---



QUARTZ MOUNTAIN RESOURCES
LTD.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JULY 31, 2016, 2015, AND 2014

(Expressed in Canadian Dollars, unless otherwise stated)

---



REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Quartz Mountain
Resources Ltd.

We have audited the accompanying consolidated financial
statements of Quartz Mountain Resources Ltd., which comprise the consolidated
statements of financial position as at July 31, 2016 and 2015 and the
consolidated statements of income (loss) and comprehensive income (loss),
changes in shareholders deficiency and cash flows for the years ended July 31,
2016, 2015 and 2014, and a summary of significant accounting policies and other
explanatory information.

Managements Responsibility for the Consolidated
Financial Statements

Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, as issued by the International
Accounting Standards Board and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.

Auditors Responsibility

Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of Quartz Mountain
Resources Ltd. as at July 31, 2016 and 2015 and its financial performance and
its cash flows for the years ended July 31, 2016, 2015 and 2014 in accordance
with International Financial Reporting Standards, as issued by the International
Accounting Standards Board.



---

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in
the consolidated financial statements which describes conditions and matters
that indicate the existence of material uncertainties that raise substantial
doubt about Quartz Mountain Resources Ltd.s ability to continue as a going
concern.

DAVIDSON & COMPANY LLP

Vancouver, Canada

Chartered Professional Accountants

October 3, 2016

---

|QUARTZ MOUNTAIN RESOURCES LTD.                     
|---------------------------------------------------
|Consolidated Statements of Financial
      Position
|(Expressed in Canadian Dollars)                    
|                                                   

|                                                       |   | July 31     |   |   | July 31     |  
|------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                       |   | 2016        |   |   | 2015        |  
|                                                       |   |             |   |   |             |  
|ASSETS                                                 |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current assets                                         |   |             |   |   |             |  
|Cash and cash equivalents                              | $ | 306,398     |   | $ | 461,986     |  
|Amounts receivable and other assets
      (note 3)     |   | 6,769       |   |   | 16,419      |  
|                                                       |   | 313,167     |   |   | 478,405     |  
|                                                       |   |             |   |   |             |  
|Mineral property interests (note 4)                    |   | 1           |   |   | 2           |  
|                                                       |   |             |   |   |             |  
|Total assets                                           | $ | 313,168     |   | $ | 478,407     |  
|                                                       |   |             |   |   |             |  
|LIABILITIES AND SHAREHOLDERS'
      DEFICIENCY         |   |             |   |   |             |  
|                                                       |   |             |   |   |             |  
|Current liabilities                                    |   |             |   |   |             |  
|Amounts
      payable and other liabilities (note 6)   | $ | 1,107       |   | $ | 4,062       |  
|Convertible debenture 
      current portion (note 7) |   |            |   |   | 50,000      |  
|Due to a related party (note 9)                        |   | 3,178,443   |   |   | 2,973,276   |  
|                                                       |   | 3,179,550   |   |   | 3,027,338   |  
|                                                       |   |             |   |   |             |  
|Convertible debenture (note 7)                         |   |            |   |   | 450,000     |  
|                                                       |   |             |   |   |             |  
|Total liabilities                                      |   | 3,179,550   |   |   | 3,477,338   |  
|                                                       |   |             |   |   |             |  
|Shareholders' deficiency                               |   |             |   |   |             |  
|Share
      capital (note 5(a))                        |   | 26,090,118  |   |   | 26,050,118  |  
|Reserves                                               |   | 592,011     |   |   | 592,011     |  
|Accumulated deficit                                    |   | (29,548,511 | ) |   | (29,641,060 | )
|Total shareholders' deficiency                         |   | (2,866,382  | ) |   | (2,998,931  | )
|                                                       |   |             |   |   |             |  
|Total liabilities and shareholders' deficiency         | $ | 313,168     |   | $ | 478,407     |  

Nature and continuance of operations (note 1) Events after
the reporting period (note 4(a) and 4(b))

The accompanying notes are an integral part of these
consolidated financial statements.

|/s/ Gordon Fretwell | /s/ Ronald W. Thiessen
|------------------- | ----------------------
|                    |                       
|Gordon Fretwell     | Ronald W. Thiessen    
|Director            | Director              

---

|QUARTZ MOUNTAIN RESOURCES LTD.                                                
|------------------------------------------------------------------------------
|Consolidated Statements of Income
      (Loss) and Comprehensive Income (Loss)
|(Expressed in Canadian Dollars)                                               
|                                                                              

