6-K
QUARTZ MOUNTAIN RESOURCES LTD (QZMRF)
UNITED **** STATES
SECURITIES **** AND **** EXCHANGE **** COMMISSION
Washington, D.C. 20549
FORM **** 6- K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
As at June 24, 2022
Commission File Number:
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD. |
|---|
| (Translation of registrant's name into English) |
14th Floor – 1040 W. Georgia Street Vancouver, British Columbia Canada V6E 4H1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
☒ Form 20-F ☐ Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SUBMITTED HEREWITH
| Exhibits |
|---|
| 99.1 | MANAGEMENT’S DISCUSSION AND ANALYSIS |
| 99.2 | CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
| 99.3 | Certificate of CEO |
| 99.4 | Certificate of CFO |
| 2 |
|---|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Quartz Mountain Resources Ltd. | ||
|---|---|---|
| Date: June 24, 2022 | By: | /s/ Sebastian Tang |
| | | Sebastian Tang |
| | | Chief Financial Officer |
| 3 |
|---|
qzmrf_ex991.htm EXHIBIT 99.1
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
THREE AND NINE MONTHS ENDED APRIL 30, 2022
T A B L E O F C O N T E N T S
| 1.1 | Date | 2 |
|---|
| 1.2 | Overview | 2 |
| 1.3 | Selected Annual Information | 5 |
| 1.4 | Summary of Quarterly Results | 5 |
| 1.5 | Results of Operations and Financial Condition | 6 |
| 1.6 | Liquidity | 6 |
| 1.7 | Capital Resources | 7 |
| 1.8 | Off-Balance Sheet Arrangements | 7 |
| 1.9 | Transactions with Related Parties | 7 |
| 1.10 | Fourth Quarter | 8 |
| 1.11 | Proposed Transactions | 8 |
| 1.12 | Critical Accounting Estimates | 8 |
| 1.13 | Changes in Accounting Policies including Initial Adoption | 8 |
| 1.14 | Financial Instruments and Other Instruments | 8 |
| 1.15 | Other MD&A Requirements | 8 |
| 1.16 | Risk Factors | 10 |
| Page 1 |
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
1.1 DATE
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial statements (the “Annual Financial Statements”) of Quartz Mountain Resources and its subsidiaries (“Quartz Mountain” or the “Company”), for the year ended July 31, 2021, the annual MD&A for the same period, and the unaudited interim condensed consolidated financial statements for the three and nine months ended April 30, 2022, as publicly filed under the Company’s profile on SEDAR at www.sedar.com. All dollar amounts herein are expressed in Canadian dollars, unless otherwise specified.
The Company reports in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (together, “IFRS”). The following disclosure and associated Interim Financial Statements are presented in accordance with IFRS.
This MD&A is prepared as of June 24, 2022. For the purposes of the discussion below, date references refer to calendar year and not the Company’s fiscal reporting period.
Cautionary Note to Investors Concerning Forward-looking Statements
This discussion includes certain statements that may be deemed “forward-looking statements.” All statements in this disclosure, other than statements of historical facts, that address permitting, exploration drilling activities and events or developments that the Company expects are forward- looking statements. Although the Company believes the expectations expressed in such forward- looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Assumptions used by the Company to develop forward-looking statements include the following: the Company’s projects will obtain all required environmental and other permits and all land use and other licenses, and no geological or technical problems will occur. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploration and exploitation successes, continuity of mineralization, potential environmental issues and liabilities associated with exploration, development and mining activities, uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition or litigation, exploration and development of properties located within First Nations treaty and asserted territories may affect or be perceived to affect treaty and asserted aboriginal rights and title, which may cause permitting delays or opposition by First Nation communities, changes in laws and government policies regarding mining and natural resource exploration and exploitation, continued ability of the Company to raise necessary capital, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. The Company reviews its forward-looking statements on an on-going basis and updates this information when circumstances require it.
1.2 OVERVIEW
The information comprised in this MD&A relates to Quartz Mountain Resources Ltd. and its subsidiaries. Quartz Mountain Resources Ltd. is the ultimate parent entity of the group.
Quartz Mountain most recently focused on assessing mineral prospects for potential acquisition and exploration in British Columbia. The Company is currently investigating new potential opportunities.
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
On February 15, 2019, Robert Dickinson resigned as Executive Chairman and CEO and Rene Carrier resigned as director. Trevor Thomas was appointed Chairman, CEO and director and Matthew Dickinson was appointed director.
On August 15, 2020, Michael Lee resigned as Chief Financial Officer. Sebastian Tang was appointed Chief Financial Officer.
On May 30, 2022, the Company appointed Robert Dickinson as Chairman and CEO and as a director of the Company. Trevor Thomas, having resigned as Chairman, President and CEO, will remain with the Company as a Director and Corporate Secretary. Leonie Tomlinson, ICD.D, a Director of Quartz Mountain since 2017, has been appointed as President of the Company. Matthew Dickinson, a Director of the Company since 2019, has been appointed as Vice President Corporate Development. Matthew Dickinson joined the Company to establish the Company’s investor relations, digital communications and media strategy. Past roles include software consulting and development in the manufacturing and e-commerce sectors, venture capital and marketing.
Other Corporate Information
The Board of Directors consists of Robert Dickinson, Trevor Thomas, Leonie Tomlinson and Matthew Dickinson. Trevor Thomas is the Corporate Secretary, Sebastian Tang is the Chief Financial Officer.
The Company is a reporting issuer in the provinces of British Columbia, Alberta and Ontario.
The Company’s head office is located at 1040 West Georgia Street, 14th Floor, Vancouver, British Columbia, Canada V6E 4H1.
The Company’s common shares are listed on the TSX Venture Exchange under the symbol QZM and certain broker-dealers in the United States make a market on the OTC Grey Market under the symbol QZMRF.
Effective May 27, 2020, the Company completed a forward share split (the “Share Split”) on the basis of two additional common shares for every common share outstanding prior to the Share Split. Outstanding warrants were adjusted by the same share split ratio. All references to shares and per share amounts have been retroactively restated to give effect to the Share Split.
