed to growth and expansion, and investors should take note of this positive development. As Micromem continues to execute on its strategic initiatives and growth plans, investors can expect to see continued strength and momentum in the company's stock performance. With the additional capital raised from the upsized private placement, Micromem is well-positioned to continue its growth trajectory and create value for shareholders in the long run.