|                                                                                |   | For the year ended July 31 |  
|------------------------------------------------------------------------------- | - | -------------------------- | -
|                                                                                |   | 2016                       |  
|Expenses                                                                        |   |                            |  
|Exploration and
      evaluation                                                | $ | 470                        |  
|Assays and analysis                                                             |   | 170                        |  
|Drilling                                                                        |   |                           |  
|Geological                                                                      |   |                           |  
|Graphics                                                                        |   |                           |  
|Property payments                                                               |   |                           |  
|Site activities                                                                 |   |                           |  
|Sustainability                                                                  |   | 300                        |  
|Transportation                                                                  |   |                           |  
|Travel and accommodation                                                        |   |                           |  
|                                                                                |   |                            |  
|General and administration                                                      |   | 322,135                    |  
|Conferences and travel                                                          |   |                           |  
|Insurance                                                                       |   | 44,075                     |  
|IT Services                                                                     |   | 22,000                     |  
|Legal, accounting and audit                                                     |   | 28,421                     |  
|Office and miscellaneous                                                        |   | 619                        |  
|Regulatory, trust and filing                                                    |   | 34,038                     |  
|Salaries and benefits                                                           |   | 189,021                    |  
|Shareholder communications                                                      |   | 3,961                      |  
|                                                                                |   |                            |  
|Operating expenses                                                              |   | (322,605                   | )
|                                                                                |   |                            |  
|Flow-through share premium (note 8)                                             |   |                           |  
|Impairment of
      mineral property interest (note 4(a))                       |   | (1                         | )
|Interest income                                                                 |   | 2,971                      |  
|Interest expense                                                                |   | (17,385                    | )
|Foreign exchange loss                                                           |   | (2,076                     | )
|Tax related to
      flow-through financing                                     |   |                           |  
|Gain on settlement of debenture
      (note 7)                                  |   | 431,645                    |  
|Income (loss) and comprehensive income (loss) for the year                      | $ | 92,549                     |  
|                                                                                |   |                            |  
|                                                                                |   |                            |  
|Basic and diluted income (loss) per common share                                | $ |                           |  
|                                                                                |   |                            |  
|Weighted average number of common shares outstanding
      (basic and dilutive) |   | 29,299,513                 |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

|QUARTZ MOUNTAIN RESOURCES LTD.                                      
|--------------------------------------------------------------------
|Consolidated Statements of Changes
      in Shareholders' Deficiency
|(Expressed in Canadian Dollars)                                     
|                                                                    

|                                              |  | Share Capital |  |   | Reserves   |  |   |                |  |   |             |  
|--------------------------------------------- |  | ------------- |  | - | ---------- |  | - | -------------- |  | - | ----------- | -
|                                              |  |               |  |   |            |  |   | Equity-settled |  |   |             |  
|                                              |  | Number of     |  |   |            |  |   | share-based    |  |   | Accumulated |  
|                                              |  | shares        |  |   | Amount     |  |   | payments       |  |   | deficit     |  
|                                              |  |               |  |   |            |  |   |                |  |   |             |  
|Balance at August 1, 2013                     |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (27,365,311 | )
|Loss
      for the year                       |  |              |  |   |           |  |   |               |  |   | (865,427    | )
|Balance at July 31, 2014                      |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (28,230,738 | )
|                                              |  |               |  |   |            |  |   |                |  |   |             |  
|Balance at August 1, 2014                     |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (28,230,738 | )
|Loss
      for the year                       |  |              |  |   |           |  |   |               |  |   | (1,410,322  | )
|Balance at July 31, 2015                      |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (29,641,060 | )
|                                              |  |               |  |   |            |  |   |                |  |   |             |  
|Balance at August 1, 2015                     |  | 27,299,513    |  | $ | 26,050,118 |  | $ | 592,011        |  | $ | (29,641,060 | )
|Income for the year                           |  |              |  |   |           |  |   |               |  |   | 92,549      |  
|Common shares issued for debenture settlement |  | 2,000,000     |  |   | 40,000     |  |   |               |  |   |            |  
|Balance at July 31, 2016                      |  | 29,299,513    |  | $ | 26,090,118 |  | $ | 592,011        |  | $ | (29,548,511 | )

Theaccompanying notes are anintegralpart of theseconsolidatedfinancialstatements.

---

|QUARTZ MOUNTAIN RESOURCES LTD.             
|-------------------------------------------
|Consolidated Statements of Cash
      Flows
|(Expressed in Canadian Dollars)            
|                                           

|                                                                       |   | For the year ended July 31 |  
|---------------------------------------------------------------------- | - | -------------------------- | -
|                                                                       |   | 2016                       |  
|Cash flows from operating
      activities:                            |   |                            |  
|Income (loss) for the year                                             | $ | 92,549                     |  
|Adjusted for:                                                          |   |                            |  
|Flow-through share
      premium                                       |   |                           |  
|Impairment of mineral property interest                                |   | 1                          |  
|Interest income                                                        |   | (2,971                     | )
|Interest
      expense                                                 |   | 17,385                     |  
|Gain on settlement of
      debenture (note 7)                         |   | (431,645                   | )
|Changes in non-cash working
      capital items:                       |   |                            |  
|Amounts receivable and
      other assets - current                    |   | 9,650                      |  
|Amounts
      receivable and other assets - non-current                |   |                           |  
|Amounts payable and other
      liabilities                            |   | 2                          |  
|Due to a
      related party                                           |   | 205,167                    |  
|Restricted cash                                                        |   |                           |  
|Net cash used in operating activities                                  |   | (109,862                   | )
|                                                                       |   |                            |  
|Cash flows from investing
      activities:                            |   |                            |  
|Disposition of mineral
      property interest                         |   |                           |  
|Interest received                                                      |   | 2,971                      |  
|Net
      cash provided by investing activities                        |   | 2,971                      |  
|                                                                       |   |                            |  
|Cash flows from financing activities:                                  |   |                            |  
|Principal
      payment on convertible debenture (note 7)              |   | (28,355                    | )
|Interest paid on convertible debenture
      (note 7)                  |   | (20,342                    | )
|Net cash used in financing
      activities                            |   | (48,697                    | )
|                                                                       |   |                            |  
|Increase (decrease) in
      cash and cash equivalents                 |   | (155,588                   | )
|Cash
      and cash equivalents, beginning of year                     |   | 461,986                    |  
|Cash and cash equivalents, end of year                                 | $ | 306,398                    |  
|                                                                       |   |                            |  
|Supplemental cash flow
      information:                              |   |                            |  
|Components of cash and cash equivalents                                |   |                            |  
|Business
      and savings accounts                                    | $ | 306,398                    |  
|Cash held in guaranteed investment
      certificates                  |   |                           |  
|                                                                       | $ | 306,398                    |  
|                                                                       |   |                            |  
|Non cash investing and
      financing activities:                     |   |                            |  
|Settlement of debenture paid
      through issuance of shares (note 7) | $ | 40,000                     |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|1. | NATURE ANDCONTINUANCE OFOPERATIONS
|-- | ----------------------------------

Quartz Mountain Resources Ltd. ("Quartz
Mountain" or the "Company") 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 is primarily engaged in the acquisition and exploration of mineral
properties.

