Quartz Mountain Resources Ltd 6-K, filed Mar 16, 2020
Quartz Mountain Resources Ltd (QZMRF)
6-K
2020-03-16
For: 2020-03-16
View Original
Added on
April 08, 2026
About this 6-K
Quartz Mountain Resources Ltd filed this 6-K on March 16, 2020.
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 March 16, 2020
Commission
File Number: 000-15490
QUARTZ MOUNTAIN RESOURCES LTD.
(Translation
of registrant’s name into English)
1500 - 1040 W Georgia Street, Vancouver, BC, 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
Exhibits
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Condensed
Consolidated Interim Financial Statements for the period ended
January 31, 2020
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Management’s
Discussion and Analysis for the period ended January 31,
2020
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Form
52-109FV2 Certification of Interim Filings Venture Issuer Basic
Certificate - CEO
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Form
52-109FV2 Certification of Interim Filings Venture Issuer Basic
Certificate - CFO
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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.
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Quartz Mountain Resources Ltd.
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(Registrant)
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Date:
March 16, 2020
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By:
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/s/ Michael Lee
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Name:
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Michael
Lee
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Title:
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Chief
Financial Officer
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3
Exhibit 99.1
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(Unaudited
- Expressed in Canadian Dollars)
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.
1
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL
POSITION
(Unaudited
- Expressed in Canadian Dollars)
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January 31,
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July 31,
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Note
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2020
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2019
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Assets
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Current
assets
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Cash
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$717
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$72,373
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Amounts
receivable and other assets
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3
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16,376
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8,188
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17,093
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80,561
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Non-current
assets
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Mineral
property interests
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4
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1
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1
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Total
assets
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$17,094
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$80,562
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Liabilities and Shareholders' Deficiency
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Current
liabilities
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Amounts
payable and other liabilities
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6
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$27,699
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$2,062
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Loan
payable
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7(c)
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107,289
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101,209
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Due
to a related party
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7(b)
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77,778
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2,972,945
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Total
liabilities
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212,766
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3,076,216
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Shareholders'
deficiency
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Share
capital
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5(a)
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26,674,981
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26,548,981
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Subscription
receipts
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5(b)
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8,200
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–
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Reserves
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592,011
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592,011
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Accumulated
deficit
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(27,470,864)
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(30,136,646)
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Total
shareholders' deficiency
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(195,672)
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(2,995,654)
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Total
liabilities and shareholders' deficiency
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$17,094
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$80,562
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Nature
and continuance of operations (note 1)
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
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/s/ Trevor Thomas
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/s/ Leonie Tomlinson
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Trevor Thomas
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Leonie Tomlinson
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Director
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Director
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2
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE
LOSS
(Unaudited
- Expressed in Canadian Dollars, except for weighted average number
of common shares)
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Three months ended January 31,
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Six months ended January 31,
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Note
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2020
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2019
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2020
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2019
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Expenses
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General
and administration
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Administrative
fees
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7(b)
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19,984
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7,296
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34,742
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24,412
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Legal,
accounting and audit
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9,613
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380
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17,113
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16,584
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Office
and miscellaneous
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14,508
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12,143
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26,793
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23,694
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Regulatory,
trust and filing
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20,349
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6,176
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30,131
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14,010
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Operating
expenses
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(64,454)
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(25,995)
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(108,779)
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(78,700)
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Other items
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Interest
income
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9
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362
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326
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577
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Interest
expense
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7(c)
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(2,636)
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(1,233)
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(5,210)
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(1,233)
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Foreign
exchange loss
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(159)
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(205)
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(437)
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(155)
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Gain
on settlement of debt
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7(b)
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2,779,882
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–
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2,779,882
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–
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Income (loss) and comprehensive income (loss) for the
period
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$2,712,642
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$(27,071)
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$2,665,782
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$(79,511)
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Basic and diluted income (loss) per common share
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$0.69
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$(0.01)
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$0.68
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$(0.02)
