Quartz Mountain Resources Ltd 6-K, filed Dec 20, 2021
Quartz Mountain Resources Ltd (QZMRF)
6-K
2021-12-20
For: 2021-10-31
View Original
Added on
April 08, 2026
About this 6-K
Quartz Mountain Resources Ltd filed this 6-K on December 20, 2021.
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
December 17,
2021
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.
[X]
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
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
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Certificate of CEO
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Certificate of CFO
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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.
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Quartz Mountain Resources Ltd. |
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Date: December 17,
2021
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By:
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/s/ Sebastian Tang
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Sebastian Tang |
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Chief Financial Officer |
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Exhibit 99.1
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
THREE
MONTHS ENDED OCTOBER 31, 2021
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
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Table
of Contents
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Page
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1.1
Date
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3
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1.2
Overview
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3
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1.3
Selected
Annual Information
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5
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1.4
Summary
of Quarterly Results
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6
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1.5
Results of Operations and Financial
Condition
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6
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1.6
Liquidity
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6
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1.7
Capital
Resources
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7
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1.8
Off-Balance Sheet
Arrangements
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7
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1.9
Transactions with
Related Parties
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7
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1.10
Fourth
Quarter
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8
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1.11
Proposed
Transactions
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8
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1.12
Critical
Accounting Estimates
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8
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1.13
Changes in Accounting Policies
including Initial Adoption
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8
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1.14
Financial Instruments and Other
Instruments
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8
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1.15
Other
MD&A Requirements
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9
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1.16
Risk
Factors
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10
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
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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 months ended
October 31, 2021, 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 December 17, 2021. 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.
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.
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.
3
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
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On
August 15, 2020, Michael Lee resigned as Chief Financial Officer.
Sebastian Tang was appointed Chief Financial Officer.
Other Corporate Information
The
board of directors consists of Trevor Thomas, Leonie Tomlinson and
Matthew Dickinson. Trevor Thomas is the Chairman, Chief Executive
Officer and 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 were approved for listing on the TSX
Venture Exchange under the symbol QZM and certain broker-dealers in
the United States make 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 agrees 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.
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.
4
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
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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.
Jake Property
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 consisted 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 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.
Other property
On
November 2, 2021 the Company entered into a binding Agreement with
Torr Resources Corp. whereby Torr is purchasing historical project
data from the Company for $150,000. The transaction is 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 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 $350,000.
1.3
SELECTED ANNUAL
INFORMATION
Not
applicable.
5
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
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1.4
SUMMARY OF QUARTERLY
RESULTS
These
amounts are expressed in thousands of Canadian Dollars, except per
share amounts. Minor differences are due to rounding.
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Fiscal
Quarter Ended
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||||||||
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Oct-31
2020
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Jul-31
2021
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Apr-30
2021
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Jan-31
2021
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Oct-31
2020
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Jul-31
2020
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Apr-30
2020
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Jan-31
2020
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Income (loss) for
the period
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$(139)
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$(122)
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$143
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$(43)
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$(95)
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$(75)
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$(66)
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$2,713
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Basic earnings
(loss) per common share
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$(0.00)
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$(0.00)
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$0.01
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$(0.00)
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$(0.00)
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$(0.00)
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$(0.00)
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$0.23
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Diluted earnings
(loss) per common share
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$(0.00)
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$(0.00)
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$0.00
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$(0.00)
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$(0.00)
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$(0.00)
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$(0.00)
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$0.23
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1.5
RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
1.5.1
(Loss)
for the period ended October 31, 2021 (“2022 Q1”) vs.
2020 (“2021 Q1”)
The
increase in loss during 2022 Q1 was mainly due to the increase in
exploration and evaluation expenditures incurred in the current
period (2022 Q1 - $97,648) versus $56,292 in 2021 Q1. The increase
is attributed to the exploration works on the Maestro Property
acquired in May 2021.
During
2022 Q1, administrative expenses decreased from $39,695 in 2021 Q1
to $37,925 in 2022 Q1. The decrease was due to the
management’s continuous effort in streamlining of office
overhead expenses including the reduction in insurance premium in
2022 Q1 versus 2021 Q1. A breakdown of general and administrative
expenses incurred during the period ended October 31, 2021 and
2020, is provided in the financial statements for the period ended
October 31, 2021.