These consolidated financial statements
(the "Financial Statements") of the Company as at and for the year ended July
31, 2016 include Quartz Mountain Resources Ltd. and its subsidiary (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 July 31, 2016, the Company had cash and cash
equivalents of $306,398, a working capital deficit, and negative net assets. 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, the ability to obtain the necessary permits to mine, the future
profitable production of any mine, and the proceeds from the disposition of any
mineral property interests. General market conditions for junior exploration
companies have resulted in depressed equity prices.

These material uncertainties raise
substantial doubt on the ability of the Company to continue as a going
concern.

During the current year, the Company
settled a debenture payable to a third party (note 7). Substantially all of the
Companys liabilities at July 31, 2016 were payable to Hunter Dickinson Services
Inc. ("HDSI"), a related party with whom the Company has reached a debt
settlement agreement (note 9(b)).

Additional debt or equity financing
will be required to fund acquisition, exploration and development 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 amounts and classification of assets and
liabilities that may be necessary should the Company be unable to continue as a
going concern.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|2. | SIGNIFICANTACCOUNTINGPOLICIES
|-- | -----------------------------

|(a) | Statement of compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | These Financial Statements have been prepared in
      accordance with International Financial Reporting Standards ("IFRS") as
      issued by the International Accounting Standards Board ("IASB") and the
      International Financial Reporting Interpretations Committee (IFRIC)
      effective for the Company's fiscal year ended July 31, 2016.                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Issuance of these Financial Statements was authorized by
      the Companys Board of Directors on September 29, 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 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.                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c) | Significant accounting estimates and
    judgments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The preparation of financial statements in conformity
      with IFRS requires management to make judgments, estimates and assumptions
      that affect the application of policies and reported amounts of assets and
      liabilities, income and expenses. Actual results may differ from these
      estimates.                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The impact of such estimates is pervasive throughout the
      financial statements, and may require accounting adjustments based on
      future occurrences. Revisions to accounting estimates are recognized in
      the period in which the estimate is revised and future periods if the
      revision affects both current and future periods. These estimates are
      based on historical experience, current and future economic conditions and
      other factors, including expectations of future events that management
      believes are reasonable under the circumstances. Changes in the subjective
      inputs and assumptions can materially affect fair value
  estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Specific areas where significant estimates or judgements
      exist are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Sources of estimation
  uncertainty:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |  | Estimated carrying amounts of assets and liabilities; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | Provisions for income taxes are an estimate of the amount
      expected to be paid based on a qualitative assessment of all relevant
      factors. The Company reviews the adequacy of these provisions at the end
      of each reporting period. However, it is possible that at some future date
      a change in tax liabilities or taxes recoverable could result from audits
      by taxation authorities. Where the final outcome of these tax-related
      matters is different from the amounts that were originally recorded, such
      differences will affect the tax provisions in the period in which such
      determination is made.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Critical accounting judgments:

| |  | Assessment of the Company's ability to continue
      as a going concern;
| | - | -------------------------------------------------------------------------

|(d) | Basis of consolidation                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                          
|    | These consolidated 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 July 31, 2016 and July 31, 2015 the Company held an
      ownership interest in the following
subsidiary:                                                                                                                                                                                                                                             

| | Name of
      Subsidiary       | Place of Incorporation | Ownership Interest | Principal Activity
| | ------------------------------ | ---------------------- | ------------------ | ------------------
| | Wavecrest
      Resources Inc. | Delaware               | 100%               | Holding company   

|(e) | Foreign currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The functional and presentation currency of the Company
      and its subsidiary, as at July 31, 2016, is the Canadian dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Transactions in currencies other than the functional
      currency are recorded at the rates of exchange prevailing on the dates of
      transactions. At the end of each reporting period, monetary assets and
      liabilities that are denominated in foreign currencies are translated at
      the rates prevailing at the period end date. Non-monetary items that are
      measured in terms of historical cost in a foreign currency are not
      re-translated. Gains and losses arising on translation are included in
      profit or loss for the period.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(f) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Financial assets and liabilities are recognized when the
      Company becomes party to the contracts that give rise to them. The Company
      determines the classification of its financial assets and liabilities at
      initial recognition and, where allowed and appropriate, re-evaluates such
      classification at each financial year end. The Company does not have any
      derivative financial instruments.                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Non-derivative financial assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company classifies its non-derivative financial
      assets into the following categories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Loans and receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Loans and receivables are financial assets with fixed or
      determinable payments that are not quoted in an active market. Such assets
      are initially recognized at fair value plus any directly
    attributable transaction costs. Subsequent to
initial recognition loans and receivables are measured at amortized cost using
the effective interest method, less any impairment losses.                                                                                                                                                                      

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Loans and receivables comprise amounts
receivable and cash and cash equivalents, described as follows:

Cash and cash equivalents

Cash and cash equivalents in the
statements of financial position consist of cash and highly liquid investments,
having maturity dates of three months or less from the date of purchase or
redeemable fixed-term deposits which are readily convertible to known amounts of
cash and are subject to an insignificant risk of change in value. The Company's
cash and cash equivalents are invested in business and savings accounts which
are available on demand by the Company for its programs.