1.2.1 Agreements
In January 2016, the Company reached an agreement with Hunter Dickinson Services Inc. (“HDSI”) to settle debt owing for services by HDSI. HDSI agreed to forgive debt in the net amount owing at that time of $3,086,089, if Quartz Mountain makes a cash payment of $180,207 and issues 1,800,000 shares (pre-forward split basis of 600,000 shares) valued at $126,000 to HDSI. The TSX Venture Exchange approved the transaction with HDSI.
The cash payment of $180,207 was paid during the year ended July 31, 2018 and the shares were issued to HDSI during the year ended July 31, 2020, completing the settlement and resulting in a gain on settlement of debt of $2,779,882 during the fiscal year ended July 31, 2020.
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
1.2.2 Properties
Angel’s Camp Property
The Company retained a 1% net smelter return royalty (the “Royalty”) payable to the Company on any production from the Angel’s Camp property located in Lake County, Oregon. On February 1, 2021, the Company entered into an agreement for the sale of 100% of the Royalty on the Angel’s Camp Property, for US$150,000 to an arms-length purchaser. This transaction was closed on February 4, 2021.
British Columbia Property
Maestro (formerly Lone Pine) Property
On June 8, 2021, the Company entered into a mineral claims purchase agreement to purchase nine mineral claims located near Houston, British Columbia for $105,000 in cash and 1,000,000 shares in the capital of the Company.
The claims are subject to a 2.5% NSR which can be bought-down to 1% for $1.5 million. There are no required work commitments for these claims as this transaction is not an option on the mineral claims.
On June 14, 2022, the Company announced that it has received from C.J. Greig & Associates Ltd. a National Instrument 43-101 Technical Report on its Maestro Gold-Silver-Molybdenum-Copper Property located in central British Columbia.
The Technical Report outlines key exploration targets including the Prodigy Zone, a priority exploration target for bulk tonnage gold and silver mineralization.
Select assay results from past operators’ drilling in the Prodigy Zone include 178 m grading 0.56 g/t Au, 18.8 g/t Ag, 0.05% Cu and 0.029% Mo; and 128 m grading 0.22 g/t Au, 103.9 g/t Ag, 0.12% Cu and 0.022% Mo.
New airborne magnetic and historical drill core re-logging programs completed by the Company indicate excellent potential for bulk tonnage style gold and silver mineralization.
The Maestro Property has excellent infrastructure, being close to the highway between the mining- support towns of Smithers and Houston, and therefore to airports, railways, and power.
Jake Property
On November 5, 2021, the Company entered into a mineral claims purchase agreement with United Mineral Services Ltd. (“UMS”) to acquire 100% interest in the Jake mineral property consisting of four staked claims (the “Jake Property”) and an option to purchase 100% of five adjacent claims owned by an arm’s length third party. The Jake Property is located approximately 162 km north of Smithers, British Columbia. The Jake Property acquisition is subject to TSX Venture Exchange approval
The total cash consideration the Company required to pay the vendor for the costs of assembling the Jake Property is $200,000 and to be paid out according to the following schedule: $50,000 immediately on the date of receipt of TSX Venture Exchange conditional approval of this transaction (“TSX-V Approval Date); $50,000 on or before the date that is six months after the TSX-V Approval Date; $50,000 on or before the date that is twelve months after the TSX-V Approval Date and $50,000 on or before the date that is eighteen months after the TSX-V Approval Date.
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
On May 24, 2022, the Company received approval from the TSX Venture Exchange for its acquisition of the Jake Property. The purchase from UMS is comprised of a 100% undivided interest in four mineral claims it staked as well as the transfer of a valid option to acquire an undivided 100% interest in five adjacent mineral claims (the “Underlying Claims”) from Electrum Resource Corporation, an arms-length third party. The Electrum option can be exercised with payment of $125,000 on or before July 14, 2022 or alternatively an equal amount spread over two years with property work commitments of $360,000. The Underlying Claims are subject to a 2% NSR which is capped at $3 million.
Other property
On November 2, 2021 the Company entered into a binding Agreement with Torr Resources Corp. whereby Torr purchased historical project data from the Company for $150,000. The transaction closed on December 15, 2021.
1.2.3 Financing
On October 18, 2021, the Company issued 1,909,092 flow-through common shares on the exercise of warrants at an exercise price of $0.05 for gross proceeds of $95,455.
On December 13, 2021, the Company issued 7,000,000 flow-through common shares on the exercise of warrants at an exercise price of $0.05 for gross proceeds of $350,000.
1.3 Selected Annual Information
Not applicable.
1.4 Summary of Quarterly Results
These amounts are expressed in thousands of Canadian Dollars, except per share amounts. Minor differences are due to rounding.
| Fiscal Quarter Ended |
|---|
| | Apr- 30<br> <br>2022 | | | Jan-31 2022 | | | Oct-31 2021 | | | Jul-31 2021 | | | Apr- 30<br> <br>2021 | | Jan-31 2021 | | | Oct-31 2020 | | | Jul-31 2020 | | |
| Income (loss) for the period | $ | (113 | ) | $ | (387 | ) | $ | (139 | ) | $ | (122 | ) | $ | 143 | $ | (43 | ) | $ | (95 | ) | $ | (75 | ) |
| Basic earnings (loss) per common share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.01 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
| Diluted earnings (loss) per common share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
1.5 Results of Operations and Financial Condition
Three months ended April 30, 2022 (“2022 Q3”) and 2021 (“2021 Q3”)
Net loss for the three months ended April 30, 2022, was $113,221 compared to a net income of $143,207 for the three months ended April 30, 2021. Net income of $143,207 in 2021 Q3 was due to the gain recognized on sale of royalty interest for U$150,000 offset by the exploration and evaluation expenses of $6,746 and general and administrative expenses of $26,752.
During the three months ended April 30, 2022, the Company incurred exploration and evaluation expense of $70,571 (2021 Q3 - $6,746). The increase in the exploration and evaluation expense in 2022 Q3 compared to 2021 Q3 was due to the geological works incurred during 2022 Q3 related to Maestro Property acquired in June 8, 2021.
Administrative fees, legal, accounting and audit increased due to several transactions in 2022 Q3 described in earlier sections. A breakdown of general and administrative expenses incurred during the period ended April 30, 2022 and 2021, is provided in the financial statements for the period ended April 30, 2022.