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Weighted average common shares outstanding
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(basic
and dilutive)
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3,947,137
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3,347,137
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3,947,137
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3,347,137
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The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
3
QUARTZ MOUNTAIN RESOURCES LTD.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN
SHAREOLDERS' DEFICIENCY
(Unaudited
- Expressed in Canadian Dollars, except for share
information)
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Share Capital
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Reserves
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Note
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Number of shares
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Amount
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Subscription receipts
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Equity-settled share-based payments
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Accumulated deficit
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Total shareholders' deficiency
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Balance
at August 1, 2018
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3,347,137
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$26,548,981
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$592,011
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$(29,982,931)
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$(2,841,939)
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Loss
for the period
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–
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–
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–
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(79,511)
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(79,511)
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Balance
at January 31, 2019
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3,347,137
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$26,548,981
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$592,011
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$(30,062,442)
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$(2,921,450)
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Balance
at August 1, 2019
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3,347,137
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$26,548,981
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$592,011
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$(30,136,646)
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$(2,995,654)
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Shares
issued for debt settlement
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7(b)
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600,000
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126,000
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126,000
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Subscription
receipts issued
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5(b)
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8,200
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8,200
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Income
for the period
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–
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–
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–
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2,665,782
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2,665,782
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Balance
at January 31, 2020
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3,947,137
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$26,674,981
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$8,200
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$592,011
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$(27,470,864)
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$(195,672)
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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)
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Six months ended January 31,
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Note
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2020
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2019
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Operating activities
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Gain
(loss) for the period
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$2,665,782
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$(79,511)
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Adjusted
for:
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Interest
income
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(326)
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(577)
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Interest
expense
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5,210
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1,233
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Changes
in working capital items:
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Amounts
receivable and other assets
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(8,188)
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(5,547)
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Amounts
payable and other liabilities
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25,637
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23,619
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Due
to a related party
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7(b)
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(2,769,167)
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34,298
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Net
cash used in operating activities
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(81,052)
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(26,485)
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Investing activities
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Interest
received
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326
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577
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Net
cash provided by investing activities
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326
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577
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Financing activities
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Proceeds
from related party loan
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7(c)
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870
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100,000
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Proceeds
from private placement
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5(b)
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8,200
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–
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Net
cash provided by financing activities
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9,070
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100,000
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(Decrease) increase in cash
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(71,656)
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74,092
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Cash,
beginning balance
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72,373
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67,205
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Cash, ending balance
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$717
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$141,297
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The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
5
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(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 and six months
ended January 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 January 31, 2020, the Company had cash of $717, a
working capital deficit, negative net assets, and is in default of
a related party loan (note 7). 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.
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, 2019. Results for the period ended
January 31, 2020, are not necessarily indicative of future
results.
The
Audit Committee of the Company’s Board of Directors
authorized issuance of these Financial Statements on March 13,
2020.
(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.
6
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(Unaudited
– Expressed in Canadian Dollars, unless otherwise
stated)
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
January 31, 2020 and July 31, 2019, 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 the 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, 2019.
(d)
Changes in accounting policies and new accounting
pronouncements
The
Company has adopted the following revised or new IFRS accounting
standards that were issued and effective January 1,
2019:
●
IFRS 16,
Leases
●
IFRIC 23,
Uncertainty over Income Tax
Treatments
These
new standards do not have material impact on the Company’s
financial statements.
3.
Amounts Receivable and Other Assets
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January
31,
2020
|
July
31,
2019
|
|
Sales tax
receivable
|
$1,611
|
$1,098
|
|
Prepaid
insurance
|
14,766
|
7,090
|
|
Total
|
$16,376
|
$8,188
|
4.
Mineral Property Interests
|
|
January
31,
2020
|
July
31,
2019
|
|
Angel's Camp
royalty
|
$1
|
$1
|
(a)
Angel's Camp Property
The
Company retains a 1% net smelter return royalty payable to the
Company on any production from the Angel's Camp property located in
Lake County, Oregon. The royalty is recorded at a nominal amount of
$1.
7
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(Unaudited
– Expressed in Canadian Dollars, unless otherwise
stated)
5.
Capital and Reserves
(a)
Authorized share capital
At
January 31, 2020 and July 31, 2019, the authorized share capital of
the Company comprised 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.
(b)
Private Placement
On
December 30, 2019, the Company announced that it has arranged a
private placement of 4,545,455 units at a price of $0.11 per unit
with insiders of the Company for proceeds of approximately
$500,000. Each Unit consists of one common share and one warrant
that allows the holder to purchase one flow-through common share at
a price of $0.15 for a period five years. Completion of the
financing is subject to TSX Venture Exchange approval. The private
placement will result in Robert Dickinson holding a control
position of approximately 43% (60%, if warrants exercised) of the
Company.