Non-derivative financial
liabilities:

The Company's non-derivative financial
liabilities comprise financial liabilities measured at amortized cost. Such
financial liabilities are recognized initially at fair value net of any directly
attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost using the effective
interest method. Financial liabilities measured at amortized cost comprise
amounts payable and other liabilities, balances due to a related party and a
convertible debenture.

Impairment of financial assets:

Financial assets are assessed for
indicators of impairment at the end of each reporting period. Financial assets
are impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been impacted.

Objective evidence of impairment could
include:

| |  | significant financial difficulty of the issuer or
      counterparty; or                        
| | - | ------------------------------------------------------------------------------------------------
| |   |                                                                                                 
| |  | default or delinquency in interest or principal payments;
      or                              
| |   |                                                                                                 
| |  | it becoming probable that the borrower will enter
      bankruptcy or financial re-organization.

For certain categories of financial
assets, such as amounts receivable, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis. The
carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets with the exception of amounts receivable,
where the carrying amount is reduced through the use of an allowance account.
When an amount receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off
are credited against the allowance account. Changes in the carrying amount of
the allowance account are recognized in profit or loss.

If, in a subsequent period, the amount
of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed through profit or loss to the extent that
the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not
been recognized.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(g) | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Exploration and evaluation expenditures are expenditures
      incurred by the Company in connection with the exploration for and
      evaluation of mineral resources before the technical feasibility and
      commercial viability of extracting a mineral resource are
    demonstrable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Exploration and evaluation expenditures are expensed as
      incurred, except for initial expenditures associated with the acquisition
      of exploration and evaluation assets through a business combination or an
      asset acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Exploration and evaluation expenditures include the cash
      consideration and the estimated fair market value of common shares on the
      date of issue or as otherwise provided under the relevant
    agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Costs for properties for which the Company does not
      possess unrestricted ownership and exploration rights, such as option
      agreements, are expensed in the period incurred or until a feasibility
      study has determined that the property is capable of commercial
      production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Administrative expenditures related to exploration
      activities are expensed in the period incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Expenditures incurred by the Company in connection with a
      mineral property after the technical feasibility and commercial viability
      of extracting a mineral resource are demonstrable are capitalized. Such
      amounts are then amortized over the estimated life of the property
      following the commencement of commercial production, or are written off if
      the property is sold, allowed to lapse or abandoned, or when impairment
      has been determined to have occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Mineral property interests, if any, are assessed for
      impairment if (i) sufficient data exists to determine technical
      feasibility and commercial viability, and (ii) facts and circumstances
      suggest that the carrying amount exceeds the recoverable amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Once the technical feasibility and commercial viability
      of the extraction of mineral resources in an area of interest are
      demonstrable, mineral property interests attributable to that area of
      interest are first tested for impairment and then reclassified to mineral
      property and development assets within property, plant and
    equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Recoverability of the carrying amount of mineral property
      interests is dependent on successful development and commercial
      exploitation, or alternatively, a sale of the respective areas of
      interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(h) | Impairment of non-financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | At the end of each reporting period the carrying amounts
      of the Company's assets are reviewed to determine whether there is any
      indication that those assets are impaired. If any such indication exists,
      the recoverable amount of the asset is estimated in order to determine the
      extent of the impairment, if any. The recoverable amount is the greater of
      (i) fair value less costs to sell, and (ii) value in use. Fair value is estimated as the amount that would
be obtained from the sale of the asset in an arm's length transaction between
knowledgeable and willing parties. In assessing value in use, the estimated
future cash flows are discounted to their present value using a discount rate
that reflects current assessments of the Company's cost of capital and the risks
specific to the asset. If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to
its recoverable amount and an impairment loss is recognized in the profit or
loss for the period. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash generating unit
to which the asset belongs.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Where an impairment loss subsequently
reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but to an amount
that does not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset (or cash-generating unit) in prior
years. A reversal of an impairment loss is recognized immediately in profit or
loss.

|(i) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Common shares are classified as equity. Transaction costs
      directly attributable to the issuance of common shares and share purchase
      options are recognized as a deduction from equity, net of any tax
      effects.                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Flow-through shares                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Canadian tax legislation permits mining entities to issue
      flowthrough shares to investors. Flow- through shares are securities
      issued to investors whereby the deductions for tax purposes related to
      eligible Canadian exploration expenses ("CEE"), as defined in the Income
      Tax Act (Canada), may be claimed by investors instead of the entity,
      pursuant to a defined renunciation process.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Renunciation may occur:                                                                                                                                                                                                                                                                                                                                                                                                       

| |  | prospectively (namely, the flow-through shares are
      issued, renunciation occurs and CEE are incurred subsequently); or     
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 
| |  | retrospectively (namely, the flow-through shares are
      issued, CEE are then incurred, and renunciation occurs subsequently).

Flow-through shares are recorded in
share capital at the fair value of common shares on the date of issuance. When
flow-through shares are issued, the difference between the fair value of
non-flow-through common shares and the amount the investors pay for flow-through
shares is recorded as a deferred liability called "flow-through share premium".
This deferred liability is credited to profit or loss when the eligible expenses
are incurred and renounced to investors.