Nine months ended April 30, 2022 (“2022 Q3 YTD”) and 2021 (“2021 Q3 YTD”)
Net loss for the nine months ended April 30, 2022, was $639,383 compared to a net income of $5,418 for the nine months ended April 30, 2021. The increase in 2022 Q3 YTD net loss was mainly due to the events described in the above section for 2022 Q3 versus 2021 Q3.
1.6 Liquidity
Historically, the Company’s primary source of funding has been the issuance of equity securities for cash through private placements to sophisticated investors and institutions. The Company is assessing mineral properties with a goal to acquire and explore mineral property interests. The Company’s continuing operations entirely depends upon the ability of the Company to obtain the necessary financing to complete any exploration and development of its projects, the existence of economically recoverable mineral reserves at its projects, the ability of the Company to obtain the necessary permits to explore or mine, the future profitable production of any mine and the proceeds from the disposition of its mineral property interests.
At April 30, 2022, the Company had an accumulated deficit of $28,367,685 and has a working capital of $322,315.
The Company believes that its liquid assets at April 30, 2022, are sufficient to meet its known obligations. The Company is actively managing its cash reserves, and conducting activities as necessary in order to ensure its ability to meet payments as they come due.
Additional debt or equity financing will be required to fund exploration or development programs. However, there can be no assurance that the Company will continue to obtain additional financial resources or that it will be able to achieve positive cash flows.
Financial market conditions for junior exploration companies have resulted in very depressed equity prices. A further and continued deterioration in market conditions will increase the cost of obtaining capital and significantly limit the availability of funds to the Company in the future. Accordingly, management is actively monitoring the effects of the current economic and financing conditions on the Company’s business and reviewing discretionary spending, capital projects and operating expenditures, and implementing cash and cash management strategies.
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
The Company does not have any material capital lease obligations, purchase obligations or any other long-term obligations.
1.7 Capital Resources
The Company had no material commitments for capital expenditures as at April 30, 2022.
The Company has no lines of credit or other sources of financing which have been arranged but are as of yet unused.
At April 30, 2022, there were no externally imposed capital requirements to which the Company is subject and with which the Company has not complied.
1.8 Off-Balance Sheet Arrangements
None.
1.9 Transactions with Related Parties
Key Management Personnel
The required disclosure for the remuneration of the Company’s key management personnel is provided in note 7(a) of the accompanying unaudited condensed interim consolidated financial statements for the period ended April 30, 2022 and 2021. These are also available at www.sedar.com.
Hunter Dickinson Inc.
The Company acquires services from arms-length and related contractors. Hunter Dickinson Inc. (“HDI”) and its wholly‐owned subsidiary Hunter Dickinson Services Inc. (“HDSI”) are the principal related Contractor to the Company. They are private companies established by a group of mining professionals and provide services under contracts for a number of mineral exploration and development companies, and also to companies that are outside of the mining and mineral development space.
The Company’s Corporate Secretary is an employee of HDSI and works for the Company under an employee secondment arrangement between the Company and HDSI. The Company’s Chief Executive Officer is a director of HDSI.
Pursuant to an agreement dated July 2, 2010, QZM can access from HDSI from time to time certain cost effective technical, geological, corporate communications, regulatory compliance, and administrative and management services on a non‐exclusive basis as needed and as requested by QZM. As a result of this relationship, the Company can readily access a range of specialized expertise on a regular basis, without having to engage or hire full‐time employees or experts.
The Company is not obligated to acquire any minimum amount of services from HDSI. The monetary amount of the services received from HDSI in a given period of time is a function of annually set and agreed charge‐out rates for and the time spent by each HDSI employee engaged by the Company.
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
HDSI also incurs third‐party costs on behalf of the Company. Third party costs are billed at cost, without markup.
There are no ongoing contractual or other commitments resulting from the Company’s transactions with HDSI, other than the payment for services already rendered and billed. The agreement may be terminated upon 60 days’ notice by either the Company or HDSI.
The details of transactions with HDSI and the balance due to HDSI as a result of such transactions are provided in the Financial Statements.
1.10 Fourth Quarter
Not applicable.
1.11 Proposed Transactions
There are no proposed material assets or business acquisitions or dispositions before the Board of Directors for consideration.
1.12 Critical Accounting Estimates
Not required. The Company is a Venture Issuer.
1.13 Changes in Accounting Policies including Initial Adoption
The required disclosure is provided in note 2 of the accompanying unaudited condensed interim consolidated financial statements as at and for the period ended April 30, 2022, which is publicly available on SEDAR at www.sedar.com.
1.14 Financial Instruments and Risk Management
The carrying amounts of cash, amounts receivable, accounts payable and accrued liabilities, and balances due to related parties, approximate their fair values due to their short-term nature.
1.15 Other MD&A Requirements
1.15.1 Additional Disclosure for Venture Issuers without Significant Revenue
| (a) | exploration and evaluation assets or expenditures | The required disclosure is presented in Section 1.5 of this MD&A. |
|---|
| (b) | expensed research and development costs | Not applicable |
| (c) | intangible assets arising from development | Not applicable |
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
| (d) | general and administration expenses | The required disclosure is presented in Section 1.5 of this MD&A. |
|---|
| (e) | any material costs, whether expensed or recognized as assets, not referred to in paragraphs (a) through (d) | None |
1.15.2 Disclosure of Outstanding Share Data
The following details the share capital structure as at the date of this MD&A:
| Number |
|---|
| Common shares | | 40,114,141 |
See 1.2 Overview for an agreement between the Company and HDSI for issuance of common shares as a debt settlement arrangement.
1.15.3 Internal Controls over Financial Reporting Procedures
The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of the Chief Executive Officer and Chief Financial Officer, the Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control over financial reporting includes those policies and procedures that:
| · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
|---|---|
| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and |
| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
There has been no change in the design of the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting as of April 30, 2022.
1.15.4 Disclosure Controls and Procedures
The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the appropriate time periods; and required information is accumulated and communicated to the Company’s management, including the Chief Executive
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND NINE MONTHS ENDED APRIL 30, 2022
Officer and Chief Financial Officer, as appropriate, so that decisions can be made about the timely disclosure of that information.
1.15.5 Limitations of Controls and Procedures
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, believe that any system of disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision- making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
1.16 Risk Factors
Please refer to “Risk Factors” discussed in the Company’s MD&A for the year ended July 31, 2021 filed under the Company’s profile on SEDAR at www.sedar.com.