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
October 31, 2021, the Company had an accumulated deficit of
$27,867,595 and has a\ working capital of $74,472.
The
Company believes that its liquid assets at October 31, 2021, are
sufficient to meet its known obligations. The Company is actively
managing its cash reserves, and curtailing 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.
6
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
|
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.
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
October 31, 2021.
The
Company has no lines of credit or other sources of financing which
have been arranged but are as of yet unused.
At
October 31, 2021, 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 October 31, 2021 and 2020. These are also
available at www.sedar.com.
Hunter
Dickinson Inc.
Hunter
Dickinson Inc. (“HDI”) and its wholly‐owned
subsidiary Hunter Dickinson Services Inc. (“HDSI”) are
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 related and
arms‐length contractors, and it is at the Company’s
discretion that HDSI provides 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 June 1, 2008, HDSI provides certain cost effective
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
benefits from the economies of scale created by HDSI which itself
serves several clients both mining and non-mining
clients.
7
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
|
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.
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 October 31, 2021, 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.
8
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
|
1.15
OTHER MD&A
REQUIREMENTS
1.15.1
ADDITIONAL DISCLOSURE
FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE
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(a)
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exploration and
evaluation assets or expenditures
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The
required disclosure is presented in Section 1.5 of this
MD&A.
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(b)
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expensed research
and development costs
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Not
applicable
|
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(c)
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intangible assets
arising from development
|
Not
applicable
|
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(d)
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general
and administration expenses
|
The
required disclosure is presented in Section 1.5 of this
MD&A.
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(e)
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any
material costs, whether expensed or recognized as assets, not
referred to in
paragraphs (a)
through (d)
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None
|
1.15.2
DISCLOSURE OF OUTSTANDING SHARE DATA
The
following details the share capital structure as at the date of
this MD&A:
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Common
shares
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Number
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.
9
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QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE MONTHS ENDED OCTOBER 31, 2021
|
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 October 31,
2021.
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 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.
10
Exhibit 99.2
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(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
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QUARTZ MOUNTAIN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited -
Expressed in Canadian Dollars)
|
|||
|
|
|
October
31,
|
(Audited)
July
31,
|
|
|
Note
|
2021
|
2021
|
|
Assets
|
|
|
|
|
Current assets
Cash
|
|
$176,848
|
$206,443
|
|
Amounts receivable
and other assets
|
3
|
6,981
|
5,112
|
|
|
|
183,829
|
211,555
|
|
Non-current
assets
Mineral property
interests
|
4
|
340,000
|
340,000
|
|
Right-of-use
asset
|
12
|
44,528
|
47,001
|
|
Total
assets
|
|
$568,357
|
$598,556
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
|
Current
liabilities
Amounts payable and
other liabilities
|
6
|
$44,261
|
$24,423
|
|
Income taxes
payable
|
|
36,452
|
36,452
|
|
Due to related
parties
|
7(a) & (b)
|
20,952
|
25,367
|
|
Lease
liability
|
11
|
7,692
|
7,466
|
|
|
|
109,357
|
93,708
|
|
Non-current
liabilities Lease liability
|
11
|
39,323
|
41,333
|
|
Total
liabilities
|
|
148,680
|
135,041
|
|
Shareholders'
equity Share capital
|
5(a)
|
27,695,261
|
27,599,806
|
|
Reserves
|
|
592,011
|
592,011
|
|
Accumulated
deficit
|
|
(27,867,595)
|
(27,728,302)
|
|
Total shareholders'
equity
|
|
419,677
|
463,515
|
|
Total liabilities
and shareholders' equity
|
|
$568,357
|
$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.