Upon eligible expenses being incurred,
the Company derecognizes the liability and recognizes a deferred tax liability,
if any, for the amount of tax reduction renounced to shareholders. The premium
is recognized as other income and the related deferred tax is recognized as a
tax provision.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(j) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Basic earnings (loss) per share is computed by dividing
      net earnings (loss) available to common shareholders by the weighted
      average number of shares outstanding during the reporting period. Diluted
      earnings (loss) per share is computed similar to basic earnings (loss) per
      share except that the weighted average shares outstanding are increased to
      include additional shares for the assumed exercise of stock options and
      warrants, if dilutive. The number of additional shares is calculated by
      assuming that outstanding stock options and warrants were exercised and
      that proceeds from such exercises were used to acquire common stock at the
      average market price during the reporting periods. For the years
      presented, there was no impact on loss per share from the potentially
      dilutive securities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(k) | Share-based payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Share-based payments to employees and others providing
      similar services are measured at the fair value of the instruments at the
      grant date. The fair value determined at the grant date is charged to
      operations over the vesting period, based on the Company's estimate of
      equity instruments that will eventually vest. The Company revises the
      estimate on each reporting date and the effect of the change is recognized
      in profit or loss.                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Share-based payment transactions with other parties are
      measured at the fair value of the goods or services received, except where
      the fair value cannot be estimated reliably, in which case they are
      measured at the fair value of the equity instruments granted, measured at
      the date the entity obtains the goods or the counterparty renders the
      service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(l) | Rehabilitation provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | An obligation to incur rehabilitation and site
      restoration costs arises when environmental disturbance is caused by the
      exploration, development or ongoing production of a mineral property
      interest. Such costs arising from the decommissioning of plant and other
      site preparation work, discounted to their net present value, are provided
      for and capitalized at the start of each project, as soon as the
      obligation to incur such costs arises. These costs are charged against
      earnings over the life of the operation.                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has no material rehabilitation and site
      restoration costs, as the disturbance to date has been minimal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(m) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Income tax on the profit or loss for the periods
      presented comprises current and deferred tax. Income tax is recognized in
      profit or loss except to the extent that it relates to items recognized
      directly in shareholders deficiency, in which case it is recognized in
      shareholders deficiency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Current tax expense is the expected tax
payable on the taxable income for the year, using tax rates enacted or
substantively enacted at year end, adjusted for amendments to tax payable with
regards to previous years.

Deferred tax is provided using the
balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes.

The following temporary differences are
not provided for:

| |  | goodwill not deductible for tax purposes;                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                             
| |  | the initial recognition of assets or liabilities that
      affect neither accounting nor taxable profit; and                                                               
| |   |                                                                                                                                                                             
| |  | differences relating to investments in subsidiaries,
      associates, and joint ventures to the extent that they will probably not
      reverse in the foreseeable future.

The amount of deferred tax provided is
based on the expected manner of realization or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at
the end of the reporting period applicable to the period of expected realization
or settlement.

A deferred tax asset is recognized only
to the extent that it is probable that future taxable profits will be available
against which the asset can be utilized. Deferred tax assets and liabilities are
offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Company intends to settle its current tax
assets and liabilities on a net basis.

|(n) | Government assistance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | When the Company is entitled to receive mineral
      exploration tax credits and other government grants, these amounts are
      recognized as a cost recovery within exploration and evaluation
      expenditures when there is reasonable assurance of their
  recovery.                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(o) | Compound financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Compound financial instruments issued by the Company
      comprise a convertible debenture that can be converted into a fixed number
      of the Company's common shares at the option of the holder.                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The liability component of a compound financial
      instrument is recognized initially at the fair value of a similar
      liability that does not have an equity conversion option. The equity
      component, if any, is recognized initially as the difference between the
      estimated fair value of the compound financial instrument as a whole and
      the estimated fair value of the liability component. Directly attributable
      transaction costs, if material, are allocated to the liability and equity
      components in proportion to their initial carrying
  amounts.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(p) | Joint venture activities and joint controlled
      operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Joint control is defined as the contractually agreed
      sharing of control over an economic activity, and exists only when the
      strategic, financial and operating decisions essential to the relevant
      activities require the unanimous consent of the parties sharing control.
      When the Company enters into agreements that provide for specific
      percentage interests in exploration properties, a portion of the Company's
      exploration activities is conducted jointly with others, without
      establishment of a corporation, partnership or other entity.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Under IFRS 11 "Joint Arrangements", this type of joint
      control of mineral assets and joint exploration and/or development
      activities is considered as a joint operation, which is defined as a joint
      arrangement whereby the parties that have joint control of the arrangement
      have rights to the assets, and obligations for the liabilities, relating
      to the arrangement.                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | In its financial statements, the Company recognizes the
      following in relation to its interest in a joint
  operation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |  | its assets, including its share of any assets
      held jointly;                     
| | - | --------------------------------------------------------------------------------------
| |   |                                                                                       
| |  | its liabilities, including its share of any
      liabilities incurred jointly;       
| |   |                                                                                       
| |  | its revenue from the sale of its share of the
      output of the joint operation; and
| |   |                                                                                       
| |  | its expenses, including its share of any
      expenses incurred jointly.             