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qzmrf_ex992.htm EXHIBIT 99.2
QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2022 AND 2021
(Unaudited - Expressed in Canadian Dollars)
| 1 |
|---|
| NOTICE TO READERS |
|---|
In accordance with subsection 4.3(3) of National Instrument 51-102, management of the Company advises that the Company's auditors have not performed a review of these condensed consolidated interim financial statements.
| 2 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>CONSOLIDATED **** STATEMENTS **** OF **** FINANCIAL **** POSITION<br> <br>(Unaudited - Expressed in Canadian Dollars) |
|---|
| April 30, | (Audited)<br> <br>July 31, |
|---|
| | Note | 2022 | | | 2021 | | |
| Assets | | | | | | | |
| Current assets | | | | | | | |
| Cash | | $ | 360,127 | | $ | 206,443 | |
| Amounts receivable and other assets | 3 | | 5,375 | | | 5,112 | |
| | | | 365,502 | | | 211,555 | |
| Non-current assets | | | | | | | |
| Mineral property interests | 4 | | 340,000 | | | 340,000 | |
| Right-of-use asset | 11 | | 39,580 | | | 47,001 | |
| Total assets | | $ | 745,082 | | $ | 598,556 | |
| Liabilities **** and **** Shareholders' **** Equity | | | | | | | |
| Current liabilities | | | | | | | |
| Amounts payable and other liabilities | 6 | $ | 16,121 | | $ | 24,423 | |
| Income taxes payable | | | 10,106 | | | 36,452 | |
| Due to related parties | 7(a)&(b) | | 6,844 | | | 25,367 | |
| Lease liability | 11 | | 10,116 | | | 7,466 | |
| | | | 43,187 | | | 93,708 | |
| Non-current liabilities | | | | | | | |
| Lease liability | 11 | | 33,168 | | | 41,333 | |
| Total liabilities | | | 76,355 | | | 135,041 | |
| Shareholders' equity | | | | | | | |
| Share capital | 5(a) | | 28,045,261 | | | 27,599,806 | |
| Reserves | | | 991,151 | | | 592,011 | |
| Accumulated deficit | | | (28,367,685 | ) | | (27,728,302 | ) |
| Total shareholders' equity | | | 668,727 | | | 463,515 | |
| Total liabilities and shareholders' equity | | $ | 745,082 | | $ | 598,556 | |
| Nature and continuance of operations (note 1) | | | | | | | |
| Events after the reporting period (note 12) | | | | | | | |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| /s/ Trevor Thomas | /s/ Leonie Tomlinson |
|---|---|
| Trevor Thomas | Leonie Tomlinson |
| Director | Director |
| 3 |
|---|
| QUARTZ MOUNTAIN RESOURCES LTD.<br> <br>CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS<br> <br>(Expressed in Canadian Dollars, except for weighted average number of common shares) |
|---|
| Three months ended April 30, | Nine months ended April 30, |
|---|
| | Note | 2022 | | | 2021 | | | 2022 | | | 2021 | | |
| Expenses | | | | | | | | | | | | | |
| Exploration and evaluation | | $ | 70,571 | | $ | 6,746 | | $ | 238,576 | | $ | 66,666 | |
| Assays and analysis | | | 540 | | | – | | | 27,918 | | | 4,769 | |
| Drilling | | | – | | | – | | | 22,455 | | | – | |
| Geological | | | 51,177 | | | 6,746 | | | 111,969 | | | 17,946 | |
| Helicopter and fuel | | | – | | | – | | | – | | | 29,520 | |
| Property costs and assessments | | | – | | | – | | | 584 | | | – | |
| Site activities | | | 11,200 | | | – | | | 59,700 | | | 13,252 | |
| Socioeconomic | | | 4,597 | | | – | | | 4,597 | | | – | |
| Technical data | | | 500 | | | – | | | 1,000 | | | – | |
| Travel and accommodation | | | 2,557 | | | – | | | 10,353 | | | 1,179 | |
| | | | 39,903 | | | 26,752 | | | 141,925 | | | 105,698 | |
| Administrative fees | 7(a) | | 8,214 | | | 6,927 | | | 31,352 | | | 27,970 | |
| Insurance | | | 6,320 | | | 8,573 | | | 23,755 | | | 24,563 | |
| IT Services | | | 2,500 | | | 3,000 | | | 8,000 | | | 9,000 | |
| Legal, accounting and audit | | | 3,209 | | | – | | | 20,564 | | | 18,276 | |
| Office and miscellaneous | | | 11,487 | | | 1,499 | | | 26,709 | | | 2,626 | |
| Regulatory, trust and filing | | | 8,173 | | | 6,753 | | | 31,545 | | | 23,263 | |
| Equity-settled share-based compensation | | | – | | | – | | | 399,140 | | | – | |
| Operating expenses | | | (110,474 | ) | | (33,498 | ) | | (779,641 | ) | | (172,364 | ) |
| Other items | | | | | | | | | | | | | |
| Accretion expense - office lease | | | (1,305 | ) | | – | | | (4,079 | ) | | – | |
| Amortization of Right-of-use asset | | | (2,474 | ) | | – | | | (7,421 | ) | | – | |
| Gain on sale of royalty interest | | | – | | | 191,654 | | | – | | | 191,654 | |
| Selling costs for royalty interest | | | – | | | (15,256 | ) | | – | | | (15,256 | ) |
| Interest income | | | 1,033 | | | 307 | | | 1,841 | | | 1,027 | |
| Foreign exchange gain (loss) | | | (1 | ) | | – | | | (83 | ) | | 357 | |
| Other income | | | – | | | – | | | 150,000 | | | – | |
| Net income (Loss) and comprehensive income (loss) for the period | | $ | (113,221 | ) | $ | 143,207 | | $ | (639,383 | ) | $ | 5,418 | |
| Basic earning (loss) per common share | | $ | (0.00 | ) | $ | 0.01 | | $ | (0.02 | ) | $ | 0.00 | |
| Diluted earning (loss) per common share | | $ | (0.00 | ) | $ | 0.00 | | $ | (0.02 | ) | $ | 0.00 | |
| Weighted average number of common shares outstanding (note 5(c)) | | | | | | | | | | | | | |
| Basic | | | 40,114,141 | | | 26,677,776 | | | 32,561,693 | | | 26,514,733 | |
| Diluted | | | 40,114,141 | | | 39,114,141 | | | 32,561,693 | | | 39,114,141 | |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 4 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>CONDENSED **** CONSOLIDATED **** INTERIM **** STATEMENTS **** OF **** CASH **** FLOWS<br> <br>(Unaudited - Expressed in Canadian Dollars) |
|---|
| Nine months ended April 30, |
|---|
| | Note | 2022 | | | 2021 | | |
| Operating activities | | | | | | | |
| Income (loss) for the period | | $ | (639,383 | ) | $ | 5,418 | |
| Adjusted for: | | | | | | | |
| Accretion expense - office lease | 11 | | 4,079 | | | – | |
| Amortization of Right-of-use asset | 11 | | 7,421 | | | – | |
