OPERATING AND FINANCIAL REVIEW AND PROSPECTS
OVERVIEW
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.
On March 2, 2023, the Company's only wholly owned subsidiaries, QZMG Resources Ltd. and Wavecrest Resources Inc. were dissolved.
The Company's financial statements are prepared on the basis that it will continue as a going concern. The Company has incurred losses since inception, and the ability of the Company to continue as a going concern depends upon its ability to continue to raise adequate financing and to develop profitable operations. Quartz Mountain's financial statements do not reflect adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company not be able to continue as a going concern.
The following discussion should be read in conjunction with the audited annual consolidated financial statements for the years ended July 31, 2025, 2024 and 2023 and the related notes accompanying this Annual Report. The Company prepares its financial statements in accordance with IFRS. The Company includes selected financial data prepared in compliance with IFRS without reconciliation to U.S. GAAP.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The required disclosure is provided in note 2 of the accompanying audited financial statements as of and for the year ended July 31, 2024, which are presented in Exhibit 99.1 of this Annual Report on Form 20-F.
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A. OPERATING RESULTS
Comprehensive income (loss) for the year ended July 31, 2025 vs. 2024
The Company recorded loss from its operations of $3,560,819 during the current fiscal year (2024 - $2,542,646). The loss incurred in fiscal 2025 was higher compared to the loss incurred in fiscal 2024 due to the commencement of the delineation drilling program for the Maestro Project in British Columbia in late February 2025.
The total amount of exploration and evaluation expenditures incurred in the current fiscal year was $2,616,260 (2024 - 2,285,511). The Company commenced its 1,445 metres of core drilling in two holes of its Maestro property and the Jake Properties during the year ended July 31, 2024. As such, the total costs of exploration and evaluation were higher in the current fiscal year compared with the prior year.
The following table provides a breakdown of the exploration and evaluation expenses incurred:
Exploration and evaluation expenses | 2025 | 2024 | ||||||
Assay and analysis | $ | 212,497 | $ | 225,954 | ||||
Drilling | 1,487,489 | 907,694 | ||||||
Engineering | - | 562 | ||||||
Environmental | 8,096 | 466 | ||||||
Geological | 441,570 | 284,834 | ||||||
Helicopter and fuel | - | 447,828 | ||||||
Property costs and assessments | 15,669 | 1,732 | ||||||
Site activities | 406,947 | 393,350 | ||||||
Socioeconomic | - | 2,330 | ||||||
Travel and accommodation | 43,992 | 20,761 | ||||||
Total | $ | 2,616,260 | $ | 2,285,511 | ||||
The following table provides a breakdown of the administration costs incurred:
General and Administration costs | 2025 | 2024 | ||||||
Administrative fees | $ | 57,934 | $ | 52,700 | ||||
Conference and travel | 405 | 705 | ||||||
Insurance | 24,929 | 23,481 | ||||||
IT Services | 33,640 | 21,120 | ||||||
Legal, accounting and audit | 144,183 | 58,023 | ||||||
Office and miscellaneous | 181,072 | 37,167 | ||||||
Regulatory, trust and filing | 85,654 | 63,939 | ||||||
Total | $ | 527,817 | $ | 257,135 | ||||
The total amount of general and administrative expenses increased in fiscal 2025 compared to that of fiscal 2024 due to all the related costs revolving around financing and increased field operations to explore the substantial Prodigy Discovery on the Maestro Project in British Columbia in April 2024.
Equity-settled share-based compensation | 2025 | 2024 | ||||||
Total | $ | 416,742 | $ | - | ||||
The equity-settled share-based compensation incurred during the year ended July 31, 2025 was related to the two stock option grants to the consultants of the Company:
(1) | the recognition of the share-based compensation for the grant of 500,000 stock options issued on January 15, 2025 with an exercise price of $0.435 and the expiry date on January 15, 2030; | |
(2) | the recognition of the share-based compensation for the grant of 500,000 stock options issued on April 24, 2025 with an exercise price of $0.77 and the expiry date on April 24, 2028; |
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Comprehensive income (loss) for the year ended July 31, 2024 vs. 2023
The Company recorded a loss from operations of $2,542,646 during the current fiscal year (2023 - income of $927,916). The loss incurred in fiscal 2024 was significantly higher compared to the loss incurred in fiscal 2023 was mainly due to increase level of exploration activities in the Maestro and Jake Properties.
The total amount of exploration and evaluation expenditures incurred in the current fiscal year was $2,285,511 (2023 - $96,479). As the Company has commenced exploration projects on the Maestro and Jake Properties during fiscal 2024, the total exploration and evaluation expenditures increased from prior year.