|(q) | Changes in accounting policies and new accounting
      pronouncements                                                                                                    
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                           
|    | Amendments, Interpretations, Revised and New
      Standards Adopted by the Company                                                                                       
|    |                                                                                                                                                                           
|    | New and amended accounting standards that became
      effective for the Companys current fiscal year did not have a material
      impact on these Financial Statements.
|    |                                                                                                                                                                           
|    | New standards, amendments and interpretations to
      existing standards not yet effective                                                                               
|    |                                                                                                                                                                           
|    | Effective for annual periods beginning on or after
      January 1, 2016                                                                                                  

| |  | IAS 1  Presentation of Financial Statements
| | - | --------------------------------------------

Effective for annual periods beginning
on or after January 1, 2018

| |  | IFRS 15, Revenue from Contracts with Customers                      
| | - | --------------------------------------------------------------------
| |  | IFRS 9, Financial Instruments  Classification
      and Measurement

Effective for annual periods beginning
on or after January 1, 2019

| |  | IFRS 16, Leases ("IFRS 16") and revised IAS 17
       Leases ("IAS 17").
| | - | -------------------------------------------------------------------------

The Company has not early adopted these
new standards, interpretations, or amendments to existing standards, and is
currently assessing the impact that these standards will have on the Company's
Financial Statements.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|3. | AMOUNTSRECEIVABLE ANDOTHERASSETS
|-- | --------------------------------

July 31, 2016
    
    
    July 31, 2015Current:Sales tax receivable
    $
    4,525
    
    $
    3,300Prepaid insurance
    
    2,244
    
    
    6,040Estimated British Columbia Mineral Exploration Tax Credit
      recoverable
    
    
    
    
    7,079Total
    $
    6,769
    
    $
    16,419


|4. | MINERALPROPERTYINTERESTS
|-- | ------------------------

July 31, 2016
    
    
    July 31,2015Galaxie Project (note
      4(a))
    $
    
    
    $
    1Angel's Camp royalty (note 4(c))
    
    1
    
    
    1Total
    $
    1
    
    $
    2


|(a) | Galaxie Project                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                             
|    | In August 2012, Quartz Mountain acquired the Galaxie
      Project from Finsbury Exploration Ltd. ("Finsbury"), a related party with
      several directors in common with the Company,
by:

| |  | issuing 2,038,111 shares with a fair value of $672,577 to
      Finsbury,                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                         
| |  | issuing 1,000,000 shares with a fair value of $330,000 to
      Bearclaw Capital Corp. ("Bearclaw"), a party with whom Finsbury had a
      property purchase agreement at the time in respect of the Gnat Pass
      Property (Gnat Property), which constituted a part of the Galaxie
      Project.
| |   |                                                                                                                                                                                                                                                                                                         
| |  | making a cash payment of $50,000 to Bearclaw, and                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                         
| |  | issuing a $650,000 convertible debenture (the
      "Debenture") (note 7) to Bearclaw.                                                                                                                                                                                                                  

Upon acquisition of the Galaxie
Project, the Company recorded the aggregate purchase price as mineral property
interest in its consolidated statements of financial position. At July 31, 2015,
due to uncertainty in the capital markets prevailing at the time, the Company
wrote down its mineral property interest in the Galaxie Project by $891,626 to a
nominal value of $1.

During the current year, pursuant to a
debt settlement agreement (note 7), the Company transferred its mineral property
interest in the Gnat Property to Bearclaw Capital Corp, a private company from
which the Company acquired the Gnat Property in exchange for, among other
considerations, its convertible debenture.

After the reporting period, the Company
let all other mineral claims in the Galaxie Project lapse and the nominal value
of $1 has been written off in these financial statements.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(b) | ZNT Project                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                          
|    | At July 31, 2016, the Company held a 100% interest in the
      ZNT property located in central British Columbia, some 15 kilometres
      southeast of the town of Smithers, British Columbia. The property was
      staked by Quartz Mountain in 2012.
|    |                                                                                                                                                                                                                                                          
|    | After the reporting period, the Company let all other
      mineral claims in the ZNT Project lapse.                                                                                                                                                     
|    |                                                                                                                                                                                                                                                          
|(c) | 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 has been recorded at a nominal amount of
      $1.                                                                                                                                                                                           

|5. | CAPITAL ANDRESERVES
|-- | -------------------

|(a) | Authorized share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | At July 31, 2016, 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) | Equity-settled share-based payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company has a share purchase option plan (the Plan)
      approved by the Company's shareholders that allows the Board of Directors
      to grant share purchase options, subject to regulatory terms and approval,
      to its officers, directors, employees, and service providers. The Plan is
      based on the maximum number of eligible shares equaling 10% of the
      Company's outstanding common shares, calculated from time to
  time.                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The exercise price of each share purchase option is set
      by the Board of Directors at the time of grant but cannot be less than the
      five day volume weighted average trading price of the Company's shares
      calculated on the day prior to the grant. Share purchase options may have
      a maximum term of 1 years (although share purchase options have generally
      been granted with a term of up to five years) and typically terminate 90
      days following the termination of the optionee's employment or engagement,
      except in the case of retirement or death. The vesting period for share
      purchase options is at the discretion of the Board of Directors at the
      time the options are granted.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The following summarizes the changes in
the Company's share purchase options:

Number of options with an exercise price of $0.45
    
    Year ended July 312016
    
    
    2015
    
    
    2014Options outstanding at
      beginning of year
    
    828,000
    
    
    1,587,000
    
    
    1,705,800Forfeited during the year
    
    (60,000
    )
    
    (36,900
    )
    
    (118,800
    )Expired during the year
    
    
    
    
    (722,100
    )
    