| Interest income | | | (1,841 | ) | | (1,027 | ) |
| Equity-settled share-based compensation | | | 399,140 | | | – | |
| Changes in working capital items: | | | | | | | |
| Amounts receivable and other assets | | | (263 | ) | | 5,228 | |
| Amounts payable and other liabilities | | | (34,648 | ) | | (3,431 | ) |
| Due to related parties | 7(a)&7(b) | | (18,523 | ) | | (74,429 | ) |
| Net cash used in operating activities | | | (284,018 | ) | | (244,639 | ) |
| Investing activities | | | | | | | |
| Sale of royalty interest net of costs | | | - | | | 176,399 | |
| Interest received | | | 1,841 | | | 1,027 | |
| Net cash provided by investing activities | | | 1,841 | | | 177,426 | |
| Financing activities | | | | | | | |
| Office lease payment (base rent portion capitalized under IFRS 16) | | | (9,594 | ) | | – | |
| Proceeds from exercise of warrants | 5(a) | | 445,455 | | | 60,000 | |
| Share issuance costs | | | – | | | (4,981 | ) |
| Net cash provided by financing activities | | | 435,861 | | | 55,019 | |
| Increase (decrease) in cash | | | 153,684 | | | (12,194 | ) |
| Cash, beginning of the year | | | 206,443 | | | 206,529 | |
| Cash, end of the period | | $ | 360,127 | | $ | 194,335 | |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 5 |
|---|
| QUARTZ MOUNTAIN RESOURCES LTD.<br> <br>CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOLDERS' EQUITY (DEFICIENCY)<br> <br>(Expressed in Canadian Dollars, except for share information) |
|---|
| Share Capital | Reserves |
|---|
| | Note | | Number of shares | | Amount | | | Equity-settled<br> <br>share-based<br> <br>payments | | Accumulated<br> <br>deficit | | | Total<br> <br>shareholders'<br> <br>equity (deficiency) | | | | Balance at July 31, 2020 | | | | 25,477,776 | $ | 27,158,423 | | $ | 592,011 | $ | (27,611,883 | ) | $ | 138,551 | |
| Flow-through shares issued through exercise of warrants | 7(b) | | | 1,200,000 | | 60,000 | | | – | | – | | | 60,000 | |
| Shares issuance costs | | | | – | | (4,981 | ) | | – | | – | | | (4,981 | ) |
| Income for the period | | | | – | | – | | | – | | 5,418 | | | 5,418 | |
| Balance at April 30, 2021 | | | | 26,677,776 | $ | 27,213,442 | | $ | 592,011 | $ | (27,606,465 | ) | $ | 198,988 | |
| Balance at July 31, 2021 | | | | 31,205,049 | $ | 27,599,806 | | $ | 592,011 | $ | (27,728,302 | ) | $ | 463,515 | |
| Flow-through shares issued through exercise of warrants | 5(a) | | | 8,909,092 | | 445,455 | | | – | | – | | | 445,455 | |
| Share purchase options | | | | – | | – | | | 399,140 | | – | | | 399,140 | |
| Loss for the period | | | | – | | – | | | – | | (639,383 | ) | | (639,383 | ) |
| Balance at April 30, 2022 | | | | 40,114,141 | $ | 28,045,261 | | $ | 991,151 | $ | (28,367,685 | ) | $ | 668,727 | |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| 6 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| 1. | NATURE AND CONTINUANCE OF OPERATIONS |
|---|
Quartz Mountain Resources Ltd. is a Canadian public company incorporated in British Columbia on August 3, 1982. The Company's corporate office is located at 1040 West Georgia Street, 14th Floor, Vancouver, British Columbia, Canada. The Company most recently focused on evaluating mineral prospects for potential acquisition and exploration in British Columbia. The Company has acquired two mineral projects and continues to investigate potential opportunities.
These condensed consolidated interim financial statements (the "Financial Statements") of the Company as at and for the three and nine months ended April 30, 2022, include Quartz Mountain Resources Ltd. and its subsidiaries (together referred to as the "Company"). Quartz Mountain Resources Ltd. is the ultimate parent entity of the group.
These Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. As at April 30, 2022, the Company had an accumulated deficit of $28,367,685, and has a working capital of $322,315. The Company's continuing operations are dependent upon new projects, the ability of the Company to obtain the necessary financing to complete exploration of any new projects, the ability to obtain the necessary permits to explore, develop, and mine new projects, and the future profitable production of any mine. These material uncertainties raise substantial doubt on the ability of the Company to continue as a going concern.
Additional debt or equity financing will be required to fund acquisition of mineral property interests. There can be no assurance that the Company will be able to obtain additional financial resources or achieve positive cash flows. If the Company is unable to obtain adequate additional financing, it would need to curtail its expenditures further, until additional funds can be raised through financing activities.
These Financial Statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
Effective May 27, 2020, the Company completed a forward share split (the “Share Split”) on the basis of two additional common shares for every common share outstanding prior to the Share Split. Outstanding warrants were adjusted by the same share split ratio. All references to shares and per share amounts have been retroactively restated to give effect to the Share Split.
COVID- 19
Given the ongoing and dynamic nature of the circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the impact of COVID-19, including any responses to it, will be on the global economy and the business of the Company or for how long any disruptions are likely to continue. The extent of such impact will depend on future developments, which are highly uncertain, rapidly evolving and difficult to predict, including new information which may emerge about COVID- 19 and additional actions which may be taken to contain it.
Such developments could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flow, and exposure to credit risk.