The following table provides a breakdown of the exploration and evaluation expenditures for the current and prior years:
Exploration and evaluation expenses | 2024 | 2023 | ||||||
Assay and analysis | $ | 225,954 | $ | 11,845 | ||||
Drilling | 907,694 | - | ||||||
Engineering | 562 | - | ||||||
Environmental | 466 | 4,410 | ||||||
Geological | 284,834 | 70,470 | ||||||
Helicopter and fuel | 447,828 | 6,390 | ||||||
Property costs and assessments | 1,732 | 1,646 | ||||||
Site activities | 393,350 | (10,700 | ) | |||||
Socioeconomic | 2,330 | 12,128 | ||||||
Travel and accommodation | 20,761 | 290 | ||||||
Total | $ | 2,285,511 | $ | 96,479 | ||||
The total amount of general and administrative expenses increased in fiscal 2024 compared to that of fiscal 2023 due to increased level of corporate development activities.
The following table provides a breakdown of the administration costs incurred:
General and Administration costs | 2024 | 2023 | ||||||
Administrative fees | $ | 52,700 | $ | 46,359 | ||||
Conference and travel | 705 | - | ||||||
Insurance | 23,481 | 23,968 | ||||||
IT Services | 21,120 | 12,000 | ||||||
Legal, accounting and audit | 58,023 | 51,818 | ||||||
Office and miscellaneous | 37,167 | 23,920 | ||||||
Regulatory, trust and filing | 63,939 | 32,512 | ||||||
Total | $ | 257,135 | $ | 190,577 | ||||
B. LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's source of funding has been the issuance of equity securities for cash, primarily through private placements to mainly sophisticated investors and institutions. The Company continues evaluating mineral prospects for potential acquisition and exploration in British Columbia. 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.
At July 31, 2025, the Company had an accumulated deficit of $35,546,915 and has a working capital of $2,881,768.
In January 2016, the Company arranged with Hunter Dickinson Services Inc. ("HDSI") to settle debt owing for services provided by HDSI whereby HDSI would forgive debt in the net amount owing at that time of $3,086,089, if the Company made a cash payment of $180,207 and issued 1,800,000 shares (pre- forward split basis of 600,000 shares) to HDSI. The TSX Venture Exchange approved the transaction with HDSI, the cash payment has been made, and issuance of the shares to HDSI was executed in December 2019. 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.
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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.
Capital Resources
The Company had no material commitments for capital expenditures as at July 31, 2025.
The Company has no lines of credit or other sources of financing which have been arranged but are as of yet, unused.
At July 31, 2025, there were no externally imposed capital requirements to which the Company is subject and with which the Company has not complied.
Requirement of Financing
The Company is in the process of assessing mineral property interests held by third parties for potential acquisition. The Company's continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of these projects, obtaining the necessary permits to mine, on future profitable production of any mine and the proceeds from the disposition of the mineral property interests.
Additional debt or equity financing will be required to fund additional exploration or development programs. The Company has a reasonable expectation that additional funds will be available when necessary to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to obtain additional financial resources and/or achieve profitability or positive cash flows, which raises substantial doubt on the ability of the Company to continue as a growing concern. If the Company is unable to obtain adequate additional financing, the Company will be required to re-evaluate its planned expenditures until additional funds can be raised through financing activities.
The Company has no "Purchase Obligations" defined as any agreement to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
C. RESEARCH EXPENDITURES
Quartz Mountain does not carry out any research or development activities. Please refer to Item 5Aand Item 5Babove for a discussion of the expenditures that the Company has incurred in connection with its business activities.
D. TREND INFORMATION
The Company does not currently hold any properties.
E. OFF - BALANCE SHEET ARRANGEMENTS
Quartz Mountain has no off-balance sheet arrangements.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The following obligations existed at July 31, 2025:
Payments due by period | ||||||||||||||||
Total | Less than 1 year | 1-5 years | After 5 years | |||||||||||||
Amounts payable and other liabilities | $ | 266,815 | $ | 266,815 | $ | - | $ | - | ||||||||
Due to a related party | 4,459 | 4,459 | - | - | ||||||||||||
Lease liability | 10,169 | 10,169 | - | - | ||||||||||||
Total | $ | 281,443 | $ | 281,443 | $ | - | $ | - | ||||||||
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The Company has no material capital lease or operating lease obligations. The Company has no "Purchase Obligations", defined as any agreement to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
G. SAFE HARBOR
The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act applies to forward-looking information provided pursuant to Item 5Eand Item 5Fabove.