    Options outstanding and exercisable at the end of year
    
    768,000
    
    
    828,000
    
    
    1,587,000


The weighted average contractual
remaining life of the share purchase options outstanding and exercisable at July
31, 2016 was 0.47 years (July 31, 2015  1.47 years, July 31, 2014  1.5 years).

|6. | AMOUNTSPAYABLE ANDOTHERLIABILITIES
|-- | ----------------------------------

Year ended July 312016
    
    
    2015Amounts payable
    $
    1,107
    
    $
    4,062


|7. | CONVERTIBLEDEBENTURE
|-- | --------------------

2016
    
    
    2015
    
    
    2014Balance at the
      beginning of the year
    $
    500,000
    
    $
    600,000
    
    $
    600,000Repayment during year
    
    (28,355
    )
    
    (100,000
    )
    
    Fair value of common shares
      issued for the settlement of the Debenture
    
    (40,000
    )
    
    
    
    
    Debt
      extinguishment
    
    (431,645
    )
    
    
    
    
    Balance at the end of the year
    $
    
    
    $
    500,000
    
    $
    600,000Current portion
    
    
    
    $
    50,000
    
    $
    600,000Non-current portion
    
    
    
    
    450,000
    
    
    $
    
    
    $
    500,000
    
    $
    600,000


Pursuant to the purchase of the Gnat
Property (note 4(a)) in fiscal year 2013, the Company issued an unsecured
$650,000 convertible debenture (the "Debenture") with an original maturity date
of October 31, 2013, to the vendor, Bearclaw Capital Corp. (Bearclaw), as part
of the purchase price. From inception to October 1, 2014, a series of amendments
to the Debenture agreement were made, and principal payments totalling $100,000
had been paid.

Effective October 1, 2014, the Company
and Bearclaw amended (the Amendment) the terms of the Debenture pursuant to
which the Company agreed to make payments on the remaining balance of $550,000 (the Principal Sum) in equal annual installments
of $50,000, commencing on January 31, 2015 (completed) and thereafter on or
before January 31 of each subsequent year until the Principal Sum is fully
repaid. Effective October 1, 2014, the principal amount outstanding was subject
to interest at 7.5% per annum, payable quarterly in arrears.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

In January 2016, the Company reached an
agreement with Bearclaw Capital Corp. whereby Bearclaw forgave a convertible
debenture with an amount owing of $500,000 in exchange of the following
consideration:

| | a) | a cash payment of $29,793 (including accrued interest of
      $1,438);       
| | -- | ------------------------------------------------------------------------------
| | b) | 2 million of the Companys common shares with fair value
      of $40,000; and
| | c) | the transfer of the Gnat Property                                             

resulting in a gain on settlement of
debenture in the amount of $431,645.

|8. | FLOW-THROUGHSHAREPREMIUMLIABILITY
|-- | ---------------------------------

Pursuant to a private placement of
flow-through shares during calendar year 2013, the Company was obligated to
spend the proceeds on eligible Canadian Exploration Expenses ("CEE") (as defined
in the Income Tax Act) prior to December 31, 2013 and to renounce them to the
investors. Accordingly, a flow-through share premium liability was recognized
and drawn down to $nil as these CEE expenditures were incurred.

|9. | RELATEDPARTYBALANCES ANDTRANSACTIONS
|-- | ------------------------------------

|(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:                                                                                                                                                                                             

Year ended July 312016
    
    
    2015
    
    
    2014Short-term employee benefits, including salaries and
      directors fees
    $
    94,000
    
    $
    160,000
    
    $
    169,000


Short-term employee benefits include
salaries, directors fees and amounts paid to HDSI (note 9(b)) for services
provided to the Company by certain HDSI personnel who serve as directors or
officers of the Company.

|(b) | Entities with Significant Influence over the
      Company                                                                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company's management believes that Hunter Dickinson
      Services Inc. ("HDSI"), a private entity, has the power to participate in
      the financial or operating policies of the Company. Scott
  Cousens, Robert Dickinson, and Ronald Thiessen,
are directors of both the Company and HDSI. Michael Lee and Trevor Thomas are
officers of the Company and are employees of HDSI.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

Pursuant to a management agreement
between the Company and HDSI, dated July 2, 2010, the Company receives
geological, engineering, corporate development, administrative, management and
shareholder communication services from HDSI. These services are provided based
on annually set rates. HDSI also incurs third party costs on behalf of the
Company on full-cost recovery basis.

Transactions with HDSI parties were as
follows:

Year ended July 312016
    
    
    2015
    
    
    2014HDSI: Services received based
      on management services agreement
    $
    171,000
    
    $
    252,000
    
    $
    511,000HDSI: Reimbursement of third party expenses paid
    
    42,000
    
    
    70,000
    
    
    24,000


Outstanding balances were as
follows:

July 31, 2016
    
    
    July 31, 2015Balance payable to HDSI
    $
    3,178,443
    
    $
    2,973,276


In January 2016, the Company and HDSI
reached an 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:

| |  | make a cash payment of $180,207 to HDSI; and
| | - | --------------------------------------------
| |  | issue 6 million shares to HDSI.             