The Company is constantly evaluating the situation and monitoring any impacts or potential impacts to its business.
| 7 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
|---|
The principal accounting policies applied in the preparation of these Financial Statements are described below. These policies have been consistently applied for all years presented, unless otherwise stated.
| (a) | Statement of compliance |
|---|
These Financial Statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB") and its interpretations. Accordingly, they do not include all of the information and note disclosures as required by International Financial Reporting Standards ("IFRS") for annual financial statements.
The accounting policies and methods of computation applied by the Company in these Financial Statements are the same as those applied by the Company in its most recent annual consolidated financial statements filed on the Company's profile on SEDAR at www.sedar.com. These Financial Statements should be read in conjunction with the Company’s financial statements as at and for the year ended July 31, 2021. Results for the period ended April 30, 2022, are not necessarily indicative of future results.
The Company’s Board of Directors authorized issuance of these Financial Statements on June 24, 2022.
| (b) | Basis of presentation and consolidation |
|---|
These Financial Statements have been prepared on a historical cost basis, except for financial instruments measured at fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information.
These Financial Statements include the accounts of the Company and the subsidiaries that it controls. Control is achieved when the Company is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Intercompany balances and transactions including any unrealized income and expenses arising from intercompany transactions are eliminated upon consolidation.
At April 30, 2022 and July 31, 2021, the Company held a 100% interest in QZMG Resources Ltd., a company that holds a 100% interest in Wavecrest Resources Inc.
| (c) | Significant accounting estimates and judgments |
|---|
The preparation of these Financial Statements in conformity with IAS 34 involved use of judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from such estimates.
In preparing these Financial Statements, significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended July 31, 2021.
| 8 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| 3. | AMOUNTS RECEIVABLE AND OTHER ASSETS |
|---|
| April 30, 2022 | July 31, 2021 |
|---|
| Sales tax receivable | $ | 5,375 | $ | 3,347 |
| Prepaid insurance | | – | | 1,765 |
| Total | $ | 5,375 | $ | 5,112 |
| 4. | MINERAL PROPERTY INTEREST |
|---|
| Maestro (formerly Lone Pine) Property | Angel's Camp Royalty | |||
|---|---|---|---|---|
| Balance, July 31, 2020 | $ | – | $ | 1 |
| Balance, April 30, 2021 | $ | – | $ | 1 |
| Balance, July 31, 2021 | $ | 340,000 | $ | – |
| Balance, April 30, 2022 | $ | 340,000 | $ | – |
| (a) | Maestro (formerly Lone Pine) Property, British Columbia |
|---|
Under a mineral claims purchase agreement (the “Agreement”) dated June 8, 2021 between the Company and Impala Capital Corp. (the “Vendor”), the Company acquired a 100% interest in nine mineral claims located near Houston, British Columbia (the “Property”). Under the terms of the Agreement, the Company made $105,000 in cash payments and issued 1,000,000 shares to the Vendor, having a fair value of $210,000, which are subject to a 4 month resale restricted period.
The Property is subject to a pre-existing 2.5% net smelter returns (NSR) held by an unrelated arm’s length third party, of which 1.5% can be purchased for $1.5 million. This NSR is subject to an annual advance payment of $25,000 (paid).
| (b) | Jake Property, British Columbia |
|---|
On November 5, 2021, the Company entered into a mineral claims purchase agreement with United Mineral Services Ltd. to acquire 100% interest in the Jake mineral property consisting of four staked claims (the “Jake Property”) and obtained an additional option to purchase 100% of five adjacent claims owned by an arm’s length third party. The Jake Property is located approximately 162 km north of Smithers, British Columbia. The Jake Property acquisition is subject to TSX Venture Exchange approval.
On May 24, 2022, the Company has received approval from the TSX Venture Exchange for its acquisition of the Jake Property. The purchase from UMS is comprised of a 100% undivided interest in four mineral claims it staked as well as the transfer of a valid option to acquire an undivided 100% interest in five adjacent mineral claims (the “Underlying Claims”) from Electrum Resource Corporation, an arms-length third party. The Electrum option can be exercised with payment of $125,000 to July 2022 or alternatively an equal amount spread over two years with property work commitments of $360,000. The Underlying Claims are subject to a 2% NSR which is capped at $3 million.
| 9 |
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| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| 5. | CAPITAL AND RESERVES |
|---|---|
| (a) | Authorized share capital |
Shares issued during the period ended April 30, 2021
On August 25, 2020, the Company issued 1,200,000 flow-through common shares on the exercise of the warrants at a price of $0.05 for gross proceeds of $60,000.
Shares issued during the period ended April 30, 2022
On October 18, 2021, the Company issued 1,909,092 flow-through common shares on the exercise of the warrants at an exercise price of $0.05 for gross proceeds of $95,455.
On December 13, 2021, the Company issued 7,000,000 flow-through common shares on the exercise of the warrants at an exercise price of $0.05 for gross proceeds of $350,000.
Flow-through shares commitment
As at April 30, 2022, the amount of flow-through proceeds remaining to be expended is approximately $469,767, which must be incurred on or before December 31, 2023.
| (b) | Warrants |
|---|
The continuity of the warrants during the period ended April 30, 2022 is as follows:
| Number **** of warrants | Weighted average exercise price () | |||
|---|---|---|---|---|
| Balance July 31, 2020 | 13,636,365 |
| Exercised | | (1,200,000 | ) | |
| Balance April 30, 2021 | | 12,436,365 | | |
| Balance July 31, 2021 | | 8,909,092 | | |
| Exercised | | (8,909,092 | ) | |
| Balance April 30, 2022 | | – | | |
All values are in US Dollars.
| 10 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| (c) | Options |
|---|
The continuity of the options during the period ended April 30, 2022 is as follow:
| Number of options | Weighted average exercise price () | ||
|---|---|---|---|
| Balance July 31, 2020 | – |
| Exercised | | – | |
| Balance April 30, 2021 | | – | |
| Balance July 31, 2021 | | – | |
| Granted | | 1,955,700 | |
| Balance April 30, 2022 | | 1,955,700 | |
All values are in US Dollars.