|
|
|
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/s/ Trevor
Thomas
|
/s/ Leonie
Tomlinson
|
|
Trevor
Thomas
|
Leonie
Tomlinson
|
|
Director
|
Director
|
3
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE
LOSS
(Expressed in
Canadian Dollars, except for weighted average number of common
shares)
|
|
Three
months ended October 31
|
|
|
Note |
2021
|
2020
|
|
Expenses
Exploration and
evaluation
|
$97,648
|
$56,292
|
|
Assays and
analysis
|
5,900
|
1,990
|
|
Geological
|
34,868
|
11,200
|
|
Helicopter and
fuel
|
–
|
29,520
|
|
Property costs and
assessments
|
584
|
–
|
|
Site
activities
|
48,500
|
12,403
|
|
Travel and
accommodation
|
7,796
|
1,179
|
|
|
37,925
|
39,695
|
|
Administrative
fees
|
7(a)
|
9,093
|
9,605
|
|
Insurance
|
|
5,192
|
7,995
|
|
IT
Services
|
|
3,000
|
3,000
|
|
Legal, accounting
and audit
|
|
1,455
|
9,312
|
|
Office and
miscellaneous
|
|
5,768
|
322
|
|
Regulatory, trust
and filing
|
|
13,417
|
9,461
|
|
Operating
expenses
|
(135,573)
|
(95,987)
|
|
Other
items
Accretion expense -
office lease
|
(1,414)
|
–
|
|
Amortization of
Right-of-use asset
|
(2,474)
|
–
|
|
Interest
income
|
326
|
470
|
|
Foreign exchange
gain (loss)
|
(158)
|
357
|
|
(Loss)
and comprehensive (loss) for the period
|
$(139,293)
|
$(95,160)
|
|
Basic
earning (loss) per common share
|
$
(0.00)
|
$(0.00)
|
|
Diluted
earning (loss) per common share
|
$(0.00)
|
$(0.00)
|
|
Weighted
average number of common shares outstanding (note
5(c))
|
||
|
Basic
|
31,474,812
|
26,351,690
|
|
Diluted
|
40,114,141
|
39,114,141
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
4
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH
FLOWS
(Unaudited -
Expressed in Canadian Dollars)
|
|
Note
|
Three months ended
October 31
|
|
|
|
|
2021
|
2020
|
|
Operating
activities
|
|
|
|
|
Income (loss) for
the period
|
|
$(139,293)
|
$(95,160)
|
|
Adjusted
for:
|
|
|
|
|
Accretion expense -
office lease
|
11
|
1,414
|
–
|
|
Amortization of
Right-of-use asset
|
11
|
2,474
|
–
|
|
Interest
income
|
|
(326)
|
(470)
|
|
Changes in working
capital items: Amounts receivable and other assets
|
|
(1,869)
|
(13,154)
|
|
Amounts payable and
other liabilities
|
|
19,837
|
17,460
|
|
Due to related
parties
|
7(a) & 7(b)
|
(4,415)
|
(66,930)
|
|
Net cash used in
operating activities
|
|
(122,178)
|
(158,254)
|
|
Investing
activities
|
|
|
|
|
Interest
received
|
|
326
|
470
|
|
Net cash provided
by investing activities
|
|
326
|
470
|
|
Financing
activities
|
|
|
|
|
Office lease
payment (base rent portion capitalized under IFRS
16)
|
|
(3,198)
|
-
|
|
Proceeds from
exercise of warrants
|
5(a)
|
95,455
|
60,000
|
|
Share issuance
costs
|
|
–
|
(4,881)
|
|
Net cash provided
by financing activities
|
|
92,257
|
55,119
|
|
Increase
(decrease) in cash
|
|
(29,595)
|
(102,665)
|
|
Cash, beginning of
the year
|
|
206,443
|
206,529
|
|
Cash,
end of the period
|
|
$176,848
|
$103,864
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
5
QUARTZ MOUNTAIN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOLDERS' EQUITY
(DEFICIENCY)
(Expressed in
Canadian Dollars, except for share information)
|
|
|
Share Capital
|
Reserves
|
|
|
|
|
|
|
Number of Shares
|
Amount
|
Equity-settled
share-based payments
|
Accumulated
deficit
|
Total shareholders'
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
|
|
–
|
(4,881)
|
–
|
–
|
(4,881)
|
|
Loss for the
period
|
|
–
|
–
|
–
|
(95,160)
|
(95,160)
|
|
Balance at October
31, 2020
|
|
26,677,776
|
$27,213,542
|
$592,011
|
$(27,707,043)
|
$98,510
|
|
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)
|
1,909,092
|
95,455
|
–
|
–
|
95,455
|
|
Loss for the
period
|
|
–
|
–
|
–
|
(139,293)
|
(139,293)
|
|
Balance at October
31, 2021
|
|
33,114,141
|
$27,695,261
|
$592,011
|
$(27,867,595)
|
$419,677
|
The
accompanying notes are an integral part of these condensed
consolidated interim financial statements.