On
January 6, 2020, Robert Dickinson advanced $8,200 towards the
financing.
6.
Amounts Payable and Other Liabilities
|
|
January
31,
2020
|
July
31,
2019
|
|
Amounts
payable
|
$27,699
|
$2,062
|
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
endedJanuary 31,
|
Six months
endedJanuary 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Short-term employee
benefits, including salaries
|
$10,150
|
$3,450
|
$17,825
|
$10,150
|
Short-term
employee benefits include salaries, director’s fees, and
amounts paid to HDSI (note 7(b)) for services provided to the
Company by certain HDSI personnel who serve as directors or
officers of the Company.
8
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(Unaudited
– Expressed in Canadian Dollars, unless otherwise
stated)
(b)
Entities with Significant Influence over the Company
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, Chief
Financial Officer, 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 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 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. Such
third party costs include, for example, directors and officers
insurance, travel, conferences, and communication services.
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
endedJanuary 31
|
Six months
endedJanuary 31
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Services received
based on management services agreement
|
$19,984
|
$7,297
|
$34,742
|
$24,412
|
|
Reimbursement of
third party expenses paid
|
$4,825
|
$3,723
|
$8,305
|
$8,252
|
|
Total
|
$24,809
|
$11,020
|
$43,047
|
$32,667
|
Outstanding
balances were as follows:
|
|
January
31,
2020
|
July
31,
2019
|
|
Balance payable to
HDSI
|
$77,778
|
$2,972,945
|
9
QUARTZ MOUNTAIN RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2020 AND
2019
(Unaudited
– Expressed in Canadian Dollars, unless otherwise
stated)
In
January 2016, the Company and HDSI reached a settlement agreement
whereby HDSI agreed to forgive the balance due to HDSI in the net
amount of $3,086,089 if the Company completes the
following:
●
makes a cash
payment of $180,207; and
●
issues 600,000
shares
The
cash payment of $180,207 has been paid and the shares have been
issued to HDSI, completing the settlement and resulting in a gain
of $2,779,882.
(c)
Related Party Loan
In
December 2018, the Company entered into a loan agreement with
United Mineral Services Ltd. (the “Lender”), a company
owned by a former director, pursuant to which the Lender advanced
to the Company a principal sum of $100,000 with a six-month term,
at an interest rate of 10% per annum calculated monthly and payable
quarterly. As of January 31, 2020, the principal amount is due and
has not been repaid. Interest payable of $6,419 has been accrued on
the loan.
In
November 2019, $870 was added to the loan principal to cover
operating expenses. As of the date hereof, the Company is
negotiating with the Lender with the view to resolve the repayment
default.
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.
9.
subsequent event
Further
to the deposit of $8,200 towards the private placement (note 5(b)),
Robert Dickinson advanced $20,000 on February 27,
2020.
The
private placement was approved by shareholders at the Annual
General Meeting held on March 10, 2020.
10
Exhibit 99.2
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
THREE AND SIX MONTHS ENDED JANUARY 31, 2020
1
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
TABLE
OF CONTENTS
|
1.1
|
Date
|
3
|
|
1.2
|
Overview
|
3
|
|
1.3
|
Selected Annual Information
|
4
|
|
1.4
|
Summary of Quarterly Results
|
5
|
|
1.5
|
Results of Operations and Financial Condition
|
5
|
|
1.6
|
Liquidity
|
5
|
|
1.7
|
Capital Resources
|
6
|
|
1.8
|
Off-Balance Sheet Arrangements
|
6
|
|
1.9
|
Transactions with Related Parties
|
6
|
|
1.10
|
Fourth Quarter
|
7
|
|
1.11
|
Proposed Transactions
|
7
|
|
1.12
|
Critical Accounting Estimates
|
7
|
|
1.13
|
Changes in Accounting Policies including Initial
Adoption
|
7
|
|
1.14
|
Financial Instruments and Other Instruments
|
7
|
|
1.15
|
Other MD&A Requirements
|
8
|
|
1.16
|
Risk Factors
|
9
|
2
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
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, 2019, the annual MD&A
for the same period, and the unaudited interim condensed
consolidated financial statements for the three and six months
ended January 31, 2020, 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 March 13, 2020. 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, Trevor Thomas was appointed Chairman, CEO and
director and Matthew Dickinson was appointed
director.
3
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
1.2.1
Agreements
In January 2016, the Company reached 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 600,000 shares to HDSI. The TSX
Venture Exchange approved the transaction with HDSI.
As of January 31, 2019, the cash payment and share issuance have
been completed, resulting in a gain of $2,779,882 on settlement of
the debt.
1.2.2
Properties
Angel's Camp Property
The Company retains a 1% net smelter return royalty payable to the
Company on any production from the Angel's Camp property located in
Lake County, Oregon. Alamos Gold Inc. holds the Angel’s Camp
property.
1.2.3
Financing
On
December 30, 2019, the Company announced that it has arranged a
private placement of 4,545,455 units at a price of $0.11 per unit
with insiders of the Company for proceeds of approximately
$500,000. Each Unit consists of one common share and one warrant
that allows the holder to purchase one flow-through common share at
a price of $0.15 for a period five years. Completion of the
financing is subject to TSX Venture Exchange approval. Completion
of the financing is subject to TSX Venture Exchange approval. The
private placement will result in Robert Dickinson holding a control
position of approximately 43% (60%, if warrants exercised) of the
Company.
On
January 6, 2020, and February 27, 2020, Robert Dickinson advanced
$8,200 and $20,000 respectively, towards the
financing.
The
private placement was approved by shareholders at the Annual
General Meeting held on March 10, 2020.
1.3
Selected Annual Information
Not applicable.
4
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
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
|
|||||||
|
|
Jan-312020
|
Oct-312019
|
Jul-312019
|
Apr-302019
|
Jan-312019
|
Oct-312018
|
Jul-312018
|
Apr-302018
|
|
(Income)
Loss for the period
|
$(2,713)
|
$47
|
$37
|
$38
|
$27
|
$52
|
$42
|
$38
|
|
Basic
and diluted (income) loss per common share
|
$(0.69)
|
$0.01
|
$0.01
|
$0.01
|
$0.01
|
$0.02
|
$0.01
|
$0.01
|
1.5
Results of Operations and Financial Condition
Net income for the fiscal quarter ended January 31, 2020, was
$2,712,642 compared to a net loss of $27,071 for the fiscal quarter
ended January 31, 2019.
A breakdown of general and administrative expenses incurred during
the period ended January 31, 2020 and 2019, is provided in the
financial statements for the period ended January 31,
2020.
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 January 31, 2020, the Company had cash of $717 and a working
capital deficit of $195,672.
There can be no certainty that the Company's existing cash balances
or the proceeds from any issuance of its common shares in the
future will provide sufficient funds for the Company's cash
requirements. The Company may pursue other financing options or
rely on joint venture partners to supply funds required. 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.
The
Company does not have any material capital lease obligations,
purchase obligations or any other long‐term
obligations.
5
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
1.7
Capital Resources
The Company had no material commitments for capital expenditures as
at January 31, 2020.
The Company has no lines of credit or other sources of financing
which have been arranged but are as of yet unused.
At January 31, 2020, there were no externally imposed capital
requirements to which the Company is subject and with which the
Company has not complied.
As the Company continues to incur losses, Shareholders’
equity has come to be in a deficit position.
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 January 31, 2020 and 2019. 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, Chief
Financial Officer, 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 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 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.
6
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
HDSI
also incurs third‐party costs on behalf of the Company. Such
third party costs include, for example, directors and officers
insurance, travel, conferences, and communication services.
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 January 31, 2020, 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.
7
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
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
|
|
(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 issued and outstanding
|
3,947,137
|
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 January 31,
2020.
8
QUARTZ MOUNTAIN RESOURCES LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THREE AND SIX MONTHS ENDED JANUARY 31, 2020
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, 2019 filed under the
Company’s profile on SEDAR at www.sedar.com.
9
Exhibit 99.3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I,
Trevor Thomas, 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 Quartz Mountain
Resources Ltd. (the “issuer”) for the interim
period ended January 31,
2020.
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:
March 13, 2020
/s/ Trevor Thomas
Trevor
Thomas
Chief
Executive Officer
|
|
|
|
|
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under
National Instrument 52-109 Certification of Disclosure 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.
|
|
|
|
|
|
Exhibit 99.4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I,
Michael Lee, 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 January 31,
2020.
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:
March 13, 2020
/s/Michael Lee
Michael
Lee
Chief
Financial Officer
|
|
|
|
|
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under
National Instrument 52-109 Certification of Disclosure 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.
|
|
|
|
|
|