| Expiry Date | Price per share | Options Outstanding | ||
|---|---|---|---|---|
| January 11, 2032 | $ | 0.20 | 1,955,700 |
On January 11, 2022, the Company granted 1,995,700 share purchase options to a director of the Company. Each option entitles the holder to purchase one common share of the Company at $0.20 per share. 1,995,700 of these options fully vested on the grant date. The expiry date of these options is January 22, 2032. The fair value of these options was determined to be $399,140 using the Black- Scholes option pricing model with the following weighted average assumptions: expected life of 10 years, volatility of 350%, dividend yield of 0%, and risk-free rate of 1.71%. The Company recognized equity-settled share-based compensation of $399,140 in connection with this grant.
| 6. | AMOUNTS PAYABLE AND OTHER LIABILITIES |
|---|
| April 30, 2022 | July 31, 2021 |
|---|
| Amounts payable | $ | 9,121 | $ | 24,423 |
| Accrued liabilities | | 7,000 | | – |
| Total | $ | 16,121 | $ | 24,423 |
| 7. | RELATED PARTY BALANCES AND TRANSACTIONS |
|---|---|
| (a) | Transactions with Key Management Personnel |
Key management personnel are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include the directors of the Company.
| 11 |
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| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
The Company compensated key management personnel as follows:
| Three months ended April 30, | Nine months ended April 30, |
|---|
| | 2022 | | 2021 | | 2022 | | 2021 | |
| Short-term employee benefits, including salaries | | 5,125 | | 3,375 | | 17,625 | | 11,475 |
| Fees related to sale of royalty interest | | – | | 2,500 | | – | | 2,500 |
| Equity-settled share-based compensation | | – | | – | | 399,140 | | – |
Short-term employee benefits include salaries, director’s fees, and amounts paid to Hunter Dickinson Services Inc. (“HDSI”) (note 7(b)) for services provided to the Company by certain HDSI personnel who serve as directors or officers of the Company and the fees paid to the Chief Financial Officer who is independent of HDSI appointed on August 15, 2020.
During the nine months ended April 30, 2022, The Company recognized equity-settled share-based compensation of $399,140 in connection with a grant of share purchase options on January 11, 2022 to a director of the Company (Note 5(c)).
During the nine months ended April 30, 2022, the Company incurred $9,000 for the fees to an entity controlled by the Chief Financial Officer (April 30, 2021 - $8,500).
As at April 30, 2022, the balance payable to the Chief Financial Officer was $1,050 (July 31, 2021 - $NIL). The balance was settled in May 2022.
| (b) | Entities with Significant Influence over the Company |
|---|
Hunter Dickinson Inc. (“HDI”) and its wholly-owned subsidiary HDSI are related private companies established by a group of mining professionals. HDSI provides services under contracts for a number of mineral exploration and development companies, and also to companies that are outside of the mining and mineral development space. The Company acquires services from a number of arms- length and related contractors. At the Company’s discretion HDSI may provide certain contract services.
The Company’s Chief Executive Officer, President, Chairman, and Corporate Secretary are employees of HDSI and work for the Company under an employee secondment arrangement between the Company and HDSI.
Pursuant to an agreement dated July 2, 2010, HDSI provides certain technical, geological, corporate communications, regulatory compliance, and administrative and management services to the Company, on a non-exclusive basis as needed and as requested by the Company. As a result of this relationship, the Company has ready access to a range of diverse and specialized expertise on a regular basis, without having to engage or hire full-time employees or experts.
The Company is not obligated to acquire any minimum amount of services from HDSI. The monetary amount of the services received from HDSI in a given period of time is a function of annually set and agreed charge-out rates for and the time spent by each HDSI employee engaged by the Company.
HDSI also incurs third-party costs on behalf of the Company. Third- party costs are billed at cost, without markup.
There are no ongoing contractual or other commitments resulting from the Company's transactions with HDSI, other than the payment for services already rendered and billed. The agreement may be terminated upon 60 days' notice by either the Company or HDSI.
| 12 |
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| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
The following is a summary of transactions with HDSI that occurred during the reportingperiods:
| Three months ended April 30, | Nine months ended April 30, |
|---|
| | 2022 | | 2021 | | 2022 | | 2021 | |
| HDSI: Services received based on management services agreement | $ | 11,644 | $ | 13,047 | $ | 30,339 | $ | 34,785 |
| HDSI: Office lease related expenses (accretion expenses, amortization of right-of-use assets under IFRS 16 and operating costs not capitalized as right-of-use assets | | 6,604 | | – | | 17,596 | | – |
| under IFRS 16)(note 12) | | | | | | | | |
| HDSI: Reimbursement of third party expenses paid | | 747 | | 1,038 | | 3,107 | | 5,643 |
| Total | $ | 18,995 | $ | 14,085 | $ | 51,042 | $ | 40,428 |
United Mineral Services
United Mineral Services Ltd. (“UMS”) is a private company wholly-owned by the Company’s Chairman and CEO who is also a key shareholder of the Company. UMS is engaged in the acquisition and exploration of mineral property interests.
| January31, 2022 | July 31, 2021 |
|---|
| Balance payable to HDSI | $ | 5,669 | $ | 9,024 |
| Balance payable to United Mineral Services | | 15,786 | | 15,786 |
| Balance payable to an officer | | 1,050 | | – |
| Balance payable to a shareholder | | 557 | | 557 |
| Due to related parties | $ | 23,062 | $ | 25,367 |
| 8. | OPERATING SEGMENTS |
|---|
The Company operates in a single reportable operating segment – the acquisition, exploration, and evaluation of mineral property interests. The Company is currently focused on the acquisition and exploration of mineral property interests in British Columbia.
| 9. | FINANCIAL INSTRUMENTS |
|---|
Financial assets and liabilities are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgement and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
| 13 |
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| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
The carrying value of cash, amounts receivable, amounts payable and other liabilities, due to a related party, and loan payable approximates fair value due to the short-term nature of the financial instruments. Cash is classified as fair value through profit or loss and measured at fair value using level 1 inputs.
| 10. | FINANCIAL RISK MANAGEMENT |
|---|
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
| (a) | Credit risk |
|---|
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets including cash and amounts receivable. The Company limits its exposure to credit risk on liquid financial assets by only investing its cash with high- credit quality financial institutions in business and savings accounts. Receivables are due primarily from a government agency.
The carrying value of the Company's cash and amounts receivable represent the maximum exposure to credit risk.
| (b) | Liquidity risk |
|---|
Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company does not have sufficient capital in order to meet short-term business requirements, and accordingly is exposed to liquidity risk.