6
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(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, 15th Floor,
Vancouver, British Columbia, Canada. The Company most recently
focused on evaluating mineral prospects for potential acquisition
and exploration in British Columbia. The Company continues to
investigate potential opportunities.
These
condensed consolidated interim financial statements (the "Financial
Statements") of the Company as at and for the three months ended
October 31, 2020, 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 October 31, 2021, the Company had an accumulated
deficit of $27,707,043, and has a working capital of $98,509. 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 will 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.
7
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
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.
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
October 31, 2021, are not necessarily indicative of future
results.
The
Company’s Board of Directors authorized issuance of these
Financial Statements on December 17, 2021.
(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
October 31, 2021 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.
8
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
(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, 2020.
3.
AMOUNTS RECEIVABLE AND
OTHER ASSETS
|
|
October 31,
2021
|
July
31, 2021
|
|
Sales tax
receivable
|
$6,981
|
$3,347
|
|
Prepaid
insurance
|
-
|
1,765
|
|
Total
|
$6,981
|
$5,112
|
4.
MINERAL
PROPERTY INTERESTS
|
|
Maestro (formerly
Lone Pine) Property
|
Angel's Camp
Royalty
|
|
Balance, July 31,
2020
|
$–
|
$1
|
|
Balance, October
31, 2020
|
$–
|
$1
|
|
Balance, July 31,
2021
|
$340,000
|
$–
|
|
Balance, October
31, 2021
|
$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).
5.
CAPITAL AND RESERVES
(a)
Authorized share capital
At
October 31, 2021 and October 31, 2020, the authorized share capital
of the Company comprised
9
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
an
unlimited number of common shares without par value and an
unlimited number of preferred shares without par
value.
No
preferred shares have been issued to date. All issued common shares
are fully paid. Shares
issued during the period ended October 31, 2020
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 October 31, 2021
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.
Flow-through shares commitment
As at
October 31, 2021, the amount of flow-through proceeds remaining to
be expended is approximately $38,700, which must be incurred on or
before December 31, 2022.
(b)
Warrants
The
continuity of the warrants during the period ended October 31, 2021
is as follows:
|
|
|
Number
of warrants
|
Weighted
average exercise price ($)
|
|
Balance
July 31, 2020
|
13,636,365
|
$0.05
|
|
|
Granted
|
(1,200,000)
|
0.05
|
|
|
Balance
October 31, 2020
|
12,436,365
|
$0.05
|
|
|
Balance
July 31, 2021
|
|
8,909,092
|
$0.05
|
|
Exercised
|
|
(1,909,092)
|
0.05
|
|
Balance
October 31, 2021
|
|
7,000,000
|
$0.05
|
|
The
outstanding warrants at October 31, 2021 are as
follows:
|
||
|
Expiry
Date
|
Price
per share
|
Warrants
Outstanding
|
|
March 26,
2025$
|
0.05
|
7,000,000
|
|
(c) Basic
and Diluted Earnings (Loss)
|
|
|
|
|
October
31, 2021
|
October
31, 2020
|
|
Weighted average
common shares outstanding
Plus net
incremental shares from assumed conversions: Warrants
|
31,474,812
8,639,329
|
26,351,68912,762,452
|
|
Diluted weighted
average common shares outstanding
|
40,114,141
|
39,114,141
|
10
11
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
For the
periods where the Company records earnings, the Company calculates
diluted earnings per share using the basic weighted average number
of shares. If the diluted weighted average number of shares was
used, the result would be a reduction in the earnings, which would
be anti-dilutive.
6.
AMOUNTS PAYABLE AND
OTHER LIABILITIES
|
|
October 31, 2021
|
July 31, 2021
|
|
Amounts
payable
|
$33,834
|
$24,423
|
|
Amounts
payable
|
$10,427
|
$-
|
|
Total
|
$44,261
|
$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.
The
Company compensated key management personnel as
follows:
|
|
Three months ended
October 31,
|
|
|
|
2021
|
2020
|
|
Short-term employee
benefits, including salaries
|
$5,500
|
$3,025
|
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 three months ended October 31, 2021, the Company incurred
$3,000 for the fees to an entity controlled by the new Chief
Financial Officer (October 31, 2020 - $2,500).
As at
October 31, 2021, the balance payable to the Chief Financial
Officer was $1,050 (July 31, 2021
-
$NIL). The balance was settled in November 2020.
(b)
Entities with Significant Influence over the Company
Hunter
Dickinson Inc. (“HDI”) and its wholly-owned subsidiary
HDSI are 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 related and
arms-length contractors, and it is at the Company’s
discretion that HDSI provides 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 June 1, 2008, HDSI provides certain technical,
geological, corporate
12
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
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.
The
following is a summary of transactions with HDSI that occurred
during the reporting period:
|
|
Three months ended
October 31,
|
|
|
|
2021
|
2020
|
|
HDSI: Services
received through management services agreement
|
$10,993
|
$10,300
|
|
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 under IFRS 16)
|
5,285
|
–
|
|
HDSI: Reimbursement
of third party expenses paid
|
2,824
|
1,640
|
|
Total
|
$19,102
|
$11,940
|
United Mineral Services
United
Mineral Services Ltd. (“UMS”) is a private company
wholly-owned by a key shareholder of the Company. UMS is engaged in
the acquisition and exploration of mineral property
interests.
|
|
October 31,
2021
|
July
31, 2021
|
|
Balance payable to
HDSI
|
$7,305
|
$9,024
|
|
Balance payable to
United Mineral Services
|
12,597
|
15,786
|
|
Balance payable to
an officer
|
1,050
|
–
|
|
Balance payable to
a shareholder
|
–
|
557
|
|
Due to related
parties
|
$20,952
|
$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 Canada. The
Company’s only long-term asset is located in the
USA.
13
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
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 marketdata (unobservable inputs).
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 October 31, 2021:
14
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
|
|
Total
|
Less than 1
year
|
1-5
years
|
|
Amounts payable and
other liabilities
|
$44,261
|
$44,261
|
-
|
|
Due to a related
party
|
20,952
|
20,952
|
-
|
|
Lease
liability
|
47,015
|
7,692
|
39,323
|
|
Total
|
$112,228
|
$72,905
|
39,323
|
The
following obligations existed at October 31, 2020:
|
|
Total
|
Less than 1
year
|
1-5
years
|
|
Amounts payable and
other liabilities
|
$21,636
|
$21,636
|
-
|
|
Due to a related
party
|
8,902
|
8,902
|
-
|
|
Total
|
$30,538
|
$30,538
|
-
|
(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
15
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
ended
October 31, 2021.
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. Refer to Note 2 (c)for details regarding the 2019
adoption of IFRS 16. Right-of-use asset A summary of the changes in
the right-of-use asset for the period ended October 31 and July 31,
2021 is as follows:
Right-of-use-asset
|
Balance at July 31,
2021
|
$47,001
|
|
Amortization
|
(2,473)
|
|
Balance at October
31, 2021
|
$44,528
|
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
October 31 and July 31, 2021 are as follows:
|
Lease
liability
|
|
|
Balance at July 31,
2021
|
$48,799
|
|
Lease payment -
base rent portion
|
(3,198)
|
|
Lease liability -
accretion expense
|
1,414
|
|
Balance at October
31, 2021
|
47,015
|
|
Current
portion
|
7,692
|
|
Long-term
portion
|
$39,323
|
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
(November 1, 2021 to July 31, 2022)
|
$9,594
|
|
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
|
$60,844
|
|
Less: imputed
interest
|
(13,829)
|
|
Lease liability as
at October 31, 2021
|
$47,015
|
16
|
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited –
Expressed in Canadian Dollars, unless otherwise
stated)
|
12.
EVENTS
AFTER THE REPORTING PERIOD
a)
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.
b)
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.
17
Exhibit 99.3
Exhibit 99.4