Completion of the settlement agreement
with HDSI has been deferred and will occur at a mutually agreed date.

|10. | OPERATINGSEGMENTS
|--- | -----------------

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.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|11. | TAXATION
|--- | --------

|(a) | Provision for current tax                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                     
|    | No provision has been made for current income taxes, as
      the Company has no taxable income.                                                                                                    
|    |                                                                                                                                                                                                     
|(b) | Provision for deferred tax                                                                                                                                                                          
|    |                                                                                                                                                                                                     
|    | As future taxable profits of the Company are uncertain,
      no deferred tax asset has been recognized.                                                                                            
|    |                                                                                                                                                                                                     
|    | As at July 31, 2016, the Company had unused non-capital loss carry
      forwards of approximately $5,222,000 (2015  $5,279,000) in Canada and
      $48,000 (2015  $48,000) in the United States.
|    |                                                                                                                                                                                                     
|    | The Company had approximately $4,358,000 (2015  $4,347,000) of
      resource tax pools available, which may be used to shelter certain
      resource income.                                     
|    |                                                                                                                                                                                                     
|    | Reconciliation of effective tax
rate:                                                                                                                                                               

Year ended July 31
    
    2016
    
    
    2015
    
    
    2014Income (loss) for the year
    $
    92,549
    
    $
    (1,410,322
    )
    $
    (865,427
    )Income tax expense
    
    
    
    
    
    
    
    Income (loss) excluding income tax
    $
    92,549
    
    $
    (1,410,322
    )
    $
    (865,427
    )Income tax expense (recovery) using the
      Company's domestic tax rate
    $
    24,000
    
    $
    (367,000
    )
    $
    (225,000
    )Non-deductible (deductible)
      expenses and other
    
    (2,000
    )
    
    31,000
    
    
    147,000Change in deferred tax rates
    
    
    
    
    (2,000
    )
    
    Differences in statutory tax
      rates
    
    
    
    
    (1,000
    )
    
    (2,000
    )Changes in unrecognized temporary differences
    
    (22,000
    )
    
    339,000
    
    
    80,000$
    
    
    $
    
    
    $
    


The Company's domestic tax rate during
the year ended July 31, 2016 was 26% (2015  26%; 2014  26%) and the effective
tax rate was nil (2015  nil; 2014  nil).

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

As at July 31, 2016, the Company had
the following balances in respect of which no deferred tax assets had been
recognized:

Resource
    
    
    EquipmentExpiry:
    
    Tax losses
    
    
    pools
    
    
    and otherWithin one year
    $
    
    
    $
    
    
    $
    One to five years
    
    48,000
    
    
    
    
    
    5,000After five years
    
    5,222,000
    
    
    
    
    
    82,000No
      expiry date
    
    
    
    
    4,334,000
    
    
    114,000$
    5,270,000
    
    $
    4,334,000
    
    $
    201,000


|12. | 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 quotes
prices included in Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: inputs for the asset or
liability that are not based on observable market data (unobservable inputs).

The carrying value of cash and cash
equivalents, receivables, amounts payable and accrued liabilities, convertible
debenture and due to related party approximates fair value due to the short term
nature of the financial instruments. Cash and cash equivalents is classified as
fair value through profit or loss and measured at fair value using level 1
inputs.

Convertible debt is measured at
amortized cost. Fair value of long-term debt is estimated using discounted cash
flow analysis based on the borrowing rate for similar borrowing arrangements.
The fair value of the Companys loan approximates its carrying value as the
interest rate is comparable to similar borrowing arrangements.

|13. | FINANCIALRISKMANAGEMENT
|--- | -----------------------

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:

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

|(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 cash
      equivalents and amounts receivable. The Company limits its exposure to
      credit risk on liquid financial assets by only investing its cash and cash
      equivalents with high-credit quality financial institutions in business
      and savings accounts.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The carrying value of the Company's cash and cash
      equivalents 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
      ensures that there is sufficient capital in order to meet short term
      business requirements, after taking into account cash flows from
      operation, if any, and the Company's holdings of cash and cash
      equivalents.                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The following obligations existed at July 31,
  2016:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Payments due by periodLess than 1Total
    
    
    year
    
    
    1-5 years
    
    
    After 5 yearsAmounts payable and other
      liabilities (note 6)
    $
    1,107
    
    $
    1,107
    
    $
    
    
    $
    Due
      to related parties (note 9)
    
    3,178,443
    
    
    3,178,443
    
    
    
    
    
    Total
    $
    3,179,550
    
    $
    3,179,550
    
    $
    
    
    $
    


The following obligations existed at
July 31, 2015:

Payments due by periodLess than 1Total
    
    
    year
    
    
    1-5 years
    
    
    After 5 yearsAmounts payable and other
      liabilities (note 6)
    $
    4,062
    
    $
    4,062
    
    $
    
    
    $
    Convertible debenture (note 7)
    
    500,000
    
    
    50,000
    
    
    450,000
    
    
    Due to related parties (note 9)
    
    2,973,276
    
    
    2,973,276
    
    
    
    
    
    Total
    $
    3,477,338
    
    $
    3,027,338
    
    $
    450,000
    
    $
    


|(c) | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Companys exposure to interest rate risk arises from
      the interest rate impact on cash and cash equivalents. 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 as a result of a decrease in the fair value of any guaranteed bank
      investment certificates included in cash and cash equivalents as they are
      generally held with large financial
institutions.

---

|Quartz Mountain Resources Ltd.                                
|--------------------------------------------------------------
|Notes to the Consolidated Financial
      Statements          
|For the years ended July 31, 2016, 2015, and 2014             
|(Expressed in
      Canadian Dollars, unless otherwise stated)

The Company from time to time has debt
instruments and is therefore 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'
      deficiency as capital. The Company manages its capital structure and makes
      adjustments to 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 year ended July 31, 2016.                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company is not subject to any externally imposed
      equity requirements.                                                                                                                                                                                                                                                                                                                                                                      

---