The following obligations existed at April 30, 2022:
| Total | Less than 1 year | 1-5 years |
|---|
| Amounts payable and other liabilities | $ | 16,121 | $ | 16,121 | $ | – |
| Due to a related party | | 6,844 | | 6,844 | | – |
| Income taxes payable | | 10,106 | | 10,106 | | – |
| Lease liability | | 43,284 | | 10,116 | | 33,168 |
| Total | $ | 76,355 | $ | 43,187 | $ | 33,168 |
The following obligations existed at April 30, 2021:
| Total | Less than 1 year | 1-5 years |
|---|
| Amounts payable and other liabilities | $ | 745 | $ | 745 | $ | – |
| Due to a related party | | 1,403 | | 1,403 | | – |
| Total | $ | 2,148 | $ | 2,148 | $ | – |
| 14 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| (c) | Interest rate risk |
|---|
The Company’s exposure to interest rate risk arises from the interest rate impact on cash. The Company’s practice has been to invest cash at floating rates of interest, in order to maintain liquidity, while achieving a satisfactory return for shareholders. There is minimal risk that the Company would recognize any loss because of a decrease in the fair value of any demand bank investment certificates included in cash as they are generally held with large financial institutions. The Company from time to time has debt instruments and is exposed to risk in the event of interest rate fluctuations. The Company has not entered into any interest rate swaps or other financial arrangements that mitigate the exposure to interest rate fluctuations.
| (d) | Market risk |
|---|
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The Company is not subject to significant market risk.
| (e) | Capital management objectives |
|---|
The Company's primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to potentially provide returns for shareholders, and to have sufficient liquidity available to fund ongoing expenditures and suitable business opportunities as they arise.
The Company considers the components of shareholders' equity (deficiency) as capital. The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue equity, sell assets, or return capital to shareholders as well as issue or repay debt.
The Company's investment policy is to invest its cash in highly liquid short–term interest–bearing investments having maturity dates of three months or less from the date of acquisition and that are readily convertible to known amounts of cash.
There were no changes to the Company's approach to capital management during the period ended April 30, 2022.
The Company is not subject to any externally imposed equity requirements.
| 11. | OFFICE LEASE – RIGHT OF USE ASSET AND LEASE LIABILITY |
|---|
The Company subleases corporate offices in Vancouver, BC from HDSI under a lease agreement dated May 1,2021 and the lease expires on April 29, 2026. Right-of-use asset A summary of the changes in the right-of-use asset for the period ended April 30, 2022 and July 31, 2021 is as follows:
| 15 |
|---|
| QUARTZ **** MOUNTAIN **** RESOURCES **** LTD.<br> <br>NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS<br> <br>FOR **** THE **** THREE **** AND **** NINE **** MONTHS **** ENDED **** APRIL **** 30, **** 2022 **** AND **** 2021<br> <br>(Unaudited – Expressed in Canadian Dollars, unless otherwise stated) |
|---|
| Right-of-use-asset **** |
|---|
| Balance at July 31, 2021 | $ | 47,001 | |
| Amortization | | (7,421 | ) |
| Balance at April 30, 2022 | $ | 39,580 | |
Lease liability: On May 1, 2021, the Company entered into lease agreement which resulted in the lease liability of $49,475 (undiscounted value of $67,486, discount rate used is 12.00%). This liability represents the monthly lease payment from May 1, 2021 to April 29, 2026, the end of the lease term less abatement granted by HDSI. A summary of changes in the lease liability during the period ended April 30, 2022 and July 31, 2021 are as follows:
| Lease liability |
|---|
| Balance at July 31, 2021 | $ | 48,799 | |
| Lease payment - base rent portion | | (9,594 | ) |
| Lease liability - accretion expense | | 4,079 | |
| Balance at April 30, 2022 | | 43,284 | |
| Current portion | | 8,165 | |
| Long-term portion | $ | 35,119 | |
The following is a schedule of the Company’s future lease payments (base rent portion) under lease obligations:
| Future lease payments (base rent portion only) |
|---|
| Fiscal 2022 (May 1, 2022 to July 31, 2022) | $ | 3,198 | |
| Fiscal 2023 (August 1, 2022 to July 31, 2023) | | 12,956 | |
| Fiscal 2024 (August 1, 2023 to July 31, 2024) | | 13,612 | |
| Fiscal 2025 (August 1, 2024 to July 31, 2025) | | 14,104 | |
| Fiscal 2026 (August 1, 2025 to April 29, 2026) | | 10,578 | |
| Total undiscounted lease payments | $ | 54,448 | |
| Less: imputed interest | | (11,164 | ) |
| Lease liability as at April 30, 2022 | $ | 43,284 | |
| 12. | EVENTS AFTER THE REPORTING PERIOD |
|---|
On May 30, 2022, the Company appointed Robert Dickinson as Chairman and CEO. Trevor Thomas, having resigned as Chairman, President and CEO, will remain with the Company as a Director and Corporate Secretary. Leonie Tomlinson, ICD.D, a Director of the Company has been appointed as President of the Company. Matthew Dickinson, a Director of the Company, has been appointed as Vice President Corporate Development.
| 16 |
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qzmrf_ex993.htm EXHIBIT 99.3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Robert Dickinson, Chief Executive Officer of Quartz Mountain Resources Ltd., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Quar tz Mountain Resources Ltd.(the "issuer") for the interim period ended April 30, 2022. |
|---|---|
| 2 | No misrepresentations: filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| Date: June 24, 2022 |
|---|
| /s/ Robert Dickinson |
| Robert Dickinson<br> <br>Chief Executive Officer |
| NOTE TO READER | |
|---|---|
| In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification ofDisclosure in Issuers' Annual and Interim Filings(NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of | |
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP. |
| The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
qzmrf_ex994.htm EXHIBIT 99.4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Sebastian Tang, Chief Financial Officer, of Quartz Mountain Resources Ltd., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Quartz Mountain Resources Ltd. (the "issuer") for the interim period ended April 30, 2022. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| Date: June 24, 2022 |
|---|
| /s/ Sebastian Tang |
| Sebastian Tang |
| Chief Financial Officer |
| NOTE TO READER | |
|---|---|
| In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification ofDisclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of | |
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP. |
| The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |